# NAHAR INDUSTRIAL ENTERPRISES LTD v. HONG KONG & SHANGHAI BANKING CORPORATION ~

- **Citation:** [2009] 12 S.C.R. 54
- **Court:** Supreme Court of India
- **Decided:** 2009-07-29
- **Case number:** Civil Appeal No. 4796 of 2009
- **Bench:** S.8. Sinha, Asok Kumar Ganguly
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nahar-industrial-enterprises-ltd-v-hong-kong-shanghai-banking-corporation-25045
- **Pages:** 89

## Headnote

RECOVERY OF DEBTS DUE TO BANKS AND
FINANCIAL INSTITUTIONS ACT, 1993/CODE OF CIVIL
c PROCEDURE, 1908:
SECTIONS 17, 18, 19, 22, 25, 31/SECTIONS 3, 4, 5, 9,
16, 17, 18, 19, 20, 96, 100, 151, 195 AND ORDER XL/
RULES 1, 5.
D
Suit - Whether High Court/Supreme Court has the power
to transfer a suit pending in Civil Court situated in one state
to a Debt Recovery Tribunal.
T
Held: The very fact that a legal fiction has been created
E and the Tribunal or the Appellate Tribunal deemed to be a
Civil Court for purposes of Section 195 and Chapter XXVI of
CPC, itself suggests that Parliament did not intend to take
away the jurisdiction of Civil Court - The legal fiction has a
limited application - Its scope and ambit cannot be extended
F - While exercising the power of transfer, the High Court and
Supreme Court would be curtailing the right of a suitor
indirectly which could not be done directly - It clearly
establishes that Parliamentary intent that only civil suits are
subject matter of inter state transfer from one Civil Court to
G another Civil Court- If such a power is exercised, all the rights
of the plaintiff remain intact, no right taken away and no right
diluted - Where a matter has been expressly provided for in
the body of the Code, ordinarily inherent power shall not be·
resorted to - If a suit is to be transferred from a Civil Court to
H
54
....
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
55
KONG & SHANGHAI BANKING CORPN.
a Tribunal, the debtor would lose some rights including the A
right to prefer an appeal before a higher court in terms of
Section 96 to 100 CPC - There exists no express power of
transfer under the ORT Act which would be applicable to the
facts of the present case - Application before the Tribunal
would lie only at the instance of the bank or the financial B
institution for the recovery of its debt - Had the jurisdiction of
Civil Courts been barred in respect of counter claim also, the
statute would have said so and Sections 17 and 18 would have
been amended to introduce the provision of counter claim -
Banks and financial institutions cannot approach the Tribunal c
unless the debt has become due - In such a contingency civil
suit will lie - Debtor may file pre-emptive suits and obtain
orders of injunction but that cannot be a ground to completely
oust the jurisdiction of the Civil Court - Constitution of India,
Articles 226, 227.
D
CONSTITUTION OF /NOIA, 1950:
Articles 139A, 142 - Power under - Wide and extensive
-
May be resorted to do complete justice - However,
conditions could be imposed - But the present case not a fit
E
case to exercise jurisdiction under Article 142.
In the Appeal and Transfer Petitions, the question
involved was whether the High Court/Supreme Court has
the power to transfer a suit pending in Civil Court situated
in one State to a Debt Recovery Tribunal situated in
F
another State.
Allowing the Civil Appeal and dismissing the Transfer
Petitions, the Court
HELD:
1.
Indisputably,
however, after the
amendments were carried out vide Amending Act 1 of
2000 and Amending Act 30 of 2004, the Debts Recovery
Tribunal would have jurisdiction to determine the claims
G
of set off and counter-claims. It may be that the bank or H
56
SUPREME COURT REPORTS
(2009] 12 S.C.R.
A the financial institution in terms of the provisions of subsection (9) of Section 19 of the Recovery of Debts Due
to Banks and Financial Institutions Act, 1993, despite
such counter-claim being treated to be a cross-suits
would be entitled to raise a contention that the same
B should not be determined by the Tribunal. In the event
-
such a contention has not been raised, the Tribunal will
have jurisdiction to pass a final judgment both on the
claim of the bank or the financial institution on the one
hand and the cross-objections of the borrower on the
other. [Para 9] [94-8-D]
...
c
Cofex Exports Ltd. vs. Canara Bank AIR 1997 Delhi 355;
Delhi High Court Bar Assn. v. Union of India, AIR 1995 Del
325 and Union of India v. Delhi High Cou

## Text

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[2009] 12 S.C.R. 54
A
NAHAR INDUSTRIAL ENTERPRISES LTD.
v.
HONG KONG & SHANGHAI BANKING CORPORATION
~
(Civil Appeal No. 4796 of 2009)
B
JULY 29, 2009
(S.8. SINHA AND ASOK KUMAR GANGULY, JJ.]
RECOVERY OF DEBTS DUE TO BANKS AND
FINANCIAL INSTITUTIONS ACT, 1993/CODE OF CIVIL
c PROCEDURE, 1908:
SECTIONS 17, 18, 19, 22, 25, 31/SECTIONS 3, 4, 5, 9,
16, 17, 18, 19, 20, 96, 100, 151, 195 AND ORDER XL/
RULES 1, 5.
D
Suit - Whether High Court/Supreme Court has the power
to transfer a suit pending in Civil Court situated in one state
to a Debt Recovery Tribunal.
