Debt Recovery Appellate Tribunal - Kolkata
Eureka Forbes Ltd. vs Allahabad Bank And Ors. on 28 December, 2006
Equivalent citations: II(2007)BC66
JUDGMENT Arunabha Barua, J. (Chairperson) 1. This appeal is directed against judgment and order dated 15th June, 1995 and a consequent recovery certificate being certificate No. 48 of 1995 dated 30th June, 1995 passed by the Debts Recovery Tribunal (D.R.T. for short) Kolkata. The claim of the Bank, namely the Allahabad Bank (respondent No. 1 here), to the tune of Rs. 22,11,618,62/- was allowed ex parte and certificate accordingly issued by the D.R.T. against the appellant, Eureka Forbes Ltd., together with Dipak Chowdhury (respondent No. 3 here) and his company, Indo Marketing (respondent No. 4 here) to be liable jointly and severally for the claim of the Bank. 2. In March, 1999, a miscellaneous application was filed before the D.R.T., Kolkata, for recalling the ex parte order dated 15th June, 1995 which was rejected. 3. That was indeed the beginning of a long legal battle of sorts right up to the Apex Court spanning a period of about ten years eventuating with a judgment of the Hon'ble High Court (Girish Ch. Gupta, J.) dated 11th June, 2004, wherein the Hon'ble Court was pleased to stay the operation of the impugned order of the D.R.T. dated 15th June, 1995 and directed the appeal to be heard on merits. 4. It is pertinent to mention in this connection that by his judgment and order dated 11th April, 2004, the previous Chairperson of this Hon'ble Tribunal had dismissed the application for condonation of delay in preferring the instant appeal against the ex parte certificate issued by the D.R.T. on the ground that the application for condonation of delay for setting aside the ex parte decree having attained finality up to the Hon'ble Supreme Court of India, the question of condoning the delay for entertaining the appeal was no longer open to be urged by the appellant. Such finding of the Hon'ble Tribunal has been set aside in civil revision by the Hon'ble Court by order dated 11th June, 2004 on the ground that the Tribunal had misdirected itself in the exercise of its jurisdiction. 5. As clearly pointed by the learned Counsel for the appellant Mr. Jananta Kr. Mitra, a careful reading of the judgment and order dated 11th June, 2004 passed in CO. No. 1568 of 2004 will reveal that whereas in the earlier proceedings relating to the setting aside of the ex parte decree of the D.R.T. dated 15th June, 1995, which went up to the Hon'ble Supreme Court of India, the scope of the enquiry was restricted to the sufficiency of the cause which prevented the appellant from appearing at the hearing of the suit, which resulted in the ex parte decree, in the present proceedings, which is an appeal from the decree itself, the enquiry is on the merit of the appeal itself. It has been elucidated in the said judgment that the merit of the suit, including the question of jurisdiction of the D.R.T. to adjudicate upon the claim against the appellant, was not the subject-matter of, and, therefore not considered in the application under Order 9, Rule 13 of the CPC. The present appeal is concerned only with the merit of the decree, including the jurisdiction of the Tribunal to issue a certificate against the appellant. The issue whether or not there was sufficient cause for non-appearance of the appellant before the D.R.T. having been concluded finally by judgment and order dated 28th November, 2001 of Bhaskar Bhattacharjee, J. in civil order No. 3137 of 2001 and the special leave petition against the said order having been dismissed by the Hon'ble Supreme Court of India by its order dated 26th April, 2002, this Hon'ble Tribunal need no longer concern itself with the question of existence or absence of sufficient cause which is stated to have prevented the appellant from appearing at the hearing of the suit. 6. The learned Advocate for the respondent-Bank Mr. P.K. Pal Choudhury would have it as well that the only point that can be taken care of by this Tribunal is with regard to the jurisdiction of the D.R.T., Kolkata and that too only with reference to the definition of "Debt" under Section 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the RDDBFI Act). 7. However, the matter in controversy primarily on the point of jurisdiction of the Tribunal has necessarily brought within its fold a short fact-situation which is virtually undisputed and it has been summed up by the appellant as follows: 8. The Bank advanced in 1984 to the respondent Nos. 2 and 3, an amount of Rs. 26,00,000/- which had been secured by alleged hypothecation of the plant and machinery and inventory of stocks in the factory premises situated at Jaikuni, Goragachha Road, Kolkata-700048. The said factory premises belonged to the appellant and the same had been given to the respondent Nos. 2 and 3 on licence basis in the year 1983 for a licence fee of Rs. 12,000/ - per month. There were delays in payment of the licence fees by the respondent Nos. 2 and 3 to the appellant. Consequently, the licence was not renewed and in 1987, the said respondents returned possession of the said factory premises to the appellant. At the time, the said respondents also handed over certain