M/s. Canara Bank vs Ramanna Naik and Ors

S. Ravi Kumar, Chairperson

This Appeal is against Order dated 30.06.2014 of DRT-II, Chennai in OA SR No.485/2014.

Brief facts leading to this Appeal are as follow:-

Appellant Bank herein filed OA for recovery of Rs.9,79,14,087/-, with future interest from nine Defendants therein, and said OA is returned, holding that Application is not maintainable in DRT, as the claim did not fall within definition of ‘debt’ defined under Section 2(g) of Recovery of Debts and Bankruptcy Act (RDB Act), 1993. Aggrieved by said Order, Appellant Bank preferred CRP No. (NPD) No.2880/2014 before Hon’ble High Court of Judicature at Madras, and Hon’ble High Court through Order dated 29.10.2018, dismissed CRP holding that CRP is not maintainable without exhausting remedy before DRAT, and made it clear that, it is open for Bank to file an Appeal before DRAT challenging impugned Order dated 30.06.2014, in accordance with law.

In pursuance of said Oder, Bank preferred present Appeal along with delay condonation Petition, and delay was condoned on 04.10.2019, and thereafter, the Appeal is registered.

Both Advocate for Appellant Bank and Respondent No.1 filed Written Submissions and reiterated the same at the time of oral submissions.

Main point involved in this Appeal is whether the claim made by Appellant Bank in Original Application (OA) falls within the definition of ‘debt’ defined under Section 2 (g) of RDB Act, 1993, to attract the jurisdiction of DRT.

Learned Advocate for Appellant Bank submitted that the issue is a pure question of law, and averments in OA have to be looked into, to the extent whether they attract the jurisdiction of DRT. He submitted Respondent No.1, the then Manager of Appellant Bank created forged Saving Bank Account, and used that account to withdraw the money, and all these acts fall within the banking operation and transaction ordinarily undertaken by Bank, therefore, it attracts the definition of ‘debt’ within the definition of Section 2 (g) of RDB Act, 1993. He further submitted that, definition of ‘debt’ under Section 2 (g) of RDB Act, 1993, has to be given a wider sense, but Tribunal below, by taking illustration mentioned in Eureka Forbes Limited Vs. Allahabd Bank and Ors., reported in (2010) 6 SCC 193, returned the OA, which is not at all correct.

In support of his arguments, Advocate for Appellant Bank has referred to the judgement of Hon’ble Supreme Court in the case of United Bank of India Vs. Debts Recovery Tribunal & Ors., reported in (1999) 4 SCC 69; Judgements of Hon’ble High Court of Madras i) Palat Achuthan Vs. Management, Citibank N.A. and Anr., reported  in  2003  SCC  Online  Mad  886  and  ii)  G. Karunanidhi Vs. The Chief Manager/Authorised Officer, Indian Bank, reported in Law Finder Doc ID No.876941; the judgements of Hon’ble High Court of Delhi i) in Vijaya Bank Vs. A. N. Tiwari reported in 1996 (36) DRJ, ii) in M/s. J. U. Mansukhani & Co & anr. Vs. Presiding Officers & Ors., reported in 1999 (51) DRJ (DB) and iii) Axis Bank Vs. Punjab National Bank, reported in 2015 SCC Online Del 8287; and judgement of Hon’ble High Court of Punjab and Haryana in the case of Punjab National Bank Vs. HDFC Bank & Anr., reported in 2017 SCC Online P & H, to support his submission that the claim made in OA falls within the definition of ‘debt’.

On the other hand, Learned Advocate for Respondent No.1 submitted that Appellant Bank made allegations of fiduciary relationship between Respondent No.1 and other Respondents, which is absolutely incorrect, and he was only discharging his duties as Manager of Bank. He further submitted that nature of operation carried out by Respondent No.1 in the capacity of Chief Manager, cannot be termed as financial transactions as contended by Appellant Bank. He further submitted that claim of Appellant Bank is not valid, and do not fall under the category of ‘debt’, since the same requires a kind of financial relationship between parties, so as to approach DRT. He further submitted that definition of term ‘debt’ under RDB Act, 1993, is very clear, and same cannot be repainted by Appellant Bank for their own desire and convenience. He further submitted that Tribunal below was right in returning the OA, and there are no grounds to interfere with Order of Tribunal below.

