S.J Vazifdar, J.:— The petition challenges an order dated 18th November, 1999 passed by the Debt Recovery Appellate Tribunal, Mumbai, dismissing the petitioners appeal from an order of the Debt Recovery Tribunal, (D.R.T) Jaipur and an order dated 11th December, 2000 passed by the Debt Recovery Appellate Tribunal (DRAT) dismissing the petitioners Review Application bearing No. 165 of 1999.
2. When this matter was taken up for admission, Mr. N.K Kamat, the learned counsel appearing on behalf of respondent No. 1 raised a preliminary issue challenging the jurisdiction of this Court to hear the matter relying on the judgment of the Supreme Court in the case of Sita Ram Singhania v. Bank of Tokyo-Mitsubishi Ltd., (1999) 4 SCC 382. Mr. Kamat also relied upon an unreported judgment of a learned single Judge of this Court (H.L Gokhale, J.) dated 22nd February, 2000 in the case of Guru Kripa Plasticizers Pvt. Ltd. v. Punjab National Bank.
3. At first blush the preliminary objection appeared to be well founded. However, as we shall demonstrate, the preliminary objection is not sustainable. The said decision of the Supreme Court has no application to the facts of this case. This becomes even more clear from the proceedings before the Supreme Court in that case which were produced before us.
4. We, therefore, proceed to deal with the limited question of jurisdiction. We are at present not concerned with the merits of the disputes between the parties for the matter has not yet been heard by us on merits. It is, therefore not necessary to set out the facts in detail. It is however necessary to examine the scope and nature of the proceedings before the DRAT which have lead to the filing of the above petition.
5. The petitioners were the promoters of respondent No. 2. The second respondent had entered into two loan agreements with the first respondent for a Rupee Term Loan for Rs. 44 lakhs, and a cash credit facility of Rs. 35 lakhs. The petitioners executed two personal guarantees in respect of each of the said credit facilities.
6. By an order dated 26th February, 1990, the BIFR sanctioned a scheme for the rehabilitation of the second respondent. The petitioners agreed to continue the said guarantees for the next one year. Respondent No. 3 i.e the new promoters agreed to give personal guarantees to the institutions/banks for payment of all loans extended to respondent No. 2. The petitioners transferred the shares and handed over the complete management and control of respondent No. 2 along with the assets and liabilities to the third respondent.
7. The first respondent filed two separate recovery proceedings against the new promoters and the petitioners before the DRT, Jaipur for recovery of Rs. 2,46,03,833 and Rs. 1,44,77,368 with interest being the amounts due in respect of the said cash credit facilities. The DRT, by orders dated 13th May, 1998 and 12th June, 1998 decreed the claims even against the petitioners.
8. The petitioners filed an appeal bearing No. 334 of 1998 before the DRAT situated in Mumbai. The DRAT by its order dated 18th November 1999 rejected the Appeal. The petitioners defences to the claim were rejected on merits. By an order dated 11th December, 2000 the petitioner's Review Petition No. 165 of 1999 was also dismissed.
9. Being aggrieved by the said orders dated 18-11-1995 and 11-12-2000 passed by the D.R.A.T, the petitioners have filed the present petition challenging the same.
10. The Supreme Court, in the case of Sita Ram Singhania (supra), relied upon by Mr. Kamat appearing on behalf of the respondents, dismissed the Special Leave Petition by the following order:—
“We see no reason why the High Courts in such matters filed by the defendants in suits instituted by the banks before the Debt Recovery Tribunal should more or less as a matter of course grant stay of proceedings before the Tribunals. The very purpose of setting up the Tribunals will be lost by granting stay merely because there is challenge to the notification constituting the tribunal. In the present case, the High Court has rightly come to the conclusion that as the proceedings were initiated in the State of Madhya Pradesh, the Allahabad High Court had no jurisdiction.”
(emphasis supplied)
11. It will thus be noticed that in the case before the Supreme Court the petitioner had challenged the vires of a notification and not the order of the DRAT adjudicating upon the disputes on merits before the parties. This is also clear from paragraph 5B of the Special Leave Petition which reads as under:—
“Because the Hon'ble High Court failed to appreciate that by virtue of impugned notification issued by the Union of India, a Tribunal at Jabalpur was established to exercise jurisdiction in respect of the State of Uttar Pradesh. It is submitted that the petitioner has no other forum to impugn such a notification except by filing a writ in the Allahabad High Court. The jurisdiction of the Court which vested in Uttar Pradesh has been taken away by the Union of India arbitrarily by issuing the impugned notification and, therefore, only the High Court of Allahabad was the appropriate forum to challenge the said notification.”