machines and finished stocks to the appellant for adjustment of the outstanding licence fees payable by them to the appellant. The appellant was totally unaware of any alleged hypothecation of such machines and finished stock in favour of the Bank. The appellant in its letter dated 28th September, 1987, clearly intimated to the respondent-Bank that it was not aware of the alleged hypothecation and that it took over the finished stocks as large sums of money were due to it from the respondent Nos. 2 and 3 towards licence fees and the said stocks were to be adjusted against its dues. 9. It may be pointed out, as submitted by the learned Advocate for the respondent-Bank, the custody of the hypothecated goods were with Indo Marketing was apparent, inter alia from the fact that the Indo Marketing also had filed the money suit No. 3 of 1993 in the Court of 8th A.D.J.. Alipore, claiming a decree against the Eureka for their unlawful taking over of the possession of those goods from Indo Marketing. 10. To my mind, in order to examine or explore the definition of 'debt' under Section 2(g) of the RDDBFI Act, 1993, and for that matter, to determine the dispute of 'Jurisdiction' as spoken to above, the fact-situation must be the most important fact decisive of the matter in controversy and it possibly deserves a lot of our attention particularly in assessing the similarity or dissimilarity of our instant case while comparing with the facts laid bare and points of law settled in several case-laws cited by both the parties. 11. However, to begin with, I might attempt to summarise the submissions made on behalf of both the appellant, namely Eureka Forbes Ltd., and the respondents, the Allahabad Bank. 12. Following arc the salient points of submission made on behalf of the appellant, Eureka Forbes Ltd. 13. It is clear from the provisions of Section 17 of the RDDBFI Act, 1993, that the jurisdiction and authority of a Tribunal is confined to a decision for recovery of debts due to Banks and financial institutions. 14. Now, what is a 'debt' has been defined under Section 2(g) of the said Act. A 'debt' has been defined to mean any liability (exclusive 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 institutions 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. 15. It is apparent from the definition of 'debt' that it has to be a liability claimed as due by a Bank or a financial institution arising in course of any business activity undertaken by the Bank. No amount claimed by a Bank as due from any person will be a debt unless such liability arises in course of any business activity undertaken by the Bank. Therefore, in order to invoke the jurisdiction of a D.R.T. to entertain a claim by a Bank against any person, the Bank will have to first aver and allege that a claim has arisen in its favour against the defendant out of a liability arising in course of any business activity with such defendant undertaken by the Bank otherwise it will not be a debt due from that defendant to the Bank as envisaged under Section 17(1) of the said Act and if it is not such debt, then the D.R.T. will have no jurisdiction, power or authority to entertain such claim or to adjudicate any liability against the defendant in favour of the Bank. 16. From the facts of the instant case, and the plaint filed, the transfer application No. 15 of 1994, it will be seen that it has neither been alleged nor been pleaded that any liability has arisen in favour of the Bank against the appellant (defendant No. 3) in course of any business activity undertaken by the Bank with the appellant. The Bank does not allege that any sum was lent or advanced by it to the appellant/ defendant No. 3 in course of any business activity undertaken by the Bank or that the appellant has acted as a guarantor in respect of any sum lent or advanced to defendant Nos. 1 and/or 2. 17. No amount has been claimed in the suit against the appellant either as a principal debtor or as a guarantor. The plaintiff-Bank does not even allege any where in the plaint that there was any transaction between the Bank on the one hand and the appellant on the other. 18. What has been alleged against the appellant is that defendant Nos. 1 and 2 have illegally and arbitrarily handed over the entire machinery, plant equipment, stock in trade, goods in transit etc. to the appellant without the knowledge of the plaintiff in a clandestine fashion and that the appellant had taken possession of the same in the part or full satisfaction of its alleged claim. It has further been alleged in para 11 of the plaint that defendant Nos. 1 and 2 had no authority to part with possession of the plants and equipments hypothecated to the Bank in favour of the appellant or anybody else. In para 12, the plaintiff has stated that a notice of demand was issued to defendant Nos. 1 and 2 claiming the amounts due and payable for the sums advanced or facilities enjoyed by the said defendants together with interest and that the appellant being defendant No. 3 in the said suit, was also bound by the said notice. In para 16 of the plaint, the plaintiff has alleged that defendant Nos. 1 and 2 on 3rd February, 1987, surreptitiously handed over possession of the factory to