SC for joint trial of borrowing cos' damage suits
The Supreme Court has ruled that there has to be joint trial of damage suits filed by borrowing companies. There cannot be two separate trials of such suits.
By Sanjay K Singh, TNN |
NEW DELHI: The Supreme Court has ruled that there has to be joint trial of damage suits filed by borrowing companies. There cannot be two separate trials of such suits.
Similarly, the recovery suits filed by banks or lending institutions must also have joint trials. Also, both these have to be in the Debt Recovery Tribunal. In saying so, the apex court has sough to discourage such suits being filed in civil courts by the borrowing companies.
A bench comprising Justices HK Sema and Justices PK Balsubramanyan zeroing in on the evidence aspects to arrive at a conclusion ordered that the joint trial of such claims and counter-claims is mandatory.
The court set aside the order of the Court of Subordinate Judge, Patna, which had refused the request of the State Bank of India seeking transfer of the damage suit of the company to the Tribunal for a joint trial of the case. It was affirmed by the Patna high court.
Citing reasons for a joint trial, the court said that accounts of the bank would have to be scrutinised not only to ascertain the sum but also to determine as to when and in what manner the cash credit was disbursed.
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“Of course, the evidence will have to be taken on whether there was any violation of conditions or latches on part of the bank if fulfilling its obligations causing damage to the company. At least a part of the evidence will be common,” said the bench.The court has ruled out the transfer of the suit from the Debt Recovery Tribunal to the civil court saying that it will defeat the purpose for which such body was established.
Therefore, the only alternative would be to transfer the suit to the Tribunal which has been created by an Act.
The claim of the company is in essence a claim for set off or a counter-claim that could be tried by the Tribunal in view of the amended Section 19 of the Act, said the court.
The verdict came in as an appeal by the State Bank of India that had sought transfer of the case to the Tribunal where it had filed a suit for the recovery of the loan amount from a company.
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The company, however, had moved a civil court claiming damages alleging the failure of the bank to fulfil its obligations under the cash-credit facility in time and in a meaningful manner.
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