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CASE NO.: Appeal (civil)  5782 of 2006

PETITIONER: Southern Petrochemicals Industries Corporation Ltd

RESPONDENT: Administrator of Specified Undertaking of Unit Trust of India and others

DATE OF JUDGMENT: 13/12/2006

BENCH: B.P. Singh & Altamas Kabir

JUDGMENT: J U D G M E N T (Arising out of SLP) No.25643 OF 2004)  

B.P. SINGH, J.

       Special Leave granted.         In this appeal by special leave, the appellant M/s. Southern  Petrochemicals Industries Corp. Ltd. has impugned the judgment and order  of the High Court of Judicature at Bombay dated August 10, 2004 in Writ  Petition No.5758 of 2004 upholding the order passed by the Chairperson of  the Debts Recovery Appellate Tribunal in Misc. Appeal No.132 of 2004.   The High Court held that the action brought against the appellant company  by respondents 1 and 2 herein for recovery of debts due to them, was rightly  entertained by the Tribunal constituted under the Recovery of Debts Due to  Banks and Financial Institutions Act, 1993, which had jurisdiction to  entertain the claim.  The objection to the jurisdiction of the Debts Recovery  Tribunal was taken at the threshold and, therefore, in this appeal we are not  concerned with the merit of the claims of respondents 1 and 2.

       The questions which arise for consideration in this appeal are whether  respondents 1 and 2, namely, Administrator of Specified Undertaking of  Unit Trust of India and UTI Trustee Company Private Limited are "financial  institutions" within the meaning of that term in the Recovery of Debts Due  to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the  ’DRT Act’).  If the answer is in the affirmative, whether the action brought  by them before the Debts Recovery Tribunal is for recovery of debts due to  them from the appellant herein, and not due to any other person on whose  behalf the aforesaid respondents are suing.

       The factual background in which these questions arise is as follows:-         Under a common loan agreement dated October 1, 1992 executed  between the Unit Trust of India (for short ’UTI’), the Industrial  Development Bank of India (for short ’IDBI’) as the lead institution, IFCI,  respondent No.4 herein, ICICI Ltd., respondent No.5 herein, and the  appellant herein, a sum of Rs.10 crores was advanced to the appellant for its  project on the terms and conditions contained therein.  The UTI also  advanced a sum of Rs.25 crores against privately placed debentures.  The  appellant Company accumulated liabilities exceeding Rs.1,000 crores and  defaulted in its obligation to the UTI under the common loan agreement.   The Reserve Bank of India was contemplating a restructure scheme pursuant  to which all the creditors of the appellant company met in September, 2003  to consider proposals for reduction in the rate of interest and fresh  scheduling of re-payment etc..  There was a general consensus among the  other creditors but the Unit Trust of India did not agree with the suggested  scheme and instead filed a claim under the DRT Act being O.A. No.237 of  2003.

       At this stage, it may be noted that under the UTI (Transfer of

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Undertaking and Repeal) Act, 2002 (hereinafter referred to as ’UTI Act,  2002’), respondent No.1, the Administrator of Specified Undertaking of Unit  Trust of India, and respondent No.2 UTI Trustee Company Private Limited,  were created.  The Unit Trust of India Act, 1963 was repealed and the Board  of Trustees referred to in Section 10 of the said Act stood dissolved.

       In O.A. No.237 of 2003, the appellant filed a Misc. Application on  December 12, 2003 praying for dismissal of the O.A. on the ground that  respondents 1 and 2 not being "financial institutions" within the meaning of  that term in the DRT Act, the Tribunal under the Act had no jurisdiction to  entertain and decide the application filed by respondents 1 and 2 for alleged  recovery of debts due to them.  The Debts Recovery Tribunal by its order of  February 12, 2004 dismissed the said application.  The appellant challenged  the order of the Tribunal before the Debt Recovery Appellate Tribunal but  the appeal was also dismissed on May 5, 2004.  The Appellate Tribunal held  that respondents 1 and 2 were "financial institutions" as defined by Section 2  (h) (i) of the DRT Act and, therefore, the application by them for recovery of  debts due from the appellant was maintainable under Section 19 of the DRT  Act.

       The Appellate Order was challenged before the High Court of  Bombay in writ petition No.5758 of 2004 which was also rejected on August  10, 2004.  The appellant has preferred this appeal by special leave  impugning the judgment and order of the High Court.

