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TMI Blog2019 (1) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the respondent in repayment of security deposit in the sum of Rs. 37,67,731/- paid from time to time as per the terms of deposit agreement. 3. It is the petitioner's case that, respondents are the owners of office premises on the second floor of a building known as "Netrali Apartments" at Pune ('said premises" for short). The petitioners and the respondents entered into a Leave and License Agreement dated 27th November, 1998 whereby the respondents granted unto the petitioners, a license to use and occupy the office premises in the said building. Besides, the parties entered into a deposit agreement in the month of December, 1998. The respondents thus, have received Rs. 37,67,731/- as and by way of refundable security deposit against the license granted unto the petitioners to occupy the said premises. 4. The Leave and License Agreement expired on 30th November, 2008 by efflux of time. That, vide letter dated 7th October 2009, petitioner demanded refund of the security deposit and requested the respondents to take possession of the licensed premises in terms of Leave and License Agreement and deposit Agreement dated 27th November, 1998. The respondents refused to refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of "debt" which reads as under: "DEBT means any liability (inclusive of interest) which is alleged as due from any person by a bank or a financial institution or by a consortium of banks or financial instititions during the course of any business activity undertaken by the bank or the financial institutions 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". 14. He has also taken us through the "interpretation" clause of the Banking Regulation Act, 1949 and in particular Section 5(b) which defines Banking and reads as under : "5(b) "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise;" He has also taken us through the provisions of Section 6 of the Banking Regulation Act, 1949 and would submit that Clause-(k) of Section 6 of sub-section (1) of the Banking Regulation Act enables the Banking Company either to acquire or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Counsel would contend that admittedly the security amount was due and payable by the respondent to the petitioner upon expiry of the license period by efflux of time. He would submit, the expression "any liability" is wide enough to cover and include unpaid security deposit amount and as such it is a "debt" and therefore the application under Section 17 of the said Act before the DRT was preferably maintainable. Mr. Tulzapurkar, Learned Senior Counsel contended that in terms of Clause-(n) of Section 6(1) of the Banking Regulation Act, acquiring the premises on leave and license basis for its banking business is an activity incidental to the promotion and advancement of the business. He would therefore contend that, the DRT, as well as, the DRAT failed to exercise the jurisdiction. 19. The Learned Senior Counsel for the petitioner, would contend that the DRT, as well as, the Appellate Tribunal both failed to appreciate the meaning of the word "debt" defined under Section 2(g) of the said Act which according to him cannot be assigned a narrow or a restricted interpretation. In support of his contention, he has relied on the judgment of the Supreme Court in the case of Eureka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression in contradistinction to specific, restricted or a limited expression. We reproduce the observations in para-50 thus ; "50. In this background, let us read the language of Section 2 (g) of the Recovery Act. The plain reading of the Section suggests that legislature has used a general expression in contra distinction to specific, restricted or limited expression. This obviously means that, the legislature intended to give wider meaning to the provisions. Larger area of jurisdiction was intended to be covered under this provision so as to ensure attainment of the legislative object, i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions." He would thus contend that, larger area of jurisdiction was intended to be covered under this provision i.e. Section 2(g) so as to ensure attainment of the legislative object i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions. 21. Learned Senior Counsel, Mr. Tulzapurkar, also relied on paragraphs-51 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent experience considerable difficulties in recovering loans and enforcement of securities charged with them. The existing procedure for recovery of debts due to the banks and financial institutions has blocked a significant portion of their funds in unproductive assets, the value of which deteriorates with the passage of time. The Committee on the Financial System headed by Shri M. Narasimham has considered the setting up of the Special Tribunals with special powers for adjudication of such matters and speedy recovery as critical to the successful implementation of the financial sector reforms. An urgent need was, therefore, felt to work out a suitable mechanism through which the dues to the banks and financial institutions could be realised without delay. In 1981 a Committee under the chairmanship of Shri T Tiwari had examined the legal and other difficulties faced by banks and financial institutions and suggested remedial measures including changes in law. The Tiwari Committee had also suggested setting up of Special Tribunals for recovery of dues of the banks and financial institutions by following a summary procedure. The setting up of Special Tribunals will not only fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutions. 26. That even otherwise, the Apex Court in the case of Eureka Forbes (supra) in para-50 has clarified that a larger area of jurisdiction was intended to be covered under this provision so as to ensure attainment of legislative object i.e. expeditious recovery and providing provisions for taking such measures which would prevent wastage of securities available with the Banks and Financial institutions. (emphasis supplied). 27. It is to be seen and noted that, the expression "debt" has been interpreted by the Apex Court in Eureka Forbes case (supra) in the context of facts of that case. In Eureka Forbes case (supra) case, the petitioner-Company was not a debtor but a third person, who had given its premises on leave and license basis to the Borrower. The borrower had hypothecated goods to the Bank. Borrower then permitted the petitioner-Company to sell the goods lying in the said premises and adjust the sale consideration against the outstanding lease rent payable by him to the petitioner-Eureka Forbes. In the given set of facts, the Apex Court in para-69 of the said judgment observed thus :- "69. In the case in hand, the goods were hypothecated to the Bank and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould prevent wastage of securities available with Banks and Financial Institutions (emphasis supplied). This proposition, if accepted, would invest the Tribunal with all powers of Civil Court, which is not intended by the Legislature. 29. The expeditious recovery; Providing provisions for taking such measures which would prevent wastage of securities available with the Bank and enforcement of such securities is the object of the Act. Thus, whole object of the said Act is to recover debts by enforcing available security by a mechanism provided under the Act. 30. In our view, if we uphold petitioner's contention, it may not attain the object of the said act. This, may also, enlarge the jurisdiction of the Tribunal. 31. The Apex Court in the case of Axis Bank v. SBS Organics (P.) Ltd. [2016] 12 SCC 18 while dealing with the provisions of the SARFAESI Act has held that the Act was intended to facilitate easy and faster recovery of loans advanced by banks and financial institutions and thus the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was introduced for a special and speedier mechanism for the recovery. 32. Learned Senior Counsel Mr. Tulzapurkar, has relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gage in activities in addition to core banking and in the process it defines as to what constitutes "banking business"." It is therefore submitted by Mr Tulzapurkar, Learned Senior Counsel, that the security deposit was given to the respondent for obtaining the premises on leave and license basis and therefore it is one of the forms of business in terms of Section 6 of the Banking Regulation Act. He would therefore contend that, since the respondent declined to refund the security amount, which was given to him in the course of the Banking business, it is a "debt" within the meaning of Section 2(g) of the Act and therefore the proceedings filed under Section 17 of the said Act were maintainable. 34. In the case of ICICI Bank Ltd. (supra), the Apex Court was dealing with the issue as to whether, inter-se transfer of Non-Performing Assets by a Bank is legal under the Banking Regulation Act. Thus, has examined the provisions of the Banking Regulation Act and scope of Sections 5(1)(a) and Section 6 of the Banking Regulation Act. Issue therein was, whether assignment of "Debt" is Banking activity within the meaning of Banking Regulation Act. In the case in hand, the issue is altogethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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