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TMI Blog1998 (7) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... e Courts where the amount of debt due to be recovered is Rs. 10 lakhs or more. All other cases involving amounts of less than Rs. 10 lakhs would continue to be heard and decided by the respective Courts where the suits for recovery are pending. Sub-section (1) of section 31, inter alia, states "shall stand transferred on that date to such Tribunal". The transfer of pending cases is an automatic process, an event which takes place on the date when the Tribunal having the jurisdiction is established. No application or any request for transfer of cases is envisaged by the Act. Once the Tribunal is established in a particular region then ipso facto the cases pending in the Courts within the jurisdiction of that Tribunal are presumed to be transferred to the said Tribunal. As the Tribunals are being established on different dates in various regions of the country, the date for transfer of pending cases will mean the date of the respective Tribunal. Sub-section (2) provides that the concerned Courts have to transfer the records relating to the suits/proceedings to the Tribunal. This is required to be done as soon as possible after the establishment of the Tribunal and consequent tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he contended that whether the dividend has been correctly paid to the appellant or not is a contentious issue, which requires evidence to be taken and the documents examined in addition to the consideration of the provisions of the Unit Trust of India Act, the procedure and practice in regard to and the rights connected with the units and various other issues which cannot be tried or decided by the Debts Recovery Tribunal, which issues do not fall within their jurisdiction and which involve a civil dispute not relating to a debt and not covered by the object of the aforesaid enactment. The questions for consideration in this appeal are ( i ) whether the nature of demand made amounts to liability which partakes of the character of a debt under the Act : and ( ii ) having regard to the nature of the demand whether the Tribunal has got the jurisdiction ? 4. In order to determine these questions, it is appropriate to refer to the definition of debt under section 2( g ) and financial institution under section 2( h ) which reads thus : " debt means any liability (inclusive of interest) which is alleged as due from any person by a bank or a financial institution or by a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a future date. In CWT v. Pierce Leslie Co. Ltd. [1963] 33 Comp. Cas. 407, a Bench of this Court pointed out that the essential requisites of a debt are ( i ) an ascertained or readily calculable amount ; (2) an absolute unqualified and present liability in regard to that amount with the obligation to pay forthwith or in future within a time certain; and (3) the obligation must have accrued and must be subsisting and should not be that which is merely accruing. Broadly stated, a debt is a liquidated money obligation for the recovery of which an action will lie. It is an ascertained, liquidated and quantified obligation enforceable in praesenti or in futuro. The fact that the time for payment will arise in future does not make it anytheless a debt. Debitum in praesenti solvendum in futuro; this is not repugnant to the conception of a debt, because the obligation is crystallised, and it is only the payability that is in abeyance. 6. In Black s Law Dictionary, the meaning of the word debt is explained as "a sum of money due by certain and express agreement. A specified sum of money owing to one person from another, including not only obligation of debtor to pay but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the personal remedy is inadequate. Statements in recent English cases, as will be seen, go beyond that ; they have suggested the recognition of a constructive trust "of a new model", which will be imposed "whenever justice and good conscience required it. . ." as an equitable remedy "by which the court can enable an aggrieved party to obtain restitution" vide Modern Equity by Jill E. Martin, 12th edition 70. Constructive trusts are also called trusts ex malefico, trust ex delicto, trusts in invitum, or involuntary trusts. Story on Equity Jurisprudence has explained, a constructive trust thus : one of the most common cases in which a court of equity acts upon the ground of implied trusts in invitum , is where a party has received money which he cannot conscientiously withhold from another party. It has been well remarked, that the receiving of money which consistently with conscience cannot be retained is, in equity, sufficient to raise a trust in favour of the party for whom or on whose account it was received. This is the governing principle in all such cases. And, therefore, whenever any controversy arises, the true question is, not whether money has been receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the person who has been wronged. The constructive trust arises from the situation in which he is entitled to the remedy of restitution, and it arises as soon as that situation is created. For this reason, the person who is wronged is entitled to specific restitution from the wrongdoer even though the wrongdoer becomes insolvent before suit is brought, and he is entitled to specific restitutions from a person to whom the wrongdoer has transferred the property, if the transferee is not a bona fide purchaser, even though the transfer is made before suit is brought for restitution. It would seem that there is no foundation whatever for the notion that a constructive trust does not arise until it is decreed by a court. It arises when the duty to make restitution arises, not when that duty is subsequently enforced . In Chase Manhattan Bank v. Israel-British Bank (London) Ltd. [1979] 3 All ER 1025 (Ch.D), after referring to the decisions in Sinclair v. Brougham [1914-15] All ER Rep 622 and Diplock s Estate, In re [1948] 2 All ER 318 (CA), it is stated at page 1032 : In the same way, I would suppose, a person who pays money to another under a factual mistake retains an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. The next aspect to be considered is, whether the Debts Recovery Tribunal is empowered to deal with contentious issues alleged to be based on contracts, other than those relating to advance of moneys by banks or financial institutions, preferably, for the money advanced by the banks and requires liability to be subsisting and legally recoverable on the date of the application. 9. Having regard to the view we have taken as to what constitutes debt and liability , when money was paid by respondent No. 1 mistakenly, but was received by the appellant consciously, having knowledge that the shares were sold, that makes the liability subsisting and legally recoverable. Regarding the claim by financial institution, clause ( h ) of section 2 of the Act defines financial institution as "( i ) a public financial institution within the meaning of section 4A of the Companies Act, 1956 ; and ( ii ) such other institution as the Central Government may, having regard to its business activity and the area of its operation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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