Standard Chartered Bank Vs Dharminder Bhohi .

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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8486 OF 2013 (Arising out of S.L.P. (C) No. 12292 of 2012)

Standard Chartered Bank … Appellant

Versus

Dharminder Bhohi and others …Respondents

J U D G M E N T

Dipak Misra, J.

Leave granted.

2. The present appeal depicts a factual score where

this Court is constrained to say that delay in

disposal of the application by the Debts Recovery

Tribunal and the appeal by Debt Recovery

Appellate Tribunal have the effect potentiality of

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creating a corrosion in the economic spine of the

country. It exposits a factual expose’ which is not

only perplexing but usher in a sense of puzzlement

which in the ultimate eventuate compels one to

ask: “How long can the financial institutions would

suffer such procrastination? How far the public

interest be put to hazard because of small, and

sometimes contrived individual interest? To what

extent the defaulters be given protection in the

name of balancing the stringent powers vested on

the banks and the statutory safegurards prescribed

in favour of loanees? Even assuming there are

legal lapses and abuses, how long the statutory

tribunals take to put the controversy to rest being

oblivious of the fact that the concept of flexibility is

insegragably associated with valuation of any

asset? One is bound to give a wake up call and

we so do by saying “Tasmat Uttistha Kaunteya”;

“Awake, Arise, ‘O’ Partha”.

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3. The present appeal, by special leave, is directed

against the judgment and order dated 16.7.2010

passed by the High Court of Delhi in Writ Petition

(C) No. 4694 of 2010.

4. The facts which are essential to be stated are that

the appellant-bank sanctioned home loan of

Rs.12.00 lacs to the respondent No. 1 on 17.5.1999

payable in equal monthly instalments and in lieu of

that the borrower mortgaged the property which

was purchased from the developer, the respondent

No. 2 herein. Since the respondent No. 1 failed to

pay the instalments, the loan account was declared

as “non performing asset” in terms of the NPA

guidelines issued by the Reserve Bank of India. On

28.12.20012 the appellant-bank issued a notice

under Section 13(2) of the Securitisation and

Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (for

short “the SARFAESI Act) to the respondent No. 1

directing him to pay the amount due as on

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27.12.2002. Since the respondent No. 1 did not

make any payment till 27.11.2004, the Tehsildar,

Gurgaon took possession of the mortgaged

property as per the order of the District Magistrate

and handed over the same to the appellant-bank.

On 10.3.2005 the appellant-bank in order to sell

the said property published possession-cum-sale

notice in the leading newspapers stating the terms

and conditions of the public auction. In response

to the said notice the respondent No. 3 submitted

its bid form dated 10.3.2005 for purchasing the

said property by way of auction. The said action

was challenged by filing an application under

Section 17(1) read with Section 19 of the SARFAESI

Act before the Debt Recovery Tribunal (DRT). The

application was presented on 15.3.2005 before the

DRT II, Delhi and the concerned Presiding Officer

declined to pass any order and sought appropriate

directions from the Debt Recovery Appellate

Tribunal (DRAT) for transfer of the said application

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to some other DRT. As no order was passed by the

DRAT, the matter was again placed before the DRT

II on 25.10.2005 and on that day the DRT was

informed that the bank had already taken over

possession of the property in question and put the

same into auction for sale. The borrower preferred

a writ petition before the High Court on 17.5.2005

and the High Court directed the borrower to

deposit certain amount with the bank and further

directed status quo, as regards the property, to be

maintained. Eventually, the High Court vide order

dated 25.7.2005 only directed the DRT to dispose

of the appeal within two months. While finally

disposing of the writ petition the High Court opined

that though no order was passed by the DRT as the

Presiding Officer was awaiting orders from the

appellate forum, the bank ought not have decided

to sell the property to render the appeal of the

borrower to become infructuous and tried to non-

suit him.

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5. Be it noted, the DRAT vide its order dated 3.6.2005

transferred the case to another Debt Recovery

Tribunal. As the property was sold in auction, the

auction purchaser, the third respondent herein,

filed an application for impleadment which was

allowed. Before the DRT her stand was that she

had deposited the entire amount of Rs.25.60 lacs

with the bank and if the borrower was still

interested to retain his property, he had to

purchase it from her. The DRT by its order dated

25.10.2005 adverted to the facts, assertions made

in the application filed by the borrower, reply filed

by the bank and appreciating the evidence on

record came to hold that there was no infirmity in

the Statement of Accounts of the bank and

thereafter taking into consideration the facts and

circumstances granted 15 days time to the

borrower to pay the entire amount to the bank and

the developer, M/s. Unitech, and Rs.1.00 lac as

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compensation to the auction purchaser.

