1999 (9) TMI 767 - SC - Companies Law

Supreme Court expands Tribunal's powers in injunction orders beyond Act, emphasizing natural justice principles

The Supreme Court allowed the appeal by a bank against the High Court's decision setting aside an order of the Debts Recovery Tribunal. The Court held ... Whether the Tribunal could pass an order granting ex parte injunction? Held that:- Appeal allowed. The Tribunal certainly has powers to pass other types of injunction orders or stay orders apart from what is stated in section 19(6). It may issue notice and after hearing the opposite side, pass orders. Or, it may pass ad interim orders without hearing the opposite side and then give a subsequent hearing to the opposite party and pass final orders. Also point out that section 22(2) too does not limit the general powers referred to in section 22(1). All that section 22(2) states is that in respect of the type of applications falling under clause (a) to (h), the Tribunal has only powers as are vested in a civil court. As in this case the counsel for the respondents refused to accept notice and that, therefore, the Tribunal proceeded to pass the impugned order. Thus, the Tribunal had conformed to principles of natural justice. The Tribunal was, there- fore, very much within its powers in passing the order in question. The High Court, therefore, erred in holding that the Tribunal had exceeded its jurisdiction and its order is, therefore, liable to be set aside. Issues:Appeal against High Court order setting aside Tribunal's order under article 227 - Interpretation of section 19(6) of the Act - Powers of Debt Recovery Tribunal under section 22 and Rule 18 - Tribunal's jurisdiction to pass injunction orders - Application of principles of natural justice in passing orders.Analysis:The Supreme Court heard an appeal filed by a bank against the Calcutta High Court's order setting aside an order of the Debts Recovery Tribunal. The bank had filed a suit for recovery of monies under the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The Tribunal passed an interim injunction restraining the respondents from recovering money from a company. The High Court set aside the order, stating it was not of the type enumerated in section 19(6) of the Act. The Supreme Court analyzed the relevant statutory provisions, including section 19(6), section 22, and Rule 18 of the Debt Recovery Tribunal (Procedure) Rules, 1993.In a previous case, the Supreme Court had discussed the Tribunal's powers under the Act and the limitations. It was established that the Tribunal's powers were wider than those of a civil court, subject to observing principles of natural justice. The Court emphasized that the Tribunal could pass orders beyond the Code of Civil Procedure, as long as it adhered to natural justice principles. The Court clarified that section 19(6) did not restrict the Tribunal's general powers under section 22(1) and that the Tribunal could pass various types of injunction orders beyond those specified in section 19(6).The Supreme Court held that the Tribunal had the authority to pass different types of injunction or stay orders, issue notices, and pass interim orders without hearing the opposite party initially. The Court emphasized that the Tribunal's powers were not limited by section 19(6) or section 22(2) and that the Tribunal acted within its jurisdiction in the case at hand by conforming to principles of natural justice. The Court overturned the High Court's decision, reinstating the Tribunal's order.The Court clarified that the appeal decision did not address the merits of the case or the interlocutory application. Any other issues, such as the death of a debtor, were to be raised before the Tribunal for appropriate legal consideration. The appeal was allowed, the High Court's order was set aside, and the Tribunal's order was restored, with no costs awarded.