Allowed

Canara Bank v. Susanta Sarkar

DRAT17 Jan 2024REGULAR APPEAL/21/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's appeal against the dismissal of its Original Application. It held that the DRT had jurisdiction under the Recovery of Debts and Bankruptcy Act to recover the debt as it was a liability in cash, regardless of whether the security (truck) was hypothecated, as debts can be secured or unsecured.

What did the court decide?

Set aside the impugned dismissal order and remanded the Original Application to the DRT for disposal in accordance with law.

Canara Bank versus Susanta Sarkar — Contract and Commercial Disputes | DRAT (2024)

¶1

Appeal No. 21 of 2022-DRAT-Kolkata

¶2

IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

¶3

Appeal No. 21 of 2022

¶4

(Arising out of O.A. 155 of 2017 in DRT-II, Kolkata)

¶5

THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

¶6

Canara Bank, Kanchrapara Branch, ‘Kanchrapara’ at Vill. Ghoshpara, P.O. & P.S. – Kalyani, District – Nadia, P.I.N. – 741 235

¶7

… Appellant

¶8

-Versus-

¶9

Susanta Sarkar, Son of Late Nimai Sarkar, 40, Sen Bagan, Agarpara, Kolkata- 700 109 and also at 61, Panchanan Tala Road, Sukchar, Sodepur, Kolkata - 700 115.

¶10

			… Respondent
Counsel for the Appellant		…	Ms. Aparajita Ghosh Mr. Souvik Ghosh
Counsel for Respondent	…		None
JUDGMENT	:		17^thJanuary, 2024

¶11

THE APPELLATE TRIBUNAL :

¶12

Instant appeal has arisen against judgment and order dated 15^th November, 2019, passed by Learned DRT-II Kolkata dismissing O.A. 155 of 2017 (Canara Bank -vs- Susanta Sarkar). 2. As per the pleadings of the parties, the facts of the case are that a Term Loan of Rs.10.00 lac for purchase of a truck under CGTMS Scheme was sanctioned by the Appellant Bank in favour of the Respondent on 23^rd September, 2015 which was to be repaid in sixty monthly instalments. Tata Truck was to be made as first charge as Loan Security. Necessary documents to secure the loan were executed by the Respondent including letter undertaking not to use the amount sanctioned by the Bank for any other purpose but for purchase of the Tata Truck which is to be hypothecated in favour of the Appellant Bank being loan security. Personal Guarantee was also executed by the Respondent in favour of the Appellant Bank. Loan amount was classified as N.P.A. with effect from 17^th March, 2016.

¶13

¶14

Appeal No. 21 of 2022-DRAT-Kolkata

¶15

Despite reminders, payment was not made. Appellant Bank filed an Original Application on 31^st January, 2017 for Rs.12,85,573.00 which includes the interest.

¶16

3. Notices were issued to the Respondent in the O.A. proceedings which were served but Respondent was not represented. Accordingly, Respondent was ordered to be proceeded ex parte vide order dated 16^th May, 2018.

¶17

4. Learned DRT arrived at a finding that there was nothing on record to show that there were any secured assets from which loan amount can be recovered. Hypothecation of the Truck was not made by the Respondent in favour of the Bank. Further it was held that the DRT has no jurisdiction to entertain the O.A. as allegedly fraud was committed upon the Bank and FIR was registered. Consequently, O.A. was dismissed for want of jurisdiction.

¶18

Feeling aggrieved by the judgment Appellant Bank preferred the appeal.

¶19

In the appeal also notices were issued to the Respondent which were duly served but the Respondent did not put in his appearance.

¶20

I have heard the Learned Counsel for the parties and perused the record.

¶21

5. Learned Counsel for Appellant would submit that Learned Tribunal has erred in recording a finding that it had no pecuniary jurisdiction to entertain the Original Application as allegedly fraud was committed by the Respondent. It is further submitted that Term Loan was sanctioned in favour of the Respondent and the debt was due from him although the secured asset, i.e. Tata Truck, was not hypothecated in favour of the Bank but the Original Application was maintainable before the Learned DRT under Section 2 (g) of The Recovery of Debts And Bankruptcy Act, 1993 (hereinafter referred to as the Act). It is further submitted that jurisdiction of the Civil Court is barred under the Act upto the matters of award of Rs.10 lac. Hence the Learned DRT was the only forum wherein secured creditor, i.e. the

¶22

¶23

Appeal No. 21 of 2022-DRAT-Kolkata

¶24

Appellant Bank, could file the Original Application under Section 19 of the Act. Section 19 of the Act reads as under :

¶25

“19. Application to the Tribunal

¶26

(1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction –

¶27

[(a) the branch or any other office of the bank or financial institution is maintaining an account in which debt claimed is outstanding, for the time being; or]

¶28

[(aa)] the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or

¶29

(b) any of the defendants, where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or

¶30

¶31

This provision clearly provides that in order to recover a debt, application is to be made before the Tribunal.

