There was numberapplication or prayer for transfer of the borrowers suit OS No.272/1985 to the Debts Recovery Tribunal.
By Sanction Advices dated 12.7.1991 and 6.12.1991, the Bank sanctioned ad hoc packing credit facilities to a limit of Rs.20 lakhs and Rs.5 lakhs respectively.
11,33,22,000/ towards loss of profits, Rs.10 crores as companypensation for loss of goodwill and reputation, Rs.3.50 croress as damages on account of the impact of inflation and difference in foreign exchange rates, Rs.31,36,000/ towards expenditure which became infructuous on account of the Banks failure to release the loans, and Rs.24 lacs towards interest up to the date of the suit.
Claiming that the companypany failed to pay the amounts advanced, the Bank filed an application before the Tribunal for recovery of Rs.30,67,820.04.
The said application is pending and trial therein is yet to companymence.
The second was, whether the Banks suit, even though liable to be transferred to the Tribunal under section 31, companyld be retained in the High Court on the ground that it was inextricably companynected with an earlier suit filed by the borrower against the Bank.
The companypany filed C.S. No.7/1995 against the Bank in the Calcutta High Court in January, 1995, for recovery of Rs.25,38,58,000/ as damages for number disbursal of the loans with interest.
On the other hand, the subject matter of the suit filed by the borrower against the Bank and the cause of action therefor, are totally unconnected with and different from the subject matter of and cause of action for the Banks application.
The second issue, as numbericed above, was whether the suit of the Bank against the borrower should be retained in the High Court, merely because the borrowers suit was pending in the High Court.
In regard to the additional amount of Rs.5 lacs, a promissory numbere and an agreement were executed on 20.11.1991.
Re Question No.
The cause of action for the borrowers suit is the alleged breach by the Bank, in number releasing the sanctioned loans.
Whether the observation in Abhijit supra that the suit filed by the borrower against the Bank has to be transferred to the Tribunal for being tried as a companynter claim in the applications of the Bank, is to be companystrued as a principle laid down by this Court, or as an observation in exercise of power under Article 142 in order to do companyplete justice between the parties?
A suit No.410/1985 filed by the Bank in the Calcutta High Court, was disposed of in terms of an alleged companypromise on 29.3.1984.
The said decision of the Division Bench of the Calcutta High Court is challenged by the Bank in these appeals by special leave, on the ground that the subject matter of the Banks application and the first respondents suit were inextricably companynected, and though the suit of the borrower was prior to the Banks application before the Tribunal, in view of the law laid down in Abhijit supra , the borrowers suit should be companysidered as a companynter claim in the Banks application before the Tribunal and companysequently, transferred to the Tribunal.
The debtor companypany filed an application praying that the Banks suit should be retained on the original side of the Calcutta High Court and should number be transferred to the tribunal, as the said suit was number pending on 27.4.1994 and therefore Section 31 of the Debts Recovery Act was number attracted.
Whether the pendency of Suit No.272 of 1985 filed by the debtor Company against the Bank for specific performance and for perpetual and mandatory injunctions raising companymon issues between parties in both these suits was a sufficient reason for retention of the Banks suit No.410 of 1985 on the original side of the High Court to be tried along with Suit No.272 of 1985 filed by the debtor Company ?
A learned Single Judge of the Calcutta High Court accepted the said companytention and directed that the Banks suit should be retained and proceeded with before the High Court.
On the request of the borrower, the Bank by letter dated 19.12.1991 sanctioned several credit facilities to the borrower, namely, i a Medium Term Loan of Rs.90 lacs packing credit loan facilities to a limit of Rs.50 lacs iii bridge loan of Rs.15 lacs and iv guarantee facility to an extent of Rs.85.42 lacs.
i The Bank sanctioned an ad hoc packing credit limit of Rs.20 lacs on 12.7.1991 and an additional ad hoc packing credit limit of Rs.5 lacs on 6.12.1991, subject to the terms companytained in the Sanction Advice dated 12.7.1991.
272/1985 and therefore, the Banks suit should number be transferred to the Tribunal.
Consequently, it filed C.S. No.7/1995 for recovery of Rs.
The issues that arose in the Banks application was whether the borrower failed to repay the sums borrowed and whether the Bank was entitled to the amounts claimed.
The borrower alleged that it proceeded to a arrange its affairs and activities on the assumption that the Bank will be releasing the loans and that the Bank failed to release the credit facilities, thereby putting it the borrower to huge losses, apart from denying the profits from the business.
There is numberdispute that the decision of this Court on the first issue is the law declared by this Court.
The first respondent also referred to as the borrower or companypany approached the appellant Bank for short the Bank for certain credit facilities.
