1997 (5) TMI 443 - HC - Indian Laws

Summary

Issues Involved:
1. Entertainability of cross-suits, counterclaims, and claims of set-off before the Debt Recovery Tribunal (DRT).
2. Jurisdictional competence of civil courts versus the DRT in cases involving cross-suits, counterclaims, and set-off claims.
3. Transfer of civil suits to the DRT and the impact on associated cross-suits and counterclaims.
4. The right to raise defenses such as payment, adjustment, set-off, and counterclaims in recovery suits.

Detailed Analysis:

1. Entertainability of Cross-Suits, Counterclaims, and Claims of Set-Off Before the DRT:
The court examined whether cross-suits, counterclaims, and claims of set-off can be entertained by the DRT, which is a tribunal with special jurisdiction to try applications by banks or financial institutions for debt recovery. The court concluded that the DRT cannot entertain counterclaims or set-off claims as it is not a civil court and its jurisdiction is limited to applications filed by banks or financial institutions. The DRT's mandate does not extend to adjudicating claims made by other parties, even if they are presented in the form of a counterclaim or set-off in a written statement.

2. Jurisdictional Competence of Civil Courts Versus the DRT:
The court held that the DRT, being a tribunal and not a court, has limited jurisdiction conferred by statute. It can only entertain applications by banks or financial institutions for recovery of debts. The civil courts, on the other hand, have broader jurisdiction, including the authority to entertain counterclaims and set-off claims. The court emphasized that the DRT's jurisdiction is exclusive for matters falling within its purview, and civil courts must transfer such cases to the DRT.

3. Transfer of Civil Suits to the DRT and the Impact on Associated Cross-Suits and Counterclaims:
The court addressed whether civil suits should be transferred to the DRT if they involve cross-suits or counterclaims. It was determined that civil suits within the DRT's jurisdiction must be transferred, but associated cross-suits and counterclaims cannot be transferred to the DRT. The civil court should direct the separation of counterclaims from the written statement and register them as independent suits. Cross-suits will continue to be tried by the civil court.

4. The Right to Raise Defenses Such as Payment, Adjustment, Set-Off, and Counterclaims in Recovery Suits:
The court recognized the defendant's right to raise various defenses, including payment, adjustment, set-off, and counterclaims. However, it clarified the distinctions between these defenses:
- Payment: Satisfaction or extinguishment of a debt before filing the written statement.
- Adjustment: Mutual demands between the same parties, akin to payment but made by the debtor.
- Set-Off: A cross-demand arising from a separate transaction, treated as a cross-action.
- Counterclaim: A separate action against the plaintiff, treated as an independent suit.

The court reiterated that set-off and counterclaims must be within the jurisdictional competence of the court or tribunal where they are raised. Since the DRT lacks jurisdiction to entertain counterclaims or set-off claims, such defenses must be pursued in civil courts.

Conclusion:
The court dismissed the appeals and upheld the transfer of suits filed by banks to the DRT, while associated cross-suits and counterclaims would remain with the civil courts. The court emphasized the need to honor the statutory framework and jurisdictional boundaries established by the DRT Act, ensuring that claims and defenses are adjudicated by the appropriate forum. The parties were directed to appear before the DRT on a specified date for further proceedings.