2003 (2) TMI 350 - HC - Companies Law

High Court Enforces Agent's Obligations Despite Transfer to Tribunal

The High Court clarified that it retained jurisdiction to enforce the agent's obligations under the agency agreement despite the suit's transfer to the ... Debt Recovery Tribunal Issues Involved:1. Jurisdiction of the High Court after the transfer of the suit to the Debt Recovery Tribunal.2. Obligations of the agent (M/s. Travancore Malabar Estates) under the agency agreement.3. Enforcement of the agent's undertaking to discharge liabilities.Detailed Analysis:1. Jurisdiction of the High Court after the transfer of the suit to the Debt Recovery Tribunal:The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, came into force on 24th June 1993, conferring exclusive jurisdiction on the Debts Recovery Tribunals (DRTs) for debt recovery applications from banks and financial institutions. Section 18 of the Act bars the jurisdiction of other courts, and Section 31 mandates the transfer of existing suits to the DRT. The Division Bench of the High Court clarified that after the establishment of the DRT, the High Court ceased to have jurisdiction to issue directions to the Court Receiver in suits transferred to the DRT. However, the Court Receiver, being an employee of the High Court, would continue to act under the administrative control of the Chief Justice and would function subject to directions from the DRT or Appellate Tribunal.2. Obligations of the agent (M/s. Travancore Malabar Estates) under the agency agreement:M/s. Travancore Malabar Estates was appointed as an agent of the Court Receiver for the tea estate. Under the agency agreement dated 22nd December 1997, the agent was obligated to discharge all liabilities, including payment of taxes, salaries, wages, and other dues. The agent was also required to furnish a 'Nil Liability Certificate' monthly, confirming the discharge of all liabilities. The agent failed to provide this certificate and discharge the liabilities, breaching the terms of the agreement.3. Enforcement of the agent's undertaking to discharge liabilities:The agent's Constituted Attorney undertook to lodge the 'Nil Liability Certificate' and discharge all liabilities at the earliest. This undertaking was recorded in a site report dated 5th December 2000. The High Court held that the agent's undertaking must be enforced and that the agent is answerable to the Court for obligations assumed under the agency agreement. The Court found no merit in the agent's defence that the High Court lacked jurisdiction to entertain the Receiver's report and directed the agent to comply with the obligations as per the agency agreement.Conclusion:The High Court granted the directions sought by the Court Receiver in her report dated 29th January 2002, directing the agent to discharge its liabilities and furnish the 'Nil Liability Certificate.' The Court Receiver was discharged, subject to ensuring the liabilities due by the agent are duly paid. The High Court maintained jurisdiction to enforce the agent's obligations under the agency agreement, despite the suit's transfer to the DRT.