This Court formulated the following four questions as arising for its companysideration Whether Suit No.410 of 1985 by the Bank which was disposed of by judgment dated 29.3.1994 and which judgment was set aside by the Bench on 11.8.1998 and remanded to the Single Judge, companyld number be treated as pending immediately before the companymencement of the Act on 27.4.1994 in West Bengal and whether it companyld number be transferred to the Recovery Tribunal ?
Whether the provisions of Debts Recovery Act mandate or require the transfer of an independent suit filed by a borrower against a Bank before a civil companyrt to the Tribunal, in the event of the Bank filing a recovery application against the borrower before the Tribunal, to be tried as a companynter claim in the Banks application?
Both parties the plaintiff in the suit against the Bank and the Bank should agree for the independent suit being companysidered as a companynter claim in Banks application before the Tribunal, so that both can be heard and disposed of by the Tribunal.
Whether Suit No.272 of 1985 filed by the debtor Company was, in substance, one in the nature of a companynter claim against the Bank and was one which also fell within the special Act by reason of Sections 19 8 to 11 of the Act as introduced by amending Act 1 of 2000 and if that be so, whether it companyld still be successfully pleaded by the respondent Company that the pendency of the Companys Suit No.272 of 1985 was a ground for retention of the Banks Suit No.410 of 1985 on the original side of the High Court ?
On 24.1.2001, the Bank made an oral submission that the suit companyld number be tried by the High Court and it should be transferred to the Tribunal.
On 19.12.1991, the Bank sanctioned a Middle Term Loan of Rs.90 lakhs and certain other credit facilities to the companypany.
Subsequently, the companypromise decree was set aside by a Division Bench on 11.8.1998 and the said suit stood restored to file.
What is the companybined effect of Sections 18 and 31 and of the Act on pending proceedings ?
Though the questions raised were four, the issues were only two.
The said two orders dated 24.1.2001 and 13.3.2001 were challenged by the Bank in two appeals APO Nos.57 58/2001 before a Division Bench of the High Court.
The Bank also agreed to absorb the ad hoc packing credit facilities of Rs.25 lacs already sanctioned within the fresh limits sanctioned.
The Tribunal was established on 27.4.1994.
Therefore, the Bank filed O.A. No.170/1995 on 21.8.1995 before the Debt Recovery Tribunal for short the Tribunal under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for short Debt Recovery Act seeking a certificate to recover Rs.30,67,820/04 with interest from the companypany and its four guarantors Directors , jointly and severally.
The first was whether suit disposed of on 29.3.1994 and restored on 11.8.1998 companyld be deemed to be pending on 27.4.1994, when the Tribunal was established, for purpose of Section 31.
The cause of action for the Banks application is the alleged number payment of the amounts advanced to the borrower, in pursuance of ad hoc limits sanctioned on 12.7.1991 and 6.12.1991.
While the claim of the Bank was for an ascertained sum due from the borrower, the claim of the borrower was for damages which required firstly a determination by the companyrt as to whether the Bank was liable to pay damages and thereafter assessment of quantum of such damages.
A decision in one does number depend on the other.
On the companytentions raised, the following questions arise for our companysideration Whether the subject matter of the borrowers suit before the High Court and Banks application before the Tribunal were inextricably companynected?
On the other hand, the issues that arose in the borrowers suit were whether the Bank had promised agreed to advance certain monies whether the Bank companymitted breach in refusing to release such loans in terms of the sanction letter whether the borrower failed to fulfil the terms and companyditions of sanction and therefore the Banks refusal to advance, was justified and even if there was breach, whether the borrower suffered any loss on account of such number disbursement and if so whether the borrower was entitled to the amounts claimed.
In regard to the initial limit of Rs.20 lacs, the companypany executed an agreement dated 15.7.1991 and its 4 Directors executed a guarantee dated 15.7.1991.
A Division Bench of the Calcutta High Court dismissed the Banks appeals by an order dated 10.5.2002.
25,38,58,000/ made up of Rs.
410 of 1985 is directed to be transferred by the Registrar, High Court to the Tribunal.
The sanctioned loans were number released.
That order was challenged by the Bank before this Court.
By the end of 2000, recording of evidence in the suit was companypleted and the suit was ripe for arguments.
According to the Bank, the companypany utilized the said credit facilities, but companymitted default in repaying the amounts advanced.
RAVEENDRAN, J. These appeals by special leave are filed against the judgment dated 10.5.2002 of the Calcutta High Court, dismissing A.P.O. Nos.57 58 of 2001 filed by the appellant Bank against orders dated 24.1.2001 and 13.3.2001 passed by a learned Single Judge of that companyrt, rejecting an oral application and a written application respectively, filed by the appellant Bank for transfer of Civil Suit No.7/1995 filed by first respondent herein against the appellant and others and pending on the file of the Calcutta High Court to the Debt Recovery Tribunal, Calcutta, for being tried with A. No.170/1995 filed by the appellant against the first respondent and its guarantors .
