Sultana Jute Mills Ltd. and others (Appellants)
Agrani Bank and others (Respondents)
Shahabuddin Ahmed CJ
MH Rahman J
ATM Afzal J
Mustafa Kamal J
Latifur Rahman J.
June 13th, 1994.
Syed Ishtiaq Ahmed, Senior Advocate (Rokanuddin Mahmud, Advocate with him) instructed by Shamsul Haque Siddique, Advocate-on-Record -For the Appellants.
M Nurullah, Senior Advocate instructed by Sharifuddin Chaklader, Advocate-on-Record-For the Respondent No. 1.
Not Represented – Respondent No. 2.
Civil Appeal No.7 of 1994
(From the Judgment and Order dated 1.12.93 passed by the High Court Division, Dhaka in Writ Petition No. 1070 of 1992).
Judgment: Mustafa Kamal J.- This appeal by leave by the defendants raises three questions of law of public importance, namely, (i) whether a defendant can claim in written statement a set-off or counter-claim against the plaintiff in a suit filed under the Artha Rin Adalat Ain, 1990; (ii) whether an application under Order VII Rule 11 CPC lies for rejection of that counter-claim; and (iii) whether a writ petition or a civil revisional application will lie to the High Court Division against an interlocutory order of the Artha Rin Adalat, in this case an order accepting or rejecting the petition under Order VII rule 11 CPC.
2. Respondent No. 1, Agrani Bank, instituted as plaintiff Mortgage Suit No. 21 of 1990 in the Court of Subordinate Judge and Artha Rin Adalat No.1, Chittagong claiming an amount of Taka 8,89,94,800.22 against the defendant-appellants. The defendant-appellants duly appeared and filed a joint written statement denying the claim altogether. In paragraphs 21?24 of the written statement they made a counterclaim of Taka 20,22,81,000.00 as “compensation” which arose out of some alleged illegalities committed by the plaintiff and they paid ad valorem Court fees on their claimed amount.
3. The plaintiff-respondent filed an application in the Artha Rin Adalat under Order VII rule 11 CPC for rejection of the counterclaim contending that the Artha Rin Adalat had no jurisdiction to entertain the counterclaim against the plaintiff. The defendant-appellants filed a written objection claiming that the petition under Order VII rule 11 CPC was not maintainable. After hearing both the parties the trial Court rejected the application of the plaintiff by its order dated 19.2.92 holding, inter alia, (a) that the Artha Rin Adalat Act, 1990, shortly the Adalat Act, having provided that the Code of Civil Procedure will be applicable to the proceedings of an Artha Rin Adalat, a counter-claim can always be made in a written statement and (b) that the counterclaim has not been barred by any law and rule 11 (d) CPC is not applicable.
4. The plaintiff?respondent challenged the order of the Artha Rin Adalat dated 19.2.92 in Writ Petition No. 1070 of 1992 in the High Court Division. The defendants filed an affidavit-in opposition and a Division Bench of the High Court Division after hearing the parties made the Rule Nisi absolute by judgment and order dated 1.12.93 holding, inter alia, that (a) that the defendants are not a financial institution and therefore incompetent to make a claim before the Artha Rin Adalat for realisation of any dues. They cannot do a thing indirectly which they cannot do directly. The Artha Rin Adalat has exercised a jurisdiction not vested in it by law by entertaining the counterclaim; (b) that the Rin Adalat though designated as a civil Court in the Adalat Act, which is a special law, is not a Civil Court established under the civil Courts Act, 1887 and that it is not a civil Court having jurisdiction of a general nature; (c) that there being no provision in the Adalat Act for moving the High Court Division against an interlocutory order and no alternative forum having been provided for speedy, efficacious and complete relief to the party aggrieved, the writ petition could not be refused only for the reason that other avenues have not been availed of; (d) that without entering into the question as to whether the claim by the defendants is for an ascertained sum, it is decided that the counterclaim cannot at all be entertained by the Artha Rin Adalat.
5. The defendant?appellants have now appealed against the said judgment and order of the High Court Division dated 1. 12.93.