the appellant, which had been accepted by defendant No. 3 with the goods lying at the said factory premises which were hypothecated to the Bank and defendant No. 3 had no authority to deal with the same. 19. On analysis of the averments in the plaint, ii will be clear that the Bank's grievance against the appellant is not in respect of any transaction with the Bank. The Bank's complaint against the appellant is that it had allegedly wrongfully taken possession of goods lying at the said premises which were stated to be even hypothecated to the Bank. In other words, the Bank is alleging that the appellant has wrongfully interfered with the goods which were allegedly hypothecated by the defendant Nos. 1 and 2 in favour of the Bank. At the most, the claim against (he appellant is a claim in tort for damages for wrongful interference with the hypothecated goods. It is not the case of the plaintiff that the appellant was bound by any contractual obligations with the plaintiff-Bank of which any breach has been committed. The plaintiff-Bank is not contending that any liability has accrued in its favour against the appellant arising out of any business activity undertaken by the Bank with the appellant. At the most the Bank's claim against the appellant being defendant No. 3 in the suit, is in alleged wrongful interference with the hypothecated goods and not in respect of a debt alleged to have arisen in course of its usual business activity or otherwise. Therefore, it cannot be said that the plaint in the suit disclose any cause of action demonstrating that any debt is due by the appellant to the Bank. 20. The Tribunal does not have the jurisdiction, power or authority to entertain or adjudicate upon any such purported claim against the appellant since it is ex facie not a debt due to the Bank by the appellant. 21. The jurisdiction of the Tribunal must include the power to hear and decide the questions at issue and the authority to hear and decide that particular controversy that has arisen between the parties. In the instant case, an assertion in the plaint that the claim of the Bank against the appellant is a debt due and payable by the appellant to the Bank is a condition precedent to the assumption of jurisdiction by the Tribunal over the claim raised by the Bank against the appellant. Such averment is significantly absent in the plaint. Once it is found as is apparent from the pleadings in the plaint, that the Bank is not claiming the amount against the appellant as a debt due as defined in the said Act, the Tribunal is immediately denuded of its jurisdiction to decide such issue and any decree passed against the appellant is rendered a nullity. Such matter of competence goes to the root of the jurisdiction of the Tribunal, and any adjudication or ascertainment of any amount due becomes devoid of jurisdiction and, therefore, nullity. 22. If the evidence led in the proceedings in support of plaintiff-Bank's case is examined, there also nothing will be found which would have entitled the D.R.T. to pass a decree against the appellant. 23. In the aforesaid circumstances, the only conclusion that the D.R.T. could have come to say that no debt was due and payable by the appellant to the Bank and that therefore, the purported claim of the plaintiff-Bank against the appellant was outside the scope of jurisdiction, power and authority of the D.R.T. under Section 17 of the said Act. In such event, the D.R.T. could not have passed the decree against the appellant. The purported claim of the Bank against the respondents, if proved, would only have been a claim for conversion of goods alleged to have been hypothecated in favour of the Bank. Such a claim could, by no stretch of imagination have been claimed of debt as contemplated under the said Act. At the most, the Bank's claim against the appellant would have been a claim in tort, and. therefore, a claim for damages. Such a claim could have been lodged and sustained only before a Civil Court and not before the D.R.T. whose jurisdiction is limited, having been restricted by the terms of the said Act. Any decree passed against the appellant by the D.R.T., therefore, is without jurisdiction and a nullity. 24. It has been contended on behalf of the respondent No. 1 Bank that the question whether the Tribunal has jurisdiction or not has been concluded by the judgment of the Calcutta High Court (Bhasker Bhattacharya, J.) in the civil revision application under Article 227 of the Constitution of India when the learned Judge refused to entertain the revision application from the order of the appellate Tribunal dismissing an appeal from an order of the D.R.T. refusing to set aside the ex parte decree in Order 9, Rule 13 of the CPC. According to the respondent-Bank, the Tribunal have refused to entertain the application for condonation of delay and allowing the application for setting aside the ex parte decree, defendant No. 3 being the appellant herein, has no further cause to agitate its grievance even in respect of the merits of the suit. According to the respondent-Bank, the matter has been finally concluded by the Apex Court, which refused to entertain a special leave petition from the order of Bhaskar Bhattacharya, J.
