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Judgment
Soumen Sen, J
This is an application by defendant nos. 1 to 4 for rejection of the plaint on the ground that this Court has no jurisdiction over the subject matter of the
suit.
The applicants contend that the suit is essentially for recovery of debt within the meaning of Section 2(g) of the Recovery of Debts due to Banks and
Financial Institution Act, 1993 (hereinafter referred to as the RDB Act) and the cause of action has been camouflaged in such a manner so as to
create an illustration of jurisdiction of this Court, which otherwise it does not have.
The applicants have also prayed for revocation of leave under Clause 12 of the Letter Patent on the ground that the Master Restructuring Agreement
(MRA) and other loan documents have been executed outside the territorial jurisdiction of this Court at 8/10 Alipore Road, Kolkata â€" 700 027.Â
However, this objection has not been seriously pursued during argument.
Mr. Sabyasachi Chowdhury, the learned Counsel appearing on behalf of the applicants, has submitted that a proper and meaningful reading of the
plaint would show that the plaintiff is essentially seeking realization of debt. The plaintiff has alleged breaches of agreements entered into between
the plaintiff and the said defendants. Mr. Chowdhury has specifically referred to paragraphs 16, 18, 31, 35, 37, 38 and 43 of the plaint and submits that
the said paragraphs would unmistakably show that the suit is essentially for realization of debt.
In paragraph 16 of the plaint, the plaintiff has mentioned the outstanding sums due from the defendant no.1 to the lenders as on 1st August, 2016. In
paragraph 18 of the plaint, it is alleged that the defendant nos. 1 to 3 were obliged to ensure that the shareholding of the defendant nos. 2 and 3 in the
defendant no. 1 is not altered without prior approval of the lenders. The said defendants have failed to create a pledge over 51% of the total equity
share capital of the defendant no.1 within 31st March, 2016. In paragraph 31 of the plaint, the plaintiff has alleged that the various defaults and
breaches committed by the defendant nos.1 to 4 of the terms of the Master Restructuring Agreement (MRA), Deed of Guarantee and Letter of
Undertaking. Â It is specifically alleged that the defendant nos.2 and 3 have defaulted in infusing Rs.325.00 crores in the defendant no.1 within the
stipulated deadline on 31st March, 2015 as per the Letter of Approval and the MRA. The defendant no.1 has also defaulted in payment of interest
and installments as well as payments under various Letters of Credit issued and executed by the lenders. In paragraph 35 of the plaint, it is alleged
that the amount payable by the defendant no.1 as on 30th June, 2016 is Rs.712.23 crores and an aggregate sum of Rs.3038.17 crores is payable by the
defendant no.1 to all the other lender banks and in such circumstances the lender banks and the plaintiff are entitled to exercise lien over the said
equity shares as security for the amount lent and advanced to the defendant no.1. In paragraph 37 of the plaint, the plaintiff has sought for a
declaration as to its legal rights in respect of the shares required to be pledged in its favour for the benefit of the lenders under the MRA. In
paragraph 38 the plaintiff has alleged that the plaintiff and the other lenders have lien over all forms of securities deposited and/or created by the
defendant nos. 1 to 4 in the ordinary course of banking business and the plaintiff is entitled to retain such securities to ensure payment of all sums due
and payable by the defendant no.1 to the plaintiff under the MRA.
Mr. Chowdhury has also referred to prayer (h) of the plaint in which the plaintiff has prayed for an enquiry into the loss and damages suffered on
account of wrongful acts, conduct and omission and breaches committed by the defendants and their failure to abide by the terms of the MRA dated
19th December, 2012 and a decree for such sum as may be found due by this Court.
Mr. Chowdhury has submitted that the prayers for perpetual and mandatory injunction are, in effect, modes of recovery of debts as envisaged in
Section 25 and 28 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993. Even such reliefs could have been claimed in an
application under Section 19 of the RBD Act in view of Section 19(13)(A) and 19(13)(B) of the said Act.
Mr. Chowdhury has referred to two decisions of the Hon’ble Supreme Court namely, United Bank of India vs. Debts Recovery Tribunal and
Others reported at (1999) 4 S.C.C. 69 and State Bank of Bikaner & Jaipur vs. Ballabh Das & Co. and Others reported at (1999) 7 S.C.C.
539, in order to show that the definition of “debt†under Section 2(g) of the RDB Act is wide enough to include the claims made in the plaint. It
is submitted that the cause of action for filing the suit is failure to discharge liability under several agreements. The plaintiff in prayer ‘h’ of
the plaint has categorically prayed for a decree for amount which may be found to be due and payable on enquiry into the loss and damages suffered
by the plaintiff on account of the wrongful acts and breaches under various agreements. In terms of the expansive definition of ‘debt’, the
claim for recovery of damages would squarely come within such definitions and accordingly Civil Court has no jurisdiction.
Mr. Chowdhury further submits that even under unamended definition of ‘debt’ the Hon’ble Supreme Court in United Bank of India (supra)
has interpreted debt to include the claim for damages and compensation which requires quantification before a decree could be passed. Mr.