Thereafter, the DRT directed as follows: -

“In case the applicant/appellant fails to deposit this amount within 15 days, the appeal/application be treated as dismissed and respondent No. 1 is free to confirm the sale in favour of the auction purchaser. The amount deposited by the applicant herein during the pendency of present proceedings as per the order of Hon’ble High Court of Delhi be given due adjustment.”

6. The borrower instead of complying with the said

order, preferred appeal No. 267 of 2005 before the

DRAT which, on 14.11.2005, admitted the appeal

and passed the following interim order: -

“Pending passing further orders, the appellant shall deposit a sum of Rs.7.55 lakhs directly to the 1st respondent-bank. However, there shall be stay of implementation of the order in favour of the 2nd and 3rd respondent.”

7. It is apt to state here that the appeal was directed

to be posted on 7.12.2005. The bank filed a reply

before the DRAT highlighting the consistent

default by the borrower. The auction purchaser,

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the third respondent herein, did not file an appeal

before the DRAT but on 25.1.2006 filed an

application under Section 151 of the Code of Civil

Procedure. The DRAT took up the application on

7.9.2007 and observed that as the purchaser had

already been impleaded as a party to the appeal,

she would have the right to address the Court

and, accordingly disposed of the application. As

the factual narration would reveal the appeal was

adjourned from time to time and, eventually on

20.5.2010, the DRAT passed the following order: -

“Counsel for the parties present. I have heard them at length. Counsel for the appellant is ready to pay the entire amount up to date minus the penal interest for which no provision was made in that context. The column of penalty portion was left blank and no amount was mentioned therein therefore I am of the considered view that the appellant has not to pay the penal interest. The residue amount be paid to the bank within 45 days from today as agreed.

The builder has already recovered the amount of Rs.7,11,745/- from the bank. That amount will be paid by the appellant to the bank directly within 45 days as agreed. The appellant will also pay Simple Interest @ 9% from the date

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of payment to the builder till its realization within 45 days.

As agreed by the Auction Purchaser he is ready to accept Rs.5 lacs as costs from the appellant and would not insist for auction sale and would surrender his rights in favour of the appellant.

The said amount be deposited with the Registrar of this court within the period of 45 days failing which the appeal shall stand dismissed on this deposit as well as other deposits stated above. The auction purchaser can withdraw this.

Liberty is also given to the Auction Purchaser to file action against the bank for any omission committed by it. Liberty is given to the appellant as well as to the builder to get the Registry executed in favour of the appellant within two months thereafter i.e. after the elapse of 45 days mentioned above. Stamp duty etc. will be paid by the appellant.

The bank is further directed to furnish the statement of account minus the penal clause within ten days.

The bank is further directed to return the amount deposited by the Auction Purchaser in the sum of Rs.25,60,000/- along with the normal interest @ 9% per annum simple without prejudice to his right against the bank.

The matter stand disposed off. Auction Purchaser and the appellant are directed to sign this order.”

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8. Aggrieved by the aforesaid order the bank

preferred writ petition and raised two contentions,

namely (i) the DRAT had modified a reasonable

and detailed order passed by DRT by a cryptic

order, and (ii) that the DRAT erred in granting

liberty to the third respondent to initiate any

action against the bank for any omission. The

High Court, by the impugned order, in the first

paragraph dealt with the element of the claim of

penal interest and opined that the grievance of

the bank was baseless. Thereafter, adverting to

the grant of 9% interest towards deposit made by

the auction purchaser with the bank, observed

that there was no error in the same as the money

was lying with the bank. Thereafter, the writ court

proceeded to observe as follows: -

“Learned counsel for the auction purchaser points out that, in fact, this interest of 9 per cent is really not full compensation but only part compensation as liberty has been granted to the auction purchaser to pursue the remedy against the bank as according to the auction purchaser this property was auctioned by the petitioner bank

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without even disclosing the factum of the lis pending between the owner and the bank in the DRT. We see no reason to exercise our extraordinary writ jurisdiction under Article 226 of the Constitution of India.”