T
Held: The very fact that a legal fiction has been created
E and the Tribunal or the Appellate Tribunal deemed to be a
Civil Court for purposes of Section 195 and Chapter XXVI of
CPC, itself suggests that Parliament did not intend to take
away the jurisdiction of Civil Court - The legal fiction has a
limited application - Its scope and ambit cannot be extended
F - While exercising the power of transfer, the High Court and
Supreme Court would be curtailing the right of a suitor
indirectly which could not be done directly - It clearly
establishes that Parliamentary intent that only civil suits are
subject matter of inter state transfer from one Civil Court to
G another Civil Court- If such a power is exercised, all the rights
of the plaintiff remain intact, no right taken away and no right
diluted - Where a matter has been expressly provided for in
the body of the Code, ordinarily inherent power shall not be·
resorted to - If a suit is to be transferred from a Civil Court to
H
54
....
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
55
KONG & SHANGHAI BANKING CORPN.
a Tribunal, the debtor would lose some rights including the A
right to prefer an appeal before a higher court in terms of
Section 96 to 100 CPC - There exists no express power of
transfer under the ORT Act which would be applicable to the
facts of the present case - Application before the Tribunal
would lie only at the instance of the bank or the financial B
institution for the recovery of its debt - Had the jurisdiction of
Civil Courts been barred in respect of counter claim also, the
statute would have said so and Sections 17 and 18 would have
been amended to introduce the provision of counter claim -
Banks and financial institutions cannot approach the Tribunal c
unless the debt has become due - In such a contingency civil
suit will lie - Debtor may file pre-emptive suits and obtain
orders of injunction but that cannot be a ground to completely
oust the jurisdiction of the Civil Court - Constitution of India,
Articles 226, 227.
D
CONSTITUTION OF /NOIA, 1950:
Articles 139A, 142 - Power under - Wide and extensive
-
May be resorted to do complete justice - However,
conditions could be imposed - But the present case not a fit
E
case to exercise jurisdiction under Article 142.
In the Appeal and Transfer Petitions, the question
involved was whether the High Court/Supreme Court has
the power to transfer a suit pending in Civil Court situated
in one State to a Debt Recovery Tribunal situated in
F
another State.
Allowing the Civil Appeal and dismissing the Transfer
Petitions, the Court
HELD:
1.
Indisputably,
however, after the
amendments were carried out vide Amending Act 1 of
2000 and Amending Act 30 of 2004, the Debts Recovery
Tribunal would have jurisdiction to determine the claims
G
of set off and counter-claims. It may be that the bank or H
56
SUPREME COURT REPORTS
(2009] 12 S.C.R.
A the financial institution in terms of the provisions of subsection (9) of Section 19 of the Recovery of Debts Due
to Banks and Financial Institutions Act, 1993, despite
such counter-claim being treated to be a cross-suits
would be entitled to raise a contention that the same
B should not be determined by the Tribunal. In the event
-
such a contention has not been raised, the Tribunal will
have jurisdiction to pass a final judgment both on the
claim of the bank or the financial institution on the one
hand and the cross-objections of the borrower on the
other. [Para 9] [94-8-D]
...
c
Cofex Exports Ltd. vs. Canara Bank AIR 1997 Delhi 355;
Delhi High Court Bar Assn. v. Union of India, AIR 1995 Del
325 and Union of India v. Delhi High Court Bar Assn. (2002)
4 sec 275, referred to.
D
2.1. Whereas in Indian Bank it was held that the
transfer can be effected with consent, the said question
was ignored in Ranjan Chemicals. Whereas the question
t-
,.
of jurisdiction of the civil court vis-a-vis the Tribunal was
E uppermost in the mind of the Bench in Indian Bank, no
significance was attached thereto in Ranjan Chemicals. It
proceeded on the basis that the joint trial would be
permissible if some of the issues are common and if
some of the evidence to be let in is also common
~
F especially when the two actions arise out of the same
transactions or series of transactions wherefor several
sub-sections of Section 19 of the Act had not been
adverted to. In Ranjan Chemicals the Court posed a wrong
question unto itself, namely the jurisdiction of the Tribunal
G vis-a-vis exclusion of jurisdiction of the civil court. Indian
Bank was decided upon taking into consideration all
provisions of the Act as also the Code. It entered into the
niceties of the question. It referred to all the binding
precedents. It was a well considered decision. Ranjan
H
Chemicals, therefore, was building upon the decision in
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
57
KONG & SHANGHAI BANKING CORPN.
Indian Bank being a coordinate Bench. It could not have A
-~
taken a contrary view. It was not even held t'iat Indian
Bank was wrong far less plainly wrong. [Para 12] [103-8F]
2.2. In Ranjan Chemicals, the Court having not posed
unto itself the aforementioned question, should have B
considered the decision of a coordinate bench in Indian
Bank in that perspective. It must furthermore be noticed
J.
that Indian Bank was clarifying Abhijit Tea. Conditions laid
down in paragraph 25 of Indian Bank must also, therefore, c
be read in that context as otherwise, the same would lead
to misreading and misinterpreting the judgment. [Para 12]
[104-C-E]
Indian Bank v. ABS Marine Products (P) Ltd. (2006) 5
SCC 72; State Bank of India v. Ranjan Chemicals Ltd. and D
another, (2007) 1 SCC 97; United Bank of India, Calcutta v.
--f·
Abhijit Tea Co. Pvt. Ltd. & Ors. (2000) 7 SCC 357; Union of
'
India v. Raghubir Singh, (1989) 2 SCC 754; Union of India
'
v. Godfrey Philips India Ltd., (1985) 4 SCC 369; SubCommittee of Judicial Accountability v. Union of India, (1992) E
4 SCC 97 and Central Board of Dawoodi Bohra Community
v. State of Maharashtra, (2005) 2 SCC 673, referred to.
