HDFC Bank Limited v. Bank of Bahrain & Kuwait BSC

14. The HDFC contends that through the Clearing House System BBK wrongly obtained credit of Rs.7.[5] Crores from the HDFC. Mr Virag Tulzapurkar submitted that there were no sufficient funds in Ashima’s HDFC account and there was an injunction restraining BBK from depositing the cheque. At least on these two grounds, he submitted that BBK obtaining credit of Rs.7.[5] Crores from HDFC Bank was illegal and improper. He submitted that in any event, the monies could be said to have been paid under a mistake and therefore, given under the provisions of Section 72 of Indian Contract Act such monies had to be returned by BBK to HDFC.

15. On 07 March 2005, HDFC filed an original application before DRT Mumbai against BBK and Ashima for recovery of amount of Rs. 7.[5] Crores. BBK and Ashima filed applications for rejection of these original application on the ground that the HDFC’s claim did not contribute a “debt” under Section 2(g) of the said Act and therefore, that the DRT lack its jurisdiction to entertain the original application.

16. By order dated 26 October 2005 (Exh-K) the DRT rejected Ashima’s and BBK’s applications and held that the amount claimed by HDFC Bank constituted a debt under Section 2(g) of the said Act and therefore, the DRT had jurisdiction to entertain HDFC’s original application. Ashima and BBk instituted Appeal Nos. 89 of 2006 and 224 of 2007 challenging DRT’s order dated 26 October 2005 holding that it had jurisdiction to entertain and proceed with HDFC’s original application. On 11 July 2014, the DRAT in response to the Purshis filed by Ashima permitted Ashima to withdraw Miscellaneous Appeal No.89 of 2006

17. This order dated 11 July 2014 at Exhibit-L (Page 138) reads as follows:- “The counsel for the appellant has filed a purshis for permission to withdraw the appeal with liberty to the appellant to keep all the issues open on merits of the case. Hence the appeal is dismissed as withdrawn.”

18. Dr, Saraft handed in the purshis filed by Ashima. This purshis seeks permission of the DRAT to withdraw Miscellaneous Appeal No.89 of 2006 without prejudice to the rights and contentions of the Appellants raised in their written statement and memo of appeal “keeping all issues open, including issue “whether claim made by the HDFC Bank amounts to a “debt” under Section 2(g) of the said Act.”

19. Similarly, on 11 July 2014, the counsel for BBK submitted that he was not pressing the BBK’s appeal. Accordingly by a separate order dated 11 July 2014 in Appeal No.224 of 2007, the DRAT dismissed the Appeal as not pressed and all issues were kept oen to rthe DRT to dispose of the same on merits without influence of both the court’s order.

20. The crucial paragraph Nos. 4 to 7 of the order dated 11 July 2014 disposing of Appeal No.224 of 2007 at Exhibit-M (pages 139 – 140) are transcribed below for the convenience of reference:-

21. After the dismissal of Ashima’s and BBK’s appeals by orders dated 11 July 2014 capable of more than one interpretations. Ashima and BBK filed applications urging framing of preliminary issue on the jurisdiction and maintainability of the HDFC’s original application. The preliminary issue concerned whether the HDFC’s claim constituted a “debt” under Section 2(g) of the said Act.

22. By a common order dated 29 July 2016, the DRT rejected such applications observing that this issue would have to be taken up together with other issues at the final hearing stage.

23. By order dated 30 June 2017 the DRT allowed the HDFC’s original application and directed Ashima and BBK to jointly and severally pay a sum of Rs.9,14,23,232.41 along with at the rate of 12% p.a. on the principal amount of Rs.7.[5] crores to the HDFC.

24. The BBK and Ashima instituted Appeal Nos.[2] of 2018 and 32 of 2018 respectively to challenge the DRT’s order dated 30 June

2017. By impugned common order dated 26 April 2024, the DRAT has allowed the appeals, set aside DRT’s order dated 30 June 2017 and remanded the matters to DRT to consider the issue of jurisdiction raised by BBK and Ashima together with other issues afresh.

