1. The petitioner herein, the State Bank of India. Industrial Area Branch. Nacharam filed an application O.A Diary No. 432,95 on the file of the Debts Recovery Tribunal at Bangalore (camp at Hyderabad) for recovery of a debt under the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (hereinafter referred to as the Act). Rule 4 of the Rules framed under the Act prescribed a format of the application containing the particulars to be given by the applicant and also the details of the requisite documents to be enclosed along with the application. The petitioner in compliance with this rules filed an application in the prescribed format giving all the details and also enclosing the necessary documents including the statement of account based on which the claim is made by the petitioner. The Registry of the Debts Recovery Tribunal raised an objection without giving any details stating that the petitioner should give the break up figures of the principal, interest and the service charges, even though all these particulars were available in the statement of account enclosed to the application filed by the petitioner. On the basis of the request made by the petitioner to post the matter before the court, the same was posted before the Tribunal on 28-6-1995 in the camp court at Hyderabad The Presiding Officer of the Tribunal relying upon the decision of the Karnataka High Court in Gowda, D.S… v. M/S. Corporation Bank, Bangalore-3…. (1) AIR 1983 Kar. 143, insisted that the petitioner should give the necessary particulars called for by the Registry for numbering the petition.
2. Learned counsel for the petitioner submits that even though it was brought to the notice of the Tribunal that the decision reported in Gowda, D.S… v. M/S. Corporation Bank, Bangalore-3…. (1 Supra) has been set aside by the Supreme Court in C.A 4214/82 vide Corporation Bank v. D.S Gowda (2) II 1994 Banking Cases 613, the Presiding Officer of the Tribunal insisted that under Sub-section 4 of Section 19 of the Act the Tribunal has got the power to call for the particulars and accordingly returned the application to the petitioner for compliance.
3. Aggrieved by the same this writ petition is filed.
4. Since this writ petition is filed on the basis of the office objection raised by the Tribunal it is not necessary to order notice to the respondent. Therefore this matter is being disposed of at the stage of admission. As mentioned already the presiding Officer of the Tribunal relied upon D.S Gowda's case and also Sub-section 4 of Section 19 of the Act for furnishing the particulars, by me petitioner. The ratio laid down in D.S Gowda's case is:
“The Courts cannot re-open any account maintained by Banks relating to transaction with its customers on the ground that the rate of interest charged, in the opinion of the Courts, is excessive or unreasonable. Section 21A of the Banking Regulation Act is a restraint on such power of Courts. However, in any case, if it is proved that the interest charged by Banks on loans advanced is not in conformity with the rate prescribed by the Reserve Bank then the Court could disallow such excess interest and give relief to the party notwithstanding the provisions of Section 21A. Banks are bound to follow the directions of Circulars issued by the Reserve Bank prescribing the structure of interest to be charged on loans and any interest charged by Banks in excess of the prescribed limit would be illegal and void Banks cannot charge compound interest with quarterly rests on agricultural advances.”
5. This decision was considered by the Supreme Court in Corporation Bank v. D.S Gowda (2 Supra) and it was held.
“But if the Reserve Bank has fixed the maximum rate of interest in exercise of the powers conferred by Sections 21/35A of the Banking Regulation Act, Section 21A would be attracted and the transaction would not be liable to be re-opened on the ground that the rate of interest fixed is excessive even though not exceeding the ceiling determined by the Reserve Bank.”
6. The Supreme Court in this decisions has set aside the decision rendered by the Karnataka High Court in Gowda, D.S… v. M/S. Corporation Bank, Bangalore-3…. (1 Supra). In the circumstances, the reliance placed upon decision in D.S Gowda's case by the Tribunal is not correct. The Tribunal relied upon Sub-section 4 of Section 19 of the Act Sub-sections 3 and 4 of Section 19 of the Act which are relevant for purpose of this case are in the following terms:
“19. Application to the Tribunal: …. (3) on receipt of the application under Sub-section (1) the Tribunal shall issue summons requiring the defendant to show cause within thirty days of the service of summons as to why the relief prayed for should not be granted (4). The Tribunal may, after giving the applicant and the defendant an opportunity of being heard pass such orders on the application as it thinks fit to meet the ends of justice.”
7. Under Sub-section (3) of Section 19 of the Act the Tribunal should issue summons requiring the defendant to show cause within 30 days of service of the summons as to why the relief prayed for should not be granted Sub-section (4) of Section 19 of the Act will come into operation only after the summons are served on the defendant and after he appear and raises an objection. Based on the objections that may be raised by the defendant, under Sub-section (4) of Section 19 of the Act, the Tribunal may call for any particulars and pass necessary orders thereon. In the circumstances the Tribunal is not correct in placing reliance upon Sub-section (4) of Section 19 of the Act even before the summons are served on the defendant.
8. For the reasons stated above the W.P is allowed and the order dt. 28-6-1995 in Diary No. 432/95 is hereby quashed. The Tribunal shall number and register the O.A No Costs.
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