2003 (2) TMI 329 - HC - Companies Law

Court Quashes Revenue Recovery Certificate under State Law, Upholds Debt Recovery Tribunal Jurisdiction

The court quashed the impugned Revenue Recovery Certificate (RRC) issued under the M.P. Adhiniyam, emphasizing the exclusive jurisdiction of the Debt ... Act to have overriding effect Issues Involved:1. Legality and jurisdiction of the impugned Revenue Recovery Certificate (RRC).2. Applicability of the Recovery of Debts Due to Banks and Financial Institutions Act (RDB Act) over the M.P. Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam, 1987 (M.P. Adhiniyam).3. Precedence of Supreme Court decisions over High Court judgments.Issue-wise Detailed Analysis:1. Legality and Jurisdiction of the Impugned Revenue Recovery Certificate (RRC):The petitioner challenged the legality and proprietary of the Revenue Recovery Certificate (RRC) dated 22-3-2001, issued by the respondent No. 1-Central Bank of India under section 3 of M.P. Adhiniyam read with rule 5 of M.P. Niyam. The petitioner, who stood as a guarantor for a loan advanced to respondent No. 3, a Private Limited Company, contended that the demand for recovery of Rs. 52,22,330 as arrears of land revenue was without jurisdiction. The court found that the issue was squarely covered by the Supreme Court decision in Unique Butyle Tube Industries (P.) Ltd. v. U.P. Financial Corpn. [2003] (1) SC 333, which held that the jurisdiction of the Debt Recovery Tribunal (DRT) under the RDB Act is exclusive for adjudicating debts due to banks and financial institutions.2. Applicability of the RDB Act Over the M.P. Adhiniyam:The petitioner's counsel argued that by virtue of section 34 of the RDB Act, the provisions of M.P. Adhiniyam could not be invoked for issuing the impugned RRC. The Supreme Court in Allahabad Bank v. Canara Bank [2000] (4) SCC 406 and Unique Butyle Tube Industries (P.) Ltd. had established that the RDB Act has overriding effect, and the jurisdiction of the DRT is exclusive in matters of debt recovery for banks and financial institutions. The court noted that the M.P. Adhiniyam is not specified in section 34(2) of the RDB Act, and thus, any action taken under the M.P. Adhiniyam is not saved and is overridden by the RDB Act.3. Precedence of Supreme Court Decisions Over High Court Judgments:The respondent's counsel relied on a decision by a Single Judge in M.L. Chorisa v. Tehsildar Balaghat [2002] 3 MP LJ 134, which upheld a similar demand under the M.P. Adhiniyam. However, the court held that the Supreme Court's decisions are binding under Article 141 of the Constitution of India. The law laid down by the Supreme Court in Unique Butyle Tube Industries (P.) Ltd. and Allahabad Bank takes precedence, rendering the Single Judge's decision in M.L. Chorisa per incuriam (not binding). Consequently, the court quashed the impugned RRC and related proceedings.Conclusion:The court allowed the writ petition, quashing the impugned demand/RRC dated 22-3-2001 issued under section 3 of M.P. Adhiniyam read with rule 5 of M.P. Niyam. The court emphasized that the RDB Act has overriding effect, and the jurisdiction for recovery of debts due to banks and financial institutions lies exclusively with the DRT. The court also highlighted the binding nature of Supreme Court judgments over conflicting High Court decisions. The respondent Bank was granted the liberty to pursue recovery under the RDB Act or any other legally permissible Act. No costs were awarded.