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BOMBAY HIGH COURT
Rohit W. Joshi, J.
M/s Ashwini Trading Co. – Petitioner
versus
Housing Bank Limited and Ors. – Respondents
Writ Petition No.7008 of 2024
Decided on 11.8.2025
For the Petitioner:Mr. S.P. Shah, Advocate
For the Respondent No.1:Mr. S.V. Adwant a/w Mr. H.S. Adwant and Mr. Aarya Deshpande, Advocates
IMPORTANT POINT
Recovery of loan amount – When loan advanced by any entity is assigned to a Bank or an entity which has advanced loan is amalgamated with Bank, Bank is entitled to claim outstanding amount as due during course of its business activity – To recover such amount also will be a part of business activity of Bank, although amount may not have been advanced by Bank itself as a loan.
Headnote:
(A) Recovery of Debts and Bankruptcy Act, 1993 – Sections 17, 18 and 19 – Recovery of loan amount – Transfer of Recovery Suit to Debts Recovery Tribunal – When loan advanced by any entity is assigned to a Bank or an entity which has advanced loan is amalgamated with Bank, Bank is entitled to claim outstanding amount as due during course of its business activity – To recover such amount also will be a part of business activity of Bank, although amount may not have been advanced by Bank itself as a loan – Section 18 bars jurisdiction of any Court or Authority to deal with a matter, which falls within jurisdiction of DRT under Section 17 – Bar under Section 18 does not operate only at stage of institution of suit – Section 18 clearly implies that bar is applicable to pending suits as well – After amalgamation of original plaintiff (HDFC Limited) with present plaintiff (HDFC Bank Limited), DRT has jurisdiction over subject matter of suit – Suit was rightly transferred by Commercial Court to DRT. (Paras 15, 18 and 29)
(B) Interpretation of Statute – Rule of Harmonious Construction – Attempt shall be made to harmonise two different provisions which appear to be in conflict with each other – However, when they cannot be reconciled attempt should be made to identify dominant purpose of Statute and find out which provision should override the other. (Para 20)
Result: Writ Petition dismissed.
JUDGMENT
The present petition takes exception to order dated 4th April, 2024 passed by the learned District Judge-2, Aurangabad, on an Application Exhibit-230 in Commercial Suit No.12/2019, thereby ordering transfer of the said suit to Debts Recovery Tribunal, Aurangabad (hereinafter referred to as “DRT, Aurangabad”).
2. A Company, named HDFC Limited had filed a suit, being Special Civil Suit No.46/2007 for recovery of amount of Rs.3,14,85,223/- against the petitioner and respondent nos.2 to 12. The suit is pertaining to recovery of amount advanced in two separate loan accounts. The outstanding amount in two loan accounts as per respondent no.1/plaintiff was Rs.2,32,28,013/- and Rs.82,62,210/- as on the date of filing of suit. After commencement of Commercial Courts Act, 2015, the said suit was transferred to Commercial Court and was registered as Commercial Suit No.12/2019. Pending the said suit, HDFC Limited came to be amalgamated with HDFC Bank Limited, vide order dated 17th March, 2023 passed by the National Company Law Tribunal, Mumbai (NCLT, Mumbai) in Company Scheme Petition No.240/2022, granting approval to the scheme of amalgamation. HDFC Bank Limited is a Banking Company under the Banking Regulation Act, 1949. In view of amalgamation of HDFC Limited with HDFC Bank Limited, all the assets and liabilities of HDFC Limited stood vested with HDFC Bank Limited. Under the scheme, HDFC Bank Limited is also entitled to continue to prosecute all litigations initiated by HDFC Limited prior to its amalgamation with HDFC Bank Limited. Accordingly, name of HDFC Bank Limited is impleaded as plaintiff in the suit and the suit is being prosecuted by HDFC Bank Limited.
3. In this backdrop, HDFC Bank Limited filed an Application, vide Exhibit – 230 in Commercial Suit No.12/2019 praying for transfer of the said suit to DRT, Aurangabad in view of Sections 17 and 18 of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as “RDB Act”).
4. The petitioner, who is defendant no.11 in the said suit opposed the application by filing detailed reply on 20th February, 2024. After hearing rival submissions, the learned Trial Court has allowed the Application filed vide Exhibit-230 vide order dated 4th April, 2024 holding that the suit was required to be transferred to DRT, Aurangabad in view of amalgamation of HDFC Limited with HDFC Bank Limited. Accordingly, the learned Trial Court ordered the matter to be placed before the learned Principal District Judge, Aurangabad for appropriate administrative action. The said order dated 4th April, 2024 is challenged by defendant no.11/petitioner by filing the present petition.
5. Mr. Subodh Shah, learned Advocate for the petitioner contends that DRT will not have jurisdiction to try the suit, which is ordered to be transferred to it by the impugned order. The learned Advocate has referred to Section 19 of the RDB Act, to contend that an Application under Section 19 of the said Act can be filed by a Bank or a Financial Institution to recover debt from any person. He contends that a proceeding for recovery of any amount other than debt cannot lie before Tribunal. He refers to definition of term “Debt” as defined under Section 2(g) of the Act to contend that the term “Debt” means only such amount, which a bank claims to be due to it from any person during the course of any business activity undertaken by the Bank. The contention is that in the present case, the loan was advanced by HDFC Limited, which was not a bank, and therefore, DRT will not have the jurisdiction to entertain the controversy forming subject matter of the suit. Mr. Shah contends that the date on which the suit was filed by HDFC Limited, the Civil Court was having jurisdiction to try and decide the suit on merits. He contends that the suit is filed in the year 2007, after establishment of DRT. Referring to the aforesaid undisputed facts, Mr. Shah draws attention to Section 31 of the RDB Act and contends that in view of the