,.
3.1. The provisions for transfer under the ORT Act
especially Section 31 which states that only suits or F
proceeding pending before the court immediately before
the establishment of the Tribunal under the Act shall
stand transferred to the Tribunal. Section 31 admittedly
does not apply to the facts and circumstances of the
present case. There is no dispute in this behalf. Moreover,
G
it is beyond any dispute that there exists no other
provision for transfer under the ORT Act from a Court to
Tribunal. The respondents, therefore, do not and cannot
rely on any of the provisions of the ORT Act for
contending that the Court had any other power to direct
transfer. [Para 13] [106-8-0]
H
58
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A
3.2. There exists no express power of transfer under
the ORT Act which would be applicable to the facts of the
present case. The provisions of the Act and the entire
statutory scheme being well-defined, no further
elaboration is required. [Para 13] [107 -A-8]
B
Raghunath Rai Bareja & Anr v. Punjab National Bank
& Anr, (2007) 2 SCC 230, referred to.
4.1. Civil court is a body established by law for
administration of justice. Different kinds of law, however
c exists, constituting different kinds of courts. Which
courts would come within the definition of the civil court
have been laid down under the Code of Civil Procedure
itself. Civil Courts contemplated under Section 9 of Code
of Civil Procedure find mention in Sections 4 and 5
D thereof. Some suits may lie before the Revenue Court,
some suits may lie before the Presidency Small Causes
Courts. The Code of Civil Procedure itself lays down that
the Revenue Courts would not be courts subordinate to
the High Court. [Para 15] [109-G-H; 110-A-B]
E
4.2. Civil Courts are constituted under statutes, like
Bengal, Agra and Assam Civil Courts Act, 1887.
Pecuniary and territorial jurisdiction of the civil courts are
fixed in terms thereof. Jurisdiction to determine subject
~
F
matter of suit, however, emanates from Section 9 of the
Code. [Para 15] [110-C-D]
4.3. Be that as it may, the word 'civil court' vis-'-vis a
court must be construed having regard to the text and
context of the statute. [Para 15] [111-D]
G
State of M.P. v. Anshuman Shukla, (2008) 7 SCC 487;
Bharat Bank Ltd. v. Employees of the Bharat Bank Ltd. 1950
SCR 459; P. Sarathy v. State Bank of India (2000) 5 SCC
355 and State of Madhya Pradesh and another v. Anushuman
H
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
KONG & SHANGHAI BANKING CORPN.
Shukla (2008) 7 SCC 487, referred to.
59
5.1. A provision in the Code which is benev0lent in
character and sub serve the social justice doctrine in a
situation of that nature has been applied, but the same,
A
by itself would not make a Tribunal a civil court. No 8
reason has been assigned as to why a Tribunal has been
considered to be a civil court for the purpose of Section
25 of the Act. The court appears to have proceeded on
the basis that an appeal before the High Court shall lie
in terms of Section 173 of the Motor Vehicles Act, 1988 C
from an Award passed by the Tribunal, thus showing that
it is a part of the hierarchy of the civil court. Motor
Accident Claims Tribunal, thus, is a court subordinate to
the High Court. No appeal against the judgment of the
Debt Recovery Tribunal lies before the High Court unlike
under the Motor Vehicles Act, 1988. The two Tribunals are D
differently structured and have been established to serve
totally different purposes. If the Tribunal was to be treated
to be a civil court, the debtor or even a third party must
have an independent right to approach it without having
to wait for the Bank or Financial Institution to approach
E
it first. The continuance of its counter-claim is entirely
dependant on the continuance of the applications filed
by the Bank. -Before it no declarato"ry relief can be sought
for by the debtor. It is true that claim for damages would
be maintainable but the same have been provided by way F
of extending the right of counter-claim. Debt Recovery
Tribunal cannot pass a decree. It can issue only recovery
certificates. The power of the Tribunal to grant interim
order is attenuated with circumspection. [Para 16) [115C-H; 116-A-B]
G
5.2. Concededly in the proceeding before the Debt
Recovery Tribunal detailed examination; crossexaminations, provisions of the Evidence Act as also
application of other provisions, of the Code of Civil H
60
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A Procedure like interrogatories, discoveries of documents
and admission need not be gone into. Taking recourse
,.
to such proceedings would be an exception. Entire focus
of the proceedings before the Debt Recovery Tribunal
centers round the legally recoverable dues of the bank.
B They have their own hierarchy. They necessarily are
subordinate to the High Court. The appeals from their
judgment will lie before a superior court. The High Court
is entitled to exercise its power of revision as also
superintendence over the said courts. [Para 16] [116-8-
..
c E]
5.3. Only because a court or a tribunal is entitled to
determine an issue involving civil nature, the same by
itself would not lead to the conclusion that it is a civil
D
court. For the said purpose, as noticed hereinbefore, a
legal fiction is required to be created before it would have
all attributes of a civil court. The Tribunal could have been
treated to be a civil court provided it could pass a decree
and it had all the attributes of a civil court including
undertaking of a full-fledged trial in terms of the
E provisions of the Code of Civil Procedure and/or the
Evidence Act. [Para 16) [116-F-H; 117-A]
5.4. It is now trite law that jurisdiction of a court must
be determined having regard to the purpose and object
F of the Act. If the Parliament, keeping in view the purpose
and object thereof thought it fit to create separate tribunal
so as to enable the banks and the financial institutions
to recover the debts expeditiously wherefor the
provisions contained in the Code of Civil Procedure as
G also the Evidence Act need not necessarily be resorted
to, by taking recourse to the doctrine of purposive
construction, another jurisdiction cannot be conferred
upon it so as to enable this Court to transfer the case
from the civil court to a tribunal. [Para 16) [117-A-C]
H·
5.5. The High Court ordinarily can be approached in
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
61
KONG & SHANGHAI BANKING CORPN.
exercise of its writ jurisdiction under Article 226 or its A
,(
jurisdiction under Article 227 of the Constitution of India.
