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2017 Supreme(P&H) 1016
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
S.J. VAZIFDAR, HARINDER SINGH SIDHU, JJ.
Punjab National Bank - Petitioner
Versus
HDFC Bank Ltd. and another - Respondents
CR-7649-2014 (O&M)
Decided On : 01-11-2017
For the Petitioner: Mr. Anil Kumar Ahluwalia
For the Respondent: Mr. Sunil Narang
IMPORTANT POINT
Recovery of Debt – Bank can recover the amount paid by it by way of forged cheque/demand draft through DRT
Headnote:(A) Recovery of Debts due to Banks and Financial Institutions Act, 1993, S.2(g) – Debt – Scope of – Recovery of Debt – Amount due to a party who has made payment under a forged instrument constitutes a debt within the meaning of word "debt" as in Section 2(g) – Bank can recover the amount paid by it by way of forged cheque/demand draft through DRT.
The words "any liability" are wide enough to include the claim in the present case. The words that follow do not exclude the claim in the present case from the definition of the word "debt". The words "under any law for the time being in force" would include the present claim irrespective of whether it is considered to be an action for money had and received or an action in tort. The words "under any law for the time being in force" do not restrict the claims to those based only on statute. The word "debt" also includes a claim "in cash or otherwise". There can hardly be any doubt that the present claim is one for cash and in any event falls within the words "or otherwise". The claim is payable as debt for though it is not payable under a decree or order of any Civil Court, it is payable "otherwise" and claims otherwise than on a decree or order of a Civil Court are also included within the ambit of the word debt. Lastly, if the claim is well founded, it certainly is legally recoverable under the law in force in India. That was rightly not even disputed.
(B) Recovery of Debts due to Banks and Financial Institutions Act, 1993, S.2(g) – Debt – Scope of – Fraud with Bank – Even when the bank is defrauded, it is in the course of the business activity undertaken by the bank – To constitute a debt under Section 2(g), it is not necessary that the claim must be on a transaction voluntarily and/or validly undertaken by the bank – Such a view would curtail the wide import of the words "business activities" – In the course of its business activities, the bank may be defrauded, but the fraud also is perpetrated on the bank in the course of the bank's business activities. (Para 13)
S.J. VAZIFDAR, J.
This is a Civil Revision against the order of the learned Civil Judge (Junior Division), Patiala, dated 02.09.2014 dismissing the petitioner’s application under order 7 Rule 10 of the Code of Civil Procedure, 1908 for transfer of the suit to the Debts Recovery Tribunal (DRT).
2. The learned Single Judge by an order dated 13.01.2016 noted that the issue is whether the amount sought to be recovered by the plaintiff i.e. the petitioner is a debt within the meaning of that term in Section 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short the Act). He observed that the matter is of utmost commercial importance and required consideration by a larger Bench. The matter was accordingly placed before one of us (S.J. Vazifdar, CJ) on the administrative side for consideration for reference to a larger Bench on the issue. Pursuant to an administrative order, the matter has been placed before our Division Bench.
3. Respondent No. 1 is the HDFC Bank Limited. Respondent No. 2, M/s Ecotex Infotech, is a constituent of respondent No. 1. The petitioner filed a suit for recovery of an amount of about Rs. 11.93 lacs together with interest at 12% per annum with quarterly rests on the following facts. Respondent No. 2 presented a demand draft purportedly drawn by the petitioner to respondent No. 1 for collection. Respondent No. 1 presented the demand draft to the petitioner. The petitioner paid the amount to respondent No. 1 who in turn credited the amount to the 2nd respondent’s account. The petitioner contends that the demand draft was forged and accordingly filed the suit to recover the amount from the respondents. The respondents resist the suit on several grounds. We are, however, not concerned with the merits of the rival contentions.
4. In its written statement, respondent No. 1 raised a preliminary objection that the Civil Judge (Junior Division) has no jurisdiction to decide the suit.
The petitioner filed the said application to have the suit transferred to the DRT. By the impugned order, the learned Civil Judge (Junior Division), Patiala dismissed the application. The learned Civil Judge (Junior Division) dismissed the application on the ground that the Court had territorial jurisdiction to try the matter. The learned Civil Judge (Junior Division) did not consider the contentions raised before us on behalf of the respondents to the effect that the claim in the suit is not a debt within the meaning of Section 2(g) of the Act possibly because they were not raised before him. It was apparently raised before the learned Single Judge who referred this matter to a Division Bench on this point.
5. The question as noted in the order of reference is whether the suit filed to recover the amount paid under an allegedly forged demand draft is an action for recovery of a debt within the meaning of that expression in Section 2(g) of the Act. In other words, the question is whether the amount due to a party who has made payment under a forged instrument constitutes a debt within the meaning of that word in Section 2(g). We have answered the question in the affirmative.
6. Sections 2(g), 3(1), 17(1) and 18 of the Act read as under:-
2. Definitions — In this Act, unless the context otherwise requires,—
(g) “debt” means [any liability (inclusive of interest) which is claimed as due from any person by a bank] or a financial institution or by a consortium of banks or financial institutions [during the course of any business activity undertaken by the bank] or the financial institution or the consortium [under any law for the time being in force], [in cash or otherwise,] whether secured or unsecured, or assigned, or [whether payable under a decree or order of any civil court or any arbitration award or otherwise] or under a mortgage and subsisting on, [and legally recoverable on, the date of the application.]
3. Establishment of Tribunal –
(1) The Central Government shall, by notification, establish one