9. Mr. Sanjay Jain, learned senior counsel appearing

for the appellant, submitted that though two

issues were raised before the High Court, yet he

would confine his relief to the second one,

namely, grant of liberty to the third respondent to

initiate any action against the bank for any

omission. It is urged by him that the High Court

has fallen into error by opining that there was no

justification to exercise jurisdiction under Article

226 of the Constitution of India whereas the

factual matrix warranted deletion of such an

observation by the DRAT as a tribunal has no

jurisdiction to grant such liberty and, especially,

when a settlement between the borrower and

auction purchaser had been arrived at. Learned

counsel would submit that the DRAT had really not

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addressed to any issue and, after recording a

settlement in a most laconic manner, recorded the

observations which really deserved to be quashed

by the High Court. It is further canvassed by Mr.

Jain that the High Court should have taken note of

the fact that the order passed by the DRAT had

already been complied with and it was absolutely

unnecessary to drag the bank to a further

litigation which is contrary to the spirit of

SARFAESI Act and the purpose of Recovery of

Debts due to Banks and Financial Institutions Act,

1993 (for short “the RDB Act”) It is also

contended that the DRAT failed to take note of the

prayer made by the appellant therein and for no

manifest reason the matter was kept pending for

more than four and half years.

10. Mr. Mohit Dham, learned counsel appearing for the

respondent No. 1, contended that he had paid the

dues of the bank within the time fixed by the DRAT

and thereafter he had also transferred the

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property in favour of a third party due to financial

difficulties. In essence, submission of learned

counsel is that putting the clock back is likely to

cause serious jeopardy to him.

11. Mr. Jatin, learned counsel appearing for the

auction purchaser, submitted that on the basis of

the liberty he had already filed a suit in the Delhi

High Court and is entitled to pursue the remedy

because of action was taken in hot haste in by the

bank in putting the property into auction without

indicating that litigation was going on between the

borrower and the bank. It is urged by him had the

said fact was made known the third respondent

would not have participated in the auction. It is

argued by him that his claim for damages cannot

be nullified and hence, the decision of the High

Court is absolutely defensible and does not

require to be interfered with.

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12. Before we dwell upon the jurisdiction of the DRAT

to give such a liberty to the auction purchaser, we

think that it is absolutely imperative, in the case

at hand, to take note of the fact that though the

appeal was filed before the DRAT on 7.11.2005

and admitted on 14.11.2005, yet the same was

disposed of on 20.5.2010 almost after four and

half years. We are at pains to say that the DRAT

has totally forgotten the obligation cast on it

under the RDB Act and also has remained quite

oblivious of the salient features and the seminal

purpose of SARFAESI Act.

13. In this context, we may fruitfully refer to the

Objects and Reasons of the SARFAESI Act. The

relevant part of it reads as follows: -

“The financial sector has been one of the key drivers in India’s efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with international prudential norms and accounting practices there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in

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the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow place of recovery of defaulting loans and mounting levels of non- performing assets of banks and financial institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respects of these areas.”

14. In Mardia Chemicals Ltd. And others v. Union

of India and others1, after referring to the

Statement of Objects and Reasons this Court dealt

with the submission that existing rights of private

parties under a contract cannot be interfered with,

more particularly, putting one party in an

advantageous position over the other. In that

context, the three-Judge Bench observed thus: -

1

(2004) 4 SCC 311

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“As discussed earlier as well, it may be observed that though the transaction may have the character of a private contract yet the question of great importance behind such transaction as a whole having far-reaching effect on the economy of the country cannot be ignored, purely restricting it to individual transactions, more particularly when financing is through banks and financial institutions utilizing the money for the people in general, namely, the depositors in the banks and public money at the disposal of the financial institutions. Therefore, wherever public interest to such a large extent is involved and it may become necessary to achieve an object which serves the public purposes, individual rights may have to give way. Public interest has always been considered to be above the private interest. Interest of an individual may, to some extent, be affected but it cannot have the potential of taking over the public interest having an impact on the socio-economic drive of the country. The two aspects are intertwined which are difficult to be separated.”

