PETITIONER: <NAME> Vs. RESPONDENT: A. NARAYANAN DATE OF JUDGMENT: 25/08/1969 BENCH: <NAME>, M. (CJ) BENCH: <NAME>, M. (CJ) <NAME>, A.N. CITATION: 1970 AIR 1953 1970 SCR (2) 90 1969 SCC (3) 464 CITATOR INFO : R 1988 SC 897 (7) ACT: Counsel, mistake of-When sufficient ground for condoning delay in filing appeal-Practice and procedure- Limitation Act , 1908, s. 5-Punjab Courts Act, s. 39(1) . HEADNOTE: The appellant's suit against the respondent for rendition of account and other reliefs was valued at Rs. 5,930/- for purposes of court fee and jurisdiction. The suit was decreed in part and the amount decreed was less. than the amount at which he stated his tentative valuation. He filed an appeal to <ORG> stating the valuation for purposes of appeal at Rs. 4,880'/-. The memorandum of appeal showed the valuation in the original suit and the court fee paid was the same amount as in the trial court. <ORG> returned the memorandum of appeal for presentation to the proper court because, under s. 39 '(1) of the Punjab Courts Act appeals above the value of Rs. 5,000/- had to filed before <ORG>. The appeal was filed in <ORG> the same day, but it was out of time. The appellant also filed a revision against the order of <ORG>. His counsel placed reliance on r. 4 in Ch. 3-B of Vol. 1 of the Rules of <ORG> which states that "in a suit for the amount found due after taking accounts it is not the tentative valuation of the plaintiff but the amount found to be due and decreed by the court that determines the forum of appeal." The High .Court held that there was no ground for extending time under s. 5 of the Limitation Act and dismissed the appeal and also the revision. In appeal to this Court, HELD: <ORG> should have extended time under s. 5 of the Limitation Act. [9'4 A--B] (i) The appellant did not have any underhand motive in filing the appeal before <ORG>, the filing had to be attributed entirely to the advice of his counsel. [93 A--B] There is no general proposition that mistake of counsel by itself is always a sufficient ground for condoning delay. It is always a question whether the mistake was bona fide or was merely a device to cover an ulterior purpose. [92 F--G] In the present case the original valuation determined the court of lowest denomination before which the appeal from the suit had to go and that forum was <ORG>. The counsel seems to have been misled by r. 4 in Ch. 3-B of Vol. 1 of the Rules and Orders of <ORG>. This rule is applicable in a case where the amount decreed is larger than the amount for which the original suit was brought. It does not apply where the amount decreed is below the valuation in the original court. There is nothing in the case to show that the error committed by the counsel was tainted by any mala fide motive. [93 C--F; 94 A] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2410 and 2411 of 1966.

Appeal from the judgment ,and order dated March 20, 1963 of <ORG>, Circuit Bench at Delhi in R.F.A. No. 122-D of 1962.

<NAME>, <NAME> and <NAME>, for the appellant (in both the appeals).

<NAME>, <NAME> and <NAME>, for the respondent (in both the appeals).

The Judgment of the Court was delivered by <NAME>, <NAME> This is an appeal against the judgment, dated March 20, 1963, of <ORG> of <ORG> dismissing an appeal and a revision filed by the present appellant. The appeal arises under the following circumstances: A suit was filed by the appellant in <ORG>-Judge, Delhi for three reliefs in respect of a business in which the respondent was stated to be the manager and also for ejectment of the respondent from the premises in which the business was being carried on The same valuation was adopted for purposes of court-fee and jurisdiction. The valuation was divided into three parts: Rs. 4,000/- were taken as the valuation for rendition of accounts or arrears of rent, Rs. 130/- for injunction and Rs. 710/- for ejectment--Total Rs. 4,840/-. During the hearing of the suit and on objection by the defendant, the= valuation for ejectment was raised to Rs. 1,800/-. It appears that the appellant paid the additional court-fee but did not amend the plant. The suit was decreed in part on May 11, 1961. The appellant obtained a decree for Rs. 600/- as arrears of rent for 3/4 portion off the shop and Rs. 463.33 P. as damages for 1/4 portion of the shop ejectment from which portion was also decreed in his favour. But the suit was dismissed as to the remaining arrears of rent or for accounts and ejectments from 3/4 of the premises.

The plaintiff (appellant) thereupon filed an appeal in <ORG>. In stating the valuation for appeal, he correctly described the: three-fold valuation in the suit as Rs. 4,000/-, Rs. 130/- and Rs. 1,800/- (total Rs. 5,930/-). He however valued the appeal as follows:

Rs. 3,400/- as the valuation for arrears of rent or for rendition of accounts, Rs. 130/- for injunction and Rs. 1,350/- for ejectment--(Total Rs. 4,880/-). Now it is obvious that if the valuation was Rs. 4,880/-

appeal would have lain in <ORG>, but if the appeal had to be valued at Rs. 5,930/- it had to go before <ORG>. When the notice of the appeal was served on the defendent (respondent) he flied a cross-objection in the same court but did not take any exception to the valuation of the appeal in <ORG> on its presentation in that Court. On July 25, 1962, the District Judge made an order upholding a preliminary objection taken before him at the hearing that the memorandum of appeal was liable to be returned for presentation to the proper court, and he ordered the memorandum of appeal to be so returned. It appears that it was filed in <ORG> the same day and, therefore, there was no loss of time after the return of the memorandum. The appeal was delayed by nearly one year.

It may, however, be mentioned that the plaintiff (appellant) did not submit to the decision of <ORG> but took the matter in revision before <ORG>. The appeal as represented and the application for revision were disposed of by the common judgment under appeal before us. <ORG> held that there was no ground for extending time under s. 5 of the Limitation Act for which purpose an application had been sub-joined to the appeal filed in <ORG>.

The question in this case is whether <ORG> was fight in dealing with this problem as it did. <ORG> seemed to be of the opinion that an Advocate (Mr. <NAME>) of 34 years' standing could not possibly make the mistake in view of the clear provisions on the subject of appeals existing in s. 39(1) of the Punjab Courts Act. That sub-section at that time clearly showed that appeals of the value of Rs. 5,000/- must be filed before <ORG> but appeals above Rs. 5'000/must be filed before <ORG>. <ORG> also felt that the learned counsel persisted in pursuing his own theory by willing a revision. It is on this account that time was denied to the present appellant in the appeal. The only question is whether the decision of <ORG> can be accepted.

The law is settled that mistake of counsel may in certain circumstances be taken into account in condoning delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. It is always a question whether the mistake was bona fide or was merely device to cover an ulterior purpose such as laches on the part of the litigant or an attempt to save limitation in an underhand way. <ORG> unfortunately never considered the matter from this angle. If it had, it would have seen quite clearly that there was no attempt to avoid the Limitation Act but rather to follow it albeit on a wrong reading of the situation.

It is quite clear that the limitation for the appeal to <ORG> was three times as much as it was for <ORG>. When the appeal was filed, litigant had as much as two months in hand to file the same in <ORG>. Further he did not attempt to save court-fee on the appeal but paid the same courtfee which would have been payable in <ORG>. It does not appear that he had an underhand motive for filing the appeal in <ORG>. Therefore, the filing of the appeal must be attributed entirely to the advice of the counsel. Here again, the counsel did not suppress anything. As has been stated earlier, he put down both the valuations in the forefront of his memorandum of appeal, that is to say, the valuation of the suit in the original court and the valuation of the appeal. No doubt the counsel was one with some experience and ought to have known that an appeal above Rs. 5,000/- must be filed in <ORG> and not <ORG> and therefore, we have to see whether he was genuinely under a mistake or not. Here there is proof that he adhered to this view, because not only he filed the appeal but also took a revision from the order of <ORG> to <ORG>, still labouring under the same mistaken view. Further he, seems to have been misled by a rule, i.e.r. 4 in Ch. 3B of Vol. 1 of the rules and orders of <ORG> which read as follows:

"In a suit for the amount found to be due after taking into accounts, it is not the tentative valuation of the plaintiff, but the amount found to be due and decreed by the court that determines the forum of appeal."

