w w w . L a w y e r S e r v i c e s . i n



Jenson & Nicholson (India) Ltd V/S Industrial Investment Bank of India and 4 Others.

    Appeal No. DRAT/CAL/A-21 of 2001

    Decided On, 27 February 2002

    At, Debt Recovery Appellate Tribunal At Kolkata

    By, THE HONORABLE JUSTICE:S.P. SRIVASTAVA. (CHAIRMAN)

    For Petitioner: Anindya Kr. Mitra, P. Banerjee and S.K. Datta, Advocates And For Respondents: A.K. Dhandhania and D. Basu Roy, Advocates.



Judgment Text


1. This appeal has been filed by the appellant against the order dated 27.11.2001 passed by the learned Presiding Officer of Debts Recovery Tribunal No. 1. Calcutta, in original application No. 51 of 2001, Industrial Investment Bank of India v. Jenson and Nicholson (India) Ltd. and Ors.

2. The brief facts of the case giving rise to present appeal as is apparent from the paper book and the judgments filed with paper book are the Industrial Investment Bank of India, a company within the meaning of Companies Act, 1956 having its Registered Office at 9, Netaji Subhash Road, Calcutta, hereinafter referred as ICCIB only, filed an application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, hereinafter referred as Act only against Jenson and Nicholson (India) Ltd. a Company within the meaning of Companies Act, 1956 having its registered office at 225, A.J.C. Bose Road, Calcutta, 700 020 hereinafter referred as a company only and others for recovery of a sum of Rs. 14,33,07,066/- only.

3. It appears that the Bank also filed applications for grant of injunction and for appointment of Receiver during the pendency of the application under Section 19.

4. On 18.10.2001 learned Presiding Officer of Debts Recovery Tribunal-1 passed an ex pane order appointing Shri P.K. Pal Chowdhury, an Advocate as Receiver on the assets and properties mentioned in the Schedule A & B of the original application filed by the Bank and directed him to take symbolic possession of the aforesaid properties and also to prepare inventory thereof, it was also directed that the business of the company will be run under the supervision and monitoring of the learned Receiver. The Receiver was also given power to inspect all the books of accounts, Bank's statements and other documents which will be complied by the Bank. It was also observed by the learned Presiding Officer that if necessary for safeguarding the interest of the Bank Receiver can give direction to the Bank which will be complied by them. By this order, the learned Presiding Officer also passed injunction order restraining the defendant Nos. 1 and 2 from transferring, alienating and otherwise dealing with, except the normal course of business, the property and assets mentioned in Schedule A & B attached with the original application of the Bank. The learned Presiding Officer also fixed 10.1.2002 for hearing of the Misc. Application filed by the Bank and the learned Counsel for the Bank was directed to communicate the order to the defendants. The defendants appeared and filed application to recall the order dated 18.10.2001. The matter was heard and after hearing the parties, the learned Presiding Officer by the order dated 27. 11.2001 passed order under challenge.

5. The appellant has challenged this order passed by learned Presiding Officer of the D.R.T. 1 in this appeal and has also prayed for grant of interim stay. It may be mentioned that the Hon'ble High Court, Calcutta, has directed this Appellate Tribunal to decide the appeal on merit. Therefore, the learned Counsel for the parties have agreed that now the matter may be heard and decided and the stay may not be considered.

6. Mr. A. Mitra, learned Counsel for the appellant submitted that the order passed by the learned Presiding Officer is against the law and has been passed without considering principles of natural justice as provided under Section 22 of the Act. He further submitted that the applications which were filed by the Bank, were filed after 8 months of moving the application under Section 19 and they were disposed of by the impugned order without giving any opportunity to the appellants to file counter affidavit to the applications for injunction and for appointment of Receiver. He further submitted that the impugned order has not been passed on the applications filed by the Bank but it has been passed on the application which was filed by the appellant for recall of the ex parte order passed by the Tribunal for granting injunction as well as appointing Receiver. Therefore the order is illegal.

