A suit for recovery of money by sale of mortgaged properties is a suit for recovery of debt and can be transferred to the Debt Recovery Tribunal.

( 1 ) THIS suit has been filed by the consortium of plaintiff banks for recovery of Rs. 13,81,41,611. 29 paise being the loan advanced by the banks. The defendants by way of securing the aforesaid loan mortgaged their properties in favour of all the banks. Original title deeds of the properties were deposited with the plaintiff No. 1 pursuant to a Resolution passed by the Governing Body of the said defendant, creating an equitable mortgage of the properties by way of a security for repayment of the term loan granted by the plaintiff-bank. The loan was not returned and the plaintiffs, therefore, filed the present suit for recovery of the said amount. The amount was sought to be recovered by sale of the mortgaged properties mentioned in the plaint.

( 2 ) ON the establishment of the Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short REFERRED TO as "the Act"), no Court or other authority had any jurisdiction, power or authority (except the Supreme Court, and a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution) in relation to the matters specified in Section 17 of the Act. Under Section 17 of the Act, it was only a Tribunal constituted under the Act which could exercise jurisdiction, power and authority to entertain and decide applications from banks and financial institutions for recovery of debts due to such banks and financial institutions and which debts were of the value of more than Rs. 10,00,000. 00.

( 3 ) AS this Court had ceased to have jurisdiction to decide this case on the Constitution of the Tribunal under the Act, this suit was proposed to be transferred to the Tribunal. However, learned Counsel for the defendant raised an objection that as this was not a simple suit for recovery of money but was a suit for recovery of money by sale of mortgaged properties, it was not governed by the provisions of the Act and could not be transferred.

( 4 ) MR. Rajiv Sawhney, Sr. Advocate, appearing for the defendant, while not disputing that the amount sought to be recovered was a debt within meaning of Section 2 (G) of the Act sought to justify his objection that the suit cannot be transferred to the Debt Recovery Tribunal on the ground that a special procedure has been prescribed under Order 34 of the Code of Civil Procedure for recovery of an amount which is sought to be recovered by sale of mortgaged property and the said suits are governed by Section 68 of the Transfer of property Act. The contention is that this is not a suit for recovery of money but is a suit for sale of property. It is contended that unless an election is made by the bank that they will not recover money from the property mortgaged by the defendant, the suit cannot be transferred. According to Mr. Sawhney, in the form which has been prescribed in the rules for filing an application before the Debts Recovery Tribunal, there is no provision that recovery can be made by sale of the mortgaged property. It is, therefore, argued that this being not a simple suit for recovery of money, this Court should not transfer the same to Debts Recovery Tribunal.

( 5 ) UNDER Section 31 of the Act, every suit or other proceedings pending before any Court immediately before the date of establishment of the Tribunal under the Act, shall stand transferred on that date to such Tribunal.

( 6 ) A suit for recovery of money by sale of mortgaged properties is required to be filed in accordance with the procedure laid down in Order 34 of the Code of Civil Procedure: Merely because the suit has been filed for recovery of money by sale of mortgaged property, it will not cease to be a suit for recovery of money. The Court in such a case is required to first pass a preliminary decree requiring the defendant to pay into Court the amount so found due from him and it is only on the failure of the defendant to pay such amount that the plaintiff will be entitled to apply for a final decree debarring