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State Bank of India and Ors. Versus Gujarmal Modi Hospital and Research Centre for Medical Sciences

1996 (2) TMI 578 - DELHI HIGH COURT

Interim Application No. 244 of 1994 and Suit No. 1565 of 1993 - Dated:- 2-2-1996 - S.K. Mahajan, J. Shankar Ghosh, S. Mukherjee, Rajeev Sawhney, Arjun Pant and Kirti Uppal, Advs JUDGMENT S.K. Mahajan, (1) This suit has been filed by the consortium of plaintiff banks for recovery of ₹ 13,81,41,611.29 paise being the loan advanced by the banks. The defendants by way of securing the aforesaid loan mortgaged their properties in favor of all the banks. Original title deeds of the properties wer .....

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nder the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short referred as "The Act"), no Court or other authority had any jurisdiction, power or authority (except the Supreme Court, and a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution) in relation to the matters specified in Section 17 of the Act. Under Section 17 of the Act, it was only a Tribunal constituted under the Act which could exercise jurisdiction, power and authorit .....

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ry of money but was a suit for recovery of money by sale of mortgaged properties, it was not governed by the provisions of the Act and could not be transferred. (4) Mr. Rajiv Sawhney, Sr. Advocate, appearing for the defendant, while not disputing that the amount sought to be recovered was a debt within meaning of Section 2(G) of the Act sought to justify his objection that the suit cannot be transferred to the Debt Recovery Tribunal on the ground that a special procedure has been prescribed unde .....

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hney, in the form which has been prescribed in the rules for filing an application before the Debts Recovery Tribunal, there is no provision that recovery can be made by sale of the mortgaged property. It is, Therefore, argued that this being not a simple suit for recovery of money, this Court should not transfer the same to Debts Recovery Tribunal. (5) Under Section 31 of the Act, every suit or other proceedings pending before any Court immediately before the date of establishment of the Tribun .....

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to Court the amount so found due from him and it is only on the failure of the defendant to pay such amount that the plaintiff will be entitled to apply for a final decree debarring the defendant from all rights to redeem the property. The Act also gives power to the Tribunal to make recovery of the amount, which is found due from the debtor, by attachment and sale of the immovable property of the defendant. In case, the Tribunal has the powers to direct the attachment and sale of the immovable .....

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ngredient of a mortgage. There may be a debt without a mortgage but there can be no mortgage without a debt. Properties are offered as security only for securing recovery of debt. If debt is repaid the mortgage ceases to be a mortgage. Even if the term debt would not have been defined in Act No. 51 of 1993 the mortgage would have been included within the meaning of debt. This is the general law and settled trend of judicial opinion. However, Act 51 of 1993 incorporates the definition of debt in .....

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able. The definition would cover all the cases . where the liability is secured by a mortgage, charge, hypothecation or in any other manner known to law. An effort at carving out a mortgage away and out of the definition of debt is futile. Therefore, a suit based on a mortgage is a suit for recovery of a debt without regard to the nature of the mortgage and the nature of the relief sought for by the plaintiff". 8. R.C. Lahoti, J. had quoted with approval the following passage from Chose in .....

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t the judgment in State Bank of India v. Samneel Engineering Co. & Others (Supra) will not apply to the facts of this case as the effect of Sections 58 and 68 of the Transfer of Property Act was not considered in that case. It is contended by Mr.Sawllney that under Section 68 of the Transfer of Property Act where a suit is brought by a mortgagee for recovery of the amount due from the mortgagor, the Court may, at its discretion, stay the suit and all proceedings therein, notwithstanding any .....

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to the defendant and it was only by way of collateral security that the defendants had deposited the title deeds of their properties with the bank. The banks have a charge on the mortgaged property and, in case, a decree is passed in their favour, they can have the same recovered by sale of the mortgaged property. There will not be any question of the Court staying the suit and other proceedings, in case, such a suit was filed in a Court of law. (11) The present suit has been filed for repayment .....

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n a suit to recover by deposit of title deed due only on the basis of the equitable mortgage created by the defendants by deposit of title deeds then the arguments made on behalf of the defendants under action 68 (2) might have prevailed. Position, however, is entirety different in the present case. The suit in this Court is not a suit where the mortgagee is suing for his mortgaged money only on the basis of equitable mortgage created by defendant but the suit is for recovery of money independen .....

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has also prayed that the amount sought to be recovered should be recovered by sale of the mortgaged property, cannot be transferred to the Debts Recovery Tribunal constituted under the Act for any of the reason argued by the defendants. I do not find any reason as to why the aforesaid Judgment delivered by R.C.Lahoti,J. should not be followed. (13) MR.UPPAL, APPEARING for defendant No.1, submits that in case the recovery could be made by sale of mortgaged properties, the legislature ought to hav .....

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