Debt Recovery Appellate Tribunal - Delhi
Manjit Kumar And Anr. vs Oriental Bank Of Commerce And Ors. on 25 July, 2002
ORDER
K.S. Kumaran, Chairperson
1. This is an application under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1923 (hereinafter referred to as 'the Act').
2. The first applicant/appellant is the proprietor of the second applicant/appellant. They were defendants 1 and 2 in O.A. No. 272/2000 titled Oriental Bank of Commerce v. Shri Manjit Kumar, Proprietor of Shivani Jewellers and Ors., before the Debts Recovery Tribunal-I, Delhi (hereinafter referred to as 'DRT-1', Delhi). The present appeal has been filed against the final order dated 7.1.2002 passed in O.A. No. 272/2000 and the order dated 16.1.2002 passed in Miscellaneous Application No. 21/2002 by the abovesaid DRT-I, Delhi.
3. By the final order dated 7.1.2002, the applicants/appellants were directed to pay to the first respondent-Bank a sum of Rs. 9,19,01,433/- together with interest and costs. The applicants/appellants filed a Miscellaneous Application No. 21/2002 under Section 22 of the Act read with Order 47, Rule I and Section 114 of CPC for review and recall of the order dated 7.1.2002, for cancelling the Recovery Certificate issued, and for taking on record the written statement filed by them. This application was dismissed by the learned DRT-I, Delhi by the abovesaid order dated 16.1.2002. The learned DRT opined that opportunity to file the written statement was given to the applicants/appellants but the same was not filed and, therefore, the final order was passed on 7.1.2002. which cannot be recalled. The learned DRT also held that no Court fee was paid on the Miscellaneous Application and that it was also not the case of the applicants before the DRT that it was a review application. Aggrieved by both the orders, the applicants/appellants have presented the appeal which is yet to be entertained in view of the fact that the present Miscellaneous Application No. 82/2002 filed under Section 21 of the Act, requesting this Tribunal to waive the deposit of 75% of the amount determined by the DRT as payable by the applicants/appellants is to be decided before ever the appeal is entertained.
4. I have heard the learned Counsels for both the sides and perused the records.
5. Before I deal with the respective contentions put forward by the applicants/appellants and the first respondent-Bank, it will be necessary to set out in brief the details of the claim made by the first respondent-Bank against the applicants before the DRT and the circumstances leading to the filing of this appeal. The claim in the O.A. filed before the DRT is that the first applicant, as the proprietor of the second applicant doing business in1 jewellery, collected the amounts, covered by 140 demand drafts, from the first respondent-Bank in the course of its business activity, but they were all forged, and for purchasing which, no consideration whatsoever was paid to the Bank. It is this amount along with the interest thereon that the first respondent-Bank claimed from the applicants/appellants.
6. The applicants/appellants, who were defendants before the DRT, were served with a show-cause notice by the DRT as to why the claim of the first respondent-Bank should not be accepted. The applicants/appellants entered appearance through Counsel in the year 2000 itself but instead of filing a reply, filed an application under Order 7 Rule 11, CPC in September, 2000, requesting the DRT to dismiss the O.A. filed by the first respondent-Bank. The main grounds urged by the applicants/defendants were that the amount claimed by the first respondent-Bank is not a debt within the meaning of Section 2(g) of the Act; that there was no business activity between them and the first respondent-Bank and, therefore, the claim of the first respondent Bank ought not to have been entertained by the DRT. The applicants/ defendants also contended that according to the first respondent-Bank, the drafts were forged and encashed in connivance with the officers of the first respondent-Bank, who have not been made parties to the O.A., and, therefore, also, the claim is not a 'debt' within the meaning of Section 2(g) of the Act. By order dated 11.10.2001, this application was dismissed by the DRT against which the applicants/defendants filed an appeal to this Tribunal, which was also dismissed on 4.12.2001 with the direction to the applicants/defendants that they may file written statement before the DRT. Instead of filing a written statement, the applicants/ defendants filed another Miscellaneous Application before the DRT for stay of further proceedings, which was also dismissed by the Tribunal on 11.12.2001. Aggrieved by the abovesaid order, the applicants/defendants filed an appeal to this Tribunal, which was also dismissed by this Tribunal by order dated 4.1.2002 with the observation that the applicants/ defendants may make a request for granting of time to file written statement. The applicants/ appellants then filed a Civil Writ Petition before the Hon'ble Delhi High Court for quashing all these orders and also praying for stay of further proceedings before the DRT. This Writ Petition was also dismissed by the Hon'ble Delhi High Court by order dated 9.1.2002, again with a direction to the applicants/defendants that they can make the request for filing written statement before the DRT, which shall be considered by the said DRT.
7. But, in the meanwhile, the final order was passed in the O.A. on 7.1.2002 decreeing the claim of the first respondent-Bank as abovesaid. The Miscellaneous Application for reviewing/recalling the abovesaid order was also dismissed on 16.1.2002.
