State Bank Of India And Ors. vs Veetee Fine Foods Ltd. And Ors.

Ranjit Singh, J

It may sound a bit strange to notice that State Bank of India has come up with this Appeal to challenge the order passed by the Tribunal below declining the prayer of the borrower Veetee Fine Foods Ltd. (for short, Veetee) to stay the action for sale of mortgaged property initiated by respondent Punjab National Bank under the SARFAESI Act. How State Bank of India being part of the consortium of Banks consisting of Punjab National Bank and Oriental Bank of Commerce would have grievance against the order declining the prayer of the borrower to stay the action under the SARFAESI Act is not easy to understand. When State Bank of India filed this Appeal, the borrower had not come up with any grievance against the impugned order. Confronted with this position, the Counsel for the Bank referred to some observation made by the Tribunal below against the Bank officials to justify its cause in taking lead to file its Appeal. The Tribunal below had asked the Bank to provide the names of the officers who have recommended the OTS of the borrower and name of those who had approved the OTS besides directing the General Manager (Recovery) of the Bank to remain present before the Tribunal below. The prayer in the Appeal may not stand in support of this purpose as advanced by the appellant Bank. Apart from seeking setting aside of the directions requiring the officials of the Bank to appear etc., the Bank has also prayed for setting aside of the impugned order vide which the Tribunal has declined the prayer of the borrower. Another prayer made in the Appeal is to seek a direction that the respondent Punjab National Bank could not put the secured assets to sale for its debt alone without including the debt of the appellant Bank. This prayer, in a way, was contradictory to the earlier relief claimed for setting aside the order declining the interim prayer. The claim of the appellant Bank, if any, could have easily been otherwise settled from the sale of the property once it was put to sale by a lead Bank of the consortium. The impression that may appear is that this Appeal apparently was filed to somehow assist the borrower with whom the appellant State Bank of India had entered into a one Time Settlement while sacrificing a substantial sum of money which was recoverable from the borrower.

While declining the prayer of the borrower to stay the action initiated by Punjab National Bank under the SARFAESI Act, the Tribunal below has observed that the appellant State Bank of India had entered into a One Time Settlement with the borrower, and had informed the respondent Punjab National Bank through its letter dated 11th March, 2014 that it would no more be interested to initiate any action because of the OTS with the borrower. The record would show that the appellant Bank had entered into a compromise with the borrower who had offered a sum of Rs. 20.90 crores towards full and final settlement against the claim of the Bank, which was to the tune of Rs. 42,18,54,402.68.

Total exposure of the three Banks constituting the consortium was Rs. 139,20,94,010.13. The borrower had obtained a limit of Rs. 168 crores. To secure this Working Capital Limited, the borrower had mortgaged factory, land and building, plant and machinery at village Larsauli, Tehsil Kannaur, District Sonepat (Haryana).

Following State Bank of India, Oriental Bank of Commerce also came up with an Appeal (No. 243/2014) to challenge the same order as was challenged by appellant State Bank of India in Appeal No. 240/2014. In this Appeal, Oriental Bank of Commerce had claimed same reliefs as were claimed by State Bank of India in Appeal No. 240/2014. One of the reliefs which both the Banks claimed in their respective Appeal is as under:-

"To order that the appellant Bank is competent and well within its rights to take commercial decisions at its absolute discretion to enter into OTS with the Borrower on the terms the appellant Bank deem fit in the facts and circumstances of the case."

Whether such a declaratory relief can competently be considered and granted may be a separate issue, but this issue raised has invited serious debate. While issuing notice in these Appeals a part of directions issued by the Tribunal below was stayed.

During the pendency of these Appeals, the Tribunal below passed another order dated 4th July, 2014, while taking notice of the order passed by this Tribunal. G.M. (Recovery) of Oriental Bank of Commerce has appeared before the Tribunal below on this date. The Tribunal below has taken note of the fact that more than Rs. 20 crores of the dues had been sacrificed by the Bank to which G.M. (Recovery) had responded with some impertinence. The Tribunal recorded some more observations about the intentional and deliberate conduct of the respondent while observing that the conscience of the Tribunal did not permit it to let the case off. The Tribunal below thereafter directed the order dated 4th July, 2014 be sent to the Governor, R.B.I., to put check on such officers and to see whether policies made by R.B.I., were duly followed by the Banks who had given rebate of crores of rupees to the borrowers. The Tribunal further directed that the copy of the said order be sent to Indian Banks Association who had published list of top 100 defaulters as to why the name of the borrower has not been included in the list of defaulters. Aggrieved against this order passed by the Tribunal below on 4th July, 2014, State Bank of India filed another Appeal (No. 377/2014) making a grievance against the scathing observation made in this order and for referring the case to R.B.I. Notice in this Appeal was also issued for hearing with other Appeals filed by the Bank.

Following on the heels of these three Appeals filed by the Banks, the borrower Veetee also filed an Appeal before this Tribunal against the order passed by the Tribunal below for staying the action. This Tribunal declined the prayer of stay as made by the borrower Veetee on the ground that Appeal was not properly constituted for want of pre-deposit. Aggrieved against this order, borrower Veetee, filed Writ Petition No. 13920/2014 before the Hon'ble High Court of Punjab and Haryana. This writ petition came to be dismissed on 18th September, 2014. Since the Appeal of the borrower was pending, the Hon'ble High Court declined to consider the plea of the borrower that the Tribunal could not go into the issue of settlement, it being not an auditor or ombudsman to scrutinise the settlement arrived at between the Bank and the borrower. In support, the borrower had relied on the law laid down by the Hon'ble Delhi High Court in Satish Chander Gupta v. State Bank of India, W.P. (C) 2588/2010, decided on 19th April, 2010. The borrower Veetee then tried its luck before the-Hon'ble Supreme Court, but the SLP was also dismissed requiring the Veetee to make deposit of 25% of the notice amount. Since the borrower failed to make this deposit, the Appeal filed by Veetee was dismissed by this Tribunal being not maintainable. Still, the borrower Veetee, being respondent in all these Appeals filed by the Banks, had been able to espouse its cause through the Banks and to an extent has succeeded as well in its mission.

