1. The main writ petition, namely W.P. No. 275 of 2003 was filed assailing the order dated 11.12.2002 passed by the Co-operative Tribunal, Hyderabad, dismissing the application, being I.A. No. 1249 of 1001 filed seeking stay of the award passed in A.R.C. No. 428 of 2001 by the Arbitrator-1st respondent, pending disposal of the appeal filed by the petitioners.
2. This Court by order dated 7.1.2003 disposed of the writ petition directing the Cooperative Tribunal to dispose of the appeal filed by the petitioners, on merits, within a period of six weeks, and till the disposal of the appeal, it was directed not to take coercive steps subject, to the petitioners paying a further sum of Rs. 2,00,000/- within a period of two weeks from the date of receipt of the order. Seeking clarification of this order, these two WPMPs are filed.
3. W.P.M.P. No. 5428 of 2003 is filed by the 2nd respondent-Bank to clarify the order dated 7.1.2003, while W.P.M.P. No. 5766 of 2003 is filed by the writ petitioners stating that at the time of tiling the writ petition, the petitioners could not question the jurisdiction of the 1st respondent-Arbitrator and subsequently they came to know that the Co-operative Tribunal, before which they filed an appeal in C.T.A. No. 41 of 2002 also has no jurisdiction to adjudicate the lis, as the alleged debt amount due is more than Rs. 10,00,000/- and that the Debt Recovery Tribunal constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, (for short, 'the Act') alone has jurisdiction.
4. Learned Counsel for the petitioners Mr. P. Badri Premnath contends that a "Banking company" as defined in Clause (c) of Section 5 of the Banking Regulation Act, 1949, includes a Co-operative Bank, and inasmuch as the alleged debt amount due is more than Rs. 10,00,000/-, the Debt Recovery Tribunal under the Act alone has jurisdiction, and therefore, the 1st respondent-Arbitrator and the Co-operative Tribunal have no jurisdiction to adjudicate the lis. In support of his contention learned Counsel relied on the decision of the Apex Court in United Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd., . Learned Counsel further submits that the petitioners have not admitted the liability as observed by the Arbitrator in the award in question and therefore seeks appropriate directions modifying the order dated 7.1.2003 passed in W.P. No. 275 of 2003.
5. On the other hand, Mr. Vedula Venkataramana, learned Counsel for the 2nd respondent-Bank submits that the meaning assigned to "Banking company" in Clause (c) of Section 5 of the Banking Regulation Act, 1949, is restrictive and would apply only to those Banks which find place in Section 51 of the Banking Regulation Act, 1949, and inasmuch as the 2nd respondent-Bank is a Co-operative urban Bank, the Co-operative Tribunal has jurisdiction to adjudicate the lis. Learned Counsel further submits that the writ petitioners have not complied with the conditional order dated 7.1.2003 passed by this Court, and therefore seeks that the order be modified to read that in the event the petitioners commit default in making the payment, the 2nd respondent would be at liberty to execute the award.
6. At the outset it is to be noted that nowhere either in the writ affidavit nor in the affidavit filed in support of the W.P.M.P. No. 5766 of 2003, the petitioners have disclosed what is the actual loan they have taken from the 2nd respondent, the rate of interest thereon, and whether they have repaid any amount in discharge of the loan amount or not. The petitioners have also stated nothing either disputing or admitting the claim made by the 2nd respondent-Bank, except stating that the award was passed without verifying the records. The petitioners, however, by way of filing this W.P.M.P. No. 5766 of 2003 have raised a plea that subsequent to the filing of the writ petition they were informed that the 1st respondent-Arbitrator and the Co-operative Tribunal have no jurisdiction to entertain the claim as the alleged debt amount due is more than Rs. 10,00,000/- and it is only the Tribunal constituted under the Act that has jurisdiction to decide the claim made by the 2nd respondent-Bank.
7. To consider the rival contentions advanced by the learned Counsels, it is to be examined whether the 2nd respondent-Bank is a "Banking company" within the meaning of Clause (c) of Section 5 of the Banking Regulation Act, 1949, and whether the 1st respondent-Arbitrator and the Co-operative Tribunal have jurisdiction to decide the dispute though the alleged debt amount due is more than Rs. 10,00,000/- to the 2nd respondent-Bank.
8. Learned Counsel for the petitioners sought to contend that "Banking company" as defined in Clause (c) of Section 5 of the Banking Regulation Act, 1949, includes a Cooperative Bank as a Co-operative Bank is conducting all such transactions within the meaning of "Banking" as defined in Clause (b) of Section 5 of the Act. Clause (i)(a) of Section 56 of the Banking Regulation Act, 1949, reads thus:
"(i) references to a 'Banking company' or 'the company' or 'such company' shall be construed as references to a Co-operative Bank;.........."