Chowdhury submits that the word ‘otherwise’ in the definition of the debt has brought into its fold any claim that may arise in view of breaches
of a contract. In other words, the prayer for specific performance of the several agreements in effect is an action for enforcement of a debt and for
realization of debt alleged to be due from the defendant nos.1 to 4 by the plaintiff and such adjudication can only be done in an application in Section
19 of the RDB Act. The jurisdiction of the Civil Court is excluded under Section 34 of the RDB Act.  Mr. Chowdhury has submitted that in
United Bank of India (supra), the Apex Court has accepted the proposition that a debt is a sum of money which is now payable or will become
payable in future by reason of a present obligation. Mr. Chowdhury argues that a bare reading of the plaint would show that the plaintiff has
asserted that “a sum of money is now payable†in Paragraph 16 and hence the suit is to be transferred to the Debt Recovery Tribunal contended
under the RDB Act.
Mr. Chowdhury submits that the plaintiff has created an illusion of a cause of action in the form of specific performance of the several agreements
although in effect it is essentially a suit for enforcement of debt and discharge of a liability. Mr. Chowdhury in this regard has relied upon Paragraph
15 of United Bank of India (supra) and the decision of the
Hon’ble Supreme Court in I.T.C. Limited vs. Debts Recovery Appellate Tribunal and Others reported at (1998) 2 SCC 70 Paragraphs 233, 26
and 27. Mr. Chowdhury submits that clever drafting creating illusion of cause of action of fraud in ITC Limited (supra) did not find favour with the
Apex Court when an objection of this kind is raised the endeavour of the court would be to find out whether the real purpose of the suit is something
else than what canvassed.
Mr. Pratap Chatterjee, learned Senior Counsel appearing on behalf of the plaintiff submits that the suit is for specific performance of several
agreements. Although there are breaches of several agreements but the plaintiff does not want recovery of money but required the defendant nos.
1 to 4 to perform their obligations under several agreements. Mr. Chatterjee has referred to few paragraphs of the plaint to show that the
defendants under the agreements could not dilute its shareholding without prior permission of the lenders. Mr. Chatterjee submits that since the said
defendants have enjoyed the facilities under several agreements and the lenders have preferred their obligation, it is now necessary for borrowers to
create further securities in discharge of their obligation so as to insulate and secure the exposures already made by the plaintiff and several other
lenders under various agreements. The defendants have not pledged shares and/or created securities in terms of Article 3 clause 3.1(B) of the
MRA. The MRA requires the borrower to furnish additional security in the event the lenders are of the opinion that the security provided by the
borrower has become inadequate to cover the balance of the lends than outstanding. Mr. Chatterjee submits that the tribunal in a proceeding under
Section 19 of the RDB Act can only issue a certificate for recovery of the amount of debt specified in the certificate. It is submitted that in the
instant case the tribunal is not competent to issue a certificate allowing prayer (a) or any other prayer of the plaints save and except perhaps prayer
‘h’. Mr. Chatterjee submits that the plaintiff is not seeking an adjudication in terms of prayer ‘h’ and the said prayer is given a go-by.
Mr. Chatterjee submits that default does not necessarily lead to realization of debt inasmuch as the plaintiff has not demanded any amount from the
defendant nos. 1 to 4. The suit is essentially for specific performance of the several agreements to create securities for loans advanced. The
frame of the suit cannot be said to be a suit for recovery of any debt.
Mr. Chatterjee has, accordingly, prayed for dismissal of the petition.
The plaintiff has instituted a suit praying, inter alia, for specific performance compelling the defendant Nos.1 to 3 to perform and /or comply with the
terms and conditions of the Master Restructuring Agreement dated 19th December, 2012, Deed of Guarantee dated 19th December, 2012 and Letter
of Undertaking dated 23rd March, 2013; the shareholding of the defendant No.1; mandatory injunction directing the defendant Nos.2 to 3 to pledge
their shareholding in the defendant No.1 with the plaintiff in terms of and/or in accordance with the Master Restructuring Agreement dated 19th
December, 2012/22nd January, 2013; mandatory injunction directing the defendant Nos.1 to 3 to execute necessary documents recording pledge of
shares held by the defendant Nos.2 and 3 in the defendant No.1 in favour of the plaintiff with immediate effect in terms of the aforesaid agreement;
mandatory injunction directing the defendant Nos.1 to 3 to execute necessary documents and issue all instructions for effecting pledge of 2,61,00,000
equity shares of and in the defendant No.1 held by the defendant Nos.2 and 3 in favour of the plaintiff; an enquiry into the loss and damages suffered
by the plaintiff on account of the wrongful acts and conduct and omission and breaches committed by the defendants and their failure to abide by the
terms of the Master Restructuring Agreement dated 19th December, 2012 and a decree for such sum as may be found due by this declaration that
2,61,00,000 equity shares in the defendant No.1 are held by the defendant No.6 for and on behalf of and/or on account of the plaintiff being the
present pledge of the said shares.
Shorn of details, it appears that the defendant No.1 had availed of several credit facilities from a consortium of lenders headed by the plaintiff. The
defendant No.1 failed to service and/or repays the debts and large amounts remained due and owing from the defendant No.1 to its various lenders.Â
Subsequently, at the request of the defendant No.1, the consortium of lenders agreed to restructure the credit facilities under the aegis of the
Corporate Debt Restructuring mechanism (hereinafter referred to as “CDRâ€), which resulted in approval for grant of additional assistance by a
Letter of Approval dated 27th September, 2012 (hereinafter referred to as “the LOAâ€).