25. It is submitted further for the appellant that the contention of the respondent-Bank suffers from an inherent misconception and is fallacious for the following reasons:
(a) A defendant against whom an ex parte decree has been passed for default of acceptance has three courses open to him as remedies,
(i) He may apply under Order 9, Rule 13 of the CPC for an order to set aside the ex parte decree (exhausted),
(ii) He may appeal from the ex parte decree under Section 96 of the CPC (instant appeal).
(iii) He may apply for a review of the judgment under Order 47, Rule 1 of the CPC (not resorted to).
26. The first of the three remedies i.e. the remedy by way of application to set aside a decree is open only in respect of an ex parte decree and cannot be resorted to if the decree passed upon contest. However, remedies under (ii) and (iii) are also available to a defendant in the case of an ex parte decree [Mulla : Code of Civil Procedure, 16th Edition, Vol-2, Page-2076]. An application under Order 9, Rule 13 of the CPC for setting aside an ex parte decree is satisfactory remedy. If an application is made in pursuance of this remedy, it cannot be said that the other remedy of appeal was suspended or that the same could not be exercised at a later date. A defendant against whom an ex parte decree has been passed is not bound to apply under Order 9, Rule 13 and if he applies and his application is rejected, though he is entitled under Order 43, Rule 1(3) to appeal from the order rejecting the application but he is not bound to do so. He may also appeal under Section 96 of the CPC from the ex parte decree itself. [Mulla: Code of Civil Procedure, 16th Edition, Vol-2 page-2077 and also (1980) 12, Calcutta Weekly Notes 885].
27. It is further submitted that even though the application of the appellant for setting aside of the ex parte decree did not succeed under Order 9, Rule 13 of the CPC either in the Trial Court or before the Appellate Tribunal or before the Writ Court under Article 227 of the Constitution of India, the appellant is entitled to agitate the said point now in appeal when the judgment and decree of the Trial Court is being challenged on the ground that the Trial Court viz. the Tribunal had no jurisdiction to entertain the claim against the appellant as there is no debt either alleged or proved to be due and payable by the appellant to the respondent-Bank.
28. Further and in an any event, in the impugned judgment the D.R.T. has not come to any finding that any money is due or payable by the appellant to the Bank. The D.R.T. has merely noted that the defendant No. 3 took possession of the factory including claim for arrears of licence fees, rent for damages etc. The defendant No. 3 by a letter written to the Chief Manager of the plaintiff-Bank admitted that they took possession of the factory alongwith plant and machinery from the defendant No. 2 at the request. There is no discussion of any kind of any alleged liability of the appellant. However, the judgment and the certificate were passed against all the three defendants jointly and severally. The judgment and certificate of the D.R.T. against the appellant is not supported by any reason or any evidence.
29. Hence the prayer for setting aside the decree with the submission that the Hon'ble Appellate Tribunal would be pleased to allow the appeal of the appellant, set aside the decree dated 15th June, 1995, passed by the Tribunal against the appellant and consequential reliefs.
30. In support of the main submission made on behalf of the appellant. Eureka Forbes, the following case laws have been submitted:
(a)
(b) AIR 1999 SC 823 at pp. 827-828
(c)
(d)
(e)
(f) (2005)1 Cal. LJ. 418
(g) United Bank of India v. D.R.T.
(h) Punjab National Bank v. Tata Infotech Ltd. II (2005) B.C. 16 (DRAT/DRT, Mumbai).
(i) Bank of India v. Vijay Ramniklal .
31. Following is the submission, in short, made on behalf of the respondent-Bank.
32. In spite of the knowledge with regard to the proceeding in question in T.A. 15 of 1994 before the D.R.T., Kolkata, appellant Eureka Forbes did not participate in the said proceeding on the plea that D.R.T. did not have jurisdiction. Writ petition was filed before the Hon'ble High Court essentially challenging the jurisdiction of the D.R.T. Writ petition was ultimately dismissed. On 15th June, 1995, judgment and decree was passed for payment of a sum of Rs. 22,11,618.62/- to be paid jointly and severally by the defendants. Accordingly, recovery certificate was issued on 30th June, 1995, by the learned Presiding Officer, D.R.T., Kolkata.
