2001 (1) TMI 899 - HC - Companies Law

Court Receiver's Jurisdiction Transition Under RDB Act: Key Clarifications and Transitional Directions

Bank of Tokyo Mitsubishi Ltd. Versus Chambra Estates

Bank of Tokyo Mitsubishi Ltd. Versus Chambra Estates - [2001] 34 SCL 919 (BOM.) Issues Involved:- Jurisdiction of the High Court to issue directions to the Court Receiver after the enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.- Continuation of the Court Receiver's role and the source of directions for the Court Receiver.- Necessary consequential directions for the Court Receiver's proceedings.Comprehensive Issue-wise Detailed Analysis:1. Jurisdiction of the High Court:The primary issue was whether the High Court retained jurisdiction to issue directions to the Court Receiver after the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act, 1993) came into force. The judgment clarified that with the establishment of the Debts Recovery Tribunal (DRT) effective from 16-7-1999, the High Court's jurisdiction over such matters ceased. This was supported by Sections 17 and 18 of the RDB Act, which vested exclusive jurisdiction in the DRT for adjudicating and executing claims related to debts due to banks and financial institutions. The Supreme Court's judgments in Allahabad Bank v. Canara Bank and Hara Parbati Cold Storage (P.) Ltd. v. UCO Bank reinforced this view, emphasizing that the DRT had exclusive jurisdiction over both adjudication and execution of debt recovery.2. Continuation of the Court Receiver's Role:The second issue concerned whether the Court Receiver, appointed by the High Court before the RDB Act, 1993 came into force, would continue to act and from whom they should seek directions. The judgment referenced the Supreme Court's decision in Hiralal Patni v. Loonkaran Sethiya, which stated that a receiver appointed without a defined tenure would continue until discharged by the court. Consequently, the Court Receiver would remain in their role but would now be subject to directions from the DRT. The High Court no longer had the authority to issue directions to the Court Receiver after the suits or proceedings were transferred to the DRT.3. Necessary Consequential Directions:The judgment provided detailed directions to ensure a smooth transition and continued functioning of the Court Receiver:- The Court Receiver, High Court, Bombay, would continue to act in all transferred matters but must seek directions from the DRT or the Appellate Tribunal.- The services of the Court Receiver would be made available to the DRT for one year from the date of the judgment, subject to the administrative control of the learned Chief Justice.- The DRT or the Appellate Tribunal could discharge the Court Receiver and appoint another suitable person as the receiver.- The Court Receiver could apply for discharge from proceedings either after one year or earlier if directed by the Chief Justice.- The DRT or the Appellate Tribunal had the jurisdiction to issue all appropriate directions to the Court Receiver that were previously given by the High Court.Conclusion:The judgment resolved the conflict by determining that post the RDB Act, 1993, the High Court no longer had jurisdiction to issue directions to the Court Receiver in matters transferred to the DRT. The Court Receiver would continue in their role but must now obtain directions from the DRT, ensuring that the transition was managed effectively and that the DRT could utilize the Court Receiver's services for a specified period.