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TMI Blog2019 (1) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... he objects and other provisions of the Act. Undisputedly, the Recovery Act was enacted primarily for the reasons that, the Banks and financial institutions should be able to recover their dues without unnecessary delay, so as to avoid any adverse consequences in relation to the public funds. The Statement of Objects and Reasons of this Act clearly state that Banks and financial institutions were experiencing considerable difficulties in recovering loans and enforcements of securities charged with them. The then existing procedure for recovery of dues of the Bank and the financial institutions blocked significant portion of their funds in un-productive assets, the value of which deteriorated with the passage of time. The Act provided for the establishment of Tribunals and Appellate Tribunals and modes for expeditious recovery of dues to the Banks and financial institutions. The expeditious recovery; Providing provisions for taking such measures which would prevent wastage of securities available with the Bank and enforcement of such securities is the object of the Act. Thus, whole object of the said Act is to recover debts by enforcing available security by a mechanism provided u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents granted unto the petitioners, a license to use and occupy the office premises in the said building. Besides, the parties entered into a deposit agreement in the month of December, 1998. The respondents thus, have received ₹ 37,67,731/- as and by way of refundable security deposit against the license granted unto the petitioners to occupy the said premises. 4. The Leave and License Agreement expired on 30th November, 2008 by efflux of time. That, vide letter dated 7th October 2009, petitioner demanded refund of the security deposit and requested the respondents to take possession of the licensed premises in terms of Leave and License Agreement and deposit Agreement dated 27th November, 1998. The respondents refused to refund security deposit as well, refused to take back possession of the licensed premises. 5. It is the petitioner s case that, they have removed their belongings from the licensed premises and expressed their readiness and willingness to handover possession of the premises to the respondents against the refund of entire security deposit. 6. That since the respondents refused to return the security deposit, they were constrained to file Origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 14. He has also taken us through the interpretation clause of the Banking Regulation Act, 1949 and in particular Section 5(b) which defines Banking and reads as under : 5(b) banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise; He has also taken us through the provisions of Section 6 of the Banking Regulation Act, 1949 and would submit that Clause-(k) of Section 6 of sub-section (1) of the Banking Regulation Act enables the Banking Company either to acquire or take the premises on leave and license basis in addition to the business of banking. He would therefore submit that, taking premises on leave and license may not be the core activity of the Bank but certainly incidental to the business of banking. He would submit that, herein premises were taken on leave and license basis for starting a bank branch for business of banking and therefore obtaining/taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferably maintainable. Mr. Tulzapurkar, Learned Senior Counsel contended that in terms of Clause-(n) of Section 6(1) of the Banking Regulation Act, acquiring the premises on leave and license basis for its banking business is an activity incidental to the promotion and advancement of the business. He would therefore contend that, the DRT, as well as, the DRAT failed to exercise the jurisdiction. 19. The Learned Senior Counsel for the petitioner, would contend that the DRT, as well as, the Appellate Tribunal both failed to appreciate the meaning of the word debt defined under Section 2(g) of the said Act which according to him cannot be assigned a narrow or a restricted interpretation. In support of his contention, he has relied on the judgment of the Supreme Court in the case of Eureka Forbes v. Allahabad Bank [2010] 101 SCL 95 and more particularly paras-47 and 64 which read thus ; 47. The next question of law, that we are called upon to consider, is the ambit and scope of provisions of Section 2(g) of the Recovery Act, on which the entire case of the parties hinges. We have already noticed that the appellant has argued with great vehemence that, there was no privity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly means that, the legislature intended to give wider meaning to the provisions. Larger area of jurisdiction was intended to be covered under this provision so as to ensure attainment of the legislative object, i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions. He would thus contend that, larger area of jurisdiction was intended to be covered under this provision i.e. Section 2(g) so as to ensure attainment of the legislative object i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions. 21. Learned Senior Counsel, Mr. Tulzapurkar, also relied on paragraphs-51 and 52 of the judgment of