       We may very briefly notice the findings recorded by the High Court.   The High Court held that the provisions of Section 18 of the UTI Act, 2002  has the effect of substituting in every Act, Rule, Regulation enacted by the  Parliament and/or Notification issued thereunder by the Central  Government, the names of respondents 1 or 2 in place of the words "Unit  Trust of India", as the case may be. In view of the provisions of Section 18,  no further amendment was required to be effected separately and  independently in every Act, Rule, Regulation enacted by the Parliament.   The whole purpose of Section 18 was to bring about this effect so that it  became unnecessary to make numerous amendments in the various Acts,  Rules and Regulations etc.  The Parliament had the legislative competence  to enact such a provision which it has done.  Referring to the Companies Act  it held that by virtue of the provisions of Section 18 of the UTI Act, 2002,  the provisions of Section 4A of the Companies Act also stood amended.  As  a result, instead of words "Unit Trust of India" found in Clause (v) of sub- section (1) of Section 4A of the Companies Act, the names of respondent 1  or 2, as the case may be, stand substituted.  As a necessary consequence  respondents 1 and 2 are deemed to be "financial institutions" under Section  4A of the Companies Act.  Such being the legal effect respondents 1 and 2  shall also be deemed to be "financial institutions" under Section 2(h) (i) of  the DRT Act.  Consequently, the application filed by respondents 1 and 2  was maintainable, they being "financial institutions" suing for the recovery  of debts due to them.

       The High Court also negatived the contention urged on behalf of the  appellant that even if respondents 1 and 2 were financial institutions, they  could not maintain the Original Application before the Debts Recovery  Tribunal since they were suing in the capacity of debenture trustee holders  or as agent of the Central Government, and not claiming recovery of amount  due to them.  The judgment of the Bombay High Court in Krishna Filaments  Limited Vs. Industrial Development Bank of India & Ors. (2004) 118  Company Cases 356 was distinguished on facts.

       Shri K.K. Venugopal, senior advocate, appearing on behalf of the  appellant advanced four main submissions before us.  Firstly, he submitted  that the use of the words "as the case may be" in Section 18 of UTI Act,  2002 introduced an element of uncertainty.  Section 18 seeks to substitute in  the place of the Unit Trust of India, the names of respondents 1 and 2 herein  in all Acts, Rules or Regulations etc.  This provision does not lay down with  any certainty as to which of the two respondents shall be deemed to be a

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financial institution in a particular Act, Rule or Regulation.  The use of the  words "as the case may be" could not be included in a definition clause.  It is  not permissible to say in a definition clause that in each case it must be  discovered which of the two names is more appropriate.  According to him,  the language of Section 18 does not at all give effect to the purpose for  which it was enacted.  Secondly, he submitted that under the DRT Act, the  debt sought to be recovered must be due to the financial institution.  A  financial institution acting as an agent cannot claim on behalf of its principal  which is not a financial institution.  The claim must be in its own right and  not on behalf of its principal which is not a financial institution.  Relying on  the provisions of the Act he contended that the Administrator acts as an  agent of the Central Government.  The legislative scheme of the UTI Act,  2002 disclosed the existence of principal agent relationship and, therefore, as  such agent the Administrator could not maintain a claim under the DRT Act.   Similarly, a trustee also could not invoke the provisions of the DRT Act.  He  submitted that the term "vested" may have different meanings depending  upon the context, the language, and the object of the statute.  It may mean  vesting of the assets or it may mean only vesting of the management.  The  statute must be construed having regard to its purpose with a view to find in  whom the assets vests.  According to him, the autonomy of the two entities  under the scheme envisaged by UTI Act, 2002, has been maintained only for  the purpose of accounting so that their performance may be objectively  judged.  While making payments, the value, assets and the liabilities of the  Trust must be taken into account.  Section 7 of the UTI Act, 2002 when it  uses the words "for and on behalf of" import the concept of agency under  Section 182 of the Contract Act.  He emphasised the distinction between  trustee and agent enunciated in W.O. Holdsworth & Ors. Vs. The State of  U.P. 1958 SCR 296  and submitted that the words used do not signify  vesting of ownership, but only vesting of management on behalf of the  Central Government.  The power to appoint the Administrator and his/its  advisors, as also the power to give directions vests in the Central  Government.  In any event, a financial institution could not recover dues  under the DRT Act acting as a trustee.  Far reaching and adverse  consequences may follow if banks are allowed to sue under the DRT Act in  such or similar capacity that is agent, trustee etc.  

       Thirdly, he submitted that there was no plea raised on behalf of  respondents 1 and 2 that the funds invested came out of the assets and  schemes entrusted to them.

       Lastly, it was submitted that under Section 19 B of the Unit Trust of  India Act, 1963 special provision for enforcement of claim by the Trust have  been made which were quite effective and sufficient.  The stringent  provisions contained therein were sufficient to protect the interest of the Unit  Trust of India.   On the other hand, Section 19 of the DRT Act provides for  another procedure for recovery of debts due to banks and financial  institutions.  Relying upon the judgment of this Court in Chhagan Lal  Magan Lal (P) Ltd. etc. etc. Vs.  Municipal Corporation of Greater Bombay  and Ors. etc. etc. (1974) 2 SCC 402, he submitted that the two procedures  laid down under two different acts for recovery of dues violated Article 14  of the Constitution of India.

