S. Ravi & Anr. v. Indian Bank .

A. Subbulakshmy, Chairperson:— The respondent Bank filed suit before the Hon'ble High Court, Madras, in C.S No. 864/1993 against the appellants defendants (MA-89/2001) for recovery of a sum of Rs. 9,02,710/- together with interest and costs and the defendants were set ex parte and the suit was decreed with costs as prayed for, on 30.11.1993 by the High Court. The petitioners did not file any petition in the High Court for setting aside the ex parte decree. After the recovery of debts due to banks and financial institutions (rddb & fi) act (the act) came into force, as the amount due from the defendants was more than Rs. 10 lakhs, the Bank filed OA for issue of Recovery Certificate before DRT, Chennai. The Tribunal issued Recovery Certificate for a sum of Rs. 33,43,051.03p by Order dated 7.12.2000 stating that no notice is required to be issued to the defendants under Section 31(A). The defendants filed the IA to re-open the OA stating that the summons were received to appear before the Tribunal on 22.12.2000 but the defendants' Counsel was informed that the OA was already disposed of on 7.12.2000 and the defendants are having valid grounds to defend their case and hence the petition must be allowed to reopen the OA.

2. The respondent Bank filed counter contending that no notice is required to be issued to the defendants under Section 31(A) and since the amount also exceeded Rs. 10 lakhs it is not necessary to file any final decree application before the Court which passed the preliminary decree and the petition is not maintainable and it is liable to be dismissed. The PO, DRT-II heard that petition and dismissed that petition. That order is challenged in this appeal.

3. Counsel for the appellants submits that the decree passed by the High Court was an ex parte decree and the High Court passed preliminary decree and the applicant Bank did not file any application for passing final decree and no final decree has been passed. As no final decree application was filed within three months from the date of passing of the preliminary decree the matter is also barred by limitation and the DRT has no power to issue Recovery Certificate on the time-barred application and hence he is entitled for re-opening the OA-8/2001. He relies upon the decision of the Madras High Court reported in State Bank of India v. Kasim Proprietor, I (2000) BC 73, and submitted that application for final decree after expiry of three years is not maintainable. He has also filed the decision of the Madras High Court in P. Subramania Pillai v. Vadivu Animal, 1988-2-L.W., wherein also it has been held that petition for final decree cannot be filed after the period of limitation of three years.

4. In the above said decisions the High Court has held that application for passing final decree after expiry of three years cannot be maintained. The matter which was pending in the High Court was transferred to the DRT after the RDDB & FI Act came into force. The Act came into force on 24.6.1993 Decree was passed by the High Court on 30.11.1993 After the passing of the RDDB & FI Act, all matters pending before the Civil Courts for the value of Rs. 10 lakhs and above are to be transferred to the DRTs as per Section 31 of the Act. The ex parte decree was passed by the High Court on 30.11.1993 and the appellant did not take any steps to set aside the ex parte decree in the High Court and that decree was transferred to the DRT under the provisions of the Act. Section 31A empowers the Tribunal to issue certificate of recovery in case of decree or order. Where a decree or order is passed by any Court before the commencement of the RDDB & FI (Amendment) Act, 2000 and has not yet been executed, then the decree holder may apply to the Tribunal to pass an Order for recovery of that amount and on receipt of that application under section 31 a(1), the Tribunal may issue a certificate for recovery to a Recovery Officer. On receipt of a certificate under Section 31 A(2), the Recovery Officer shall proceed to recover the amount as if it was a certificate in respect of a debt recoverable under this Act. By virtue of the power conferred on the Tribunal under Section 31 A, the Tribunal issued a Recovery Certificate on 7.12.2000 The Tribunal has also ordered issue of notice to the appellants directing the appellants to appear before the Tribunal on 22.12.2000 but passed the Order on 7.12.2000 itself issuing Recovery Certificate.

5. Counsel for the appellants submits that after issuing summons to the appellants defendants directing them to appear on 22.12.2000 without waiting for the appearance of the defendants, prematurely on 7.12.2000 the Tribunal has passed the order issuing Recovery Certificate and the order passed by the Tribunal is erroneous and so it must be reopened. Section 31A of the Act does not contemplate any issuing of notice to the defendants before the issue of recovery certificate. section 31a clearly states that when the decree holder applies to the Tribunal to pass an order for recovery of the amount on receipt of that application the Tribunal may issue a certificate for recovery to Recovery Officer. So the PO, DRT, Chennai, thought fit to pass the order on 7.12.2000 itself without waiting till 21.12.2000 as no notice is contemplated under Section 31 A. So it cannot be stated that the Tribunal passed the order erroneously without waiting for the appearance of the defendants.

6. The defendants appellants without taking any steps to set aside the ex parte decree passed by the High Court and also without filing any petition to set aside the ex parte decree before the DRT has come forward with this petition to reopen the case after the DRT has issued the recovery Certificate. Without taking any steps to set aside the ex parte decree passed by the High Court after the Tribunal issued Recovery Certificate, the petitioners have come forward with this petition and this petition is not at all maintainable as the DRT has rightly passed the Order issuing Recovery certificate under Section 31 A. As I have already stated, for passing order under Section 31A there is no need to issue any summons to the defendant. So even though the Tribunal has ordered issue of notice for appearance of the defendants on 22.12.2000 and the Tribunal passing the Order prior to that on 7.12.2000 issuing Recovery Certificate; cannot be said to be an erroneous Order and the Order is not a nullity. So the petition filed by the petitioners to reopen the case is not at all maintainable since the Order has been validly passed under Section 31 A.

