Sneha Industries and others vs State Bank of Hyderabad and others

B. Subhashan Reddy, J.—This writ petition is filed questioning the jurisdiction of the Debt Recovery Tribunal constituted under The Recovery of Debts Due to Banks and Financial Institutions Act, 1993'', hereinafter referred to as "the Act".

The petitioners have obtained loan from the ist respondent-bank (hereinafter referred to as "the bank") and on account of non-payment of the same, the bank had filed OS No.220/95 on the file of the Court of the II Additional Subordinate Judge, Ranga Reddy District for recovery of Rs.8,35,590-72 ps. The loan being a secured one, preliminary decree was passed by the Civil Court on 14-7-1997 to pay the suit amount of Rs.8,35,590.72 ps. with 17.75% interest from 5-6-1995 i.e. the date of filing of the suit to the date of the decree. As the said amount has not been paid, final decree proceedings under Order XXXIV Rule 5 of CPC were initiated by the bank for recovery of the amount by sale of the properties. By the time, final decree proceedings were initiated, the amount swelled to Rs.l 1,98,099.72. The same was returned by the civil Court on the ground that the debt exceeded Rs.10.00 lakhs. This order of the Civil Court was clearly erroneous for the reason that date of filing of the suit was the criterion for determining the jurisdiction of the civil Court vis-a-vis the Debt Recovery Tribunal under the Act as the Debt Recovery Tribunal, which is the 2nd respondent herein could assume jurisdiction only if the debt was more than Rs.10.00 lakhs, as on the date of the filing of the suit before the civil Court in the year 1995. But, admittedly, as the suit amount was less than Rs.10.00 lakhs, the civil Court had jurisdiction and rightly the civil Court entertained the suit and decreed the same, but had erroneously did not proceed with the final decree proceedings on wrong interpretation of the provisions of the Act. The Act which is the Central enactment (No.51 of 1993) came into force with effect from 24-6-1993. The said Act is applicable by virtue of sub-section (4) of Section 1, if the debt to any bank is Rs.10.00 lakhs or more. If the debt is less than Rs.10.00 lakhs, then common law Court is the forum. Further, the amount of debt due on the date of filing of the suit in the common law Court or application before the Debt Recovery Tribunal, is the criterion. Merely because the amount was less than Rs.10.00 lakhs as on the date of filing of the suit in the civil Court, but with interest, it swelled to the figure of more than Rs.10.00 lakhs at the time of decree or thereafter, the civil Court will not lose jurisdiction. But, in the instant case, even though the order of the civil Court returning the application for final decree proceedings was erroneous, neither the petitioners nor the bank had challenged the same and as such, the said order had become final. What is more, the Bank had filed OA No.929/98 before the 2nd respondent-Tribunal, which has entertained the same. As on the date of the filing of the said OA, the debt has further swelled to Rs.12,45,913.79 ps. The break-up figure is as mentioned below:

(A) Suit amount 8,35,590.72

(B) Interest @17.75% from 5-6-1995 to 14-7-1997 3,12,702.42

(C) Costs of the suit 36,34.00

Total Rs. 12,45,913.79

It is pertinent to mention that the preliminary decree which was passed by the civil Court had become final, as there was no appeal preferred against it.

This writ petition has been filed contending that the original debt claimed in the civil suit being Rs.8,35,590.72 ps. (less than Rs.10.00 lakhs), OA No.929/95 before the 2nd respondent-Tribunal is not maintainable in view of sub-section (4) of Section 1 of the Act. There cannot be any exception to this contention. But, the fact remains that neither the petitioners nor the bank had challenged the said order of civil Court returning the petition for final decree proceedings and as such, the petitioners have to blame themselves. Insofar as the 1st respondent-bank is concerned, the same had accepted the order of the civil Court returning the final decree proceedings and had chosen to file the OA before the 2nd respondent-Tribunal. But, it cannot have the decree as a matter of course, from the 2nd respondent-Tribunal. It has to undergo the full course of the trail as if OA No.929/98 is a fresh case instituted.

Insofar as the validity of the proceedings before the 2nd respondent-Tribunal is concerned, the same do not suffer from lack of jurisdiction. Admittedly, as on the date of filing of OA No.929/88, the debt was more than Rs.10.QO lakhs and as such, the 2nd respondent-Tribunal had jurisdiction to entertain the same. But, as already mentioned supra, OA No.929/98 has to be tried as a fresh proceeding. The decree of the civil Court can only be taken as a basis for jurisdictional purposes as the word ''debt'' defined in clause (g) of Section 2 of the Act takes-in not only the original amount due from any person to a bank or financial institution, secured or otherwise, but also the amount payable under a decree or order of any civil Court, in the instant case, as the amount is recoverable on account of the decree of the civil Court, and the amount being more than Rs. 10.00 lakhs, it is a debt within the meaning of Section 2(g) of the Act and as such, the 2nd respondent-Tribunal has got jurisdiction to entertain the same.

In the result, this writ petition is dismissed. No costs.