Respondent Punjab National Bank which was lead Bank of the consortium having initiated action under the SARFAESI Act seems to have succumbed too and entered into a One-Time Settlement with the borrower. While the Appeals were pending, State Bank of India came up to disclose before this Tribunal that the OTS entered into between the appellant State Bank of India and the borrower had failed as the borrower could not adhere to the terms of the settlement in making the payments. Unlike many other cases, State Bank of India being generous still allowed the borrower to adhere to the One-Time Settlement. Ultimately, all the three Banks have pleaded before this Tribunal that they have entered into settlement with the borrower while sacrificing a substantial sum of money due to each Bank forming part of the consortium.

Unconcerned with this settlement, the Tribunal below seems to have gone on to decide the S.A. and by taking note of earlier orders dated 9th June, 2014 and 4th July, 2014 has made some observation that the OTS by the appellant State Bank of India and Oriental Bank of Commerce cannot be binding on the third member of consortium. While not appreciating the act of certain Bank officials named in the order, the Tribunal below has ordered to send the copy of the order to the Director, Central Bureau of Investigation as well as to the Central Vigilance Commissioner to check the antecedents of the defaulters so that they may not ruin the economy of the country further for their personal gains and further test their policy of divide and rule amongst the consortium members etc. Aggrieved against this order passed by the Tribunal disposing of the S.A., in this manner, State Bank of India filed yet another Appeal (No. 153/2015) in which also notice was issued and this Appeal was clubbed with the other pending Appeals for hearing.

Once all the Banks of the consortium have entered into settlement, the Appeals filed by the respective Banks were rendered infructuous. These Appeals could have been disposed of as such but for the fact that Counsel for the parties pleaded before this Tribunal for adjudicating the issue relating to the extent of jurisdiction that Tribunals can exercise in the rights of the Banks to enter into settlement and also in regard to the power and jurisdiction of the Tribunals to issue direction for enquiry or for summoning the officials of the Bank while considering the lis pending before the Tribunals. This issue being of considerable importance, this Tribunal has heard the Counsel for the parties and had even invited the Counsels at the Bar to appear and make submission in this regard. Accordingly, all the four Appeals (Nos. 156/2015, 240/2014, 243/2014 and 377/2014) have been heard and are being disposed of through this common order after a prolonged debate.

Before considering the issue of jurisdiction of the Tribunals so far as settlement arrived between the Bank and the borrower is concerned, I would first deal with the issue of power and jurisdiction of the Tribunals to direct investigation of or referring the cases to CBI and Central Vigilance Commission etc. Incidentally, this issue has already been considered by this Tribunal while deciding Inward (Appeal) No. 658/2014, Oriental Bank of Commerce v. Rehal Steel Industries, on 28th October, 2015. The precise question considered in this case was whether the Recovery Tribunal would have jurisdiction to refer the case to CBI or not. After taking note of various judgment, this Tribunal has held that the Tribunals constituted under the RDDBFI Act do not exercise any such powers for which it can be taken to have powers to direct investigation by CBI or to refer the case for investigation to CBI which force is otherwise constituted under the Delhi Special Police Establishment Act. It is observed that the jurisdiction of this Police force to investigate an offence is circumscribed by the limitation imposed under Section 6 of the Delhi Special Police Establishment Act and any happening in the State can only be investigated by this special force with the consent of the State Government. It is further held that the Tribunal constituted under the RDDBFI Act cannot have powers like Constitutional Courts would have to refer the case to the Special Police Establishment under the Delhi Special Establishment Act. It would be appropriate to revisit the detailed observation made by this Tribunal in Oriental Bank of Commerce v. Rehal Steel Industries (supra), which is as under:

"Apparently, the Tribunal below has gone overboard to issue the impugned directions, that too, on an application filed in a disposed of SA. Not only this, the Tribunal below, in my view, even has failed to consider if it will have any power or jurisdiction to refer the case to CBI. The Tribunals constituted under the RDDBFI Act have limited jurisdiction which they can exercise strictly in terms of the provisions contained in the SARFAESI Act and the RDDBFI Act. This Tribunal in Miscellaneous Appeal No. 380/2011 titled Hari Kripa Towers (P) Ltd. v. Ministry of Finance, II (2015) BC 1 (DRAT), has held that there is no power or source available under these enactments on the basis of which any directions for holding investigation or inquiry can be issued by these Tribunals. It is further held:

"10. The investigation has to be by setting the criminal law into motion which certainly may not be within the competence of this Tribunal. The inquiry also can be either held under the Criminal Procedure Code or any other inquiry in nature of domestic inquiry. No directions to hold investigation can be issued and such directions would be a call beyond the jurisdiction of this Tribunal. This Tribunal also would have no source or power to direct inquiry in nature of domestic inquiry which may be directed against any person who may have committed any misconduct."