       After submissions were made by the respondents herein, Shri  Venugopal did not press the last two submissions noted above.  The  submission based on Section 5(4) of the UTI Act, 2002 was not pressed  since it touched the merit of the claim of respondents 1 and 2, which could  not be gone into at this stage.  Similarly, the submission based on Section 19  B of the Unit Trust of India, 1963 and Section 19 of the DRT Act was not  pressed in view of the principles laid down by this Court in its judgment in  Gujarat State Financial Corporation Vs. Natson Manufacturing Co. Pvt.  Ltd. and Ors. (1979) 1 SCC 193.  We shall not therefore, notice the  submissions urged by the respondents in response to the aforesaid two  submissions not pressed by Shri Venugopal.

Shri R.F.Nariman, senior counsel appearing on behalf of the

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Administrator, respondent No.1, submitted that Section 7 of the UTI Act,  2002 gives effect only to a part of the scheme which must be understood in  the background of the larger scheme envisaged by the Act read as a whole.   Under Section 3 of the Act the statutory successor is the Central  Government and the share capital vests in the Central Government.  Refund  of the share capital is to be made by the Central Government to the  contributors named therein.  It is for this reason that the Central Government  steps in.  Under Section 4, the undertaking (excluding the specified  undertaking) vests in the Specified Company.  The specified undertaking  vests in the Administrator under Section 5.  This is the scheme of transfer  and, therefore, Sections 7 and 18 of the Act must be read harmoniously.  He  further submitted that even if it is assumed for the sake of argument that the  Administrator acts as an agent of the Central Government, that is immaterial  because the Administrator and the Specified Company are deemed to be  "financial institutions" by reason of Section 18 of the Act read with Section  4A of the Companies Act.  In any event, in this case, the facts are quite clear  and respondents 1 and 2 have sued for recovery of amounts due to them, and  they have not acted as an agent or as a debenture trustee.                 Shri Rakesh Dwivedi, senior advocate appearing on behalf of the UTI  Trustee Company \026 respondent No.2 herein drew our attention to Section 3  of the Unit Trust of India Act 2002 and submitted that the aforesaid  provision refers to "the initial capital of the Trust".  To understand that term  one must refer to Section 4 of the Unit Trust of India Act, 1963 which  provided for the initial capital of the Trust.  Section 4 aforesaid provided that  the initial capital of the Trust shall be five crores of rupees divided in the  form of certificates each of which shall be of such face value as may be  prescribed and contributed in the manner hereinafter referred.  Sub-section   (2) refers to the contribution to be made by the Reserve Bank of India, the  Life Insurance Corporation, the State Bank and the subsidiary banks and  other institutions.  Section 22 of the 1963 Act provided that the capital of the  Trust in relation to the first unit scheme shall consist of the initial capital, the  unit capital of the said scheme, any reserves created for that scheme etc. etc.    Thus when Section 3(2) of 2002 Act refers to "the initial capital", it refers to  the initial capital created under Section 4 of the Unit Trust of India Act,  1963.   

He submitted that under the UTI Act, 2002 the initial capital has to be  refunded by the Central Government. Thereafter Sections 4 and 5 of the UTI  Act, 2002 Act deal with the Undertaking of the Trust and the Specified  Undertaking of the Trust which vest in the Specified Company and the  Administrator respectively. The Undertaking as well as the Specified  Undertaking represent the assets, schemes etc. which were created under  various Schemes under the Unit Trust of India Act, 1963.  Each of the  Schedules represent the business and liabilities etc.   Under Section 3 the  initial capital is refunded in the manner prescribed and the other assets are  divided in the manner provided.  Under the proviso to Section 4 if any  business, asset or property is not represented or related to the Undertaking or  Specified Undertaking, it shall vest in the Central Government.  Thus under  Section 3 the initial capital is refunded.  Under Sections 4 and 5 the  business, assets and properties are divided and while the Specified  Undertaking of the Trust vests in the Administrator, the Undertaking vests in  the Specified Company.  Whatever remains vests in the Central  Government.  This represents a complete scheme under which the entire  assets and liabilities are distributed and stand refunded or vested as the case  may be, in accordance with the provisions of Sections 3, 4 and 5.

