Calcutta High Court
Icici Bank Limited vs Coventry Coil-O-Matic (Haryana) ... on 7 December, 2004
Equivalent citations: IV(2005)BC91, (2005)2CALLT77(HC), 2005(1)CHN341, [2006]130COMPCAS289(CAL)
Author: Subhro Kamal Mukherjee
Bench: Subhro Kamal Mukherjee
ORDER Subhro Kamal Mukherjee, J.
1. The plaintiff institutes this suit, inter alia, for declaration that the promoters' shares as undertaken to be pledged with the plaintiff are charged in favour of the plaintiff, for declaration that any pledge and/or charge of shares of the promoters of the defendant No. 1 is void, perpetual injunction restraining the defendants from dealing with, encumbering or creating any third party interest or from creating any charge in respect of the promoters' shares of the defendant No. 1 or any assets or securities as mentioned in the loan documents or owned by the defendants as, also, various units of the defendants, mandatory direction upon the defendants to deposit the sale proceeds of their properties, for mandatory direction upon the defendant to pledge shares in favour of the plaintiff as was undertaken by the defendants, for specific performance of pledge, covenants, promises, assurances given by the defendants to the plaintiff.
2. The said suit was filed, inter alia, with the following allegations :
(a) The plaintiff at the instance of the defendants provided various loans to the defendant No. 1 in accordance with the documents executed and/or securities created therefor. The plaintiff altogether granted five loans/ advances to the defendant No. 1. The defendant No. 1 executed agreements from time to time in order to avail the aforesaid loan facilities subject to its compliance with the terms and conditions set out in the agreements as also in the general conditions inasmuch as the general conditions are part of the loan facility agreements. As the defendant No. 1-company failed to pay the dues in time, as agreed upon by and between the parties, the plaintiff recalled the loans and invoked the guarantees. However, the company wont before the BIFR and in terms of the directions of the BIFR, the plaintiff granted concessional benefits to the defendant No. 1 firstly on March 20, 1998 and secondly on March 22, 2000.
(b) All the promoters and associates executed undertakings for non-disposal of their shareholdings in the defendant No. 1, which were confirmed by the defendant No. 1. The defendant No. 1 on or about May 10, 2003, in reply to the letter of the plaintiff dated April 22, 2003, intimated that the defendant No. 3 had pledged the shares covered by the non-disposal undertaking and meant for being pledged with the plaintiff with Punjab National Bank, Gariahat Branch, without any intimation to the plaintiff. The plaintiff, upon coming to know of such development, immediately took up the matter with the defendant No. 3 and asked the said defendant to immediately withdraw such pledge of shares in favour of Punjab National Bank and to re-pledge the same with the plaintiff in terms of the aforesaid specific undertaking. Till date, however, the defendants did not take any step whatsoever.
(c) The defendant No. 2 executed a corporate guarantee, which has been continuing, and confirmed that in case of default on the part of the defendant No. 1, the defendant No. 2 would be treated as the principal borrower and would pay all the dues of the plaintiff. However, contrary to such guarantee, the defendant No. 2 had started to sell off its assets and securities situated at Nagpur and at Andul, Howrah with an eye to defeat and/or delay the recovery by the plaintiff.
(d) In spite of the fact that such recovery is not a part of the present suit, the plaintiff claims a declaration that the defendant No. 2 cannot dispose of its properties during the existence of such guarantee.
3. The defendant No. 1 appears and files an application, inter alia, praying for rejection of the plaint of this suit.
4. Mr. Jishnu Saha, learned Advocate, appearing in support of this application, argues that in view of the provision of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (the said Act of 1993 in short), this suit is not maintainable before this Court. Mr. Saha draws my attention to Sections 17 and 18 of the said Act of 1993 and submits that presently the Tribunal constituted under the said Act of 1993 can only entertain and decide the prayers from the banks and the financial institutions for recovery of debts due to such banks and financial institutions and no Court is entitled to exercise any jurisdiction, power or authority in relation to the matters specified in Section 17 of the said Act of 1993. Mr. Saha draws my attention to the definition of 'debt' and submits that the expression 'debt' has to be given the widest amplitude to mean any liability, which is claimed 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. Mr. Saha, therefore, submits that this is essentially a suit in the aid of the recovery of the debt and this proceeding is to be entertained and decided by the Tribunal constituted under the said Act of 1993. Mr. Saha in support of his contentions cites the decisions in the cases of United Bank of India v. Debts Recovery Tribunal and Ors., , Hiralall and Sons and Ors. v. Lakshmi Commercial Bank, and Allahabad Bank v. Canara Bank and Anr., .
