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Axis Bank Ltd V/S Bhanu Oil and Dal Mills and Others.


Company & Directors' Information:- AXIS BANK LIMITED [Active] CIN = L65110GJ1993PLC020769

Company & Directors' Information:- N K OIL MILLS PVT LTD [Active] CIN = U15201GJ1994PTC022669

Company & Directors' Information:- B P OIL MILLS LIMITED [Active] CIN = U15142UP1965PLC003232

Company & Directors' Information:- I AXIS LIMITED [Active] CIN = U72200TG2003PLC040977

Company & Directors' Information:- AXIS CORPORATION PRIVATE LIMITED [Active] CIN = U35990MH2010PTC208288

Company & Directors' Information:- K P L OIL MILLS PRIVATE LIMITED [Active] CIN = U15142KL1983PTC003685

Company & Directors' Information:- K D DAL MILLS PRIVATE LIMITED [Strike Off] CIN = U15122UP2013PTC057832

Company & Directors' Information:- N K B OIL MILLS PRIVATE LIMITED [Active] CIN = U15142KL1999PTC013095

Company & Directors' Information:- K K K OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15142KL2000PTC013621

Company & Directors' Information:- S N OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15142HR1986PTC025702

Company & Directors' Information:- G. B. OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15326HR1985PTC019817

Company & Directors' Information:- R. OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15141DL1992PTC047883

Company & Directors' Information:- J K OIL MILLS COMPANY LIMITED [Strike Off] CIN = U15143UP1955PLC002570

Company & Directors' Information:- DAL (INDIA) PRIVATE LIMITED [Active] CIN = U51103TN1998PTC039964

Company & Directors' Information:- N N OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15147MH1999PTC117989

Company & Directors' Information:- AXIS LTD [Amalgamated] CIN = U51109WB1981PLC034186

Company & Directors' Information:- J & T OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15141KL2006PTC019754

Company & Directors' Information:- A AND R OIL MILLS PVT LTD [Strike Off] CIN = U15315CH1994PTC014265

Company & Directors' Information:- BHANU OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15142HR2003PTC035196

    Appeal No. R-180 of 2012

    Decided On, 29 November 2012

    At, Debt Recovery Appellate Tribunal At Allahabad

    By, THE HONORABLE JUSTICE: R.K. GUPTA
    By, (CHAIRPERSON)

    For Petitioner: Mr. Sanjay Kumar Gupta, Advocate And For Respondents: Mr. Sunil Bhalla, Mr. Vikram Bhalla, Advocates for the Respondent Nos. 1 to 4 and Mr. Hari Ram, Advocate for the Respondent No. 7



Judgment Text


1. The Counsel for the parties are heard. This is an Appeal preferred under Section 20 of the RDDBFI Act, 1993 challenging the order passed by the Debts Recovery Tribunal, Jabalpur on 10th September, 2012. By this order the Tribunal has rejected the Original Application so preferred by the appellant-Bank. The Tribunal arrived at a finding that the transaction as such does not come within the jurisdiction of the Tribunal because the claim is not covered by the definition of 'debt' in Section 2(g) of the Act 1993. The facts leading to the present case are that the respondent No. 5 Jai Durga Commodity Trading Private Limited issued a cheque in the name of the respondent No. 1 Bhanu Oil and Dal Mills. The cheque was issued of the appellant-Bank and after receipt of the cheque by the respondent No. 1, the same was presented for its collection to the State Bank of India, the respondent No. 8. The said cheque was cleared by the appellant-Bank. This is also to be seen that when the cheque was issued, the account of the respondent No. 5 was not closed and on the date when the cheque was cleared by the appellant-Bank the account was closed. The cheque was cleared by the appellant-Bank in favour of the respondent No. 1. When the appellant came to know that the cheque has been wrongly cleared by them then they instituted the proceedings for recovery of the said amount from the respondents which was paid by the appellant-Bank. The amount was not returned by the respondents therefore, the Bank preferred an application under Section 19 of the RDDBFI Act, 1993.

2. The preliminary objection was raised on behalf of the respondents that the facts so pleaded in the Original Application so preferred by the appellant-Bank does not come within the definition of the 'debt' in Section 2(g) of the RDDBFI Act, 1993 and the Tribunal dismissed the Original Application of the appellant-Bank. The order of dismissal of the said Original Application is challenged by the appellant-Bank by filing the present Appeal.

3. This is to be seen that the word "debt" has been defined in Section 2(g) of the RDDBFI Act, 1993 which is reproduced as under:

'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 the application.
4. As it is evident from the definition of the word 'debt' that there has to be liability which is claimed as due from any person by the Bank or a Financial Institution or by a consortium of Banks during the course of any business activity undertaken by the Bank or a Financial Institution or by a consortium of Banks. There is no dispute in the present case that the cheque so issued by the respondent No. 5 was wrongly cleared by the appellant-Bank during the course of the business activity but the question in the present case is that whether the said transaction relates to any liability which is claimed to be due from the respondents by the appellant being the Bank. The said transaction does not relate to grant of any facility by the Bank either in favour of the respondent No. 1 or respondent No. 5. It was the case where the cheque was wrongly cleared by the appellant-Bank. During the time when the cheque was issued, the account of the respondent No. 5 was subsisting but when the cheque was cleared the account of the respondent No. 5 was closed. After the closure of the account, the said cheque should not have been cleared. Thus, it was a wrong clearance of the cheque which resulted into the loss of the amount of the appellant-Bank and such a transaction will not be a liability which is claimed due from the respondents by the Bank. The word 'liability' is not defined in RDDBFI Act, 1993 but the meaning of the word 'liability' can be read as ordinary or dictionary meaning and according to the Black's Law Dictionary, Ninth Edition, page 997 'liability' means "the quality or state of being legally obligated or accountable; legal responsibility to another or to society, enforceable by civil remedy or criminal punishment."

