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Structured Summary of the Opinion (F.I. Rebello, J.)

Factual and Procedural Background

The petitioners challenged an order of the Debt Recovery Appellate Tribunal (DRAT) which, having accepted the petitioners' contention that the proceedings originally filed by the respondent before the Debt Recovery Tribunal (DRT) were without jurisdiction, directed the return of the plaint (application) so it could be presented to the proper civil court. The petitioners contended that the DRT, being a statutory body under the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 (RDB Act), had no jurisdiction to order the return of the plaint because the application under Section 19 of the RDB Act was neither a plaint nor a suit within the meaning of the Code of Civil Procedure (CPC) and because the RDB Act lacked a provision expressly authorising return of plaints.

The respondent defended the DRT's order by relying on Section 22 of the RDB Act, arguing that the Tribunal is not bound by the CPC procedure, is to be guided by the principles of natural justice and, read with Section 22(2), has many of the powers of a civil court. On the facts, the dispute arose from a licence of a flat: the petitioners owned the flat, the respondent was the licensee who deposited Rs. 21 lakhs as security, the licence was allegedly terminated early and a cheque/payment dispute followed. The respondent filed a recovery action under the RDB Act; the DRT initially dismissed an objection but the Appellate Tribunal accepted the petitioners' contention (order dated 26 November 2007) and directed return of the plaint; the respondent then presented the plaint in the competent Civil Court where proceedings are pending.

Legal Issues Presented

  1. Whether, after the Tribunal concluded that it had no jurisdiction over the subject matter, it could nevertheless pass a consequential order directing return of the plaint (application) for presentation to the proper court.
  2. Whether the Debt Recovery Tribunal (DRT) can exercise all powers of a civil court under the Code of Civil Procedure — specifically whether the power to return a plaint (Order VII Rule 10 CPC) is one of the powers the Tribunal can exercise under Section 22 of the RDB Act and, if not expressly conferred, whether Section 22(1) authorises such power subject to the principles of natural justice.

Arguments of the Parties

Petitioners' Arguments

  • The Tribunal is a creature of statute (the RDB Act) and therefore lacks jurisdiction to direct the return of the original application to the respondent for presentation to the civil court.
  • The application filed under Section 19 of the RDB Act is neither a plaint nor a suit as contemplated by the Code of Civil Procedure; the RDB Act contains no provision for return of a plaint, and accordingly the Tribunal could not direct such a return.