This rule is applicable in a case in which the amount decreed is larger than the amount for which the original suit was brought. Now it is well-known that in a suit for accounts, the plaintiff is not obliged to state the exact amount which would result after the taking of accounts. He may do so if he is able to; but if he is not, he can put a tentative valuation upon his suit for accounts taking care that the valuation is adequate and reasonable in all the circumstances of the case. But the rule also obtains that if the amount which is found is larger than the amount at which he stated his tentative valuation, he must file the appeal against the larger amount and in the forum before which an appeal of that valuation can go. This rule does not apply where the amount decreed is below the valuation in the original court. Here the original valuation holds good both to find the forum and to put a valuation. After the amendment of the valuation on account of ejectment the total claim was Rs. 5,930/- and that determined the court of lowest denomination before which the appeal from the suit had to go. That according to the other rule which we have cited was <ORG>. The second rule, which we have later cited, does not cut across the first rule. This appears to be the error which was committed by Mr. <NAME> and we do not find anything in the case to show that this error was tainted by any mala-fide motive on the part of the counsel for the litigant. In the circumstances we think that <ORG> would have been justified in extending time under s. 5 of the Limitation Act and the reasoning of <ORG> unfortunately started from a wrong angle. We accordingly set aside the order of <ORG> and remit the appeal for hearing and disposal according to law. The appellant will however pay all the costs of the respondent which have been incurred till today irrespective of the result.

We may mention that there are two appeals pending before us. The other appeal is from the revisional order of <ORG> and we think that there is no need to pronounce any decision in that appeal, because it becomes infructuous by reason of our decision in this appeal. As the appeal before. <ORG> is an old one, we hope that <ORG> will be able to give it priority.

y.p. Appeal remitted.


<NAME>, J.

1. <ORG> is in detention and has applied for a writ in the nature of Habeas Corpus under Article 226 , Constitution of India.

2. His house was searched on 14-7-1952 and some documents were recovered. He was arrested and was produced before the Sub-divisional Magistrate, Goalpara on 15th July. He directed his remand to police custody till 26-7-195-2. A case under Section 8B, Assam Maintenance of Public Order (Amendment) Act, 1951, was registered against him.

3. The Sub-divisional Magistrate rejected two petitions of bail put in on behalf of the petitioner on 15th and 16th July. On 21st July the petitioner applied for bail to the Sessions Judge, Lower Assam Districts, under Section 498. The application was struck off as infructuous on 6-9-1952 as the petitioner had been released on 1-9-1952. He was released on the basis of the final report by the police under Section 173, Criminal P. C. A certified copy of this report has been annexed to the petition. In this report the facts leading to the search of the house of the petitioner and the registration of the case against him are stated. By this report it was prayed that the accused person be discharged. The reason stated was that though investigation had not been completed, the Government had decided not to proceed with the case.

4. On his release on 1st September the petitioner had hardly gone some paces from the jail where he was re-arrested. He was informed that he was being arrested under the Preventive Detention Act. The order of detention dated 29-8-1952 was served on him in Nowgong Jail where he was taken after his arrest. This order was passed by the Governor of Assam in the exercise of powers conferred on him by Sub-section (1) of Section 3 read with Sub-clause (ii) of Clause (a) of the said Section and by Section 4, Preventive Detention Act, 1950 (Act 4 of 1950).

5. It is not necessary to reproduce all the grounds of detention. The grounds we are concerned with are grounds Nos. (4) to (6). These are reproduced below:

"(4) That being inspired by Muslim ideology, you, with a view to undermine the security of the State, organised a spy-ring in Goalpara District from the later part of 1951 with Nafatulla of Meamari, District Goalpara, Dr. Mazum Ali of Lalmanirhat and other, in order to collect information about border security etc., in the Goalpara district and pass on such information across the border to Pakistan through a well organised courier system and also by post with a view to help Pakistan authorities against India.

(5) That the aforesaid spy-ring was detected by police on 18-6-1952 on which date a letter dated 16-6-1952 written by you to Dr. <NAME> of Lalmanirhat (East Pakistan) containing secret information regarding the strength and nature of border security measures in the Goalpara District was obtained through secret search, which cannot be disclosed to you in public interest.

(6) That as a result of strict watch kept on your movements another letter written by you to the address of the <NAME> of Eangpur (East Pakistan) was recovered on 12-7-1952 from the possession of your courier <NAME> when he was about to post it at Lakhipur P.O. The said courier made a confession before a Magistrate that you had sent him to post that letter as you used to do on other occasions. The letter inter alia revealed that you had a map of the border prepared and sent it to Pakistan and that you have been acting as a paid spy receiving money from time to time for supplying secret information against the interest of India.

In your letter of 12-7-52 you made a reference to your letter dated 16-6-52 and expressed surprise and anxiety at the non-receipt by the addressee Dr. <NAME> as it was obtained through a secret source and detained by the police."

6. In the counter-affidavit of the Chief Secretary to <ORG> it is admitted that the petitioner was proceeded against under the Assam Maintenance of Public Order (Amendment) Act. But it is further stated that his prosecution had to be dropped as the evidence was of a nature that its disclosure in Court was not in the interest of the State. The petitioner was therefore, allowed to be released and action was taken under the Preventive Detention Act.

7. On 4-11-1952 another petition containing additional grounds challenging the validity of the detention order was put in.

8. Mr. <NAME>, the learned counsel for the petitioner, has first argued that as the detention order was passed on a date (29th August) when the petitioner was admittedly in custody the order was initially invalid. No detention order was necessary then as the petitioner was already in custody. The satisfaction of the detaining authority could not be real and detention order would not therefore be legal. In support of this contention he has relied on, <CITATION> , A. I. R. 1951 Assam 43 ; <CITATION> , A. I. R. 1952 Assam 175, and an unreported decision in <CITATION> , criminal Misc. case no. 24 of 52. He has also referred to <CITATION> , A.I.R. 1944 pat. 354, which was relied on in <CITATION> , A. I. R. 1951 Assam 43.

9. <CITATION> , A.I.R. 1951 Assam 43, the petitioners who challenged the validity of the detention orders were in custody in connection with cases arising out of an alleged attack on the police. They were in custody as under-trial prisoners at the time the orders of detention were passed. It was held in relation to the facts of that case that when a person was already in detention, it was obvious that another order of detention was not necessary, as he would not be in a position to act in a manner prejudicial to the maintenance of public order. The detaining authority in such circumstances could not really feel satisfied that an order of detention was necessary for any of the purposes mentioned in Section 3 of the Act. It was further observed that the orders of detention, though they spoke of the satisfaction of the <ORG>, had no relation to the realities of the situation, for on the date on which the detention orders were passed, there was no necessity of any detention order. It is on the reasoning given in this judgment that the learned counsel for the petitioner relies. The decision, however, was based on the facts of the two cases disposed of by it and is necessarily limited in its application to a similar set of facts. No proposition of law much less a general proposition of law was laid down. The only question under consideration was whether in the circumstances of the cases dealt with, it could be said that any one in the position of the detaining authority could say that he was satisfied that detention orders were necessary.

10. <CITATION> , A.I.R. 1952 Assam 175, the facts were similar. The petitioner was in custody when the detention order was passed. The learned Chief Justice held relying on <CITATION> , A.I.R. 1951 Assam 43, that by reason of the confinement of the petitioner he was not in a position to act in a manner prejudicial to the maintenance of public order and it was futile to say that the detaining authority was satisfied that it was necessary to pass an order of detention. The learned Chief Justice, however, pointed out that if the detaining authority by reason of the past or contemplated activities of the petitioner in the State is satisfied that the detention is necessary, then it must give expression to that satisfaction, not when the petitioner is in jail custody but after his release. If and when he is released from jail custody and the Government is still satisfied that it is necessary to make an order of detention so as to prevent the petitioner from acting in a manner prejudicial to the purposes sanctioned in Section 3 of the Act, it then, if it thinks proper, can pass an order of detention.'

