Holding

Section 31 contemplates transfer of any pending proceeding, including execution applications, to the DRT, which has jurisdiction when the debt (principal plus interest) exceeds Rs 10 lakhs, and Order 21 Rule 10 CPC does not apply.

Summary

Punjab National Bank sued Chajju Ram and others for a principal sum of Rs 6,19,250. The trial court decreed the amount with interest, totalling Rs 12,91,398, and the bank filed an execution application. After the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 came into force and a Debts Recovery Tribunal (DRT) was established, the bank sought transfer of the execution proceedings to the DRT, which the trial court allowed. The Punjab & Haryana High Court reversed, holding that only the civil court could execute the decree and that the DRT lacked jurisdiction because the principal was below the Rs 10 lakhs threshold. The Supreme Court held that Section 31 of the Act includes execution proceedings as "proceedings" and that the DRT has jurisdiction when the total debt (principal plus interest) exceeds Rs 10 lakhs, rendering Order 21 Rule 10 CPC inapplicable. Consequently, the appeal was allowed and the High Court’s decision set aside.

Issues considered

Whether Section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 permits transfer of an execution application to a Debts Recovery Tribunal.
Whether the DRT has jurisdiction to entertain the execution application when the decree amount, including interest, exceeds Rs 10 lakhs despite the principal being lower.
Whether Order 21 Rule 10 of the Code of Civil Procedure, 1908 applies to execution proceedings under the Act.
Effect of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 (Section 31A) on the jurisdiction of the DRT.

Legislation cited

Code of Civil Procedure, 1908s. Order 21 Rule 10
Recovery of Debts Due to Banks and Financial Institutions Act, 1993s. 1(4), s. 17, s. 18, s. 2(9), s. 2(g), s. 31, s. 34

Subjects

Debt recoveryDebts Recovery TribunalExecution proceedingsTransfer of casesJurisdictionRecovery of Debts ActSection 31Section 31AOrder 21 Rule 10 CPCInterest on decree

Judgment

A PUNJAB NATIONAL BANK, DASUYA
v.
CHAJJU RAM AND ORS.

AUGUST 1, 2000

B [B.N. KIRPAL, A.P. MISRA AND RUMA PAL, JJ.]

Debt Laws:

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 :
Sectiofts 1(4), 2(9), 17, 18, 31, 31-A and 34.
c
Execution application-Entertaining of-By Debts Recovery Tribunal-
Jurisdiction of-Civil Court passed a decree in favour of a Bank for a sum
which exceeded the minimum prescribed under S.1 (4 )-But the decree was not
executed till the Debts Recovery Tribunal was established-Held, Tribunal has
D jurisdiction to entertain the execution application and not the civil court-
Further, 0.21 R.10 CPC not applicable to such cases-Recovery of Debts Due
to Banks and Financial Institutions (Amendment) Act, 2000-Code of Civil
Procedure, 1908-0.21 R.10.

Sections 1(4) and 2(g)-Execution application-Debt due-Recovery
E of-In excess of minimum prescribed under S.1(4)-Determination of-Held,
principal amount together with interest thereon have to be taken into account
to determine the minimum prescribed amount-Tribunal gets jurisdiction only
if the debt due exceeds the prescribed amount.
Words and Phrases :
F
"Debt"-Meaning of-In the context of S.2(9) of the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993.

"Proceeding" and "cause of action"-Meaning of-In the context of
S.31 of the Recovery of Debts Due to Banks and Financial Institutions Act,
G
1993.

The appellant-Bank filed a suit in the civil court against the re-
spondents for recovery of Rs. 6,19 ,250. The trial court decreed the suit for
Rs. 12,91,398 including interest. Thereafter, the appellant filed an execu-
H tion application before the civil court.
84
P.N.B., DASUYA v. CHAJJU RAM 85
In the meanwhile, the Recovery of Debts Due to Banks and Financial A
Institutions Act, 1993 had come into force and a Debts Recovery Tribunal
was established. The appellant then moved an application before the civil
court for transfer of the execution proceedings, which was allowed.