In the said case, it was further rules thus: -

“81. In view of the discussion held in the judgment and the findings and directions contained in the preceding paragraphs, we hold that the borrowers would get a reasonably fair deal and opportunity to get the matter adjudicated upon before the Debts Recovery Tribunal. The effect of some of the provisions may be a bit harsh for some of the borrowers but on that ground the impugned provisions of the Act cannot be said to be unconstitutional in view of the fact that the object of the Act is to achieve speedier recovery of the dues declared as NPAs and better availability of capital liquidity and resources to help in growth of

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the economy of the country and welfare of the people in general which would subserve the public interest.”

15. In Authorised Officer, Indian Overseas Bank

and another v. Ashok Saw Mill2, though in a

different context, the Court has expressed thus: -

“33. It is clear that while enacting the SARFAESI Act the legislature was concerned with measures to regulate securitization and reconstruction of financial assets and enforcement of security interest. The Act enables the banks and financial institutions to realize long-term assets, manage problems of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non- performing assets by adopting measures for recovery of reconstruction.”

Thereafter, the Bench proceeded to state thus: -

“36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore

2

(2009) 8 SCC 366

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possession even though possession may have been made over to the transferee.”

16. In United Bank of India v. Satyawati Tondon

and others3, this Court restated the purpose of

bringing the SARFAESI Act and in that context

observed the role of the tribunal as under: -

“23. Sub-section (2) of Section 17 casts a duty on the Tribunal to consider whether the measures taken by the secured creditor for enforcement of security interest are in accordance with the provisions of the Act and the Rules made thereunder. If the Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that the measures taken by the secured creditor are not in consonance with sub-section (4) of Section 13, then it can direct the secured creditor to restore management of the business or possession of the secured assets to the borrower. On the other hand, if the Tribunal finds that the recourse taken by the secured creditor under sub- section (4) of Section 13 is in accordance with the provisions of the Act and the Rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor can take recourse to one or more of the measures specified in Section 13(4) for recovery of its secured debt.

3

(2010) 8 SCC 110

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24. Sub-section (5) of Section 17 prescribes the time-limit of sixty days within which an application made under Section 17 is required to be disposed of. The proviso to this sub-section envisages extension of time, but the outer limit for adjudication of an application is four months. If the Tribunal fails to decide the application within a maximum period of four months, then either party can move the Appellate Tribunal for issue of a direction to the Tribunal to dispose of the application expeditiously.”

17. In Transcore v. Union of India and another4,

the Court, while discussing about the various

provisions of the SARFAESI Act, expressed thus: -

“60.Value of an asset in an inflationary economy is discounted by “time” factor. A right created in favour of the bank/FI involves corresponding obligation on the part of the borrower to see that the value of the security does not depreciate with the passage of time which occurs due to his failure to repay the loan in time.”

We have referred to the aforesaid authorities to show that

speedy disposal of the application and the appeal are

fundament objects of the enactment and “time factor” has

inextricable nexus with the sustenance of economy.

4

(2008) 1 SCC 125

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18. Having discussed about the purpose and

legislative intendment of the SARFAESI Act we

think it appropriate to refer to the legislative

purpose of the RDB Act. We are absolutely

conscious that this was an earlier legislation and

because it could not become that effective, the

SARFAESI Act was enacted. While dealing with the

purpose of the said legislation and how it works,

this Court in Satyawati Tondon (supra) has

observed that an analysis of the provisions of the

DRT Act shows that primary object of that Act was

to facilitate creation of special machinery for

speedy recovery of the dues of banks and

financial institutions. This is the reason why the

DRT Act not only provides for establishment of the

Tribunals and the Appellate Tribunals with the

jurisdiction, powers and authority to make

summary adjudication of applications made by

banks or financial institutions and specifies the

modes of recovery of the amount determined by

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the Tribunal or the Appellate Tribunal but also bars

the jurisdiction of all courts except the Supreme

Court and the High Courts in relation to the

matters specified in Section 17. Thereafter the

Division Bench proceeded to state thus: -

“7. For few years, the new dispensation worked well and the officers appointed to man the Tribunals worked with great zeal for ensuring that cases involving recovery of the dues of banks and financial institutions are decided expeditiously. However, with the passage of time, the proceedings before the Tribunals became synonymous with those of the regular courts and the lawyers representing the borrowers and defaulters used every possible mechanism and dilatory tactics to impede the expeditious adjudication of such cases. The flawed appointment procedure adopted by the Government greatly contributed to the malaise of delay in disposal of the cases instituted before the Tribunals.”

