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PETITIONER: UNITED BANK OF INDIA

       Vs.

RESPONDENT: THE DEBTS RECOVERY TRIBUNAL & ORS.

DATE OF JUDGMENT:       08/04/1999

BENCH: G.B.Pattanaik, M.B.Shah

JUDGMENT:

PATTANAIK, J.

       Leave granted.

     The  appellant,  United Bank of India filed a suit  in the  High Court of Calcutta which was registered as Suit No. 276  of  1991, claiming different reliefs against the  three defendants.   While  the  suit was pending,  the  Parliament enacted  the  Recovery of Debts Due to Banks  and  Financial Institutions  Act,  1993  (hereinafter referred to  as  ’the Act’) to  provide  for the establishment of  tribunals  for expeditious  adjudication and recovery of debts due to Banks and  Financial  Institutions  and   for  matters   connected therewith or incidental thereto.  The Act came into force on 24th  of June, 1993.  By operation of Section 31 of the Act, the suit in question stood transferred to the Debts Recovery Tribunal,  established  under the Act and was renumbered  as Transferred  Application No.  163 of 1996.  The  respondents moved  an  application  before   the  tribunal,   contending thereunder   that  the  tribunal   had  no  jurisdiction  to entertain  suit  in  question in view of the nature  of  the reliefs prayed for and as such, plaint should be returned to the plaintiff for being filed in the High Court itself.  The tribunal   disposed  of  the   applications  filed  by   the defendants holding that the tribunal has the jurisdiction to decide  the  claim of the plaintiff.  The three  defendants, thereafter  filed three separate applications under  Article 227  of  the Constitution of India, challenging  the  orders passed  by  the tribunal.  By the impugned order,  the  High Court  set aside the order of the tribunal on a finding that under  the Act, the tribunal gets jurisdiction to  entertain and  decide  applications  from   the  banks  and  financial institutions  for  recovery of debts due to such  banks  and financial institutions but the plaintiff’s claim in question cannot  be held to be a ’debt’ as defined in Section 2(g) of the  Act  inasmuch as the claim is of an  undetermined  sum, which  is  required to be ascertained upon an inquiry to  be conducted  by the tribunal.  The High Court was also of  the view  that  the  suit  as framed, is  one  for  damages  and compensation  which  is required to be quantified  before  a decree  to be passed and such a suit will not be within  the purview  of  the  provisions of the Act in  question.   With these conclusions, the applications of the defendants having been allowed, the plaintiff has approached this court.

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     Mr.   G.L.   Sanghi,  the   learned  Senior   Counsel, appearing  for  the  plaintiff-appellant contends  that  the plaint  read  as a whole on the basis of averments made  and the  reliefs sought for, it cannot be held to be a suit  for damages  but on the other hand, it is essentially a suit for realisation  of money due to a bank which has become due  in course  of the business activity undertaken by the bank  and as  such  it is a suit for recovery of a debt under  Section 2(g)  of  the  Act  and the High Court  committed  error  in holding that the tribunal had no jurisdiction.  Mr.  Sanghi, further  contended  that while deciding the question  as  to whether the claim in question can be adjudicated upon by the tribunal  constituted  under the Act, the substance  of  the matter  has to be looked into.  According to Mr.  Sanghi,  a suit  for  recovery of debt from one of the defendants  does not  cease to become so merely because certain ancillary and incidental  relief  has been sought for against  some  other defendants.  Mr.  Sanghi, lastly urged that the very purpose and  object  of  the Act will be frustrated if the  suit  in question  is  not allowed to be disposed of by the  tribunal constituted under the Act and on the other hand is relegated to  the ordinary civil court as has been ordered by the High Court  in the impugned Judgment.  According to Mr.   Sanghi, the  expression ’debt’ in Section 2(g) is of wide  amplitude and  there  should  be no justification to give  a  narrower meaning  and  thereby  limiting   the  jurisdiction  of  the tribunal.

     Mr.   Gupta, the learned Senior Counsel, appearing for the  defendants  on  the  other   hand  contended  that  the plaintiff’s  claim is one for damages and compensation which would  again  be  dependant upon the  inquiry  or  receiving information  from the defendants 2 and 3 with regard to  the refund  pay  orders and the statement of  accounts  thereof. According  to  Mr.   Gupta, howsoever  wide  the  expression ’debt’  in Section 2(g) of the Act may be, it will certainly not encompass within itself the claim of the plaintiff-bank, as  there  has been no borrowing from the plaintiff-bank  by the  defendant  No.   1 and, therefore, the High  Court  was fully  justified  in  coming  to  the  conclusion  that  the tribunal  has  no  jurisdiction  to entertain  the  suit  in question.