       He submitted that Section 7 no doubt refers to the appointment of  Administrator of the Specified Undertaking for the purpose of taking over  the administration thereof and to carry on the management for and on behalf  of the Central Government.  The Central Government has been given powers  to issue directions.  He submitted that such control is exercised over every  Government Corporation.  The provisions of the Act vest the power to  administer in the Administrator, reserving to the Central Government the  right to regulate the exercise of its powers and functions.  This does not

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prevent the Administrator from acting on his own.  As an Administrator he  has power to recover dues owing to the Specified Undertaking.  The very  wide powers vested in the Administrator have been enumerated in Section  10 of the Act.  He also submitted that in the instant case the Administrator  had acted to recover the amount due to the Specified Undertaking and  similarly the Specified Company had taken action to recover dues owing to  it.  In the instant case there is no dispute that the amounts sought to be  recovered were paid by the Unit Trust of India and those amounts are now  sought to be recovered by respondents 1 and  2 in whom the rights vest to  recover the amounts due.                   The Learned Additional Solicitor General appearing on behalf of the  Union of India drew our attention to the definition of "public financial  institution" under Section 2(fa) of the Unit Trust of India Act, 1963 and  submitted that it includes every financial institution other than the Trust  specified by or under Section 4-A of Companies Act, 1956.  Section 2(e) of  the UTI Act, 2002 defines the "financial institution" as having the same  meaning assigned to it in clause (h) of Section 2 of the DRT Act, 1993.   Section 2(h) of the DRT Act, 1993 defines the "financial institution" to  mean a public financial institution within the meaning of Section 4-A of the  Companies Act, 1956 and such other institution as the Central Government  may by Notification specify. He, therefore, submitted that High Court was  right in holding that Section 18 effected an amendment in Section 4-A of the  Companies Act with the result that instead of "Unit Trust of India" the  "Specified Company" and the "Administrator" stood substituted.  They  being financial institutions have every right to invoke the provisions of the  DRT Act.   

       Before considering the submissions advanced on behalf of the parties,  it may be useful to notice some of the provisions of the UTI Act, 2002.  The  definitions of "financial institution", "Specified Company", the "Specified  Undertaking" and "Undertaking" are relevant and they define as follows :- " (e) "financial institution" shall have the meaning  assigned to it in clause (h) of section 2 of the Recovery of  Debts Due to Banks and Financial Institutions Act, 1993; (h) "specified company" means a company to be formed  and registered under the Companies Act, 1956 (1 of  1956) and whose entire capital is subscribed by such  financial institutions or banks as may be specified by the  Central Government, by notification in the Official  Gazette, for the purpose of transfer and vesting of the  undertaking; (i) "specified undertaking" includes all business, assets,  liabilities and properties of the Trust representing and  relatable to the schemes and Development Reserve Fund  specified in the Schedule I; (l) "undertaking" includes all business, assets, liabilities  and properties of the Trust representing and relatable to  the schemes and plans specified in the Schedule II;"         Sections 3 and 4 provide as follows -  

"3. Transfer of initial capital.-- (1) On the appointed day, the initial capital of the Trust,  contributed by the Development Bank, the Life Insurance  Corporation, the State Bank and the subsidiary banks and  other institutions under sections 4 and 4A of the Unit  Trust of India Act, 1963, as it stood immediately before  the commencement of this Act, shall stand transferred to,  and vest in, the Central Government (2) The initial capital contributed by the Development  Bank, the Life Insurance Corporation, the State Bank and  the subsidiary banks and other institutions shall be  refunded, by the Central Government, to such extent as  may be determined by it, having regard to the book  value, the assets and liabilities of the Trust

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4. Undertaking of Trust to vest in specified company  and specified undertaking of Trust to vest in  Administrator.-- (1) On such date as the Central Government may, by  notification in the Official Gazette, appoint, there shall be  transferred to, and vest in,- (a) the specified company, the undertaking  (excluding the specified undertaking) of the Trust  for such consideration and on such terms and  conditions as may be mutually agreed upon  between the Central Government and the  subscribers to the capital of the specified company; (b) the Administrator, the specified undertaking of  the Trust

(2) The decision of the Central Government, as to  whether any business, assets, liabilities or properties  represent or relate to the undertaking or specified  undertaking, shall be final: Provided that any business, asset or property which is not  represented or related to the undertaking or specified  undertaking, shall vest in the Central Government."

       Sub-section (1) of Section 5 must also be noticed which provides :-

"5. General effect of vesting of undertaking or  specified undertaking in specified company or  Administrator.-- (1) The undertaking of the Trust which is transferred to,  and which vest in, the specified company or the specified  undertaking of the Trust, which is transferred to, and  which vest in, the Administrator, as the case may be,  under section 4, shall be deemed to include all business,  assets, rights, powers, authorities and privileges and all  properties, movable and immovable, real and personal,  corporeal and incorporeal, in possession or reservation,  present or contingent of whatever nature and  wheresoever situate including lands, buildings, vehicles,  cash balances, deposits, foreign currencies, disclosed and  undisclosed reserves, reserve fund, special reserve fund,  benevolent reserve fund, any other fund, stocks,  investments, shares, bonds, debentures, security,  management of any industrial concern, loans, advances  and guarantees given to industrial concerns, tenancies,  leases and book-debts and all other rights and interests  arising out of such property as were immediately before  the appointed day in the ownership, possession or power  of the Trust in relation to the undertaking or the specified  undertaking, as the case may be, within or without India,  all books of account, registers, records and documents  relating thereto and shall also be deemed to include all  borrowings, liabilities, units issued and obligations of  whatever kind within or without India then subsisting of  the Trust in relation to such undertaking or the specified  undertaking, as the case may be."         Sub-sections 1 to 3 of Section 7 read as under :- "7. Appointment of Administrator to manage  specified undertaking.-- (1) The Central Government shall, on and from the  appointed day, appoint a person or a body of persons, as  the "Administrator of the specified undertaking of the  Unit Trust of India" for the purpose of taking over the  administration thereof and the Administrator shall carry  on the management of the specified undertaking of the  Trust for and on behalf of the Central Government