11. In <NAME> v. <ORG>, Criminal Misc. case no. 25 of 1952 (Assam) also the order of detention was passed against the petitioner on 10th February when he was in jail as an under-trial prisoner for an offence under the Official Secrets Act . It was admitted that the petitioner had been arrested on 17-3-1951 in connection with the offence under the Official Secrets Act and that he had been in custody since then till 18th February.The order of detention was held to be lacking in the reality of the satisfaction, in the last two cases the circumstance that the Government had decided for reasons of <ORG> to drop the prosecution and passed the order of detention in anticipation of the release either did not exist or was presumably not brought to the notice of the learned Chief Justice. His observations in <CITATION> , A. I. R. 1952 Assam 175, however, distinctly show that he envisaged a situation in which a detaining authority may feel satisfied that a detention order is necessary in the case of a person who has been or is about to be released from custody.

12. The facts of the present case are very different. The distinguishing feature of this case is the admitted circumstance that the Government decided in public interest to abandon the prosecution. The decision was conveyed to the police. It was in pursuance of this decision that the police reported under Section 173 , Criminal P. C., for the release of the petitioner before completing the investigation. The Government thus were responsible for the release and were fully aware of it. In anticipation of this release the order of detention was passed. It was served admittedly after the release of the petitioner. <CITATION> , A. I. R. 1951 Assam 43, the prosecution and detention in consequence were continuing and an order under Preventive Detention Act seemed unnecessary, but this cannot be said in the present case.

13. We have now to see whether it is wrong in law to pass an order on a date when a person is in detention although he is about to be released. This question was not raised or decided in any of the three cases relied on by the learned counsel for the petitioner. It has been contended on behalf of the State of Assam that it cannot be laid down as a matter of law that an order of detention under the Preventive Detention Act can in no circumstances be passed when a person is already in custody. The learned Advocate-General is supported in his view by the observations of their Lordships of <ORG> in <CITATION> , A. I. R. 1945 F. C. 18. The observations are to the following effect :

"But where the earlier order of detention is held defective merely on formal grounds there is nothing to preclude a proper order of detention being based on the pre-existing grounds themselves, especially in cases in which the sufficiency of the grounds is not examinable by the <ORG>. There is equally no force in the contention that no order of detention can be passed against a person who is already under detention. The decision of <ORG> in <CITATION> , 23 Pat. 252, cannot be understood as laying down any such proposition as a general proposition of law."

In this passage their Lordships of <ORG> gave one concrete case in which an order of detention may become necessary even though the petitioner is already in detention. Other instances of similar cases can be easily conceived ; one is supplied by the present case.

14. The Preventive Detention Act requires the detaining authority to be satisfied that an order of detention is necessary for the purposes specified in the Act. Whenever therefore a detention order is passed for the detention of a person who is already in detention, the question that would arise would be whether the detaining authority could feel satisfied that the order was necessary for the purposes of the Act. This essentially is a question the determination of which must depend on the circumstances of each case.

15. <CITATION> , A.I.R. 1951 Assam 43, the decision in the Patna case was relied on but not on this point. Reference was made to it in support of the observation that where a man is arrested and brought before the <ORG> on some definite and specific charge, it seems very undesirable and quite wrong for an order of detention to be made against him before he has been tried on the charge and his guilt or innocence is finally determined. This question does not arise in the case in view of the fact that before passing the order of detention the State of Assam had decided to drop the prosecution.

16. There is nothing in the language of the provisions contained in the Preventive Detention Act which would debar a detaining authority from passing an order against the person who is in detention. The necessity of the order may be questioned and it may be argued in a given case that the order is not made bona fide. An order may be challenged as having been made mala fide without imputing any improper motive to the detaining authority. An order can be said to have been made mala fide when there is malice in law though there may be no malice in fact and the malice in law may be deemed to exist when an order is made contrary to the objects and purposes of the Preventive Detention Act or when the detaining authority permits itself to be influenced by considerations which are outside the scope of the Act. In all cases where this question arises, it will have to be decided with reference to the circumstances of each case. As held in <CITATION> , A.I.R. 1952 S.C. 106 the question of bad faith if raised would certainly have to be decided with reference to the circumstances of each case. But it cannot be said that the order is invalid in law merely because it was made not on a day that the petitioner was in detention. The language of the relevant provisions in the Preventive Detention Act does not suggest this contention. It also derives no support from authority.

This takes us on to the question of mala fides or bad faith which has been pressed with considerable force. The circumstances which bear" on this question are admitted. The Government decided to drop the prosecution and then passed the detention order which was served after release. The learned counsel for the petitioner has urged that the prosecution was dropped because there was no evidence to support the charge and the order of detention in these circumstances must be regarded as having been made mala fide. He urges that there was really no material which could satisfy the detaining authority as to the necessity for making a detention order. For if such material existed, it should have been availed of to support the charge made in the case that was registered against the petitioner.

The affidavit which has been put in on behalf of the <ORG> of Assam embodies the statement that the reason which induced the <ORG> to drop the prosecution was that it would be against the interest of the <ORG> to disclose evidence which would have had to be produced to substantiate the charge. It was thought that it would not be in the public interest to disclose available evidence and considering the nature of the charge, it is not easy to doubt that the <ORG> was faced with a real difficulty. The petitioner himself has produced a copy of the report made under Section 173 , Criminal P. C. The report states that the <ORG> decided to abandon the prosecution even though the investigation in the matter had not been concluded. To urge in these circumstances that the <ORG> had no evidence to support the charge is not facing facts. The investigation had not been concluded but available evidence was such that its disclosure in open Court was considered not expedient. I find no justification in the circumstances of this case to hold that the <ORG> even though convinced that there was no proof that he was indulging in any activity prejudicial to the security of <ORG> decided to detain him. The affidavit of the Chief Secretary emphasizes as stated in the grounds of detention that the <ORG> had information that the petitioner was indulging in activity prejudicial to the security of the <ORG>.

17. It was held in <CITATION> , A.I.R. 1951 ALL. 838 that the mere fact that the arrest was originally ordered for a specific offence but it was not followed by prosecution for that offence cannot affect the power of that detaining authority to take preventive action after the interim or final release of the person detained. It cannot be held that where an arrest unaccompanied by prosecution is followed by an order of detention, the Court must hold that the detention was mala fide. The burden of proving that the order was mala fide lies upon the detenu. I entirely agree with this proposition.

18. In <NAME> v. District Magistrate, South Kanara, A. I. r. 1949 Mad. 712 it was held that simply because a man has been arrested under Section 151 , Criminal P. C. it cannot be said that the powers under the Madras Act 1 of 1947 (say Madras Maintenance of Public Order Act) cannot be exercised and the persons who are arrested cannot be detained thereunder. In such a case in the absence of any other circumstances the detention under the Act is not by itself proof of mala fides.

19. In <NAME> v. Commr. of Police, Calcutta, A. I. R. 1952 cal. 26 even the failure of prosecution under the ordinary criminal law was held by itself not sufficient to make the subsequent application of the Preventive Detention Act mala fide. All that we have in this case is that a case was registered against the petitioner but it had to be dropped for reasons of State. This circumstance by itself does not at all prove bad faith or mala fides on the part of the <ORG>. The order was served on the petitioner after his release. His detention under the order therefore cannot be regarded as having been made mala fide.

20. It has also been contended on behalf of the petitioner that the statement of facts contained in the grounds of detention is false, that the local police had a grudge against the petitioner as he had made serious complaints against them to superior authorities and that it was out of sheer vindictiveness and malice that they sent false reports against him which misled the detaining authority. It is denied that the petitioner ever wrote any letters to which reference has been made in the grounds of detention.

21. It is settled law that the Court cannot go into the question of truth or falsity of the statement of facts contained in the grounds of detention. If the facts stated in the grounds of detention are disputed, the remedy that the law allows to the petitioner is by a representation to the Government. As regards actual malice on the part of the local police, there are allegations on one side and denial on the other. As observed by the learned Chief Justice of <ORG> in <CITATION> , A. I. R. 1951 S.C. 270 on page 274 the burden of proving allegations about mala fide conduct is on the petitioner. In this case he cannot be deemed to have discharged it.

