2002 (11) TMI 672 - HC - Companies Law

Summary

Issues:
Setting aside ex parte decree under Order 9 Rule 13 CPC in High Court jurisdiction vs. Debt Recovery Tribunal jurisdiction.

Analysis:
The plaintiff, Punjab and Sind Bank, filed a suit for recovery against the defendants, who were proceeded ex parte, resulting in an ex parte decree dated 20-2-1998. The defendants claimed they were never served summons/notices and became aware of the decree only later. The applicant argued that the court which passed the decree has the jurisdiction to set it aside, citing relevant case laws. However, the defendant's counsel contended that the Debt Recovery Tribunal (DRT) constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, had exclusive jurisdiction over the matter due to the decretal amount being a debt as per the Act.

The court referred to section 31 of the Act, which deals with the transfer of cases, stating that suits and proceedings over Rs. 10 lakhs stood transferred to the DRT. Notably, the decree sought to be executed in this case was above Rs. 50 lakhs, leading to the automatic transfer of the suit and proceedings to the DRT. The court emphasized that even execution proceedings pending in the Civil Court were transferred to the Tribunal if the amount exceeded the specified limit, as established by relevant case laws.

Citing various Supreme Court decisions, the court reiterated that suits originally instituted in the High Court or transferred to it would get automatically transferred to the DRT by operation of law. The court upheld the validity of the Act and clarified that once a Debt Recovery Tribunal is established with exclusive jurisdiction, all relevant cases should stand transferred to the Tribunal. Consequently, the court rejected the application for setting aside the ex parte decree, emphasizing that such matters should be addressed before the DRT under the Act, not in the High Court.

In conclusion, the court dismissed the application, affirming that the suit and all related proceedings had been transferred to the DRT as per section 31 of the Act. The judgment highlighted the importance of jurisdictional clarity and adherence to the legal framework established under the Act for matters concerning debt recovery cases involving banks and financial institutions.