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(2) The Central Government may issue such directions  (including directions as to initiating, defending or  continuing any legal proceedings before any court,  tribunal or other authority) to the Administrator as to his  powers and functions as that Government may deem  desirable and the Administrator may apply to the Central  Government at any time for instructions as to the manner  in which he shall conduct the management of the  specified undertaking or in relation to any matter arising  in the course of such management (3) Subject to the other provisions of this Act and the  Schemes made thereunder and the control of the Central  Government, the Administrator shall be entitled,  notwithstanding anything contained in any other law for  the time being in force, to exercise, in relation to the  management of the specified undertaking, the powers  specified under section 10 including powers to dispose of  any property or assets of such specified undertaking  whether such powers are derived under any law for the  time being in force."

Section 18 which is of considerable significance in this appeal is  reproduced below :- "18. Substitution in Acts, rule or regulation or  notification by specified company or Administrator in  place of Trust.\027 In every Act, rule, regulation or notification in force on  the appointed day, for the words "Unit Trust of India",  wherever they occur, the words, brackets and figures  "specified company referred to in the Unit Trust of India  (Transfer of Undertaking and Repeal) Act, 2002" or  "Administrator of the specified undertaking of the Unit  Trust of India referred to in the Unit Trust of India  (Transfer of Undertaking and Repeal) Act, 2002", as the  case may be, shall be substituted" It is also necessary to notice the relevant provisions of the Recovery of  Debts Due to Banks and Financial Institutions Act, 1993.  Section 2 (g)  defines "debt" as follows :- "[ (g) "debt" means any liability (inclusive of interest)  which is claimed as due from any person by a bank or a  financial  institution or by a consortium of banks or  financial institutions during the course of any business  activity undertaken by    the bank or the financial  institution or the consortium under any law for the time  being in force, in cash or otherwise,  whether secured or  unsecured, or assigned, or whether payable under a  decree or order of any civil court or any       arbitration  award or otherwise or under a mortgage and subsisting  on, and legally recoverable on, the date of the  application;]"           A "financial institution" under the said Act is defined by Section 2(h)  in the following words :- (i)     a public financial institution within the meaning of  section 4A of the Companies Act, 1956 (1 of  1956);

(ii)    Such other institution as the Central Government  may, having regard to its business activity and the  area of its operation in India by notification,  specify ;  

Section 17 deals with the jurisdiction, powers and authority of the  Tribunals constituted under the Act.  It reads as under :-

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"17. Jurisdiction, powers and authority of Tribunals.- -(1) A Tribunal shall exeroise, on and from the appointed  day, the jurisdiction, powers and authority to entertain  and decide applications from the banks and Financial  institutions for recovery of debts due to such banks and  financial institutions. (2) An Appellate Tribunal shall exercise, on and from the  appointed day, the jurisdiction, powers and authority to  entertain appeals against any order made, or deemed to  have been made, by a Tribunal under this Act."         Sub-sections (1) and (2) of Section 19 are also relevant.  They read as  under :- "19.    Application to the Tribunal. \026 (1)  Where a bank  is a financial institution has to recover any debt from any  person, it may make an application to the Tribunal within  the local limits of whose jurisdiction \026 (a)     the defendant, or each of the defendants where  there are more than one, at the time of making the  application, actually and voluntarily resides or  carries on business or personally works for gain, or (b)     any of the defendants, where there are more than  one, at the time of making the application, actually  and voluntarily resides or carries on business or  personally works for gain, or )       the cause of action, wholly or in part, arise. (2)     Where a bank or a financial institution, which has  to recover the debt from any person, has filed an  application to the Tribunal under sub-section (1) and  against the same person another bank or financial  institution also has claim to recover its debt, then, the  later bank or financial institution may join the applicant  bank, or financial institution at any stage of the  proceedings, before the final order is passed, by making  an application to that Tribunal."

