2001 (4) TMI 858 - HC - Companies Law

High Court Upholds Debt Recovery Tribunal's Exclusive Jurisdiction

The High Court affirmed the exclusive jurisdiction of the Debt Recovery Tribunal to try suits for recovery of debt under the Act. It emphasized the ... Debt Recovery Tribunal - Jurisdiction of Issues:Jurisdiction of Debt Recovery Tribunal to try suit for recovery of debt; Appeal against Tribunal's order; Exercise of inherent jurisdiction by the High Court.Analysis:1. Jurisdiction of Debt Recovery Tribunal:The respondent bank initially filed Suit No. 906 of 1994 seeking specific performance, damages, and recovery of a specific amount. Upon the enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1973, the suit was transferred to the Debt Recovery Tribunal. The appellants objected to the Tribunal's jurisdiction, stating that specific performance fell outside its purview. The bank subsequently withdrew the claim for specific performance and damages, focusing only on the recovery of the debt. The Tribunal, however, still found the suit to be for specific performance and ordered its transfer back to the civil court. The High Court, in the impugned order, held that after the bank relinquished the claim for specific performance, the suit was exclusively triable by the Tribunal under the Act due to the nature of the claim falling within the definition of 'debt'. The High Court emphasized that the civil court's jurisdiction was ousted by section 18 of the Act, and thus, the suit was to be transferred back to the Tribunal for adjudication.2. Appeal against Tribunal's Order:The appellant contended that the Tribunal's order of 28-7-1998 had attained finality as no appeal was filed against it. The High Court, however, rejected this argument, stating that the failure to appeal did not grant jurisdiction to the civil court to try the suit, especially after the bank had abandoned other reliefs. The High Court affirmed that the Tribunal's order was appealable but proceeded to exercise its inherent jurisdiction to quash the erroneous order of the Tribunal. The High Court emphasized that the Tribunal's assumption that the suit was still for specific performance was incorrect, as the bank had already given up that claim. The High Court, in line with established legal principles, set aside the Tribunal's order and directed the Tribunal to proceed with the suit on its merits in accordance with the law.3. Exercise of Inherent Jurisdiction by High Court:While the learned single Judge did not quash the Tribunal's order, the High Court, in the exercise of its inherent jurisdiction and power of superintendence, set aside the erroneous order passed by the Tribunal. The High Court, citing precedents, clarified that the existence of an alternative remedy did not bar its jurisdiction to grant appropriate relief. The High Court's decision to quash the Tribunal's order and direct the Tribunal to proceed with the suit underscored the importance of correct legal interpretation and adherence to statutory provisions.In conclusion, the High Court affirmed the exclusive jurisdiction of the Debt Recovery Tribunal to try suits for recovery of debt under the Act, emphasized the importance of correct legal interpretation, and exercised its inherent jurisdiction to rectify the erroneous order of the Tribunal, directing the Tribunal to proceed with the suit on its merits.