State Bank Of Patiala vs Inderjit Poultry Farms

Ranjit Singh, J

Appeal No. 27/2000 was filed by M/s. Inderjit Poultry Farms and others against the order passed in O.A. No. 80/1997. The appellants were aggrieved against that part of the order whereby the Tribunal had allowed the claim of recovery of sum of Rs. 9,71,297/- along with pendente lite and future interest as, according to the appellants the Tribunal below had no jurisdiction to entertain and try this case. This submission, however, was raised for the first time before the Appellate Tribunal and this was the objection raised by the respondent-Bank.

The respondent-Bank had also filed an appeal (No. 21/2000) seeking modification of the order passed by the Tribunal below entitling the Bank to an amount of Rs. 13,37,503/- and future contractual interest which was to rest quarterly from the dare of filing of the suit till realization of the entire amount.

Notices were issued in both the appeals. Appeal No. 27/2000 came to be decided on 10.2.2010. In its order dated 10.2.2010, this Tribunal held that the Tribunal below had no jurisdiction to try this case and the decree passed by it was set aside. This was in terms of the decision of the Hon'ble Supreme Court in the case of Central Bank of India v. State of Kerala & Ors., I (2009) BC 705 (SC)=II (2009) SLT 247. The appeal No. 2112000 filed by the Bank was accordingly disposed of with the direction to return the plaint of the Bank to the Civil Court wherefrom it was transferred to the DRT.

Aggrieved against the orders passed in Appeal No. 21/2000, the Bank filed a Writ Petition before the Hon'ble Punjab and Haryana High Court where efforts were made to settle the issue first, but, later the impugned order passed in Appeal No. 21/2000 has been set aside. The Hon'ble Court has found that the impugned order was devoid of any reasoning and so the same was set aside with the direction to rehear the matter and pass order afresh. The short order passed by the Hon'ble High Court reads as under:

"Mr. S.C. Dhawan, Assistant General Manager, State Bank of Patiala, Regional Office, Panchkula and respondent No.4 are present in Court. It is quite obvious that no settlement is possible.

In view of the aforesaid, we have to adopt the first course of action as set out in our order dated 11.9.2013 i.e. to set aside the impugned order being devoid of any reasoning with a direction to rehear the matter and pass afresh order.

Thus orders (Annexures P-4, P-5 and P-6) are accordingly set aside and the matter is remanded back to the Debts Recovery Appellate Tribunal for taking a decision in accordance with law.

Writ Petition is accordingly allowed leaving the parties to bear their own costs.

Parties to appear before the Debts Recovery Appellate Tribunal on 11.11.2013."

Since in the above noted order reference has been made to the course as mentioned in the order dated 11.9.2013 that order may also need a reference, which is as under:

"We have heard learned Counsel for the parties. It really cannot be disputed before us that the main order impugned in the present petition is completely devoid of any reasoning. After sketching out the contentions the judgment of the Curt and the provisions straightaway the operative portion has been incorporated without any reasoning whatsoever.

At the same time we are conscious of the fact that this matter was dragged on for a long time as a commercial dispute. The Debts Recovery Tribunal found a sum of Rs. 9,71,297/- due along with interest from 11.1.1995 till the date of realization with interest payable @ 12½% per annum with yearly rests on Rs. 4,26,556/- (term loan account) and @ 15% per annum with yearly rests on Rs. 5,44,741/- (cash credit account).

Learned Counsel for respondent Nos. 4 and 5 (appointed as Amicus Curiae on 6.12.2011) states that he is willing to make an endeavour to put a quietus to the dispute if the principal amount as determined under the decree is made payable with some reasonable interest, the amount already deposited adjusted, with the condition that if the respondents now defaults in payment of the amount, as may be agreed upon, the decree would operate as per its original terms.

We thus call upon both i.e. the authorized representative of the petitioner-Bank, competent to take a call on the issue and Shri Inderjit Singh, sole proprietor of respondent No.4, to remain present in Court on the next date of hearing. We may note that respondents Nos. 5 and 6 are the parents of Shri Inderjit Singh, who are the guarantors of the loan amount and have also mortgaged their properties to secure the loan.

