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Judgment
Ranjit Singh, J
M/s Neoteric Informatique Ltd. (appellant) has been directed to deposit the amount payable to Mr. Rajen Mata, the Managing Director of M/s Telerex E-Tech Private Ltd. (respondent No. 2) which was engaged as Chief Technical Advisor by the appellant. Aggrieved against this direction, the appellant has filed this present appeal. The appellant in short would raise a plea about the jurisdiction of the Tribunal to pass such an order against the appellant which is neither the borrower nor the guarantor and not even a party in the O.A. filed by the bank for recovery of the amount due against M/s Telerex E-Tch Private Ltd.
Concededly, the appellant was not impleaded as party by the bank in the O.A. filed before the DRT-I, Delhi. Still, the bank filed an application under section 19(12), (20) and (25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act) read with rule 18 of the Debts Recovery Tribunal (Procedure) Rules, 1993 (for short, the Rules), praying the Tribunal to issue direction to defendant No,.1. i.e., M/s Telerex E-Tech Private Ltd. to deposit either with the applicant bank or with the Tribunal the entire amount received by it @Rs. 3 lac per month from M/s Neoteric Informatique Ltd. and also to deposit 20% commission which it has received from the said firm from the year 2011 to March 2012.
The bank had, in fact, filed an O.A. for the recovery of Rs. 1,70,71,518/-against defendants, i.e., respondents 2 to 5 herein. It is evident from the application that respondent No. 2 has closed its office at Madangir, New Delhi and shifted everything to Okhla Industrial Area - I, New Delhi. It is also alleged that respondent No. 2 has transferred its business operations and staff to appellant. It is stated that this is done to defraud the bank and the appellant is entering into renewal of contracts with the customers of respondent No. 2 for annual maintenance. In this regard, reference is made to a letter dated 2.11.2011. The bank has even been able to get copy of the Memorandum of Understanding and terms of engagement entered into between respondent No. 2 and appellant and appellant is paying a sum of Rs. 3 lac per month to respondent No. 2 and is also paying commission of 20% of net margin for all sales and services generated during the business.
On this application, the Tribunal below issued notice to the defendant/respondents 2 to 5. Said respondents appeared and denied the allegation that they have transferred their business to the appellant. It is stated that the said company is separate entity and there is no transfer of business to the said company. Otherwise, it is conceded that the appellant is paying Rs. 3 lac per month to respondent No. 2 w.e.f. April 2011 and also paying commission of 20% of the net margin of sales and services generated during the business. However, it is explained that respondent No. 2 owes a considerable amount to the appellant and this amount is required to be paid to them. In furtherance of the said Memorandum of Understanding is being adjusted against the said overdue amount but no business has been shifted to the appellant.
It appears that notice has also been issued to the appellant though it is not a party respondent. Accordingly, the appellant has filed reply that it is not a party to the proceedings and it does not owe any amount to the applicant bank. As per the appellant, respondent No. 2 has not transferred to it any business. To explain the Memorandum of Understanding, it is stated that the appellant had entered into this memoranda between the company and Mr. Rajen Mata whereby the company has hired the services of said Mr. Rajen Mata as Chief Technical Advisor in his professional capacity as statedly he had 25 years experience in the field and the payment is made in lieu of that. The plea, therefore, is that the applicant has unnecessarily involved the appellant company in the alleged dispute.
The Tribunal has relied upon the affidavit filed by the applicant/ respondent bank in support of the application to contend that the appellant had entered into renewal contract with the customers of respondent No. 2 for annual maintenance. Reference is made to a letter dated 1.6.2011 written for renewal of the earlier contract entered into between respondent No. 2. The Tribunal has observed that the appellant as well as respondents 2 and 3 have not filed any relevant record and the appellant had not furnished any acceptable reason in this regard. From this, the Tribunal has concluded that the appellant had engaged the services of Mr. Rajen Mata as Chief Technical Advisor. On this basis, the Tribunal has found that there is prima facie case and balance of convenience in favour of the applicant bank to pass an interim protection and hence the impugned order.