25. The operative portion of the DRAT’s impugned common order dated 26 April 2024 (Exhibit – A at pages 30 to 39) reads as follows:-

26. These Petitions challenge the DRAT’s impugned common order dated 26 April 2024 on the grounds urged by the respective Senior Advocates as noted above. On evaluating the rival contentions and the material on record, we clarify that we do not wish to go into the issue as to whether the DRT in this case has decided the issue of jurisdiction or in any evident, decided the issue of jurisdiction correctly in the context of HDFC’s claim constituted a “debt” under Section 2(g) of the said Act i.e. an issue which should have been addressed and decided by the DRAT itself. The factual material sufficient for deciding inter-alia the issue of jurisdiction or for that matter all other issues relating to the entitlement or otherwise of the HDFC was very much on record. The issue whether the questions like whether the issue of jurisdiction stood concluded either by earlier orders of DRAT or by the order of Gujarata High Court in an appeal against the order disposed of on 28 February 2014, were legal issues that the DRAT was duty bound to address and decide upon. Similarly, even the issue whether HDFC’s claim constituted a “debt” under Section 2(g) of the said Act, was a legal issue squarely raised before the DRAT and which, the DRAT should have itself decided. The DRAT also had sufficient factual material before it to decide the issue of entitlement of HDFC to claim against Ashima and BBK.

27. Given the above position, we are satisfied that the DRAT was not at all justified in simply remanding the matter to DRT for deciding the issue of jurisdiction and all other issues in the original application “afresh”. The DRAT, without discharging its of an first appellate authority, has simply chosen to remand the matter to DRT without recording any cogent reasons for adopting this easy course of action.

28. Mr. Virag Tulzapurkar was justified in submitting that DRAT’s common order dated 26 April 2024 must be set aside and the DRAT must be directed to decide all issues one way or the other in Appeal Nos. 2 of 2018 and 32 of 2018 instituted by the Respondents. He submitted that the remain was not a justified and was contrary to settled legal position that remands must not be ordered routinely or lightly.

29. The contentions of the learned Senior Advocates for the Respondents about the Respondents being entitled to right of an appeal cannot be a good ground to sustain the remand order. By setting aside the remand order and restoring the Respondents’ appeals, the Respondents would get an effective opportunity of prosecuting their appeals. On all contentions of all parties are proposed to be kept open.

30. This was admittedly not a case where the DRT had decided on a preliminary point without recording findings on other issues. In such a case if the appellate court reverses the decree on a preliminary point, the appellate court may remand the matter to the trial court to decide other issues and determine the suit. This is what is provided under Order 41 Rule 23 of the Code of Civil Procedure. Under Order 41 Rule 23-A the appellate court can order a remand even in other cases not covered by Order 41 Rule

23. However, by a catena of decisions, the Hon’ble Supreme Court has clarified that the remand cannot be ordered lightly. In a case where the provisions of Order 41 Rule 23 do not apply, the remand can be ordered if considered necessary by the Appellate Court in the interest of justice. The Hon’ble Supreme Court has held that as far as possible the Appeal Court should dispose of the appeal finally unless remand is imperative.

31. In Arvind Kumar Jaiswal (D) (supra), the Hon’ble Supreme Court made the following observations which apply to the facts and circumstances of the present matter:- “An order of remand prolongs and delays the litigation and hence, should not be passed unless the appellate court finds that a re-trial is required, or the evidence on record is not sufficient to dispose of the matter for reasons like lack of adequate opportunity of leading evidence to a party, where there had been no real trial of the dispute or there is no complete or effectual adjudication of the proceedings, and the party complaining has suffered material prejudice on that account. Where evidence has already been adduced and a decision can be rendered on appreciation of such evidence, an order of remand should not be passed remitting the matter to the lower court, even if the lower court has omitted to frame issue(s) and/or has failed to determine any question of fact, which, in the opinion of the appellate court, is essential. The first appellate court, if required, can also direct the trial court to record evidence and finding on a particular aspect/issue in terms of Rule 25 to Order XLI, which then can be taken on record for deciding the case by the appellate court. In the present case, the High Court, as the first appellate court, which is also a court of fact and law, has passed an order of remand observing that the judgment of the trial court was, in its opinion, not written as per the mandate of Section 33 and Rule 4(2) and 5 of Order XX of the Code, as the discussion and reasoning on certain aspects was not detailed and elaborate. This is not a case where the evidence is not adduced and on record. In fact, the first portion of the judgment of the High Court elaborately records the contention of the parties and the facts and evidence relied by the parties. In view of the aforesaid, we allow the present appeal, and set aside the impugned judgment and restore the first appeal to its original number before the High Court, to be decided on merits and in accordance with law, as per the provision of order XLI of the Code. As the appeal has been pending for a considerable time, the High Court would decide the appeal expeditiously as possible.”

32. In Ashwinkumar K Patel (supra), the Hon’ble Supreme Court held that the High Court should not ordinarily remand a case under Order 41 Rule 23 CPC to the lower court merely because it considered that the reasoning of the lower court in some respects was wrong. Such remand orders lead to unnecessary delays and cause prejudice to the parties to the case. When the material was available before the High Court, it should have itself decided the appeal one way or the other. It could have considered the various aspects of the case mentioned in the order of the trial court and considered whether the order of the trial court ought to be confirmed reversed or modified.

