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TMI Blog1998 (4) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial Institutions Act, 1993 (Act No. 51 of 1993), does not have the jurisdiction to entertain prayers for mortgage in a substantive petition under section 19 of the said Act. The Debt Recovery Tribunal as constituted under section 3 of the connected Act is conferred with jurisdiction in terms of section 19 to entertain and decide applications of the banks and the financial institutions. The said Tribunal is authorised to have assumed jurisdiction from the appointed day when the connected Act has come into force with regard to initiation of any proceeding for recovery of debts due to banks and financial institutions and the said proceeding is required to be initiated in terms of the provisions under section 19. All applications which have been filed on or after the appointed day as mentioned in the Act, the Tribunal is conferred with jurisdiction to entertain lis within the limited sphere and it has also been conferred with powers and jurisdiction to proceed with any pending proceeding before any court before the establishment of a Tribunal under the Act after transfer of pending cases in terms of section 31 of the Act. The challenge looms large on the score on a common ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and after scanning of section 17 it appears that apart from other formalities the Tribunal is conferred with power to be in seisin of the controversy relating to recovery of debts. The jural expression 'debt' has been defined in section 2(g) which is quoted hereunder : "'debt' means any liability (inclusive of interest) which is alleged as due from any person by a bank or financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution 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." 3. There is no iota of doubt that the Tribunal being a creature of the statute is conferred with jurisdiction and/or authority for recovery of debts due to banks and financial institutions. The significant expression contained in the aforesaid provision of section 17 is the debts due to such banks or financial institutions. The entire meaning of the construction of the expression 'deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of words and phrases with the word 'liability' in its widest import means an obligation or duty to do something or to refrain from doing something. There is no reason why any restricted meaning should be given to the word liability. It is significant to refer that in order to illustrate the meaning of the word liability, a reference may be made to the expression (namely inclusive of interest) which obviously indicates that liability tends to bring within the sweep of its ambit even liability other than that which is payable in terms of cash that is why in the definition portion a reference was made to interest. The said definition of debt further proceeds by inclusion of the expression 'due'. Before assessing the meaning of the word 'due' a distinction may be made between the debt owing and debt due. P.N. Chatterjee, one of the learned counsel appearing for one of the parties has highlighted the said distinction and according to Chatterjee, when a debt is ascribed as due it means due to the bank. Debt is due to the banks and financial institutions or analogous agency from any person and the expression owing means that such financial institution is owed money from the person conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Act. There is no specific exclusion or limited exclusion of the invocation and/or application of the provisions of the Transfer of Property Act contemplated within the four corners of the connected statute with which we are to deal. A passing reference is made to the same as at a later stage we will have the occasion to deal with the provisions of the concept of mortgage as perceived under the provisions of the Transfer of Property Act. Kashikanta Moitra, one of learned advocates appearing for one of the petitioners, has submitted that on the question of the Tribunal being one of limited jurisdiction whether the Tribunal can embark upon the adoption of uncanalised powers. Another reference may be made to the case of P.S.L. Ramanathan Chettiar v. O.R.M.P.R.M. Ramanathan Chettiar AIR 1968 SC 1047, where the apex court, while dealing with the Madras Agricultural Relief Act of 1938, has the occasion to refer to the meaning of the word 'debt'. The term 'debt', as per the provisions of the said local Act, has been defined in section 3(iii) of the said Act as meaning 'any liability in cash or kind, whether secured or unsecured due from an agriculturist whether payable under a decree o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing and which includes within its compass such enforceable obligation to be paid in cash or otherwise obviously entails that relinquishment of liability is required to be replenished by cash or otherwise. Some controversy seems to have erupted because of the contentions raised by the respective counsel for the parties as to what is meant by the expression 