The court ruled that DRT lacks jurisdiction to adjudicate claims for damages founded in tort under the Recovery of Debts and Bankruptcy Act, emphasizing the importance of maintaining expeditious debt recovery processes.

ORDER :

(Mohammed Shaffiq, J.)

The issue that arises for consideration in this batch of writ petitions revolves around the scope of sub-section (8) to Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as “RDB Act”).

1.1. There are six writ petitions, three filed by INMA International Limited (W.P.Nos.33396, 33398, 33399 of 2019) and other three writ petitions filed by Indian Overseas Bank (W.P.Nos.3412, 3419 and 3427 of 2020). All six writ petitions are filed challenging the common order dated 14.11.2019 of the Debt Recovery Appellate Tribunal (hereinafter referred to as “DRAT”) in R.A. Nos.110, 111 and 138 of 2019. Since the issue that arises for consideration in all six writ petitions are inter-connected, these writ petitions are disposed of by way of a common order. For the purpose of this order, we shall refer to INMA International Limited as 1^st petitioner, Mr.G.Rathinavelu as 2^nd petitioner and Mr.G.Sundaravadivelu as 3^rd petitioner (collectively as petitioners) and Indian Overseas Bank as respondent bank.

2. Brief facts:

In the above batch of writ petitions, INMA International Limited was originally represented by its Directors viz., 2^nd and 3^rd petitioners. Proceedings were initiated against 1^st petitioner under Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) wherein Resolution Professional (RP) came to be appointed vide order dated 21.09.2022. In view thereof, 1^st petitioner company viz., INMA International Limited is represented by RP. Before proceeding to narrate the relevant facts, we intend to clarify at the outset that proceedings were initiated under RDB Act, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”) and IBC. The present writ petitions are challenging the order of DRAT under RDB Act, we would thus focus primarily on the proceedings under RDB Act. While setting out briefly the proceedings under SARFAESI and IBC, we also intend to deal with facts under the following heads rather than a chronological narration of facts inasmuch as the proceedings overlap. The heads of narration of facts being:

A) Proceedings under RDB Act;

B) Proceedings under SARFAESI Act;

C) Proceedings under IBC.

A. Proceedings under RDB Act:

2.1. 1^st petitioner is engaged in Engineering Constructions on Turn-key Project Basis. One Mosmetro India Private Limited (hereinafter referred to as “Principal Contractor”), an Indian subsidiary of Mosmetrostroy, a Russian company awarded to 1^st petitioner works/ contract of supplying fabricated reinforcement cages for precast elements of the cylindrical tunnel for the Chennai Metro Rail Project in Chennai. Work order was issued on 06.12.2012.

2.2. 1^st petitioner approached respondent bank for financing the project. Respondent bank sanctioned Clean Cash Credit of Rs.5 crores, Cash Credit limit against Book Debts to the tune of Rs.5 crores and Letter of Guarantee to the tune of Rs.20 crores. 2^nd and 3^rd petitioners stood as guarantors and offered their personal properties worth Rs.32 crores by way of security to respondent bank towards above facilities.

2.3. While 1^st petitioner carried out the work, payments were delayed by the Principal Contractor. Principal Contractor abandoned the project sometime in May 2015, without settling payment due to sub-contractors including 1^st petitioner. As a result, 1^st petitioner faced severe financial cons