¶32

6. ‘Debt’ is defined under Section 2 (g) of The Recovery of Debts

¶33

And Bankruptcy Act, 1993 which reads as under :

¶34

“2(g) "debt" means any liability (inclusive of interest) which is claimed as due from any person [or a pooled investment vehicle as defined in clause (da) of section 2 of the Securities Contracts (Regulation) Act, 1956,] by a bank or a 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 assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application [and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or;]]”

¶35

Bare perusal of the provision would reveal that it includes

¶36

secured or unsecured debts both.

¶37

7. Section 18 of the Act bars jurisdiction of all the Courts or

¶38

authorities which reads as under :

¶39

“18. Bar of jurisdiction

¶40

On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under

¶41

¶42

Appeal No. 21 of 2022-DRAT-Kolkata

¶43

Article 226 and 227 of the Constitution) in relation to the matters specified in Section 17.”

¶44

8. Section 17 (1) of the Act deals with the jurisdiction of the Tribunal which reads as under :

¶45

“17. (1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions.”

¶46

A conjoint reading of the provisions of Section 17 and 19 coupled with the definition of ‘Debt’ under Section 2 (g) of the Act would reveal that the Debt Recovery Tribunal was constituted for hearing the matters of recovery of debts from any person which is due to the Banks and Financial Institutions. Debt, as defined under Section 2 (g) of the Act, specifies that ‘Debt’ means any liability which includes any secured or unsecured liability due to any person.

¶47

9. Case laws, as referred by the Learned DRT, no doubt relates to the jurisdiction of the Civil Court as well as bar therein for the proceedings which are within the jurisdiction of the Tribunal. But they are not applicable to the facts of present case.

¶48

10. In the present case, admittedly a loan was taken by the Respondent for purchase of a vehicle, i.e. a Truck. The vehicle should have been hypothecated in favour of the Bank but the vehicle was not purchased.

¶49

11. Learned Counsel for Appellant submits that the Respondent has played fraud upon the Bank by obtaining the loan for purchase of the vehicle but the same was not purchased as such, proceedings are also initiated against the Respondent which are pending.

¶50

12. It is relevant to note that the Respondent did not appear either before the DRT or this Tribunal. Accordingly, there is no challenge to the fact that loan was sanctioned and disbursed in favour of the Respondent. Personal Guarantee was also given by the Respondent although a fraud has been allegedly played upon the Bank but the fact remains that it was an unsecured debt which is to be recovered by the Bank. Debt Recovery Tribunal would have jurisdiction to entertain the

¶51

¶52

Appeal No. 21 of 2022-DRAT-Kolkata

¶53

application under Section 19 of The Recovery of Debts And Bankruptcy Act, 1993 for recovery of the debt.

¶54

13. Accordingly, I am of the considered opinion that the Learned DRT has mis-directed itself in recording a finding that it has no jurisdiction rather Civil Court has jurisdiction in the matter. Accordingly, the impugned order is liable to be set aside. Appeal deserves to be allowed.

¶55

The appeal is allowed. The impugned order dated 15^th November, 2019, passed by Learned DRT-II Kolkata is set aside. Learned DRT is directed to dispose of the O.A. in accordance with law expeditiously.

¶56

No order as to costs.

¶57

File be consigned to Record room.

¶58

Copy of the order be supplied to Appellant and the Respondent and a copy be also forwarded to the concerned DRT.

¶59

Order dictated, signed, and pronounced in open Court.

¶60

(Anil Kumar Srivastava,J) Chairperson

¶61

Dated: 17^th January, 2024 ac

Canara Bank v. Susanta Sarkar

Case brief

What is this about?

What did the court decide?

Canara Bank v. Susanta Sarkar

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Union Bank of India versus Jagityala Warehousing Pvt. Ltd.

Union Bank of India versus M/s Jagityala Warehousing Pvt. Ltd.

Bank of Baroda and Ors. versus M/s Sunway Infrastructure Services Ltd. and Ors.

Canara Bank versus Ms Hero Wiretex Ltd.

Icici Bank Limited versus Elora Mishra

Cfm Asset Reconstruction Private Limited versus Ma Chandi Durga Ispat Limited