That being the position of law otherwise, any direction by a Tribunal constituted under the RDDBFI Act to refer the matter to CBI constituted under the Delhi Special Police Establishment Act would certainly appear to be beyond the powers of the Tribunal. In fact, there has been a serious debate about the powers of the constitutional Courts like High Court to issue direction for investigation to CFBI which is constituted under the Delhi Special Police Establishment Act. This issue has been resolved by a Constitution Bench in the case of State of West Bengal v. The Committee for Protection of Democratic Rights West Bengal, II (2010) SLT 136 : JT (2010) (2) SC 352 : 2010 (3) SCC 571.

The issue before the Constitution Bench was whether the High Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, can direct the Central Bureau of Investigation established under the Delhi Special Police Establishment Act to investigate a cognizable offence,, which is alleged to have taken place within the territorial jurisdiction of the State, without the consent of the State Government.

Though the Court, after elaborate discussion, has answered the question holding that the High Court, in exercise of jurisdiction under Article 226 of the Constitution, can direct CBI to investigate cognizable offence without the consent of the State and that such power will neither impinge upon the federal structure of Constitution nor violate the doctrine of separation of power and shall be valid in law, but, at the same time, has emphasised that while passing any order, the Courts must bear in mind certain self-imposed limitations on the exercise of these constitutional powers. It is further observed that the very plenitude of the power under the said Articles 226 and 32 requires great caution in its exercise. The Court has also gone on to observe that no flexible guidelines can be laid down to decide whether or not such power should be exercised but it is noted that time and again it has been reiterated that such an order is not to be passed as matter of routine or merely because a party has levelled some allegations against the local police. The Supreme Court has held that this extraordinary power must be exercised sparingly, cautiously and in exceptional situations where it becomes necessary to provide credibility and instill confidence in investigations or where the incident may have National and International ramifications or where such an order may be necessary for doing complete justice and for enforcing the fundamental rights. It is observed that otherwise the CBI would be flooded with a large number of cases and with limited resources, may find it difficult to properly investigate even serious cases and in the process lose its credibility and purpose with unsatisfactory investigations.

It is in the above-noted background of legal position that the validity of the directions issued by the Tribunal referring the case to CBI is required to be examined. The power of the CBI to investigate a criminal case has to be strictly regulated in terms of the provisions of the Delhi Special Police Establishment Act under which this force has been constituted. The preamble of the Act would show that it is enacted with a view to constitute a special force in Delhi for investigation of certain offences in Union Territories and to make provisions for the superintendence and administration of the said force and for extension to other areas of the powers and jurisdiction of the members of the said force in regard to the investigation of the said offences.

Section 5 of the Act empowers the Central Government to extend the powers and jurisdiction of Special Police Establishment to any area, in a State, not being a Union Territory for the investigation of any offences or classes of offences specified, in a notification under Section 3 and on such extension of jurisdiction, a member of the Establishment shall discharge the functions of a Police officer in that area and shall, while so discharging such functions, be deemed to be a member of the Police force of that area and be vested with the powers, functions and privileges and be subject to the liabilities of a Police officer belonging to that Police force.

Section 6 of the Act makes a provision for consent of the State Government to exercise of powers and jurisdiction. This section states that nothing contained in Section 5 shall be deemed to enable any member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in a State, not being a Union Territory or railway area, without the consent of the Government of that State. Thus, Section 6 imposes a restriction on the powers of the Central Government to extend the jurisdiction of the said Establishment and such extension of power can only be with the consent of the State Government concerned. It is on the basis of these provisions that challenge was made before the Hon'ble Supreme Court in the case, The Committee For Protection of Democratic Rights West Bengal (supra) to the power and jurisdiction of the High Court to direct investigation without the consent of the State Government concerned. If there was serious debate about the powers of the Constitutional Courts to refer the case for investigation by CBI, the power of the other Courts and the Tribunals which are constituted under the RDDBFI Act would certainly be questionable. The power of the High Court to direct investigation by CBI while exercising jurisdiction under Art. 226 has been upheld, the article being very heart of the Constitution, Under Articles 32 and 226 of the Constitution, the Constitutional Court exercises the power of judicial review which is an integral part and essential feature of the Constitution, constituting part of its basic structure. The Hon'ble Supreme Court has observed that ordinarily the power of the High Court and the Supreme Court to test the Constitutional validity of legislations can never be ousted or even abridged. That being the scope of the power exercised by the Supreme Court and High Court under Articles 32 and 226 of the Constitution respectively was the main cause for upholding the powers of the High Court and the Supreme Court to direct investigation by special Police force like CBI."

In the same very judgment, this Tribunal has considered the scope of powers to be exercised by the Tribunals constituted under the RDDBFI Act. In this regard, the observation of this Tribunal is as under:

"The Tribunal constituted under the RDDBFI Act have been given power under the statute to pass such orders and give such directions to give effect to its order or to prevent abuse of its process or to secure the ends of justice under Section 19(25) of the RDDBFI Act. While considering this provision, the Hon'ble Supreme Court in case of Standard Chartered Bank v. Dharminder Bhohi VIII (2013) SLT 313 : IV (2013) BC 407 (SC) : 2013 Vol. 15 SCC 341, has held that the Tribunal is required to function within the statutory parameters. It is further held that the Tribunal does not have any inherent powers and it is limpid that Section 19(25) of the Act confers limited powers. The Court has also gone on to notice the difference between the Courts and the Tribunals while discharging their judicial power and functions. The Court has noted the well-recognized difference between the Courts and the Tribunals as under:

(i) Courts are established by the State and are entrusted with the State's inherent judicial power for administration of justice in general. Tribunals are established under a statute to adjudicate upon disputes arising under the said statute, or disputes of specified nature. Therefore, all Courts are Tribunals, but all Tribunals are not Courts.