7. He further submitted that though the appellant had mentioned in the application for recall that the opportunity of hearing was not given to them even then the learned Presiding Officer did not consider this aspect of the case that the Bank had not supplied the copies of the application as directed by the Presiding Officer. He further submitted that the copies of the applications were supplied to the Counsel for the appellant on the 1st day when the argument was going on. Therefore, the appellant had no ample opportunity to meet the allegation contained in the application and the affidavit filed by the Bank. His further submission is that the ex parte order which was passed was beyond the scope of the original application under Section 19. Therefore, the Presiding Officer has committed error in law in taking into consideration the facts mentioned in two applications. His further submission is that when the learned Presiding Officer had fixed 10.1.2002 for hearing of the applications filed by the Bank then he should not have heard the matter earlier to the date fixed by him. His further submission is that there was absolutely no ground in the application filed by the Bank for passing the ex parte order on 18.10.2001. The learned Counsel has submitted that in the application for recall it was specifically mentioned that the parties are meeting together and are trying their best to get the matter compromised. Therefore, during the course, of conversation of compromise, it was not just and proper for the learned Presiding Officer to pass the impugned order. In support of his contention, he further submitted that if Bank could wait for 8 months for interim relief and filed application after 8 months then the learned Presiding Officer should not have passed the order impugned as there was inordinate delay in filing the application. His further submission is that there was no averment in the application for appointment of Receiver that the loan granted by the Bank is not secured, but they have simply said that the appellant may sell the properties which was not sufficient cause for passing the impugned order. He further submitted that the Tribunal had no jurisdiction to appoint a Receiver over the business of the company as there was no such prayer in the application itself, therefore, the order passed by the Tribunal is beyond the prayer made by the Bank. In the last, he submitted that while passing the impugned order on both the stages i.e. on the ex parte order and the impugned order the Tribunal has not considered the balance of convenience and the point of just and convenient. Therefore the order is bad in law. The learned Counsel for the appellant in support of his contention placed before this Tribunal the ex pane order which is at Page 151 of the paper book and after reading the ex parte order, he vehemently urged that there is no consideration of balance of convenience or the Tribunal has considered the point of just and convenient. He submitted that Advocate who has been appointed Receiver is not an expert and cannot supervise the work of the Company and he further submitted that the commission has no right to sell the property. He further submitted that from the perusal of the ex parte order, it is apparent on the face of the record that the Tribunal directed the Bank to supply the copies to the appellant which was not done. He pointed out that the application which was filed by the Bank for appointment of Receiver is at Page 89 of the paper book and submitted that in paragraph 11 the Bank has only said that the defendant No. 1 may sell or transfer or alienate the assets and property in order to frustrate the recovery action, the contention is that it was not sufficient for appointment of Receiver as the Bank has not said that it is just and convenient to appoint Receiver. That the learned Counsel also placed before this Tribunal, the application filed by the Bank for grant of injunction the application is at Page 120 of the paper book. His submission is that the papers which were considered by the learned Presiding Officer during the course of argument i.e. the statement of accounts, documents, filed by the Bank and other documents have wrongly been considered without getting the reply against the applications filed by the Bank. The learned Counsel for the appellant has placed reliance on a case reported in AIR 1997 Madras, Page 34, S. Mahalaxmi v. M. Syanala and Ors. on the point that while passing ex parte under Order 40 Rule 1, the Court has to give reasons. He further placed reliance on a case reported in III (2000) SLT 604=AIR 2000 Supreme Court, Page 1573, Union of India v. Era Educational and Ors. Relevant is paragraphs 6 of the Judgment and the learned Counsel has submitted that the interim relief cannot be granted beyond the scope of the Suit. He has further placed reliance on a case reported in 1999, Vol II Supreme Court, Page 377, 5 Ari Jain Swetambar Terapanthi Vid v. Phundan Singh and Ors. where also the question of grant of interim order was considered by the Court then he placed reliance on a case reported in 1925 Calcutta, Page 817, where the Court considered the point of appointment of Receiver of a Company under Order 40 Rule 1 of the C.P.C. submitted that there is no jurisdiction in a Court to appoint a Receiver of a company the except in debentures matters when the business and the assets of the company are charged with payment of claim of debentures holder. He placed reliance on a case reported in 71 C.W.N Page 383. Relevant portion is in paragraphs 15 and 16 of judgment on the point that when the application for injunction and Receiver was filed the material point that the talk of compromise was going on was suppressed from the Tribunal and ex pane order was obtained on 18.10.2001.