From the submissions of both sides, it is clear that, averments of OA are the criteria for deciding whether the claim made by Appellant Bank falls within the definition of ‘debt’. A complete reading of OA wound indicate that Respondent No.1 herein helped the other Respondents, in withdrawing a sum of Rs.8.10 Crores for a consideration of a sum of Rs.80 Lakhs. In para 13 of OA, it is clearly averred that 1st Defendant for a consideration of Rs.80 Lakhs conspired with other Defendants and provided KYC documents in respect of the Trust Account abetted forgery, received Cheque for Rs.8,10,00,000/- for the purpose of making fixed deposit, handed over the Cheque to the other Defendants, abetted opening of the Savings Bank Account with a false photographs and signatures caused and delivered a false, forged and fraudulent FDRs etc.,

From a reading of entire OA averments, it has to be inferred that allegations against 1st Respondent herein is that he has misappropriated a sum of Rs.8.10 Crores by conspiring with other Respondents, and OA is for recovery of that amount. Much is argued on behalf of Appellant Bank that definition of ‘debt’ has to be given a liberal meaning and any liability during the course of any business activity undertaken by Bank would fall within ambit of Section 2 (g) of RDB Act, 1993.

Now,  the  question  is  whether  the  act  of  1st Respondent, namely conspiring with other Respondents and allowed them to withdraw a sum of Rs.8.10 Crores for a consideration of Rs.80 Lakhs, would it fall within the course of business activity of Bank, and answer would be in negative. So, when specific allegation is that there is misappropriation, and Bank wants to recover that amount, particularly on the allegation that 1st Respondent did that act for a consideration of Rs.80 Lakhs, it would definitely do not fall within ambit and definition of ‘debt’ termed under Section 2(g) of RDB Act, 1993. In fact, in the decision relied on by Tribunal below i.e. Eureka Forbes Limited Vs. Allahabad Bank and Ors., in para 67, a reference is made to the judgement of Hon’ble High Court of Gujarat in Bank of India vs. Vijay Ramniklal Kapadia, wherein Hon’ble High Court of Gujarat held that, where there is misappropriation of amount by Bank employee, that misappropriation do not fall within the definition of ‘debt’ under Section 2 (g) of RDB Act, 1993, thereby, such claim cannot be tried before Tribunal. So, in view of Hon’ble Supreme Court decision which Tribunal below relied on and also judgement of Hon’ble High Court of Gujarat referred to above, since the claim is towards misappropriation of amount, it do not fall within the meaning of ‘debt’ defined under Section 2 (g) of RDB Act, 1993, and the same cannot be tried before Tribunal.

Further, a trial before Tribunal is under a summary procedure, and here, the allegation in the OA, requires an elaborate enquiry, particularly, when the allegation is that 1st Respondent herein conspired with the other Respondents, and allowed them to withdraw Rs.8.10 Crores, after receiving a consideration of Rs.80 Lakhs, it definitely requires a thorough and a detailed enquiry, and it cannot be decided summarily. All the decisions relied on by Appellant Bank are on different circumstances; for example, decisions of Hon’ble High Court of Madras are in respect of claims made against Bank employees, who availed loans, as employees, for purchasing certain articles or house etc., and one decision is in respect of an Advocate of Bank received money on behalf of Bank and failed to remit it back to Bank. In all these cases, Courts have held that those transactions fall within the meaning of banking transactions thereby attracts definition of ‘debt’.

As already referred to above, in this case, the claim is for recovery of misappropriated amount, therefore, it do not fall within the definition of ‘debt’ defined under Section 2 (g) of RDB Act, 1993, thereby Tribunal has no jurisdiction to try said claim, and DRT-II, Chennai, is absolutely right in returning the OA, and there are no grounds to interfere with said Order.

For these reasons, Appeal is liable to be dismissed as devoid of merits, and accordingly, Appeal RA 179/2019 is dismissed, with no order as to costs. All pending IAs, if any stand dismissed.