Civil suit over derivative agreements barred where the same defence could be raised before the Debt Recovery Tribunal.

A civil suit seeking a declaration that foreign exchange derivative agreements were void and unenforceable, together with consequential injunction, was held not maintainable because the same dispute could be raised as a defence before the Debt Recovery Tribunal. The court applied the statutory scheme of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, under which the Tribunal can decide the bank's recovery claim as well as the defendant's defence, set-off and counterclaim. Allowing a parallel civil action would risk conflicting findings and defeat the Act's objective of expeditious recovery. The injunction claim was also treated as barred, and the declaration was not an independent, effective remedy.

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Issues: Whether the civil suit seeking declaration that foreign exchange derivative agreements were void and unenforceable, along with consequential injunction, was barred because the same dispute could be raised as a defence before the Debt Recovery Tribunal.

Analysis: The dispute concerned whether the plaintiff could maintain a civil action for declaration and injunction when the bank had a recovery claim before the Debt Recovery Tribunal. The statutory scheme of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 shows that the Tribunal is empowered not only to decide the bank's recovery application but also to consider the defendant's defence, set-off and counterclaim. The purpose of the Act is expeditious recovery, and permitting a parallel civil suit on the same issue would create the risk of conflicting findings and frustrate the legislative object. Earlier orders and decisions relied upon by the plaintiff were distinguished because they did not decide the present jurisdictional issue on merits or were concerned with transfer questions rather than maintainability. The relief of injunction was also found to be barred, and the declaration sought could not be granted as a standalone, toothless remedy.

Conclusion: The civil court's jurisdiction was held to be barred and the suit was held not maintainable.

Final Conclusion: The suit was dismissed with costs and the pending applications became infructuous.

Ratio Decidendi: Where a bank's recovery claim before the Debt Recovery Tribunal can be met by the same defence that is sought to be declared in a civil suit, the civil court's jurisdiction is barred and a parallel suit for declaration and consequential injunction is not maintainable.

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