The High Court exercises such jurisdiction not only over
the courts but also over the Tribunals. Appellate tribunals
have been constituted for determining the appeals from
judgments and orders of the Tribunal. The principles of B
purposive construction, therefore, are not attracted in the
instant case. Had the Parliament intended to make the
Tribunals civil courts, a legal fiction could have been
,.(
raised. There are statutes like the Andhra Pradesh Land
Grabbing Act where such a legal fiction has been raised. c
[Para 16] [117-H; 118-A-B]
5.6. Whereas the doctrine of purposive construction
is a salutary principle, the same cannot be extended to a
case which would lead to an anomaly. It can inter alia be
D
resorted to only when difficulty or doubt arises on
account of ambiguity. It is to be preferred when object and
'
purpose of the Act is required to be promoted. [Para 16]
[118-C-D]
Bhagwati Devi v. Mis IS Goel, 1983 [ACJ 123); Kususm
E
/gnats & Alloys v. Punjab National Bank, (2005) 12 SCC 358;
Rajasthan State Road Transport v. Poonam Pahwa, (1997)
6 SCC 100; Dolly Kantibhai Patel v. Batu Tukaram, (2001)
. .,.,
9 SCC 723; Mohan Singh v. Saheb Singh, (2000) 9 SCC
.
403; Kah/on v. K Paramasivam, (2004) 13 SCC 564 and Ml F
~
'
s Jai Shiva Cement v. Allahabad Bank, (JT) 2000 (8) SC 323,
distinguished.
New India Assurance Company Ltd. v Nusli Neville
Wadia and Another (2008) 3 SCC 279; Dilip S. Dahanukar
G
v. Kotak Mahindra Co. Ltd. and Another (2007) 6 SCC 528;
1
South Eastern Coalfields Ltd. v. CCET, MP (2006) 6 SCC
340; Uco Bank v. Rajinder Lal Capoor (2008) 5 SCC 257 and
Sri Ram Saha v. State of West B.engal and Ors. JT 2004 (9)
f'S 136 : (2004) 11 SCC 497, held inapplicable.
H
A
B
c
D
E
F
G
H
62
SUPREME COURT REPORTS
[2009] 12 S.C.R.
\
Parmananda Pegu v. State of Assam, (2004) 7 SCC
779; Dataware Design Labs. v. State Bank of India, [2005]
12 Comp. Cas. 176 (Ker) at 184 and V. Laxminarasamma
v. A. Yadaiah (Dead) and Ors., 2009 (3) SCALE 685,
referred to.
United States v. Detroit Timber & Lumber Co., 200 U.
S. 321, 337, referred to.
6. The Tribunal was constituted with a specific
purpose as is evident from its statement of objects. The
preamble of the Act also is a pointer to that too. It has a
limited jurisdiction. Under the Act, as it originally stood,
did not even have any power to entertain a claim of set
off or counter-claim. No independent proceedings can be
initiated before it by a debtor. A debtor under the
common law of contract as also in terms of the loan
agreement may have an independent right. No forum has
been created for endorsement of that right. Jurisdiction
of a civil court as is barred only in respect of the matters
which strictly come within the purview of Section 17
thereof and not beyond the same. The Civil Court,
therefore, will continue to have jurisdiction. [Para 17]
[119-E-G]
Industrial Credit and Investment Corpn. of India Ltd. v.
Grapco Industries Ltd., (1999) 4 SCC 710, relied on.
7. The Court would be subordinate to High Court in
terms of the provisions of the Code only in the event it
comes within the purview of the hierarchy of the court
as contained in Section 3 of the Act. This, however, does
not mean that even when the Presiding Judge or the
Presiding Officer of the Court exercises power conferred
upon it under a statute still then it would not be a court
subordinate to the High Court. A court while adjudicating
a dispute under the Employees State Insurance Act or a
Reference Court under the Land Acquisition Act, Election
...
•
~
--t
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
63
KONG & SHANGHAI BANKING CORPN.
Tribunal or a Tribunal acting as a Motor Vehicles Accident A
1 Claim Tribunal, while exercising revisional jurisdiction
from an order passed by the Executive Magistrate under
the Code or exercising an appellate power under special
statutes like Municipal Acts would still be a court
subordinate to the High Court. However, for the B
aforementioned purpose the Presiding Officer must be
holding a Court which would otherwise come within the
purview of the hierarchy of the courts. [Para 18] [121-F-
--1
H; 122-A-B]
NP Balakrishanan v. P.M.R. Mariyumma, AIR 1997 c
Kerala 89; Mis. Brooke Bond India Ltd. v. Union of India and
others, AIR 2001 AP 526; Oevendra Somabhai Naik v. Mis.
Accurate Transheet Pvt. Ltd. AIR 2003 Gujarat 141; State
Bank of India v. Madhumita Construction (Pvt.) Ltd. And
D
others, AIR 2003 Cal 7 and Greater Bombay Coop. Bank Ltd.
v. United Yam Tex {P) Ltd., (2007) 6 SCC 236, referred to .
