TaxTMI 
TaxTMI 
2017 (8) TMI 1589
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.... at between the appellants and the concerned financial institution or its successor-in-interest, the respondent Trust, a substantial payment is said to have been made by the appellants to the Trust. According to the case made out in the plaint, in lieu of the balance amount due, the appellants agreed to issue shares in one or more of them in favour of the Trust together with a buy-back agreement simultaneously executed as the issuance of the shares. It is the further case in the plaint that disputes arose between the two sets of parties regarding the modality of the issuance of shares and the buy-back agreement following which the respondent Trust has sought to revoke the settlement and fall back on its original claim. 3. There is no apparent dispute that the Trust enjoys the status of a financial institution and is entitled to invoke both the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of its debts and security interests as defined in such statutes. 4. It may also be noticed at the outset that the appellants may have made a clean breast ....
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.... Section 34 of the said Act would operate only upon it being evident that a Debts Recovery Tribunal or a Debts Recovery Appellate Tribunal would have authority to adjudicate the claim made in the plaint and grant the reliefs sought. The appellants submit that both limbs have to be satisfied for the bar under the first part of Section 34 of the said Act to operate: that a DRT or DRAT has to have the authority at the time of the institution of the suit to adjudicate on the matters covered thereby; and, such DRT or DRAT has also to have the authority to grant the reliefs claimed. 9. According to the appellants, it is only upon any measures being taken by a secured creditor under Section 13(4) of the said Act that a person affected or aggrieved by such measures may approach a DRT in such regard. The appellants assert that prior to any measure being taken by a secured creditor under Section 13(4) of the said Act, any person aggrieved or affected thereby cannot carry a grievance to DRT. Thus, the appellants suggest, it was premature for the trial court to not entertain the suit at a stage when only a notice under Section 13(2) of the said Act had been issued and it was clearly spelt out....
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....n the judgment reported at (2004) 4 SCC 311 (Mardia Chemicals v. Union of India) and the validity of the apparently harsh provisions of such statute cannot be revisited, at least at this level. Section 34 of such Act places an embargo on civil courts to exercise jurisdiction even to receive any suit or proceedings in respect of any matter which a DRT or DRAT is empowered by or under the Act to determine. There are two limbs to Section 34 of the Act and the present discussion is largely confined to the first limb since the appeal has arisen at the receiving stage of the suit. Section 34 of the Act has to be seen along with Section 17(1) thereof. The two provisions mandate as follows: "17. Right to appeal - (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application alongwith such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken: ..." "34. Civil Court not to have jurisdiction - No civil court shall have jurisdi....
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....ld be issued in due course or a copy of the plaint would be necessary to be forwarded to the defendant in case any interlocutory application is made, whereupon, it should be left to the option of the defendant whether to object to the action or the form thereof. In short, the appellants exhort that a court or the judge considering whether leave under Clause 12 of the Letters Patent ought to be granted or not should not suo motu embark on an exercise to assess the maintainability of the action on any other score. 17. The appellants' submission on such first aspect of the matter is exceptionable. There is, indisputably, an application of the judicial mind when assessing whether leave ought to be granted or not under Clause 12 of the Letters Patent. Even Clause 12 of the Letters Patent contains an embargo in the receipt by this court of a class of suits that has come to be known as suits for land. Clause 12 of the Letters Patent ordains that a suit for land may be entertained in this court only if the subject land is wholly or partly situate within the territorial jurisdiction of this court. That necessarily obliges a judge approached for leave under Clause 12 of the Letters Pate....
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....ourt shall not have jurisdiction to entertain a class of actions, it is obligatory on the part of the court to ensure that it does not act in derogation of such statutory command whenever the matter first receives the attention of any judge of the court. That there is a practice in this court that when leave is not sought under Clause 12 of the Letters Patent, the plaint may be presented before the Master and it may get admitted without any inquiry as to its maintainability, cannot dilute the responsibility of a judge being presented a plaint to ascertain whether the suit is ex facie prohibited from being received. Ideally, the Master should also undertake the same exercise and, if in doubt, refer the matter to the judge in chambers. 19. When a statutory provision so unambiguously prohibits a civil court to entertain any suit or proceedings in the explicit language as used in Section 34 of the said Act, it goes to the very root of the authority of the civil court and anything done in derogation thereof would be inherently lacking in jurisdiction. When a question of inherent lack of jurisdiction is involved as a consequence of a statutory bar to receive an action, the court must at....