A Master Restructuring Agreement (MRA) was executed by the plaintiff and the defendant No.1 on 19th December, 2012/22nd January, 2013 and
also by the proforma defendant Nos.7 to 24. The total sum of the restructured credit facilities, both fund based and non-fund base, under the MRA
was Rs.3, 053.26 Crores. The credit facilities under the MRA were secured inter alia by a Deed of Guarantee dated 19th December, 2012
executed by the defendant No.2 in favour of the Lenders. The defendant No.2 also issued a Letter of Undertaking dated 23rd March, 2013 to the
plaintiff, confirming, inter alia, that it shall pledge the shares held by it in the defendant No.1 in favour of the Lenders, in accordance with the terms of
the LOA and the MRA. The defendant Nos.1 to 4 also executed other documents from time to time in favour of the Lenders in relation to the
MRA and the credit facilities covered thereby. The credit facilities granted to the defendant No.1 under the MRA were secured, inter alia, by a
pledge of 24 per cent of the total equity share capital of the defendant No.1 held by the defendant Nos.2 and 3 out of the total 74 per cent equity share
capital held by the defendant Nos.2 and 3 at the material time.
The defendant Nos.1 to 3 were to ensure that the shareholding of the defendant Nos.2 and 3 in the defendant No.1 is not altered without prior
approval of the Lenders and 51 percent of the total equity share capital held by the promoters of the defendant No.1, that is, the defendant Nos.2 and
3 is pledged with the Lenders at the earliest and not later than 31st March, 2016.
The defendant No.2, however, in alleged breach of the terms and conditions of the MRA, has reduced its shareholding in the defendant No.1 from
53.37 per cent to 40.35 per cent, by way of sale of its shareholding without prior approval of the Lenders. Further, the defendant Nos.2 and 3
alleged to have also failed to create pledge of 51 per cent of the total equity share capital of the defendant No.1 with the lenders by 31st March, 2016,
as required under the MRA.
At the request of the defendant No.4, the defendant No.6 had also granted credit facilities to the extent of Rs.25,00,00,000 and a loan agreement
dated 4th April, 2015 was duly executed between the defendant NO.4 and the defendant No.6. Such credit facility was inter alia secured by pledge
of 2, 61,00,000 equity shares held by the defendant No.2 in the defendant No.1 in favour of the defendant No.6 as evidenced by a Pledge Agreement
dated 4th April, 2015. In terms thereof, the defendant No.6 was entitled to assign all its rights, interests and benefits to any person without requiring
any consent from the defendant Nos.2 and 4. An irrevocable Power of Attorney dated 7th April, 2015 was also executed by the defendant Nos.2
and 4 severally in favour of the defendant No.6.
The defendant No.1 alleged to have defaulted in its commitments to the defendant No.6. The defendant No.1 also sought extension of credit
facilities for an uncertain period from the defendant No.6. The acts and conduct of the defendant No.1 created a bonafide apprehension in the
minds of the plaintiff that the defendant Nos.1, 2 and 3 would not fulfill their obligations under the aforesaid documents and shall not pledge sufficient
equity shares of the defendant No.1 upto the agreed level of 51 per cent of the total equity share capital. The said defendants were already in
breach of their several obligations inter alia under the MRA, the said guarantees and the said undertakings.
In such circumstances, the plaintiff to safeguard and protect its interest and those of the other Lenders, pursuant to negotiations obtained assignment
of the security held by the defendant No.6 whereby all rights and entitlements of the defendant No.6 in respect of the credit facilities granted to the
defendant Nos.1, 2, 4 and Visa Bao Ltd. stood assigned in favour of the plaintiff. Such assignments inter alia included 2, 61, 00,000 equity shares
held by the defendant No.2 in the defendant No.1. Four Deeds of Assignment all dated 9th September, 2015 were duly executed between the
plaintiff and the defendant No.6.
In view of such assignment in favour of the plaintiff, the plaintiff acquired rights, title and interest in the pledged securities and/or shareholding of the
defendant No.1 and the plaintiff became entitled to exercise its rights in relation to the assigned shares and securities. By virtue of the assignments
dated 9th September, 2015, the plaintiff is in law and/or should be deemed to be the pledgee in possession of the said 2, 61, 00,000 equity shares in the
defendant No.1 and the assignor, being the defendant No.6, is obliged to act solely on the instructions of the plaintiff in respect of the said 2, 61, 00,000
equity shares in the defendant No.1. The Lenders may also consider initiating recovery proceedings post an exit from the ongoing CDR scheme.Â
However, the proposed action would need internal approvals from each of the respective Lenders. This is likely to be a time consuming exercise
and it is for this reason that though the
Lenders are entitled to seek a money decree against the defendant Nos.1 to 4 as also seek appropriate declaratory reliefs for creation, perfection and
enforcement of security interests which were created or liable to be created under the MRA due to the urgent need to seek protections of the
securities against the defendant Nos.1 to 3, the plaintiff is presently not seeking such other reliefs. The plaintiff has prayed for leave under Order 2
Rule 2 of the Code of Civil Procedure, 1908 in respect of reliefs for money decree and enforcement of security interests against the defendants Nos.1
to 4.
In this background, the arguments of the respective parties are required to be considered.