22. The learned counsel has also referred to the alleged hurried nature of the proceeding before <ORG> and utilised it as a circumstance pointing to the mala fides of the detaining authority. He pointed out that the report of <ORG> was made on 16th September. The <ORG> had one month's time within which to place the case before <ORG>. The case must have been forwarded some time before 16th September. The advisory <ORG> also had a period of another ten weeks for making a report. The report was made on 16th September. The <ORG> and the <ORG> acted in haste and thus the petitioner was prevented from having his representation considered by <ORG>. It is not contended that there has been any violation of any provision of law contained in the Detention Act in this regard ; nor is it contended that the detention has become illegal or invalid by reason of the procedure adopted. The learned advocate relies on what he calls undue haste on the part of the <ORG> in obtaining the decision of <ORG> for the purposes of confirming the order of detention in proof of the alleged bad faith on the part of the <ORG>.

It is worthy of note that in the petition under Article 226 , Constitution of India and also in the petition put in on 4th November containing additional grounds the petitioner has not made any grievance of the fact that he intended to represent to the Government and that he has been deprived of this right by any action on the part of the Government. The grounds of detention were sup plied to him along with the order. It was up to trim to represent without delay if he wanted to.

The Government can place the case before <ORG> at any time within the period allowed to them under Section 9 , Preventive Detention Act. If petitioner desired consideration of his representation by the <ORG>, he should have represented without delay. The petitioner still has the right to make a representation to the Government.

I do not find anything in the procedure adopted by the <ORG> or <ORG> to justify a finding that detention is invalid owing to mala fides on the part of the detaining authority, particularly in view of the fact that it is not contended that any provisions contained in the Preventive Detention Act has been violated either by the <ORG> or by <ORG>.

All that the Government had to do was to afford the petitioner the earliest opportunity of making a representation. This was done as the grounds of detention were supplied to the petitioner when the order of detention was served on him. Allegations of mala fide are extremely easy to make. They are not as easy to substantiate. In my opinion no case has been made out on this point.

The petition is dismissed for reasons given above.


<NAME>, J.

1. Relying on the Full Bench case in <NAME> v. <NAME> (1918) I.L.R. 41 Mad. 985: 35 M.L.J. 335 Mr. <NAME> asks us to hold that the District Munsif's order dismissing 1st defendant's claim petition on 15-6-14 became final in consequence of 1st defendant's failure to set it aside by instituting a suit within one year. This point was not raised until the present suit reached the stage of the first appeal and might be disallowed on that ground.

2. But it may be answered directly as <ORG> allowed it to be argued and as we have heard full arguments in this Court.

3. In <NAME> v. <NAME> (1918) I.L.R. 41 Mad. 985: 35 M.L.J. 335 <NAME>, observed. " The language of Order 21, Rule 63 leaves little room for doubt that all orders which negative the right set up by the claimant or the decree holder are within the rule."

4. Was then the District Mun%if's order dated 15<ORG>6<ORG>14 one that negatived the claimant's right. It runs thus: "Sale stopped. The claim cannot be investigated by this <ORG>. Petition dismissed." The order was thus based on two circumstances, first, that the execution was not proceeded with in the District Munsif's <ORG>, second, that under Section 63 Civil Procedure Code, the only court having jurisdiction to adjudicate on the claim was the <ORG><ORG><ORG>. The petition was dismissed, because the District Munsif has no authority to dispose of it and because it became unnecessary to investigate the claim when the sale was stopped. In my opinion this order was not passed under Order 21 Civil Procedure Code which relates to the investigation of claims, but was passed in the course of execution. It did not negative the right set up by the claimant, but it was an order declining to adjudicate either for or against him; and upon the substance of his claim it cannot be treated as an order more against him than against the decree<ORG>holder. Under such circumstances 1st defendant was not bound to set it aside (see <CITATION> (1914) 26 M.L.J. 499. and Gollamapalli <ORG>bayya v. Sankara Venkataratnam (1917) M.W.N. p. 851. So far as the order was in substance an order under Section 63 Civil Procedure Code it is worthy of note that this section falls under the head of attachment in Part II of the new Code, the corresponding Section 285 of the Code of 1882 being groifped alsongside with Sections 278 to 283 which related to the investigation of claims and objections and corresponded to Rules. 58 to 63 of Order 21. This fortifies me in the view I have taken that it was not an order disposing of the claim set up by 1st defendant. This is the only point argued and as it fails, the lower appellate court' judgment must be upheld and <ORG> dismissed with costs.

Ramesam, J.

5. The plaintiff has not sought to base his claim nvthe <ORG> on the construction of the order (Exhibit-VII) dated 15-6-14 for which he now contends. It is clear he was content to accept it as an order not negativing the claimant's right. Nor was the point raised in the issues or at the trial before the District <NAME>. He raised it for the first time before the Sub Judge as respondent. Mr. <NAME> contends that he ought to be allowed to raise it as it is a pure question of law. It is true that, when a new question is a pure question of law, it may be allowed to be raised in the discretion of the court hearing the Second Appeal. I do not think that, having regard to the somewhat unhappy language of the District <NAME> and the conduct of the parties that we ought to exercise our discretion in favour of the appellant. Mr. <NAME> contends that, after the <NAME>'s expression of his opinion that the Sub Judge was the proper person to decide the claim petition, the decree holder ought to have applied to the Subordinate Judge to be made a party to the enquiry in that court and in the absence of such an application, the order of the Sub Judge (Exhibit II dated 1-9-14) binds him. That it is open to him to so apply seems to follow from <CITATION> (1911) I.L.R. 35 Mad. 588. At this stage I am bound to observe that Section 63 of the Code is defective. It does not point out the procedure to be followed by the decree-holders in the inferior court and how the higher court is to pass a decision so as to bind them.

6. Whether the order of <ORG> is to.be upheld as the final order on the claim petition or not, I agree with my learned brother in holding that Ex. VII cannot be taken to be an order negativing the claimant's right. But for this view, it would be necessary to consider the further question whether the order Ex. VII (Supposing it is an order negativing the right put forward by the claimant) has not to be set aside within a year, the attachment against which the claim was made, having terminated (See Ex. I) and the decree-holder having made a fresh attachment followed by a fresh claim-petition and a fresh order (Ex. A) allowing the claim. On this point, I am inclined to agree with the decisions in <CITATION> (1914) 26 M.L.J. 499 followed by Gollam-palli Subbayya v. Sankara Venkataratnam (1917) M.W.N. 851 and with the decision in, <CITATION> (1882) I.L.R. 8 Cal. 279 and <CITATION> (1818) I.L.R. 13 Bom. 72 and Kamini Kant Roy v. Ram Nath Chucker butty I.L.R. 21 C. 265 cited therein, I do not think that the decision in <NAME> v. <NAME> (1915) 27 I.C. 800 supports the conclusion drawn in <NAME> v. <NAME> (1920) 40 M.L.J. 7 from the decision in which I respectfully dissent. The conclusiveness of the order on claim petitions provided for by Order 21, Rule 63 is really a subordinate branch of the rule of res judicqta and should be limited not only to the parties to the order but also to the claims put forward and to other rights worked out in pursuit of those claims. To hold otherwise is really to say that a decree or order involving a decision is reajudication between the parties even as to the titles not litigated in the proceedings a conclusion opposed to the fundamental principles of the doctrine of res judicata and to create a species of an order in rem. If notice was issued to defendants 1 and 2 in the claim proceedings in <NAME> v. <NAME> (1920) 40 M.L.J. 7. I would hold that the case was correctly dicided.

7. In the result, I agree with the order of my learned brother.


CASE NO.: Appeal (civil) 4679 of 1995 PETITIONER: UNION OF INDIA & ANR. Vs. RESPONDENT: <ORG> & ORS. DATE OF JUDGMENT: 14/03/2002 BENCH: <NAME>, <NAME> & <NAME> JUDGMENT:

W I T H T.P. (C) Nos. 400, 406-409, 302-304, 321, 329, 335, 355, 356, 357, 358, 813, 778 of 1996, 659-667 of 1995, C.A. Nos. 3951, 15334 of 1996, 5394 of 1997, 6227-6243, 6245-6246 of 2000, W.P. (C) No. 37 of 2001, T.C. (C) No. 4 of 1998 and C.A. No. 2098 of 2002 in SLP (C) No. 27932 of 1995, C.A. Nos. 2094-2097, 2099-2145 of 2002 in SLP (C) Nos. 9640-9643, 18268-18314 of 1999 J U D G M E N T KIRPAL, J.

Leave granted. The transfer petitions are allowed.

