The main legal point established in the judgment is the interpretation of the legal provisions of the Companies Act - 1956, Recovery of Debts due to Banks and Financial Institutions Act - 1993, and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act - 2002 to determine the court's jurisdiction over the suit.

K.R. SHRIRAM, J.

1. This is a cluster of matters where the issue that requires to be decided is whether this Court has jurisdiction to receive, try and dispose of the suit?

For the sake of convenience, I am taking the brief facts from suit No.771 of 2002.

2. The plaintiff is a public limited company incorporated under the Indian Companies Act, 1913 (VII of 1913) and a Financial Institution within the meaning of Section 4-A of the Companies Act, 1956. Defendant no.1, is a company within the meaning of the Companies Act, 1956 (1 of 1956) and inter-alia carrying on business of manufacturing, producing, distributing, importing, exporting, buying, selling and dealing in all types of goods and products based on rubber and/or plastics for domestic and industrial use and such other ancillary products. Defendant nos.2 to 10 are necessary parties inasmuch as they may have interest in the properties of defendant no.1 that are charged/mortgaged to the plaintiff.

3. This suit is filed by the plaintiffs as debenture trustees for the debenture holders in respect of debentures issued by defendant no.1. Defendant no.1 had executed a declaration of trust, i.e., a trust deed in favour of the plaintiff for the benefit of the debenture holders. The trust deed recorded the terms and conditions of this trusteeship including the remuneration therefor.

4. The applicant who is defendant no.1 has taken out Notice of Motion No.2078 of 2012 in Suit No.771 of 2002 raising the preliminary issue of jurisdiction. The applicant is seeking rejection of plaint under Order VII, Rule 11 of the Code of Civil Procedure, 1908 or in the alternative return the plaint to be presented in the Debt Recovery Tribunal. It was submitted that this suit was filed for recovery of amounts above Rs.10 lakhs allegedly due to the debenture holders and the plaintiff and other defendants are bankers and financial institutions and hence the suit was barred and the plaintiff should be directed to approach the Debt Recovery Tribunal under the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (RDB Act).

5. The facts in this case are almost identical to the facts in the judgment of a Division Bench of this Court in the matter of Krishna Filaments Ltd. Vs. Industrial Development Bank of India (Debenture Trustees) & Ors. 2004 (2) Mh. L.J. 823. The submissions of Mr. Dhond, counsel for the plaintiff were also similar to the submissions made on behalf of the banks/financial institutions in that suit. In short, what the plaintiff submitted was that the cause of action leading to the filing of the present suit is arising out of the breach or violation of the provisions of the trust deed by defendant no.1 in its capacity as a trustee for the debenture holders. It is not a suit by a bank or a financial institution for recovery of the debt due to it for which purpose a separate jurisdiction is created in favour of the Tribunals under Section 17 of the RDB Act and the cognizance of such suits by the other courts is barred under Section 18 of the RDB Act. In the case of Krishna Filaments Ltd. (supra), the Court came to a conclusion that the plaintiff or the bank acted as a trustee for the subscribers to the debentures of the defendant company and the suit filed was in that capacity to recover the amounts payable to the debenture holders. As the amount claimed, except a small amount of remuneration, was meant not for the plaintiff bank/financial institutions but was due to the subscribers of the debentures, the claim of the bank/financial institutions cannot be said to be for recovery of a debt due to a financial institution within the meaning of the term 'debt' under the RDB Act. Therefore, the Court concluded that it cannot be held that the suit for recovery of these amounts would amount to an application for recovery of debts due to a financial institution under Section 17 of the RDB Act or that this Court will have no jurisdiction to receive try and dispose t