Section 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 defines debts as follows:-
“2(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 under 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.â€
The said definition of debt has undergone an amendment in the year 2000 subsequent to a decision of the Hon’ble Supreme Court in United Bank
of India Vs. Debts Recovery Tribunal and Ors. reported at (1999) 4 SCC 69 where notwithstanding the unamended definition, the Apex Court has
given an extended meaning to the definition of ‘debt’. The Hon’ble Supreme Court has interpreted the expression ‘debt’ of the
unamended 2(g) to include any liability which is alleged as dues from any person by a bank during the course of any business activity undertaken by
the bank either in cash or otherwise, whether secured or unsecured, whether payable under a decree or order of any court or otherwise and legally
recoverable on the date of the application. This judgment of the
Hon’ble Supreme Court has been relied upon by Mr. Sabyasachi Chowdhury, the learned Counsel appearing on behalf of the applicants to argue
that the expression ‘debt’ was given a widest amplitude and in the said decision it was held that a claim in the nature of damages would also
come within the purview of the expression ‘debt’. In UBI (Supra), the United Bank of India filed a suit against Avery India Ltd. & Ors. in the
High Court at Calcutta being Suit No.276 of 1991 praying for the following reliefs:-
“a) Decree for Rs.1,75,26,638.55p against the defendant No.1 with further interest from 1st April, 1991 till realization at the rate of 18% per
annum.
b) Decree against the defendant No.2 for delivery of List of Encashed Refund pay orders, encashed Refund Pay orders and computerized Tabulations
of the encashed Refund Pay orders and Accounts and in default a decree for Rs.1,75,26,638.55p with further interest from 1st April, 1991 till
realization at the rate of 18% per annum.
c) Decree against the defendant No.3 for delivery of List of Encashed Refund Pay orders, encashed Refund Pay orders and computerized
Tabulations of the encashed Refund Pay Orders and Accounts and in default a decree for Rs.1,75,26,638.55p with further interest from 1st April,
1991 till realization at the rate of 18% per annum.
d) Enquiry into the respective liabilities of the defendants Nos.1,2 and 3 and decree against each of them for the sum due on such enquiry.
e) Decree for Accounts against each of the defendants Nos.1,2 and 3.
f) Receiver.
g) Injunction.
h) Costs.
i) Further and other reliefs.â€
During the pendency of the suit, the RDB Act was enacted and came into force on 24th June, 1993, and under Section 31 thereof the said suit was
transferred to the Debts Recovery Tribunal and was renumbered as T.A. No.163 of 1996.
The facts relating to the filing of the suit are that Avery India Ltd. was a constituent of the plaintiff and obtained banking and credit facilities from the
plaintiff, inter alia, in Account No.A-139. In respect of such banking and credit facilities, Avery India Ltd. (in short “Avery) is liable to pay the
plaintiff’s claims. Andrew Yule & Company Ltd. (in short “Andrew Yule) obtained from the plaintiff certain paid Refund Pay Orders being
the properties of the plaintiff on an undertaking to prepare proper statements and reconcile the accounts and return the same. In breach of its
undertakings Andrew Yule has failed to return the said paid Refund Pay Orders and to render any account in respect thereof thereby causing loss and
prejudice to the United Bank of India (in short “UBI). The UBI claimed return of the paid Refund Pay Orders and complete accounts in default
a money decree. The Choksey Bhargava & Company (in short “Chokseyâ€) has admitted and acknowledged that certain paid Refund Pay
Orders and statements of accounts in relation to the transactions by and between the plaintiff and the first defendant are in its possession and
custody. The paid Refund Pay Orders are the properties of the plaintiff and the Choksey has wrongfully detained such orders. Choksey is liable
to deliver the said documents along with proper accounts in relation thereto to the UBI and in default the Choksey is liable to compensate the UBI in
respect thereof to the extent of the UBI’s claims herein. Both Andrew Yule and Choksey in breach of their duty committed wrongful acts and
omissions in relation to the Refund Pay Orders account, knowing that such wrongful acts would cause and has caused loss and prejudice to the
UBI. The UBI is, therefore, entitled to and claims damages by way of compensation from each of the Andrew Yule and Choksey.
On 7th December, 1979, the Avery India Ltd. requested the United Bank of India to act as its banker for payment of Refund Orders in connection
with the public issue of shares made by the Avery. Avery proposed to issue Refund Orders drawn on the UBI in favour of those who had applied
for shares in the Avery and in consideration of the UBI agreeing to pay the Refund Orders, the Avery undertook to indemnify the UBI in respect of
such payments.
By two letters dated 7th November and 20th November, 1979, the Andrew Yule informed the UBI that about two lakhs Refund Orders would be
issued and the number will begin from 1 to 195155.
By a letter dated 11th December, 1979 the Avery India Ltd. confirmed that approximately two lakhs Refund Orders would be posted from 17th
December, 1979. The Avery further informed that it made arrangement for making payment to the plaintiff of Rs.11, 59, 90,372/- at Bombay.Â
The total amount to be refunded was stated as Rs.19, 48, 26,441/-.
The UBI debited the said amount with the amounts paid against Refund Orders produced by the payees thereof. At the request of the Avery, the
UBI transferred to State Bank of India a sum of Rs.25,00,500/- for the purpose of making payment of Refund Pay Orders at the places where the
United Bank of India did not have its Branches. Ultimately it turned out that the payees in those specified places instead of eacashing with State
Bank of India got their Refund Pay Orders collected through their Bankers from the UBI via the Clearing House.
