THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LTD. versus GRAPCO INDUSTRIES LTD. AND ORS.

Citation: [1999] 3 S.C.R. 759 · Decided: 14-05-1999 · Supreme Court of India · Bench: S. SAGHIR AHMAD · Disposal: Disposed off

Judgment (excerpt)

THE INDUSTRIAL CREDIT AND INVESTMENT 
CORPORATION OF INDIA LTD. 
v. 
GRAPCO INDUSTRIES LTD. AND ORS. 
MAY 14, 1999 
[S. SAGHIR AHMAD AND D.P. WADHWA, JJ.] 
A 
B 
Recove1y of Debts Due to Banks and financial Institution Act, 1993 
Sections 19,22-Ex parte order of injunction-Jurisdiction of Debts Recovery 
Tribunal-Held, Tribunals empowered to make interim order by way of C 
injunction or stay-It also has power to grant that order even ex parte-
Requirement of passing a reasoned order. 
The appellant, a financial Company filed an application u/s I9 of the 
Recovery of Debts Due to Banks and financial Institutions Act, I993, claiming D 
an amount of over Rupees thirty six and a half crore against respondents I 
and 2 jointly and severally. The Debts Recovery Tribunal constituted under 
the Act granted on ex-parte order of injunction restraining the respondent 
from transferring or alienating the properties hypothecated to ICICI. High 
Court in petition under Art 227 of the Constitution stayed the operation of 
the order of Tribunal, putting no restraints on the respondents not to deal E 
with the assets and properties. Holding that on merits also the Tribunal was 
wrong in granting an ex parte order as the Tribunal did not give any reasons 
and that it was an ominbuns order. However, the High Court did not refer 
at all to the facts of the case. These appeals had been filed against the 
judgment of the High Court. The questions which arose for consideration in F 
these appeals is whether the Debts Recovery Tribunal has jurisdiction to 
grant an interim ex parte order of injunction or stay against the defendants 
on an application filed by the bank or financial institution for recovery of 
debt as defined under clause (g) of Sec 2 of the Act. 
Disposing of the appeals, this Court 
HELD : I. I. When Section 22 of the Recovery of Debts to Banks and 
Financial Institutions Act says that the Tribunal shall not be bound by the 
procedure laid by the Code of Civil Procedure, it does not mean that it will 
not have jurisdiction to exercise powers of a Court as contained in the Code 
G 
of Civil Procedure. Rather, the Tribunal can travel beyond the Code of/Civil H 
759 
760· 
SUPREME COURT REPORTS 
[1999] 3 S.C.R. 
A Procedure and the only fetter that is put on its powers is to observe the 
principles of natural justice. [766-D-FJ 
1.2. Further, when power is given to the Tribunal to make interim 
order by way of injunction or stay, it inheres in it the power to grant that 
order even ex parte, if it is so in the interest of justice and as per the 
B requirements as spelt out in the judgment of this Court in Morgan's Case. 
[768-B) 
Morgan Stanely Mutual Fund v. Kartick Das, (19941 4 SCC 225, 
relied on. 
1.3. An ex parte order is only of short duration and it is granted to 
C safeguard the interest of the applicant, but, at the same time, such an order 
cannot be granted as a matter of course. A Court or Tribunal has also to 
consider the consequences of such an order if ultimately the order is to be 
revoked after hearing the defendant. In such circumstances, the Tribunal 
must put the applicant on terms while granting an ex parte order and 
D compensate the defendant in case the ex parte order was obtained without any 
justification and harm has been caused to the defendant. An ex parte order 
can also affect the reputation of the person against" whom it is issued and 
sometimes it may be difficult to undo the damage caused by an interim order. 
A Tribunal while granting ex parte order of stay or injunction must record 
reasons, may be brief one, and cannot pass a stereo-typed order in terms of 
E the prayer made. Then an ex parte order cannot be allowed to continue 
indefinitely and the continuance of interim order has to be decided without 
undue delay when the defendant puts in his appearance. Sub-section (8) of 
Section 19 requires that application for recovery of debt itself is to be 
disposed of finally within a period of six months from the date of receipt of 
F the application. That also shows the urgency to decide whether an interim 
order of injunction or stay granted ex parte has to be continued or not. 
[768-C-F) 
1.4. Criticism of the High Court that even on merits, the Tribunal was 
wrong in granting an ex parte order, without it itself examining the facts of 
G the case, was based on abstract principles of Law. There was no bar on the 
High Court to itself examine the merits of the case in the exercise of its 

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