.,_
8.1. The Civil Court indisputably has the jurisdiction
to try a suit. If the suit is vexatious or otherwise not
maintainable action can be taken in respect thereof in
E
terms of the Code. But if all suits filed in the Civil Courts,
whether inextricably connected with the application filed
i' before the ORT by the banks and financial institutions are
transferred, the same would amount to ousting the
jurisdiction of the Civil Courts indirectly. Suits filed by the
F
debtor may or may not be counter claims to the clairris
fifed by banks or financial institutions but for that purpose
consent of the plaintiff is necessary. It is furthermore
difficult to accept the contentions of the respondents that
the statutory provisions contained in section 17 and 18 G
~ of the ORT Act have ousted the jurisdiction of the civil
court as the said provisions clearly state that the
jurisdiction of the civil court is barred in relation only to
applications from banks and financial institutions for
recovery of debts due to such banks and financial H
64
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A institutions. A civil court is entitled to decide the
\.
respective claims of the parties in a suit. It must come
within the purview of the hierarchy of courts as indicated
in Section 3 of the Code. It will have jurisdiction to
determine all disputes of civil nature unless the same is
B barred expressly by a statute or by necessary
implication. The jurisdiction of the civil court would be
ousted only in respect of the matters contained in
Section 18 which has a direct co-relation with Section 17
thereof, that is to say that the matter must relate to a debt
.._
C payable to a bank or a financial institution. The
application before the Tribunal would lie only at the
instance of the bank or the financial institution for the
recovery of its debt. Had the jurisdiction of the civil courts
been barred in respect of counterclaim also, the statute
would have said so and Sections 17 and 18 would have
D been amended to introduce the provision of
counterclaim. [Para 19] [125-E-H; 126-A-E]
8.2. It must be rememl:iered that the jurisdiction of a
civil court is plenary in nature. Unless the same is ousted,
E expressly or by necessary implication, it will have
jurisdiction to try all types of suits. [Para 19] [127-B-C]
8.3. The Act, although, was enacted for a specific
~
purpose but having regard to the exclusion of jurisdiction
F expressly provided for in Sections 17 and 18 of the Act,
it is difficult to hold that a civil court's jurisdiction is
completely ousted. Indisputably the banks and the
financial institutions for the purpose of enforcement of
their claim for a sum below Rs. 10 lakhs would have to
G file civil suits before the civil courts. It is only for the
claims of the banks and the financial institutions above
H
r
the aforementioned sum that they have to approach the
Debt Recovery Tribunal. It is also without any cavil that
the banks and the financial institutions, keeping in view
the provisions of Sections 17 and 18 of the Act, are
4
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
65
KONG & SHANGHAI BANKING CORPN.
necessarily required to file their claim petitions before the
A
Tribunal. The converse is not true. Debtors can file their
claims of set off or counter-claims only when a claim
application is filed and not otherwise. Even in a given
situation the banks and/or the financial institutions can
ask the Tribunal to pass an appropriate order for getting
8
the claims of set-off or the counter claims, determined by
a civil court. The Tribunal is not a high powered tribunal.
It is a one man Tribunal. Unlike some Special Acts, as for
example Andhra Pradesh Land Grabbing (Prohibition)
A Act, 1982 it does not contain a deeming provision that the c
Tribunal would be deemed to be a civil court. [Para 19]
[130-A-E]
.._
8.4. The liabilities and rights of the parties have not
been created under the Act. Only a new forum has been
created. The banks and the financial institutions cannot D
approach the Tribunal unless the debt has become due.
In such a contingency, indisputably a civil suit would lie.
"' There is a possibility that the debtor may file preemptive
suits and obtain orders of injunction, but the same alone,
by itself cannot be held to be a ground to completely oust
E
the jurisdiction of the civil court in the teeth of Section 9
of the Code. Recourse to the other provisions of the
Code will have to be resorted to for redressal of his
y
individual grievances. It is also difficult to accept the
contention that the civil court's jurisdiction is not in
F
consonance with the Act. [Para 19] [130-F-H; 131-A]
8.5. On the ground of inconsistency in the
procedures contained in the two Acts alone, the
jurisdiction of the civil court cannot be said to have been
G
ousted. Sub-section (2) of Section 22 deals with
{
applicability of the provisions of the Code in a limited
manner. Sub-section (3) raises a legal fiction that the
proceeding before the Tribunal or the Appellate Tribunal
shall be deemed to be a judicial proceeding within the
H
66
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A meaning of Sections 193 and 228 and for all the purposes
of Section 196 of the Indian Penal Code, 1860. The very
fact that a legal fiction has been created and the Tribunal
or the Appellate Tribunal shall be deemed to be a civil
court for purposes of Section 195 and Chapter XXVI of
B the Code of Civil Procedure, 1908, itself suggests that the
Parliament did not intend to take away the jurisdiction of
the civil court. In any event, the said legal faction has a
limited application. Its scope and ambit cannot be
extend.ed. The Parliamentary statutes, like the Family
c Courts Act confer all the powers on Family Courts which
>-
are essential for discharging the functions of Civil Court
under the Code of Criminal Procedure. This Court
accepts that disposal of a civil suit takes a long time. But
indisputably remedy of summary and speedy trial by itself
0 would not be sufficient to oust the jurisdiction of the civil
court. Had the intention of the Parliament been so, it
could have expressly said so. Casus omissus, as is well
known, cannot be supplied. [Para 19] [131-8; 132-H; 133A-F]
E
Dhulabhai v. State of M.P., (1968) 3 SCR 662; Dwarka
Prasad Agarwal v. Ramesh Chander Agarwal, (2003) 6 SCC
220; Nagri Pracharini Sabha v. Vth Addi. Distt. and Sessions
Judge, 1991 Supp (2) SCC 36; Ramesh Chand Ardawatiya
v. Anil Panjwani, (2003) 7 SCC 350; Rajasthan SRTC v. Zakir
F Hussain, (2005) 7 SCC 447 and Vijay Kumar Sharma v. State
of Kamataka, (1990) 2 SCC 562, referred to.
