NAHAR INDUSTRIAL ENTERPRISES LTD. versus HONG KONG & SHANGHAI BANKING CORPORATION

Citation: [2009] 12 S.C.R. 54 · Decided: 29-07-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Disposed off
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Judgment (excerpt)

[2009] 12 S.C.R. 54 
A 
NAHAR INDUSTRIAL ENTERPRISES LTD. 
v. 
HONG KONG & SHANGHAI BANKING CORPORATION 
~ 
(Civil Appeal No. 4796 of 2009) 
B 
JULY 29, 2009 
(S.8. SINHA AND ASOK KUMAR GANGULY, JJ.] 
RECOVERY OF DEBTS DUE TO BANKS AND 
FINANCIAL INSTITUTIONS ACT, 1993/CODE OF CIVIL 
c PROCEDURE, 1908: 
SECTIONS 17, 18, 19, 22, 25, 31/SECTIONS 3, 4, 5, 9, 
16, 17, 18, 19, 20, 96, 100, 151, 195 AND ORDER XL/ 
RULES 1, 5. 
D 
Suit - Whether High Court/Supreme Court has the power 
to transfer a suit pending in Civil Court situated in one state 
to a Debt Recovery Tribunal. 
T 
Held: The very fact that a legal fiction has been created 
E and the Tribunal or the Appellate Tribunal deemed to be a 
Civil Court for purposes of Section 195 and Chapter XXVI of 
CPC, itself suggests that Parliament did not intend to take 
away the jurisdiction of Civil Court - The legal fiction has a 
limited application - Its scope and ambit cannot be extended 
F - While exercising the power of transfer, the High Court and 
Supreme Court would be curtailing the right of a suitor 
indirectly which could not be done directly - It clearly 
establishes that Parliamentary intent that only civil suits are 
subject matter of inter state transfer from one Civil Court to 
G another Civil Court- If such a power is exercised, all the rights 
of the plaintiff remain intact, no right taken away and no right 
diluted - Where a matter has been expressly provided for in 
the body of the Code, ordinarily inherent power shall not be· 
resorted to - If a suit is to be transferred from a Civil Court to 
H 
54 
.... 
NAHAR INDUSTRIAL ENTERPRISES LTD. v. HONG 
55 
KONG & SHANGHAI BANKING CORPN. 
a Tribunal, the debtor would lose some rights including the A 
right to prefer an appeal before a higher court in terms of 
Section 96 to 100 CPC - There exists no express power of 
transfer under the ORT Act which would be applicable to the 
facts of the present case - Application before the Tribunal 
would lie only at the instance of the bank or the financial B 
institution for the recovery of its debt - Had the jurisdiction of 
Civil Courts been barred in respect of counter claim also, the 
statute would have said so and Sections 17 and 18 would have 
been amended to introduce the provision of counter claim -
Banks and financial institutions cannot approach the Tribunal c 
unless the debt has become due - In such a contingency civil 
suit will lie - Debtor may file pre-emptive suits and obtain 
orders of injunction but that cannot be a ground to completely 
oust the jurisdiction of the Civil Court - Constitution of India, 
Articles 226, 227. 
D 
CONSTITUTION OF /NOIA, 1950: 
Articles 139A, 142 - Power under - Wide and extensive 
-
May be resorted to do complete justice - However, 
conditions could be imposed - But the present case not a fit 
E 
case to exercise jurisdiction under Article 142. 
In the Appeal and Transfer Petitions, the question 
involved was whether the High Court/Supreme Court has 
the power to transfer a suit pending in Civil Court situated 
in one State to a Debt Recovery Tribunal situated in 
F 
another State. 
Allowing the Civil Appeal and dismissing the Transfer 
Petitions, the Court 
HELD: 
1. 
Indisputably, 
however, after the 
amendments were carried out vide Amending Act 1 of 
2000 and Amending Act 30 of 2004, the Debts Recovery 
Tribunal would have jurisdiction to determine the claims 
G 
of set off and counter-claims. It may be that the bank or H 
56 
SUPREME COURT REPORTS 
(2009] 12 S.C.R. 
A the financial institution in terms of the provisions of sub-
section (9) of Section 19 of the Recovery of Debts Due 
to Banks and Financial Institutions Act, 1993, despite 
such counter-claim being treated to be a cross-suits 
would be entitled to raise a contention that the same 
B should not be determined by the Tribunal. In the event 
-
such a contention has not been raised, the Tribunal will 
have jurisdiction to pass a final judgment both on the 
claim of the bank or the financial institution on the one 
hand and the cross-objections of the borrower on the 
other. [Para 9] [94-8-D] 
... 
c 
Cofex Exports Ltd. vs. Canara Bank AIR 1997 Delhi 355; 
Delhi High Court Bar Assn. v. Union of India, AIR 1995 Del 
325 and Union of India v. Delhi High Court Bar Assn. (2002) 
4 sec 275, referred to. 
D 
2.1. Whereas in Indian Bank it was held that the 
transfer can be effected with consent, the said question 
was ignored in Ranjan Chemicals. Whereas the questio
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