12. Only the following questions of law were raised in the Special Leave Petition.
“(a) Where the vires of a notification issued by the Central Government in respect of State of Uttar Pradesh are challenged then whether the Hon'ble High Court of Allahabad can decline to interfere by holding that the High Court of Madhya Pradesh at Jabalpur will have jurisdiction and specially when the same High Court is hearing the validity of the same notification in other pending writ petitions?
(b) Whether it is mandatory for the High Court to pass similar orders in respect of the contentions raised by different persons in similar writ petitions?”
13. The case before the Supreme Court was not one where an order of the DRAT was challenged. The decision on the contrary supports the petitioners' contention that the High Court within whose jurisdiction the Tribunal is situate, has jurisdiction to entertain a petition challenging the decision of such Tribunal. In the present case there is no such challenge. In the present case it is the order of the DRT on merits that was challenged before the DRAT. The DRAT in turn adjudicated upon the merits of the disputes between the parties. The petition in turn challenges the order of the DRAT. We are therefore, in agreement with the submission of Mr. Tulzapurkar that the judgment of the Supreme Court is clearly distinguishable and has no application to the facts of the present case. We shall deal with the said unreported judgment of this Court after dealing with Mr. Tulzapurkar's submissions.
14. Mr. V.V Tulzapurkar next submitted that although the original order was passed by the DRT in Jaipur the same merged in the order dated 18th November, 1999 of the DRAT which is in Mumbai. He further contended, that accordingly a part of the cause of action had arisen in Mumbai and this Court would therefore have jurisdiction in view of Article 226(2) of the Constitution of India.
15. In support of his submission, that the order of the DRT merged in the order of the DRAT. Mr. Tulzapurkar relied upon a judgment of the Supreme Court in the case of Collector of Customs v. East India Commercial Co. Ltd., AIR 1963 SC 1124. In this case the respondent had imported 2,000 drums of mineral oil. Out of this quantity, the appellant, the Collector of Customs, Calcutta, confiscated 50 drums by order dated September 20, 1950. He also imposed a personal penalty of Rs. 61,000/- on the respondent under the Sea Customs Act, No. 8 of 1878 (hereinafter referred to as the Act). The respondent appealed to the Central Board of Revenue under section 188 of the Act, and this appeal was dismissed in April, 1952. Thereupon the respondent filed a petition under Article 226 of the Constitution in the Calcutta High Court. A question was raised as to the jurisdiction of the Calcutta High Court to hear the petition. The matter was referred to a Full Bench of the Calcutta High Court. The Full Bench addressed itself to two questions viz. (i) whether any writ could issue against the Central Board of Revenue which was a party to the writ petition and which was permanently located outside the jurisdiction of the High Court, and (ii) whether if no writ could issue against the Central Board of Revenue any writ could be issued against the appellant, which was the original authority to pass the order under challenge, when the appellate authority (namely, the Central Board of Revenue) had merely dismissed the appeal. The Full Bench held that the Calcutta High Court had no jurisdiction to issue a writ against the Central Board of Revenue. On the second question it held that as the Central Board of Revenue had merely dismissed the appeal against the order of the Collector of Customs, Calcutta, the really operative order was the order of the appellant viz. the Collector of Customs, Calcutta, which was located within the jurisdiction of the High Court and that, therefore, it had jurisdiction to pass an order against the Collector of Customs in spite of the fact that order had been taken in appeal to the Central Board of Revenue to which no writ could be issued. The Full Bench granted a certificate to appeal to the Supreme Court. Their Lordships of the Supreme Court held as follows:—
“4. The question therefore turns on whether the order of the original authority becomes merged in the order of the appellate authority even where the appellate authority merely dismisses the appeal without any modification of the order of the original authority. It is obvious that when an appeal is made, the appellate authority can do one of three things, namely, (i) it may reverse the order under appeal, (ii) it may modify that order, and (iii) it may merely dismiss the appeal and thus confirm the order without any modification. ……………………… In all these cases after the appellate authority has disposed of the appeal, the operative order is the order of the appellate authority whether it has reversed the original order or modified it or confirmed it. ……………………………………………… We, therefore, feel that on principle when once an order of an original authority is taken in appeal to the appellate authority which is located beyond the territorial jurisdiction of the High Court, it is the order of the latter authority which is the operative order after the appeal is disposed of; and as the High Court cannot issue a writ against the appellate authority for want of territorial jurisdiction it would not be open to it to issue a writ to the original authority which may be within its territorial jurisdiction once the appeal is disposed of, though it may be that the appellate authority has merely confirmed the order of the original authority and dismissed the appeal.”