Respondent's Arguments

  • Section 22 of the RDB Act provides that the Tribunal "shall not be bound by the procedure laid down by the Code of Civil Procedure" and thus is not restrained by CPC formalities; it is to be guided by natural justice.
  • Section 22(2) confers on the Tribunal many specific powers analogous to those of a civil court (summoning witnesses, requiring production of documents, receiving evidence on affidavits, issuing commissions, reviewing decisions, dismissing for default, etc.), and merely because some powers are specifically listed does not mean the Tribunal lacks jurisdiction to exercise other procedural powers based on equity; the only procedural limitation is adherence to natural justice.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Raizada Topandas v. Gorakhram Gokalchand, AIR 1964 SC 1348 Principle that the power of a civil court to return a plaint is limited to cases of want of territorial or pecuniary jurisdiction; if the court has no jurisdiction over the subject matter it cannot order return of the plaint and must dismiss the suit. The Court relied on this decision to hold that where the Tribunal concluded it had no jurisdiction over the subject matter, it could not direct return of the plaint; the Raizada principle controlled the present question about the competence to return a plaint after finding lack of subject-matter jurisdiction.
Ananti v. Channu, AIR 1930 All. 193 (Full Bench) Explains the distinction between cases where a plaint should be returned (territorial/pecuniary jurisdiction issues) and where a court has no jurisdiction over the subject matter (in which case the suit must be dismissed). The Supreme Court in Raizada relied on the paragraph from Ananti; the present Court reproduced and relied upon that paragraph to reinforce the principle limiting return of plaints to territorial/pecuniary jurisdiction situations.
Industrial Credit & Investment Corporation of India Ltd. v. Grapco Industries Ltd., AIR 1999 SC 1975 Held that Section 22 of the RDB Act means the Tribunal, though not bound by CPC procedure, can exercise powers of a civil court and travel beyond the CPC; the only fetter is observation of natural justice (including power to grant interim/ex parte relief in appropriate cases). The Court cited Grapco to conclude that the Tribunal could exercise powers analogous to a civil court (and could go beyond CPC procedures), and therefore could, in principle, exercise the power to return a plaint in cases limited to pecuniary or territorial jurisdiction — but this did not assist the Tribunal once it had found it lacked subject-matter jurisdiction.
Morgan Stanley Mutual Fund v. Kartick Das, (1994) 4 SCC 225 Sets out principles to be considered by a court or tribunal in granting ex parte injunctions; ex parte relief is an exception and should be granted only in exceptional circumstances. The Court referenced Morgan Stanley to explain limitations on extraordinary interim or ex parte relief; Grapco applied Morgan Stanley's principles. Morgan Stanley was cited for the general proposition that procedural powers beyond CPC are subject to established safeguards.
Harshad Chiman Lal Modi v. D.L.F. Universal Ltd., AIR 2006 SC 646 Addresses whether proceedings before an earlier court that lacked subject-matter jurisdiction can be treated as a continuation in the proper court; held that if the earlier forum had no jurisdiction over the subject matter, proceedings in the later competent court are not a continuation of the earlier proceedings. The Court cited Harshad Modi to support the proposition that when a court is found to have no jurisdiction over the subject matter, the proceedings in the court of proper jurisdiction are not continuation of earlier proceedings; used this reasoning in refusing to exercise extraordinary jurisdiction despite finding that the Tribunal lacked power to order return of the plaint.
Ramdutt Ramkissen Dass v. E.D. Sassoon & Co., AIR 1929 Privy Council 103 Holds that a second suit instituted in a court of proper jurisdiction after an earlier suit is found to have been instituted in a court without jurisdiction cannot be regarded as a continuation of the first suit. The Court relied on this Privy Council decision to reinforce the view that a suit presented in the competent civil court after return of the plaint cannot, where the earlier forum lacked subject-matter jurisdiction, be treated as a mere continuation; used to justify non-interference by this Court with the present procedural posture.

Court's Reasoning and Analysis

The Court framed the central legal question as whether the Tribunal, having concluded it lacked jurisdiction over the subject matter, could nevertheless direct the return of the plaint (application). The analysis proceeded in distinct steps:

  1. The Court identified and recorded the factual matrix: the dispute concerned a licence and a security deposit of Rs. 21 lakhs; a cheque/payment dispute led the respondent to file a recovery application under the RDB Act; the DRT initially dismissed an objection but the Appellate Tribunal accepted the petitioners' jurisdictional contention and directed return of the plaint.
  2. The Court examined the controlling precedent in Raizada Topandas (and the Full Bench principle in Ananti v. Channu) which explains the limits of the power to return a plaint: where a court lacks only territorial or pecuniary jurisdiction it may return a plaint to be presented to a proper court, but where a court lacks jurisdiction over the subject matter entirely, the plaint — as framed — does not confer jurisdiction and the suit must be dismissed rather than returned.
  3. The Court then considered whether the DRT could exercise the civil-court power to return a plaint. It noted that Order VII Rule 10 CPC governs return of a plaint, and that Section 22(2) of the RDB Act lists specific civil-court powers conferred on the Tribunal. Since return of the plaint is not explicitly enumerated, the Court addressed whether Section 22(1) (stating the Tribunal is not bound by CPC procedure but is to be guided by natural justice) could be read to permit such a power.
  4. The Court relied on the Supreme Court's decision in Grapco Industries (Industrial Credit & Investment Corporation of India Ltd. v. Grapco Industries Ltd.) which held that the Tribunal, while not bound by CPC, may exercise powers of a civil court and even travel beyond the CPC, subject to the single fetter of observing the principles of natural justice. Grapco recognised that interim and ex parte powers may be exercised by the Tribunal in appropriate cases.
  5. Reconciling Raizada and Grapco, the Court concluded that although the Tribunal can exercise civil-court powers (and thus, in principle, could direct return of a plaint in cases of territorial or pecuniary jurisdiction), the Raizada principle nonetheless bars a tribunal from ordering return of the plaint after it has itself concluded that it lacks jurisdiction over the subject matter. Applying that rule to the facts, the Court found the Tribunal could not have directed return of the plaint once it had determined absence of subject-matter jurisdiction.
  6. Finally, the Court addressed whether it should use its extraordinary jurisdiction to interfere with the Appellate Tribunal's order. Given that the plaint had already been presented to the competent civil court and proceedings were pending there, and noting authorities (Harshad Modi and the Privy Council decision in Ramdutt Ramkissen Dass) that a second suit instituted in a competent court after an earlier court is found to lack jurisdiction is not a mere continuation, the Court held that the petitioners can raise limitation and related pleas before the civil court and that it was not necessary for this Court to interfere in the present exercise of extraordinary jurisdiction despite its conclusion that the Tribunal had no jurisdiction to order return of the plaint after coming to the conclusion that it lacked subject-matter jurisdiction.