33. Eureka appellant minded to file many applications, consequent appeals in D.R.A.T., Kolkata, Hon'ble High Court and even once in the Hon'ble Supreme Court from time to time for the last ten year, in order to nullify the judgment and certificate passed by the D.R.T. without success and the said certificate still stands.
34. No evidence was adduced by Eureka before the D.R.T. There was no rebuttal of the case and Eureka had no positive case of its own to put forward before the learned Tribunal below. There is nothing to disprove in any manner the facts put forward and proved by the Bank. Eureka therefore, has no say on fact and the only point raised by Eureka that may come up for decision is with regard to the jurisdiction of the D.R.T., Kolkata and that too within the confines of the definition of "Debt" under Section 2(g) of the RDDBFI Act, 1993, which includes the claim for damages as well. Admittedly, Indo Marketing was a borrower and the hypothecated goods kept as security against the loan taken from the Bank by Indo Marketing had been sold by Eureka. The claim of the Bank was very much within the definition of debt in Section 2(g) which has a wide meaning and amplitude. It is wide enough to include claim even of an undermined sum as damages. Entire averments made in the plaint has to be looked into while deciding whether claim can be adjudicated upon by the Tribunal constituted under the Act. Both damages and debts are claims within the jurisdiction of the Tribunal to decide and jurisdiction can in no way be said to be ousted. The claim of the Bank was certainly within the definition of 'debt' under Section 2(g) of the Act and D.R.T., Kolkata, was the only forum for the Bank in accordance with law to adjudicate the concerned claim of the Bank.
35. Following case-laws have been mainly relied upon by the respondent-Bank.
1. United Bank of India v. Debts Recovery Tribunal .
2. Cosmosteel Pvt. Ltd. v. Union of India .
3. Punjab National Bank v. Tata Infotech Ltd. II (2005) BC 16 (DRAT/ DRT).
4. State Bank of India v. Madhumita Construction (Pvt.) Ltd. .
5. Punjab National Bank v. Oriental Insurance Company Ltd. 2003(2) Bank C.L.R. 485.
6. V. Films Ltd. v. Unit Trust of India, Chennai I (1999) BC 702 (PB) : 1999(1) Bank C.L.R. 639.
7. A. P. State Financial Corporation v. GAR Re-Rolling Mills .
8. Bhanu Kumar Jain v. Archana Kumar .
36. I have carefully given my mind to the respective submissions made on behalf of both the parties and have also gone through the case-laws cited in support thereof.
37. I think the whole matter boils down only to a couple of propositions- one is a question of maintainability of the instant appeal and the other one is the question of jurisdiction of the D.R.T. based on the definition-even an expansive definition of debt in Section 2(g) of the RDDBFI Act, 1993.
38. As to the maintainability of the appeal, I am of the opinion that the matters of issue estoppel or res judicata, the doctrine of election or want of cause of action as agitated by the respondent-Bank must not stand in the way of maintaining the appeal and, I am, one in line with the submissions made on behalf of the appellant and am not persuaded by the lines of reasonings on this count made on behalf of the respondent-Bank as discussed above.
39. The point is, however long-drawn or unwelcome the pursuit of the appellant might have been in trying to set aside the ex parte decree under Order 9, Rule 13 of the CPC, which anyway had ended in a fiasco, to my mind, that is entirely another aspect of the matter touching only the question of sufficiency of cause in preventing the appellant to appear on the date fixed for the hearing; nothing more, nothing less. That story is now a thing of the past.
40. But that has not been the end of the day for the appellant. Failed in Order 9, Rule 13 of the CPC once for all, the appellant has still seen success in Section 96 of the CPC where an independent appeal is permissible in law from the said ex parte decree whereby the decree is challenged on merits as being not tenable in facts and law relating to the case.
