B.Ramana Kumar., LLB., FCA, Advocate
While this is a time tested position in matters of tax matters, the Supreme Court has ruled this in matters of recovery of debts also. The Hon’ Supreme court has held that writ jurisdiction of the Court cannot be invoked to test the validity/correctness of each and every interim order passed by the lower authorities. In this case the lower authority is the Debt Recovery Tribunal (“DRT”) under the provisions of the act.
Canara Bank had filed application before the DRT for recovery of amounts valued of around 30 lacs with interest in respect of an Open Cash Credit facilities granted to one T. P. Vishnu Kumar (“Appellant”). The debts, over a period of time became irregular and subsequently NPA. The Appellant filed his response the application before the DRT and submitted his inability to file a detailed written statement in the absence of the requisite records and that the bank has not made the same available to him. He, further, filed separate interim applications seeking production of entire set of documentation along with the accounts. The DRT dismissed all the interim applications of the appellant.
Subsequent to the order of the DRT, the Appellant filed writ petition under Article 226 of the Constitution before Single Bench of Mad HC for issuance of writ of mandamus directing Canara Bank to grant access / produce to the documentation and statement of accounts. The Appellant contended that merits of the matter cannot be dealt with and decided at the interim stage but should be decided in a trial. Further, he contended that the documentation and the accounts were critical to make the detailed submissions and that the applications cannot be admitted without entire documents being submitted. Canara Bank contended that the Tribunal is permitted to make such orders and give such directions and pleaded that the court did not have a jurisdiction in this matter and the DRT is sufficiently equipped to handle the issue. The Single Bench held that non-furnishing of documents amounted to prejudice against the Petitioner and allowed the writ petition directing the Respondent Bank to submit the documents.
The said decision was appealed by the Bank before Division Bench as despite alternate remedy prevailing under the Act writ jurisdiction was invoked. The Divisional bench of the Hon’ble Madras High court allowed the appeal by the bank leading to the present petition before the Supreme Court.
Gist of the Judgment
The only issue to be determined before the SC was whether existence of alternate remedy barred invoking the jurisdiction of the civil court.
The purpose of the Act was ensuring speedy recovery of bank dues. Due to severe delay in adjudicating and disposing such cases, banks and financial institutions like any other litigants were subjected to go through a process of pursuing the cases for recovery through civil courts for unduly long periods, leading to the trapping of crores of rupees in litigation proceedings, which the banks could not re-advance, leading to enactment of the Act and DRT to assure expeditious recovery proceedings and speedy adjudication of matters concerning debt recovery of banks.
The SC held that writ petitions cannot be filed in case of recovery of dues in an arbitrary manner. The writ route may be adopted only when there exists any statutory violation or when the litigants feel that the proceedings are conducted in an arbitrary, unreasonable and unfair manner. As the Act itself provides for a mechanism or an alternate remedy, writ route would defeat the very objective of enacting a separate statute and establishing a specialized Tribunal. Thus the matter was sent back to the DRT to deal with it.
At this juncture, it is pertinent to note that the special act was enacted to give the much needed speedy justice and closure to the litigants. The act has extensive powers and the special tribunal has jurisdiction not only in regard to the adjudication of the liability but also in regard to the execution proceedings.
Section 18 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 explicitly bars the jurisdiction of other authorities and courts except the Supreme Court and High Courts under Articles 226 and 227 of the Constitution. This exception is given only in the rarest cases in the situations described above. Further Section 17 provides that the Debt Recovery Tribunal (DRT) being a special tribunal shall have jurisdiction to decide on applications from banks and financial institutions for recovery of debts due to them.
The Supreme Court in Allahabad Bank vs. Canara Bank & Anr., held that the DRT is conferred with the exclusive jurisdiction and that it is not proper for the defaulting borrowers to be able to invoke the jurisdiction of Civil Courts for frustrating the proceedings initiated by the banks and other financial institutions. That being the position, the parties have to agitate their grievances only before the said forum, DRT and not before the Supreme Court under Article 226 of the Constitution or any other forum. There are many decisions to reiterate the fact that the special tribunals have adequate powers to deal with the routine matters on the dispute and writ is not a remedy in them.
This judgment is one more attempt to clarifying the law in relation to adopting the writ route where alternate remedy exists.
The same analogy can be extended to the income tax act, where orders of the assessing officer or the CIT appeals are to be appealed against before the appropriate forum only where the alternate remedy lies. Writs are to be filed against these orders only on situations where the proceedings are conducted in an arbitrary, unreasonable and unfair manner, demands enforced contrary to the circulars prevalent or pending appeals or where the statutory rules are seemed to be violated.
(The author is a practicing advocate and can be reached at firstname.lastname@example.org)