TaxTMI 
TaxTMI 
2006 (5) TMI 194
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....e Debt Recovery Tribunal (hereinafter referred to as "the Tribunal") under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ("the Act of 1993"). The bank has filed Original Application No. 199/2001 for recovery of a sum of Rs. 6,67,51,922 from the Company and nine others including the present petitioners. Pending the said proceeding, after introduction of the Act of 2002, the Bank has initiated proceeding for recovery of its dues as envisaged by the Act of 2002. On 7-12-2005 the Bank has issued notice for remittance of its dues within sixty days as envisaged by section 13(2) of the Act of 2002. Feeling aggrieved, the petitioners have preferred the present petitions. 3. The challenge is three-fold. Mr. Joshi has submitted that the Company has moved reference before the Board for Industrial and Financial Reconstruction (hereinafter referred to as "the BIFR") as envisaged by section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 ('the Act of 1985'). The BIFR has been seized of the matter and is inquiring into the working of the Company. Pending the said inquiry, no recovery proceeding shall be maintainable against the Company as envisaged ....
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..... He has further assured that the Bank, unless it discharges its obligation under sub-section (3A) of section 13 of the Act of 2002, shall not proceed in furtherance of the impugned notice dated 7-12-2005. The impugned notice issued under section 13(2) of the Act of 2002 cannot be vitiated on that ground. He has also submitted that the present petitions are premature as no coercive recovery has been made from the petitioners. In the event any action is taken under section 13(4) of the Act of 2002, the petitioners shall have alternative efficacious remedy of statutory appeal before the Tribunal. Therefore also, the present petitions require to be dismissed in limine. 5. It is not in dispute that the borrower Norris Medicines Limited has made a reference to the BIFR under the Act of 1985. Section 22 of the Act of 1985 provides for suspension of legal proceedings, contracts, etc., pending any inquiry or preparation of a scheme or during implementation of the sanctioned scheme in respect of an industrial company. Thus, the protection conferred against the execution, distress or the like by section 22 of the Act of 1985 is confined to the properties of the Sick Industrial Companies a....
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....al institution to seek permission of the Tribunal to withdraw the application for the purpose of taking action under the Act of 2002. The said section 19(1) and the proviso thereof read as under : "Application to the Tribunal.-(1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction- (a)the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides or carries on business or personally works for gain; or (b)any of the defendants, where there are more than one, at the time of making the application, actually and voluntarily resides or carries on business or personally works for gain; or (c)the cause of action, wholly or in part, arises : Provided that the bank or financial institution may, with the permission of the Debts Recovery Tribunal, on an application made by it, withdraw the application, whether made before or after the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004 for the purpose of taking action under the Securitisation and Recon....
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....withdraw its application made to the Debts Recovery Tribunal." (p. 199) Consequently, it has been held that : ". . . Thus, we conclude that the Bank or financial institution has to elect its remedy to either proceed under the RDB Act or to withdraw such proceedings to enable them to initiate action under the Act." (p. 199) 10. The Bombay and the Kerala High Courts, however, have a different view. The Kerala High Court has, in the matter of Sahir Shah v. Bank of India 2006 (1) ISJ (Banking) 263 held that, ". . . It is not mandatory on the part of the Bank or Financial Institution to make an application before the Tribunal or to seek permission before invoking the provisions of the Securitisation Act. The power conferred on the Tribunal under the third proviso to section 19(1)(c) is only to refuse or grant permission for withdrawal. No power is conferred on the Tribunal under the RDB Act to prevent the Bank or Financial Institution from invoking the provisions of the Securitisation Act. Only power conferred on the Tribunal is to decide as to whether the request for withdrawal of the application pending before the Tribunal could be granted or not." 11. The Bombay High C....
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.... 13. What could be the legislative intent ? Does not a right to withdraw the pending proceeding inhere in every litigant ? Is not inherent that a legal proceeding pending before any Court or judicial forum cannot be withdrawn without the express permission of that Court or the judicial forum? If withdrawal of any legal proceeding with the permission of the Court is permissible under ordinary law, why should the Legislature specifically provide for application for such permission. If the legislative intent were to make it compulsory to withdraw the pending proceeding before the Tribunal, the Legislature has not said so in specific terms. In my view, it would be incongruent to say that a pending proceeding be withdrawn with the permission of the Tribunal for the purpose of recovering the dues from the secured assets and to file a further proceeding in case the sale proceeds from the sale of the secured assets do not satisfy the dues in its entirety. Neither the above proviso [Unlike sub-rule (3) of rule 1 of Order XXIII, CPC] nor the sub-section (10) of section 13 provides for making application afresh after it is once withdrawn as envisaged by the aforesaid proviso. 14. I am in ....
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....d also arise as section 24 of the Act of 1993 provides that, "Limitation.-The provisions of the Limitation Act, 1963 (36 of 1963), shall, as far as may be, apply to an application made to a Tribunal." If the Legislature intended the aforesaid proviso to be mandatory, the Legislature would have provided for extension of period of limitation as it has been done in the Act of 1985. Section 22 of the Act of 1985 provides for suspension of the legal proceedings and contracts. In view of the suspension of the proceedings under sub-section (1) of section 22 of the Act of 1985, the Legislature has extended the period of limitation by a specific provision made in sub-section (5) of the said section 22 as under: "(5) In computing the period of limitation for the enforcement of any right, privilege, obligation or liability, the period during which it or the remedy for the enforcement thereof remains suspended under this section shall be excluded." 15. In the present case, however, though section 24 of the Act of 1993 provides that the Limitation Act shall apply, the Legislature has not provided for the extension of period of limitation by such period during which the application p....