(ii) Courts are exclusively manned by Judges. Tribunals can have a Judge as the sole member, or can have a combination of a judicial member and a technical member who is an 'expert' in the field to which the Tribunal relates. Some highly specialized fact-finding Tribunals may have only technical members, but they are rare and are exceptions.

(iii) While Courts are governed by detailed statutory procedural rules, in particular Code of Civil Procedure and the Evidence Act, requiring an elaborate procedure in decision making, Tribunals generally regulate their own procedure applying the provisions of the Code of Civil Procedure only where it is required, and without being restricted by the strict rules of the Evidence Act."

Accordingly, the Court had held that Tribunal under the RDDBFI Act has been established with a specific purpose. As observed by the Court, the duty of the Tribunal is to see that the disputes are disposed of quickly regard being had to the larger public interest. It is noticed by the Court that the role of the Tribunal has not been fettered by technicalities. The Tribunals are required to bestow attention and give priority to the real controversy before it arising out of the special legislations. The Court has highlighted the provisions of Section 34 of the SARFAESI Act and Section 34 of the RDDBFI Act providing for overriding effect, to observe that sacrosanct purpose with which the Tribunals have been established is to put the controversy to rest between the Bank and the borrower and any third party who has acquired any interest. It is noticed that these Tribunals have been conferred jurisdiction by special legislation to exercise particular power in particular manner as provided under the Act. They cannot assume the role of a Court of different nature which can grant liberty to initiate any action against the Bank. They are only required to decide the lis that comes within their domain. If it does not fall within their sphere of jurisdiction, they are required to say so. The Court has thus ordered deletion of certain observation terming these unwarranted and being wholly bereft of jurisdiction.

In view of the law laid down above, which is reiterated herein, the direction issued by the Tribunal below to refer the case to CBI for investigation and to Central Vigilance Commission etc. cannot be sustained.

The prime question which has been addressed in these Appeals relates to the jurisdiction of this Tribunal to go into the One Time Settlement reached between the borrower and the Bank. The submission by the Counsel for the appellant is that recovery Tribunals constituted under the RDDBFI Act cannot question or go into the issue of one-time settlement reached between the Bank and the borrower and, as such, the Tribunal can only see if the action initiated under the SARFAESI Act has been validly initiated under the provisions of the Act and nothing more. In short, the plea by the Counsel for the appellant is that these Tribunals are not created as an auditor or ombudsman to scrutinise the settlement. For this view, strong reliance is placed on the Division Bench judgment of the Delhi High Court in case of Satish Chander Gupta (supra).

The Court in this case was considering the One Time Settlement reached between the Bank and the guarantor for which an application was moved before the DRT and which was dismissed being devoid of merits. Aggrieved against this order, the guarantor had filed an Appeal before this Tribunal, which was also dismissed. The guarantor had then filed a writ petition before the High Court. The Division Bench has held that the DRT can have no objection as the Bank which is claimant had agreed for settlement. It is observed that the Bank is dominus litis and it is for the Bank to decide against which party it desires the litigation to continue. The High Court has also taken note of the fact that this Tribunal had proceeded to deal with Order 23, Rule 1 of the CPC. The High Court has observed that this Tribunal had rightly taken note of the observation of the Hon'ble Supreme Court in the case of Hulas Raj Baij Nath v. Firm K.B. Bass and Co., AIR 1968 SC 111, where it is held that the defendant in a Suit cannot insist that a Plaintiff must be compelled to proceed with a Suit at any stage when a party seeks withdrawal of the suit. High Court has noticed that this Tribunal appears to think that it is some kind of ombudsman/auditor of the Bank to scrutinize the settlement arrived at between the Bank and the borrower. It is observed that it is not the function of the DRAT. Relying on this, Counsel for the appellant would urge that once the settlement is arrived at between the parties, the Tribunal can have no role to pay.

The Counsel for the appellant would also rely upon the case of Satinder Kapur v. P.N.B., W.P. (C) No. 106032/2009 decided on 21st December, 2009. In this case, the issue before the High Court was whether DRT can refuse to grant permission to the Applicant/Bank to withdraw a pending application under Section 19 of the RDDBFI Act when both the Bank and the debtor have entered into an out-of-Court settlement. The Division Bench of the Hon'ble High Court in this case has relied upon the view expressed by the Hon'ble Supreme Court in Hulas Raj Baij Nath (supra) to the effect that there is no provision in the Code of Civil Procedure which requires the Court to refuse permission to withdraw the Suit in such circumstances and to compel the Plaintiff to proceed with it. The Hon'ble Supreme Court, has so held while interpreting the provisions or Order 23 Rule 1 of CPC. This provision, as held by the Supreme Court, gives an unqualified right to a Plaintiff to withdraw from a Suit and if no permission to file a fresh Suit is sought under Sub-rule (2) of that Rule, the Plaintiff becomes liable for such costs as the Court may award and becomes precluded from instituting any fresh Suit in respect of the subject-matter under Sub-rule (3) of the Rule.

It is important to notice that the issue in the case of Satinder Kapur (supra) was entirely different and this related to the right to withdraw a suit. The provisions of Order 23, Rule 1 are rather clear in this regard. It states that plaintiff at any time after institution of a Suit may as against all or any of the defendants abandon his Suit or abandon a part of his claim. The Division Bench has very aptly observed that in this case neither party had sought any stamp of approval imprimatur of the Tribunal with regard to the compromise that they had entered into. Thus, there was no occasion for the DRT to enter upon an examination of the terms thereof. This judgment thus has dealt with only the right of Plaintiff to withdraw the suit apparently has held so finding that neither of the party had sought a stamp of the approval of the Tribunal with regard to the compromise. There is thus a scope to construe that where the parties are seeking any stamp of approval of the Tribunal, then the Tribunal may have some right to examine the terms of the compromise. As already noticed, the judgment in the case of Hulas Raj Baij Nath (supra) was only dealing with the right to withdraw the Suit and nothing more.