       Section 34 gives to the Act over-riding effect by providing as  follows:-  "34. Act to have over-riding effect.--(1) Save as  otherwise provided in subsection (2), the provisions of  this Act shall have effect notwithstanding anything  inconsistent (herewith contained in any other law for the  time being in force or in any instrument having effect by  virtue of any law other than this Act." (2) The provisions of (his Act or the rules made  thereunder shall be in addition to, and not in derogation  of, the Industrial Finance Corporation Act, 1948 (15 of  1948), the Stale Financial Corporations Act, 1951 (63 of  1951), the Unit Trust of India Act, 1963 (52 of 1963), the  Industrial Reconstruction Bank of India Act, 1984 (62 of  1984) 2[, the Sick Industrial Companies (Special  Provisions) Act, 1985 (1 of 1986) and the Small  Industries Development Bank of India Act, 1989 (39 of  1989)]."         Before the High Court the main submission urged on behalf of the  appellant was that respondents 1 and 2 herein are not ’financial institutions’  within the meaning of DRT Act, 1993.  The respondents, however, relied on  Section 11 of the UTI Act 2002 and Section 2(h)(ii)(ii) of the DRT Act to  contend that the aforesaid respondents are ’financial institutions’ within the  meaning of the term in the DRT Act.  The High Court upheld the contention  of the respondents.  Section 18 of the UTI Act, 2002 in terms provide that  for the words "Unit Trust of India", wherever they occur in any Act, rule,  regulation, or notification, the words " Specified Company" and  "Administrator of the Specified Undertaking of the Unit Trust of India" shall  be substituted.  The effect of this provision is that in every Act, rule,

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regulation or notification the words "Unit Trust of India" are substituted by  the "Specified Company" and the "Administrator of the Specified  Undertaking" referred to in the UTI Act, 2002.  It is, therefore, not necessary  to pass a separate amending Act or to amend all the rules, regulations or  notifications by adopting an amending procedure.  Section 18 of the UTI  Act, 2002 operates by its own force to bring about the substitution.   Legislative policy adopted by the Parliament to enact a legislation which  effects an amendment in other Acts, rules, regulations, notifications etc. is  permissible subject to its legislative competence.  If the enactment brings  about such amendments as is within the legislative competence of the  Parliament and the statutes, notifications, etc. in which such amendment is  affected are also within the legislative competence of the Parliament, the  method adopted by the Parliament cannot be assailed.   Rather than enacting  several statutes and numerous amendments of rules, regulations,  notifications etc., the Parliament achieved this purpose by a single  enactment.           Section 4-A of the Companies Act provides that each of the financial  institutions specified in sub-section (1) shall be regarded for the purpose of  this Act, as a public financial institution.  The financial institutions specified  included the "Unit Trust of India" established under Section 3 of the UTI  Act, 1973.  By operation of Section 18 of the UTI Act, 2002, "Unit Trust of  India" is substituted by the "Specified Company" or "Administrator of the  Specified Undertaking", as the case may be.  Thus, the "Specified  Company" and the "Administrator of the Specified Undertaking" must be  deemed to be financial institutions specified in sub-section (1) of Section 4- A of the Companies Act.           This takes us to the definition of ’financial institution’ under the DRT  Act, Section 2(h) whereof defines a "financial institution" to mean a public  financial institution within the meaning of Section 4-A of the Companies  Act.  Consequently by reason of deemed amendment of Section 4-A of the  Companies Act, the "Specified Company" and the "Administrator of the  Specified Undertaking" come within the definition of financial institutions  as defined under Section 2(h) of the DRT Act.           Mr. Venugopal submitted that under Section 18 of the UTI Act, 2002  the substitution is of "Specified Company" or "Administrator of the  Specified Undertaking", "as the case may be".   According to him this brings  about an uncertainty and in each case it has to be discovered as to whether  one or the other is substituted.  According to him Section 18 which in a  sense is a definition clause should not permit such uncertainty.  We find no  merit in this submission.  By reason of Section 18 of the UTI Act, 2002, in  place of Unit Trust of India, both respondents 1 and 2 stand substituted.   Both are entitled to sue as financial institutions and the question whether  they have an enforceable claim must be decided in the facts and  circumstances of each case.  There is no uncertainty because the assets  possessed by these two identities are clearly enumerated in Schedules I and  II of the UTI Act, 2002.  We, therefore, do not find that the use of the words  "as the case may be" introduces any element of uncertainty.         The next question is whether respondents 1 and 2 are seeking to  recover the debts owing to them or whether they are acting as agent on  behalf of their principals, or as trustees.  The Scheme of the Act discloses that the Unit Trust of India created  under the Unit Trust of India Act, 1963 ceased to exist and in its place the  Specified Company and the Administrator of the specified undertaking of  the Trust were created which took charge of all the properties, business  assets, rights etc. of the erstwhile Unit Trust of India.  The initial capital of  the Trust stood transferred to and vested in the Central Government under  Section 3(1) of the Act.  Sub-section (2) however, mandated that the initial  capital contributed by the named contributors shall be refunded by the  Central Government to such extent as may be determined by it.  Section 21  provides for the repeal of the Unit Trust of India Act, 1963 and the  dissolution of its Board of Trustees.   Having done so UTI Act of 2002 by Section 4 thereof vested in the  specified company the undertaking of the Trust (excluding the specified  undertaking) for such consideration and on such terms and conditions as  may be mutually agreed upon between the Central Government and the