41. And why not? If it is a legal recourse, or, in other words, a route separate and independent of the other which has failed him and which of course is legally permissible, there is no stopping him. The reason precisely is, the reliefs claimed in Order 9, Rule 13, CPC and the one under Section 96 of the CPC are distinct and separate for each other and the two proceedings are indeed different. The relief claimed in a proceeding under Order 9, Rule 13 of the CPC is for setting aside the decree passed ex parte against the defendant for his non-appearance on the date fixed and if he succeeds showing sufficient cause, the ex parte decree is recalled and the Court decides the claim on merits hearing both sides. It is not the real merits of the claim in the suit but the sufficiency, the particular cause or explanation for nonappearance that becomes the focal point for determination in Order 9, Rule 13 of the CPC. But under Section 96 of the CPC the same ex parte decree is under challenge on merits, for example, on the ground that it itself is a nullity on the face of it based on the pleadings relating to the claim or lacks jurisdiction of the Court or Tribunal to decide it just as here in this case, as contended by the appellant. Viewed that way, as it stands, the shutters of Order 9, Rule 13 is down but the door of Section 96 is ajar. The remedy of the one does not run together with the other; they are not simultaneous for the same relief. If they were, you have to chance upon the one and leave the other. You cannot be a chooser of both at the same time inviting confusion and conflict because that is what the law forbids for reasons of equity and public policy. That is what the doctrine of election enjoins. In an appeal under Section 96 of the CPC before the Tribunal the relief claimed is the dismissal of the suit itself in toto. Here, the remedy resorted to comes consecutively and not simultaneously. The choice is fresh and open. Doctrine of election has no play. As is said by the Supreme Court in A. P. State Financial Corporation v. GAR Re-Rolling Mills (supra) (at p. 2160, para 15): "The doctrine of election clearly suggests that when two remedies are available for the same relief, the party to whom the same remedies are available has the option to elect either of them but that doctrine would not apply to cases (just as me of those here with us) where the ambit and scope of the two remedies are essentially different. To hold otherwise may lead to injustice and inconsistent result". On the alleged bar to res judicata or 'issue estoppel' to my mind, since nothing is actually decided on merits with regard to claim in question, it docs neither shuts the mouth of the party nor closes the door of the Court for a try to have an access to justice before the Tribunal. Therefore, the appeal is quite maintainable that way. However, the decision of the Apex Court in Bhanu Kumar Jain v. Archana Kumar (supra), would probably settle the dispute at rest to allow the appellant to go ahead. The Supreme Court said that whereas the defendant would not be permitted to raise a contention as regards the correctness or otherwise of the order posting the suit for ex parte hearing by the Trial Court and/or existence of a sufficient cause for nonappearance of the defendant before it, it would be open to him to -argue in the first appeal filed by him against Section 96(2) of the CPC on the merit of the suit so as to enable him to contend that the materials brought on record by the plaintiffs were not sufficient for passing a decree in his favour or the suit was otherwise not maintainable. Lack of jurisdiction of the Court can also be a possible plea in such an appeal.
42. Let us now move to the heart of the matter for a harder look.
43. There is hardly any disputing the proposition that jurisdiction of the Tribunal with reference to the definition of DEBT under Section 2(g) of the RDDBFI, Act 1993, hold the center-stage for the controversy. In fact, the whole lot of legal exercise by the parties has been one of defining and re-defining, squeezing or stretching the definition including seeing or not the "damage" in the "debt".
44. Section 2 (g) of the RDDBFI Act, 1993, defines "debt" as follows:
Section 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 any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application.
45. The controversy in this regard being what it is, the following lines of the definition may be highlighted.
(i) that 'debt' means any liability;
(ii) which is alleged as due from any person by a Bank;
(iii) during the course of any business activity undertaken by the Bank;
(iv) subsisting on, and legally recoverable on, the date of the application.
46. How do they fit in to the fact-situation of the case already discussed? Pleadings or the plain averments in the plaint by the Bank only do build up the facts that make for interpretation or application of the law in this case. It is true that appellant Eureka has chosen to leave it at that. There is no deposition or evidence on their side. Nevertheless, it is maintained by the learned Advocate for the appellant that there is actually no need for the appellant to adduce any evidence because the pleadings disclose facts or allegations which by themselves are sufficient to sustain the conviction that no liability in terms of the 'debt' can be fastened to the appellant. Or, in other words, it is contended that no 'debt' as defined in Section 2(g) of RDDBFI Act was due to and payable by the appellant to the Bank and, therefore, the purported claim of the plaintiff-Bank against appellant was outside the scope of jurisdiction, power and authority of the D.R.T. under Section 17 of the RDDBFI Act. Consequently, it is submitted that the D.R.T. could not have passed the decree against the appellant,
47. It is submitted on behalf of the respondent-Bank that the claim of the Bank is within the definition of debts and D.R.T., Kolkata was the only forum for the Bank in accordance with law to adjudicate the claim in question by the Bank, that admittedly, Indo Marketing was a borrower and the hypothecated goods kept as security against the loan taken from the Bank by Indo Marketing had been sold by Eureka, that Eureka, Indo Marketing and Deepak are therefore, jointly and severally liable to satisfy the certificate dues of the Bank and the Bank is legally entitled to recover its certificate dues from any/or all of them.