Counsel for the appellant has also relied on the case of Prem Kumar Gupta v. Bank of India, 2015 (DLT Soft) 499 (DB), W.P. (C) 2630/2014 decided on 9th March, 2015. In this case, the High Court has considered the scope of the provisions of Section 19(25) of the RDDBFI Act, which provided that the Tribunal may make such orders and give such direction as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. Though in the judgment impugned before the High Court in this writ petition this Tribunal had taken the view that under the provisions of Section 19(25) of the RDDBFI Act the Tribunal has inherent powers but, subsequently, on reconsideration, the scope of Section 19(25) has been correctly viewed by this Tribunal in the case of Oriental Bank of Commerce v. Rehal Steel Industries Ltd., (supra) while relying upon the law laid down by the Hon'ble Supreme Court in Standard Chartered Bank v. Dharminder Bhohi (2013) SLT 313 : IV (2013) BC 407 (SC) : (2013) 15 SCC 341. It is held that the recovery Tribunal is required to function within the statutory parameters and the Tribunals does not have any inherent power and it is limpid that Section 19(25) confers limited powers. This will not leave much scope so far as the issue relating to the definition of a Tribunal is concerned.

There may not be any statutory or constitutional provision which defines exhaustively what a Tribunal is, but the well recognized difference between Court and Tribunal has also been noted while taking note of the judgment of the Hon'ble Supreme Court in Standard Chartered Bank's case (supra). There is thus no need for any further elaboration in this regard. The position that would emerge from the above discussion is that the recovery Tribunals constituted under the Act are to exercise limited jurisdiction and are to function within the statutory parameters and that such Tribunals will not have any inherent powers and it is limpid that Section 19(25) confers limited power.

That being the scope, it has to be now seen if such Tribunals would have any power or jurisdiction to scrutinize the terms of settlement arrived at between the Bank and the borrower..

From the law as noticed above, it is clear that the Bank or the borrower would be at liberty to withdraw any Suit or proceedings pending before the Tribunals in view of any settlement arrived at between them and this Tribunal or the Tribunal below will have no jurisdiction to decline such a prayer to withdraw the suit, if made. The consequences of such withdrawal would ultimately fall upon the parties concerned and for this purpose the consequences as contained in Order 23, Rule 1(4) of CPC may follow. This sub-rule provides that where the plaintiff abandons his suit part of the claim under Sub-rule (1) of Order 23 of CPC or where the Plaintiff withdraws from the Suit or part of claim without the permission referred to in Sub-rule (3), he shall be liable for such costs as the Court may award and shall be precluded from instituting any fresh Suit in respect of such subject-matter or such part of the claim. For the purpose of compromising a suit, the provisions of Order 23 Rule 3 of CPC are relevant whereas Order 23, sub-rule (1) of CPC only relates to withdrawal of the suit. Order 23 Rule 3 is as under :-

"3. Compromise of suit-Where it is proved to the satisfaction of the Court that a Suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the Plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the Suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit.

Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question, but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment."

Thus, for compromising the suit, it is required to be proved to the satisfaction of the Court that the Suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the Plaintiff in respect of the whole or any part of the subject-matter of the Suit, the Court shall order such agreement, compromise or satisfaction to be recorded and shall pass the decree in accordance therewith. Thus, some satisfaction by the Court would come into play when the compromise in the Suit is prayed for before any Court.

Till 2013, there was no provision made in regard to compromise of the proceedings pending before the recovery Tribunals. A provision has now been introduced in the form of Section 19(20A) of RDDBFI Act which is on the lines of Order 23, Rule 3 bestowing jurisdiction on the Tribunals for its satisfaction where the claim of the applicant is adjusted wholly or in part by any lawful agreement or compromise. This newly introduced provision of Section 19(20A) of the RDDBFI Act is as under-

"(20A) Where it is proved to the satisfaction of the Tribunal that the claim of the Applicant has been adjusted wholly or in part by any lawful agreement or compromise in writing signed by the parties or where the defendant has repaid or agreed to repay the claim of the Applicant, the Tribunal shall pass orders recording such agreement, compromise or satisfaction of the claim."

The wording of this section is almost identical to the wordings of Order 23, Rule 3. Thus, where the parties seek an order from the Tribunal on the basis of any agreement or compromise or satisfaction of a claim, then the Tribunal may have to see that it is proved to its satisfaction that the claim of the Applicant had been adjusted wholly or in part by any lawful agreement or compromise which is in writing and signed by the parties and that the defendant has repaid or agreed to repay the claim of the Applicant. It is only then the Tribunal shall pass order recording such agreement or compromise. Will it still be possible to say that there is no jurisdiction on the part of the Tribunal to see that the Suit has been adjusted wholly or in part and that such an agreement or compromise is lawful and it is written and signed by the parties? The Tribunal may now also see if the defendant had repaid or agreed to repay the claim of the Applicant and only then it would order recording of such agreement.

What could be the purpose of introducing these provisions specifically in the RDDBFI Act. If we look at the provisions of Section 22 of the RDDBFI Act, it can be noticed that the Tribunal and Appellate Tribunal are not bound by the procedure laid down by the Code of Civil Procedure. The Tribunal is to be guided by the principles of natural justice and such Tribunal has powers to regulate its own procedure. The purpose of introducing Section 19(20A) in the RDDBFI Act as can be seen from the Statement of Objects and Reasons is to enable the Banks and Financial Institutions to enter into settlement or compromise with the borrower and also to empower the DRTs to pass an order acknowledging such settlement or compromise.

