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2004 Supreme(Bom) 1390
IN THE HIGH COURT OF BOMBAY
Shah A.P. Kamdar S.U., JJ.
Southern Petrochemicals Industries Corporation Limited .... Petitioner.
Versus
Administrator of Specified Undertaking
of Unit Trust of India others.... Respondents.
Writ Petition No. 5758 of 2004, decided on 10-8-2004.
Advocates appeared :
S.G. Aney, Sr.A. with Harish Pandya Raj Mehta i/b. Crawford Co., for petitioner.
Virendra Tulzapurkar with P.A. Saraf i/b. K. Munjee Co., for respondent 1 2.
Headnote:Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 19 - Unit Trust of India (Transfer of Undertaking and Repeal) Act (58 of 2002), Section 18 and Companies Act (1 of 1956), Section 4-A(1) and (2) - Recovery of dues. - Even though loan advanced by erstwhile entity Unit Trust of India, application for recovery of dues by Public Financial Institutions substituted for UTI is maintainable. - The provisions of Section 18 of the Unit Trust of India Act, 2002 which incorporates the respondent Nos. 1 and 2 as the two separate institutions as the successor in interest of the erstwhile entity Unit Trust of India substitutes the names of respondent No. 1 and 2 wherever the name of Unit Trust of India appears. The provisions of Section 18 are in the nature of ominpotent amendment because the provisions of Section 18 is wide enough to cover all the Acts, Rules and notifications and other regulations enacted by parliament and wherever the name Unit Trust of India appears therein stands substituted by the respondent Nos. 1 and 2. The true and correct effect of Section 18 is that every Act, Rule Regulation enacted by the Parliament and/or notification issued thereunder by the Central Government and if in any such Act, Rule, regulation or notification contains the words ’Unit Trust of India’ then such words shall stand substituted simultaneously by insertion of both the names of respondent Nos. 1 and 2. The provisions of Section 18 does not require further amendment to every Act, rule, regulation enacted by the Parliament separately and independently. The Parliament has provided a sweeping amendment to every Act by incorporating Section 18 under the said Unit Trust of India Act, 2002. The Companies Act 1 of 1956 is one of such statute which is also enacted by the Parliament. By virtue of provisions of Section 18 of the said Unit Trust of India Act of 2002, the provisions of Section 4-A of the said Companies Act also stood amended. The provision of clause (v) of sub-section (1) of Section 4-A of the said Companies Act prior to its amendment provided for the erstwhile Unit Trust of India as a financial institution. On amendment of the Unit Trust of India Act, 2002 the said provision has to be read as substituted with that of the respondent Nos. 1 and 2 one it is so read, then the respondent No. 1 and 2 would be public financial institution under Section 4-A of the Companies Act 1 of 1956. Section 2(h)(i) of the Recovery of Debts Due to Banks and Financial Institutions Act provides that every public financial institution within the meaning of Section 4-A of the Companies Act 1 of 1956 would be deemed to be a financial institution under Section 2(h)(i) of the Recovery of Debts Due to Banks and Financial Institutions Act. Therefore, the respondent Nos. 1 and 2 by virtue of Section 18 of the said Unit Trust of India Act of 2002 would become a public financial institution as defined under Section 2(4)(i) of the Recovery of Debts Due to Banks and Financial Institutions Act and consequently the application by the respondent Nos. 1 and 2 under Section 19 of the Recovery of Debts Due to Banks and Financial In stitutions Act for recovery of dues which were lent in advance to the petitioner by the erstwhile entity Unit Trust of India is maintainable.
2. The petitioner is a public limited company incorporated and registered under the Companies Act 1 of 1956 and is inter alia engaged in the manufacture and distribution of fertilizers, pharmaceuticals products, etc. The Unit Trust of India (U.T.I) was a body corporate under the provisions of the Unit Trust of India Act, 1963 which is since repealed by the provisions of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (hereinafter referred to as the said U.T.I. Act of 2002). Under a common loan agreement dated 1-10-1992 which was executed between the petitioner, the said Unit Trust of India and I.D.B.I. as the lead institution a sum of Rs. 1000 lacs were advanced to the petitioner herein. An additional loan of around Rs. 2,500 lacs was also advanced by U.T.I. to the petitioner herein against privately placed debentures.
3. By virtue of the said U.T.I. Act of 2002, the said entity Unit Trust of India stood dissolved and bifurcated in two separate entities viz., administrator of the specified undertaking of the Unit Trust of India and U.T.I. Trustee Company. Section 18 of the said Act is the subject-matter of interpretation in the present proceedings.
4. Pursuant to the said U.T.I. Act, 2002 coming into force the newly constituted entities being respondent No. 1 and 2 herein, filed an original application before the Debt Recovery Tribunal for the recoveries of the dues which were lent in advance by the erstwhile entity U.T.I.
5. In the said application it has been contended that the petitioner herein committed defaults of the common loan agreement particularly the terms of Schedule V thereto under which the said amount was repayable in 32 quarterly instalments by the petitioner to the erstwhile entity U.T.I. and now to respondent Nos. 1 and 2 as successor in title thereto. According to respondent Nos. 1 and 2 in the said original application, a sum of Rs. 31,97,66,221 is due and payable by the petitioner to them.
6. In the said original application, the present petitioner took out a Misc. application on 12-12-2003 seeking that the Original Application No. 237 of 2003 should be dismissed for want of jurisdiction inter alia on the ground that the respondent Nos. 1 and 2 herein are not the Financial Institutions as prescribed under the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the said D.R.T. Act). It was thus contended that the respondent Nos. 1 and 2 cannot approach the said Debt Recovery Tribunal under section 19 of the D.R.T. Act and, therefore, the Tribunal has no jurisdiction to adjudicate the said claim of the respondent Nos. 1 and 2 and the said application is liable to be dismissed.
7. By an order and judgment dated 12-2-2004, the said application was dismissed by the learned member of the Debt Recovery Tribunal, being aggrieved by the said judgment and order, the petitioner preferred an appeal being Appeal No. 132 of 2004 before the Debt Recovery Appellate Tribunal at Bombay. By an order and judgment dated 5-5-2004, the Debt Recovery Appellate Tribunal has also dismissed the appeal preferred by the petitioner inter alia rejecting the contention of the petitioner that the original application is not maintainable and/or that it has no jurisdiction to entertain the application under the provisions of D.R.T. Act.
8. By the said order the learned Chairperson of the Appellate Tribunal has inter alia held that the respondent Nos. 1 and 2 are financial institution within the meaning of the word "financial institution" as defined under section 2(h)(i) of the said D.R.T. Act and thus, an application of their dues is maintainable under section 19 of the D.R.T. Act. It is this order of the Tribunal