48. On the other hand, the most significant part of the submission made on behalf of the appellant is this. It is apparent from the definition of ''debt" that it has to be a liability claimed as due by a Bank or a financial institution arising in course of any business activity undertaken by the Bank. No amount claimed by a Bank as due from any person will be a debt unless such liability arises in course of any business activity undertaken by the Bank. Therefore, in order to invoke the jurisdiction of a D.R.T. to entertain a claim by a Bank against any person the Bank will have to first aver and allege that a claim has arisen in its favour against the defendant out of a liability arising in course of any business activity with such defendant undertaken by the Bank, otherwise it will not be a debt from the defendant to the Bank as envisaged in Section 17(1) of the said Act, and if it is not such debt, then the D.R.T. will have no jurisdiction, power or authority to entertain such claim or to adjudicate any liability against that defendant in favour of the Bank.
49. From the facts of the instant case, and the plaint filed in transfer application No. 15 of 1994, it will be seen that it has neither been alleged nor been pleaded that any liability has arisen in favour of the Bank against the appellant (defendant No. 3) in course of any business activity undertaken by the Bank with the appellant. The Bank does not allege that any sum was lent or advanced by it to the appellant/ defendant No. 3 in course of any business activity undertaken by the Bank or that the appellant has acted as a guarantor in respect of any sum lent or advanced to defendant No. 1 and/or 2. No amount has been claimed in the suit against the appellant either as a principal debtor or as a guarantor. The plaintiff-Bank does not even allege any where in the plaint that there was any transaction between the Bank on the one hand and the appellant on the other.
50. On analysis of the averments in the plaint, it will be clear that the Bank's grievance against the appellant is not in respect of any transaction with the Bank. The Bank's complaint against the appellant is that it had allegedly wrongfully taken possession of goods lying at the said premises which were stated to have been hypothecated to the Bank. In other words, the Bank is alleging that the appellant has wrongfully interfered with the goods which were allegedly hypothecated by defendant Nos. 1 and 2 in favour of the Bank. At the most, the claim against the appellant is a claim in tort for damages for wrongful interference with the hypothecated goods. It is not the case of the plaintiff that the appellant was bound by any contractual obligations with the plaintiff-Bank, of which any breach has been committed. The plaintiff-Bank is not contending that any liability has accrued in its favour against the appellant arising out of any business activity undertaken by the Bank with the appellant. At the most, the Bank's claim against the appellant, being defendant No. 3 in the suit, is an alleged wrongful interference with the hypothecated goods, and not in respect of a debt alleged to have arisen in course of its usual business activity or otherwise. Therefore, it cannot be said that the plaint in the suit discloses any cause of action demonstrating that any debt is due by the appellant to the Bank. The Tribunal does not have the jurisdiction, power or authority to entertain or adjudicate upon any such purported claim against the appellant, since it is ex facie not a debt due to the Bank by the appellant. The jurisdiction of the Tribunal must include the power to hear and decide the questions at issue and the authority to hear and decide that particular controversy that has arisen between parties. In the instant case, an assertion in the plaint that the claim of the Bank against the appellant is a debt due and payable by the appellant to the Bank, is a condition precedent to the assumption of jurisdiction by the Tribunal over the claim raised by the Bank against the appellant. Such averment is significantly absent in the plaint. Once it is found, as is apparent from the pleadings in the plaint, that the Bank is not claiming the amount against the appellant as a debt due as defined in the said Act, the Tribunal is immediately denuded of its jurisdiction to decide such issue, and any decree passed against the appellant is rendered a nullity. Such matter of competence goes to the root of the jurisdiction of the Tribunal, and any adjudication or ascertainment of any amount due becomes devoid of jurisdiction and, therefore nullity.
51. I am afraid, I cannot pursuade myself to the line of reasonings put forward by the submissions made on behalf of the respondent-Bank. On the contrary, I find plenty of substance in what is said on the side of the appellant.
