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Issues Involved:
1. Whether the nature of demand made amounts to a liability that partakes of the character of a 'debt' under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 2. Whether the Tribunal has jurisdiction to adjudicate the matter. Detailed Analysis: Issue 1: Nature of Demand as 'Debt' The appellant questioned the jurisdiction of the Debt Recovery Tribunal (DRT) on the grounds that the transaction in the present suit does not fall under the definition of 'debt' as per the Act. The appellant contended that the dividend paid to him was not a debt but a matter of contract between the parties, requiring evidence and examination of documents. The court referred to the definition of 'debt' under section 2(g) of the Act, which includes any liability (inclusive of interest) alleged as due from any person by a bank or financial institution, whether secured or unsecured, and legally recoverable on the date of application. The court cited various judicial interpretations, including Stroud's Judicial Dictionary and Law Lexicon, which define 'debt' as a sum payable in respect of a liquidated money demand recoverable by action. The court concluded that the mistaken payment of the dividend to the appellant constitutes a 'debt' as it involves a pecuniary liability that is legally recoverable. Issue 2: Tribunal's Jurisdiction The appellant argued that the Tribunal lacked jurisdiction as the transaction did not relate to a debt under the Act. The court examined the provisions of section 31 of the Act, which mandates the transfer of all pending cases involving debts of Rs. 10 lakhs or more to the Tribunal. The court noted that the transfer of such cases is automatic upon the establishment of the Tribunal. The court also referred to section 19 of the Act, which empowers the Tribunal to hear both parties and pass orders to meet the ends of justice, including determining liability after adjudication. The court held that the Tribunal has jurisdiction to try all questions that come within the definition of 'debt,' including the claim in the present suit. Fiduciary Relationship and Constructive Trust The court discussed the concept of constructive trust, citing the Karnataka High Court's decision in S. Kotrabasappa v. Indian Bank, which held that a constructive trust arises when a party receives money that cannot be conscientiously withheld from another party. The court concluded that there exists a fiduciary relationship between the appellant and respondent No. 1, wherein a liability has to be ascertained. The court emphasized that the basic object of the Act is to provide machinery for the expeditious recovery of debts due to banks and financial institutions, and the Tribunal has jurisdiction to adjudicate the claim. Conclusion The court affirmed the impugned order, holding that the nature of the demand made amounts to a liability that partakes of the character of a 'debt' under the Act, and the Tribunal has jurisdiction to adjudicate the matter. The appeal was dismissed, and the Tribunal was directed to decide on the nature of the claim or liability uninfluenced by the court's view.
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