9. A reading of the above clause it is clear that reference to a "Banking company" has to be construed as a reference to a Co-operative Bank as it is conducting all such transactions within the meaning of "Banking" as defined in Clause (b) of Section 5 of the Act. Part-V of the Banking Regulation Act, has been incorporated into the Banking Regulation Act by Act 23 of 1965, qua this amendment, Co-operative Societies, including State Co-operative Banks have been brought within the regulatory framework of the Banking Regulation Act and encompassed within the definition of "Banking company". In view of this, I am of the considered view that the 2nd respondent-Bank is a Bank within the meaning of "Banking company" as defined in Clause (c) of Section 5 of the Banking Regulation Act. In view of this position, 1st respondent-Arbitrator and the Co-operative Tribunal have no jurisdiction to decide the dispute as the alleged debt amount due to the 2nd respondent-Bank is more than Rs. 10,00,000/- and it is only the Debit Recovery Tribunal constituted under the Act has the jurisdiction.
10. As observed supra, the petitioners for the first time by way of filing this W.P.M.P. No. 5766 of 2003, have taken the plea of jurisdiction. Nonetheless, the fact remains that the 1st respondent-Arbitrator and the Co-operative Tribunal have no jurisdiction to decide the matter. Though the petitioners subjected themselves to the jurisdiction of the 1st respondent-Arbitrator and appealed against the award before the Co-operative Tribunal that does not by itself confer jurisdiction on the forum so chosen when it is manifestly demonstrated that the forum so chosen has no jurisdiction. It is for this reason the matter is bring considered again at the instance of the parties to resolve the controversy involved in this case.
11. It is well settled proposition of law that the appeal filed as against the award passed by a forum is a continuation of the original proceedings instituted before that forum. The Apex Court in United Bank of India's case (supra) at paras 17 and 18 held thus :
"17 ....The suit filed by the Bank in 1985, even though it was disposed of by judgment dated 29.3.1994, stood revived with continuity by the remand order passed by the Division Bench of 11.8.1998 and cannot be treated as freshly instituted on 11.8.1998 before the Single Judge but must, in the eye of the law, be treated as pending on the crucial day i.e., 27.4.1994.
18. ....The pendency of appeal before the Appellate Court may be the de facto position. But, the concern in the present case is with the position in law, and as to the effect of the remand order. Once the appeal is allowed, the intermediate events of disposal of the suit and the appeal vanish into the air and the continuity of the suit before the Trial Court is restored."
12. In the said ruling, the Apex Court has also considered the combined effect of Sections 18 and 31 of the Act on pending proceedings. It is apposite to refer to certain Sections 17, I8and31 of the Act. Section 17 of the Act reads thus:
"17. Jurisdiction powers and authority of Tribunals :
(1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the Banks and financial institutions for recovery of debts due to such Banks and financial institutions."
13. Section 17 of the Act deals with jurisdiction, powers and authority of Tribunals. Section 18 of the Act reads thus:
"18. Bar of jurisdiction.--On and from the appointed day, no Court or other authority shall have, or be entitled to exercise any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under
Articles 226 and 227 of the Constitution) in relation to the matters specified in Section 17."
14. On a reading of the Section 18 it is clear that it operates as a bar of jurisdiction regarding the Courts or other alternative forum for exercising any jurisdiction except the Supreme Court and High Courts exercising jurisdiction under Articles 226 and 227 of the Constitution in relation to the matters specified in Section 17 of the Act. Section 31 reads thus:
"31. Transfer of pending cases.--(1) Every suit or other proceeding pending before any Court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action whereon it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal:
Provided that nothing in this sub-section shall apply to any appeal pending as aforesaid before any Court."
15. Though Mr. Vedula Venkataramana, learned Counsel for the 2nd respondent-Bank submits that the meaning assigned to "Banking company" in Clause (c) of Section 5 of the Banking Regulation Act, 1949, has to be given a restrictive meaning, the said arguments cannot be acceded to in view of the bar imposed in Section 18 of the Act. The Apex Court in the above case (supra) considering Sections 18 and 31 and by applying the principle of purposive interpretation held that the suit filed by the Bank in the year 1985 and which stood remanded by the Appellate Court on 11.8.1998 must in the eye of the law be deemed pending before the Single Judge and that it would stand transferred to the Tribunal.
16. In view of the Apex Court judgment in United Bank of India'S case (supra) and also in view of Sections 18 and 31 of the Act, this Court is of the considered view that the forums chosen by the parties inherently lacks jurisdiction to decide the claim. Accordingly the Cooperative Tribunal, before which the appeal C.T.A. No. 41 of 2002 is pending, is directed to transfer the case under Section 31 of the Act and on receipt of the same the Tribunal constituted under the Act shall proceed with the case under Clause (b) of Sub-section (2) of Section 31 of the Act.
17. The Order dated 7.1.2003 passed in Writ Petition No. 275 of 2003 stands modified to the extent indicated above. W.P.M.P. No. 5766 of 2003 and W.P.M.P. No. 5428 of 2003 are ordered accordingly.