Holding and Implications

Holding:

The Tribunal did not have jurisdiction to direct return of the plaint (application) after it had itself come to the conclusion that it lacked jurisdiction over the subject matter.

Immediate implications and consequences stated by the Court:

  • The plaint has already been presented in the competent Civil Court and proceedings are pending there.
  • The petitioners retain the ability to raise before the Civil Court pleas regarding limitation and whether the time spent before the DRT/DRAT should be excluded; those are matters for the Civil Court to decide.
  • Although this Court held that the Tribunal erred in directing return of the plaint after finding lack of subject-matter jurisdiction, the Court declined to interfere by exercising its extraordinary jurisdiction because the proper civil proceedings are already pending; therefore the Court did not set aside the Appellate Tribunal's order in the exercise of extraordinary jurisdiction.

The opinion does not purport to lay down a broader new precedent beyond applying existing authorities. The decision's direct legal effect is limited to the parties and to the present procedural posture described above.

Order accordingly.
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    Lt. Col. Anil Bhat & Ors. v. Citibank, N.A

    F.I Rebello, J.:— Rule. Heard forthwith.

    2. The petitioners have approached this Court against the order of the Debt Recovery Appellate Tribunal which after accepting the contention of the petitioners herein that the proceedings filed before it by the respondent were without jurisdictions directed the return of the plaint (Application) for presentation to the proper Court. The petitioners are aggrieved by this part of the order. It is the submission on behalf of the petitioners that the Tribunal under the Act being a creature of Statute, consequently would have no jurisdiction to direct return of the Original Application to the Respondent for presentation to the proper Court. The application filed under Section 19 of the Act is neither a plaint nor a suit as contemplated under the Code of Civil Procedure and as the Recovery of Debts Due to Banks & Financial Institutions Act, 1993, hereinafter referred to as RDB Act, does not have a provision for return of plaint, it was not open to the Tribunal to direct return of the plaint.

    3. On the other hand on behalf of the Respondent it is submitted that considering the language of section 22 of the rdb act the Tribunal is not bound by the procedure laid down by the Code of Civil Procedure. The relevant portion of section 22 of the rdb act reads as under:—

    “22. Procedure and powers of the Tribunal and the Appellate Tribunal.— (1) The Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Tribunal and the Appellate Tribunal shall have their sittings.

    (2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:—

    (a) summoning and enforcing the attendance of any person and examining him on oath.

    (b) requiring the discovery and production of documents;

    (c) receiving evidence on affidavits.

    (d) issuing commissions for the examination of witnesses or documents;

    (e) reviewing its decisions.

    (f) dismissing an application for default or deciding it ex parte;

    (g) setting aside any order of dismissal of any application for default or any order passed by it ex parte.

    (h) any other matter which may be prescribed.”

    It is further submitted that merely because some specific powers under the C.P.C have been conferred under sub-section (2), the Tribunal will not cease to have jurisdiction to exercise those powers based on equity. The only fetter in exercise of the procedural powers is to observe the principles of natural justice.

