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of <h1>Supreme Court Upholds DRT's Injunction Power, Emphasizes Natural Justice</h1> <h3>Industrial Credit and Investment Corpn. of India Versus Grapco Industries Ltd.</h3> Industrial Credit and Investment Corpn. of India Versus Grapco Industries Ltd. - 1999 AIR 1975, 1999 (3) SCR 759, 1999 (4) SCC 710, 1999 (3) JT 619, 1999 ... Issues Involved:1. Jurisdiction of the Debts Recovery Tribunal (DRT) to grant ad interim ex parte orders of injunction or stay.2. Merits of the Tribunal's decision to grant an ex parte order of injunction.Summary:Jurisdiction of the Debts Recovery Tribunal (DRT) to Grant Ad Interim Ex Parte Orders of Injunction or Stay:The primary question of law was whether the Debts Recovery Tribunal (DRT), constituted u/s 3(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, has the jurisdiction to grant ad interim ex parte orders of injunction or stay against the defendant on an application filed by a bank or financial institution for recovery of debt. The Calcutta High Court had held that the Tribunal has no jurisdiction to grant such ex parte orders under the Act. However, the Supreme Court disagreed with the High Court's reasoning, stating that when Section 22 of the Act says the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, it does not mean it lacks jurisdiction to exercise powers of a Court as contained in the Code. The Tribunal can travel beyond the Code of Civil Procedure, provided it observes the principles of natural justice. The Supreme Court emphasized that the power to make interim orders by way of injunction or stay inherently includes the power to grant such orders ex parte if it is in the interest of justice.Merits of the Tribunal's Decision to Grant an Ex Parte Order of Injunction:The High Court also held that the Tribunal was wrong on merits in granting an ex parte order of injunction, criticizing the Tribunal for not providing reasons and issuing an omnibus order. The Supreme Court noted that an ex parte order is only of short duration and should be granted under exceptional circumstances, considering factors such as irreparable harm, balance of convenience, and prima facie case. The Tribunal must record reasons, even if brief, and ensure the ex parte order does not continue indefinitely without undue delay. The Supreme Court found the High Court's criticism valid but noted that the High Court did not consider the merits of the case itself. The Supreme Court suggested that the High Court could have remanded the matter to the Tribunal for an expeditious decision while continuing the interim order in a modified form.Case Specifics:In the case involving ICICI and Grapco Industries Ltd., the Tribunal had granted an ex parte order of injunction restraining the respondents from transferring or alienating properties hypothecated to ICICI and appointed a special officer for inventory. The High Court set aside this order without considering the merits of ICICI's case. The Supreme Court noted that the High Court could have remanded the matter to the Tribunal for a quick decision while maintaining an interim order. Due to the passage of time and the unknown stage of proceedings before the Tribunal, the Supreme Court decided not to interfere with the High Court's judgment but allowed the Tribunal to pass an interim order if the matter was still pending.Conclusion:The Supreme Court concluded that the DRT has the jurisdiction to grant ad interim ex parte orders of injunction or stay, provided it adheres to the principles of natural justice. The appeals were disposed of accordingly, with the appellants entitled to costs.
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