List again on 25.9.2013 in the motion matters."

It can be thus seen that the Hon'ble High Court has only perused the order passed in Appeal No. 21/2000 which basically was passed on the basis of detailed order passed in Appeal No. 27/2000. If appears that the order passed in Appeal No. 27/2000 was not placed before the Hon'ble High Court, where mention in detail had been made to facts and law by this Tribunal while taking a view that the DRT had no jurisdiction in the case. While taking this view this Tribunal had relied upon the law laid down by the Apex Court in Central Bank of India's case (supra).

When these appeals came up for hearing today, Mr. Inderjit Singh appeared in person on behalf of the appellants in Appeal No. 27/2000. None, however, has appeared on behalf of State Bank of Patiala either to argue ill Appeal No. 2112000 or to defend in Appeal No. 27/2000. As is noticed above, the Hon'ble High Court has found fault with the impugned order on the ground that it is completely devoid of any reasoning. It is noticed by the High Court that after sketching out the contentions, the judgment of the Courts and provisions, the operative portion was incorporated without any reasoning whatsoever. This view apparently had been found from the order passed in Appeal No. 21/2000. As already noticed, there is no indication either available from the order or from the pleadings that the order passed in Appeal No. 27/2000 was shown or placed before the High Court. It may need a mention here that this Tribunal had noticed in its order passed in Appeal No. 27/2000 the facts in details and had discussed the law and the judgment to arrive at the conclusion that he DRT had no jurisdiction in the case to deal with the suit which was transferred from the Civil Court. For the sake of convenience, the order dated 10.2.2010 passed by this Tribunal in Appeal No. 27/2000 is reproduced below:

"1. Both the parties have locked horns over the question of jurisdiction of Debts Recovery Tribunal. The important question involved in this appeal is whether the loan obtained for poultry farm by an agriculturist can be recovered in the Court of the said Tribunal.

The facts germane to the instant case are these. The Bank filed a suit for recovery of a sum of Rs. 13,37,503/- including interest upto 9.1.1995 against the applicants in the Civil Court, Jagadhri on 11.1.1995. Mr. Sunder Singh and Smt. Iqbal Kaur, appellants 2 and 3, executed deeds of guarantee and also mortgaged their property to secure the repayment of the loan advanced to the appellant No.1 herein. Thereafter, the case was transferred to DRT, Jaipur which was having jurisdiction at that time. The learned Presiding Officer DRT, Jaipur vide his orders dated 10.11.1998 and 8.12.1998 issued a recovery certificate in the sum of Rs. 9,71,297/- along with pendente lite and future interest and costs. The learned DRT placed reliance on a judgment of the Hon'ble Madras High Court, I (1995) BC 185 and held that the Bank cannot charge interest with monthly/quarterly or half yearly rests on loans advanced for agricultural purposes. It was also held that the Bank was entitled to charge interest with yearly rests. It may be mentioned here that the appellants had obtained the said loan for poultry fanning which amounted to loan for agricultural purposes as per Section 2(A) of the Haryana Agricultural Credit Operations and Miscellaneous Provisions (Bank) Act, 1973 (in short' Act of 1973'. The learned DRT also held that the plaintiff Bank was also not entitled to interest at higher rate as well as penal interest because it was provided in Annexure-7 that the plaintiff Bank would be entitled to charge interest at the enhanced rates after giving notice to the borrowers. Annexure-4 further provides that the Bank may charge interest at the higher rates after giving notice to the borrowers. Since the Bank did not give notice to the borrowers, therefore, it was not entitled to charge higher rate of interest. It was further ordered that the plaintiff Bank will calculate interest @ 15% p.a. with yearly rests in Cash Credit Account and @ 12.5% p.a. with yearly rests in the Terms Loan Account.

Before me only one submission was made to the effect that the learned DRT had no jurisdiction to entertain and try this case. The learned Counsel for the appellants laid emphasis on the fact that this argument is being raised for the first time before the Appellate Court and there lies no rub in raising and adjudicating this plea. In order to fortify his argument he has invited my attention towards a few authorities.

In Kiran Singh & Ors. v. Chaman Paswan & Ors., AIR 1954 SC 340, it was held:

"It is fundamental principle that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties."