The challenge to the constitutional validity of The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act') on the ground that the Act is unreasonable and is violative of Article 14 of the Constitution, and that the same is beyond the legislative competence of the <ORG>, arises for consideration in these cases.

The banks and financial institutions had been experiencing considerable difficulties in recovering loans and enforcement of securities charged with them. The procedure for recovery of debts due to the banks and financial institutions which was being followed had resulted in a significant portion of the funds being blocked. In order to remedy the locking up of huge funds, the <ORG> enacted the said Act, which was preceded by an ordinance. The Act, inter alia, provides for the establishment of Tribunals and Appellate Tribunals. The Tribunals have been given the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions, while the Appellate Tribunals have the jurisdiction, powers and authority to entertain appeals. The procedure which is required to be followed is provided and the Act also has provisions relating to the modes of recovery of debts for which Recovery Officers are to be appointed.

The jurisdiction of the <ORG> is in respect of debts which are in excess of Rs. 10 lacs. In other words, for disputes between the banks and the other parties it was <ORG> which have the jurisdiction to entertain the same if the claim was less than Rs. 10 lacs. According to Section 18 of the Act, no <ORG> or other authority is entitled to exercise any jurisdiction, powers or authority in relation to matters in respect of which such jurisdiction, powers and authority are vested with the <ORG>. Section 18, however, provides that the bar of other <ORG>s and authorities to entertain such disputes shall not in any way oust the jurisdiction of this <ORG> or of the High <ORG>s in exercise of their jurisdiction under Articles 226 and 227 of the Constitution.

The validity of the said Act was successfully challenged before the <ORG>. By it's decision reported in <ORG> <CITATION> , AIR 1995 Delhi 323, against which appeal No. 4679 of 1995 is filed, <ORG> held that though <ORG> could be constituted by <ORG> even though it was not within the purview of Articles 323A and 323B of the Constitution, and that the expression "administration of justice" as appearing in Entry 11A of List III of the Seventh Schedule to the Constitution would include <ORG>s as well administering justice; the impugned Act was unconstitutional as it erodes the independence of the judiciary and was irrational, discriminatory, unreasonable, arbitrary and was hit by Article 14 of the Constitution. In this judgment, it also quashed the appointment of a Presiding Officer of the <ORG> but that question no longer arises for consideration in these appeals.

In arriving at the aforesaid conclusion <ORG>, inter alia, held as follows:

(a) The act, in particular, Section 17 did not have a provision for a counter-claim as provided under the provisions of the Code of Civil Procedure and, therefore, the Act was irrational and arbitrary.

(b) The Act lowered the authority of <ORG> vis-à-vis the <ORG> in view of the fact that suits for recovery of money exceeding Rs. 10 lacs are to be filed before the <ORG> while the suits for an amount between Rs. 5 lacs and Rs. 10 lacs was to be filed before <ORG> and for less than Rs. 5 lacs before the subordinate Courts. This lowered the status of <ORG> inasmuch as the <ORG>, which was presided by an officer who did not have the status of a <ORG> Judge would be deciding the suits for recovery of money exceeding Rs. 10 lacs.

(c) The Act eroded the independence of the judiciary since the jurisdiction of <ORG> had been truncated and vested in the <ORG>. It also came to the conclusion that the independence of the judiciary was eroded as <ORG> had no role to play in the appointment of the presiding officers.

During the pendency of this appeal, <ORG> was also required to consider the validity of this Act. By judgment dated 16.08.1999 to 20.08.1999, which is the subject-matter of Civil Appeal Nos. 6227-6246 of 2000, <ORG> came to the conclusion that though the <ORG> has legislative competence to enact the law, but as it had abrogated/negated the power of judicial review, which had violated the basic feature of the Constitution, the Act was void. It further held that some of the provisions of the impugned Act were liable to be struck off. The sections which were struck down were Section 17 which gives jurisdiction, powers and authority to the <ORG> and was held to be violative of Article 14 as being arbitrary and unreasonable. It also struck down the appointment of Recovery Officer and held the modes for recovery of debts under Sections 25 and 28(1) and (2) as being unarbitrary, unreasonable and without any guidelines, control etc. It further quashed Section 31 which deals with the transfer of suits/proceedings and Section 34(1) which gives overriding effect to the Act.

In the course of hearing, our attention was invited to a decision of <ORG> in the case of <CITATION> , AIR 2001 Karnataka 176 where a Single Judge of <ORG>, while taking a different view from the one expressed by <ORG>, came to the conclusion that the <ORG> did not have the legislative competence to enact the Act inasmuch as Entry 11A of List III could not include "<ORG>" and furthermore that the <ORG> could not exercise power to enact this law under the provisions of Article 323A or 323B of the Constitution. In other words, a <ORG> could not be constituted for any matter not specified in Articles 323A and 323B.

We will first deal with the question as to whether the <ORG> has the competence to enact a law for establishing such Banking Tribunals. In order to examine the question of the competence of the <ORG> to enact such a law, it is pertinent to bear in mind the observations of this <ORG> in <CITATION> ,  1 SCR 829 at 836 which are as follows:

".. As pointed out by <NAME> in The United Provinces v. Atiqa Begum [1940] F.C.R. 110 at page 134 none of the items in the Lists is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. It is, therefore, clear-and it is acknowledged by Chief Justice <NAME>-that in construing an entry in a List conferring legislative powers the widest possible construction according to their ordinary meaning must be put upon the words used therein. The cardinal rule of interpretation, however, is that words should be read in their ordinary, natural and grammatical meaning subject to this rider that in construing words in a constitutional enactment conferring legislative power the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude."

(Emphasis added) Again in <CITATION>  2 SCR 33 at page 51 it was observed as follows:

"It seems to us that the function of Art. 246(1 ), read with entries 1-96 List I, is to give positive power to <ORG> to legislate in respect of these entries. Object is not to debar <ORG> from legislating on a matter, even if other provisions of the Constitution enable it to do so."

In <ORG>'s decision, it was held that what one has to ask is whether the matter sought to be legislated is included in List II or in List III and no question has to be asked about List I. If the answer is in the negative, then it follows that the <ORG> has power to make laws with respect to that matter or text.

It has thus been clearly enunciated that the power of the <ORG> to enact a law, which is not covered by an Entry List II and List III, is absolute. While Articles 323A and 323B specifically enable the legislatures to enact laws for the establishment of tribunals, in relation to the matters specified therein, the power of the <ORG> to enact a law constituting a Tribunal, like <ORG>, which is not covered by any of the matters specified in Article 323A or 323B, is not taken away. With regard to any of the entries specified in List I, the exclusive jurisdiction to make laws with respect to any of the matters enumerated in List I is with the <ORG>. The power conferred by Article 246(1) can be exercised notwithstanding the existence of Article 323A or 323B of the Constitution.

Articles 323A and 323B are enabling provisions which specifically enable the setting up of tribunals contemplated by the said Articles. These Articles, however, cannot be interpreted to mean that it prohibits the legislature from establishing tribunals not covered by these Articles, as long as there is legislative competence under an appropriate entry in the Seventh Schedule. Articles 323A and 323B do not take away that legislative competence. The contrary view expressed by <ORG> in <NAME> case does not lay down the correct law and we expressly disapprove of the same.

The Delhi High Court and <ORG> have held that the source of the power of the <ORG> to enact a law relating to the establishment of <ORG> is entry 11A of List III which pertains to "administration of justice; Constitution and organisation of all Courts, except <ORG> and <ORG>" In our opinion, entry 45 of List I would cover the types of legislation now enacted. Entry 45 of List I relates to "Banking". Banking operations would, inter alia, include accepting of loans and deposits, granting of loans and recovery of the debts due to the bank. There can be little doubt that under Entry 45 of List I, it is the <ORG> alone which can enact a law with regard to the conduct of business by the banks. Recovery of dues is an essential function of any banking institution. In exercise of its legislative power relating to banking, the <ORG> can provide the mechanism by which monies due to the Banks and Financial Institutions can be recovered. The <ORG> have been set up in regard to the debts due to the banks. The special machinery of a <ORG> which has been constituted as per the Preamble of the Act, "for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto" would squarely fall within the ambit of Entry 45 of List I. As none of the items in the lists are to be read in a narrow or restricted sense, the term "Banking" in Entry 45 would mean legislation regarding all aspects of Banking including ancillary or subsidiary matters relating to Banking. Setting up of an adjudicatory body like the Banking <ORG> relating to transactions in which banks and financial institutions are concerned would clearly fall under entry 45 of List I giving the <ORG> specific power to legislate in relation thereto.