6. Mr. Syed Ishtiaq Ahmed, learned Counsel for the appellants, draws our attention to section 5(4) and (5) of the Adalat Act. Section 5(4) provides that the Artha Rin Adalat shall be deemed to be a Civil Court, and, subject to the provisions of this Act, all the powers and jurisdictions exercisable by a civil Court under the Code of Civil Procedure, 1909 shall be exercised by the Artha Rin Adalat. Section 5(5) provides that in respect of regulating the proceeding of the Artha Rin Adalat the said Adalat shall follow the procedure provided in the Code of Civil Procedure, 1908 for regulating the procedure of a civil Court, unless the Adalat Act contains anything different. He submits that the defendants became entitled to file a written statement to the plaintiffs claim under Order VIII rule 1, CPC and was further entitled to claim of set-off in the written statement against the plaintiffs demand under Order VIII Rule 6 of the Code of Civil Procedure which is as follows:
“6.(1) Where in a suit for the recovery of money the defendant claims to set?off against the plaintiff’s demand any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the Court, and both parties fill the same character as they fill in the plaintiffs suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, present a written statement containing the particulars of the debt sought to be set-off. (2) The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Court to pronounce a final judgment in respect both of the original claim and of the set-off but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree.
(3) The rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off.”
7. The appellants, Mr. Ahmed submits, in claiming the set?off have not travelled beyond the rights given to them under sections 5(4) and (5) of the Adalat Act. This right is conceded in the Act itself. There is no provision in the Adalat Act excluding the jurisdiction of the Artha Rin Adalat from adjudicating upon a set?off and counterclaim against a financial institution. There is no question of doing a thing indirectly which cannot be done directly. The High Court Division erred in law, he submits, in holding that the counterclaim was not maintainable.
8. Mr. Md. Nurullah, learned Counsel for the plaintiff-respondent No.1, on the other hand, has drawn our attention to section 5(1) and section 2 (Kha) of the Adalat Act and has argued that the provisions of the Code of Civil Procedure will be subject to the overriding consideration in the said two sections and the counterclaim being contrary to what has been provided in the said two sections of the Adalat Act, the High Court Division rightly held that the counter?claim was not maintainable.
9. During the hearing of the appeal it was not disputed by either side that the Adalat Act is a special legislation providing for special measures to realise the loans given by financial institutions. The Preamble of the Act recites that the Act has been enacted to provide for special provisions to realise loans given by financial institutions. However, the Preamble is not decisive. Section 2(ka) of the Adalat Act defines “financial institutions.’ and section 2 (kha) defines a loan”. Section 5(1) of the Adalat Ac provides that notwithstanding anything contained in any other law all suits concerning the realisation of “loan” by financial institutions shall be instituted in the Artha Rin Adalat and all such suits shall be decided only in the said Adalat. The clear implication of section 5(1) read with section 2(kha) of the Adalat Act is, that it is only a financial institution which can be a plaintiff before the Artha Rin Adalat and no one else. It also implies that all kinds of suits are not entertainable by the Artha Rin Adalat. Only those suits which are concerned with the realisation of “loan” as defined in the Act and as disbursed by a financial institution can be filed in the Artha Rin Adalat, no other kind of suit. Section 5(4) grants to the Artha Rin Adalat the powers and jurisdictions of a civil Court, but subject to the provisions of the Adalat Act. Section 5(5) makes the Code of Civil Procedure, 1908 applicable to the proceeding of the Artha Rin Adalat, but only if the Adalat Act does not contain anything different.
10. In express terms the Adalat Act has made serval departures from the Code of Civil Procedure. Section 5(ka) provides that a hearing of a suit cannot be adjourned for more than three times and the suit has to be disposed of within six months from its institution. Section 6 provides that subject to the provisions of section 7, the proceeding, order, judgment and decree of an Artha Rin Adalat cannot be questioned before any Court or any other authority. An application by a defendant under Order IX rule 13 CPC will not be entertainable unless half of the decretal amount is deposited along with the application. Section 7 provides that an aggrieved person may appeal against the judgment or decree of an Artha Rin Adalat to the High Court Division within 30 days from the date of judgment or decree, provided that no appeal shall lie against an interlocutory order of an Artha Rin Adalat. If a defendant wishes to file an appeal against a decree of the Artha Rin Adalat then he has to deposit to the trial Court at least half of the decretal amount (now 25%) before filing the appeal and unless the said deposit is made his appeal will not be maintainable, A defendant can file an appeal against a final order under Order IX rule 13 CPC or against the original judgment and decree within 30 days of the passing of the said final order to the High Court Division only on depositing half (now 25%) of the decretal amount. Section 8 also imposes a restriction on the Artha Rin Adalat to allow instalments in the payment of decretal dues.
11. These are the express departures from the corresponding provisions in the Code of Civil Procedure.
12. The Adalat Act, however, does not contain any express provision barring a defendant from claiming a set-off or counterclaim in a written statement. The question is, whether the bar is contained in any other provision of the Adalat Act impliedly.
