1996 (2) TMI 578 - HC - Indian Laws

Summary

Issues:
1. Jurisdiction of the Court vs. Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
2. Suit for recovery of money by sale of mortgaged properties and its transferability to the Debt Recovery Tribunal.
3. Applicability of Section 68 of the Transfer of Property Act in cases of recovery of debt secured by mortgage.

Analysis:

Issue 1:
The suit filed by a consortium of plaintiff banks sought recovery of a loan amount from the defendants who had mortgaged their properties as security. The Court noted that after the establishment of the Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, only the Tribunal had jurisdiction over matters related to recovery of debts exceeding a specified value, barring certain exceptions for the Supreme Court and High Courts under Articles 226 and 227 of the Constitution.

Issue 2:
The defendants objected to the transfer of the suit to the Tribunal, arguing that it was not a simple money recovery suit but involved the sale of mortgaged properties. However, the Court clarified that a suit for recovery of money by sale of mortgaged properties is still a suit for recovery of money under the Code of Civil Procedure. The Court emphasized that if the Tribunal has the power to direct the attachment and sale of immovable property, a suit for recovery by sale of immovable property can be filed before it, justifying the transfer of such suits to the Tribunal.

Issue 3:
The defendants contended that Section 68 of the Transfer of Property Act allows for a stay of proceedings until the mortgagee exhausts all remedies against the mortgaged property, which the Tribunal lacks. However, the Court rejected this argument, stating that in cases where the suit is for recovery of the loan amount independently of the mortgage, Section 68 of the Transfer of Property Act does not apply. The Court highlighted that the suit was for repayment of the loan, and the mortgage was collateral security, allowing for recovery by sale of the mortgaged property without a stay of proceedings.

In conclusion, the Court held that the suit for recovery of debt by sale of mortgaged property could be filed before the Debt Recovery Tribunal under the Act. The Court found no valid reason to prevent the transfer of the suit to the Tribunal, ultimately transferring the case for further proceedings before the Tribunal.