8. Mr. Mitra, learned Counsel for the appellant on the basis of the facts and circumstances mentioned in the application for recall of the order and the law cited by him vehemently urged that it is a fit case in which the appeal may be allowed and the order of the appointment of Receiver and injunction may be set aside. He submitted that this is a company which manufactures paints and has got valuable properties and factories and has got its own secret of business. Therefore, if the Receiver submits report as per direction of the learned Presiding Officer the Company will put to loss as its secrets will be opened. He further submitted that the appellant have filed a reply of the Bank's objection wherein it has been specifically stated that the Receiver has done some acts which are prejudicial to the interest of the factory therefore this act on the part of Receiver may be taken into consideration while disposing of the present appeal. He submitted that from the facts and circumstances either mentioned in the original application or in the applications of injunction and Receiver, there is no case for injunction nor learned Presiding Officer has considered that it is just and convenient to appoint a Receiver.

Mr. A.K. Dhandhania, learned Counsel for the Bank in reply submitted that the provisions of C.P.C. which are meant for appointment of Receiver is Order 40 Rule 1 of the C.P.C. and in what case Receiver should be appointed on a property of a Company has been dealt with in detail by Hon'ble High Court of Mumbai in case reported in 1995 Bombay, P 268, which is a Full Bench case. He placed reliance on AIR 1995 Bombay P 268, State Bank of India v. Trade Aid Paper and Allied Products. He placed reliance on paragraphs 5,9,10 and 12 of judgment, it is not necessary to quote all these paragraphs he submitted that the Full Bench has considered in detail situation under which the appointment of Receiver should be made.

9. He further placed reliance on a case reported in VII (1999) SLT 197=(1999) 7 Supreme Court Cases 488, Industrial Credit and Investment Corporation of India Ltd. and Ors. v. Karnataka Ball Bearings Corporations Ltd. and Ors. He further submitted that the Hon'ble Supreme Court has considered the applicability of Section 29 of the State Financial Corporation Act, 1951 in a case reported in 2000 Vol. I Supreme Page 404, Haryana Financial Corporation and Anr. v. Jagadamba Oil Mills and Anr. Relevant paragraph is paragraph 6 of the judgment where it has been laid down that corporation is an instrumentality of the State and deals with the public money. Learned Counsel for the respondent further submitted that from the documents available on the record, it was apparent that at least appellants are not running in loss rather it had earned profit and had shown his income in the statement which is on the record. Therefore, these documents have been considered by the learned Presiding Officer in considering the point of prima facie case of balance of convenience and the point of just and convenient while appointing a Receiver, he has submitted that the Receiver has not been authorised to sell any property but he has been simply directed to supervise and monitor the business and submit report as per direction issued by the Presiding Officer and if something is done by this Receiver beyond his authority given by the Tribunal then that the parties may have right to approach the Tribunal or other forums available under the law. He further submitted that when the applications were filed no doubt ex parte order was passed but subsequently when the appellants appeared by filing application for recall of the order. The matter was fully considered at length and proper order has been passed by the Tribunal. The order does not suffer from any error in law.

10. Mr. D. Basu Roy appearing for IDBI adopted the argument of Mr. A.K. Dhandhania. Mr. P. Banerjee, appearing for the appellant has submitted that the learned Counsel for the Bank has submitted that there is no case for appointment of Receiver on a Company where the word just and convenient has been considered. He placed reliance on a case reported in 1996 Vol-I Banking Cases, Page 79, Metal Forging (P) Ltd. v. Allahabad Bank and Ors.. Mr. P. Banerjee submitted that Bank has no doubt filed application for recovery of amount. But if the Receiver is appointed on the company then the Court or the Tribunal must see that it is just and convenient and in the present case, learned Presiding Officer of a Tribunal has not considered this aspect of the case. After hearing the learned Counsels of the parties at length and going through the relevant papers of the paper books, I am of the view that the sole question which is to be considered in this case by this Tribunal is whether the Tribunal has rightly passed the impugned orders, whether the Tribunal has considered the principles laid down under Orders 39 and 40 of the C.P.C. which deal with injunction or as well as appointment of Receiver. It is settled law that the provisions of C.P.C. are not applicable in the proceedings under the Provision of Act, but the Tribunal can take the help of provisions of C.P.C. while disposing of the applications for injunction or Receiver and the provisions of C.P.C. so far as they are applicable apart from the two provisions of C.P.C. relevant for consideration as stated above while granting injunction on appointing Receiver, The learned Presiding Officer of the lower Tribunal has been given certain powers to pass interim order under Section 19 of the Act. The relevant provisions of Section 19 which deals with the power of the Presiding Officer for passing interim orders are mentioned under Sections 19(12),( 13), (18) and (25).