13. If the Adalat Act is read as a whole, it will be found that it contains four different kinds of subject matters, namely, (i) the jurisdictional matter setting out the parameter and boundaries of the special Court set up under a special legislation (section 5(1) read with section 2(ka) and (kha)); (ii) establishment of the special Court and its administration (section 4 and section 5(2) and (3)); (iii) the procedural provisions (section 5(4), (5), (5Ka), (6) and section 6); and (iv) substantive rights (right of appeal under section 7).
14. The jurisdictional provisions in the Act are the overriding considerations in determining the applicability of the procedural provisions of the Code of Civil Procedure. The Artha Rin Adalat is not a full-fledged civil Court with all the powers and Jurisdictions of a civil Court. It is a civil Court of defined and limited jurisdiction. The procedural provisions in the Code of Civil Procedure must yield, first, to the jurisdictional boundaries of the Artha Rin Adalat and secondly, to the procedural provisions of the Adalat Act itself, if contrary or different. Hence the procedural right given to a defendant under Order VIII rule 6 CPC will be subject to the overriding consideration, namely, whether the Artha Rin Adalat has been conferred the jurisdiction to adjudicate upon a set-off or counterclaim. The main issue will be not whether the defendant has a procedural right to claim a set-off or counterclaim or whether. it has been expressly barred by the Adalat Act, but whether the Artha Rin Adalat itself has the jurisdiction conferred on it to adjudicate upon the set-off or counter-claim.
15. Sub?rule (1) of rule 6 of Order VIII makes it quite clear that a plea of set-off or counterclaim is a claim for satisfaction of a debt to the defendant. The plea of set-off sets off a further chain of lis. The plaintiff acquires the right to file a written statement to the defendant’s claim and the Court has to adjudicate upon, apart from the plaintiffs claim, the defendant’s claim as well. Order XX rule 19(1) of the Code of Civil Procedure requires the Court to mention the dues of the defendant separately in the decree. No difficulty arises if the Court moves from one adjudication to the other within jurisdiction. But, say, if the set?off or counterclaim exceeds the pecuniary limits of the jurisdiction of the Court, then under Order VIII rule 6(1) itself, the set?off or counterclaim is not maintainable. The Adalat Act is hovering over the Code of Civil Procedure. It does not give the Artha Rin Adalat any jurisdiction to adjudicate upon any matter other than that provided in section 5(1) of the Adalat Act. The moment the Artha Rin Adalat assumes the jurisdiction to try the defendant’s plea of a set?off or counterclaim, even within pecuniary jurisdiction, it transgresses beyond the overall jurisdictional limit of the Court, defined and delimited by the Adalat Act. The procedural right of the defendant will give way to the jurisdictional provisions of the Adalat Act. The procedure, by itself, will not confer jurisdiction upon the Artha Rin Adalat. The procedural right of a set?off or counterclaim is not higher than the Court’s jurisdiction itself. The trial Court therefore made a jurisdictional error in entertaining the set?off or counter-claim.
16. Our view therefore is that a defendant cannot claim in a written statement a set?off or counter-claim against the plaintiff in a suit filed under the Artha Rin Adalat Act. The bar to claim a set?off or counter-claim is not expressly contained in the Adalat Act, but it is impliedly contained in section 5(1), read with section 2(ka) and 2(kha) and in sections 5 (4) and 5(5) thereof. The Artha Rin Adalat, in our view, has no jurisdiction conferred on it to adjudicate upon a defendants plea of set?off or counter-claim. Its jurisdiction is not extended by the omission to bar other adjudications expressly in the statute. It will derive its jurisdiction from the express provisions of the statute and not from the procedural provisions of the Code of Civil Procedure.
17. We further hold that the defendant has a right to file a written statement under Order VII rule I CPC, as this procedural right is not inconsistent with the Adalat Act, but the, defendant has no procedural right to claim a set?off or counterclaim under rule 6 in a suit under the Adalat Act in whatever form, as rule 6 is inconsistent with the jurisdictional provisions of the Adalat Act. The High Court Division was right in its reasoning that what cannot be done directly cannot be done indirectly.
18. Mr. Syed Ishtiaq Ahmed contends next that not being a plaint the counterclaim was not liable to be dismissed under Order VII rule 11 CPC. Mr. M. Nurullah submits, on the other hand, that the effect of set?off under Order VIII rule 6(2) is that the written statement shall have the same effect as a plaint in a cross?suit so as to enable the Court to pronounce a final judgment in respect both of the original claim and of the set?off. Therefore, he submits, the counterclaim could be rejected like a plaint under Order VII rule 11 CPC.
