Allowed

Indian Bank v. M/S J. U. Mansukhani & Co.

DRT20 May 2026TA/1261/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an original application by Indian Bank to recover Rs. 2.43 crore along with interest and costs from two defendants (a share broker and his firm). The court held that funds credited to defendants' accounts via forged demand drafts, procured through collusion with the bank, constituted a 'debt' under the RDB Act despite the lack of a traditional loan account.

What did the court decide?

Joint and several payment of Rs. 2,43,50,000/- plus costs and interest, recoverable from personal assets if not paid within 30 days.

Indian Bank versus M/S J. U. Mansukhani & Co. — Banking and Recovery | DRT (2026)

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Before SUSHIL KUMAR RASTOGI, Presiding Officer Debts Recovely Tribunal-Il, Delhi

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TAlt26U2022

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TNDTAN BANK VS M/S. J.U. MANSUKHANT & CO &^ORS

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Reserued on =^23.04.2026

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Pronounced on : 20.05.2026

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Indian Bank

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Applicant bank

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Vs.

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M/s J.U. Mansukhani & Co.

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Mls Uttam Financial Seruices Ltd

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HDFC Bank Ltd

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Canara Bank Defendants

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Present Mr. Devanshu Yadav, Counsel appears for applicant bank.

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Mr. Sanjay Bhatt, Counsel for defendant nos.1 & 2.

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None for defendant nos.3 & 4 (Proforma Party).

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FINAL ORDER

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This original application has been filed by the applicant bank, on 29.07.L998 through Mr. M.S. Pafthasarathy, Asst. General Manager of the applicant bank under Section 19 of the RDB Act, 1993 against the defendants for recovery of a sum of Rs.2,43,50,000/together with cost, charges and pendentellite and future interest @24.00o/o from date of filing of this O.A. till the realization in full

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The brief facts of the citse are that at the request of defendant nos.l & 2, the applicant bank issued the Bank Drafts Facilities i.e., (1). D.D. No.032133- dated 25.03.1998 of Rs.30,00,000/-. (2). D.D. No.032134 - dated 25.03.1998 o1 _Bs._3I40,000/-. (3). D.D.

TA NO/r 26112022 2

No.032135- dated 25.03.1998

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Rs.40,00,000/-. (4). D.D. No.032008^-dated 23.03.1998 of Rs.30,00,000/-.^{(5). D.D. No.194223 -} dated 25.02.L998 of^{Rs.13,50,000/-.It is submitted} that similarly defendant no. 2^{also requested the} appticant bank at^{its Jamshedpur, Bihar branchfor the} issuance of bank drafts and^{got issued bank drafts} nos.032136 dated^{25.03.1998 for Rs.45,00,000/-and} another drafts^{no.032137 dated 25.03.1998for} RS.5O,0O,OOO/- and^{the samewere also payableat the} seruices branch,^{New Delhi of the applicant bank. The} proceeds of the above drafts^{were received by the} defendants through^{clearing by getting the same} presented through defendant^{nos.3 and 4. As therewas} no suspicion the same^{were paid in due course of} banking business.^{The said drafts were fraudulently} obtained by^{defendantnos.1 & 2 in collusion with the} bank official. It^{is submittedthat on reconciliation of the} accounts it^{was found out that the defendants have not} deposited the amount^{for gettingissued these bank} drafts, and the^{payment of the samehas resultedin} over drafted. It^{is submittedthat the proceedsof the} drafts is lying^{deposited in the accounts of the} defendants bearing^{accountnos.0231286004of} defendant no.t^{and accountno.04008400080f} defendant no.2^{being maintained with defendantno.3} HDFC bank ltd.^{similarty,some amount is also lyingin} the account of^{defendant nos. 1 & 2 being maintained} with defendant no.4.^{The applicant approached} defendant nos.3^{& 4 for paying to it the amounts lying} the accounts of^{defendant nos.l & 2 on 28.07.t998, as} the drafts have been^{fraudulently obtaird, but the} defendants have^{failed to} P91^{with the money.} ,l\

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TA NO/126U2022 3

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It is further submitted that the

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defendants enjoyed and utilized the amount of the demand drafts without depositing the amount of the demand drafts and the same may be treated^{as over} draft and failed to repay the due amounts.^The applicant requested the defendants to^{repay the} amount, but there was no response^{from the} defendants. Thus, th€^{present g.4fIA is preferred by} the applicant bank to recover^{its dues.}

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On notice by this Tribunal,^{the defendants put} appearance through counsel.^{The defendantnos.1 to 3} have fited written statement^{and evidence. The} defendant no.4 failed to^{file written statement.}