8. As pointed out already, the applicants/appellants, who have presented the appeal, have also moved this application under Section 21 of the Act, requesting this Tribunal to waive the condition imposed upon the applicants/appellants by the said provision requiring them to deposit 75 % of the amount determined by the DRT. Section 21 of the Act mandates that the appellant has to deposit 75% of the amount determined by a Tribunal before the appeal is entertained, though a discretion is vested in the Appellate Tribunal to either waive this condition in its entirety or reduce the amount.
9. This application is opposed by the first respondent-Bank by filing a suitable reply.
10. The contention of the learned Counsel for the applicants/appellants is that the applicants/appellants are not customers of the first respondent-Bank.
11. He points out that even according to the case of the 1st respondent-Bank, certain drafts were stolen, forged and the cash covered by the drafts was received by the applicants/ appellants and, therefore, the applicants/appellants are liable to pay the said amount covered by the drafts with interest. According to the learned Counsel for the applicants/appellants, they received these drafts from their customers on their (applicants/appellants) supplying materials to them and the drafts so given by their customers were encashed by the applicants/ appellants through their own Bankers. Therefore, learned Counsel for the applicants/ appellants contends that the applicants/appellants are not the customers of the first respondent-Bank and that the amount was not paid to them in the course of the business activity of the first respondent-Bank.
12. The learned Counsel for the applicants/appellants contended that this amount claimed is also not a 'debt' within the meaning of Section 2(g) and that the DRT will have jurisdiction to entertain a claim only in respect of such a 'debt'.
13. The learned Counsel for the applicants/appellants relied upon a decision of the Hon'ble Delhi High Court in Oriental Bank of Commerce v. Sri Mohan Gupta, 62 (1996) Delhi Law Times 239, wherein it has been held as follows :
"... Although the definition of debt as given in the Act is a wide one, the controlling words are 'means any liability (inclusive of interest) which is alleged as due from any person by a Bank or the financial institution during the course of any business activity undertaken by the Bank or the financial institution under any law.' (emphasis supplied). I am of the view that the debt is required to arise during the course of business activity undertaken by the Bank qua the said person. It cannot be said that a suit for the recovery of embezzled or misappropriated sum is one arising under business undertaken by the Bank with an employee..."
But this decision of the Hon'ble Delhi High Court has no application to the facts of the case on our hand inasmuch as the suit referred to in the decision abovesaid was filed against the employee of a Bank who had allegedly misappropriated the Bank's money, whereas, the present suit is not against the employees of the Bank. The applicants/appellants herein had encashed the demand drafts and received the money from the first respondent-Bank. They are neither the employees nor had they misappropriated the Bank's money as such employees. Therefore, this decision will not be of any help to the applicants/appellants.
14. As against this, learned Counsel for the first respondent-Bank contended that the amount received by the applicants/appellants is a 'debt' within the meaning of Section 2(g) of the Act. Section 2(g) of the Act defines the debt as follows :
" '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."
The learned Counsel for the first respondent-Bank laid stress upon the words 'any liability (inclusive of interest) which is claimed as due from any person by a Bank', and also the words 'during the course of any business activity undertaken by the Bank found in Section 2(g) of the Act. The learned Counsel for the first respondent-Bank contended that the words 'any person' indicates that the applicants/appellants need not necessarily be customers of the Bank. He also contended that the words 'any liability' will show that it need not be a transaction which normally takes place between a creditor and a debtor where the debtor borrows money from the creditor, but these words 'any liability' will also cover a situation like the one where the applicants/appellants had received the money by encashing certain forged demand drafts purported to have been issued by the first respondent-Bank. He, therefore, contended that the amount due and recoverable from the applicants/appellants by the first respondent-Bank would be a 'debt' with in the meaning of the Act in respect of which the claim can be made before the Debts Recovery Tribunal. In support of his contention, learned Counsel for the first respondent-Bank relied upon a Division Bench decision of the Hon'ble Delhi High Court in J.U. Mansukhani & Co. v. The Presiding Officer, 81(1999) DLT 524 (DB)=A1R 2000 Delhi 103. That was also a case where the Bank had filed the Original Application before the Debts Recovery Tribunal against the respondents (petitioners before the Hon'ble Delhi High Court) by pleading that they had approached the Bunk for issuance of certain drafts from one branch of the Bank and had encashed the drafts and received the proceeds through clearance. It was also alleged that the drafts and the money were fraudulently obtained in collusion with the Bank officials, and no amount had been deposited for purchasing these Bank drafts. The plea taken by the alleged debtors was that the proceedings before the Tribunal were without jurisdiction; that they were bonafide purchasers of the drafts that there was no evidence to show that the alleged debtors had any business activity with the Bank and that the alleged debtors had not requested the Bank to issue the drafts in question. The alleged debtor moved an application for rejecting the Original Application. That application was dismissed by the Tribunal against which they approached the Hon'ble Delhi High Court. The Hon'ble Delhi High Court held as follows :
"The use of the expression 'any liability' or 'any person' and otherwise throughout the section shows the legislative intent to provide the word 'debt' with the widest possible meaning. Issuance of a Bank drafts is clearly the business activity of the Bank. The essence of the definition of 'debt' in Section 2(g) of the Act is the existence of any liability founded on the allegation as due from any person, the creditor being a Bank or a financial institution or a consortium of the two; the liability may be in cash or otherwise; it may be secured or unsecured; it may be payable under a decree or order of any civil Court or otherwise the only rider being that the liability must be legally recoverable."