33. In Municipal Corporation, Hyderabad (supra), the Hon’ble Supreme Court reiterated that the Court should loathe to exercise its powers of remand routinely. It is not to be exercised by the appellate court only because it finds it difficult to deal with the entire matter. If it does not agree with the decision of the trial court, it has to come with a proper finding of its own. The appellate court cannot shirk its duties.

34. In S. P. Builders (supra), the learned Single Judge of Allahabad High Court, in the context of powers of DRAT ordering a remand, made relevant observation at paragraphs 10 to 14. The learned Single Judge held that the DRTA is not a body of limited jurisdiction. It exercises power coextensive with the DRT. If there was no want of any relevant material, if the DRT had not discussed some issues properly, it was open to the DRAT to consider itself all such issues and to decide the matter. That itself cannot be a reason to remand the matter to the DRT. Quoting the observations of Hon’ble M. Katju, J, as His Lordship then was, in Nehru Steel Rolling Mills Vs Commissioner of Sales Tax[5] it was held that a remand order should not be readily made and it should only be made when for very strong reasons the authority cannot itself dispose of the matter on merits. It seems that these remand orders were made by the authorities merely to get rid of the case so that the authority could avoid going into the matter deeply and deciding the issue once and for all. This kind of attitude is to be deprecated.

35. The learned Single Judge also referred to Abid Hasan Watch Company, Varanasi Vs. Commissioner of Sales Tax[6], in which it was held that in exceptional cases remand may be ordered, like when there has been no real trial. Mere insufficiency of evidence is no ground for allowing a party to adduce further evidence on remand. 1993 UPTC 407 1995 UPTC 1035 Remand with a view to enable a party to fill up lacuna in evidence is not permissible. In protracted litigation the remand should not be resorted to on the ground that a final curtain should be drawn.

36. The Allahabad High Court also considered the Hon’ble Supreme Court’s decisions including the decision in Pushpa Devi Vs. Binod Kumar Gupta[7] where it was held that if the entire material is available and the parties have raised all issues before the Appellate Court, it should not remand the matter but decide it on its own merits. The approach of the DRAT in lightly remanding the matter to the DRT is contrary to law and precedence on the subject. No valid grounds have been assigned to resort to such remand. No difficulties have been cited for the DRAT to itself decide the legal and factual issues. The entire material was before the DRAT. The DRAT was in the best position to interpret its earlier orders. The remand has been ordered lightly and without taking cognizance of a law and the precedence on the subject.

37. The DRAT also failed to appreciate that the original application was filed by HDFC in 2005. The DRT rejected the Respondents’ objection to maintainability on 26 October 2005. The Respondents’s appeals instituted in 2006 and 2007 were disposed of only on 11 July 2014. The DRT allowed HDFC’s original application on 30 June 2017. The impugned common order has been made on 26 April 2024. Thus, the matter is lingering for last almost 20 years. Still, the DRAT has remanded the matter to DRT without recording any cogent reasons to justify such remand.

38. For all the above reasons, we set aside the DRAT’s impugned common order dated 26 April 2024 in Appeal Nos. 2 of 2018 and 32 of 2018 instituted by the Respondents and restored these two AIR 2004 SC 1239 Appeals to the file of DRAT. The DRAT must now decide these appeals in accordance with law without once again remanding them to DRT.

39. All parties contentions are left open and should be considered by the DRAT in accordance with law.

40. Since the impugned common order dated 26 April 2024 is now set aside, the reliefs in BBK’s Writ Petition No.12708 of 2024 are rendered infructuous or in any event, cannot be granted. BBK’s Writ Petition No.12708 of 2024 is liable to be dismissed and is hereby dismissed without costs order.

41. The rule is accordingly made absolute in the above terms in Writ Petition No.9344 of 2024 and discharged in Writ Petition No.12708 of 2024.

42. There shall no order for costs.

43. The parties are directed to now appear before the DRAT on 05 March 2025 at 10.30 am and file an authenticated copy of this judgment and order.

44. Having regard to the pendency of this matter since 2005, we request the DRAT to dispose of the Respondents’ Appeal Nos. 2 of 2018 and 32 and 2018 as expeditiously as possible. Even the parties must cooperate with the DRAT in expeditious disposal of these appeals. (Jitendra Jain, J) (M.S. Sonak, J)