The view taken in the following authorities neatly dovetails with the above said proposition-Sunder Dass v. Ram Prakash, AIR 1977 SC 1201; Sushil Kumar Mehta v, Gobind Ram Bohra (Deadt through LRs, (1990) 1 SCC 193 and Sarvan Kumar & Anr. v. Madan Lal Aggarwal, JT 2003(1) SC 607.

Counsel for the respondent-Bank did not pick up a conflict with this aspect. In the light of this discussion, I am of the considered view that there lies no legal impediment in going through this question at this belated stage.

The learned Counsel for the respondent-Bank vehemently argued that the learned DRT is authorised to deal with such like matters. In order to bring his point home, he has cited an authority, Balkar Singh v. Oriental Bank a/Commerce, (1993) 104 PLR 389. The facts of the said case are these. The appellant had obtained loan for purchase of a tractor. The Bank instead of filing regular civil suit under Order 34 Rule 1 of CPC, filed an application under Sub-section (1) of Section 8 of the Act of 1973 before the prescribed authority. The prescribed authority allowed the application of the Bank. During the execution, borrower paid only a part of the decretal amount. Thereafter the Bank instead of resorting to the provisions of the said Act for the realization of the amount, filed a civil suit under Order 34, CPC. An objection was raised by the borrower that the civil suit was not competent in view of the order passed by the prescribed authority under Sub-section (1) of Section 8 of the Act. The Trial Court while relying upon the judgment of the Kerala High Court. Canara Bank v. Thankappan, 1990 L.S.J. (Banking) 78 (Ker), declined to entertain the objections of the borrower and held that the civil suit is competent. In the said case, the Hon'ble High Court of Punjab and It Haryana was pleased to hold as under:

"4. After hearing learned Counsel for the parties at length, I am of the considered view that this revision petition deserves to succeed. The petitioner under the terms of the mortgage, was required to pay the amount of loan in certain instalments. He having defaulted, the Bank became entitled to recover the amount. The Bank had two options with it, (i) to file a civil suit under Order 34 of the Code of Civil Procedure, or (ii) to proceed to recover the amount under the Act. The Bank chose to proceed under the Act. Sub-section (1) of Section 8 of the Act provides that the Prescribed Authority on the application of the Bank, should make an order against any agriculturist or his heir or legal representative, directing the payment of any sum due to the Bank on account of financial assistance availed of by the agriculturists by the sale of any land or any interest therein upon which the payment of such money is charged or mortgaged. Proviso to Sub-section (1) of Section 8 of the Act has to be passed only after filing notice to the agriculturist, as the case may be, and after calling upon him to pay the amount due. Once an order under Sub-section (1) of Section 8 of the Act is passed then under Sub-section (2), the same becomes executable in the same manner as the decree of a Civil Court. For the facility of reference, Sub-section (2) of Section 8 of the Act is reproduced as under;

8.(2) Every order passed by the prescribed authority under Sub-section (1) shall be deemed to be a decree of Civil Court and shall be executed in the same manner as a decree of such Court."

A combined reading of Sub-sections (1) and (2) of Section 8 of the Act makes it clear that once an application is filed under Section 8 of the Act, then after calling upon the agriculturist, the Prescribed Authority is required to pass an order for the payment of the money due. This order then takes the shape of Civil Court decree, and can be executed in the same manner as a decree of such Court. There is no provision under the Act, empowering the Prescribed Authority to dismiss the claim of the Bank. Learned Counsel for the respondent has not been able to satisfy me as to how the suit under Order 34 of the Code of Civil Procedure, would be maintainable. His only contention is that neither the Code of Civil Procedure nor the provisions of the Act, bar the filing of such a suit, I fail to understand that when a decree has already been obtained by the Bank and the same is in terms of the decree which a Civil Court could pass, then how a suit could be filed under Order 34 of the Code of Civil Procedure. It is not the case of the respondent that the decree cannot be executed, rather at one stage an execution application was filed for the realization of the decretal amount and some amount was paid by the petitioner. Till date a sum of Rs. 1,13,000/- has been paid to the Bank. The filing of a civil suit would certainly be of no purpose as the decree already stands in favour of the Bank and the amount under the same can be realized by putting to auction the property which was mortgaged with the Bank. The judgment of Kerala High Court relied upon by the Trial Court has no application to the facts of the present case as in that case, the suit was held to be competent because no recovery could be effected under the notification issued under the Revenue Recovery Act. The notification referred to in that Act did not contain provision like Sub-section (2) of Section 8 of the Act, where a decree could be executed like a Civil Court decree. To my mind, it would be an exercise in futility if the civil suit is allowed to proceed as the very purpose for which the Bank filed the present suit, has already been achieved by it by obtaining a decree under the Act. A party cannot be vaxed twice for the same cause.