The learned counsel for the appellant has raised a number of pleas. Counsel would first contend that such an order could not have been made by the Tribunal below when the appellant was not even impleaded as a party. Counsel submits that the appellant is neither a borrower nor a guarantor and the amount or transaction between the appellant and respondent No. 2, if any, cannot be defined as 'debt' and hence would be beyond the scope of interference by the Tribunal. The counsel states that the 'debt' has defined under section 2(g) of the RDDBFI Act and it means any liability which is claimed as due from any person by a bank or financial institution etc. The counsel accordingly would contend that by no stretch of imagination this amount can fall within the definition of 'debt'. The counsel has also highlight this fact that there is no enabling power or provision in the Act which empowers the Tribunal to pass an order requiring a non-party to deposit the amount in the manner as directed. To substantiate his submission, the counsel would read the provisions of section 19(12) to say that the Tribunal can make an interim order (whether by way of injunction or stay or attachment) against the 'defendant' to debar him from transferring, alienating, or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal. Since the appellant is not a 'defendant', such an order could not have been made against it. Similarly, section 19(20) talks of opportunity of hearing to any applicant or defendant while passing an interim or final order and, thus, this provision also could not be used in the instant case against the appellant. So far as the provisions of section 19(25) of the Act are concerned, the counsel' submits that inherent powers may be bestowed on the Tribunal as per this provision but it cannot be formed as a base to invoke power and jurisdiction to pass an order of the nature which the Tribunal has passed. To further highlight this aspect, the counsel would point out that the bank declined to implead the appellant as a party on the ground that he is neither a necessary or proper party.
The counsel for the bank did make an attempt to show that such an order could be passed as it is not a simple case of payment of consultation fee as being claimed but whole business stands transferred. The counsel, however, could not explain as to why then the bank would plead that the appellant is neither a necessary nor a property party.
The counsel for the bank has further not been able to show any specific provision which would authorize the Tribunal below to pass such an order against a person or party which is not a impleaded party before it. The submission of the counsel that the appellant was afforded an opportunity of hearing would not mean much if the Tribunal has no power' to pass such an order against stranger to lis who is not made party by applicant bank. The Tribunal below is required to pass an order in accordance with law. This application being under section 19(12), 19(20) and 19(25) of the Act it would have to be seen if these provisions which would authorize the Tribunal to pass an order against other than 'defendant'. Apparently these provisions may not be available as a source for passing the impugned order. Sections 19(12) and 19(20) clearly talk of order against defendant whereas Section 19(25) talks of inherent powers with the Tribunal. Inherent powers are generally to give effect to any order which can be made under the Act in order to prevent the abuse of its process or to secure the ends of justice. This power when preserved thus enable the Court or the Tribunal to pass such order as may be necessary go given effect to any order which can be passed under the Act. If an order cannot be passed under the Act, obviously, it cannot be passed by invoking the inherent power of the Tribunal to prevent abuse of its process or to secure the ends of justice. If any order cannot be passed under the provisions of the Act and such an order is made saying that this is' to prevent abuse of the process of the Court or Tribunal, it may, indeed, lead to abuse of its process as such. I am thus not in a position to accept this submission that such an order could have been passed under section 19(25) of the Act once it is held that such an order otherwise cannot be passed under any of the provisions of the Act.
I find force in this submission made by the counsel for the appellant that the Tribunal has passed this order for which base cannot be traced to any of the provisions under the Act. Merely by issuing notice to a person without making him a party to the said proceedings and where the applicant or plaintiff does not find him to be a proper or necessary party, one cannot be saddled with any liability as done in the present case. Counsel for the appellant at one stage had also pleaded that he is prepared to implead the appellant as a party. I desist from making any comment on this request which the respondent has to decide itself.
The impugned order, therefore, cannot be sustained and is set aside. However, this order would not be a bar for the bank to take any appropriate proceedings in accordance with law.
The appeal is disposed of in the above terms.