The learned counsel has drawn our attention to the provisions of the Act and we are unable to agree with <ORG> that the Act or any other provision thereof is in any way arbitrary or bad in law. During the pendency of these appeals, the Act has been amended and whatever lacunae or infirmities existed have now been removed by the said Amending Act and with the framing of more Rules. For example, Rules have been framed in 1998 for the appointment of Presiding Officers of the Tribunals as well as the Presiding Officers of the Appellate Tribunals. The Rules contemplate appointments being made by <ORG>. Each of <ORG> is to consist of the Chief Justice of India or a Judge of <ORG> as nominated by the Chief Justice of India along with other members referred to in the said Rules. <ORG> so constituted would ensure fair and impartial selection of competent persons to act as Presiding Officers of the Tribunal. Furthermore Section 19 after its amendment reads as follows:

"19. Application to the <ORG>.- (1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the <ORG> within the local limits of whose jurisdiction-

(a) the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or

(c) the cause of action, wholly or in part, arises.

(2) Where a bank or a financial institution, which has to recover its debt from any person, has filed an application to the <ORG> under sub-section (1) and against the same person another bank or financial institution also has a claim to recover its debt, then, the later bank or financial institution may join the applicant bank or financial institution at any stage of the proceedings, before the final order is passed, by making an application to the <ORG>.

(3) Every application under sub-section (1) or sub-section (2) shall be in such form and accompanied by such documents or other evidence and by such fee as may be prescribed:

Provided that the fee may be prescribed having regard to the amount of debt to be recovered:

Provided further that nothing contained in this sub-section relating to fee shall apply to cases transferred to the <ORG> under sub-section (1) of Section 31 .

(4) On receipt of the application under sub-section (1) or sub- section (2), the <ORG> shall issue summons requiring the defendant to show cause within thirty days of the service of summons as to why the relief prayed for should not be granted.

(5) The defendant shall, at or before the first hearing or within such time as the <ORG> may permit, present a written statement of his defence.

(6) Where the defendant claims to set-off against the applicant's demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the <ORG>, present a written statement containing the particulars of the debt sought to be set-off.

(7) The written statement shall have the same effect as a plaint in a cross-suit so as to enable the <ORG> to pass a final order in respect both of the original claim and of the set-off.

(8) A defendant in an application may, in addition to his right of pleading a set-off under sub-section (6), set up, by way of counter-claim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not.

(9) A counter-claim under sub-section (8) shall have the same effect as a cross-suit so as to enable the <ORG> to pass a final order on the same application, both on the original claim and on the counter claim.

(10) The applicant shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be fixed by the <ORG>.

(11) Where a defendant sets up a counter-claim and the applicant contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent action, the applicant may, at any time before issues are settled in relation to the counter-claim, apply to the <ORG> for an order that such counter-claim may be excluded, and the <ORG> may, on the hearing of such application make such order as it thinks fit.

(12) The <ORG> may make an interim order (whether by way of injunction or stay or attachment) against the 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 <ORG>.

(13) (A) 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,-

(i) is about to dispose of the whole or any part of his property; or

(ii) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the <ORG>; or

(iii) is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, the <ORG> may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the <ORG>, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt, or to appear and show cause why he should not furnish security.

(B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the <ORG>, the <ORG> may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt.

(14) The applicant shall, unless the <ORG> otherwise directs, specify the property required to be attached and the estimated value thereof.

(15) The Tribunal may also in the order direct the conditional attachment of the whole or any portion of the property specified under sub-section (14).

(16) If an order of attachment is made without complying with the provisions of sub-section (13), such attachment shall be void.

(17) In the case of disobedience of an order made by the <ORG> under sub-sections (12), (13) and (18) or breach of any of the terms on which the order was made, the <ORG> may order the properties of the person guilty of such disobedience or breach to be attached and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the <ORG> directs his release.

(18) Where it appears to 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 <ORG> and for the 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 has, or such of those powers as the <ORG> thinks fit; and

(e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof.

(19) Where a certificate of recovery is issued against a company registered under the Companies Act , 1956 , the <ORG> may order the sale proceeds of such company to be distributed among its secured creditors in accordance with the provisions of Section 529-A of the Companies Act, 1956  and to pay the surplus, if any, to the company.

(20) The <ORG> may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the order for payment of interest from the date on or before which payment of the amount is found due up to the date of realisation or actual payment, on the application as it thinks fit to meet the ends of justice.

(21) The <ORG> shall send a copy of every order passed by it to the applicant and the defendant.

(22) The Presiding Officer shall issue a certificate under his signature on the basis of the order of the <ORG> to the Recovery Officer for recovery of the amount of debt specified in the certificate.

(23) Where the <ORG>, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of the jurisdiction of two or more <ORG>s, it may send the copies of the certificate of recovery for execution to such other <ORG>s where the property is situated:

Provided that in a case where the <ORG> to which the certificate of recovery is sent for execution find that it has no jurisdiction to comply with the certificate of recovery, it shall return the same to the <ORG> which has issued it.

(24) The application made to the <ORG> under sub- section 9(1) or sub-section (2) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the application finally within one hundred and eighty days from the date of receipt of the application.

(25) The <ORG> 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."

The aforesaid section prescribes the manner in which an application to the <ORG> filed by a bank or a financial institution is to be dealt with. Section 22 provides that the <ORG> and the Appellate <ORG> shall not be bound by the procedure laid down by the Code of Civil Procedure, but shall be guided by the principles of natural justice and, subject to the rules framed. They shall have powers to regulate their own procedure as given to them. The <ORG> and the Appellate <ORG> under Section 22(2) are given the same powers as are vested in a civil court with regard to the matters specified in the said sub-section which include the power of summoning and enforcing the attendance of any person and examining him on oath.

The very purpose of establishing the <ORG> being to expedite the disposal of the applications filed by the banks and financial institutions for realisation of money, the <ORG> and the Appellate <ORG>s are required to deal with the applications in an expeditious manner. It is precisely for this reason that Section 22(1) stipulates that the <ORG> and the Appellate <ORG> shall not be bound by the procedure laid down by the Code of Civil Procedure. Therefore even though the <ORG> can regulate its own procedure, the Act requires that any procedure laid down by it must be guided by the principles of natural justice while, at the same time, it should not regard itself as being bound by the provisions of the Code of Civil Procedure.

On behalf of some of the respondents, it was contended that on a correct interpretation of Rule 12(6) of the Debts Recovery <ORG> (Procedure) Rules, 1993, wherever any party desires the production of a witness for cross-examination, then his evidence could not be taken by way of affidavit but it would be mandatory for the <ORG> to require the production of the witness. It was submitted that this provision is in pari materia with Order 19 Rule 1 of the Code of Civil Procedure, and the view taken by some of the <ORG>s that a party does not have a right to cross-examine a witness, whose evidence is taken on affidavit, is not correct.

With the amendment of the Act in 2000 while a new Section 19 was inserted in place of the existing one, section 22 has not undergone any change and the same reads as follows:

"22. Procedure and powers of the Tribunal and <ORG>

(1) The <ORG> and the Appellate <ORG> shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the <ORG> and the Appellate <ORG> shall have powers to regulate their own procedure including the places at which they shall have their sittings.

(2) The <ORG> and the Appellate <ORG> shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:-

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examination of witnesses or documents;

(e) reviewing its decisions;

(f) dismissing an application for default or deciding it ex parte;

(g) setting aside any order of dismissal of any application for default or any order passed by it ex parte;

(h) any other matter which may be prescribed.

(3) Any proceeding before the <ORG> or the Appellate <ORG> shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 , and for the purposes of Section 196 , of the Indian Penal Code and the <ORG> or the Appellate <ORG> shall be deemed to be civil court for all purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 ."