19. The better view is that a set?off or counter-claim is contained in a written statement and although its effect is that of a plaint in a cross?suit, it remains the subject matter of a written statement and cannot be severed from the written statement to be treated as a plaint under Order VII rule 11 CPC. Consequently, an application under Order VII rule 11 CPC for rejection of a counterclaim does not in terms of that Order and Rule lie and the plaintiff may take recourse to section 151 CPC for rejection of the set?off or counterclaim. Alternatively, the plaintiff may bring the maintainability of the set?off or counterclaim as an issue of law under Order XIV rule 2 CPC and have the issue decided first. No harm has been caused in this case however by taking recourse to Order VII rule 11 CPC as the trial Court had power under section 151 CPC to reject the counterclaim altogether on the basis that a still?born counterclaim cannot be allowed to proceed to the prejudice of the plaintiff, entailing costs, time and energy in prosecuting a non?maintainable claim. In view of the patent inadmissibility of the counterclaim within the framework of the Adalat Act, we will treat the plaintiffs application as one under section 151 CPC.
20. The next point urged by Mr. Syed Ishtiaq Ahmed is that the plaintiff?respondent’s writ petition before the High Court Division was not maintainable. Section 6 of the Adalat Act no doubt provides that the proceeding, order, judgment and decree of Artha Rin Adalat cannot be questioned before any Court or any other authority, but section 6 has been made applicable subject to the provisions of section 7. In other words, he submits, the provisions of section 7 are the master provisions and section 6 is subordinate to section 7. Section 7 provides for an appeal against the judgment or decree of an Artha Rin Adalat to the High Court Division within 30 days from the date of judgment or decree. By providing an appeal to the High Court Division, he submits, the Adalat Act has very clearly made the Artha Rin Adalat amenable to the revisional jurisdiction of the High Court Division. The proviso to section 7 provides that no appeal shall lie against an interlocutory order of an Artha Rin Adalat, which, he submits, means that an appeal is barred but a revision shall lie before the High Court Division in respect of both appealable orders and revisional orders. He submits that the ouster of jurisdiction of a Superior Court cannot be lightly inferred and there being no express ouster of the revisional jurisdiction of the High Court Division, an implied ouster cannot be inferred in the scheme of the Adalat Act.
21. Mr. Md. Nurullah, on the other hand, supports the judgment of the High Court Division on this point.
22. Revisional jurisdiction of the High Court Division is provided for in section 115 of the Code of Civil Procedure and in making under section 6 the proceeding, order, judgment and decree of an Artha Rin Adalat not amenable to interference by any Court or authority, the aim of the Adalat Act was to create departures from the Code of Civil Procedure. Section 7, it may be said, was meant to be an exception to this complete ouster of interference. An exception has been made in respect of a judgment and decree in section 7(1). Another exception has been made in respect of a final order under Order IX rule 13 CPC. In both cases appeal will be to the High Court Division. There is room for argument that both the appellate and revisional powers of interference with any “order”, interlocutory or otherwise, is expressly barred by section 6. The proviso to section 7(1) barring an appeal against an interlocutory order has been provided for only as a measure of abundant caution. In other words, section 6 is the master ouster provisions, section 7 is an exception to that ouster. The exception cannot render the ouster provision nugatory. There is scope for argument that if both appellate and revisional interlocutory orders of an Artha Rin Adalat are amenable to the revisional jurisdiction of the High Court Division, then section 6 is rendered largely nugatory. There was no need to say in section 6 that no “order” of an Artha Rin Adalat is amenable to interference by any Court or authority, when in the next breath all interlocutory orders, appellate and revisional, are supposedly made amenable to the revisional jurisdiction of the High Court Division. There is also scope for further argument that revision is impliedly barred because the Adalat Act being a special legislation setting up a special Court the remedies will follow as provided therein and if there is any exclusion indicated therein, as in section 6, it will include a remedy under the general law.
23. Our view is, that in this case it matters little whether the High Court Division arrived at its decision on the counterclaim by way of revision or writ, because the counterclaim was not patently maintainable and there is nothing wrong in the finding of the High Court Division on this material question.
24. Mr. Syed Ishtiaq Ahmed next submits that in case this Court dismisses the appeal the written statement filed by the appellants may be returned along with the Court fees paid so that the appellants may file a fresh written statement without the counterclaim and may file a suit against the plaintiff in a proper forum using the Court fees they have paid.
25. We do not think this is necessary. The written statement in paragraphs 1-20 contains a full defence of the suit and the defendants need not be given any further opportunity to file any fresh written statement. The Court fees paid cannot be returned because once used the Court fees paid will have no further use to the appellants.
The appeal is therefore dismissed without costs. Paragraphs 21-24 of the appellants’ written statement is struck off and the counterclaim is rejected as being not maintainable under the Adalat Act.
Source : 46 DLR (AD) (1994) 174