11. Under Section 19(12) the Tribunal may make an interim order (whether by way of injunction or stay or attachment) against defendant to debar him from transferring, alienating or otherwise dealing with or disposing of any property and assets belonging to him without the prior permission of the Tribunal. Sub-section 13(A) says where-at any stage of the proceedings, the Tribunal is satisfied, by affidavit or otherwise that the defendant with intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him is about to dispose of the property orders may be passed. Sub-section (18) says where it appears the Tribunal to be just and convenient the Tribunal may by order (a) appoint a receiver of any property whether before or after grant of certificate for recovery of debt: (b) remove any person from the possession or custody of the property, (c) commit the same to the possession, custody or management of the Receiver, (d) confer upon the Receiver all such powers, as to bringing and defending suits in the Courts or filing and defending applications before the Tribunal and for realization, management protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits and the execution of documents as the owner himself or such of those powers as the Tribunal thinks fit. Thus, from perusal of this Section 19, Sub-sections (12) and (18), it is apparent that the Tribunal has jurisdiction to pass an interim order by way of injunction and also by way of appointing Receiver during the pendency of the application under Section 19, apart from the aforesaid Sub-clauses of Section 19, Sub-clause (25) also gives power to the Tribunal to make such order and to give such direction as may be necessary or expedient to give effect to its order or to prevent abuse of its process or to secure the ends of justice. From perusal of the order passed by the Tribunal on the first instance, which was ex parte it is apparent that the order was passed only on the basis of the allegations made in the applications (for injunction and for Receiver) but when the defendant came to know of this order and filed application for recall of the order passed ex parte, it is apparent from the application which is on the record that they tried to satisfy the Tribunal that the order which have been passed by the Tribunal ex parte is not a proper order and it was passed without giving opportunity to the appellant and without considering this fact that it was neither just and convenient nor there was any prima facie case and balance of convenience in favour of Bank to get injunction restraining the appellant from dealing with the property of the company. From the argument of the learned Counsel for the appellant that the ex parte order was not complied with by the appellant as no information as per direction issued by the learned Presiding Officer was given to the appellant to meet the allegations contained in the application filed for appointment of Receiver or for grant of injunction rather when they came to know they filed application for recall of the order and this application was considered only when the impugned order was passed and the application which was filed by the Bank was not actually considered and when the Bank did not supply the copies of the application, the appellant could not file the counter affidavit as a matter of fact, they remained unheard and points mentioned in the application. Therefore the ends of justice has not been served by passing order impugned. I am not satisfied from the argument of the learned Counsel of the appellant. It is true in the order it was specifically mentioned that the matter will be taken up on 10.1.2002 and it was specifically mentioned that the Bank will serve a copy on the appellant which was not complied with but when the appellant appeared and filed application for recall, it was considered by the learned Presiding Officer from the perusal of the order passed by the learned Presiding Officer, it is apparent that he has heard the learned Counsel for the appellant Bank and the defendant on order dated 18.10.2001. The relevant paragraph of judgment of the learned Presiding Officer in paragraph 4, where he has mentioned that "I have heard the learned Lawyers of both the parties and examined the entire record of the case submitted before the Tribunal. The factors essential for issuance of the interim relief including prima facie case, balance of convenience, irreparable loss, just and convenient situation for the ends of substantial justice have been deeply considered of the facts and circumstances which have emerged in this case".

12. From the above mentioned facts in the judgment now it cannot be said that only the application filed by the appellant for recall of the order was considered and the application filed by the Bank on which the ex parte order was passed was not considered. Argument of the learned Counsel of the appellant on the points have not been considered cannot be accepted as from the perusal of the interim order, it is apparent on the face of the record that the learned Presiding Officer has passed a detailed order on the basis of the facts and circumstances, material available at the time of hearing. Therefore, even if the Presiding Officer while pertaining with the judgment has not used the words that it is just and convenient it cannot be said that he overlooked the contents of Order 40 Rule 1 of the C.P.C. the point of just and convenient is the satisfaction of the Presiding Officer and is a question of fact. Application under Section 19 is still to be decided by the Presiding Officer. Therefore, whatever the order has been passed by the learned Presiding Officer is within the jurisdiction conferred under Section 19 and its Sub-section of the Act mentioned above. Order does not require any interference by this Tribunal exercising the power under appeal. The appeal has no merit.

The appeal is dismissed without any cost. Appeal dismissed.