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subscribers to the capital and the specified company.  The decision of the  Central Government as to whether any business, assets, liabilities or  properties represent or relate to the undertaking or specified undertaking is  made final.  If there remained any business, asset or property which was not  represented or related to the undertaking or specified undertaking, that  vested in the Central Government.  In this manner, the erstwhile Unit Trust  of India ceased to exist and in its place a specified company and an  Administrator of the specified undertaking of the Trust came into existence.   The transfer and vesting of assets, rights etc. in these two bodies is in the  widest possible terms as would be obvious from a plain reading of Section 5  of the UTI Act, 2002.  It provides that what is transferred and vested in the  specified company or the Administrator of the specified undertaking, shall  be deemed to include:- "all business, assets, rights powers, authorities and privileges  and all properties, movable and immovable, real and personal,  corporeal and incorporeal, in possession or reservation, present  or contingent of whatever nature and wheresoever situate  including lands, buildings, vehicles, cash balances, deposits,  foreign currencies, disclosed and undisclosed reserves, reserve  fund, special reserve fund, benevolent reserve fund, any other  fund, stocks, investments shares, bonds debentures, security,  management of any industrial concern, loans advances and  guarantees given to industrial concerns, tenancies, leases and  book-debts and all other rights and interests arising out of such  property as were immediately before the appointed day in the  ownership, possession or power of the Trust in relation to the  undertaking or the specified undertaking, as the case may be".       

       Thus the transfer and vesting is complete. All contracts, deeds bonds,  guarantees, other instruments and working arrangements subsisting  immediately before the appointed day cease to be enforceable against the  erstwhile Trust but shall be of as full force and effect against or in favour of  the Specified Company or the Administrator, as the case may be, in which  the undertaking or specified undertaking has vested, and enforceable as fully  and effectually as if instead of the Trust, the Specified Company or the  Administrator, as the case may be, had been named therein or had been a  party thereto.  Similarly, all unit schemes taken by the Board of the erstwhile  Trust are deemed to have been taken by the Specified Company or the  Administrator as the case may be.         Having vested the undertaking of the Trust in the Administrator,  Section 7 of the Act provides for the appointment of the Administrator of the  specified undertaking who is entrusted with the task of taking over the  administration thereof and to carry on the management of the specified  undertaking of the Trust for and on behalf of the Central Government.  sub- section (2) of Section 7 empowers the Central Government to issue such  directions to the Administrator as to his powers and functions as the  Government may deem desirable.  The Administrator may also seek  directions from the Central Government as to the manner in which he shall  conduct the management of the specified undertaking or in relation to any  matter arising in the course of such management.   Much was sought to be made of the use of the words "carry on the  management of the specified undertaking of the Trust for and on behalf of  the Central Government" in Section 7 of the UTI Act, 2002.  It was also  emphasized that under sub-section (2) of Section 7 the Central Government  has been authorized to issue directions to the Administrator as to his powers  and functions and similarly permitted the Administrator to seek directions of  the Central Government as to the manner in which he shall conduct the  management of the specified undertaking or in relation to any matter arising  in the course of such management.  The power to issue directions of this  nature are to be found in several other statutes which create a Government  cooperation or other legal entity.   The power to issue directions vested in  the Central Government is with a view to provide policy guidance to the  Administrator.  The fact that the management is carried on by the  Administrator of the specified undertaking on behalf of the Central  Government which is authorized to issue directions to the Administrator