'otherwise' which follows as an appendage to the expression by way of noun, namely, cash. The word 'otherwise' in terms of ordinary English Grammar appears to be an adverb which is preceded by interjection of the word 'or'. The term 'or' is capable of being conceived of either as a preposition or as a conjunction. A preposition is a word before a noun or a pronoun. Therefore, the word 'or' cannot be conceived of as a preposition as it is before the word 'otherwise' which is to be rated as an adverb. Accordingly, the word 'or' cannot but be conceived of as a conjunction which joins two words, namely, cash or otherwise. The dictionary meaning of the word 'otherwise' tends to suggest and it means 'in a different way'. While construing the expression 'cash' or 'otherwise', a lot of debate was advanced by way of adoption of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnected statute. The term 'mortgage' has been defined in section 58 of the Transfer of Property Act and as per definition a mortgage is transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. In the light of the definition, different types of mortgage are contemplated under the Transfer of Property Act, namely, (a) simple mortgage (b) mortgage by conditional sale (c) usufructuary mortgage (d) English mortgage (e) mortgage by deposit of title deeds and (f) anomalous mortgage. Accordingly, from the catena of different types of mortgage, as mentioned herein, there appears to be six types of mortgage. In terms of definition as given in section 58 of the Transfer of Property Act, the transferor is called mortgagor, the transferee a mortgagee : the principal money and interest of which payment is secured for the time being are called mortgage-money and the instrument by which transfer is effected is called a mortgage deed. 6. According to the definition given in the aforesaid section, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to him, the relief claimed is by way of sale of mortgaged property and as such according to him, usufructuary mortgage or mortgage by conditional sale is excluded from the perspective of considera-tion. He has further contended that majority of the cases with which the court is concerned belong to the type and category of simple mortgage as the interest conveyed is the right to cause the property to be sold. Section 60 of the Transfer of Property Act confers a right on the mortgagee to redeem. As per section 60, at any time after the principal money has become due, the mortgagor has a right on payment or tender at a proper time and place of the mortgage money to require the mortgagee to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee. A right to redeem is a right conferred upon the mortgagor by enactment of which he can only be deprived by means and in the manner enacted for that purpose. Even a second mortgagee desiring to be deeded is bound to pay the whole amount due under the first mortgage and not merely the price realised by the sale held in execution of the first mortgage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference has been drawn from the said authority at page 75 to the effect that a mortgage debt cannot be severed from security. Even references were made from some of the decisions in AIR 1934 Rangoon 250, 255, in order to drive home the point that a suit for mortgage has been held to be a suit for land. While making reference to the definition of mortgage provided under section 58 of the Transfer of Property Act, it has been contended that mortgage is an interest in the land which is to be deemed as immovable property and in support of the same reference was made to the decision in [1929] ILR Cal 1 [FB]. 7. In India the law of mortgage is codified in substantive form in the Transfer of Property Act while proceeding for recovery of mortgage debt is to be found being covered by the provisions of Order 34 of the Code of Civil Procedure. The characteristic feature of a mortgage is that the right in the property created by the transferor is accessory to the right to recover the debt. The debt subsists in a mortgage while a transaction by which debt is extinguished is not a mortgage but a sale. It is worthwhile to refer to the extracts from Ghosh on Law of Mortgage, sixth edition, at pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit for mortgages of immovable property as focussed in the provision of Order 34 of the Code of Civil Procedure. Before adverting to the provisions of Order 34 of the Code of Civil Procedure, this court is made to faulter at the door step in its investigation with regard to the adoption of the procedure as confusion regarding the proceeding for recovery of debts and suit for mortgages of immovable property is required to be cleared. When the proceeding assumes the shape of the character of a subsisting lis before the statutory forum under the Act, namely, the Debt Recovery Tribunal, the character of the lis has to be commenced in terms of section 19 of the Debt Recovery Act No. 51 of 1993. On a perusal of the said section 19 the picture that has emerged is about the proceeding for recovery of debts. Alternatively, it may