9.1. The Code not only contains procedural
provisions but also substantive rights ; right of appeal is
one of them. A forum of appeal is determined in terms of
G the provisions of the Code having regard to the pecuniary
jurisdiction of the Court as may be notified by the
appropriate Government from time to time. A suitor has
the right to maintain a first appeal. A second appeal also
is maintainable before a High Court, subject of course to
H the effect that questions of law must be there for the
_,
f
'
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
67
KONG & SHANGHAI BANKING CORPN.
court's consideration. For the said purpose no preA
deposit is required to be made, as is necessary in terms
of the Act, that 75% of the awarded amount is required
to be deposited, subject of course, to an order to the
contrary, which may be passed by the Debt Recovery
Appellate Tribunal. Such a right of conditional appeal,
B
curtails party's right to maintain an appeal as a matter of
right. While saying so, this Court is not oblivious of the
fact that in terms of Order XLI Rule 1 of the Code, in the
event of passing of a money decree the amount is
required to be deposited. The said provision, however, c
has been held to be directory. Order XLI Rule 1 is required
to be read with Order XLi Rule 5 thereof. [Para 20) [135C-F)
9.2. A civil suit may also be maintainable before
Original Side of the High Court in terms of the statutes
D
under which the High Courts are constituted or in terms
of the provisions of the Letters Patent. An intra court
appeal is available against a decree passed by a Single
Judge of a High Court in a suit filed before it. In the event,
however, if a civil suit is transferred to the Debt Recovery
E
Tribunal, the plaintiff would be deprived of his right in
relation to the procedural mechanism as contained in the
Code as also the Evidence Act. His right of appeal would
"'
also stand curtailed. While exercising the power of
transfer, the High Court and this Court would thus be
F
curtailing the right of a suitor indirectly which could not
be done directly. It clearly establishes the Parliamentary
intent that only civil suits are subject matter of inter State
transfer from one civil court to another civil court. If such
a power is exercised, all the rights of the plaintiff remain
G
intact, no right is taken away and no right is diluted. [Para
~
20) [136-8-E]
Colonial Sugar Refining Company v. Irving, (1905) AC
369 (PC); Garikapati Veeraya v. N. Subbiah Chaudhry, -1957
SCR 488; Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. and
H
68
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A Anr., (2007) 6 SCC 528; Sihor Nagar Palika Bureau v.
Bhabhlubhai Virabhai & Co., (2005) 4 SCC 1; Ma/wa Strips
Pvt. Ltd. v. Jyoti Limited {2009) 2 SCC 426 and Transmission
Corporation of A.P. v. Ch. Prabhakar and Ors .. (2004) 5 SCC
551, referred to.
B
10.1. Section 151 of the Code of Civil Procedure does
not confer any extraordinary jurisdiction on this Court. It
saves the inherent power of all the civil courts, i.e., from
the trial judge to this Court. Thus, where a matter has
c
expressly been provided for in the body of the Code,
ordinarily inherent power shall not be resorted to. The
underlying principle of Section 151 of the Code ordinarily
would apply where the area is grey. It indisputably
confers incidental powers. It confers power on a court to
do something which in absence of any provision
D contrary thereto would lead to advancement of justice
and prevent injustice. The power to transfer one case
from one court to another or from one tribunal to another
having jurisdiction of a different State is an extraordinary
,.
jurisdiction. For exercising the said power, this Court has
E to take into consideration a large number of factors. Such
a power is to be exercised if exceptional situation arises
and not otherwise. [Para 21) [136-F-H;137-A-B]
10.2. The Plaintiff furthermore is the do minus litus. He
may institute a suit having regard to the provisions
.,
F contained in Sections 16 to 20 of the Code of Civil
Procedure in any civil court within whose jurisdiction
inter alia a cause of action arises. If the jurisdiction of the
civil court is not barred or if he having regard to common
law principle is entitled to maintain an a.ction in two
G different forums, he may choose one of them. A debtor
having regard to the provisions of the ORT Act would not
be entitled to maintain an action before the Tribunal. If a
suit is to be transferred from a civil court to a tribunal, he
wotJld lose some rights including the right to prefer an
H appeal before a higher court in terms of Sections 96 and
-
.J
NAHAR INDUSTRIAL ~TERPRISES LTD. v. HONG
69
KONG & SHANGH°AI BANKING CORPN.
100 of the Code of Civil Procedure. [Para 21] [139-A-D]
A
10.3. This Court is also unable to persuade to hold
that the right of transfer of a case being procedural in
nature should be construed liberally. By reason thereof,
substantive right of a party cannot be taken away. The 8
rules of procedures are intended to provide justice and
not to defeat it. [Para 21] [140-E-F]
Padma Sen and Another v. The State of Uttar Pradesh
AIR 1961 SC 218; Manohar Lal Chopra v. Rai Bahadur Rao
Raja Seth Hirata/ AIR 1962 SC 527; Rajasthan State Road C
Transport Corporation and Anr. v. Bal Mukund Bairwa, 2009
(2) SCALE 428; Union of India and Another v. Delhi High
Court Bar Association and Others (2002) 4 SCC 275; Mis.
Ram Chand and Sons Sugar Mills Private Ltd. v. Kanhaya/al
Bhargava and Others AIR 1966 SC 1899; N. T. Veluswami D
Thevar v. G. Raja Nainar and others [AIR 1959 SC 422; Ml
s.