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In their written^{statement the defendantnos.l &} 2 have denied the^{facts mentioned in the OA. It is} submitted that the^{present Origina! Application filed by} the applicant is not^{maintainableon the ground that the} defendant nos.1 & 2^{had never approached the} applicant nor engaged^{in any business activityor} transaction with the^{applicant for obtainingthe drafts in} question amounting to Rs.2.435 crores^{or otherwise} with the applicant.^{The defendant nos.l & 2 had} received the said drafts^{from one Jai PrakashSingh of} M/s. Money Multiplier Seruices,^{who was one of their} clients, in the normal^{course of their business activity.} It is submitted that this^{Hon'bte Tribunal has no} jurisdiction to entertain and/or adjudicate upon the present application. It is submitted that^{the present} proceedings before this Hon'ble Tribunal^{are without} jurisdiction. It is submitted that the^{jurisdiction of this} Hon'ble tribunat is defined^{under Section 2(g) read with} section L7 0f the^{DRT Act. section 17 0f the DRT Act} empowers this Hon'ble^{Trlbgga! to entertain and decide}

TA NO/I26u2022

applications from Banks &^{Financia! InsUtutions for} recovery of debts due to^{Banks and Financial} Institutions. It is submitted that^{the expressiondebt is} defined under section^{2 (g) of the Act whichclearly} empowers the Banks and^{Financial Institutions to} recover only those debts^{due which arise during the} course of any business^{activity undeftaken by the bank} and it is confined^{to those debts which are subsisting} and legally^{recoverableon the date of the application.} It is submitted that^{the present applicationfiled by the} applicant bank^{would reveal that except for a bald} averment there^{is no documenton record to suppoft or} prima facie establish that the^{fact the defendantshad} entered into any^{businessactivity. Thus, the present} application filed^{by the applicant bank hereinis not} mainhinable under^{the provisions of the DRT Act and} is, therefore,^{liable to be dismissedby this Hon'ble} Tribunal with^{exemplary cost. It is submittedthat the} aforesaid application^{filed by the applicant is bad for} mis-joinder of^{parties. The defendant nos. 1 & 2 had no} transaction with^{the applicantbank for obtaining the} said drafts.^{Therefore, the aforesaid applicationfiled by} the applicant^{is liable to be dismissedfor mis-joinder of} pafties. It is fufther submitted^{that the aforesaid} application^{filed by the applicant is bad for non-joinder} of^parties. The^{applicant has not impleadedone Jai} prakash singh, resident of 389, Sunari west Layout, Road No. 8,^{Kagatnagar,Jamshedpur-831011,who is a} proper and necessry^{party to the present application.} The applicant^{has admittedly undertakenbusiness} activity with Shri^{Jai Prakash Singhand/orhis agents or} his servants. It^{is prayed that this HontleTribunalmay} dismiss the Present^O.A.

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g,it

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In the written^{statement the defendant} no.3/HDFC Bank Ltd. has denied^{the facts mentionedin} the OA. It is submitted that^{the applicant bank is guilty} of conceatment of material^{facts form this Hon'ble} Tribunal and has thus approached^{this Hon'bleTribunal} with uncleaned hands.^{The applicantbank has not till} date disclosed that the^{money alleged to have been} kept deposited in the^{accounts with the defendant no.3} has been received by^{them long before the filing of the} present recovery application^{before this Hon'ble} Tribuna!. It is further^{submittedthat as per the} applicant ban( the^{defendant nos. 1 and 2 have} committed the^{forgery in respect of certainbank drafts} of the applicant^{bank and it was allegedthat the} proceeds of these drafts^{were collected by the} defendant^{no. 3 as collectingbankersof defendant nos.} 1 and 2. However^{while fling the Recovery application} before this^{Hon'bleTribunal and till 30th January200L,} the applicant bank^{concealed the very material} information of^{having received the money sought to} have been recovered^{by the applicant bank. It is further} submitted that^{the defendant no.3 wish to inform this} Hon'bte Tribuna!^{that on account of alleged fraud} committed by^{the defendant nos. 1 and 2, of which the} defendant no.3^{has no knowledge, a criminal} Complaint, being^{the GR clse No. 1368 of 1998, was} filed by the applicant^{bank against defendant nos. 1 and} 2 before the chief^{Judicial Magistrate, Jamshedpur. The} said fact has been^{admitted by the Applicant Bank in} the Interim Application^{dated 30th January 2001.That} vide order dated^{22nd August1998, the ChiefJudicial} Magistrate directed^{the police to transfer the amounts} held in the account^{of the defendants nos.l and 2} maintained with^{the defendgnt no.3 to the applicant}

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sJ, ,

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bank. It is^prayed that this Hontle^{Tribunal may the} present recovery proceedings as against defendant no.3 in not maintainable as^{no further relief can be} sought by the applicant^{bank against it and they have} been unnecessarily arrayed^{as defendantsin the} matter.

