COFEX EXPORTS LIMITED Vs. CANARA BANK

JUDGEMENT

(1.) This order shall govern the disposal of FAO(OS) 266/95 and FAO(OS) 314 to 319 OF 1996. These appeals raise issues of frequent occurrence touching the entertainablity of cross- suits, counter claims and claims of set-off before Debt Recovery Tribunal, and impact of their existence in written statement on the jurisdictional competence of the civil court qua the jurisdiction of Debt Recovery Tribunal over such cases which are associated with cross suits, cross claims and claims for set-off, filed or preferred reciprocally. Let us lay the factual matrix so as to seat the legal questions proping up for decision. Cofex Export vs. Canara Bank and Ors. arises out of civil suit No. 3193/92 filed by Canara Bank against the appellant and two others for recovery of Rs. 25,21,556.98. The Suit was filed on 24.8.92. The transactions entered into between the parties are banking and loan facilities, packaging credit facility and loan on pledge and hypothecation. In the written statement filed on 22.11.94, the defendants 1 and 2 have preferred counter-claim, wherein the pleas raised are that the plaintiff bank has charged excessive rate of interest in breach of agreement between the parties and has also adjusted more amounts then due in the discounting of foreign bills. It is submitted that if the statements of account are correctly drawn up consistently with the agreements between the parties and the plaintiff gives due credit to all the amounts set out in the written statement then nothing would be found due and payable by the defendants; instead the plaintiff bank may be found liable to pay something to the defendants.

(2.) 1 All the six suits have been filed by State Bank of India. They seek recovery of debts secured by mortgages. In none of the cases written statement has been filed. In each of the cases the defendant/s have moved applications under Section 151 Civil Procedure Code seeking stay of the civil suit on the ground that the defendants are facing criminal prosecution on the same facts as set out in the plaint and filing of the written statement would prejudice them in their defence in the criminal trial on account of their defence being disclosed. On 23.5.94, in each of the suits, the learned trial Judge has directed filing of written statement to be deferred till disposal of the application seeking stay of the suit.

(3.) 4.2 It appears that the defendants in suit No. 2806 to 2810/93, all belong to one family or one business house known as TAYAL GROUP having floated companies and partnership firms consisting of the members of the group/family. The Tayal Group has filed following five suits against the State Bank of India :- (i) Suit No. 150/94 titled M/S Tayal Sales Corporation Pvt Ltd v. State bank of India, Delhi. The suit is for recovery of Rs. 10 lacs, for declaration with consequential relief and for injunction. The plaintiff in this suit is seeking adjustment of the claim in suit No. 2812/93 said to have been instituted by the State Bank of India against the plaintiff for Rs. 1,48,38,922.75 and has sought in addition a decree in the sum of Rs. 10 lacs as damages apart from the relief and declaration. (ii) Suit No. 493/94 titled Sh Geeta Ram Gupta v. State Bank of India. This is a suit for recovery of Rs. 4 lacs, for declaration with consequential relief and for injunction. The plaintiff in this suit is seeking a sum of Rs. 4 lacs after adjustment of the defendant/banks claim in suit No. 2808/93., (iii) Suit No. 711/94 M/S M.T. Plywood Traders Pvt Ltd v. State Bank of India. (iv) Suit No. 837/94 M/S Sandeep Plywood Pvt Ltd v. State Bank of India. (v) Suit No. 2085/94 M/S. Tayal Plywood Industries Pvt Ltd v. State Bank of India. All the civil suits stated hereinabove, were filed on the Original Side of the High Court. With the coming into force of the Recovery of Debts Due to Banks and Financial Institutions Act 1893 ( Act No. 51 of 1993) (hereinafter the Act, for short) the suits filed by the Banks were sought to be transferred and the records transmitted to the Debt Recovery Tribunal. The defendants have moved applications seeking the relief of the suits not being transferred to the Tribunal. The learned trial Judge has overruled the contentions of the defendants and directed the suits to be transferred to the Tribunal vide his order dated 22.8.95. The order of the learned Single Judge has been reported as 1996 IV AD ( DELHI) 49=1996(39)DRJ 73. The aggrieved defendants have come up in appeals. It was submitted by Mr A.S. Chandihok, the learned counsel for the appellant in FAO (OS) 266/95 that it is the valuable right- also statutorily recognised - of a defendant to prefer a counter-claim and have it tried in the same suits filed by the plaintiff. The transfer of the suit would prejudice this valuable statutory right of the defendant, as the Tribunal would not have competence to try the counter-claim. Mr H.C. Dhal, the learned counsel appearing for the appellants in other appeals has submitted that the cross suits filed by the defendants are in the nature of cross-claims or counter-claims. Transfer of the suit filed by the Bank to the Tribunal would not be accompanied by corresponding transfer of the civil suits filed by TAYAL GROUP to the Tribunal. The result would be that the bank's claim would be tried expeditiously by the Tribunal while the suits filed by Tayal Group would continue to remain pending in the civil court which would result in valuable right of the defendants being lost. Also the possibility of conflicting decrees coming into existence cannot be ruled out. This would occasion serious and unforeseen complications, also failure of justice. It was also submitted that to the extent of the claim in suit, a cross-claim or cross suit may tantamount to a plea in the nature of set-off, which plea being a plea essentially in nature of defence shall have to be heard and tried with the suit filed by the bank. Shri Ishwar Sahai, the learned Senior Advocate assisted by Shri Sanjeev Kalra and Shri Atul Kumar advocate appearing for the State Bank of India and Shri J.N. Aggarwal appearing for the Canara Bank have submitted that the Tribunal having been established by Parliament though a legislative enactment within its legislative competence, the law has to take its own course. Such claims as lie within the jurisdiction of the Tribunal have to be tried by it and cannot be withheld by the civil court so also the civil court cannot afford to transfer such claims to the Tribunal as are not entertainable by it nor the Tribunal is supposed to try, hear and decide such claims as do not lie within its jurisdiction. The questions arising for decision are :- Can a civil court refuse to transfer a civil suit to the Tribunal lying within latter's jurisdictional competence merely because a cross suit or a counter-claim has been filed or preferred ?