Hon'ble Delhi High Court also held that the question whether the Tribunal has jurisdiction or not, at this stage, will have to be decided on the basis of the allegations made in the Original Application.
15. The learned Counsel for the first respondent-Bank also relied a decision of the Hon'ble Supreme Court in United Bank of India v. Debts Recovery Tribunal, III (1999) SLT 482=1 (2000) BC 662=AIR 1999 SC 1381, wherein it has been held as follows :
"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 due 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 Banker 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."
The learned Counsel for the first respondent-Bank also relied upon the decision in GV Films Ltd. v. Unit Trust of India and Anr., I (1999) BC 702. That was a case where certain dividend amounts were wrongly paid to the alleged debtor who had received the same in spite of the fact that the shares had been already sold, It was held that the amount so due to the financial institution was a liability subsisting and legally recoverable and the DRT had jurisdiction to entertain a claim made for recovery of the said amount. Of course, the learned Counsel for the applicants/appellants contended that a careful perusal of this decision will show that the dividend amount was consciously received by the alleged debtor with the knowledge that the shares had been sold whereas in the present case on hand, it cannot he said that the present applicants/appellants were aware of either the fact that the drafts were forged or that they were not supported by any consideration and, therefore, this decision will not help the first respondent-Bank. But the learned Counsel for the first respondent-Bank pointed out from the allegations 'bund in the O.A. filed before the DRT that all these 140 drafts were in seriatim, issued by the same Bank, and contended that it will clearly indicate that there must have been connivance between the applicants/appellants and the persons who allegedly handedover the drafts to them. But in my view, to decide this question at this stage would amount to going into the merits of the appeal. This Tribunal has at this stage to consider the facts to the limited extent, i.e., for the purpose of finding out whether the prayer of the applicants/appellants to waive the condition imposed by Section 21 can be accepted or not. The definition of the term 'debt' found in Section 2(g) of the Act and the various decisions cited by the learned Counsel for the first respondent-Bank show that this term has to be given a very wide meaning as to include any liability which is due and payable to the Bank during the course of its business activity and is legally recoverable. On the facts, and in the circumstances of this case, it is clear that the liability due to the first respondent-Bank is a 'debt' within the meaning of the Act and the same can be recovered by taking resort to proceeding before the DRT. Of course, learned Counsel for the applicants/appellants contended that the applicants/appellants are not the customers of the first respondent-Bank and that they had not received the drafts from the first respondent-Bank directly and, therefore, it cannot be said that they had any business activity with the Bank. Such a contention cannot be accepted. Not only the issuance of a draft will be a business activity undertaken by the Bank but even paying the amount covered by the drafts will also be such an activity. If paying the amounts covered by certain drafts presented by the applicants/appellants is not a business activity undertaken by the Bank, the applicants/appellants have not been able to point out as to what sort of an activity it is.
16. In my view, it is evident that the liability allegedly due from the applicants/appellants is one which had arisen during the course of business activity undertaken by the Bank and, therefore, it is not necessary that the applicants/appellants should be customers of the first respondent-Bank. For the purpose of finding out whether the DRT had jurisdiction to entertain the O.A. or not, we have to take into consideration the allegations in the O.A. only and, in view of what I have stated, the liability allegedly due from the applicants/appellants is a 'debt' within the meaning of the Act and, therefore, the DRT has jurisdiction to entertain the O.A.
17. These were the contentions put forth by the learned Counsel for the applicants/ appellants to contend that the condition imposed by Section 21 of the Act should be waived. It is not as if the financial condition of the applicants/appellants is bad and, therefore, they are unable to pay the money. Even, otherwise, the applicants/appellants have not been able to make any ground to waive the condition imposed by Section 21 of the Act, much less, in its entirety. But taking into consideration the fact that a sum of Rs. 9 crores and odd is the amount determined by the DRT as due and payable by the applicants/appellants, I am of the view that instead of 75% of the amount determined by the DRT, the applicants/appellants can be allowed to deposit 50% of the amount so determined before ever the appeal is entertained.
18. This application is ordered accordingly, and the applicants/appellants are directed to deposit 50% of the amount determined by the DRT as due from and payable by the applicants/appellants to the first respondent-Bank. The said amount shall be deposited with the first respondent-Bank within a period of six weeks from today.
19. List the Appeal on 12.9.2002 for further orders.
20. Copy of this order be furnished/sent to both the parties and the DST concerned.