It is true that the Tribunals may not be bound by the procedure laid down in the CPC but it is a facilitative provision. The Tribunals have been removed from the fetters and rigours of the procedural law contained in the CPC but are not barred from following the same procedure while regulating their own procedure. The provision contained in the CPC mostly would be indicative of the compliance with the natural justice. The Tribunals under the Act then would be free to adopt and follow the procedure prescribed in the CPC as well. That being the position, the provisions contained in Order 23, Rule 3 and the effect of the decree on the basis of compromise cannot be ignored.

Section 19(20A) of the RDDBFI Act which is on the line with Order 23, Rule 3 would clearly mean that the DRT can now pass an order acknowledging such settlement or compromise and for that purpose the Tribunal would ask the parties to prove to its satisfaction that the claim has been adjusted wholly or in part and such agreement or compromise is lawful and is also in writing and signed by the parties. The empowering provisions contained in Order 23, Rule 3 of CPC and Section 19(20A) of the RDDBFI Act would have an importance. It is not mere showing existence of an agreement or compromise would be the requirement of this provision. It is required to be proved to the satisfaction of the Court or the Tribunal that such an agreement or compromise is reached. The Tribunal and the Court has to satisfy itself that the agreement or compromise is lawful, that is not voidable under the Indian Contract Act. There is a purpose behind this requirement of law. Sub-section (3) of Section 96 of CPC and Rule 3-A of Order 23 of CPC would give out the purpose in this regard. Sub-section (3) of Section 96 of CPC says that no Appeal shall lie from a decree passed by the Court with the consent of the parties. Rule 3-A of Order 23 of CPC says that no Suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. The conjoint reading of Sub-section (3) of Section 96 of CPC and Rule 3-A of Order 23 of CPC would make it abundantly clear that the consent decree cannot be challenged. Where Sub-section (3) of Section 96 of CPC makes a consent decree non-appealable Rule 3-A of Order 23 of CPC declares any action seeking to set aside the compromise decree non-maintainable. These two provisions constitute substantive right in favour of the holder of such a decree. Such being the purport of the statute, the Court should satisfy itself before recording its satisfaction and passing the order.

Would the provisions of Section 19(20A) having been introduced in the year 2013 have any effect on the view which may have been expressed by the Courts or Tribunals prior to this amendment was introduced? The Statements of Objection and Reasons for introducing such a provision has already been noted above. This is to empower the DRTs to pass an order acknowledging such settlement or compromise. That being the position in law, effect of such an order being what is noticed above, in my view, it would not be reasonable to urge that the Tribunals would have no jurisdiction to examine the settlement or compromise before affixing its stamp on such settlement or compromise. The wide view canvassed by the Counsel for the appellant that the DRTs, would have no jurisdiction to question or examine the settlement cannot be accepted. It may be so that the Tribunals are not auditors or ombudsmen as held by the Delhi High Court and cannot act as such, but if any party wants a stamp of approval of on the settlement or agreement, then the Tribunal will have to satisfy itself that such compromise has adjusted the claim wholly or in part and that the agreement is lawful, being in writing and signed by the parties and that the defendant has paid or agreed to pay the claim of the Applicant. Only then, the Tribunal shall pass an order recording such agreement, compromise or satisfaction of the claim.

The broad line of submission as canvassed by the Counsel for the appellant even otherwise may not appear to be in tune with the duties expected from the officials who are dealing with the public money as trustee of the public fund. The applicability of principle of public accounting cannot be completely ignored in such cases. In this regard, it would be for the benefit of all to take notice of the observation of the Hon'ble Supreme Court in the case of Eureka Forbes Limited v. Allahabad Bank, III (2010) BC 1 (SC) : IV (2010) SLT 280 : (2010) 6 SCC 193. The Hon'ble Supreme Court in this case has taken note of the conduct of the Bank officials who having come to know of the doings of the respondents kept on disbursing heavy loans to the respondents. The Court has taken note of the fact that the officers and officials of the Bank took no serious steps to ensure the goods hypothecated to the Bank are not disposed of without their consent. Noticing these facts, the Court has observed that all this indicated definite negligence on the part of the quarters concerned. Thereafter, the Court has taken note of the legislative object of expeditious recovery of public dues. The Court has observed that the legislative object of expeditious recovery of all public dues and due protection of security available with the Bank to ensure prepayment of debts cannot be achieved when the officers/officials of the Bank act in such a callous manner. The Court has then held:

"76. There is a public duty upon all such officers/officials to act fairly, transparently and with a sense of responsibility to ensure recovery of public dues. Even, an action on the part of the public servant can lead to a failure of public duty and can jeopardize the interest of the State or its instrumentality."

The Court has further held that scheme of the Recovery Act and language of its various provisions imposes an obligation upon the Banks to ensure a proper and expeditious recovery of its dues. The Court has then dealt with the concept of public accountability in the following manner-

"78. The concept of public accountability and performance is applicable to the present case as well. These are instrumentalities of the State and thus all administrative norms and principles of fair performance are applicable to them with equal force as they are to the Government department, if not with a greater rigour. The well-established precepts of public trust and public accountability are fully applicable to the functions which emerge from the public servants or even the persons holding public office, in State of Bihar v. Subhash Singh, (1997) 4 SCC 430, this Court, in exercise of the powers of judicial review stated that, the doctrine of full faith and credit applies to the acts done by officers in the hierarchy of the State. They have to faithfully discharge their duties to elongate public purpose.