5. There is no dispute that the amount was wrongly paid by the appellant-Bank which is recoverable but the question in the present case is whether this amount can be termed to be a 'debt' and whether recovery of this amount under the RDDBFI Act, 1993 can be made. Section 19 provides for moving an application for recovery of the 'debt' due to Banks and Financial Institutions. The Bank can move an application to the Tribunal within the local limits of whose jurisdiction the respondent or appellant comes. The word 'debt' has already been explained hereinabove and according to the said discussion the transaction in the present case does not come within the purview of 'debt' merely because the amount is recoverable which is wrongly paid during the course of business activity will not come within the definition of word "debt" as per Section 2(g) of the RDDBFI Act, 1993. Thus, the submission so made by the Counsel appearing for the appellant that the nature of the transaction so made in the present case is covered under the Section 2(g) will be too big pig to be swallowed that the transaction as such is covered within the definition of the word 'debt' as per Section 2(g) of the RDDBFI Act, 1993.

6. The Madras High Court discussed about the judgment of Debts Recovery Tribunal in a case reported as G.V. Films Limited v. Unit Trust of India, I : (1999) B.C. 702 (DB), where the Hon'ble Madras High Court while considering the definition of word "debt" has held that the debt means an expressed agreement therefore, there should be a liability under the agreement. In the present case, there is no agreement as such through which the liability is created. There only remains the wrong payment in the present case wherein the appellant-Bank has wrongly cleared the cheque which was for respondent No. 4.

7. The Apex Court in Eureka Forbes Ltd. v. Allahabad Bank, III : (2010) BC I (SC) : IV (2010) SLT 280 : (2010) 6 SCC 193, has also discussed the definition of the word 'debt'. The Apex Court in the said judgment has discussed both the amended and unamended definition of the word 'debt'. The Apex Court has held in para No. 36 as under:

36. On the plain analysis of the above stated judgment of this Court, it is clear that the word 'debt' under Section 2(g) of the RDDBFI Act is incapable of being given a restricted or narrow meaning. The Legislature has used general terms which must be given appropriate plain and simple meaning. There is no occasion for the Court to restrict the meaning of the word 'any liability', 'any person' and particularly the words 'in cash or otherwise'. Under Section 2(g), a claim has to be raised by the Bank against any person, which is due to Bank on account of/in the course of any business activity undertaken by the Bank. In the present case, Bank had admitted granted financial assistance to respondent Nos. 2 and 3, who in turn had hypothecated the goods, plants and machinery in favour of the Bank. There cannot be any dispute before us that the goods in question have been sold by the appellant without the consent of the Bank. Respondent Nos. 2 and 3 have hardly raised any dispute and resistance, to the claim of the Bank. In fact, even before this Court there is no representation on their behalf. The documentary and oral evidence on record clearly established that the Bank has raised a financial claim upon the principal debtor, as well as upon the person who had intermeddled and/or at least dealt with the charged goods without any authority in law. Not only this, the appellant had sold the hypothecated goods and stocks by public auction, despite the fact the appellant had due knowledge of the fact that the goods were charged in favour of the Bank. Another aspect of this case which required to be considered by this Court is, what was intended to be suppressed by the Legislature by enacting the RDDBFI Act, 1993 and thereafter, by amending various provision, including Section 2(g) in the year 2000. Obviously, the mischief which was intended to be controlled and/or prevention of wastage of securities provided to the Bank, was the main consideration for such enactment. The purpose was also to prevent wrong-doers from taken advantage of their wrong/mistakes, whether permissible in law or otherwise. These preventive measures are required to be applied with care and purposefully in accordance with law to ensure that the mischief, if not entirely extinguished, is curbed.
8. On the basis of the said judgment, it is clear that the liability of any person has to be under business transaction. The business transaction of the Bank is also to provide financial assistance to the borrower and for that there has to be an agreement. In the present case, the respondents are not the borrowers and no financial assistance was provided by the appellant-Bank to them. There was no agreement of any nature between the Bank and the respondents for providing any financial assistance so that the respondents can be said to be borrowers and wrong payment as such as cannot be termed to be a financial assistance. The respondents cannot be said

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to be debtors. 9. This Tribunal in Paliwal Industries v. Union Bank of India, Appeal No. R-1242/2010 decided on 2nd February, 2011 has also held that where the Bank has agreed under an agreement for providing financial assistance and if while providing the financial assistance the money is withdrawn fraudulently then the transaction as such comes within the definition of debt but in the present case, the position is different which have been discussed in the earlier paragraph that no assistance has been provided by the appellant-Bank to the respondents which constitutes the debt. 10. Under these circumstances, the transaction of wrongly clearing the cheque by the appellant-Bank cannot be said that there had been a debt. In view of the aforesaid, I do not find any substance in the present Appeal to hold that the transaction as such comes within the purview of the word 'debt' and accordingly, the Appeal is without any merit and hence the same is dismissed. Order announced in open Court in presence of the Counsel for the appellant.
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