Eureka Forbes case (supra) which reads as under : 51. We may notice some of the general expressions used by the framers of law in this provision : (a) any liability; (b) claim as due from any person; (c) during the course of any business activity undertaken by the Bank; (d) where secured or unsecured; (e) and lastly legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Financial System headed by Shri M. Narasimham has considered the setting up of the Special Tribunals with special powers for adjudication of such matters and speedy recovery as critical to the successful implementation of the financial sector reforms. An urgent need was, therefore, felt to work out a suitable mechanism through which the dues to the banks and financial institutions could be realised without delay. In 1981 a Committee under the chairmanship of Shri T Tiwari had examined the legal and other difficulties faced by banks and financial institutions and suggested remedial measures including changes in law. The Tiwari Committee had also suggested setting up of Special Tribunals for recovery of dues of the banks and financial institutions by following a summary procedure. The setting up of Special Tribunals will not only fulfill a long-felt need, but also will be an important step in the implementation of the Report of Narasimham Committee. Whereas on September 30, 1990, more than fifteen lakhs of cases filed by the public sector banks and about 304 cases filed by the financial institutions were pending in various courts, recovery of debts involved more than ₹ 5,622 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d prevent wastage of securities available with the Banks and Financial institutions. (emphasis supplied). 27. It is to be seen and noted that, the expression debt has been interpreted by the Apex Court in Eureka Forbes case (supra) in the context of facts of that case. In Eureka Forbes case (supra) case, the petitioner-Company was not a debtor but a third person, who had given its premises on leave and license basis to the Borrower. The borrower had hypothecated goods to the Bank. Borrower then permitted the petitioner-Company to sell the goods lying in the said premises and adjust the sale consideration against the outstanding lease rent payable by him to the petitioner-Eureka Forbes. In the given set of facts, the Apex Court in para-69 of the said judgment observed thus :- 69. In the case in hand, the goods were hypothecated to the Bank and the appellant admittedly had knowledge prior to the sale of the goods, that they were hypothecated to the Bank. If the contention of the appellant is accepted, it will amount to giving advantage or premium to the wrong doers. It would also further perpetuate the mischief intended to be suppressed by the enactment. This could complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prevent wastage of securities available with the Bank and enforcement of such securities is the object of the Act. Thus, whole object of the said Act is to recover debts by enforcing available security by a mechanism provided under the Act. 30. In our view, if we uphold petitioner s contention, it may not attain the object of the said act. This, may also, enlarge the jurisdiction of the Tribunal. 31. The Apex Court in the case of Axis Bank v. SBS Organics (P.) Ltd. [2016] 12 SCC 18 while dealing with the provisions of the SARFAESI Act has held that the Act was intended to facilitate easy and faster recovery of loans advanced by banks and financial institutions and thus the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was introduced for a special and speedier mechanism for the recovery. 32. Learned Senior Counsel Mr. Tulzapurkar, has relied on the judgment of the Supreme Court in the case of ICICI Bank Ltd. v. Official Liquidator of APS Star Industries Ltd. [2010] 10 SCC 1. 33. Mr. Tulzapurkar, Learned Senior Counsel has cited this judgment in support of the argument that acquiring/taking premises on leave and license basis is one of the forms of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it is one of the forms of business in terms of Section 6 of the Banking Regulation Act. He would therefore contend that, since the respondent declined to refund the security amount, which was given to him in the course of the Banking business, it is a debt within the meaning of Section 2(g) of the Act and therefore the proceedings filed under Section 17 of the said Act were maintainable. 34. In the case of ICICI Bank Ltd. (supra), the Apex Court was dealing with the issue as to whether, inter-se transfer of Non-Performing Assets by a Bank is legal under the Banking Regulation Act. Thus, has examined the provisions of the Banking Regulation Act and scope of Sections 5(1)(a) and Section 6 of the Banking Regulation Act. Issue therein was, whether assignment of Debt is Banking activity within the meaning of Banking Regulation Act. In the case in hand, the issue is altogether different which we have dealt with in the foregoing paras. Mr. Tulzapurkar, Senior Counsel may be right in saying that, acquiring the premises on leave and license basis for the temporary period is one of the forms of businesses contemplated under Section 6 of the Banking Regulation Act but unpaid security ..... X X X X Extracts X X X X X X X X Extracts X X X X
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