19. In Official Liquidator, Uttar Pradesh and

Uttarakhand v. Allahabad Bank and others5,

though in a different context, this Court observed

that the RDB Act has been enacted in the

backdrop that the banks and financial institutions 5

(2013) 4 SCC 381

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had been experiencing considerable difficulties in

recovering loans and enforcement of securities

charged with them and the procedure for recovery

of debts due to the banks and financial institutions

which were being followed had resulted in a

significant portion of the funds being blocked.

Emphasis has been laid on blocking of funds in

unproductive assets, the value of which

deteriorates with the passage of time. That apart,

the purpose of the RDB Act, as is evincible, is to

provide for establishment of Tribunals and

Appellate Tribunals for expeditious adjudication

and recovery of debts due to banks and financial

institutions and for matters connected therewith

or incidental thereto. Section 17 of the RDB Act

deals with jurisdiction, powers and authority of the

Tribunals. It confers jurisdiction on the Tribunal to

entertain and decide applications from the banks

and financial institutions for recovery of debts due

to such banks and financial institutions.

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20. Thus, the intendment of this legislation is for

speedy recovery of dues to the bank. In this

backdrop, the tribunals are expected to act in

quite promptitude regard being had to the nature

of the lis and see to it that an ingenious litigant

does not take recourse to dilatory tactics. It may

be aptly noted that an action taken by the bank

under SARFAESI Act is subject to assail before the

DRT and a further appeal to the DRAT. Neither the

DRT nor the appellate tribunal can afford to sit

over matters as that would fundamentally

frustrate the purpose of the legislation. In the

case at hand, we really fail to fathom what

impelled the DRAT to keep on adjourning the

matter and finally dispose it by passing an

extremely laconic order. It is really perplexing. A

tribunal dealing with an appeal should not allow

adjournments for the asking. It should be kept

uppermost in mind of the Presiding Officer of the

tribunal that grant of an adjournment should be

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an exception and not to be granted in a routine

and mechanical matter. In the case at hand, such

a delineation by the DRAT only indicates its

apathy and indifference to the role ascribed to it

under the enactment and the trust bestowed on it

by the legislature. A curative step is warranted

and we expect the Chairman and the members of

the DRAT shall endeavour to remain alive to the

obligations as expected of them by such special

legislations, namely, the SARFAESI Act and the

RDB Act.

21. Be it noted, the principal purpose is to see that

recovery of dues which is essential function of any

banking institution does not get halted because of

procrastinated delineation by the tribunal. It is

worthy to note that the legislature by its wisdom

under Section 22 of the RDB Act has provided that

the DRT and the appellate tribunal shall not be

bound by the procedure laid down by the Code of

Civil Procedure, but shall be guided by the

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principles of natural justice and subject to the

rules framed. They have been conferred powers

to regulate their own procedure as given to them.

It is so, for the very purpose of their establishment

is to expedite disposal of the applications and the

appeals preferred before them. They have the

character of specialized institutions with expertise

and conferred jurisdiction to decide the lis in

speedy manner so that the larger public interest,

that is, the economy of the country does not

suffer. But, a pregnant one, in the case at hand

the DRAT did not dispose of the appeal for four

and a half years. We can only say that apart from

the curative step the tribunal as well as the DRAT

has to rise to the occasion, for delay in

adjudication of these type of litigations brings a

long term disaster. A cute slumber shall not do.

22. The grievance of the bank does not end here. On

the contrary this is the beginning of the end.

Accentuating the grievance, it is submitted by Mr.

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Jain, learned senior counsel for the appellant, that

the DRAT travelled beyond the prayer made by

the borrower inasmuch as the borrower in

essentiality had prayed for grant of compensation

and alternatively extension of time for sixty days.

Due to the pendency of the appeal before the

tribunal, submits Mr. Jain, the extension of time

melted into total insignificance. Despite that, as

the order would indicate, a consensus was arrived

at between the auction purchaser and the

borrower and the same is clear from the order, as

the DRAT had directed that the auction purchaser

and the borrower would sign the order. The bank

was not a party to the said adjustment or

consensus. The bank was only directed to refund

the amount along with 9% interest and that has

been done without recording a finding whether

the bank was really at fault or not and, more so,

when the borrower had exhibited a non-challant

attitude not to pay back the money or to deposit

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the amount as directed by the High Court.