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The applicant bank^{and defendantnos.1 to 3 have} filed their respective^evidence.

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Heard the Ld.^{counsels of both the partiesand} perused the record.

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The main^{contention of the defendantis that the} defendant no.1 &^{2 has no relationshipwith the} applicant bank^{and the amount claimed by the applicant} bank does not^{come within the category of debt as} defined under^{RDB Act. It is submitted that there is no} account of defendant^{no.l & 2 in the applicantbank and} the defendant^{no.1 & 2 has never taken any loan or} credit facility from^{the applicantbank. It is also} submitted that^{the defendant no.1 & 2 has never} applied for^{issuance of the bank drafts and therefore,} there is no relationship^{of borrower and creditor} between the defendant^{no.l & 2 and the applicant} bank. Therefore,^{the presentOA is not maintainable} and is liable to^{be dismissed. On the otherhand the Ld.} counsel of the^{applicant has submitted that the} defendant no.2^{has requested the applicant bank for} issuance of the^{bank draft and got issued bank draftin} collusion with the^{employeesof the applicant bank. It is} submitted that^{these drafts were fraudulentlyobtained} by defendant no.l^{& 2 in collusion with the bank} officials and on^{the considerationof the account it was} found that the defendants^{have not deposited the} amount of^{getting issued theieigmand drafts and the}

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payment of the same has resulted in overdraft. It is also submitted that the^proceeds of^{the draft are lying} deposited in the account of the^{defendantno.1 & 2} maintained with the defendant^{no.3 i.e. HDFC Bank.} Therefore, the amount may be^{treated as overdraftand} falls within the category of debt^{as defined under the} RDB Act and the applicant^{is entitled to recover the} same from the defendant^{no. 1 & 2. Therefore,the main} contention is that the^{amountof the over draft has not} been deposited by the^{defendant no.l & 2 and the} defendant no.l &^{2 have obtaineddrafts in collusion} with the bank officiats^{and therefore, the amount which} has been utilized by the^{defendant no.1 & 2 comes} within the definition^{of debt and can be recovered under} Section 19 of the^{RDB Act. From perusal of the record} it is clear that defendant^{no.l & 2 have no direct} banking relation^{with the applicantbank and has not} opened any account^{with the applicant bank. It is also} clear that the defendant^{no.l & 2 have never applied} for any loan from the^{applicant bank. Therefore,it has} to be decided on the^{conductof the defendantno. 1 &} 2 as to whether the^{amount deposited in the accounts} of the defendant^{no.1 & 2 comes within the categoryof} debt as defined under^{the RDB Act. The main} contention of the^{Ld. counsel of the defendant no.1 &} 2 is that they have^{not appliedfor the issuance of the} drafts. In the^{writtensubmissionthe Ld. counsel for} defendant no.1 &^{2 has submitted that the defendant} no.l is a share broker^{and a memberof Delhi Stock} Exchange and sub^{broker of defendant no.2 Uttam} Financiat Seruices Ltd.^{who is a member of Mumbai} Stock Exchange.^{In SeptemberL997 Shri Jai Prakash} Singh,^proprietor of^{Money MultiplierSeruices} approached the defendant{o.,^{with the request to} r\

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register him as a client of defendant no.l and submitted required form and also entered^{into an} agreement whereby Mr. Jai Prakash Singh^was registered as a client and also furnished a^bank guarantee to settle his trades and in order to secure amount that would be due arising^{from such} transactions. During the course of the^{business the} client Shri Jai Prakash Singh^{used to send and receive} money from defendant no.1 &^{2 and monies were} normally sent through demand^{drafts. Between} October, L997 to^{March 1998 the defendant no.l & 2} received from and made^{paymentsto their client} including DD amount of^{Rs.2,43,50,000/-towards} setttement of various trades.^{TheseDDs were received} and deposited in^{normal and ordinary course of} business in the clients^{account maintainedby defendant} no.l & 2 as^per norms^{of the SEBI. It is fufther} submitted that the DDs^{were neither defective nor} forged and in the^{normal course of businessthey were} encashed and transactions^{were acknowledged by the} client. It is submitted^{that the bank suspected some} fraud to be committed^{by its own officialsand has} lodged an FIR with the^{police. It is submittedthat the} defendants have never^{approachedthe bank for} issuance of the DDs. It^{is submittedthat during cross} examination, the witnesses^{have admitted the same} fact. It is submitted that^{the applicant bank along with} the^police officials has^{raided the office of the defendant} no.l & 2 and forced them^{to write letters to their} bankers that in case^{the court orderthey would pay the} amount frozen in their^{accountwith the bank.} Therefore, it is submitted^{that the amountdoes not} come within the category^{of debt. In this regard I have} perused the record. From^pelg3l of the^{record filed by}