     In  view of the rival stand of the parties, the  short question that arises for consideration is, as to whether the said  claim  of the plaintiff can be said to be a claim  for recovery  of  debts due to the plaintiff as  provided  under Section  17(1)  of the Act.  The answer to this question  in turn  would depend upon the meaning of the expression ’debt’ as  defined  in Section 2(g) of the Act.  Before we  examine the  two provisions referred to above, it is to be borne  in mind  that  the procedure for recovery of debts due  to  the banks  and financial institutions which was being  followed, resulted  in  a  significant  portion  of  the  funds  being blocked.   To  remedy  the  locking up of  huge  funds,  the Finance  Minister  introduced "The Recovery of Debts Due  to Banks  and  Financial  Institutions Bill, 1993",  which  was passed  by  the  Parliament  and   the  Act  has  come  into existence.   The  statement  and  objects   of  the  Act  as reflected  in  the  Bill introduced by the Minister  in  the Parliament may be extracted hereunder in extenso:

     "Banks   and   financial   institutions   at   present

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experience considerable difficulties in recovering loans and enforcement  of securities charged with them.  The  existing procedure  for  recovery  of  debts due  to  the  banks  and financial  institutions has blocked a significant portion of their  funds  in  unproductive assets, the  value  of  which deteriorates with the passage of time.  The Committee on the Financial   System  headed  by   Shri  M.   Narasimham   has considered  the  setting  up of the Special  Tribunals  with special  powers for adjudication of such matters and  speedy recovery as critical to the successful implementation of the financial  sector  reforms.  An urgent need was,  therefore, felt to work out a suitable mechanism through which the dues to  the  banks and financial institutions could be  realised without  delay.  In 1981, a Committee under the Chairmanship of  Shri  T.   Tiwari  had  examined  the  legal  and  other difficulties  faced by banks and financial institutions  and suggested  remedial measures including changes in law.   The Tiwari  Committee  had also suggested setting up of  Special Tribunals  for  recovery of dues of the banks and  financial institutions  by following a summary procedure.  The setting up  of  Special Tribunals will not only fulfil  a  long-felt need,   but   also  will  be  an  important  step   in   the implementation  of  the  Report   of  Narasimham  Committee. Whereas  on 30th September, 1990 more than fifteen lakhs  of cases  filed by the public sector banks and about 304  cases filed  by the financial institutions were pending in various courts,  recovery of debts involved more than Rs.5622 crores in  dues  of Public Sector Banks and about Rs.391 crores  of dues  of the financial institutions.  The locking up of such huge  amount  of public money in litigation prevents  proper utilisation  and recycling of the funds for the  development of  the  country.   The  Bill   seeks  to  provide  for  the establishment  of  Tribunals  and  Appellate  Tribunals  for expeditious  adjudication and recovery of debts due to banks and  financial  institutions.  Notes on clauses  explain  in detail the provisions of the Bill.

     The  Act  and the relevant provisions will have to  be construed  bearing  in  mind  the   objects  for  which  the Parliament  passed  the enactment.  The prime object of  the enactment  appears to be to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due  to  banks  and financial institutions and  for  matters connected therewith or incidental thereto.

     The expression ’debt’ has been defined in Section 2(g) to  mean:  "Sec.2(g) :  ’debt’ means any liability(inclusive of  interest)  which is alleged 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 whether  payable under a decree or order of any civil  court or  otherwise and subsisting on, and legally recoverable on, the date of the application."

     Section  3(1)  provides for establishment of  tribunal which reads as under:

     "Section3(1):    The  Central   Government  shall,  by notification,  establish one or more Tribunals, to be  known as   the   Debts   Recovery   Tribunal,  to   exercise   the jurisdiction,  powers  and  authority   conferred  on   such Tribunal by or under this Act."

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     Section  17(1)  provides the jurisdiction, powers  and authority of tribunal which reads as under:

     "Section  17(1)  :  A Tribunal shall exercise, 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".

     Section  18 bars the jurisdiction of other courts  and authority  on  and  from the appointed day to  exercise  any jurisdiction in relation to the matters specified in Section 17.

     Section  31  is the provision for transfer of  pending cases which reads as under:

     "Section  31:   (1)  Every suit  or  other  proceeding pending  before  any  court immediately before the  date  of establishment  of a Tribunal under this Act, being a suit or proceeding  the cause of action whereon it is based is  such that  it  would  have  been, if it  had  arisen  after  such establishment,  within  the jurisdiction of  such  Tribunal, shall  stand  transferred  on that date  to  such  Tribunal: Provided that nothing in this sub-section shall apply to any appeal pending as aforesaid before any court.  (2) Where any suit  or other proceedings stands transferred from any court to  a Tribunal under sub-section(1)- (a) the court shall, as soon  as may be after such transfer, forward the records  of such suit or other proceedings to the Tribunal;  and (b) the Tribunal  may,  on receipt of such records, proceed to  deal with such suit or other proceeding, so far as may be, in the same  manner  as  in the case of an application  made  under Section  19  from  the stage which was reached  before  such transfer  or  from  any  earlier stage  or  de-novo  as  the Tribunal may deem fit."

