Legal Briefing

Case report: JP Vishnu Kumar v Canara Bank PN Road, Tiruppur & ors

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India | 01 May 2013

In the case of JP Vishnu Kumar v Canara Bank PN Road, Tiruppur & ors [2013], the Honourable Supreme Court of India had recently held that powers of the High Court under Article 2261 of the Constitution of India cannot be invoked in the matter of recovery of dues under the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (the 1993 Act) unless there is any statutory violation resulting in prejudice to the party or where proceedings under the Act are wholly arbitrary, unreasonable and unfair.


FACTS

The Canara Bank, Tiruppur (the respondent) had initiated debt recovery proceedings against the appellants before the Debt Recovery Tribunal (the Tribunal), Coimbatore in the year 2002. The appellants, after a lapse of five years, moved interim applications before the Tribunal seeking a direction from the Tribunal to produce an extract of accounts as well as documents relating to certain banking transactions. These interim applications were vehemently opposed by the respondent on the grounds that none of the documents sought were germane to the debt recovery proceedings and therefore the whole exercise was an attempt merely to protract the proceedings. The interim applications were rejected by the Tribunal on the ground that the intention of the appellant was only to delay the proceedings. The appellant thereafter filed a writ petition under Article 226 of the Constitution before the High Court of judicature at Madras.

The single judge allowed the writ petition and held that the appellants had made out a case for production of documents sought for in the interim applications. The respondent, aggrieved by the order, took up the matter in appeal before the Division Bench by filing a writ appeal. The writ appeal was allowed by the Division Bench on the ground that the appellants had not availed of the alternative remedy available under s20 of the Act. The appellants finally moved to the Honourable Supreme Court of India against the order of the Division Bench vide a special leave petition (SLP).


REASONING ADOPTED AND DECISION

A Division Bench of the Supreme Court comprising of Honourable Mr Justice KS Radhakrishnan and Honourable Mr Justice Deepak Mishra addressed the case by way of a detailed judgment. Justice Radhakrishnan at paragraph 4 of the common judgment recounted the events leading up to the SLP ‘as a classic case which shows how the parties can protract proceedings in fiscal matters’. Justice Radhakrishnan (speaking for the Bench) at paragraph 6 succinctly laid out the intent and purpose underlying the Act and particularly, Debt Recovery Tribunals, which, according to him, were constituted for expeditious adjudication and recovery of debts due to banks and financial institutions. It was pointed out in the judgment that the Act itself provides the mechanism to an aggrieved party, if such party is dissatisfied with an order passed by the Tribunal. In this context, reference was made to s20 of the Act, which enables any person aggrieved by an order made, or deemed to have been made, by the Tribunal to prefer an appeal to an Appellate Tribunal having jurisdiction in the matter.

The Honourable Court expressed the view that powers of the High Court under Article 226 cannot be invoked in the matter of recovery of dues under the Act, unless exceptional situations arise: ie there is any statutory violation resulting in prejudice to the party or where such proceeding or action is wholly arbitrary, unreasonable and unfair.

According to the Honourable Court, the Act itself provides for a specific remedy, by way of an appeal under s20 of the Act. In view of the same, the Bench observed that the single judge of the High Court was not justified in invoking jurisdiction under Article 226 of the Constitution to examine whether the rejection of the interim applications by the Tribunal were correct or not. It was further observed at paragraph 10 of the judgment that, if the correctness of each and every interim order passed by the Tribunal is going to be tested in a writ court, it will only defeat the object and purpose of establishing such a tribunal.

Accordingly, the SLP was dismissed on the grounds stated above.


COMMENT


Vide this judgment, the Honourable Supreme Court has reiterated the doctrine of ‘exhaustion of equally efficacious alternative remedies’. The Court has thus reaffirmed the principle of law settled in earlier cases such as Om Prakash v Jagdish Lal Marwaha [2009] and Committee of Management v Vice Chancellor [2009], in which exercise of writ jurisdiction was declared unwarranted in the presence of an equally efficacious alternative remedy available under a particular statute.

Thus, there is no gainsaying that in a given case, the High Court may not entertain a writ petition under Article 226 of the Constitution on the ground of availability of an alternative remedy – the rule, however, cannot be said to be of universal application. It must be noted that the rule (of exclusion of writ jurisdiction) is a rule of discretion and not compulsion for the courts. In an appropriate case, in spite of the availability of an alternative remedy (prescribed under the relevant statute), a writ court may still exercise its discretionary jurisdiction of judicial review in at least three contingencies:

  1. where writ proceedings seek the enforcement of any fundamental rights guaranteed under the Constitution;
  2. where there is grave failure of natural justice, and
  3. where orders or proceedings are wholly without jurisdiction or the vires of any particular statute that is the subject matter of a challenge2.

Notes

  1. In exercise of such jurisdiction (as specifically conferred by the Constitution under the stated Article), a writ, direction or order may be issued by any High Court of the country to any inferior court/tribunal or indeed to any agency of the state. Such jurisdiction constitutes a part of the basic structure of the Constitution, and cannot be taken away/abridged by any amendment to the Constitution by the parliament.
  2. See: Whirlpool Corporation v Registrar of Trade Marks [1999], Harbanslal Sahnia & anor v Indian Oil Corporation Ltd & ors [2003], State of HP v Gujarat Ambuja Cement Ltd [2005] and Sanjana M Wig v Hindustan Petroleum Corporation Ltd [2005].