TMI Blog2000 (9) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bank and was one which also fell within the special Act by reason of section 19(8) to (11) of the Act (as introduced by Amending Act 1/2000) and if that be so, whether it could still be successfully pleaded by the respondent-company that the pendency of the company’s suit 272 of 1985 was a ground for retention of Bank’s Suit No. 410 of 1985 on the original side of the High Court ? Held that:- Both the suits, the one by the Bank against the respondent (suit 410 of 1985) and the other by the debtor-against the Bank (suit 272 of 1985) which raises claims or pleas in the nature of set-off or counter-claim are interconnected. Direct the Bank’s suit 410 of 1985 to be transferred by the Registrar, Calcutta High Court to the appropriate Tribunal under the Act. So far as the debtor-company’s suit 272 of 1985 is concerned, action has to be taken likewise by the Registrar in the light of our finding which finding has become necessary in view of the contention on behalf of the debtor-company before us and that appropriate orders will be passed in relation to suit 272 of 1985 expeditiously, at any rate, within one month from today. - CIVIL APPEAL NO. 4897 OF 2000 - - - Dated:- 5-9- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the crucial date i.e., 27-4-1994, in the High Court, as required by section 31. Therefore, it was not covered by section 31. This was the contention in the application filed by the respondent-company seeking retention of the suit on the original side of the High Court of Calcutta. 6. The above application filed by the respondent-company was allowed by another learned Single Judge on 3-9-1999 and the Bank s suit was directed to be retained in the High Court on the basis that the Act did not apply. By the same order, the Registrar of the High Court was restrained from transferring the suit to the Tribunal. 7. Against the above order dated 3-9-1999, the Bank has preferred the present appeal by Special leave. 8. In this appeal, Shri Dhruv Mehta appeared for the appellant-Bank and contended that the High Court erred in not transferring the Bank s suit 410 of 1985 to the Tribunal. 9. Elaborate arguments were addressed before us by Sri Shanti Bhushan, the learned senior counsel for the respondent-company and Dr. Rajeev Dhawan, the learned senior counsel for the guarantor. We shall deal with these contentions. 10. An additional point has been raised before us by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the respondent-company that the pendency of the company s suit 272 of 1985 was a ground for retention of Bank s Suit No. 410 of 1985 on the original side of the High Court ? Points 1 and 2 : 12. Was the Suit 410 of 1985 filed by the Bank pending before the Single Judge on 27-4-1994? That is the crucial question. That depends on the interpretation of section 18, 31 and 34 of the Act. 13. In the judgment of the High Court now under appeal before us, the learned Single Judge held that when the Act came into force on 27-4-1994, the suit was not pending before the Single Judge as the compromise decree was passed on 29-3-1994 and in fact the appeal against the said decree was pending before the Division Bench till 11-8-1998 and therefore the suit would not stand transferred to the Tribunal. It was assumed that the suit would not get revived from its institution and that therefore it was not a suit pending "immediately before the date of establishment of a Tribunal under this Act" i.e., 27-4-1994, as required by section 31(1). It was also observed that the proviso to section 31(1) permitted only appeals pending on that date to be retained in the Civil Court (the High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt if the appeal was disposed of once and for all and the suit was not remanded. 17. Applying the above principle, we are of the view that the suit 410 of 1985 filed by the Bank in 1985, even though it was disposed of by judgment dated 29-3-1994, it stood revived with continuity by the remand order passed by the Division Bench on 11-8-1998, and cannot be treated as a freshly instituted on 11-8-1998 before the Single Judge but must, in the eye of the law, be treated as pending on the crucial date i.e., 27-4-1994. 18. It was argued that on 27-4-1994, the crucial date, if the appeal was pending before the Division Bench, the suit could not have also been pending simultaneously. The pendency of appeal before the Appellate Court may be the de facto position. But, we are concerned here with the position in law, and as to the effect of the remand order. Once the appeal is allowed, the intermediate events of disposal of the suit and the appeal Vanish into the air and the continuity of the suit before the Trial Court is restored. 19. There is yet another important reason as to why the suit must be held as one falling within the Act. This reason flows from section 18 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session would apply even at the appellate stage, unless of course, appeals were kept outside the impact of the new Act, as in the proviso to section 31 of the Act. Even the Appellate Court has to apply the law ousting its jurisdiction. 