Inaction, arbitrary action or irresponsible action would normally result in dual hardship. Firstly, it jeopardizes the interest of the Bank and public funds are wasted and secondly, it even affects the borrower's interest adversely provided such person was acting bona fide. Both these adverse consequences can easily be avoided by the authorities concerned by timely and coordinated action. The authorities are required to have a more practical and pragmatic approach to provide solution to such matters. The concept of public accountability and performance of functions takes in its ambit proper and timely action in accordance with law. Public duty and public obligation both are essentials of good administration whether by the State instrumentalities and/or by the Financial Institutions.

In Centre for Public Interest Litigation v. Union of India, I (2012) CLT 385 (SC) : (2007) 8 SCC 202 this Court declared the dictum that State actions causing loss are actionable under public law and this is as a result of innovation to a new tool with the Court, which are the protectors of civil liberty of the citizens and would ensure protection against devastating results of State action. The principles of public accountability and transparency in State action even in the case of appointment, which essentially must not lack bona fides were enforced by the Court. All these principles enunciated by the Court over a passage of time clearly mandate that public officers are answerable both for their inaction and irresponsible actions. What ought to have been done, if not done, responsibility should be fixed on the erring officers then alone the real public purposes of an answerable administration would be satisfied.

The doctrine of full faith and credit applies to the acts done by the officers and presumptive evidence of regularity of official acts done or performed, is apposite in faithfully discharge of duties to elongate public purpose and to be in accordance with the procedure prescribed. It is a known fact that, in transactions of Government business, none would own personal responsibility and decisions are leisurely taken at various levels (refer State of A.P. v. Food Corporation of India, (2004) 13 SCC 53)

Principle of public accountability is applicable to such officers/officials with all its vigour. Greater the power to decide, higher is the responsibility to be just and fair. The dimensions of administrative law permit judicial intervention in decisions, though of administrative nature, but are ex facie discriminatory. The adverse impact of lack of probity in discharge of public duties can result in varied defects not only in the decision-making process but in the decision as well. Every public officer is accountable for its decision and actions to the public in the larger interest and to the State administration in its governance."

That being the position, whether there is ex facie failure on the part of the officials/officers of the Bank may remain under some sort of scrutiny as the issue relates to recovery of public money. Would it not be open for the Tribunals to bring such a conduct to the notice of authority to take action? No wonder ever}' public officer is accountable for its decision to the public in the larger interest and to the State administration in its governance. As held by the Hon'ble Supreme Court, greater the power to decide, the higher is the responsibility to be just and fair. The principles of public accountability have been made applicable to such officers with all its vigour. It may, thus, not be open for the Bank officials to claim that their conduct would be immune from scrutiny even if they act in violation of their statutory obligation which even is found to be taken arbitrarily or is irresponsible action and where it is a case of no action at all If such leverage is left with the officials of the Bank to act in any manner they like, the result would be waste of public fund which would in effect may act to protect the interest of the borrower. Such adverse consequences are required to be avoided and these can be avoided only in case there is some check and balances where the doctrine of full faith and credit applies to the acts done by the officers. May be that this Tribunal cannot direct or take action, but may be in a position to bring it to the notice of the competent authority to examine.

Even in the case of Indian Bank v. Blue Jaggers Estates Limited, III (2010) BC 694 (SC) : VI (2010) SLT 26 : (2010) 8 SCC 129, the Hon'ble Supreme Court has held that the Court cannot lose sight of the fact that the Bank is a trustee of public funds. The Banks cannot compromise the public interest for benefiting private individuals. Relevant observation of the Hon'ble Supreme Court reads thus:

"25. The Court cannot lose sight of the fact that the Bank is a trustee of public funds. It cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the Bank are duty-bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the Bank is not only entitled but duty-bound to recover the amount by adopting all legally permissible methods. Parliament enacted the Act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of the Banks and Financial Institutions. Reference in this connection deserves to be made to the judgments of this Court in Delhi Transport Corpn. v. DTC Mazdoor Congress, 1991 Supp. (1) SCC 600, Central Bank of India v. State of Kerala, I (2009) BC 705 (SC) : II (2009) SLT 247 : (2009) 4 SCC 94 and United Bank of India v. Satyawati Tondon, III (2010) BC 495 (SC) : VI (2010) SLT 52 : (2010) 8 SCC 110."

If the view canvassed by the Counsel for the appellant is accepted in totality it would mean that there would be no way to scrutinise even where the Bank officials who are trustees of the public fund act to compromise the public fund for the benefit of the private individuals. This position would sound too alarming and at least would not impress me for according to my approval. I am, therefore, of the considered view that after the advent of Section 19 (20A), the Tribunals would be in a position to examine the settlement or compromise strictly in tune with the provisions now introduced in the RDDBFI Act. The effect of acknowledging this settlement or compromise by the Tribunal would be as is given in Section 96 (3) of CPC and Rule 3 (A) of Order 23 of CPC. That being the effect of such a stamp of approval, the scrutiny by the Tribunal while affixing such stamp will have to be provided for and it is indeed provided in this Act.

As already held, the action of the Tribunal below in referring the case to CBI or Central Vigilance Commission for investigation is beyond the power and jurisdiction of the Tribunal and cannot be sustained and will need to be set aside. The Tribunal may have been in a position to scrutinise or examine the settlement and compromise as pleaded before it, but it ought to have avoided any scathing observation against any of the officials or officers of the Bank unless they were found to be acting arbitrarily, negligently or in any uncalled for manner which resulted in wasting of public fund or serving the interest of the borrower in any way.

