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Issues:
Transfer of civil suits to Debt Recovery Tribunal under Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Analysis: The appellant bank filed two civil suits for recovery of dues. The suits were pending when the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 came into force. The bank applied for transferring the suits to the Debt Recovery Tribunal, which the court allowed but retained the counter claim. The respondents challenged this decision in the High Court, arguing that the Act did not apply until the facts were decided. The High Court allowed the revisions, setting aside the lower court's orders. The bank contended that the High Court overlooked the Act's provisions and wrongly criticized the lower court. The key issue was whether the amounts claimed were legally recoverable debts. The bank had provided credit against exports, but the foreign buyers did not pay, leading to outstanding amounts. The High Court's interpretation of the term "debt" under the Act was questioned, emphasizing that the bank had alleged the amounts due and legally recoverable. The Act's provisions grant exclusive jurisdiction to the Tribunal for debt recovery cases. The definition of "debt" includes liabilities alleged as due, whether secured or unsecured, payable under a court order, and legally recoverable. The High Court's failure to consider the bank's allegations and the automatic transfer of suits to the Tribunal under Section 31 were highlighted. The defense raised by the respondents regarding insurance cover did not discharge their liabilities, making the suits eligible for transfer. The Supreme Court held that the High Court erred in considering the applications premature and not treating the suits as debt recovery proceedings under the Act. The Court allowed the appeals, setting aside the High Court's judgment and reinstating the lower court's orders.
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