For the following reason I am unable to locate substance in these arguments. The authority cited by the learned Counsel for the respondent Bank does not apply to the facts of this case on all fours. The fact of Punjab and Haryana High Court's authority are altogether different. The decree was passed by none else by the "Prescribed Authority" itself and the Civil Court was not permitted to re-agitate this question. The need to discuss the scope of Section 20 of the Act of 1973 did not arise. In the instant case we are dealing with a different problem, i.e., whether the Civil Court or the DRT has the power at all to entertain and try this case? The other relevant provisions of the Act of 1973 are reproduced in order to understand the problem unequivocally. The terms 'agriculture', 'agricultural' purpose and' agriculturists' are defined in Section 2(a) and (b) of the Act of 1973 as follows:

"(a) "agricultural" and "agricultural purpose" shall include making land if for cultivation, cultivation of land, improvement of land including development of sources of irrigation, raising protecting and harvesting of crops, horticulture, forestry, planting and farming, cattle breeding, animal husbandry, dairy farming, seed farming, pisciculture, apiculture, sericulture, piggery, poultry farming and such other activities as are generally carried on by agriculturists, dairy farmers, cattle breeders, poultry farmers and other categories of persons engaged in similar activities including marketing of agricultural products their storage and transport and the acquisition of implements and machinery in connection with any such activity;

(b) "agriculturist" means a person who is engaged in agriculture."

Section 8. Recovery of dues of Bank through prescribed authority-(1) An official of the State Government notified by the State Government as the prescribed authority for the purpose of this section may, on the application of a Bank, make an order against any agriculturist or his heir or legal representative, directing the payment of any sum due to the Bank on account of financial assistance availed of by the agriculturists by the sale of any land or any interest therein upon which the payment of such money is charged or mortgaged:

Provided that no order shall be made by the prescribed authority under this section for the sale of any land or any interest therein or any other immovable property upon which the payment of money is charged or mortgaged unless the agriculturist or the heir or legal representative of the agriculturist as the case may be; has been served with a notice by the prescribed authority calling upon him to pay the amounts due.

(2) Every order passed by the prescribed authority under Sub-section (1) shall be deemed to be a decree of a Civil Court and shall be executed in the same manner as a decree of such Court.

Section 8-A. Recovery ill case of personal security-(1) Where any amount of financial assistance is granted by a Bank to an agriculturist and the agriculturist fails to pay the amount together with interest on the due date then, without prejudice to the other provisions of this Act, the local principal officer of the Bank, by whatever name called, may forward to the Collector a certificate in a manner prescribed, specifying the amount due from the agriculturist.

(2) The certificate referred to in Sub-section (1) may be forwarded to the Collector within a period of three years from the date when the amount specified in the certificate fell due.

(3) On the receipt of the certificate, the Collector shall proceed to recover from the agriculturist the amount specified therein as arrears of land revenue."

Section 20. "Exemption for legislations relating to money lending and agriculturist debt relief-Nothing in any law for the time being in force dealing with money-lending or agriculturist' debt relief shall apply to financial assistance availed of by an agriculturist from a Bank."

Now 1 advert to the Constitution of India which lays down some preferential provisions for the State legislation. Article 246 of the Constitution of India runs as follows:

"246. Subject-matter of laws made by Parliament and by the Legislatures of States-(1) Notwithstanding anything in Clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").

(2) Notwithstanding anything in Clause (3) Parliament and subject to Clause (I) the Legislature of any State also have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List").