The State Bank of India had Refund Pay Orders to the extent of Rs.1, 29,143/- only and the balance amount was utilized by the Avery India Ltd. for
other purposes.
According to the instructions of the Avery, the UBI through its different branches paid the Refund Pay Orders issued by the Avery India Ltd. The
Avery India Ltd. did not deposit sufficient funds to meet such payments which as on 1st February, 1983 amounted to about Rs.34,39,000/-. The
UBI debited the said Account No.A-139 with Rs.14, 25,000/- leaving a credit balance of Rs.2, 572.25p. therein. After the adjustments the outstanding
claim of the plaintiff in respect of the payments of the Refund Pay Orders was Rs.20, 04,500/- with interest and bank charges as on 21st April, 1988,
which was debited to the said Account No.A-139.
The UBI has, from time to time, requested the Avery India Ltd. to pay the claims of the UBI. The Avery acknowledged its liability to the plaintiff
but on some pretext or other has been deferring but never refused payment of the plaintiff’s claims.
By a letter dated 2nd April, 1980, the Avery and/or the Andrew Yule requested the UBI to make over the paid Refund Pay Orders to the Andrew
Yule. The Avery and/or the Andrew Yule also undertook to produce or return such paid Refund Pay Orders to the UBI whenever asked for and
that they undertook to keep the UBI fully indemnified against any loss or misuse of the said paid Refund Pay Orders.
At the request of the Avery and/or the Andrew Yule, the UBI delivered to the Avery and/or the Andrew Yule the paid Refund Pay Orders. The
Andrew Yule had and/or has in its possession and custody the Paid Refund Pay Orders taken from the plaintiff on trust, a list of such paid Pay Orders
and computerized Tabulation of the encashed Refunds Pay Orders and is wrongfully detaining the same. The UBI claims return and delivery of the
said list of and the encashed Refund Pay Orders and the computerized Tabulations of the encashed Refund Pay Orders and in default of such return
and delivery a decree for Rs.1, 75, 26,638.55P. Being the compensation for the damages and loss suffered by the UBI for the wrongful acts of the
Andrew Yule.
By a letter dated 13th April, 1989, the Avery India Ltd requested the United Bank of India to hand over encashed Refund Pay Orders to the
Choksey. The Choksey on the undertaking return or deliver to the United Bank of India and on trust obtained certain encashed Refund Pay Orders.
Without prejudice to the statements and contentions in the aforesaid paragraphs, the United Bank of India states that the list of encashed Refund Pay
Orders, the encashed Refund Pay Orders and the computerized Tabulations of the encashed Refund Pay Orders are with the Choksey for the UBI
and on which the Choksey is liable to deliver to the UBI but is wrongfully detaining the same. The UBI claims delivery of the said documents and in
default a decree for Rs.1, 75, 26,638.55p. Being the compensation for damages and loss suffered by the UBI due to wrongful acts of the Choksey.
Each of the defendants upon transfer of the suit to DRT raised objections before the DRT that it has no power or authority or jurisdiction to adjudicate
the claim of UBI or direct delivery of list of encashed refund pay orders and computerized tabulations of the encashed refund pay orders and accounts
against Andrew Yule and Choksey nor the claim of UBI for enquiring into the respective liabilities of the defendants can be adjudicated by the
Tribunal. The Claim of UBI could be justified only on the basis of the Refund Orders submitted to it by the unsuccessful applicants for shares and
since such claim was not a defined claim but was dependent upon an enquiry into the purported liabilities of the defendants such claim could not be
said to be ‘debt’ within the meaning of RDB Act, 1993.  It is not a ‘debt’ within the meaning of Section 2(g) of the DRT Act as it
stood prior to 2000. The Tribunal rejected the said application by an order dated 20th February, 1997. Against the said order of the Tribunal, three
defendants filed three separate applications under Article 226 of the Constitution of India before the High Court at Calcutta.
 The High Court expressed an opinion that the suit as framed is one for damages and compensation which is required to be quantified before a
decree to be passed and such a suit will not be within the purview of the provisions of the said Act. The relevant observations are:-
“The question of jurisdiction raised by the defendants before the Tribunal goes to the very root of the Tribunal’s competence to entertain the
suit despite its transfer from this Court to the Tribunal under Section 31 of the 1993 Act. In such perspective, instead of deferring the decision in
respect thereof, the Tribunal, in my view, should have decided the question as to whether it was competent to hear the suit as a Transferred
Application. Since the Tribunal did choose to dispose of the petitioner’s application for return of the plaint by its separate order No.4 dated 20th
February, 1997, it could have also disposed of the applications filed by the other defendants on the same lines.
Having regard to the frame of the suit and the reliefs prayed for therein, the objection raised by the defendants/petitioners regarding the Tribunal’s
competence to hear the suit is of great relevance and cannot be taken lightly. The Tribunal, being a creature of statute, will have to exercise its
jurisdiction and function within the confines of the statute. If the statute does not empower it to adjudicate on a claim for the purpose of
quantification of such claim and recovery thereof, then, in such event, the Tribunal cannot assume jurisdiction to do so.