Learned senior counsel is also critical of the order

passed by the High Court which has declined to

address the core issue by stating that there was

no need to exercise the extraordinary writ

jurisdiction under Article 226 of the Constitution.

Learned senior counsel would submit that the

High Court has failed in its constitutional duty to

scrutinise whether a liberty of the present nature

could have been granted by the tribunal, clothed

with such special and restricted jurisdiction.

23. Presently to the spectrum of jurisdiction. Section

17 of the SARFAESI Act allows any person,

including a borrower, aggrieved by any of the

measures referred to in sub-section (4) of section

13 taken by secured creditor to submit an

application to the DRT having jurisdiction in the

manner within 45 days from the date of such

measures have been taken. Sub-section (3) of

Section 17 empowers the DRT to question the

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action taken by the secured creditor and the

transaction entered into by virtue of Section 13(4)

of the SARFAESI Act. It has been held in Ashok

Saw Mill (supra) that the legislature by virtue of

incorporation of sub-section (3) in Section 17 has

gone to the extent of vesting the DRAT with

authority to set aside a transaction including sale

and to restore possession to the borrower in

appropriate cases. Section 18 of the SARFAESI Act

makes provision for an appeal to the appellate

authority from any order made by the Debts

Recovery Tribunal. The Debts Recovery Tribunal,

needless to say, has the same jurisdiction as

conferred under Section 17 of the RDB Act. In this

context, Section 19 of the SARFAESI Act is worth

reproducing: -

“19. Right of borrower to receive compensation and costs in certain cases. – If the Debts Recovery Tribunal or the Court of District Judge, on an application made under section 17 or section 17A or the Appellate Tribunal

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or the High Court on an appeal preferred under section 18 or section 18A, holds that the possession of secured assets by the secured creditor is not in accordance with the provisions of this Act and rules made thereunder and directs the secured creditors to return such secured assets to the concerned borrowers, such borrower shall be entitled to the payment of such compensation and costs as may be determined by such Tribunal or Court of District Judge or Appellate Tribunal or the High Court referred to in section 18B.”

24. We have reproduced the aforesaid section to point

out that the legislature has brought in this

provision by way of substitution by Act 30 of 2004

with effect from 11.11.2004 to confer jurisdiction

on the DRT and DRAT to entertain a plea of the

borrower for grant of compensation and costs.

25. At this juncture, we may clarify that we do not

intend to dwell upon the subtle distinction

between the compensation and damages as

canvassed at the Bar as that is not needed in this

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case. The thrust of the matter is whether DRAT

has the jurisdiction to grant any liberty and, more

so, in a case when the borrower and the auction

purchaser have entered into a compromise. As

has been stated earlier, the bank was not a party

to the compromise.

26. Section 19 of the RDB Act, occurring in Chapter IV

of the Act, deals with procedure of tribunals. Sub-

section (25) of Section 19 reads as follows: -

“(25) The Tribunal may make such orders and give such directions 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.”

27. The aforesaid provision makes it quite clear that

the tribunal has been given power under the

statute to pass such other orders and give such

directions to give effect to its orders or to prevent

abuse of its process or to secure the ends of

justice. Thus, the tribunal is required to function

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within the statutory parameters. The tribunal

does not have any inherent powers and it is limpid

that Section 19(25) confers limited powers. In this

context, we may refer to a three-Judge Bench

decision in Upper Doab Sugar Mills Ltd. v.

Shahdara (Delhi) Saharanpur Light Rly. Co.

Ltd.6 wherein it has been held that when the

tribunal has not been conferred with the

jurisdiction to direct for refund, it cannot do so.

The said principle has been followed in Union of

India v. Orient Paper and Industries Limited7.

28. In Union of India v. R. Gandhi, President,

Madras Bar Association8, the Constitution

Bench, after referring to the opinion of

6

AIR 1963 SC 217

7

(2009) 16 SCC 286

8

(2010) 11 SCC 1

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Hidayatullah, J. in Harinagar Sugar Mills Ltd. v.

Shyam Sunder Jhunjhunwala9, the

pronouncements in Jaswant Sugar Mills Ltd. v.