    4. The question, therefore, for consideration of this Court is whether after the Tribunal came to the conclusion that it had no jurisdiction over the subject matter, could it then have passed the consequential order of directing return of the plaint (Application).

    5. A few facts may be set out:— The petitioners owned a flat which was let out to respondent for a period of 3 years. The respondent by way of security kept deposit of Rs. 21.00 lakhs with the petitioners. According to the petitioners respondent terminated the license before the expiry of the period. The petitioners in preparation of handing over gave a cheque dated 3rd October, 2000 for the return of the security deposit amount. According to the petitioners they paid Rs. 21.00 lakhs in cash because the petitioners wanted early possession of the flat as there was another multi national bank who was willing to take the same on license. The respondent on 3rd October, 2000 presented the cheque which was returned on the next day. It is hot necessary to refer to the other averments except to state that the respondent thereafter filed a suit for recovery of the amount as set out in the cheque under the RDB Act. The petitioners herein raised a defence that the Tribunal had original jurisdiction to decide only amounts claimed as a debt and in the instant case as it was not a debt, the Tribunal would have no jurisdiction. This application was dismissed by the Tribunal, but in Appeal the Appellate Tribunal accepted the contention of the petitioners by its order dated 26th November, 2007. Pursuant to the order directing return of the plaint the respondent have presented the plaint before the Competent Court where the proceedings are pending.

    6. Let us consider the submission. An added submission is that even if the Civil Court holds that it has no jurisdiction over the subject matter then its jurisdiction to direct return the plaint is limited to those cases relating to want of territorial or pecuniary jurisdiction. The argument proceeds on the footing that if the Court has no jurisdiction over the subject matter, once it holds that it has no jurisdiction it can pass no further order. In a case of territorial or pecuniary jurisdiction the Court would have jurisdiction over the subject matter, but cannot entertain the proceedings because it does not have territorial jurisdiction or the claim is not within its pecuniary limits.

    Such an issue had come up for consideration before the Supreme Court in Raizada Topandas v. Gorakhram Gokalchand, AIR 1964 SC 1348. The issue before the Supreme Court was whether on a proper interpretation of Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 the Court of Small Causes, Bombay, had exclusive jurisdiction to deal with the same. Relief sought in a Suit filed before the City Civil Court was that the plaintiff be declared to be a in lawful possession and the Defendants had no right to enter into or remain in possession of the shop, injunction and other consequential reliefs. The defence raised was that the question involved in the suit related to possession of the premises as between landlord and tenant and the Court of Small Causes alone will have jurisdiction to entertain and try the suit. On these pleadings a preliminary issue was framed. The City Civil Court held in favour of the defendants and accordingly made an order that the plaint be returned to the plaintiff for presentation to the proper Court. In Appeal before the High Court the Court took a view that the City Civil Court had jurisdiction. Against that order Special Leave to Appeal was preferred from which the Appeal arose. Before the Court the issue was, if the defendant raised the claim or question as to existence of relationship of landlord and tenant as to between the defendant and the Plaintiff the jurisdiction of City Civil Court is ousted even though the plaintiff pleads that there is no such relationship and the only Court which has exclusive jurisdiction to try the suit is the Court of Small Causes. In answering the question the Court relied on the principle as explained in a Full Bench decision of the Allahabad High Court in Ananti v. Channu, AIR 1930 All. 193. We may gainfully reproduce the said paragraph:

    “The plaintiff chooses his forum and files his suit. If he establishes the correctness of his facts he will get his relief from the forum chosen. If he frames his suit in a manner not warranted by the facts and goes for his relief to a court which cannot grant him relief on the true facts, he will have his suit dismissed. Then there will be no question of returning the plaint for presentation to the proper court, for the plaint as framed, would not justify the other kind of court to grant him the relief. If it is found on a trial on the merits so far as this issue of jurisdiction goes, that the facts alleged by the plaintiff are not true and the facts alleged by the defendants are true, and that the case is not cognisable by the court, there will be two kinds of orders to be passed. If the jurisdiction is only one relating to territorial limits or pecuniary limits, the plaint will be ordered to be returned for presentation to the proper Court. If, on the other hand, it is found that, having regard to the nature of the suit, it is not cognizable by the class of court to which the court belongs, the plaintiff's suit will have to be dismissed in its entirety.”