assume the character on transfer of pending suits prior to the coming into force of the Act, namely, before the establishment of the Tribunal and the same will be required to be transferred, namely, pending suits under section 31 of the Act. A combined reading of section 19 and section 31 of the Act projects a picture of initiation of a proceeding or transfer of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it may frustrate the object of the Act. It has been observed in the case in Muddada Chayanna v. Karnam Narayana, AIR 1979 SC 1320, that, 'interpretation of statute must further not frustrate the object of the Act'. In the background of the same it is to be kept in mind the Statement of Objects and Reasons of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which is reproduced below : "Banks and financial institutions at present experience considerable difficulties in recovering loans and enforcement of securities charged with them. The existing procedure for recovery of debts due to banks and financial institutions has locked 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 M. Narasimham has considered the setting up of special Tribunals with special powers for adjudication of such matters and speedy recovery as crucial to the successful implementation of the financial sector reforms. An urgent need was further felt to work out a suitable mechanism through which the dues to banks and financial institutions could be realised without del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is recovery of debts due to banks and financial institutions. The Tribunal has been conferred also with the authority to settle any other matters connected with or incidental thereto while adjudicating such claims or directing recovery which brings within its compass, the concept of mortgage which is accessory to the right to recover the debt. While assessing the question of interpretation of the statute this court has been reminded by Mitter, the learned Additional Solicitor-General that there is imperative need and requirement to eliminate the vices of statute. As an onlooker to the overall scenario, this court is overtaken by a feeling that when corridors of the court are raided by an army of wilful defaulting borrowers, it appears to be a calculated attempt to obstruct due course of judicial procedure. A reference may be made to the case of Jennison v. Baker [1972] 1 All ER 997 and the germane observation borrowed from there is quoted as hereunder (page 1006) : "The law should not be seen to sit by limply, while those who would defy it go free and those who seek its protection lose hope." 11. As pointed out by the Supreme Court in Shivanarayan Kabra v. State of Madras, AIR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power to regulate its own procedure. The statute contemplates the proceeding for recovery of debt at the instance of the banks and financial institutions under section 19 of the Act as a recovery proceeding having a summary character and even if the prayer is made by way of a relief founded on the claim of mortgage, the same will retain its complexion and character as a recovery proceeding of debt due in cash or otherwise covering any type of liability inclusive of interest. Therefore, prime emphasis is on a summary procedure for recovery of debt within the meaning of section 2(g) of the Act and the procedure guiding governance of the same will be regulated by section 22 itself of the statute and it cannot be said that it shall be guided and governed by Order 34 of the Code of Civil Procedure. If in view of the prayer founded on mortgage it has to be deemed as a suit for mortgage, then, it will have to be deemed as a suit for land. In that view of the matter the jurisdiction of the court will be in the place where the suit property is situate, namely, location of the immovable property in terms of section 16 of the Code of Civil Procedure. As observed if it is contemplated as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the procedure and adjudicate on the issue of the prayer for mortgage in a summary manner as provided in terms of the procedure laid down under section 22 of the Act in accordance with the substantive law of the relevant provisions of Chapter IV of the Transfer of Property Act which is a composite chapter relating to mortgage. 13. In the light of the above let this court deal with separate petitions under article 227 of the Constitution in serially which are altogether 14 in number as a common question of law is involved in all the matters which are taken up for analogous hearing. 