Exclusive debt recovery jurisdiction under the special statute prevails over company court control and limits distribution to section 529A priorities.

The special recovery mechanism under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was stated to confer exclusive jurisdiction on the Tribunal for adjudication and on the Recovery Officer for of recovery certificates, leaving no parallel role for ordinary courts or the company court. The pending winding up proceedings under the Companies Act, 1956 did not require leave of the company court or permit it to stay or transfer the recovery action. Distribution of sale proceeds was to be worked out by the Tribunal under the limited priority preserved by section 529A of the Companies Act, with workmen's dues retaining priority. A respondent-bank without its own adjudicated entitlement could not claim a share in the realised proceeds.

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Issues: (i) Whether, under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Tribunal and Recovery Officer have exclusive jurisdiction in adjudication and execution of bank debt recovery proceedings. (ii) Whether, in the face of pending winding up proceedings under the Companies Act, 1956, leave of the company court is required and the company court can stay or transfer proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. (iii) Whether, for sale proceeds realised under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, distribution and priorities are to be worked out only by the Tribunal and, if so, the extent to which section 529A of the Companies Act, 1956 applies. (iv) Whether the respondent-bank could claim any share in the sale proceeds realised at the instance of the appellant-bank.

Issue (i): Whether, under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Tribunal and Recovery Officer have exclusive jurisdiction in adjudication and execution of bank debt recovery proceedings.

Analysis: Sections 17 and 18 vested the power to entertain and decide bank recovery applications exclusively in the Tribunal, and section 31 showed that even pending proceedings stood transferred to that special forum. The recovery scheme under Chapter V, read with section 34, left no room for parallel adjudication or execution by ordinary courts or the company court. The Tribunal determined liability, and the Recovery Officer alone executed the recovery certificate.

Conclusion: The Tribunal had exclusive jurisdiction for adjudication, and the Recovery Officer had exclusive jurisdiction for execution, in favour of the appellant.

Issue (ii): Whether, in the face of pending winding up proceedings under the Companies Act, 1956, leave of the company court is required and the company court can stay or transfer proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis: The special recovery mechanism under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, together with its overriding clause, was held to prevail over sections 442, 446 and 537 of the Companies Act, 1956. Since the Tribunal itself had exclusive power over adjudication and execution, the company court could not interdict those proceedings or require leave as a condition precedent. The pending winding up petition did not alter that position.

Conclusion: Leave of the company court was not necessary and the company court could not stay or transfer the recovery proceedings, in favour of the appellant.

Issue (iii): Whether, for sale proceeds realised under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, distribution and priorities are to be worked out only by the Tribunal and, if so, the extent to which section 529A of the Companies Act, 1956 applies.

Analysis: Section 19(19) directed distribution among secured creditors only in accordance with section 529A of the Companies Act, 1956, which meant that only the limited class of claims protected by that provision could be recognized. Workmen's dues retained priority, and a secured creditor could claim priority only within the narrow compass of section 529A. The Tribunal, not the company court, had to apply that rule to monies realised under the special Act.

Conclusion: Distribution of sale proceeds and working out of priorities lay with the Tribunal, and only section 529A applied to that limited extent, in favour of the appellant.

Issue (iv): Whether the respondent-bank could claim any share in the sale proceeds realised at the instance of the appellant-bank.

Analysis: The respondent-bank had not obtained any decree or adjudication in its own favour and had not shown that it fell within the limited class of secured creditors entitled to invoke section 529A. Nor were the conditions for invoking the principle underlying section 73 of the Code of Civil Procedure, 1908, satisfied. In the absence of the necessary legal foundation, no share in the sale proceeds could be claimed by the respondent-bank.

Conclusion: The respondent-bank was not entitled to any part of the sale proceeds.

Final Conclusion: The special recovery regime prevailed over the company court's powers, the impugned stay order was unsustainable, and the sale proceeds had to be dealt with by the Tribunal subject to first satisfying workmen's dues.

Ratio Decidendi: Where a special statute creates an exclusive forum for adjudication and execution of debts and contains an overriding clause, the company court's winding up powers yield to that special mechanism, and distribution of realised assets must be made only within the limited statutory priority scheme expressly preserved by the special enactment.

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