By a notification dated 19.6.1997, some of the rules contained in the Debts Recovery Tribunal (Procedure) Rules, 1993, were amended. It is not necessary to refer to all the amendments so made, but what is important is to examine Rule 12 which, after amendment, reads as follows:

"12. Filing of reply and other documents by the respondent (1) The defendant may file two complete sets containing the reply to the application along with documents in a paper book form with the registry within one month of the service of the notice of the filing of the application on him.

(2) The defendant shall also endorse one copy of the reply along with documents as mentioned in sub-rule (1) to the applicant.

(3) The <ORG> may, in its discretion on application by the defendant, allow the filing of reply referred to in sub-rule (1), after the expiry of the period referred to therein.

(4) If the defendant fails to file the reply under sub-rule (1) or on the date fixed for hearing of the application, the <ORG> may proceed forthwith to pass an order on the application as it thinks fit.

(5) Where a defendant makes an admission of the full or part of the amount of debt due to a bank or financial institution, the <ORG> shall order such defendant to pay the amount, to the extent of the admission, by the applicant within a period of one month from the date of such order failing which the <ORG> may issue a certificate in accordance with Section 19 of the Act to the extent of amount of debt due admitted by the defendant.

(6) The <ORG> may at any time for sufficient reason order that any particular fact or facts may be proved by affidavit, or that the affidavit of any witness may be read at the hearing, on such conditions as the <ORG> thinks reasonable:

Provided that where it appears to the <ORG> that either applicant or defendant desires the production of a witness for cross-examination, and that such witness can be produced an order shall not be made authorising the evidence of such witness to be given by affidavit.

(7) If the defendant denies his liability to pay the claim made by the applicant, the <ORG> may act upon the affidavit of the applicant who is acquainted with the facts of the case or who has on verification of the record sworn the affidavit in respect of the contents of application and the documents as evidence.

(8) Provisions contained in section 4 of the Bankers' Books Evidence Act, 1891  shall apply to a certified copy of an entry in a banker's book furnished along with the application filed under sub-section (1) of Section 19 by the applicant."

As a result of the amendments made in the Act and the Rules, the position which would emerge is that Section 19(1) of the Act requires the filing of an application by a bank or a financial institution for the recovery of debt to be made before a <ORG> having territorial jurisdiction. On receipt of the application, summons are issued to the defendant who has to show cause within the stipulated period as to why the relief prayed for should not be granted. A right is now given by sub-section 6 of Section 19 to the defendant to claim a set-off against the applicant's demand and the said written statement is to have the same effect as a plaint in a cross-suit. Under sub-section 8 of Section 19, the defendant is also entitled to set-up a counter claim in addition to his right of claiming a set-off. Sub-section 20 of Section 19 provides that after giving the applicant and the defendant an opportunity of being heard, the <ORG> may pass such interim or final order as it thinks fit to meet the ends of justice. It is after this order that a certificate is issued by the Presiding Officer to the Recovery Officer for recovery of money. Section 22 of the Act has not been amended. Therefore, reading Sections 19 and 22 of the Act together, it appears that the <ORG> and the Appellate <ORG> are to be guided by the principles of natural justice while trying the matter before them. Section 22(1) of the Act stipulates that the <ORG> and the Appellate <ORG>, while being guided by the principles of natural justice, are to be subject to the other provisions of the Act and the Rules. Rule 12(7) provides that if a defendant denies his liability to pay the claim made by the applicant, the <ORG> may act upon the affidavit of the applicant who is acquainted with the facts of the case. In this Rule, which deals with the consideration of the applicant's bank application, there is no reference to the examination of witnesses. This sub-rule refers only to the affidavit of the applicant. Rule 12(6), on the other hand, provides that the <ORG> may, at any time, for sufficient reason order a fact to be proved by affidavit or may pass an order that the affidavit of any witness may be read at the hearing. It is in the proviso to this sub-rule that a reference is made to the cross- examination of witnesses.

At the outset, we find that the Rule 12 is not happily worded. The reason for establishing banking tribunals being to expedite the disposal of the claims by the banks, the <ORG> thought it proper only to require the principles of natural justice to be the guiding factor for the <ORG> in deciding the applications, as is evident from Section 22 of the Act. While the <ORG> has, no doubt, been given the power of summoning and enforcing the attendance of any witness and examining him on oath, but the Act does not contain any provision which makes it mandatory for the witness to be examined, if such a witness could be produced. Rule 12(6) has to be read harmoniously with the other provisions of the Act and the Rules. As we have already noticed , Rule 12 (7) gives the <ORG> the power to act upon the affidavit of the applicant where the defendant denies his liability to pay the claims. Rule 12(6), if paraphrased, would read as follows:

1. The <ORG> may at any time for sufficient reason order that any particular fact or facts may be proved by affidavit.. on such conditions as the <ORG> thinks reasonable;

2. The <ORG> may at any time for sufficient reason order.that the affidavit of any witness may be read at the hearing, on such conditions as the <ORG> thinks reasonable.

In other words, the <ORG> has the power to require any particular fact to be proved by affidavit, or it may order the affidavit of any witness may be read at the hearing. While passing such an order, it must record sufficient reasons for the same. The proviso to Rule 12(6) would certainly apply only where the <ORG> chooses to issue a direction, on its own, for any particular fact to be proved by affidavit or the affidavit of a witness being read at the hearing. The said proviso refers to the desire of an applicant or defendant for the production of a witness for cross-examination. In the setting in which the said proviso occurs, it would appear to us that once the parties have filed affidavits in support of their respective cases, it is only thereafter that the desire for a witness to be cross-examined can legitimately arise. It is at that time, if it appears to the <ORG>, that such a witness can be produced and it is necessary to do so and there is no desire to prolong the case that it shall require the witness to be present for cross-examination and in the event of his not appearing, then the affidavit shall not be taken into evidence. When <ORG> and <ORG> in exercise of their jurisdiction under Article 226 and Article 32 can decide questions of fact as well as law merely on the basis of documents and affidavits filed before it ordinarily, there should be no reason as to why a <ORG>, likewise, should not be able to decide the case merely on the basis of documents and affidavits before it. It is common knowledge that hardly any transaction with the <ORG> would be oral and without proper documentation, whether in the form of letters or formal agreements. In such an event the bona fide need for the oral examination of a witness should rarely arise. There has to be a very good reason to hold that affidavits, in such a case, would not be sufficient.

The manner in which a dispute is to be adjudicated upon is decided by the procedural laws which are enacted from time to time. It is because of the enactment of the Code of Civil Procedure that normally all disputes between the parties of a civil nature would be adjudicated upon by the civil courts. There is no absolute right in anyone to demand that his dispute is to be adjudicated upon only by a civil court. The decision of <ORG> proceeds on the assumption that there is such a right. As we have already observed, it is by reason of the provisions of the Code of Civil Procedure that the civil courts had the right, prior to the enactment of the Debt Recovery Act , to decide the suits for recovery filed by the banks and financial institutions. This forum, namely, that of a civil court, now stands replaced by a banking tribunal in respect of the debts due to the bank. When in the Constitution Articles 323A and 323B contemplate establishment of a tribunal and that does not erode the independence of the judiciary, there is no reason to presume that the banking tribunals and the appellate tribunals so constituted would not be independent, or that justice would be denied to the defendants or that the independence of the judiciary would stand eroded.

Such tribunals, whether they pertain to Income-tax or Sales-tax or Excise and Customs or Administration, have now become an essential part of the judicial system in this country. Such specialised institutions may not strictly come within the concept of the judiciary, as envisaged by Article 50 , but it cannot be presumed that such tribunals are not an effective part of the justice delivery system, like courts of law. It will be seen that for a person to be appointed as a Presiding Officer of a <ORG>, he should be one who is qualified to be a District Judge and, in case of appointment of the Presiding Officer of <ORG> he is, or has been, qualified to be a Judge of <ORG> or has been a member of <ORG> who has held a post in Grade-I for at least three years or has held office as the Presiding Officer of a <ORG> for at least three years. Persons who are so appointed as Presiding Officers of the <ORG> or of <ORG> would be well versed in law to be able to decide cases independently and judiciously. It has to be borne in mind that the decision of <ORG> is not final, in the sense that the same can be subjected to judicial review by <ORG> under Articles 226 and 227 of the Constitution.