The respondents thereupon filed a revision petition in the High Court.
B
The High Court, while reversing the decision of the trial court, held that
the execution proceedings could not be transferred and it was only the civil
court, which had passed the decree, which could execute the same. The
High Court further held that because the original decree, which was passed,
was for the principal sum of Rs. 6,19,250, the Tribunal would get no
jurisdiction. Hence this appeal. c
On behalf of the respondents it was contended that the use of the
words 'cause of action' in Section 31 of the Act indicated that it was only
pending suits which could be transferred.
D
Allowing the appeal, this Court

HELD : 1. Section 31 of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 contemplates not only the transfer of a su~
but also transfer of a proceeding, which may be other than a suit, like an
execution application. Understood in this context, the words 'being a suit E
or proceeding the cause of action whereon it is based ........ ' would mean
that in the case of an execution application if the decree is for more than
Rs. 10 Iakhs, then that is the cause of action or the reason for an applica-
tion for execution being filed before the Debts Recovery Tribunal. To put
matters beyond doubt, the Act has been amended by the Recovery of Debts F
Due to Banks and Financial Institutions (Amendment) Act, 2000 by which
Section 31-A has been inserted. [88-B-C; D]

Allahabad Bank v. Canara Bank & Am:, JT (2000) SC 411, relied on.

2. The High Court has erred in holding that because the original G
decree, which was passed, was for the principal sum of Rs. 6,19,250 the
Tribunal would get no jurisdiction. The decree was for a sum of Rs.
6,19,250 plus interest at the rate of 16-1/2 per cent per annum from the
date of filing of the suit till the recovery of money. As and when the amount
due to the bank under the decree became more than Rs. 10 Iakhs and an H
86 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A application for execution was filed, it could only be entertained by the
Tribunal and not by the Civil Court. It is clear that in view of the provi-
sions of Section 34 of the Act, the provisions of Order 21 Rule lOof the
Code of Civil Procedure, 1908 would have no application. [89-A-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4365 of 2000.
B
From the Judgment and Order dated 1.4.99 of the Punjab & Haryana
High Court in R.P. No. 51 of 1998.

Dhruv Mehta, Ms. Shobha and S.K. Mehta for the Appellant.

C G.S. Jaswal and K.S. Rana for the Respondents.

The Judgment of the Court was delivered by

KIRPAL, J. Special leave granted.

The appellant, on 26th August, 1988 filed a suit for recovery of Rs.
D 6,19,250 in the Civil Court. By judgment dated 16th February, 1994, the trial
court, decreed the suit for the aforesaid amount with interest at the rate of
16/Yz per cent per annum from the date of filing of the suit till the recovery
1 of money. On 21st December, 1994, an execution application was filed by the
appellant before the Court of Civil Judge, Dasuya. According to the appellant,
E an amount, of Rs.12,91,398 being the principal amount, of Rs.6,19,250 plus
interest, thereon as per the decree, bad become due & payable and it was in
respect of this amount that execution was sought.

In the meanwhile on 25th June, 1993, the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the Act")
F had come into force. On 30th August; 1994, a Tribunal was set up in Jaipur
and it was given jurisdiction to decide claims even with regard to those arising
in the State of Punjab. On 18th February, 1997, the appellant moved an
application before the Civil Court, Dasuya for transfer of the execution
proceedings to the Debts Recovery Tribunal, Jaipur. This application was
G allowed and the trial court ordered the transfer of the execution proceedings
to the Debts Recovery Tribunal, Jaipur.

The respondents thereupon filed a revision petition in the High Conrt.
By judgment dated !st April, 1999, the High Court came to the conclusion,
while reversing the decision of the trial court, that the execution proceedings
H could not be transferred and it is only the Civil Court, which had passed the
P.N.B., DASUYA v. CHAJJU RAM [KIRPAL, J.] 87
decree, which could execute the same. Hence, this appeal by special leave. A

The point in issue is no longer res in1eva. After analysing the provisions
of the Act, this Court, in Allahabad Bank v. Canara Bank & Ano1he1: IT (2000)
4 SC 411 held that the word ·proceeding' in Section 31 of the Act would
\
include an execution proceeding pending before a Civil Court before the
commencement of the Act. It was further held that the suits and proceedings B
.... so pending would stand transferred to the Tribunal. This conclusion emanated
from the fact that the definition of the word 'debt' contained in Section 2(g)
of the Act, inter alia, meant any liability which was due to a bank and was
payable under a decree or order of a Civil Court. The decretal amount being
a debt as en visaged by Section 2(g) would clearly attract the provisions of C
Sections 17 and 18 of the Act which give exclusive jurisdiction to the Tribunals
constituted thereunder to decide the questions regarding recovery of debts due
to the banks and financial institutions. Section 31 which deals with transfer of
cases reads as under :

