1995 (11) TMI 467 - HC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of Debt Recovery Tribunal (DRT) to hear mortgage suits.
2. Definition and scope of "debt" under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
3. Procedural and substantive rights of mortgagors under the Transfer of Property Act and Civil Procedure Code (CPC).

Summary:

1. Jurisdiction of Debt Recovery Tribunal (DRT) to hear mortgage suits:
The review application raised the issue of whether the Debt Recovery Tribunal (DRT) has the jurisdiction to hear, try, and dispose of mortgage suits. The court initially directed the records to be transmitted to the DRT, but the defendants sought a review, arguing that the suit was within the jurisdictional competence of the civil court.

2. Definition and scope of "debt" under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993:
The court examined whether a suit for recovery of mortgage debt falls within the jurisdiction of the DRT u/s 17 of the Act. The term "debt" as defined in Section 2(g) of the Act includes any liability alleged as due from any person by a bank or financial institution, whether secured or unsecured. The court concluded that a mortgage debt is included within the meaning of "debt" as defined u/s 2(g) of the Act, and thus, a suit based on a mortgage is a suit for recovery of a debt.

3. Procedural and substantive rights of mortgagors under the Transfer of Property Act and Civil Procedure Code (CPC):
The defendants argued that the Transfer of Property Act and Order 34 CPC confer certain rights and protections on mortgagors, which would be lost before the DRT. The court rejected this argument, stating that the substantive law of mortgage and the covenants in the deed would still bind the Tribunal. The Act's provisions must receive an object-oriented interpretation to expedite the recovery of debts, and the Tribunal has the competence to try claims for recovery of debts based on mortgages.

Conclusion:
The court held that the DRT has jurisdiction over suits for recovery of mortgage debts, and the term "debt" under the Act includes mortgage debts. The review application seeking to recall the order transmitting the suit to the DRT was rejected.