2009 (7) TMI 1193 - SC - FEMA

Whether the High Court/Supreme Court has the power to transfer a suit from a Civil Court to the DRT? Whether Article 142 is applicable to direct a transfer from a Civil Court to DRT, especially when the DRT Act does not bar the jurisdiction of the Civil Court to entertain a suit against a bank and therefore powers under Article 142 ought not to be exercised to have such an effect or Article 142 is not applicable where a statute occupies the field or Power under Article 142 should be exercised only to prevent injustice and do complete justice between the parties? Held that - Having regard to our finding that even Section 24 of the Code of Civil Procedure cannot be taken recourse to, there cannot be any doubt whatsoever that the Punjab and Haryana High Court could not have transferred the suit from the civil court Ludhiana to DRT. Appeal allowed.

Issues Involved:

1. Whether the High Court and/or Supreme Court has the power to transfer a suit from a Civil Court to a Debt Recovery Tribunal (DRT).
2. Applicability of the decision in Indian Bank v. ABS Marine Products (P) Ltd. to the transfer of a suit from a Civil Court to the DRT.
3. Whether the power to transfer exists and, if so, whether it should be exercised in the facts and circumstances of the case.
4. Applicability of Article 142 of the Constitution to direct a transfer from a Civil Court to DRT.
5. Whether the transfer of a case should be refused under Article 142 to do complete justice and stay proceedings before the DRT pending the disposal of the suit.

Detailed Analysis:

1. Power to Transfer a Suit from Civil Court to DRT:

The core issue was whether the High Court or Supreme Court has the power to transfer a suit pending in a Civil Court to a DRT. The Court held that the High Court had no power to transfer a pending Civil Suit to a DRT as it was beyond its jurisdiction. The effect of such a transfer would oust the jurisdiction of the Civil Court, which is impermissible without express statutory provisions. The DRT is sui generis and follows a different procedure from Civil Courts. The power to transfer under the Code of Civil Procedure (CPC) (Sections 22, 23, 24, and 25) is inapplicable as these sections apply to transfers between courts, and the DRT is not a court. The power to transfer under the DRT Act is restricted to cases filed by banks pending when the Act came into force and within the DRT's jurisdiction.

2. Applicability of Indian Bank v. ABS Marine Products (P) Ltd.:

The decision in Indian Bank v. ABS Marine Products (P) Ltd. was applicable in the context of transferring a suit from a Civil Court to the DRT to be tried as a counterclaim. The Court clarified that the observations in Abhijit Tea Co. Pvt. Ltd. v. United Bank of India applied only if the subject matter of the bank's suit and the suit of the defendant against the bank were inextricably connected and both parties agreed to the transfer. The decision in State Bank of India v. Ranjan Chemicals Ltd. and another, which departed from this ratio without referring the matter to a larger bench, was not considered good law.

3. Exercise of Power to Transfer:

Even if the power to transfer exists, the Court held that it should not be exercised in the facts and circumstances of the case. The Tribunal's jurisdiction is limited and does not extend to independent suits filed by borrowers against banks. The Tribunal is not a civil court, and its jurisdiction is confined to applications filed by banks for recovery of debts.

4. Applicability of Article 142:

The Court held that Article 142 should not be exercised to transfer a suit from a Civil Court to the DRT. The DRT Act does not bar the jurisdiction of Civil Courts to entertain suits against banks. Article 142 is not applicable where a statute occupies the field, and it should be exercised only to prevent injustice and do complete justice between the parties. The jurisdiction of the Civil Court is not ousted by the DRT Act, except in matters directly related to the recovery of debts due to banks and financial institutions.

5. Refusal to Transfer Under Article 142:

The Court refused to exercise its powers under Article 142 to transfer the case to the DRT, emphasizing that the Civil Court's jurisdiction is not completely ousted by the DRT Act. The Tribunal has a limited jurisdiction and cannot pass a decree or grant certain reliefs available in a Civil Court. The transfer of a suit would deprive the plaintiff of substantive rights, including the right to appeal. The Court directed the Tribunal to dispose of the bank's claims expeditiously while complying with all legal requirements.

Conclusion:

The Court concluded that the High Court of Punjab and Haryana had no jurisdiction to transfer the suit from the Civil Court, Ludhiana, to the DRT. The civil appeal was allowed, and the impugned judgment of the High Court was set aside. The Tribunal was directed to proceed expeditiously with the bank's claims, ensuring compliance with legal requirements. The transfer applications were dismissed, and no costs were imposed.

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