"31. Transfer o.f pending cases. - ( 1) Every suit or other proceed- D
ing pending before any court immediately before the date of estab-
lishment of a Tribunal under this Act, being a suit or proceeding the
cause of action whereon it is based is such that it would have been, if
it had arisen after such establishment, within the jurisdiction of such
Tribunal, shall stand transferred on that date to such Tribunal.
E
Provided that nothing in this sub-section shall apply to any appeal
pending as aforesaid before any court.

(2) Where any suit or other proceeding stands transferred from
any court to a Tribunal under sub-section (1), -
F
(a) the court shall, as soon as may be-after such transfer, forward
the records of such suit or other proceeding to the Tribunal; and

(b) the Tribunal may, on receipt of such records, proceed to deal
with such suit or other proceeding, so far as may be, in the same
manner as in the case of an application made under Section 19 from G
the stage which was reached before such transfer or from any earlier
stage or de novo as the Tribunal may deem fit."

A bare reading of the aforesaid Section shows that execution
application being a proceeding pending in a Civil Court when the Act
H
88 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A came into force was liable to be transferred to the Tribunal because the
amount for which the execution application had been filed as per the
decree which had been passed, was over Rs. 10 lakhs.

Learned counsel for the respondents submitted that the use of the words
'cause of action' in Section 31 indicated that it is only pending suits which
B could be transferred. We are unable to agree with this submission. The words ,.
'cause of action' are preceded by the words 'being a suit or proceeding'.
Section 31 contemplates not only the transfer of a suit but also transfer of a
proceeding which may be other than a suit, like an execution application.
Understood in this context, the words 'being a suit or proceeding the cause of
C action whereon it is based ...... ' would mean that in the case of an execution
application if the decree is for more than Rs. 10 lakhs, then that is the cause
of action or the reason for an application for execution being filed before the
Tribunal.

To put matters beyond doubt, the Act has been amended by the Recovery
D of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 and
Section 3 lA has been inserted which reads as follows :

"3 lA. Power of Tribunal to issue certificate of recovery in case
of decree or order, - (1) Where a decree or order was passed by any
Court before the co•nmencement of the Recovery of Debts Due to
E
Banks and Financial Institutions (Amendment) Act, 2000 and has not
yet been executed, then, the decree-holder may apply to the Tribunal
to pass an order for recovery of the amount.

(2) On receipt of an application under sub-section(!), the Tribunal
F may issue a certificate for recovery to a Recovery Officer.

(3) On receipt of a certificate under sub-section (2), the Recovery
Officer shall proceed to recover the amount as if it was a certificate
in respect of a debt recoverable under this Act."

G The aforesaid Section 31A is clearly applicable in the present case. The
decree was passed by Court before the commencement of the Amendment Act
and the same has not yet been executed. At least after the amendment, it is
only the Tribunal which would have the jurisdiction of entertaining the
application for execution of the decree inasmuch as the amount due for which
H the decree was sought to be executed is over Rs.IO lakhs. We are also unable
P.N.B., DASUYA v. CHAJJU RAM [KIRPAL, J.J 89
to agree with the High Court that because the original decree which was passed A
was for principal sum of Rs.6,19,250 the Tribunal would get no jurisdiction.
It is to be seen that decree was for a sum of Rs.6, 19,250 plus interest at the
rate of 16-112 per cent per annum from the date of filing of the suit till the
recovery of money. As and when the amount due to the bank under the decree
became more than Rs. 10 lakhs and an application for execution was filed, it
B
could only be entertained by the Tribunal and not by the Civil Court. It is clear
that in view of the provisions of Section 34 of the Act, the provisions of Order
21 Rule lO C.P.C. would have no application.

For the aforesaid reasons, the appeal is allowed and the judgment of the
High Court is set aside, with costs throughout. c
v.s.s. Appeal allowed.