5. Mr. Joy Saha, learned Advocate, appears for the defendant No. 2 and he supports the case of the defendant No. 1. Mr. Joy Saha submits that on or about October 11, 2004, State Bank of India has filed an application before the Debt Recovery Tribunal against the defendant No. 2 for recovery of debt concerning the same securities. Therefore, to avoid conflicting judicial opinions and multiplicity of proceedings, the plaint of this suit has to be returned to the plaintiff for presentation before the Debt Recovery Tribunal.
6. Per contra, Mr. Hirak Mitra, learned Senior Advocate, appearing on behalf of the plaintiff, submits that this suit is perfectly maintainable in this Court inasmuch as this is not a suit for recovery of 'debt' within the meaning of Section 2(g) of the said Act of 1993.
7. I have already indicated the essential averments of the plaint of this suit as also the prayers made by the plaintiff in this suit. I have carefully considered that the entire averments made by the plaintiff in the plaint and it is not possible for me to hold that the jurisdiction of this Court is ousted.
8. The expression 'debt' has been defined under Sub-section (g) of Section 2 of the said Act of 1993, which runs as under :
"(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."
9. Mr. Mitra submits that the scope of the Act cannot be expanded to indicate complete ouster of jurisdiction of the Civil Courts. Mr. Mitra submits that the legislature consciously used the expression 'means' while defining the expression 'debt' in the said Act of 1993 and, therefore, the said Act contemplates limited ouster of jurisdiction of the Civil Courts. Mr. Mitra cites the decision in the case of P. Kasilingam and Ors. v. P. S. G. College of Technology and Ors., and draws my attention to the following observation of the Apex Court:
"A particular expression is often defined by the legislature by using the word 'means' or the word 'includes'. Sometimes the words 'means and includes' are used. The use of the word 'means' indicates that 'definition is a hard-and-fast definition, and no other meaning can be assigned to the expression than is put down in definition.' See : Gough v. Gough, 1891(2) QB 665 ; Punjab Land Development and Reclamation Corporation Ltd. v. Presiding Officer Labour Court, . The word 'includes' when used, enlarges, the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. The words 'means and includes', on the other hand, indicate 'an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions'."
10. The decisions cited by Mr. Saha are distinguishable.
In United Bank of India (supra) the bank filed a suit in the High Court against three defendants for recovery of debt from one of them and for certain ancillary and incidental reliefs against the others. Question arose whether the Tribunal constituted under the said Act of 1993 had the jurisdiction to decide such claims. The High Court answered in the negative, inter alia, on the ground that the claim was an undetermined amount and was, therefore, not a debt within the meaning of the said Act of 1993. The Supreme Court of India, in the aforesaid background, observed that the expression 'debt' has to be given the widest amplitude and held that the jurisdiction of such Tribunal was not ousted.
In Hiralall and Sons (supra), the Supreme Court of India declined to transfer a proceeding from the Debt Recovery Tribunal, inter alia, on the ground that a suit based on an insurance claim and a claim based on letter of credit arose out of different causes of action though it might be true that in the case pending before the High Court against the insurance company and in the application pending before the Tribunal certain common issues might arise inasmuch as the jurisdiction of the Tribunal has been exclusive and the jurisdictions of other Courts have been barred.
In Allahabad Bank (supra), the Apex Court, inter alia, considered the recommendations of the Tiwari Committee, which recommended constitution of a special Tribunal for recovery of debts due to banks and financial institutions. The said committee stated in its report that the exclusive jurisdiction of the Tribunal must relate not only in regard to the adjudication of the liability, but, also, in regard to the execution proceeding. The Supreme Court of India, inter alia, observed that even in regard to execution, the jurisdiction of the Recovery Officer was exclusive.
11. In none of the cases Supreme Court of India observes that even a suit for declaration and specific performance of contract instituted by the bank or the financial institution against their borrowers has to be instituted before the Tribunal by enlarging the scope of the Act of 1993.
12. This is essentially a suit for declaration, injunction and specific performance and not one for recovery of a debt. The plaintiff wants to enforce specifically a covenant. Under the said Act of 1993 limited ouster of Civil Court is contemplated. It is not possible to enlarge the scope of the said Act of 1993 to hold that even matters arise out of debt are to be entertained and decided by the Tribunal constituted under said Act of 1993; matters connected with the debt are not covered.
13. Here the disputes arise from general law of contract. When the relief's are claimed on the general law of contract, a suit filed in Civil Court cannot be said to be not maintainable.
14. The application filed by the defendant No. 1 is, therefore, rejected.
15. I make no order as to costs.
16. All parties are to act on xerox signed copy of this dictated order on usual undertakings.