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Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Judges
Acts
  • Articles 226 and 227 of the Constitution, Section 20 of the Act
  • Section 5, Subsection 2 of the 1983 Income Tax Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Judges
Acts
  • Articles 226 and 227 of the Constitution, Section 20 of the Act
  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

The State Bank of India filed a suit on 12-10-2001 before the Debts Recovery Tribunal (DRT), Cuttack, seeking recovery of approximately Rs 23 lakhs. An affidavit by way of evidence was submitted by the Bank on 21-01-2002. The respondents (defendants before the DRT) filed their written statement on 16-02-2002 and, on 06-10-2002, objected to the Tribunal’s decision to accept the Bank’s evidence on affidavit.

On 11-11-2002 the DRT rejected the respondents’ application to cross-examine the deponent of the Bank’s affidavit. The respondents did not appeal this interlocutory order. After hearing the matter finally on 31-01-2003, the DRT, by its decree/final order dated 09-04-2003, allowed the Bank’s claim with simple interest at 13 % per annum.

No statutory appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“the Act”) was filed. Instead, one of the defendants moved Writ Petition (C) No. 2428 of 2004 before the High Court of Orissa on 24-02-2004, alleging violation of the principles of natural justice because cross-examination had been refused. On 16-08-2004 the High Court allowed the writ petition, holding that the refusal of cross-examination vitiated the proceedings and that Articles 226 and 227 of the Constitution empowered it to set the matter right.

The State Bank of India challenged the High Court’s order before the Supreme Court. Special leave was granted and the appeal was heard on merits.

Legal Issues Presented

  1. Whether the High Court could invoke its jurisdiction under Articles 226 and 227 of the Constitution to set aside a final decree passed by the DRT when an alternative statutory remedy of appeal under Section 20 of the Act was available.
  2. Whether the refusal by the DRT to permit cross-examination of the Bank’s deponent constituted a violation of the principles of natural justice that could justify bypassing the statutory appellate mechanism.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Supreme Court reasoned that the High Court’s writ jurisdiction cannot be employed to circumvent the specific appellate remedy provided by Section 20 of the Act. It observed that the respondents, if aggrieved by the DRT’s refusal to allow cross-examination, should have challenged that interlocutory order—and, more importantly, the final decree—before the Debt Recovery Appellate Tribunal (DRAT). Resorting to a writ petition nearly ten months after the DRT’s final order amounted to an impermissible collateral attack.

The Court emphasised that the availability of an efficacious statutory appeal is a sufficient bar to writ jurisdiction except in exceptional circumstances, which were not present here. Mere non-grant of cross-examination did not, in the Court’s view, automatically entitle a party to invoke extraordinary jurisdiction, particularly when the statute provides a complete mechanism for redress.

Consequently, the High Court erred in entertaining and allowing the writ petition. The Supreme Court set aside the High Court’s order, reiterating that adherence to the statutory appellate framework is mandatory where such a remedy exists.

Holding and Implications

ALLOWED – The appeal by the State Bank of India is allowed; the High Court’s order dated 16-08-2004 is set aside and the DRT’s decree/final order stands restored.

Implications: The decision reinforces that litigants must exhaust the appellate remedy under Section 20 of the Act before invoking writ jurisdiction. It signals that High Courts should decline to entertain writ petitions that effectively challenge DRT decrees when a statutory appeal is available, thereby preserving the hierarchical scheme established by the RDB Act. No new substantive precedent on natural justice was laid down; the ruling primarily clarifies procedural discipline.

    State Bank Of India v. Allied Chemical Laboratories And Another

    Order

    1. Special leave granted.

    2. We have heard counsel for the parties.

    3. The appellant has challenged the impugned order of the High Court of Orissa at Cuttack dated 16-8-2004 in Writ Petition (C) No. 2428 of 2004 whereby the High Court while allowing the writ petition preferred by the respondents held that the DRT, Cuttack violated the principles of natural justice by not permitting the respondents to cross-examine the witness, whose evidence on affidavit was entertained. The High Court rejected the contention that an appeal could have been preferred against the order and went on to hold that where principles of natural justice have been violated the jurisdiction of the High Court under Articles 226 and 227 of the Constitution can be invoked to set right the injustice caused to the petitioner. The facts of the case are that a suit was filed by the appellant State Bank of India for recovery of a sum of Rs 23 lakhs and odd on 12-10-2001. The affidavit by way of evidence was filed on behalf of the Bank on 21-1-2002. The respondent filed its written statement on 16-2-2002 and its objections to entertaining the affidavit by way of evidence on 6-10-2002.

    4. The DRT, Cuttack on 11-11-2002 rejected the application filed on behalf of the respondents for cross-examination of the deponent before it. This order was not appealed against. Counsel submitted that this was not necessary in view of the observations contained in the order that if during the course of the hearing it was felt necessary to reconsider the matter, appropriate orders may be passed.

    5. The Debts Recovery Tribunal heard the matter finally on 31-1-2003 and the claim of the Bank was allowed with simple interest @ 13 per cent per annum. The respondent did not prefer an appeal as provided under Section 20 of the Act against the decree passed by the DRT. Much later, after about 10 months, one of the defendants filed a writ petition before the High Court of Orissa at Cuttack on 24-2-2004 making a grievance that the deponent was not permitted to be cross-examined. There was, therefore, violation of principles of natural justice.

    6. We have heard counsel for the parties. We fail to understand how the High Court could have exercised its jurisdiction under Articles 226 and 227 of the Constitution to set aside a decree/final order passed by the DRT on 9-4-2003, in a collateral proceeding wherein the decree/final order was challenged indirectly on the ground that the application of the respondent for cross-examining the deponent had earlier been wrongly rejected. We have no hesitation in holding that when the DRT did not accede to the request of the respondent to cross-examine the deponent, it could have, in the appeal preferred by it, assailed the decree/final order on that ground and the Appellate Authority would have passed appropriate orders. The mere fact that the respondent had not been given an opportunity to cross-examine the deponent did not enable the respondent to bypass the provision for appeal and approach the High Court directly by a writ petition under Articles 226 and 227 of the Constitution, challenging the decree/final order on the ground that the order earlier passed, refusing to permit the cross-examination of the deponent, was erroneous.

    7. In the facts and circumstances of this case, we hold that the respondent ought to have availed the remedy provided under Section 20 of the Act and preferred an appeal before the Appellate Tribunal wherein he could have urged all his grievances and challenged the decree/final order passed by the DRT. The order passed by the High Court in exercise of writ jurisdiction is wholly unjustified and it is accordingly set aside.

    8. The appeal is allowed.

    9. No orders as to costs.

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    Comments

    State Bank Of India v. Allied Chemical Laboratories And Another
    (Sep 5, 2005)