    Relying on this principle the Court held, that the view taken by the High Court was correct. The proposition which follows is that the power of the Civil Court to direct return of the plaint is limited to those cases where it has no territorial or pecuniary jurisdiction. In case if it has no jurisdiction in respect of the subject matter then it cannot direct return of the plaint. If this principle is accepted on the facts of the case then the Tribunal would have no jurisdiction to direct return of the plaint as it came to the conclusion that it had no jurisdiction over the subject matter.

    7. The next question that we are called upon to is to answer the issue is whether the D.R.T, can exercise all the powers of a Civil Court under the Code of Civil Procedure. Return of the plaint is governed by the provisions of Order 7, Rule 10. We have earlier reproduced the relevant provisions of Section 22(2) of the C.P.C The power to return the plaint is not one such power which the Tribunal and the Appellate Tribunal has been conferred specifically. In the absence of conferring such power, can the Tribunal under the powers conferred on it under Section 22(1) direct return of the plaint. A similar issue had come up for consideration and stands concluded in the case of Industrial Credit and Investment Corporation of India Ltd. v. Grapco Industries Ltd., AIR 1999 SC 1975. The question for consideration before the Court was whether the Tribunal under the RDB Act had jurisdiction to grant ad-interim ex parte order of injunction or stay against the defendant on an application filed by the bank or financial institution for recovery of debt. After considering the provisions the High Court had taken a view that the Tribunal had no jurisdiction to grant ex parte order. The Supreme Court reversed the order of the High Court and observed as under:—

    “We, however, do not agree with the reasoning adopted by the High Court. When Section 22 of the Act says that the Tribunal shall not be bound by the procedure laid by the Code of Civil Procedure, it does not mean that it will not have jurisdiction to exercise powers of a Court of Civil Procedure. Rather, the Tribunal can travel beyond the Code of Civil Procedure and the only fetter that is part on its powers is to observe the principles of natural justice.”

    Considering the language of Section 22 the Court observed as under:—

    “We have to give meaning to Section 22 of the Act as here the Tribunal is exercising powers of a Civil Court while trying a money suit. Further, when power is given to the Tribunal to make interim order by way of injunction or stay, it inherits in it the power to grant that order even ex parte, if it is so in the interest of justice and as per the requirements as spelt out in the judgment of this Court in Morgan's case which has been quoted above.”

    We need not refer to in detail the judgment in the case of Morgan Stanley Mutual Fund v. Kartick Das., (1994) 4 SCC 225 : (1994 AIR SCW 2801). There the Court was considering Section 14 of the Consumer Protection Act, 1986, which section did not provide for grant of any interim relief or even ad-interim relief and provided, only for final relief. The Supreme Court there laid down the principles to be taken into consideration by Court or Tribunal in granting ex parte injunction. Apart from the other general principles the Supreme Court took the view that the exparte order should be granted only under exceptional circumstances and that grant of ex parte order is not a rule but an exception.” Considering the judgment in Grapco Industries Ltd. (supra) the proposition follows that even though there is no specific power conferred on a Tribunal under the RDB Act, considering Section 22(1) the Tribunal though not bound by the procedure laid down in the Code of Civil Procedure is not extinguished of jurisdiction to exercise powers of a Court under the C.P.C, rather the Tribunal can travel beyond the scope of C.P.C, but in doing so, the only fetter is to observe the principles of natural justice. The Tribunal therefore, would have jurisdiction to direct return of the plaint but in cases limited to pecuniary or territorial jurisdiction.