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does not detract from the fact that the "specified undertaking" vests in the  Administrator.  The wide sweep of the language employed in Section 5 of  the Act leaves no manner of doubt that the vesting in the Administrator or in  the Specified Company is complete.  The powers vested in the Administrator  under Section 10 of the Act cover almost every power of management and  administration.  Section 10 (1) (b) in particular authorizes him on the advice  of the Board of Advisors to invest, acquire, hold or dispose of securities and  to exercise and enforce all powers and rights incidental thereto including  protection or realization of such investment etc.  Thus, it is a part of the  power of management vested in the Administrator to invest as well as to  realize such investments.  Apparently therefore, if any amount is owing to  the specified undertaking, the Administrator has the authority to take all  necessary steps to realize any amount due to the specified undertaking.  The  statute vests this power in the Administrator.  It cannot therefore by any  stretch of imagination be assumed that the Administrator does not possess  the power to make recoveries in course of management of the specified  undertaking.  The mere fact that the Central Government may give him  directions or he may seek instructions from the Central Government of the  nature contemplated by sub-section (2) of Section 7, does not mean that the  power exercised by the Administrator are not the powers vested in him by  law.  Subject to such directions as may be given under the aforesaid sub- section, it is the Administrator who must exercise his power of management  and administration.  Apparently therefore in recovering dues owing to the  specified undertaking, the Administrator exercises the powers vested in him  under the Act in his own right since the undertaking vests in him, and the  Act vests in him wide powers of management and administration which  include the power to recover dues owing to the specified undertaking.  It is,  therefore, futile to contend that the Administrator acts as an agent of the  Central Government.  He acts in exercise of the powers vested in him by the  statute and in the manner prescribed by the statute.         Even assuming that the Administrator manages the specified  undertaking on behalf of the Central Government, that will not make any  difference.  The amounts sought to be recovered are allegedly owing to the  Specified Company and the Administrator, who as we have found are  "financial institutions" within the meaning of that term in the DRT Act,  1993.  Thus, the Specified Company and the Administrator of the Specified  Company are not seeking to recover any dues owing to the Central  Government, and therefore, they cannot be held to be acting on behalf of the  Central Government.  In their own right they are seeking to recover the  amounts due to them in exercise of status and power conferred upon them by  statute.  So viewed, the nature of control of the Central Government over  them is wholly irrelevant in considering the question of jurisdiction of the  Debts Recovery Tribunal to entertain such a claim.         Similarly, the vesting of the undertaking (excluding the specified  undertaking) in the Specified Company is also complete in terms of Section  5 of the Act.  Being a company, it is a distinct legal entity and, therefore,  must exercise its authority in accordance with law.  Advisedly, the  legislature did not vest the specified undertaking in a company as it has done  in the case of undertaking other than specified undertaking, because in so far  as the specified undertaking of the Trust is concerned, the Act contemplates  the redemption of all the schemes and the payment of entire amount to  investors.  After this is achieved, the Administrator in terms of Section 8 of  the Act shall vacate his office and forthwith deliver to the Central  Government, or any institution or officer specified by it, possession of all  assets and properties representing and relatable to the specified undertaking  which are in his possession, custody and control.  The Administrator of  specified undertaking is, therefore, constituted as a statutory authority under  the Act with wide powers and functions vests in him in relation to the  specified undertaking which also stand vested in him.  When he seeks to  recover dues owing to the specified undertaking he exercises his own  authority as Administrator and assumes powers which vests in him by law.    There is nothing in the Act which may justify the submission that the  specified company acts as a trustee.  It manages and executes the schemes  contained in Schedule I of the Act in accordance with the provisions of the  Act.

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       Learned counsel for the appellant submitted that under the Banking  Regulation Act, 1949 Section 6 authorises a banking company to engage in  business even as an executor.  According to him, an executor cannot recover  dues under the provisions of the DRT Act.  He placed reliance on the  judgment of the Supreme Court in State Bank of India Vs. Special Secretary  Land & Land Revenue & Reforms & Land & Land Utilisation Deptt. of W.B.  and Ors. 1995 Supp (4) SCC 30 particularly paragraph 5 thereof.  This Court  considered its earlier decision in Holdsworth (Supra).  The question which  arose for consideration of this Court was whether Section 19 of the Urban  Land (Ceiling and Regulation) Act, 1976 was attracted to vacant land of a  Trust created by a private individual, if a Bank accepted administration of  such Trust and became a trustee in the course of carrying on its permitted  commercial activity.  The decision in that case turned on the meaning of the  words "to hold" under Section 2(l) of the Act and interpreting the said term,  this Court held that the vacant land owned or possessed as owner or in  certain other capacities by Central Government or others as specified in sub- section (1) of the Section were exempted from the applicability of the  provisions in Chapter III of the Act.  Clause (iii) of sub-section (1)  mentioned banks falling within the meaning of the explanation given thereto  as those which fell in exempted categories.  The decision therefore, rested on  the meaning given to the term "to hold" in Section 19 of the Act.         Having examined the provisions of the UTI Act, 2002 we have no  doubt that vesting in the Administrator or the Specified Company is  complete. The concept of mere vesting of management cannot be imported  into the scheme of the Act.  The Administrator and the Specified Company  were therefore, fully authorized in law to recover the dues from the  appellants as "financial institutions".  The Debts Recovery Tribunal had  therefore undoubted jurisdiction to entertain their claims.   On the basis of the materials placed before us there is nothing to  suggest that they were acting either as agents of the Central Government or  as trustees.  We therefore, hold that they have acted in the exercise of power  vested in them by the UTI Act, 2002 and in their own right.   The High Court was, therefore, right in dismissing the writ petition  preferred by the appellants challenging the jurisdiction of the Debts  Recovery Tribunal. We find no merit in this appeal and the same is,  therefore, dismissed but without any order as to costs.