Admittedly, the scope and ambit of the 1993 Act is confined to the recovery of debts due to Banks and financial institutions. Subsections (1) and (4)
of Section 19 of the said Act provides that where a Bank or financial institution has to recover a debt from any person, it may make an application to
the Tribunal in the manner indicated and the Tribunal may after giving the applicant and the defendant an opportunity of being heard pass such orders
on the application as it thinks fit to meet the ends of justice.
“Debt†has been defined in clause (g) of Section 2 of the 1993 Act as follows:-
“2(g) “debt†means any liability (inclusive of interest) which is alleged as due from any person by a bank or 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 whether payable under a decree or order
of any civil court or otherwise and subsisting on, and legally recoverable on, the date of the application.â€
If the aforesaid definition of “debt†is read with the provisions of Section 19 and more particularly Sub-section (7) of Section 19 of the aforesaid
Act, it is difficult to escape the conclusion that the said expression can only be related to a specific and quantified amount for the purposes of the said
Act and not in respect of an undermined sum which is required to be ascertained upon an enquiry to be conducted by the Tribunal which is also
dependent on documents to be filed by the defendants. For the same reason I am also unable to accept Mr. Dutta’s contention that a debt
within the ambit of the 1993 Act would not only include cash but also a list of encashed Refund Pay Orders or tabulated accounts. In my view, the
scheme of the 1993 Act does not envisage that the Tribunal should launch on an investigation to quantify a claim, but to ensure quick recovery of a
claim already quantified.
In the instant suit, although, a decree for a quantified amount has been sought for against Avery India Ltd., a prayer has also been made for an
enquiry into the respective liabilities of all the defendants, including Avery India Ltd., and decree against each of them for the sum found due on such
enquiry. Such enquiry is again dependent on the other prayers for delivery of the list of Encashed Refund Pay Orders, Encashed Refund Pay
Orders and computerised tabulations of the encashed Refund Pay Orders and Accounts.
Notwithstanding Mr. Dutta’s submissions that the default clauses in prayers (b) and (c) of the plaint would bring the suit within the ambit of the
1993 Act, I am unable to bring myself to agree with Mr. Dutta in view of the other prayers in the plaint.
There is little doubt that the instant suit has been framed as one for damages and compensation which is required to be quantified before decrees, as
prayed for, can be granted and, in my view, the same is sufficient to take the suit out of the ambit of the 1993 Act which deals with the recovery of
specified amounts.â€
The Bank preferred a Special Leave Petition. The Hon’ble Supreme Court reversed the findings of the High Court. Mr. Chowdhury draws
inspiration from Paragraphs 13 and 15 of the said judgment in view of relief claimed in prayer (h) of the plaint. The said Paragraphs read:-
“13. Mr. Sanghi, the learned Senior Counsel, appearing for the appellant relied upon the decision of this court in Kesoram Industries & Cottton
Mills Ltd. vs. Commissioner of Wealth Tax (Central) Calcutta, reported in 1966(2) SCR 688, in support of his contention that the plaintiff's claim
would be a debt. In the aforesaid case, the court was considering as to what is the meaning of the expression 'debt' as it was required to ascertain
whether a liability to pay income tax and super tax on the income of the accounting year would be a 'debt' within the meaning of Section 2(m) of the
Wealth Tax Act. This decision to our mind will be not of much assistance inasmuch as the expression 'debt' has been defined in the Act in question
though the general meaning of 'debt' may be of a persuasive value in interpreting the expression 'debt' in the Act but it is too well settled that where an
expression in any Act has been defined, the said expression will have the same meaning and is not necessary to find out what is the general meaning
of the expression. In the aforesaid case, the court noticed as to how the word 'debt' was interpreted in Webb vs. Stenton (1883) 11 Q.B.D.,518,527,
wherein it was held a 'debt' is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in
praesenti, solvendum in futuro. After noticing a large number of authorities, the court also held that all the decisions agree that the meaning of the
expression 'debt' may take colour from the provisions of the concerned Act; it may have different states of meaning, but the following definition is
unanimously accepted; a debt is a sum of money which is now payable or will become payable in future by reason of a present obligation.
In the case in hand, there cannot be any dispute that the expression 'debt' has to be given the widest amplitude to mean any liability which is
alleged as dues from any person by a bank during the course of any business activity undertaken by the bank either in cash or otherwise, whether
secured or unsecured, whether payable under a decree or order of any court or otherwise and legally recoverable on the date of the application. In
ascertaining the question whether any particular claim of any bank or financial institution would come within the purview of the tribunal created under
the Act, it is imperative that the entire averments made by the plaintiff in the plaint have to be looked into and then find out whether notwithstanding
the specially created tribunal having been constituted, the averments are such that it is possible to hold that the jurisdiction of such tribunal is ousted.