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the applicant bank it is clear that^{forgedDDs were} issued without depositing the amount^{with the applicant} bank and the same were encashed^{in the account of the} defendant no.l & 2 and therefore,^{it is clear that the} defendant no.1 & 2 are the^{beneficiaryof the amount} received from forged DDs.^{Therefore, it is clear that the} defendant no.t & 2^{got encashed the forgedDDs and} is a beneficiary of the^{fraud. In this regard I have gone} through the definition of^{the debt as defined under} Section 2(g) of the^{RDB Act which is as below:-}

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t@ "debt" mans any^{liability (inclusive of} interest) which is claimd^{as due from any} rerwn 7[or a potd investment vehicle as defind in clause (da) of wtion 2 of the tuurities^Contra# (Regulation) Act, 1956 G2^{ol'1956)J by a bank or a} financial institution or^{by a consrtiumof bank or} financial institutions during^{the coutw of any} business activity undertaken^{by the bank or} the financiat institution^{or the consrtiumunder} any law for the^{time being in forcq in cash or} otherwisg

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whether wurd or un*curd,^{or assignd,or} whether^payable under^a dsre^{or order of any civil} court or any arbitration^{award or otherwis or} under a mortgage and^{subsistingon, and lqally} ruoverable oO the date^{of the applicationl[and} includes any tiabitity^{towards debt ssuritieswhich} remains unpaid in full^{or part after notice of ninety} days serud uryn^{the funower by the debenture} truste or any other^{authorityin whos favour} security interest^is creatd^{for the funefrt of holderc} of debt scurities or;JJ'

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From^perusal of the abovellefinition,^{it is clear that}

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any amount received during the^{course of the} business activity underbken by the bank^{or financial} institutions may be termed as a debt^{as per above} clause. Therefore, there is no^{necessityof privacy of} contract between the applicant^{bank and the defendant} no.1 & 2 for deciding the fact that^{the amountreceived} by the defendant no.l &^{2 falls within the category of} debt. If the amount^{has been receivedduring the course} of the business of the bank,^{the same will be termedas} debt and can be^{recovered under Section 19 of the RDB} Act. Therefore, the contention^{of the defendant no.1 &} 2 that the amount that^{has been receivedby the} defendant no.l &^{2 in ordinary course of business does} not fall within the category^{of the debt is not liable to} be accepted. The^{amount has been creOiteAin the} account of the defendant^{no.l & 2 without depositing} the amount of the^{demanddrafts and the amount has} been utilized by the^{defendantno.1 & 2, therefore,it} shall be deemed to^{be a debt and the applicant bankis} entitled to recover the^{same under Section 19 of the} RDB ACt.

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From^perusal of^{the entire evidence, it is clear that} the defendants have^{failed to prove their case as}

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claimed in the written^{statement. On the other hand,} the applicant bank^{has provedhis case against the} defendants and therefore,^{the defendants are liable to} pay the amount claimed by the applicant^{bank and the} OAffA of the applicant^{bank is liable to be allowed.}

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In the light of the^{above discussions,the presentTA} deserues to be allowed.---{\

TA NO/l26112022

ORDER

I hereby allow this T.A. of the applicant^{bank and} direct the defendant nos. 1 and 2 to^{pay jointly and} severally to the applicant bank within 30^{days from} today, a sum of Rs.2,43,50,000/- along^{with cost,} expenses and interest @15olo from the date of^{filing of} this O.A. which has become T.A till the^{date of} realization

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In case of failure to deposit the above^amount within the stipulated^period, the same shall^be recovered from the sale of^{personal movable and} immovable assets of the defendant nos.t and^2.

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Recovery Certificate be^{issuedforthwith and be} sent to Recovery Officer, Debts^{Recovery Tribunal-Il,} Delhi.

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The registry of this Tribunal is^{herebydirected to} issue free copy of the order and send the^{sameto both} the parties.

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Parties are direct to appear^{before the Ld.} Recovery Officer, DRT-II, Delhi on^{20.07 .2026. Pending} IAs, if ?Ily, stand disposed of.

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File be consigned to records.

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! 9A Date: 20.05.2026 (susHrL KUMAR ruiStOCr) PRESIDING OFFICER DRT-II, DCIhi This^judgement has been signed,^dated and pronounced in open coult.

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Date :20.05.2026

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)). (susHrL KUMAR nnSrOGI) PRESIDING OFFICER DRT-II, Delhi

Indian Bank v. M/S J. U. Mansukhani & Co.

Case brief

What is this about?

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Indian Bank v. M/S J. U. Mansukhani & Co.

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