16. Their Lordships went on to hold:
“(5) It is this principle, viz. that the appellate order is the operative order after the appeal is disposed of, which is in our opinion the basis of the rule that the decree of the lower Court merges in the decree of the Appellate Court, and on the same principle it would not be incorrect to say that the order of the original authority is merged in the order of the appellate authority whatsoever its decision-whether of reversal or modification or mere confirmation.”
17. Applying the ratio of the judgment of the Supreme Court to the present case, the order of the DRT in Jaipur merged in the order of the DRAT, Mumbai. The Courts in Jaipur would have no jurisdiction to entertain the present petition which challenges the orders of the DRAT, Mumbai. This Court, therefore, has jurisdiction to entertain the petition.
18. In support of his submission that the cause of action would also arise where the consequences fell on the petitioners, Mr. Tulzapurkar relied upon a Division Bench Judgment of this Court in the case of Damomal Kauromal Raisingani v. Union Of India*, AIR 1967 Bom. 355. In paragraph 5 the Division Bench held that even assuming that the impugned order was made by the third respondent in New Delhi, the effect of the order fell on the petitioner at Ulhasnagar where he resided and that the proceedings that would be taken against the petitioner in consequence of the impugned order would be by officers located within the territory in relation to which this Court exercises jurisdiction. The Division Bench accordingly held that the place where the consequence of the order fell on the petitioner would be a place where at least the cause of action in part would arise. The petitioners reside in Mumbai. Therefore in this case also the consequences would fall on them in Mumbai.
19. In support of this submission that the cause of action would also arise in a place where the order was made (in this case it was made in Mumbai) Mr. Tulzapurkar relied upon the above judgment in Damomal's case and also on a judgment of a Division Bench of the Delhi High Court in the case of Indian Institute of Technology v. Dr. P.C Jain, 1991 (45) Delhi Law Times 42. The Division Bench of the Delhi High Court in paragraph 18 held that a writ is maintainable in the High Court within whose jurisdiction the appellate authority is based. We are in respectful agreement with the judgment of the Delhi High Court.
20. Mr. Tulzapurkar lastly submitted that a part of the cause of action having arisen in Mumbai, this Court has jurisdiction to entertain the petition in view of Article 226(2) of the Constitution. We are in agreement with Mr. Tulzapurkar. The 15th amendment to the Constitution which introduced clause 2 in Article 226 was intended to widen the ambit of the area for reaching the writs issued by the High Court. Clause 2 of Article 226 is as under:—
“(2) The power conferred by clause (1) to issue directions, orders or writs to any Government authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories.”
21. In this connection Mr. Tulzapurkar relied upon the judgment of the Supreme Court in the case of Navinchandra N. Majithia v. State of Maharashtra, (2000) 7 SCC 640 : AIR 2000 SC 2966. The Supreme Court held that the power conferred on the High Courts under Article 226 could as well be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part arises and it is no matter that the seat of the authority concerned is outside the territorial limits of the jurisdiction of that High Court. The Supreme Court further held that the amendment was aimed at widening the width of the area for reaching the writs issued by different High Courts. The Supreme Court also held that the words “cause of action wholly or in part arises” seem to have been lifted from section 20 of the Code of Civil Procedure, which section also deals with the jurisdictional aspect of the Courts.
22. Mr. Kamat, also relied upon the aforesaid unreported judgment of a learned single Judge of this Court dated 22nd February, 2000 in the case of Guru Kripa (supra). In that case the transaction between the parties in the proceedings before the original tribunal had taken place in Chandigarh. Punjab. The original Tribunal dealing with that area was situated in Jaipur. The proceedings, therefore, came to be filed before the DRT in Jaipur. The appeal was filed before the DRAT which is situated in Mumbai. The facts, therefore, are almost identical to the facts of the present case. In that case also the appeal to the DRAT was from a decree and order of the DRT and the petition before the learned Single Judge was filed challenging the order of the DRAT. The learned Single Judge relying upon the judgment of the Supreme Court in case of Sita Ram Singhania (supra) held that since the transaction between the parties had taken place in Chandigarh, it would be desirable for the parties to approach the appropriate forum at Chandigarh and accordingly rejected the petition. The judgment, however, does not take into account the distinction between the facts in that case and the facts in Sita Ram Singhania's case. We, therefore, hold that the judgment of the Learned Single Judge does not lay down the law correctly.
23. We are in agreement with the aforesaid submissions of Mr. Tulzapurkar on behalf of the petitioners and hold that this Court has jurisdiction in the present petition.
24. The petition stands adjourned to 2nd March, 2001 for consideration on merits.
25. Certified copy expedited.
Order accordingly.