2008 (1) TMI 941 - HC - Income Tax

Summary

Issues Involved:
1. Maintainability of the suit under Clause 12 of the Letters Patent.
2. Bar of jurisdiction under Section 18 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993.
3. Allegation of fraud on the Court.
4. Availability of alternative remedy under Section 20 of the 1993 Act.

Issue-wise Detailed Analysis:

1. Maintainability of the Suit under Clause 12 of the Letters Patent:

The court examined whether the suit in question could be considered a "suit for land" under Clause 12 of the Letters Patent, which would affect its maintainability in the High Court's Original Side jurisdiction. The court referred to several precedents, including the Full Bench decision in *Vellappa Chettiar vs. Saha Govinda Doss* and the Supreme Court's ruling in *Adcon Electronics Pvt. Ltd. vs. Daluate*. It concluded that the suit was not for the determination of title or possession of land, nor would granting relief directly affect the title or possession of the land. Instead, the suit sought a declaration that an order obtained by fraud was null and void. Therefore, the suit was not barred under Clause 12 and was maintainable in the High Court's Original Side.

2. Bar of Jurisdiction under Section 18 of the 1993 Act:

The court analyzed whether the suit was barred by Section 18 of the 1993 Act, which excludes the jurisdiction of civil courts in matters specified under Section 17, i.e., recovery of debts by banks and financial institutions. The court cited several Supreme Court decisions, including *Lala Ram Swarup vs. Shikar Chand*, *State of A.P. vs. Manjeti Laxmi Kantha Rao*, and *Indian Bank vs. ABS Marine Products (P) Ltd.*, which clarified that civil courts retain jurisdiction in cases where the statutory tribunal has not complied with fundamental judicial procedures or where fraud is alleged. The court found that the plaintiff was not a party to the DRT proceedings and alleged fraud in obtaining the order. Hence, the suit was not barred by Section 18 of the 1993 Act.

3. Allegation of Fraud on the Court:

The court examined the plaintiff's allegations of fraud, noting that fraud vitiates all judicial acts. It referred to *S.P. Chengalvaraya Naidu vs. Jagannath*, where the Supreme Court held that a judgment obtained by fraud is a nullity and can be challenged in any court. The court also cited *State of Andhra Pradesh vs. T. Suryachandra Rao* and *A.V. Papayya Sastry vs. Govt. of A.P.*, which emphasized that fraud on the court renders a transaction void ab initio. The court found that the plaintiff had made a prima facie case of fraud, which justified the suit's maintainability.

4. Availability of Alternative Remedy under Section 20 of the 1993 Act:

The court considered the argument that the plaintiff could have appealed to the Debts Recovery Appellate Tribunal (DRAT) under Section 20 of the 1993 Act. However, it noted that sub-section (2) of Section 20 precludes appeals from orders made with the consent of the parties. Since the DRT's order was a consent order, the plaintiff could not appeal to the DRAT. The court held that the plaintiff could not be left without a remedy and upheld the maintainability of the suit.

Conclusion:

The court dismissed the appeals, affirming the maintainability of the suit under Clause 12 of the Letters Patent and holding that it was not barred by Section 18 of the 1993 Act. The court also found that the allegations of fraud warranted judicial scrutiny and that the plaintiff had no alternative remedy under Section 20 of the 1993 Act. The applications to reject the plaint were rightly dismissed by the learned single Judge, and the appeals were dismissed with no order as to costs.