23. If indeed the contention of the learned senior counsel for the respondents, Sri Shanti Bhushan and Dr. Rajeev Dhawan is to be accepted, a strange result would follow inasmuch as, on a combined reading of sections 18 and 34 of the Act, the suit can neither be transferred to the Tribunal nor can it be decided by the learned Single Judge in view of the clear prohibition in section 18 of the Act. If it is not to be transferred to the Tribunal and if it is to be retained in the Civil Court, without disposal as contended, then there will be a stalemate. It has to be kept perpetually pending in the Civil Court and necessarily the file has to be consigned to the record room. Or the plaint will have to be returned for presentation before the proper Court or Tribunal. That was surely not the intendment of the Act of 1993. When this aspect was put to the learned senior counsel for the respondents, there was practically no answer. It was, no doubt, faint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atute could not be filled by judicial interpretation. Otherwise, it would amount to judicial legislation. That was the argument. 29. We cannot agree with either contentions. The remanded suit cannot remain in the Civil Court with no chance of disposal. Again, our decision that the restoration of the suit is with continuity from the date of original institutions of the suit does not amount to legislation but is the result of the application of a fundamental principle of law applicable to the civil procedure. It cannot therefore be said that we have encroached upon the jurisdiction of the legislature. 30. In this context the following words of Justice Holmes are apposite. He said : "I recognise without hesitation that Judges do and must legislate, but they do so only interstitially; they are confined from molar to molecular motion" (1917) ( Southern Pacific Co. v. Jensen , (1916) 244 US 205 at 221). 31. Again, Justice Cardozo said that though the powers of interpretation of the Courts are narrow, yet they can fill up gaps. He said : "No doubt, the limits for the judge are narrower. He legislates only between gaps. He fill the open spaces in the law." (B. Cardozo, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pril, 1979, under a registered deed, that initially the shares in the plaintiff s company were held by 1st and 2nd plaintiffs, that at the instance of this Bank, the plaintiff 3 purchased the shares on 13-1-1982, that in or about December 1981 and January 1982, it was duly agreed between the Bank and the Tea Company and the plaintiffs 3 and 4 and by plaintiff 2 that ( i ) defendant would not charge interest on its outstanding upto the season 1981-82 since 1-7- 1981, ( ii ) that the said outstanding dues would be paid by plaintiff company at Rs. 75,000 p.m., ( iii ) that the Bank would extend credit facilities according to its needs from the season 1982-83, which advance interest would be recovered out of the proceeds of sale of Tea. It was also alleged that these terms would appear from the records and correspondence between the parties and also from the course of conduct and/or dealings. A dispute is also raised about the correctness of the amount claimed by the Bank as per its accounts. It was pleaded that a certain amount of Rs. 1,55,951 paid by the Bank to workmen for 1981-82 season had to be adjusted for 1981-82 which was a free interest period, that similarly credit had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further financial assistance is to be given in future. 38. In our view, the above pleas raised by the respondent-company are all inextricably connected with the amount claimed by the Bank. The plea of the company is that interest is not to be charged or is to be charged at a lesser rate, that instalments are to be permitted and more monies should have been advanced. In our view, these claims made by the company in its suit 272 of 1985 against the Bank amount to counter-claim and fall within sub-sections (8) to (11) of section 19 of the Act (as introduced by Act 1/2000). The plea for deduction of damages is in the nature of a set-off falling under sub-sections (6) and (7) of section 19. 39. Sub-sections (6) to (11) of section 19 read as follows : "(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 Tribunal, 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 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be directed to file an independent action. The Tribunal would then consider whether the debtor should be directed to file an independent action in regard to any part of the debtor s claim. 41. In our view, the company s suit 272 of 1985 in so far claims a relief for specific performance, perpetual and mandatory injections, it is in substance in the nature of a counter-claim under sub-sections (8) to (10) of section 19 and are in the nature of a counter-claim. The plea for deduction of damages is in the nature of a set-off falling within section 19(6) and (7). Both are equated to cross-suits. If a set-off or a counter-claim is to be equated to a cross suit under section 19, a fortiori there can be no difficulty in treating the cross-suit as one by way of set-off and counter-claim, and as proceedings which ought to be dealt with simultaneously with the main suit by the Bank. In fact, the Bank has not objected to such a course. Indeed, section 19(11) says that if any particular counter-claim raised in the suit 272 of 1985 cannot be decided by the Tribunal while deciding the Bank s suit, the defendant may apply to the Tribunal for exclusion of such a counter-claim. But such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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