2001 (1) TMI 1018 - HC - Indian Laws

Seeking grant of stay on proceedings - petitioner's application for stay of proceedings was rejected on the ground that the provisions of the Bombay Relief Undertaking Act, 1958 (BRU Act) cannot prevail over the Recovery Of Debts Due To Banks and Financial Institutions Act,1993 - HELD THAT - If the object of BRU Act is kept in view along with the object of the DRT Act, it is apparent that there is no conflict between two Acts and both can be read harmoniously to operate together. As stated by the Apex Court, the BRU Act is framed for the purpose of resurrecting and rehabilitating industrial undertakings by temporarily suspending remedies to enforce fulfillment of obligations and liabilities so as to prevent unemployment and thus give immunity from legal actions so as to render working of such undertakings in smooth and effective manner. At the same time the DRT Act has been brought on the statute book to subserve the purpose of protecting public money of which the banks, and financial institutions are custodian, and to recover dues of such money expeditiously; if that is so, both the statutes are beneficial in nature with an underlying public purpose. Under the BRU Act what is suspended is the remedy against the right to enforce the liabilities which have already been incurred and in the event of notification prevailing over the DRT Act all that happens is that the undertaking is permitted to run and there is no question of public money being siphoned away in the interregnum. This petition is required to be entertained not only because the Tribunal lacks jurisdiction but also for any other purpose ; namely, to further the legislative intent instead of frustrating it. In view of what is stated hereinbefore, we reject the preliminary objection raised on behalf of the respondent caveators. No observations may be taken to be final on merits, because the said observations have been made only for the limited purpose of ascertaining whether we could entertain the petition or not in view of the preliminary objections - Rule returnable on 22.02.2001.

Summary

Issues Involved:
1. Jurisdiction of the Debts Recovery Tribunal (DRT) vis-`a-vis the Bombay Relief Undertaking Act (BRU Act).
2. Availability and appropriateness of alternative remedy under the DRT Act.
3. Harmonious interpretation of the BRU Act and the DRT Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Debts Recovery Tribunal (DRT) vis-`a-vis the Bombay Relief Undertaking Act (BRU Act):
The petitioner challenged the DRT's jurisdiction to proceed with the recovery of debts in light of the BRU Act notification. The BRU Act provides for a temporary suspension of rights, privileges, obligations, and liabilities of relief undertakings to prevent unemployment. Specifically, Section 4(1)(a)(iv) of the BRU Act states that any remedy for enforcement of liabilities shall be suspended, and all related proceedings shall be stayed during the notification period. The DRT Act, on the other hand, aims for the expeditious adjudication and recovery of debts due to banks and financial institutions. The court noted that the BRU Act and DRT Act operate in different fields: the former aims to prevent unemployment by temporarily suspending creditors' rights, while the latter focuses on the recovery of public money. The court held that the DRT's order was without jurisdiction due to the BRU Act's suspension provisions.

2. Availability and appropriateness of alternative remedy under the DRT Act:
Respondent No.1 argued that the petition should not be entertained as an appeal under Section 20 of the DRT Act was available, which provided a statutory alternative remedy. The court acknowledged that while the DRT Act includes provisions for appeals, it does not completely bar the High Court's jurisdiction under Articles 226 and 227 of the Constitution. The court referred to various precedents indicating that the existence of an alternative remedy does not operate as an absolute bar to the exercise of writ jurisdiction, especially in cases involving jurisdictional errors or violations of fundamental principles of justice. The court emphasized that the rule requiring exhaustion of alternative remedies is a rule of policy, convenience, and discretion rather than a strict rule of law.

3. Harmonious interpretation of the BRU Act and the DRT Act:
The court examined the legislative intent and objectives of both statutes. The BRU Act aims to temporarily protect industrial undertakings from legal actions to prevent unemployment, while the DRT Act seeks to expedite the recovery of debts. The court concluded that both statutes could be harmoniously interpreted to operate together. The BRU Act's temporary suspension of enforcement remedies does not negate the DRT Act's provisions; rather, it temporarily postpones the enforcement of creditors' rights. The court reasoned that allowing the DRT Act to override the BRU Act would frustrate the latter's legislative intent. Conversely, suspending DRT Act proceedings during the BRU Act's notification period would allow the industrial undertaking to stabilize and eventually satisfy its creditors' claims.

Conclusion:
The court rejected the preliminary objection regarding the alternative remedy and held that the petition was maintainable. It emphasized that the DRT lacked jurisdiction due to the BRU Act's suspension provisions and that the High Court's intervention was necessary to uphold the legislative intent of both statutes. The petition was admitted, and interim relief was granted to stay the DRT proceedings against the petitioner.

Order:
The petition was admitted with a returnable date of 22.02.2001, and interim relief was granted in terms of para 7(B). The petitioner was permitted to join all opponents in the relevant O.A. numbers as respondents.