Lakshmi Chand10, Associated Cement

Companies Ltd. v. P.N. Sharma11 and Kihoto

Hollohan v. Zachillhu12, ruled thus: -

“45. Though both courts and tribunals exercise judicial power and discharge similar functions, there are certain well-recognised differences between courts and tribunals. They are:

(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

9

AIR 1961 SC 1669

10

AIR 1963 SC 677

11

AIR 1965 SC 1595

12

1992 Supp (2) SCC 651

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under the said statute, or disputes of a 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 specialised 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 the 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.”

29. From the principles that have been culled out by

the Constitution Bench, it is perceptible that a

tribunal is established under a statute to

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adjudicate upon disputes arising under the said

statute. The tribunal under the RDB Act has been

established with a specific purpose and we have

already focused on the same. Its duty is to see

that the disputes are disposed of quickly regard

being had to the larger public interest. It is also

graphically clear that the role of the tribunal has

not been fettered by technicalities. The tribunal is

required to bestow attention and give priority to

the real controversy before it arising out of the

special legislations. As has been stated earlier, it

is really free from the shackles of procedural law

and only guided by fair play and principles of

natural justice and the regulations formed by it.

The procedure of tribunals has been elaborately

stated in Section 19 of the RDB Act.

30. It is apt to note here that Section 34 of the

SARFAESI Act bars the jurisdiction of the civil

court. It reads as follows: -

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“34.Civil court not to have jurisdiction. – No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).”

Section 34 of the RDB Act provides that the said Act would

have overriding effect. We have referred to the aforesaid

provisions to singularly highlight that the sacrosanct purpose

with which the tribunals have been established is to put the

controversy to rest between the banks and the borrowers

and any third party who has acquired any interest. They

have been conferred jurisdiction by special legislations to

exercise a particular power in a particular manner as

provided under the Act. It cannot assume the role of a court

of different nature which really can grant “liberty to initiate

any action against the bank”. It is only required to decide

the lis that comes within its own domain. If it does not fall

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within its sphere of jurisdiction it is required to say so.

Taking note of a submission made at the behest of the

auction purchaser and then proceed to say that he is at

liberty to file any action against the bank for any omission

committed by it has no sanction of law. The said observation

is wholly bereft of jurisdiction, and indubitably is totally

unwarranted in the obtaining factual matrix. Therefore, we

have no hesitation in deleting the observation, namely,

“liberty is also given to the auction purchaser to file action

against the bank for any omission committed by it”.

31. As we have directed for deletion for the same

reasons we also set aside the judgment of the

High Court whereby it has declined to interfere

with the grant of liberty by the DRAT. This being

the only prayer by Mr. Jain, it is answered in the

affirmative in his favour by stating that such grant

of liberty was not within the domain of the tribunal

regard being had to its limited jurisdiction under

such special legislation and further, especially,

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when the bank was not a party to the

compromise.

32. Before parting with the case, we are obliged to

deal with another aspect. DRAT is required to

adjudicate the lis in an apposite manner. It is

hearing an appeal from an order passed by the

DRT. It cannot afford to pass a laconic order.

Learned counsel for the auction purchaser

endeavoured hard to impress us that the order

being a cryptic one this Court should set aside

the same and remit the matter to the DRAT. The

said prayer has been seriously opposed by Mr.

Jain, learned senior counsel for the appellant-bank

and Mr. Dham, learned counsel for the borrower.

Two aspects weigh in our mind not to take

recourse to such a mode, namely, (i) the auction

purchaser has not challenged the order passed by

the DRAT before the High Court nor has he come

to this Court and further Mr. Jain has restricted his

argument only with regard to grant of liberty; and

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(ii) with the efflux of time the bank has realized its

money and the property has changed hands. It

can be stated with certitude that it is absolutely

unnecessary to direct the DRAT to proceed with

the appeal de novo. Hence, we refrain from

adopting the said course.

33. Resultantly, the appeal is allowed to the extent

indicated hereinabove. In the facts and

circumstances of the case there shall be no order

as to costs.

………….…………….J. [Anil R. Dave]

………….…………….J. [Dipak Misra]

New Delhi; September 13, 2013.

STANDARD CHARTERED BANK Vs DHARMINDER BHOHI .

STANDARD CHARTERED BANK Vs DHARMINDER BHOHI .