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2014 (7) TMI 1375 - HC - Indian LawsSuit for declaration that the Structured Currency Option Agreements entered into between the plaintiff and the defendant Bank are agreements by way of wagers hit by the bar of Section 30 of the Indian Contract Act 1872 or not - seeking permanent injunction restraining the defendant Bank from in any manner acting upon or seeking to enforce any transaction under the said agreements - HELD THAT - The preamble to the DRT Act describes the same as an Act to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto ; Section 3 thereof provides for establishment of tribunals to be known as DRTs to exercise the jurisdiction power and authority conferred thereon by the Act - Had the DRT no jurisdiction power and authority to adjudicate on the defence of the defendant there would have been no need to provide for legal representation by the defendant or for the defendant to examine witnesses. The DRT vide Section 17 has the jurisdiction power and authority to decide on the defence to an application for recovery of debt filed before it. Once the DRT is held to have such a power the jurisdiction of the Civil Court to declare existence of a state of affairs which is a defence to a claim before the DRT has to be necessarily held to be barred. The Supreme Court recently in STANDARD CHARTERED BANK VERSUS DHARMINDER BHOHI AND OTHERS 2013 (9) TMI 1289 - SUPREME COURT has reiterated that the intendment of the DRT Act is speedy recovery of dues to the bank and the DRTs and DRATs are expected to see to it that an ingenious litigant does not take recourse to dilatory tactics. It was further held that any delay would fundamentally frustrate the purpose of the legislation. The Supreme Court with the said observations set aside the part of the order of the DRAT giving liberty to the auction purchaser of a property to file a civil suit. If the jurisdiction of this Court to grant the consequential relief of injunction is barred can this Court have jurisdiction to grant the relief of declaration and / or should this Court grant the relief of declaration which without the consequential relief of injunction would be a toothless declaration incapable of saving the plaintiff from the claim of the defendant Bank if the DRT was to conclude otherwise and thus but a mere scrap of paper - this Court ought to refuse to grant the relief of declaration also which is but a discretionary relief. It cannot be forgotten that grant of every injunction entails declaration of rights and no injunction can be granted without adjudicating conflicting rights of the parties. Thus where grant of injunction is prohibited such prohibition cannot be circumvented by instead granting declaration. This follows from Section 34 of the Specific Relief Act also which bars making of such a declaration where the plaintiff able to seek further relief omits to do so. The only difference here is that though the plaintiff has claimed further relief such further relief is barred by Section 34 of the SARFAESI Act. The suit is thus found to be not maintainable. The amendment claimed to the plaint does not affect its maintainability. Thus the suit is dismissed and resultantly the pending applications are infructuous. The plaintiff is also burdened with costs of the suit. Counsel s fee assessed at Rs.20, 000/-.
Issues Involved:
1. Validity and enforceability of "Structured Currency Option" Agreements under Section 30 of the Indian Contract Act. 2. Jurisdiction of the Civil Court versus Debt Recovery Tribunal (DRT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act). 3. Maintainability of the suit in the Civil Court. Issue-wise Detailed Analysis: 1. Validity and Enforceability of "Structured Currency Option" Agreements: The plaintiff, a partnership firm, sought a declaration that the "Structured Currency Option" Agreements dated 14th January 2008 and 1st February 2008, entered into with the defendant Bank, were void and unenforceable as they were wagering contracts under Section 30 of the Indian Contract Act, 1872. The plaintiff argued that the bank had misled them into signing these agreements without explaining their ramifications and that the agreements were inherently risky and speculative. The plaintiff also sought a permanent injunction to prevent the bank from enforcing any transactions under these agreements. 2. Jurisdiction of the Civil Court versus Debt Recovery Tribunal (DRT): The defendant Bank contended that the jurisdiction of the Civil Court was barred by Section 18 of the DRT Act, as the DRT had the authority to adjudicate on the recovery of debts due to banks and financial institutions. The bank argued that the DRT had the jurisdiction, power, and authority to decide on the defense to an application for recovery of debt filed before it, including the validity of the agreements in question. The court noted that the DRT Act was enacted to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions, and Section 18 of the Act barred the jurisdiction of Civil Courts in matters specified in Section 17. 3. Maintainability of the Suit in the Civil Court: The plaintiff argued that the suit was maintainable in the Civil Court, citing the principle that a plaintiff is the dominus litus and may choose the forum for litigation. The plaintiff also referred to previous judgments, including Nahar Industrial Enterprises Ltd. v. Hong Kong & Shanghai Banking Corporation and Indian Bank v. ABS Marine Products (P) Ltd., to support their contention. However, the court observed that the question of maintainability of the suit in light of the DRT Act was not conclusively decided in these cases. The court concluded that the DRT had the jurisdiction to decide on the defense to the bank's claim, and therefore, the jurisdiction of the Civil Court was barred. Conclusion: The court dismissed the suit, holding that the jurisdiction of the Civil Court was barred by Section 18 of the DRT Act, as the DRT had the authority to adjudicate on the defense to the bank's claim, including the validity of the "Structured Currency Option" Agreements. The court also noted that granting the relief of declaration and injunction in the Civil Court would be counterproductive to the purpose of the DRT Act, which was to ensure speedy recovery of dues to banks and financial institutions. The plaintiff was burdened with the costs of the suit, and the pending applications were rendered infructuous.
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