Lakshmiratan Engineering Works Ltd.
v.
Asst.
Commissioner (Judicial) !., Sales Tax, Kanpur Range, Kanpur
and another AIR 1968 SC 488; Industrial Investment Bank
of India Ltd. v. Marshal's Power & Telecom (I) Ltd. and Another E
(2007) 1 SCC 106; Durga Hotel Complex v. Reserve Bank
of India and Others (2007) 5 SCC 120 and Durgesh Sharma
v. Jayshree, (2008) 9 sec 648, referred to.
11. Indisputably, the power of this Court under
Articles 139A and 142 of the Constitution of ln<:lia is a wide
F
and extensive one. This Court may resort thereto to do
complete justice. While doing so, this Court would be
entitled to impose conditions. This Court is of the opinion
that it may not be a fit case to exercise jurisdiction under
Article 142 of the constitution of India. [Para 22) [141-DG
E; 142-8)
Mardia Chemicals Ltd. and Others v. Union of India
(2004) 4 sec 311, referred to.
H
70
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A
12. It is made clear that having regard to the
pleadings of the parties as also the purpose and object
for which the Tribunal has been constituted, it should
proceed to dispose of the bank's claims expeditiously.
This Court has no doubt that while determining the
B respective claims of the parties and the nature thereof,
_,,..
the tribunal shall comply with all the requirements of.faw.
[Para 23] [142-C-D]
Case Law Reference:
c
(2006) 5 sec 12
referred to
Para 5
(2001) 1 sec 97
referred to
Para 5
(2008) 9 sec 648
referred to
Para 6
D
AIR 1997 Delhi 355
referred to
Para 9
AIR 1995 Del 325
referred to
Para 9
(2002) 4 sec 215
referred to
. Para 9
T
(2000) 1 sec 357
referred to
Para 10
E
(1989) 2 sec 754
referred to
Para 12
(1985) 4 sec 369
referred to
Para 12
(1992) 4 sec 97
referred to
Para 12
"
F
(2005) 2 sec 673
referred to
Para 12
(2007) 2 sec 230
referred to
Para 13
(2008) 1 sec 487
referred to
Para 15
-
G
1950 SCR 459
referred to
Para 15
(2000) 5 sec 355
referred to
Para 15
(2008) 1 sec 487
referred to
Para 15
1983 [ACJ 123]
distinguished
Para 16
H
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
71
KONG & SHANGHAI BANKING CORPN
(2005) 12 sec 358
distinguished
Para 16
A
-I
(1997) 6 sec 100
distinguished
Para 16
(2001) 9 sec 123
distinguished
Para 16
"
(2000) 9 sec 403
distinguished
Para 16
ii;:.
B
(2004) 13 sec 564
distinguished
Para 16
(JT) 2000 (8) SC 323
distinguished
Para 16
(2008) 3 sec 219
held inapplicable
Para 16
c
(2007) 6 sec 528
held inapplicable
Para 16
(2006) 6 sec 340
held inapplicable
Para 16
(2008) 5 sec 257
held inapplicable
Para 16
JT 2004 (9) SC 136 :
D
(2004) 11 sec 497
held inapplicable
Para 16
-
...
(2004) 1 sec 119
referred to
Para 16
[2005] 12 Comp. Cas.
E
176 (Ker) at 184
referred to
Para 16
2009 (3) SCALE 685
referred to
Para 16
y
200 u. s. 321, 337 .
referred to
Para 16
F
(1999) 4 sec 110
relied on
Para 17
AIR 1997 Kerala 89
referred to
Para 18
AIR 2001 AP 526
referred to
Para 18
AIR 2003 Gujarat 141
referred to
Para 18
G
AIR 2003 Cal 7
referred to
Para 18
(2007) 6 sec 236
referred to
Para 18
(1968) 3 SCR 662
referred to
Para 19
H
72
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A
(2003) 6 sec 220
referred to
Para 19
1991 Supp (2) SCC 36 referred to
Para 19
r
(2003) 1 sec 350
referred to
Para 19
B
(2005) 1 sec 447
referred to
Para 19
(1990) 2 sec 562
referred to
Para 19
(1905) AC 369 (PC)
referred to
Para 20
1957 SCR 488
referred to
Para 20
c
t
(2007) 6 sec 528
referred to
Para 20
(2005) 4 sec 1
referred to
Para 20.
(2009) 2 sec 426
referred to
Para 20
D
(2004) 5 sec 551
referred to
Para 20
AIR 1961 SC 218
referred to
Para 21
•
AIR 1962 SC 527
referred to
Para 21
•
,.
E
2009 (2) SCALE 428
referred to
Para 21
(2002) 4 sec 275
referred to
Para 21
AIR 1966 SC 1899
referred to
Para 21
AIR 1959 SC 422
referred to
Para 21
F
AIR 1968 SC 488
referred to
Para 21
(2007) 1 sec 1 os
referred to
Para 21
(2001) 5 sec 120
referred to
Para 21
G
(2004) 4 sec 311
referred to
Para 22
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4796 of 2009.
H
From the Judgment & Order dated 15.9.2008 of the High
•
.y
J
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
73
KONG & SHANGHAI BANKING CORPN.
Court of Punjab & Haryana at Chandigarh in Transfer A
Application No. 186 of 2008.
WITH
T.P.(C) No. 1195 of 2008.
B
T.P. (C) No. 1196 of 2008, 1207-1209 of 2008.
Dr. A.M. Singhvi, Ashok Desai, Shyam Divan, K.K.