    8. Having said so the question still remains whether after having come to the conclusion that it had no jurisdiction over the subject matter considering the principles laid down in Raizada Topandas, (AIR 1964 SC 1348) (supra) the Tribunal could have directed the return of the plaint. The principle which the Supreme Court accepted in Raizada Topandas, (supra) was that if a plaint as drafted does not confer jurisdiction on the Court in respect of the subject matter, then it will have no jurisdiction to direct return of the plaint. In such a case it will have jurisdiction limited to the extent of a case of pecuniary and territorial jurisdiction. If this proposition is accepted then the learned Tribunal on determination of the issue as to whether it has jurisdiction over the subject matter could not have directed the return of the plaint.

    9. Having so answered, the question is whether this Court should interfere in the exercise of its extra ordinary jurisdiction as in the meantime the plaint has already been lodged with the Civil Court which is seized of the matter. The effect of return of the plaint would sound in limitation as to whether it is a continuation of the proceedings or not. Whether the return of the application and presenting the same in the Civil Court is a continuation of the proceedings, this Court really need not answer as the plea can be raised by the petitioner herein, before the Civil Court. Suffice it to say that we may only refer to some of the judgments. In Harshad Chiman Lal Modi v. D.L.F Universal Ltd., AIR 2006 SC 646 : (2006 (1) AIR Bom R 611). A suit had been filed on the Original Side of the High Court of Delhi for various reliefs. In the written statement filed no plea was raised as to jurisdiction. The suit then was transferred to the District Court. Issues were framed which did not include as to jurisdiction. Subsequently amendment was sought to raise an objection as to jurisdiction. It was allowed and additional issue was framed and the Court held that it had no jurisdiction and accordingly directed return of the plaint for presentation to proper Court. The order was confirmed by the High Court as well as by the Supreme Court. An interlocutory application was filed in the disposed of Appeal by the Applicant. In the application it was pointed out that when the applicant had approached the Supreme Court against the judgment of the Delhi High Court. Status quo had been directed. The Additional District Judge was allowed to proceed with the suit, but directed not to deliver the judgment until further orders. The trial Court proceeded with the suit. Evidence was recorded, but did not proceed to pronounce the judgment. The plea before the Supreme Court was that the Gurgaon Court which was the Court of competent jurisdiction should be directed to proceed with the suit from the stage at which it stood transferred and to decide it expeditiously. This was resisted by the respondent contending that once the Court took the view that Delhi Court had no jurisdiction and the direction was given for return of the plaint for presentation to proper Court and when presented to the Gurgaon Court it cannot be treated as continuation of the proceedings as the earlier proceedings were in a Court which had no jurisdiction. The suit would commence on the day when the plaint would be presented to the proper Court. In answering this issue the Supreme Court held that the suit could not have been instituted in the Delhi Court keeping in view the subject matter. The plea that the Gurgaon Court should proceed with the matter from the stage where the proceedings continued in Delhi could not be accepted as it could not be said that they were continuation of proceedings considering that the Delhi Court had no jurisdiction over the subject matter. The Court then also noted that distinction between pecuniary jurisdiction and jurisdiction in respect of the subject matter.

    10. In Ramdutt Ramkissen Dass v. E.D Sassoon & Co., AIR 1929 Privy Council 103 the Privy Council considering Section 4 of the Limitation Act, observed that where a suit has been instituted in a Court which is found to have no jurisdiction and it is found necessary to raise a second suit in a Court of proper jurisdiction, the second suit cannot be regarded as a continuation of the first, even though the subject matter and the parties to the suits were identical.

    11. In our opinion, considering that the plaint has already been presented and for that matter the respondents herein could have always filed a Second Suit on the first Court holding that it has no jurisdiction and as the issue whether the suit as filed is within limitation or whether the time taken before the D.R.T and D.R.A.T can be excluded are the issues which will be available to the petitioner to be, raised the suit now pending. Thus it is not necessary for this Court in such circumstances to interfere in the exercise of our extra ordinary jurisdiction with the order passed even though we have held that the Tribunal would have no jurisdiction to direct return of the plaint after it came to the conclusion that it had no jurisdiction over the subject matter.

    Order accordingly.
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    Lt. Col. Anil Bhat & Ors. v. Citibank, N.A
    (Feb 9, 2009)