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....ow, to the second question: whether Section 34 of the said Act prohibited the receipt of the suit in the manner in which it was presented. 24. The extent of the exclusion of the jurisdiction of a civil court would depend not only on the construction of a provision providing for such exclusion, but also on the recognition of a provision that clothes some other authority to entertain that matter which the civil court is prohibited from receiving. It is elementary that a person seeking to assert a legally valid right must have a forum to do so. It is inconceivable that the opportunity of asserting a legal right is not curtailed or suspended by law, yet there is no forum therefor. The immediate assertion of a legal right may, however, be temporarily suspended by law; as done by the proviso to Section 13(3A) of the Act of 2002. 25. The Act of 2002 as it was enacted did not provide for the consideration of a reply to the notice of demand by the concerned banks or financial institutions. Following the Supreme Court decision in Mardia Chemicals, Section 13 of the Act of 2002 was amended to provide for the consideration of a reply by the borrower to the notice of demand issued by a notifi....
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....stricting the operation of the bar on the civil court for receiving a suit to set in only upon any measure being adopted by a bank or financial institution under Section 13(4) of the Act. 29. A single bench judgment of this court and the judgment in the appeal arising therefrom have also been placed by the appellants for the proposition that merely because a suit appears to be in the form of a defence to the measures taken by a bank or financial institution under Section 13(4) of the Act would not entail the suit not being maintainable if the reliefs sought are incapable of being granted by a DRT or DRAT. In the case pertaining to the unreported decision of the single bench in GA 2352 of 2014 in CS 217 of 2013 (Frontline Corporation Limited v. Punjab and Sind Bank) rendered on November 2, 2016, the plaintiff had obtained a loan from the defendant bank to develop an immovable property whereat the defendant was a tenant. The agreement between the parties envisaged the defendant would shift out temporarily to enable the construction to be undertaken and completed before returning to enjoy possession of a part of the new building. A loan for the project was obtained by the plaintiff f....
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....hough they may be geared towards the same goal. The emphasis in the first limb is on "any matter which a ... Tribunal is empowered by or under this Act to determine", whereas the second part covers "any action taken or to be taken in pursuance of any power conferred by or under" the Acts of 2002 and 1993. A DRT will be empowered by or under the said Act of 2002 to determine any matter once any measure under Section 13(4) of such Act is taken by a notified secured creditor or its authorised officer under Chapter III of the Act of 2002. In other words, till such time that any measure under Section 13(4) is taken by a notified secured creditor or its authorised officer, the jurisdiction to determine the propriety of such measure does not vest in any DRT or DRAT. Thus, merely because a notified secured creditor has issued a notice under Section 13(2) of the Act of 2002, it does not imply that the bar under the first limb of Section 34 of the said Act is kicked in, so to say. The bar under such first limb of Section 34 of the said Act begins with any measure being taken by a notified secured creditor or its authorised officer under Section 13(4) of such Act. 32. But even in a civil sui....
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....o determine the subject-matter of the suit vests in a DRT or DRAT after the institution of the suit, the suit cannot be regarded as bad. It is here that the second limb of the provision takes over as it prohibits the interdiction of any action taken or to be taken in pursuance of any power conferred by or under the Act or under the Act of 1993. Thus, a plaint cannot be rejected - and, similarly, refused to be received - if no DRT or DRAT is empowered to determine the subject-matter thereof at the time of its institution. That is not to say, however, that even if the bar operates and a suit is accidentally received, the plaint relating to such suit cannot be rejected later. It must only emphasised that the bar operates at the threshold and not if a DRT or DRAT becomes vested with the authority to determine the subject-matter of the suit at any time after the institution of the suit. 34. Again, in all humility, it must be pointed out that the last two sentences in paragraph 50 of the report in Mardia Chemicals fails to notice the distinction between the two limbs of Section 34 of the said Act. What is said in such two sentences would be true of the second limb of Section 34: the bar....
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....jurisdiction to examine whether the measures taken by a notified secured creditor under Section 13(4) of the Act were legal or not. 37. A line may be added here on the operation and working of the doctrine of precedents. As far as a High Court is concerned, if divergent opinions of two Supreme Court judgments rendered by benches of varying strengths are cited on a legal issue, where the subsequent judgment does not notice the earlier judgment, it is the view of the bench of greater strength that is binding. But if an earlier view of a Supreme Court bench of greater strength is noticed and the dictum in such earlier bench is read down or explained or modified, it is the later judgment - irrespective of the fact that it may have been passed by a bench of lesser strength - that becomes binding. 38. On such consideration, the present suit was maintainable at the time that it was presented for admission and leave under Clause 12 of the Letters Patent was sought: not because any of the reliefs claimed in such suit is incapable of being granted by a DRT or DRAT; but only because at the time of such institution, no DRT or DRAT was empowered by or under the Act of 2002 to determine any pa....