14. In the first matter before this court in the matter of Hindustan Laminators (P.) Ltd. v. Central Bank of India C.O. No. 1082 of 1996 has preferred the connected petition against the order No. 2, dated 19-4-1996, passed by the Presiding Officer, Debt Recovery Tribunal in O.A. No. 84 of 1997. In view of the analogous decision passed by this court analogous to Grapco Industries Ltd. v. ICICI Ltd. [1999] 97 Comp Cas 99 /[1998] 16 SCL 301 cannot sustain the operative part of the order as it is of the view that the Tribunal is not possessed of any authority, power or jurisdiction to pass ad interim e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been recorded that the copies of the document to be relied upon by the bank were not served on the opposite parties along with the plaint. Therefore, the question of giving a direction to the bank to furnish further documents and particulars cannot arise. Accordingly, this court is also not in a position to interfere with the second order as quoted above. The second order also is allowed to remain. Accordingly, the said revisional application stands dismissed on contest. 16. The next case is the case of Multirise Towers (P.) Ltd. v. Allahabad Bank being directed against Order No. 13, dated 28-1-1997, and order dated 13-5-1997, passed by the debt Recovery Tribunal in O.A. No. 211 of 1995. By the impugned order as aforesaid dated 28-1-1997, a prayer was made on behalf of the respondents in the connected proceeding before the Tribunal on the ground of the marriage ceremony of the son of the learned advocate scheduled to be held on 25-1-1997. The same was rejected. This court intends to interfere with the discretion exercised by the Tribunal and that part of the order so far as rejection of the prayer of adjournment is concerned, it be granted and the order impugned is interfered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief for mortgage the Tribunal has no jurisdiction to entertain the mortgage matters. This plea will stand rejected in view of the decision arrived at by this court that the Debt Recovery Tribunal has the jurisdiction to entertain the same. The Tribunal is directed to give another date to the concerned respondent to file a written statement and/or written objection to the application under section 19 and is directed to proceed with the proceeding as expeditiously as possible. Accordingly, the same is disposed of. 18. The next case is the case of Biswabharati Industries v. State Bank of India. There has been a challenge thrown to the assumption of jurisdiction as to the entertainability on the question of mortgage debt by the Tribunal in a proceeding under section 19(1) of the Act. In view of the decision herein the same is self-explanatory. In view of the nature of the order passed by directing an amount to be paid to the tune of Rs. 10,33,851.90 together with interest, the same is appealable in view of the provisions of the Act in terms of the statutory provisions. Therefore, the remedy against the impugned order is by way of appeal. If the petitioner is also advised, it can pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95. A prayer was made in the connected proceeding so that the Tribunal cannot proceed with the matter any further on the ground that relief is prayed for about mortgage and in view of the reasons as spelt out hereinabove and in view of the decision arrived at that the Tribunal has jurisdiction to entertain a plea of mortgage. In view of such decision let it be referred to the Tribunal so that it can proceed with the matter immediately in accordance with law and in terms of the provisions and the formalities by the statute. There is no reason to grant a stay of proceeding and the order impugned is set aside and the revisional application stands dismissed on contest. 22. The next matter in the case of Calcutta Refractory v. United Commercial Bank C.O. No. 2144 of 1996 and the said application is directed against Order No. 19, dated 18-8-1996, passed by the Debt Recovery Tribunal in T.A. No. 261 of 1994. The Tribunal by the impugned order has refused to entertain the prayer for return of the plaint on the question that the Tribunal has no authority to go into the question of mortgage. The same being answered in the affirmative whereby it has been held for the reasons as indicated her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made. Accordingly, the question of determination of framing of a particular issue, namely, the preliminary issue as sought to be hinted at probably based on the question of determination of the jurisdiction of Tribunal to deal with the question of mortgage becomes redundant and as such the same becomes automatic and no useful purpose would be served. An opportunity on the whole for the ends of justice should be offered to both the parties to file evidence on affidavit within a particular date as fixed by the Tribunal and it should proceed with the proceeding. It should discourage the practice of prolonging the litigation by vexatious proceeding of filing of plethora of applications to prolong the period of pendency of litigation. Subject to the above observations the applications stand disposed of. 24. The next case is one of Duttapukur Hatcheries (P.) Ltd. v. Bank of India which is directed against order dated 17-12-1996, passed by the Debt Recovery Tribunal in O.A. No. 91 of 1996. The point canvassed in the impugned order is about the jurisdiction of the Tribunal to entertain the controversy relating to mortgage which has now been answered in the affirmative. For the foregoing r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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