Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
M/s Jayem Auto Industries (p.)Ltd. – Appellant
Versus
Bank of Baroda & Ors. – Respondents
W.P.(C) 2859 of 2015 & CM Appl. 38804 of 2023
Decided On : 01-08-2023
Recovery of Debts Due to Banks and Financial Institutions Act - Discharge of Liability - Section 19 - [Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 19] - The court addressed the dispute of whether the payments made by the petitioner discharged its liability against the Bills of Exchange issued by it. The petitioner claimed to have made payments directly to the bank, while the bank disputed the discharge of liability, alleging that the payments were credited to the borrower's other accounts and not against the Bill Discounting facilities. The court found that the lower court failed to consider and address the issues raised by the petitioner and remanded the matter for fresh consideration, taking into account the evidence led by the parties and the effect of the bank's settlement in respect of the dues of the borrower by recovery of an amount from the Official Liquidator.
Fact of the Case:
The petitioner challenged an order passed by the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal, disputing the discharge of its liability against Bills of Exchange issued by it. The lower courts allowed the bank's action and held the petitioner liable to pay a sum along with interest, without considering the evidence and defense raised by the petitioner.
Finding of the Court:
The court found that the lower courts failed to consider and address the issues raised by the petitioner and ordered the matter to be remanded for fresh consideration, taking into account the evidence led by the parties and the effect of the bank's settlement in respect of the dues of the borrower by recovery of an amount from the Official Liquidator.
Issues: The main issue was whether the payments made by the petitioner discharged its liability against the Bills of Exchange issued by it. The court also addressed the failure of the lower courts to consider the evidence and defense raised by the petitioner.
Ratio Decidendi: The court's decision was based on the failure of the lower courts to consider and address the issues raised by the petitioner, leading to the remand of the matter for fresh consideration, taking into account the evidence led by the parties and the effect of the bank's settlement in respect of the dues of the borrower by recovery of an amount from the Official Liquidator.
Final Decision: The petition was allowed, and the matter was remanded to the lower court for fresh consideration, with directions for the bank to refund the amount collected by debiting the petitioner's bank account if the lower court finds in favor of the petitioner.
JUDGMENT
Vibhu Bakhru, J.
1. The petitioner has filed the present petition impugning an order dated 15.04.2011 passed by the learned Debts Recovery Tribunal-II, New Delhi (hereafter `the DRT') in Original Application (OA) No.54/2002 captioned Bank of Baroda v. M/s Reinz Talbros Ltd. & Ors.. The petitioner also impugns an order dated 08.12.2014 passed by the learned Debts Recovery Appellate Tribunal (hereafter `the DRAT') in Appeal No.449/2012 captioned M/s Jayem Auto Industries (P) Limited v. Bank of Baroda & Ors., whereby the petitioner's appeal against the DRT's order dated 15.04.2011 was disposed of.
2. Respondent no.1 (hereafter `BOB') had filed an Original Application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (now known as Recovery of Debts and Bankruptcy Act, 1993) seeking recovery of the amounts due in respect of financial facilities provided to M/s Reinz Talbros Ltd. (hereafter `the Borrower'). The petitioner was arrayed as respondent no.7 in the said proceedings instituted in the DRT.
3. BOB had proceeded against the petitioner for recovery of amounts, which it claimed were due against certain Bills of Exchange (hundies) accepted by it. BOB states that the financial facilities extended by it to the Borrower also included Bill discounting facilities and the Borrower had discounted certain Bills of Exchange, which included those accepted by the petitioner.
4. Admittedly, the petitioner had drawn/accepted four hundies, which were discounted by BOB. These were against invoices for supplies made by the Borrower to the petitioner. The details of the Invoices and the said hundies are set out below:
| S. No. | Bill Number | Hundies No./Bank Ref. No. | Date | Amount |
| 1. | 39 | 2831 | 12.11.2000 | 2,51,335.40 |
| 2. | 41 | 2884 | 23.11.2000 | 3,10,116.80 |
| 3. | 44 | Xxxx | Xxxxxx | 3,57,251.80 |
| 4. | 45 | 2882 | 26.11.2000 | 2,12,599.40 |
5. It is the petitioner's case that it had discharged its liability against the said hundies by making payments directly to BOB. The petitioner claims that it had released the payment against the Hundi Nos.2831 prior to the date of its maturity pursuant to the request made by the Borrower. It had made a payment of Rs.2,50,000/- by a cheque bearing no.221488 dated 07.11.2000. The said Hundi No. 2831 was issued in respect of Bill No. 39 for an amount of Rs.2,51,335.40/-. The petitioner claims that the balance amount of Rs.1,335.40/- was adjusted towards the freight paid by the petitioner. Thus, the petitioner had discharged its liability against the said Invoice in full.
6. The petitioner claims that Hundi Nos. 2884 and 2882, which were accepted against the Bill Nos. 41 and 45 for amounts of Rs.3,10,116.80/- and Rs.2,12,599.40/- were maturing on 23.11.2000 and 26.11.2000 respectively. However, the said date was extended. The petitioner claims that it discharged its liability in respect of the said two hundies (Hundi Nos. 2882 and 2884) by issuing cheques bearing no.196897 and 196898 dated 11.01.2001 for amounts of Rs.2,12,599.40/- and Rs.3,10,116.80/-, respectively being the value of the said hundies.
7. The petitioner claims that the remaining hundi (hundi issued against Bill No.44) for a sum of Rs.3,57,251.80/- was also discharged by payment directly to BOB. It claimed that the Bank Manager (Mr P.K. Nagpal) had approached the petitioner and demanded payment in respect of the said hundi and the same was also paid by a cheque bearing no.203354 dated 05.03.2001 for an amount of Rs.3,57,251.80/-.
8. There appears to be no dispute regarding the receipt of payment of Rs.3,57,251.80/- against the Hundi accepted against Bill No.44. The controversy relates to the liability against the remaining three hundies. Whilst, BOB does not dispute that the payment of Rs.3,57,251.80/- was received by it against the Bill of Exchange, it disputes that the petitioner has discharged its liability in respect of the remaining three hundies aggregating to an amount of Rs.7,74,
The court clarified that there is no provision in the Recovery of Debts and Bankruptcy Act ousting the remedy of a civil suit by a defendant in a claim by the bank, and the proceedings under the Act ....
The main legal point established in the judgment is that a bank, as the dominus litis, has the right to implead a necessary and proper party for the recovery of its dues, especially in cases of alleg....
The court emphasized the need for sufficient evidence to establish claimed amounts and held that liability cannot be fastened on a mere assumption.
Public sector banks must adhere to principles of fairness and non-arbitrariness in their dealings, as established under Article 14 of the Constitution.
The superior court can intervene in cases of manifest injustice but must defer to statutory appellate processes if adequately pursued.
The central legal point established in the judgment is the importance of upholding consent terms, the obligations of the parties, and preventing deliberate obstruction of recovery proceedings.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
