Home Case Index All Cases Indian Laws Indian Laws + HC Indian Laws - 2016 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (3) TMI 601 - HC - Indian LawsDebenture-trustee initiation proceedings before the Debt Recovery Tribunal - Whether a debenture trustee suing on behalf of the debentureholder for recovery of sums payable to the debentureholder can file a suit on the original side of this Court since suit is for recovery of the debt? - Held that:- On plain reading of clause (g) of section 2 it appears that the word `Debt' has been given a very wide meaning. It means any liability 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 their business activity. In the decision of the Apex Court in the case of Eureka Forbes Limited Vs. Allahabad Bank relied upon by the first defendant, it was held that the word debt in the RDB Act cannot be given a restricted meaning and the legislature has not intended to restrict it to the relationship of creditor and debtor. However, subsection 1 of section 17 confers jurisdiction on the DRT to deal with the applications made by the banks and financial institutions for recovery of debts “due to such banks and financial institutions”. Thus, DRT can entertain an application for recovery provided the application is made by a bank or a financial institution for the recovery of debt due to such bank or financial institution. If recovery is sought of a debt which is not due to a bank or a financial institution, the DRT will not get jurisdiction under section 17. It will be necessary to make a reference to the Regulations framed by the Securities and Exchange Board of India under section 30 of the Security and Exchange Board of India Act,1992. The said Regulations are the Securities and Exchange Board of India (Debenture Trustees) Regulations,1993 (for short “the Regulations”). Clause (bb) of the Regulation 2 defines a debenture trustee to mean a trustee of a trust deed for securing any issue of debentures of a body corporate. Clause (ba) of Regulation 2 defines a debenture by giving the same meaning to it which is provided in subsection 12 of section 2 of the Companies Act,1956. It is the obligation of the debenture trustee to enforce the security in the interest of the debenture holders. Moreover, it is the obligation of the debenture trustee to carry out such acts as are necessary for the protection of the debenture holders and to do all the things necessary in order to resolve the grievances of the debenture holders. On plain and simple reading thereof a bank or a financial institution can file applications before the DRT for “recovery of debts due to such bank or financial institution”. If a bank files an application for recovery of an amount which is not due and payable to itself, the DRT will not get jurisdiction under section 17. For example, a suit filed by a bank acting as an executor of a will seeking to recover amounts due to the estate of the deceased will not come under the purview of section 17. Such proceedings will not be the one to recover the debt due and payable to the bank itself. In such a case, the jurisdiction of a Civil Court is not excluded. After the decision of the Division Bench in the case of Krishna Filaments, section 17 has not undergone any amendments. The definition of financial institution was amended for including therein a securitisation company or a reconstruction company which has obtained a certificate under section 3(4) of the Securitisation Act
|