With the aforesaid principle in mind, on examining the averments made in the plaint, we have no hesitation to come to the conclusion that the claim in
question made by the plaintiff is essentially one for recovery of a debt due to it from the defendants and, therefore, it is the tribunal which has the
exclusive jurisdiction to decide the dispute and not the ordinary civil court. In this view of the matter the High Court was in error to hold that the
dispute in question is not entertainable by the tribunal under Section 17 of the Act. We, accordingly set aside the impugned order of the Calcutta High
Court and direct that the suit in question which stood transferred to the tribunal, constituted under the Act and was registered as Transferred
Application No.163 of 1996 be disposed of by the tribunal in accordance with law. These appeals are allowed but in the circumstances, without any
order as to costs.â€
In State Bank of Bikaner & Jaipur (supra), relied upon by Mr. Chowdhury, the Hon’ble Supreme Court was considering whether on account of
non-payment of the amounts due under the bills by foreign buyers would come within the purview of Section 2(g) of the DRT Act. The State Bank
of Bikaner & Jaipur filed two civil suits, one against Ballabh Das & Sons and its partners and the other against Ballabh Das & Co. and its partners in
the Court of the District Judge at Jaipur for recovery of its dues. During the pendency of the suits, DRT Act came into force. The proceedings
were transferred to the DRT. The order transferring the proceedings before the DRT challenged by the respondents by filing two revisions
applications before the Rajasthan High Court. The High Court held that the question whether the amounts claimed in the suits are legally
recoverable or not is a question of fact and can be adjudicated only after recording the evidence. It further held that whether the amounts claimed
fall within the meaning of the term “debt†as defined by Section 2(g) of the Act is also a question of fact and till those facts are decided by the
Court, the provisions of the Act cannot be said to have become applicable to the suits on and from the date on which the Tribunal at Jaipur was
established. The facts of the case appear to be that the respondents were enjoying export credit facility with the bank. Under such facility, the
respondents obtained advances from the bank from time to time against the pre-shipment and post-shipment exports of precious stones, jewellery,
diamonds etc. There was non-payment to the bank by foreign buyers of the bills mentioned in the two suits. The defence of the respondents was
that under the insurance cover obtained at the instance of the Bank from the Export Credit Guarantee Corporation, the bank is insured against any loss
on account of non-realization of amounts from foreign buyers and on delivery by the respondents to the bank of documents of export of goods for
which the credit was given or advances were made are to be deemed to be payments by the respondents to the bank. The respondents had
delivered the documents in respect of the suit transactions to the bank and, therefore, the amounts mentioned in those documents should be deemed to
have been paid to the bank. But the fact remains that the amounts claimed under the two suits have not been received by the Bank and were still
outstanding at the time of filing of the suit were not in dispute. On such facts, in Paragraphs 7, 8 and 10, the Apex Court examined the definition of
“debt†in the following words:-
“7. According to the definition, the term `debt' means liability which is alleged as due from any person by a bank or a financial institution or by a
consortium of banks or financial institutions. It should have arisen 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. The liability to be discharged may be in cash or otherwise. It would be
immaterial whether the liability is secured or unsecured or whether it is payable under a decree or an order of any Civil Court or otherwise. However,
it should be subsisting and legally recoverable on the date on which proceedings are initiated for recovering the same.
The important words in the definition ""alleged as due"" have been over looked by the High Court and, therefore, it has erroneously held that unless
the amounts claimed by the bank are determined or decided by a competent forum they cannot be said to be due and would not amount to `debt' under
the Act. What was necessary for the High Court to consider was whether the bank was alleged in the suits that the amounts are due to the bank from
the respondents, that the liability of the respondent has arisen during the course of its business activity, that the said liability is still subsisting and legally
recoverable.
The High Court also failed to appreciate that the defence raised by the respondents does not prime facie show that the liabilities stood discharged
either under the insurance cover/guarantee or otherwise. The defence raised by the respondents is that the insurance cover/guarantee provides that
delivery by the exporter to the insured of documents of export of goods for which the credit has been given or advance has been made shall be
deemed to be payment by the Exporter to the insured and, therefore, when the respondents delivered the export documents to the bank they should be
deemed to have paid the amounts due under those exports to the bank. This defence can be considered only for the limited purpose of finding out
whether the liability of the respondents was subsisting on the dates on which the suits were filed. Otherwise, it has no relevance for the purpose of
deciding the jurisdiction of the forum. The contract of insurance/guarantee is between the Export Credit and Guarantee Corporation of India Ltd. and
the appellant - bank and prima facie the term/condition in the said insurance cover/guarantee referred to above is for the benefit of the insurer and not
for the benefit of the exporter, i.e. the respondents. It does not absolve the respondents of the liability to repay the amounts borrowed for the purpose
of making exports if the foreign buyer of those goods does not make payment to the bank of the amounts payable in respect of those goods. Though
the insurer/guarantor under the insurance/guarantee possibly would stand discharged from its liability to the insured on the exporters delivering the
documents of export of goods to the insured, prima facie, the principal debtor would still remain subsisting. Thus, even this pre-requisite for the liability
to be called a debt as contemplated by the Act having been satisfied the suits filed by the bank should have been treated by the High Court as
proceedings for recovery of the debts.â€
In deciding an application of this nature, the Court has to examine the frame of the suit in order to ascertain whether the reliefs claimed in the suit
could be granted by the tribunal. In examining the nature of the suit, the Court may also look into the purpose behind filing the suit in the civil court
with a view to find out if by a clever drafting an illusion of a cause of action has been created in order to attract the jurisdiction of this Court. The
Court is not expected to give unnecessary emphasis or restricted and narrow the scope and interpretation of the word ‘debt’ as it may likely to
frustrate the very object of the Act. The Court is required to ascertain on a reading of the plaint the primary object of the suit.