     But  we  are not really very much concerned  with  the aforesaid  provision since the suit in question had in  fact been  transferred to the tribunal.  At this stage it will be necessary to notice a few authorities cited at the bar.  Mr. Gupta,  for the respondents relied upon the decision of this court  in  Union of India vs.  Raman Iron Foundry, (1974)  2 SCC  231, in support of his contention that the  plaintiff’s claim  cannot  be  held to be a debt within the  meaning  of Section  2(g) of the Act.  In the aforesaid case, the  issue before  the  court was whether in view of Clause 18  of  the General Conditions of Contract contained in standard form of contract,  can  the Government exercise the right to  retain the  money  due  to  the contractor even  before  the  claim against  the contractor is satisfied.  Thus Clause 18 of the General  Conditions  of Contract was for  consideration  and considering  the same, the court repelled the stand of Union of  India that it can retain the sum of the contractor, even before  the  claim  of the Union against the  contractor  is adjudicated  upon.  We do not think that this decision is of any  assistance for adjudicating the lis in question in  the case in hand.

     Mr.  Sanghi, the learned Senior Counsel, appearing for the  appellant  relied  upon the decision of this  court  in Kesoram  Industries & Cottton Mills Ltd.  vs.   Commissioner of  Wealth  Tax (Central) Calcutta, reported in 1966(2)  SCR 688, in support of his contention that the plaintiff’s claim

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would  be  a  debt.  In the aforesaid case,  the  court  was considering  as  to  what is the meaning of  the  expression ’debt’  as it was required to ascertain whether a  liability to  pay  income  tax  and super tax on  the  income  of  the accounting  year  would  be a ’debt’ within the  meaning  of Section  2(m)  of the Wealth Tax Act.  This decision to  our mind  will  be  not  of  much  assistance  inasmuch  as  the expression  ’debt’  has been defined in the Act in  question though  the general meaning of ’debt’ may be of a persuasive value  in interpreting the expression ’debt’ in the Act  but it  is too well settled that where an expression in any  Act has  been  defined, the said expression will have  the  same meaning and is not necessary to find out what is the general meaning of the expression.  In the aforesaid case, the court noticed  as  to how the word ’debt’ was interpreted in  Webb vs.  Stenton (1883) 11 Q.B.D.,518,527, wherein it was held a ’debt’ is a sum of money which is now payable or will become payable  in  the future by reason of a  present  obligation, debitum in praesenti, solvendum in futuro.  After noticing a large  number  of authorities, the court also held that  all the  decisions  agree  that the meaning  of  the  expression ’debt’  may take colour from the provisions of the concerned Act;   it  may  have different states of  meaning,  but  the following  definition is unanimously accepted;  a debt is  a sum  of money which is now payable or will become payable in future by reason of a present obligation.

     In  the case of State of Punjab vs.  S.  Rattan Singh, (1964)5 SCR 1098, on which Mr.  Sanghi has also relied upon, the  question  for  consideration  was whether  in  view  of Sections 4 and 11 of the Patiala Recovery of State Dues Act, a civil court can have jurisdiction to decide if a person is a  defaulter  or  not.  After examining  the  provisions  of Sections  4 and 11 of the said Recovery Act, this court came to hold:-

     "It  is reasonable to conclude that the provisions  of Section  4 of the Act empower the head of the department  to determine  not only the amount of State dues recoverable but also  the  liability of the alleged defaulter to  pay  those debts.  It follows, therefore, that in view of provisions of Section  11 of the Act, no civil court can have jurisdiction to  determine  these  two matters, such as  determining  the amount  of  State dues recoverable and the liability of  the alleged defaulter to pay the amount."

     In  the case in hand, there cannot be any dispute that the  expression ’debt’ has to be given the widest  amplitude to  mean  any  liability which is alleged as dues  from  any person  by a bank during the course of any business activity undertaken  by the bank either in cash or otherwise, whether secured  or  unsecured,  whether payable under a  decree  or order  of any court or otherwise and legally recoverable  on the  date of the application.  In ascertaining the  question whether  any  particular  claim  of any  bank  or  financial institution  would  come within the purview of the  tribunal created  under  the  Act, it is imperative that  the  entire averments  made  by the plaintiff in the plaint have  to  be looked  into  and then find out whether notwithstanding  the specially  created  tribunal  having been  constituted,  the averments  are  such  that it is possible to hold  that  the jurisdiction of such tribunal is ousted.  With the aforesaid principle  in  mind, on examining the averments made in  the plaint, we have no hesitation to come to the conclusion that the  claim in question made by the plaintiff is  essentially

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one  for  recovery of a debt due to it from  the  defendants and,  therefore, it is the tribunal which has the  exclusive jurisdiction  to  decide  the dispute and not  the  ordinary civil  court.  In this view of the matter the High Court was in  error  to  hold  that the dispute  in  question  is  not entertainable  by the tribunal under Section 17 of the  Act. We, accordingly set aside the impugned order of the Calcutta High  Court and direct that the suit in question which stood transferred  to the tribunal, constituted under the Act  and was  registered as Transferred Application No.163 of 1996 be disposed  of by the tribunal in accordance with law.   These appeals  are  allowed but in the circumstances, without  any order as to costs.