At, Debt Recovery Appellate Tribunal At Chennai
By, THE HONORABLE JUSTICE: A. SUBBULAKSHMY. (CHAIRMAN)
1. This miscellaneous appeal is directed as against the order passed by the learned Presiding Officer, Debts Recovery Tribunal (DRT), Bangalore, in dismissing the petition in impleading another party as 3rd defendant in the Original Application (OA).
2. The petition to implead M/s. Shamanur Estates, Bangalore, as defendant No. 3 was filed by the 2nd defendant. The 2nd defendant contends that the shares of the defendant were agreed to be sold for a nominal price to M/s. Shamanur Estates, which is to clear the debts due to the Bank and M/s. Shamanur Estates has also paid a sum of Rs. 9.95 crores to the Bank and the Bank has accepted the amount and so M/s. Shamanur Estates has to be impleaded as party 3rd defendant in the OA. The Bank filed objections contending that the proposed 3rd defendant is not a debtor and there is no privity of contract between the Bank and the proposed 3rd defendant. It further contends that the Bank is not a party to any of the lease agreements and M/s. Shamanur Estates is not expected to clear Rs. 5.35 crores to the applicant and several proceedings have gone on before the Company Court, BIFR and AIFR between the Bank and the defendants 1 and 2 and so the 3rd defendant is not a necessary party to this suit. The petition was heard by the Presiding Officer, DRT, Bangalore, and he dismissed that petition.
3. The Counsel for the appellant submitted that the proposed party is a necessary party to these proceedings since the proposed party has stepped into the shoes of the 1 st defendant M/s. Mafatlal Plywood Industries Ltd., and purchased its shares and has undertaken to discharge the debt due by the 1st defendant and so the proposed party must be added as a party to this OA to have proper adjudication in the matter.
4. Counsel for the respondent-Bank submitted that there is no privity of contract between the Bank and the proposed party. No agreement has been entered into between the appellant and the proposed party and the Bank is not at all concerned with regard to any arrangement made between the defendants and the proposed party and the proposed party is not a debtor within the meaning of the Recovery of Debts Due to Banks and Financial Institutions (RDDB&FI) Act, 1993 (the Act) and there is no need to implead the proposed party as 3rd defendant. As rightly pointed out by the learned Counsel for the respondent Bank, the proposed party is not at all a debtor and there is no privity of contract between the Bank and the proposed party.
5. An application to the Tribunal under the Act will lie where a Bank or a financial institution has to recover any debt from any person within the legal limits as set out under the provisions. Section 2(g) of the Act defines "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 application. The provisions of this Act are applicable only for recovery of the debt from the person for the debt incurred by him and which is claimed as due from him by the Bank or financial institution. The proposed party has nothing to do with the transactions entered into between the plaintiff-Bank and defendants 1 and 2. The proposed party is not a debtor and he nowhere comes under the provisions of the Act. The Tribunal has to decide only the liability of the debtor to the plaintiff-Bank. The proposed party is not at all concerned with regard to the proceedings between the plaintiff-Bank and defendants 1 and 2. He is not a necessary party to these proceedings. I see no ground to interfere with the order passed by the Presiding Officer, DRT, Bangalore.
6. Appeal dismissed. Costs of Rs. 5000 to be paid to the respondent Bank.