If the Court is of the view that the tribunal is unable to decide the issues raised in the suit due to lack of jurisdiction, the task of the Court is easier. The
jurisdiction of the civil court is plenary as opposed to the jurisdiction of tribunals whose jurisdictions are restricted and confined to the powers given to
such tribunal by the statute. A particular cause of action may give rise to diverse reliefs but all the reliefs may not be granted by the Tribunal due to
lack of jurisdiction. Where bifurcation of relief is possible and some of the reliefs could not be granted by the tribunal as the tribunal can only decide
issues falling within its jurisdiction and not the other issues by reason of limitations on its power and jurisdiction, a party cannot be precluded from
seeking an adjudication on such other issues. The jurisdiction of the civil court to decide such other related issues which may be declaratory or of
specific performance as claimed in the present suit has been recognized in ICICI Banks Limited Vs. Coventry Coil-O-Matic (Haryana) Limited &
Ors. Reported at 2005 (1) CHN 341 (HC).
In ICICI Banks (supra), similar objection raised by the defendants was rejected upon consideration of the essential averments of the plaint and the
prayers made by the plaintiff in the suit. The ratio of the decision appears to be that where the disputes arise from general law of contract and the
reliefs are claimed on the general law of contract, a suit filed in the Civil Court cannot be said to be not maintainable. Similarly, if the money has
been advanced by the bank and the debtor has agreed to create a mortgage, the lender bank can always file a suit in a Civil Court for specific
performance of the agreement to mortgage.
 The instant suit is essentially a suit for declaration, injunction and specific performance and not for recovery of a debt. In none of the cases, the
Supreme Court of India observes that even a suit for declaration and specific performance of contract instituted by the bank or the financial institution
against their borrowers has to be instituted before the Tribunal by enlarging the scope of the Act of 1993.
The plaintiff wants to enforce specifically a covenant. Even the expanded definition of debt, in my mind, does not completely oust the jurisdiction of
the Civil Court. The scope of the Act cannot be expanded to indicate complete ouster of jurisdiction of the Civil Courts. The plaintiff is not
seeking recovery of any debt. The plaintiff wants to secure the loan already advance. The plaintiff admits that the defendants/applicants are in
breach of several agreements. The defendants are wrongly refusing to perform its obligations. The plaintiff has an option. The plaintiff may
either accept the breach and determine the contract and sue for damages or the plaintiff may ignore such breach and require the defendants to
perform its obligation by affirming its continued existence. The plaintiff in the instant case has performed its obligations and requiring the defendants
to fulfil and perform their obligations. The securities furnished are inadequate to cover the credit facilities extended to the defendant Nos.1 to 4.
A bare reading of the plaint would show that the suit has been filed to enforce MRA and corresponding agreements and a declaration that the Lender
Banks and/or the plaintiff are entitled to exercise lien over the equity shares as also in respect of the shares required to be pledged in its favour for the
benefit of the lenders under the MRA. The grievance of the plaintiff appears to be that although the plaintiff has performed its obligation under the
MRA including providing a sum in excess of Rs.3,000 crores to the defendant No.1, the said defendants have not discharged and/or performed their
corresponding obligation. The defendant Nos.1 to 4 have acted in breach of their obligations and have failed and/or neglected and/or would attempt
to neglect and/or refuse to pledge the shares as contemplated in the MRA. The plaintiff and the other lenders have lien over all forms of securities
deposited and a declaratory relief has been claimed in the plaint including a mandatory injunction compelling the defendant Nos.1 to 3 to execute
necessary documents recording pledge of the equity shares of the defendant No.1 in favour of the plaintiff.
The present definition of ‘debt’ is of wider amplitude and the word “any liability†is used as opposed to “determined liability or definite
liability†and precisely for this reason the prayer (h) of the Plaint cannot be adjudicated by this Court.
The present suit is not for payment on account of debt or for recovery of debt. The suit is simplicitor for specific performance and declaration,
although, prayer (h) in view of the amended Section 2(g) of the RDB Act, 1993, becomes debt.   The dominant purpose of the suit is not for
recovery of debt. It is true that a suit for damages arising out of banking transaction may attract Section 2(g) of the RDB Act, 1993 and would
automatically oust the jurisdiction of the Civil Court to decide such dispute but all civil suits which are not for recovery of debt but arise out of general
law of contract in which bank is involved, does not automatically oust the jurisdiction of the Civil Court. The body and soul of the suit are for
specific performance and declaration. That is the central theme of the suit.
In so far as a revocation of clause 12 of the Letters Patent is concerned, the plaintiff has stated in paragraph 49 that the Master Restructuring
Agreement has been executed within the jurisdiction of this Court and the rights of the plaintiff and other lenders have been invaded by the defendants
and such invasion has taken place at 34, Chowringhee Road, Kolkata-700001. The said averments should be taken as true and correct for the purpose
of deciding this application. Â In fact, no argument as such has been advanced for revocation of leave under Clause 12 of the Letters Patent.
In view of the aforesaid, this application fails.
Mr. Sachida Nanda Pandey, Advocate representing the defendant nos. 1 to 4 waives service of the writ of summons. A copy of the plaint along with
the writ of summons shall be served upon Mr. Pandey within a week from date.
In view of such dismissal, the defendant nos. 1 to 4 shall file written statement within six weeks from the date of service of the plaint along with writ
of summons.