With the establishment of the <ORG>, Section 31 provides for the transfer of pending cases from Civil <ORG> to the <ORG>. We do not find such a provision being in any way bad in law. Once a Debt Recovery <ORG> has been established, and the jurisdiction of <ORG> barred by Section 18 of the Act, it would be only logical that any matter pending in the civil court should stand transferred to the <ORG>. This is what happened when the Central Administrative <ORG> was established. All cases pending in the High <ORG> stood transferred. Now that exclusive jurisdiction is vested in the Banking <ORG>, it is only in that forum that bank cases can be tried and, therefore, a provision like Section 31 was enacted.

With regard to the observations of <ORG> in relation to the pecuniary jurisdiction of the tribunals and of <ORG>, the Act has been enacted for the whole of India. In most of the States, <ORG> do not have original jurisdiction. In order to see that the <ORG> is not flooded with cases where the amounts involved are not very large, the Act provides that it is only where the recovery of the money is more than Rs. 10 lacs that the <ORG> will have the jurisdiction to entertain the application under Section 19 . With respect to suits for recovery of money less than Rs. 10 lacs, it is the subordinate courts which would continue to try them. In other words, for a claim of Rs. 10 lacs or more, exclusive jurisdiction has been conferred on the tribunal but for any amount less than Rs. 10 lacs, it is the ordinary civil courts which will have jurisdiction. The bifurcation of original jurisdiction between <ORG> and the subordinate Courts is a matter which cannot have any bearing on the validity of the establishment of the <ORG>. It is only in those <ORG> which have original jurisdiction that an anomalous situation arises where suits for recovery of money less than Rs. 10 lacs have to be decided by <ORG> while the tribunals have jurisdiction to decide suits for recovery of more than Rs. 10 lacs. This incongruous situation, which can be remedied by <ORG> divesting itself of the original jurisdiction in regard to such claims and vesting the said jurisdiction with the subordinate courts or vice versa, cannot be a ground for holding that the Act is invalid.

At the time when <ORG> had rendered its decision there was only one <ORG>. It is for that reason that <ORG> had observed that the judicial review was illusory. Now, more <ORG>s have been established and the inconvenience of the litigant in travelling a long distance to approach a <ORG> cannot be regarded as making the judicial review of the <ORG>'s decision illusory. Furthermore, with the pecuniary jurisdiction of the <ORG> being of Rs. 10 lacs and above for a fairly large number of borrowers of small amounts, the civil courts are not divested of their jurisdiction.

<ORG> had held that Sections 25 and 28 are arbitrary and unreasonable, being without any guidelines or control. These observations were made prior to the amendment of Sections 25 and 28 . After amendment the said provisions read as under:-

"25. Modes of recovery of debts.- The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (22) of section 19 , proceed to recover the amount of debt specified in the certificate by one or more of the following modes, namely:-

(a) attachment and sale of the movable or immovable property of the defendant;

(b) arrest of the defendant and his detention in prison;

(c) appointing a receiver for the management of the movable or immovable properties of the defendant.

28. Other modes of recovery.- (1) Where a certificate has been issued to the Recovery Officer under sub-section (7) of section 19 , the Recovery Officer may, without prejudice to the modes of recovery specified in section 25 , recover the amount of debt by any one or more of the modes provided under this section.

(2) If any amount is due from any person to the defendant, the Recovery Officer may require such person to deduct from the said amount, the amount of debt due from the defendant under this Act and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Recovery Officer:

Provided that nothing in this sub-section shall apply to any part of the amount exempt from attachment in execution of a decree of a civil court under section 60 of the Code of Civil Procedure, 1908 (5 of 1908).

(3) (i) The Recovery Officer may at any time or from time to time, by notice in writing, require any person from whom money is due or may become due to the defendant or to any person who holds or may subsequently hold money for or on account of the defendant, to pay to the Recovery Officer either forthwith upon the money becoming due or being held or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount of debt due from the defendant or the whole of the money when it is equal to or less than that amount.

(ii) A notice under this sub-section may be issued to any person who holds or may subsequently hold any money for or on account of the defendant jointly with any other person and for the purposes of this sub-section, the shares of the joint holders in such amount shall be presumed, until the contrary is proved, to be equal.

(iii) A copy of the notice shall be forwarded to the defendant at his last address known to the Recovery Officer and in the case of a joint account to all the joint holders at their last addresses known to the Recovery Officer.

(iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, bank, financial institution, or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like to be made before the payment is made notwithstanding any rule, practice or requirement to the contrary.

(v) Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.

(vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or the part thereof is not due to the defendant or that he does not hold any money for or on account of the defendant, then, nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Recovery Officer to the extent of his own liability to the defendant on the date of the notice, or to the extent of the defendant's liability for any sum due under this Act, whichever is less.

(vii) The Recovery Officer may, at any time or from time to time, amend or revoke any notice under this sub-section or extend the time for making any payment in pursuance of such notice.

(viii) The Recovery Officer shall grant a receipt for any amount paid in compliance with a notice issued under this sub-section, and the person so paying shall be fully discharged from his liability to the defendant to the extent of the amount so paid.

(ix) Any person discharging any liability to the defendant after the receipt of a notice under this sub-section shall be personally liable to the Recovery Officer to the extent of his own liability to the defendant so discharged or to the extent of the defendant's liability for any debt due under this Act, whichever is less.

(x) If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the Recovery Officer, he shall be deemed to be a defendant in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were a debt due from him, in the manner provided in sections 25 , 26 and 27 and the notice shall have the same effect as an attachment of a debt by the Recovery Officer in exercise of his powers under section 25 .

(4) The Recovery Officer may apply to the court in whose custody there is money belonging to the defendant for payment to him of the entire amount of such money, or if it is more than the amount of debt due, an amount sufficient to discharge the amount of debt so due.

(4A) The Recovery Officer may, by order, at any stage of the execution of the certificate of recovery, require any person, and in case of a company, any of its officers against whom or which the certificate of recovery is issued, to declare on affidavit the particulars of his or its assets.

(5) The Recovery Officer may recover any amount of debt due from the defendant by distraint and sale of his movable property in the manner laid down in the Third Schedule to the Income-tax Act , 1961 ."

While Section 25 provides for modes of recovery of debts either by attachment and sale or arrest or appointment of a receiver, Section 28 provides for modes of recovery in addition to the ones specified in Section 25 . A perusal of the aforesaid provisions cannot lead one to the conclusion that the same are arbitrary, unreasonable or without any guidelines. It is quite clear that in order to recover the debts, the recovery officer has to attach and sell the immovable property and that for protection and preservation of the same, he has the power to appoint a Receiver for the management thereof.

By virtue of Section 29 of the Act, the provisions of the Second and Third Schedules to the Income-tax Act , 1961 and the Income-Tax (Certificate Proceedings) Rules, 1962, have become applicable for the realisation of the dues by the Recovery Officer. Detailed procedure for recovery is contained in these schedules to the Income-Tax Act , including provisions relating to arrest and detention of the defaulter. It cannot, therefore, be said that the recovery officer would act in an arbitrary manner. Furthermore, Section 30 , after amendment by the Amendment Act , 2000, gives a right to any person aggrieved by an order of the Recovery Officer, to prefer an appeal to the <ORG>. Thus now an appellate forum has been provided against any orders of the Recovery Officer which may not be in accordance with law. There is, therefore, sufficient safeguard which has been provided in the event of the Recovery Officer acting in an arbitrary or an unreasonable manner. The provisions of Sections 25 and 28 are, therefore, not bad in law.

For the aforesaid reasons, while allowing the appeals of <ORG> and the Banks, we hold that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is a valid piece of legislation. As a result thereof, the writ petitions or appeals filed by various parties challenging the validity of the said Act or some of the provisions thereof, are dismissed. It would be open to the parties to raise other contentions on the merits of their cases before the authority constituted under the Act and, only thereafter, should <ORG> entertain a petition under Article 226 and/or 227 of the Constitution. Transferred Cases stand disposed of accordingly. Parties to bear their own costs.

.....<NAME>

[ B.N. Kirpal ] ...J.

[ <NAME> ] .J.

[ <NAME> ] March 14, 2002.