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2008 Supreme(All) 2070
2009 (75) ALR 343
DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD
J.M. MALIK, J.
ASTRA EXPORTS AND HOLDINGS (P) Ltd., KOLKATA and another
Versus
PUNJAB NATIONAL BANK, MAINPURI BRANCH
Appeal Nos. 830 and 829 of 2007
Decided on : September 2, 2008
Counsel for the Appellants: R.G. Goswami.
Counsel for the Respondents: S.D. Kautilya, Kush Saxena and Ashish Mishra.
The main legal point established in the judgment is that the R.D.D.B.F.I. Act, 1993 does not apply to parties that are neither banks nor financial institutions, and therefore, such parties cannot claim any relief under the Act.
Headnote:
Assignment - Recovery of Debt - R.D.D.B.F.I. Act, 1993 - Section 1, 2, 17, 19 - The judgment discusses the applicability of the R.D.D.B.F.I. Act, 1993 to the case and highlights the definitions of 'banking company' and 'debt' under the Act. It emphasizes that the Act does not apply to parties that are neither banks nor financial institutions and excludes the jurisdiction of third parties. The court also refers to a Division Bench of Delhi High Court's decision regarding the permissibility of debt assignment.
Fact of the Case:
The appellant, Astra Exports and Holdings (P) Ltd., challenged the orders of the recovery officer and the D.R.T. dismissing their application for substitution as decree-holders. The appellant sought to proceed with the execution of the decree in their favor or remit the entire records of execution to the original jurisdiction of the Civil Court.
Finding of the Court:
The court found that the R.D.D.B.F.I. Act, 1993 does not apply to parties that are neither banks nor financial institutions, and therefore, the appellant, as an assignee, is not covered by the Act and cannot claim any relief under it. The court dismissed the appeals and granted the appellant liberty to approach the Civil Court for execution of the decrees.
Issues: The main issue was the applicability of the R.D.D.B.F.I. Act, 1993 to the case and whether the appellant, as an assignee, could proceed with the execution of the decree under the Act.
Ratio Decidendi: The court held that the R.D.D.B.F.I. Act, 1993 does not apply to parties that are neither banks nor financial institutions, and therefore, the appellant, as an assignee, is not covered by the Act and cannot claim any relief under it. The court also emphasized that there is no legal impediment in approaching the Civil Court for execution of the decrees.
Final Decision: The appeals were dismissed, and the appellant was given liberty to approach the Civil Court for execution of the decrees.
J.M. MALIK, CHAIRPER'SON.-This order shall decide the above said two cases, which entail the same question of law and were consolidated vide my order dated 29th August, 2008. In both the cases Punjab National Bank and Allahabad Bank, the respondents/ decree-holders entered into two different agreements of assignment and assigned their rights of recovery of debt amount from Shree Laxmi Niwas Paper mills Ltd., in both the cases, which is the judgment-debtor in both the cases, in favour of Astra Exports and Holdings (P) Ltd., Kolkata, appellant in both the cases. The appellant moved an application for substitution as decree-holders being assignees in, place of the above said two different assignors. The recovery officer vide its order dated 12th April, 2006 and the learned D.R.T. vide its order dated 30th April, 2007 found no favour with the above said applications and dismissed the same.
The appellant has challenged those orders in these appeals.
2. I have heard the Counsel for the parties. Counsel for the appellant pointed out that his prayer made in the written submissions filed on behalf of the applicant-assignee/appellant Astra Exports and Holdings (P) Ltd., 8 Lyons Range, Ground Floor, Kolkata-700001, W.B. is legal and should be considered by this Court. The said prayer in written submissions dated 2nd December, 2005 is reproduced as follows:
"It is, therefore, most respectfully prayed that this Hon'ble Tribunal may be pleased to permit the applicant i.e., assignee/transferee of the decree by the bank to proceed with the execution of decree in the aforesaid. D.R.C. case in its favour with due impleadment in place of the assignor /transferor bank as per law and/or in the alternative this Hon'ble Tribunal may be pleased to remit/send back the entire records of execution in the aforesaid D.R.C. case along with the connected records to the original jurisdiction of Civil Court, Mainpuri for the adjudication of the rights of the applicant/ assignee as per law so that justice may be done, otherwise the applicant/assignee/transferee shall suffer irreparable loss and injury." . (Emphasis supplied)
3. Instead of touching the heart of the problem the learned Counsel for the appellants just skirted it. The appellant is neither a bank nor a financial institution. The Act itself suggests that. when the matter is pending. between private parties, which are neither bank nor financial institutions, the instant Act namely R.D.D.B.F.I. Act, 1993 shall have no application. The above said Act seeks to provide for the establishment of Tribunals and Appellate Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions. Sub-section (1), Clause (4) provides that:
"(4) The provisions of this Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than Rs. 10,00,000 or such other amount, being not less than one lakh rupees, as the Central Government may, by notification, specify."
4. It, therefore, clearly, specifically and unequivocally excludes other parties including the appellant.
5. Again sub-section (2) (e) defines the banking company as follows:
"The banking company was having the meaning assigned to it in Clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949)". Clause (c) of section of the Banking Regulation Act, 1949 is reproduced below:
"(c) 'banking company' means any company which transacts the business of banking in India.
Explanation.-Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking with the meaning of this clause."
6. Again section 2, Clause (g) defines the debt in the following terms:
"(g) 'debt' means any liability (inclusive of interest) which is claimed as due from any pe