Venugopal, Rakesh Dwivedi, R.F. Nariman, S. Ganesh, Nandini
Gore, Diya Kapoor, Premtosh Mishra, Pragya Singh Baghel, c
Lakshmi Ramachandran, Jatin Mongia, (for Manik
Karanjawala), Sameer Parekh, H. Jayesh, Huzefa Nasikwala,
Nitin Thukral, Arjun Garg, Rukhmini Bobde, Ruchi Aggarwal (for
Parekh & Co.) B. Rajendran, I. Abrar, V. Balaji, Parvesh Thakur,
(for Narendra Kumar) for the appearing parties.
The Judgment of the Court was delivered by
S.B. SINHA, J.1. Leave granted.
INTRODUCTION
2. Whether the High Court and/or this Court has the power
to transfer a suit pending in a Civil Court situated in one State
to a Debt Recovery Tribunal situated in another is the question
involved herein.
BACKGROUND FACTS
3. We may notice the facts of the matter from Civil Appeal
D
E
F
@ SLP (C) No.24715 of 2008. It arises out of a judgment and
order dated 15th September, 2008 passed by a learned Single
Judge of the High Court of Punjab and Haryana at Chandigarh
G
in Transfer Application No.186 of 2008 whereby and
whereunder the suit filed by the appellant Jnd pending before
the Civil Judge (Junior Division), Ludhiana was transferred to
the Debt Recovery Tribunal-Ill at Mumbai.
H
74
SUPREME COURT REPORTS
[2009] 12 S.C.R.
A
Some of the parties to the lis before us are the banks or
financial institutions within the purview of the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 (1993 Act).
The others are debtors of such banks or financial institutions.
The parties hereto entered into diverse agreements in terms
B whereof banks or the financial institutions lent money to the
debtors.
Appellant entered into International Swaps and Derivatives
Agreement with the respondent. On 1.11.2006, the appellant
C and the respondent entered into globally used market standard
Master Agreement and Schedule published by ISDA (ISDA
Master Agreement) (hereinafter referred to as "Master
Agreement") wherein the respondent undertook derivative
transactions for hedging or transformation of risk exposure.
D
Under the said Master agreement i.e. the ISDA Agreement
including the Schedule thereto, the appellant had entered into
ten transactions with the respondent and out of those ten
transactions, appellant has unwound (closed at the instance of
the appellant at a mutually agreed value) four transactions; one
E transaction got matured and one expired due to occurrence of
a contingent event. In ali the six transactions, appellant had
received an aggregate sum of about Rs.1,87,00,000/- (Rupees
one crore eighty seven lakhs only) from the respondent. In
respect of 2 transactions Swap Reference: NCW072009996
F and Swap Reference: NCW 072009997 both dated 13th July,
2007, the appellant has till date received Rs.13,00,000 (Rupees
Thirteen Lakhs Only) from the respondent.
As on 02.04.2008, four foreign exchange derivative
transactions were outstanding between the appellant and the
G respondent, dated 13.07.2007, 13.07.2007, 26.07.2007 and
30.07.2007.
Appellant vide his letter of 03.04.2008 purported to
disclaim, repudiate and reject only two out of those four
H transactions, i.e , the transactions with trade dates 26th July
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG
75
KONG & SHANGHAI BANKING CORPN. [S.B. SINHA, J.]
2007 and 30th July, 2007.
A
-I
Appellant filed a suit in the Civil Court at Ludhiana s:=eking
a declaration that foreign exchange derivative contracts dated
26.7.2007 and 30.7.2007, entered into by and between therr:
were void as being illegal and violative of Foreign Exchange
B
Management Act, 2000 as_ well as the Circulars and Guidelines
issued by the Reserve Bank of India, and, thus, against public
policy. The said suit was markecT~s Civil Suit No.108 of 2008.
~
An application for grant of injunction was also filed. By
reason of an order dated 5.4.2008, the learned Civil Judge c
directetj both the parties to maintain status quo in regard to the
said two contracts, directing:
'•
"Lest the purpose be not defeated by delay, both the
parties are directed to maintain status quo (as on today)
D
regarding the contracts involving the present cases till
16.4.2008. Compliance U/O 39 R.3 CPC be made as per
rules. Plaintiffs shall also be duty bound to get the service
effected on defendants for date fixed Summons be also
given dasti."
E
The said order of status quo is said to have been
communicated to the respondent on or about 8.4.2008.
Respondent issued a notice dated 12.4.2008 upon the
appellant terminating the pending derivative transaction.
F
Appellant contends that termination of the said derivative
transaction is in violation of the order of status quo passed by
the learned Civil Judge on 5.4.2008. Appellant responded to
the said notice calling upon it to withdraw the same.
On or about 15.4.2008, the respondent-bank filed an
G
-~
application before the Debt Recovery Tribunal at Mumbai
marked as OA No.122 of 2008 along with an interim
application marked as Interim Application No.125 of 2008 for
recovery of dues under the two remaining Foreign Exchange
H
Derivatil!e Contracts dated 13.7.2007.
76
SUPREME COURT REPORTS
(2009] 12 S C.R.
A
Meanwhile, the order of status quo passed on 5.4.2008
was extended by the learned Civil Judge by an order dated
16.4.2008 till 23.4.2008. In the original application filed by the
respondent-bank, the Tribunal by an order dated 22.4.2008
restrained the appellant from alienating, or in any way creating
B third party interests in its fixed assets in relation to the
transactions which were not the st1bject matter of the suit.
Respondent-bank issued two letters on 24.4.2008 to the
appellant calling upon it to .iay the amount due under the two
transactions dated 26 7.2008 and 30.7 2008.