7. Counsel for the appellants also further submitted that on the preliminary decree passed, the property cannot be brought for attachment and hence cannot be brought for sale and the remedy of the decree holder is to apply only for passing final decree. He relies upon the decision of the High Court in Jivandas Khimji v. Dindoyal Shah, 50 C.W.N 486, wherein it has been held that “A preliminary decree is a mortgage suit is not a decree for payment of money and such a decree, in default of payment by the judgment-debtor, as directed thereunder, cannot be executed by the attachment and sale of the properties of the judgment-debtor. The sole remedy of the decree-holder in such circumstances is to apply for a final decree under Order 34 Rule 6 of the Civil Procedure Code.” Of course, in the case of mortgage decree there is no finality until the passing of the final decree but the case on hands stands on a different footing. Ex parte decree was passed by the High Court and the Bank filed OA for issue of recovery certificate before DRT, Chennai, under the provisions of the RDDB & FI Act. So, the question of passing the final decree does not arise and the DRT is empowered to issue a Recovery Certificate under Section 31A of the Act. Exercising such power the DRT has issued Recovery Certificate which as I have already stated is legally enforceable and there is no error in passing such Order.

8. Counsel for the appellants further submitted that the PO, DRT can also withdraw the Recovery Certificate. For that he relies upon the decision in I (1999) BC 317 of the DRAT, Mumbai, wherein the DRAT has held that “Presiding Officer under Section 26 of the Act has no doubt the powers to withdraw the Certificate issued by him. The powers in my opinion are limited. They do not enlarge the scope of Review as if the fresh suit or appeal is being decided. If the order (decree) passed by the Presiding Officer is set aside in appeal, withdrawal is contemplated. Secondly, in case of settlement or adjustment inter se the parties after the decree is passed, certificate can be withdrawn. In no other eventuality, Presiding Officer can withdraw his own certificate which has the effect of finality of determination of ‘debt’.”

9. The above said decision states that if the Order passed by the PO, DRT is set aside in the appeal and in case of settlement or adjustment inter se between the parties the Certificate can be withdrawn. It is also stated therein that after issue of Certificate, the Presiding Officer becomes functus officio to probe into the legality or validity and the question of nullity or the jurisdiction of the Civil Court which passes the decree cannot be gone into by the PO. I am entirely in agreement with the view taken by the DRAT in I (1999) BC 317 and I am also of the view that after issue of Certificate the PO becomes functus officio to probe further in the matter.

10. Counsel for the appellants further Submits that the ex parte decree was passed by the High Court and that decree cannot be set aside by the Tribunal and the Tribunal cannot act on the decree passed by the High Court. On this, he has cited the decision of the Calcutta High Court in Allahabad Bank v. Ghanshyam Das Damani, AIR 1998 Calcutta 243, wherein the Calcutta High Court has held that—

“Order 9 Rule 13 of the Civil P.C and Section 22(2)(g) has to be read side by side. In the earlier one the Court which has passed decree can pass an order to set aside and in the later one setting aside any order of dismissal of any application for default or any order passed by ‘it’ ex parte. The cardinal principle is if the suit is decreed ex parte by the Civil Court it should be revived by the Civil Court alone and if order is passed ex parte before the Tribunal it will be revived by it alone. If the suit decreed by the High Court and recalled by the Tribunal under control and supervision of such High Court, it will be a last day of the judiciary. Incidentally High Court is one having different jurisdiction. There should be a limitation as to how far Tribunal should proceed with a matter assigned before it and as unfettered right to the Tribunal, if at all given by the Legislature may create hazardous situation in the judicial discipline. Moreover, the suit filed in the original side is to be guided by the Original Side Rules. Original Side Rules has prevailing effect over the Code of Civil Procedure. In such a situation, an application of Order 9 Rule 13 cannot be said to be an application under Order 9 Rule 13 of the Code of Civil Procedure alone but an application both under the Original Side Rules as well as Code of Civil Procedure. Therefore, if the ex pane, decree is passed by High Court, application for recalling it and/or setting aside has to be passed in High Court and no question of transfer of same to Tribunal under Act arises.

11. The Calcutta High Court has clearly held in the above said decision that if ex parte decree is passed by the High Court, an application for recalling it or setting aside has to be passed only in the High Court and no question of transfer of that application to the Tribunal under the RDDB & FI Act arises. In the case before the Calcutta High Court the application for recalling and setting aside the ex parte decree was filed and the plaintiff respondent stated that application to set aside the ex parte decree are to be sent before the appropriate Tribunal under the aforesaid Act and the petitioner has stated that he has no objection to transfer the suit from the High Court to the appropriate Tribunal but the suit in which an ex parte decree as passed by this Court ought to be recalled and set aside first by this Court then the suit can be transferred there. At that juncture it was decided by the Calcutta High Court that if ex parte decree was passed by the High Court and the application for setting aside that ex parte decree has to be filed before the High Court the Order on that application has to be passed by the High Court and no question of transferring that petition to set aside the ex parte decree to the Tribunal arises and the High Court which passed the decree has to set aside the ex parte decree.

12. No such question arises in this case. The appellants never filed any petition to set aside the ex parte decree passed by the High Court before the High Court and now after Recovery Certificate was issued by the Tribunal based upon the decree passed by the High Court the petitioners have come forward with this petition to reopen the case. So the principles laid down by the Calcutta High Court in AIR 1998 Calcutta 243 are not applicable to the facts of this case. The petitioners have come forward with this petition to re-open the case after the Tribunal has rightly passed the order under Section 31A of the Act. The petition filed by the petitioners to re-open the case is not at all maintainable. The PO, DRT-II, Chennai, has rightly dismissed that petition. I find no error in the Order passed by the PO, DRT-II, Chennai.

13. Appeal dismissed.

Appeal dismissed.