52. The thing is, the more I read the into the definition of "debt" in Section 2(g) the more I wonder, how come, in the given fact-situation, the so-called liability of the debt must relate or connect to its vital limb of one that speaks of..."during the course of any business activity undertaken by the Bank". To my mind, it does not connect that anyway and that precisely is the missing link the Bank is unable to bridge. Looking out for this link in the "entire averments made in the plaint" in an attempt to take the definition of "debt" to its "widest amplitude" as spoken to by the Hon'ble Apex Court in United Bank of India v. Debts Recovery Tribunal, (supra), to my mind, does not help the Bank either.
53. I might say in this connection that each case has its own peculiar fact and circumstance. Law is one but it swings one way or the other in the matter of interpretation only in accordance with the particular or peculiar factual matrix and conspectus of circumstances of a given case such as this to which the law has to be applied.
54. Bank of India v. Vijay Ramniklal Kapadia (supra), as cited on behalf of the appellant is a case in point, for example. It is said that any liability due from any person by a Bank during the course of any business activity undertaken by the Bank will constitute 'debt' by a 'fraud' committed by an employee of the Bank cannot or should not be construed a 'debt'.
55. I am also inclined to share the view of the Hon'ble D.R.A.T., Mumbai, in Punjab National Bank v. Tata Infotech Ltd. (supra) also as cited by the appellant. There it was found that all the sundry money-claims of the Bank from anywhere and everywhere arising from whatever claims cannot be branded as "debt", that definition of "debt" as given in Section 2(g) makes it clear that the subject-matter of recovery of debt must arise "during the course of any business activity undertaken by the Bank" and subsisting on and legally recoverable on the date of the application and finally that it would be erroneous to say that the claim for damages in tort also would be triable by the D.R.T.
56. Much reliance has been placed by the Bank on a judgment of the Hon'ble Court in Cosmosteels Pvt. Ltd. v. Union of India (supra) (Amilava Lala, J.) to say that although damages cannot be construed as 'debt' as per meaning of the Act, but it cannot be included as claim for adjudication. But the point is, whether it is a "debt" of Section 2(g) or "debt" inclusive of a claim of damages, one of the basic-ingredients of debt as defined in Section 2(g) of the Act, namely that the liability of the 'debt' must-arise of any "business activity undertaken by the Bank" with the appellant cannot be done away with. After all, hardly does the Bank contend or allege that there was any business activity or privity of contract, between the Bank and the appellant. As has been rightly pointed out by the learned Advocate for the appellant, even assuming for the sake of argument but not admitting that a claim for damages is included within the term "debt" as used in Section 2(g) of RDDBFI Act, it is clear from the definition itself that for the D.R.T. to assume jurisdiction such claim must arise "during the course of any business activity undertaken by the Bank" with the defendant against whom such claim is made, I think that the question of damage in general as a claim within the scope and ambit of the definition of 'debt' in Section 2(g) not detached or divorced from it, opened up the issue for determination in Cosmostcels Pvt. Ltd. as referred to above-
whether the claim of damages can be construed as debt" (page 59, para 16 of the judgment). The essential ingredient of "debt" in Section 2(g), namely that the debt liability or claim must arise during the course of any business activity undertaken by the Bank remains where it is for application in a given factual aspect of a case even in seeing damage in the 'debt' defined. This particular aspect of the matter did not come up for consideration in Cosmosteels. Also, the learned Advocate for the appellant has pointed out that in Cosmosteel case the Supreme Court judgment and decision in AIR 1999 SC 1381 as discussed above was not in consideration by the Hon'ble Court and as such the Hon'ble High Court decision is per incuriam. The decision, I am afraid, does not assist the respondent-Bank either in terms of the peculiar fact-situation of our case.
57. Having said all that, to my mind, the net result is, the ex parte decree in question passed against the appellant, Eureka Forbes Ltd., by the D.R.T., Calcutta, is without jurisdiction and therefore, the appeal must succeed. Consequently, the entire sum of money appropriated by the respondent-Bank as per orders of the Hon'ble Court in CO. No. 1568 of 2004 will be refundable together with interest at the lending rate also as per the said orders of the Hon'ble Court.
58. Accordingly, the decree in question dated 15th June, 1995 in T.A. 15 of 1994 passed by the D.R.T., Calcutta, and certificate in pursuance thereof as against the appellant, Eureka Forbes Ltd., is hereby set aside. The entire sum appropriated by the respondent-Bank in terms of the orders of the Hon'ble Court in CO. No. 1568 of 2004 be refunded to the appellant by the Bank together with interest at the lending rate within a period of three months from date. There shall be not order as to costs.