1996 (9) TMI 634 - HC - Companies Law

High Court's Jurisdiction Upheld Over Tribunal Orders; Speedy Case Disposal Emphasized

The applications under Article 227 of the Constitution were rejected, affirming the Tribunal's decision to address the jurisdiction issue along with other ... - Issues Involved:1. Maintainability of applications under Article 227 of the Constitution.2. Whether the Tribunal should decide the jurisdiction issue as a preliminary issue or along with other issues.Detailed Analysis:1. Maintainability of Applications under Article 227 of the Constitution:The primary contention raised was whether applications under Article 227 of the Constitution are maintainable when an appeal lies against the orders passed by the Bank Recovery Tribunal under the Debts (Due to Bank and Financial Institutions) Act, 1993.The argument against maintainability was based on Section 20 of the said Act, which provides for an appeal to an appellate tribunal. However, the judgment clarified that Section 18 of the Act exempts the jurisdiction of the High Court while exercising power under Articles 226 or 227 of the Constitution. It was emphasized that even if an appeal lies under the Act, the High Court retains its jurisdiction to entertain a petition under Articles 226 or 227 if the order of the Tribunal is without jurisdiction, arbitrary, or violates principles of natural justice. This position was supported by precedents from the Supreme Court, including A. V. Venkateswaran v. Ramchand Sobhraj Wadhwani and Smt. Kuntash Gupta v. Management of Hindu Kanya Mahabidyalaya.The judgment concluded that applications under Article 227 are maintainable in appropriate cases, even if an appeal provision exists under the Act. The preliminary objection raised by the respondents was overruled.2. Decision on Jurisdiction Issue as Preliminary or Along with Other Issues:The core legal question was whether the Tribunal should decide the jurisdiction issue as a preliminary issue under Order 14, Rule 2 of the Code of Civil Procedure before addressing other issues.The judgment discussed the object and scheme of the Debts Recovery Act, 1993, which was enacted to provide for the expeditious adjudication and recovery of debts due to banks and financial institutions. The Act aimed to address the significant delays in debt recovery under the existing judicial system, which blocked substantial public funds in litigation.The Tribunal's discretion under Section 22 of the Act to regulate its own procedure was emphasized. The Tribunal is not bound by the Code of Civil Procedure but guided by principles of natural justice. However, the Tribunal can invoke the procedure of the Code if the ends of justice so require.The judgment highlighted that the amended Order 14, Rule 2 of the Code of Civil Procedure provides limited discretion to decide a preliminary issue. The Tribunal must consider the object and scheme of the Act, which aims for the speedy disposal of cases. Deciding the jurisdiction issue as a preliminary issue could lead to delays, defeating the purpose of the Act.The Tribunal's decision to address the jurisdiction issue along with other issues was deemed appropriate to expedite the proceedings. The judgment noted that if the jurisdiction issue is decided first and appealed, it could lead to further delays. Conversely, deciding all issues together allows for a more efficient resolution, aligning with the Act's objective.The judgment concluded that the Tribunal was justified in deciding the jurisdiction issue along with other issues, rejecting the argument that the Tribunal acted illegally or with material irregularity.Conclusion:The applications under Article 227 of the Constitution were rejected, affirming the Tribunal's approach to decide the jurisdiction issue along with other issues to ensure expeditious adjudication as intended by the Debts Recovery Act, 1993. There was no order as to costs.