Incidentally, it may call for notice here that it is not always appropriate to comment on the conduct of any officer or any person before the Court. Need to exercise judicial restraint has been expressed by the Hon'ble Supreme Court in large number of cases. The legal position in regard to the use of words or language specifically castigation of Judges or witnesses while interfering with judicial orders passed by lower hierarchy in judiciary came up for consideration by the Apex Court. The use of intemperate language or extravagant criticism against a contrary view against a Judge or judgment has always been consistently disapproved by the Hon'ble Supreme Court for over half a century by now. It is said that "judicial restraint is a virtue". It is an attribute of a Judge which he is obliged to keep refurbished from time to time. The Courts have to remind themselves that judicial hierarchy is provided to set right an error which may possibly creep in any finding but such powers are certainly not for belching diatribe at judicial personages. A Jurist has rightly said that "a Judge who has not committed any error is yet to be born". As back as in 1962, the Hon'ble Supreme Court was constrained to observe that the High Court was not justified in passing remarks against the Trial Judge and even regretted that the Court had persuaded itself to use some extravagant language in criticizing the Trial Court. The Apex Court has made similar observations in respect of High Court criticism of witness by the said Court. This approach adopted by the High Court was termed as shocking lack of experience or absence of judicial poise and balance. Noticing the judicial experience, it is said that while adjudicating rival claim, it is not always easy to decide where the truth lies. The Court accordingly has observed that it would be unsafe to overlook the fact that all judicial mind may not react in the same way. It is not unusual that one Judge may find a particular evidence to be respectable but to another it may not appear to be so. The Court has observed that knowledge that another view is possible on the basis of material produced acts as a sobering factor and leads to always use of temperate language in recording judicial conclusions. Adoption of unduly strong intemperate or extravagant criticism against the contrary view has to be always avoided. Any use of disparaging remarks acts contrary to rule of natural justice.

Very recently this issue again arose before the Hon'ble Supreme Court. While relying on half a century old observations, the Court again stressed the need to adopt utmost judicial restraint for using strong language against lower judiciary. The Supreme Court says that if it is so done, the Judge concerned is left with no remedy. Reminding all concerned of what was said by the Court in the case of Judicial Officer serving in the State of M.P. (K.P. Tiwary v. State of M.P., 1994 Supp. (1) SCC 540), the Apex Court has observed that the use of intemperate language and castigating strictures on the Judges of lower judiciary diminishes the image of judiciary in the eyes of public. Let us note the observation which are as under:

"We are, however, impelled to remind the learned Judge of the High Court that however anguished he might have been over the unmerited bail granted to the accused, he should not have allowed himself the latitude of ignoring judicial precaution and propriety even momentarily. The higher Courts every day come across order of the lower Courts which are not justified either in law or in fact and modify them or set them aside. That is one of the functions of the superior Courts. Our legal system acknowledges the fallibility of the Judges and hence provide for Appeals and revision. A Judge tries to discharge his duties to the best of his capacity. While doing so, sometimes, he is likely to err. It is well said that Judge who has not committed an error is yet to be born and that applied to Judges at all level from lowest to the highest. Sometimes the difference in views of the Higher and the lower Courts is purely a result of difference in approach and perception. On such occasions, the lower Court are not necessarily wrong and the Higher Court always right.....The Judges in the Higher Courts have also duty to ensure judicial discipline and respect for judiciary from all concerned. The respect from judiciary is not enhanced when Judges at lower level are criticized intemperately and castigated publicly. No greater damage can be done to the administration of justice and to the confidence of the people in judiciary than when the Judges of High Courts publicly express lack of faith in the subordinate Judges for one reason or the other. It must be remembered that the officer against whom such strictures are publicly passed, stand condemned forever in the eyes of their subordinates and of members of public. No better device can be found to destroy the judiciary from within. The Judges must, therefore, exercise self restraint......"Any Judge itching for making observations has to pause for a moment and read the following Counsel of Lord Cardozo before ventilating his expression:

"Write an opinion, and read it a few year later when it is dissected in the brief of Counsel. You will learn for the first time the limitation of power of speech or if not those speech in general, at all events your own. All sorts of gap and obstacles and impediments will obtrude themselves before your gaze, as pitilessly manifest as the hazard, on a golf course. Sometimes you will know that the fault is truly yours, in which event you can only smite your breast, and pray for deliverance thereafter."

Needless to mention the judicial restraint and discipline are as necessary to the orderly administration of justice as they are to the effectiveness of the Army. The duty of restraint, this humility of function should be constant of our Judges. This quality in decision making is as much necessary for Judges to command respect as to protect the independence of judiciary. Judicial restraint in this regard might better be called judicial respect that is the respect by the judiciary.

That being the legal position, the castigating of Bank officials and passing disparaging remarks need to be avoided. I would therefore expunge all those remarks contained in the impugned order against the Bank officials, as they obviously were passed ignoring well-known law laid down by the Hon'ble Supreme Court and apparently were in violation of the principles of natural justice.

In the result, I will set aside the directions issued by the Tribunal below to refer the case to CBI as well as to CVC and Governor, RBI. I would also set aside any remarks made against the Bank officials. I am not inclined to accept the view that the Tribunals under the RDDBFI Act cannot examine the settlement or compromise. If the Bank or the parties seek the stamp of approval of the compromise or settlement, then the Tribunal would be competent to examine the said settlement or compromise in terms of Section 19(20A) of the RDDBFI Act. If the parties seek to withdraw the case on the ground of settlement reached, then the Tribunal of course cannot have any say. In view of above noted facts, all the Appeals are disposed of in the light of the observations made above.