(3) Subject to Clauses (1) and (2) the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the 'State List').

(4) xxxxx

List II - State List. Item 30 runs as follows:

"30. Money-lending and money lenders; relief of agricultural indebtedness.

Again, in Central Bank of India v. State of Kerala & Ors., 1 (2009) BC 705 (SC)=II (2009) SLT 247, it was held:

"We have considered the respective arguments/submissions. Article 245 of the Constitution is the source of legislative power of Parliament and State Legislatures. It provides that subject to the provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State. The legislative field of the Parliament and State Legislatures have been specified in Article 246. In terms of Clause (1) of Article 246, Parliament has exclusive power to make laws with respect to any of the matters enumerated in List III the Seventh Schedule. Under Clause (2) the Parliament and subject to Clause (1) the Legislature of any State also have power to make laws with respect to any of the matters enumerated in List II in the Seventh Schedule. Subject to Clauses (1) and (2), the Legislature of State has exclusive power to make laws for such matters enumerated in List II in the Seventh Schedule. It is thus evident that Parliament has exclusive power to legislate with respect to any of the matters enumerated in List I and State Legislatures enjoys similar power with respect to any of the matter enumerated in List II. The combined effect of the different clauses of Article 246 is that in respect of any matter falling within List I, Parliament has exclusive power of legislation, whereas the State Legislature has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule and with respect to the matters enumerated in List III, both the Parliament and State Legislature have power to make laws. Article 254 which contains mechanism for resolution of conflict between Central and State legislations enacted with respect to any matter enumerated ill List III of the Seventh Schedule reads as under:

"254. inconsistency between laws made by Parliament and laws made by the Legislatures of States-(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of Clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.

(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect of that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State:

Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to amending, varying or repealing the law so made by the Legislature of the State."

"15. Undisputedly, the DRT Act and Securitisation Act have been enacted by Parliament under Entry 45 in List I in the Seventh Schedule whereas Bombay and Kerala Acts have been enacted by the concerned State Legislatures under Entry 54 in List II in the Seventh Schedule. To put it differently, two sets of legislations have been enacted with reference to entries in different lists in the Seventh Schedule. Therefore, Article 254 cannot be invoked per se for striking down State legislations on the ground that the same are in conflict with the Central legislations. That apart, as will be seen hereafter, there is no ostensible overlapping between two sets of legislations. Therefore, even if the observations contained in Kesoram Industries case (supra) are treated as law declared under Article 141 of the Constitution, the State legislations cannot be struck down on the ground that the same are in conflict with Central legislations."

Under these circumstances, I find that the DRT had no jurisdiction to try this case. I, therefore, set aside the decree passed by the learned DRT, but, as per the Hon'ble Apex Court's authority in Central Bank of India v. State of Kerala & Ors. (supra), it is hereby ordered that this judgment shall not preclude the Bank from realizing their dues by taking recourse to other proceedings as may be permissible under law. There shall be no order as to costs."

The view formed by this Tribunal that the DRT did not have jurisdiction apparently is well-considered and does not call for any further reasoning or consideration. It is also based on the law laid down by the Hon'ble Supreme Court on the basis of various provisions in the statute. In Central Bank of India's case (supra), the Hon'ble Supreme Court has considered the effect of law made by the Parliament and the State Legislature and on that basis this Tribunal had reached the conclusion that the DRT had no jurisdiction to try this case. This Tribunal had further directed that this order shall not preclude the Bank from realizing its dues by taking recourse to other proceedings as may be permissible under law. The order passed by the Tribunal on 10.2.2010, as reproduced above, is a detailed one after considering legal provisions of law on the subject. If this judgment had been placed before the Hon'ble High Court, the observation as made by the Hon'ble High Court in the order passed in Appeal No. 21/2000 might not have been made.

In view of above and for the detailed reason given in the order dated 10.2.2010 in Appeal No. 27/2000, no further orders are called for. In any case no one has appeared today to make submissions on behalf of the Bank. The appeals are accordingly decided in terms of the order dated 10.2.2010 passed in Appeal No. 27/2000.

There shall be no order as to cost.