STATE BANK OF INDIA Vs. RANJAN CHEMICALS LTD

JUDGEMENT

(1.) Leave granted.

(2.) This appeal is filed by the State Bank of India (hereinafter referred to as the bank) challenging the order of the High Court of Patna affirming an order of Subordinate Judge- I, Patna in Suit No. 168 of 2001 refusing to transfer the suit for being tried jointly with O.A. No. 18 of 2002 filed by the bank before the Debt Recovery Tribunal, Patna. The bank sought the transfer on the basis that the suit was in the nature of a counter claim to its claim and arose out of the same cause of action as the one put in suit by the bank before the Tribunal. The bank originally granted a term loan to M/s. Ranjan Chemicals Ltd. (hereinafter referred to as the company) of Rs. 30 lakhs. The bank further extended a cash credit facility to the company. The company failed to meet its obligations under the account. Thereupon the bank issued a notice calling upon the company to repay the amounts due under the loan transactions and to close its accounts. On receipt of that notice, the company filed a suit before the Court of Subordinate Judge -I, of Patna as Suit No. 168 of 2001 claiming that the bank had failed to fulfil its obligations while making available the cash credit facility and has not honoured its commitments in time to release the working capital which was agreed to as part of a rehabilitation process of the company and because of the delay on the part of the bank in fulfilling its obligations, the company had suffered losses leading to the Board of Industrial and Financial Reconstruction, recommending its winding up and in view of the fact that the losses were incurred because of the failure of the bank to fulfil its obligations, the company was entitled to recover a sum of Rs. 1739.15 lacs as damages with interest thereon. The bank in its turn approached the Debt Recovery Tribunal constituted under The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 by way of O.A. No. 18 of 2002 filed under Section 19(1) of that Act.

(3.) In the suit, the bank moved an application praying that the said suit be transferred to the Debt Recovery Tribunal for being tried jointly with O.A. No. 18 of 2002 pending before the Tribunal, since both proceedings arose out of the same cause of action, namely, the grant of a loan and the providing of a cash credit facility by the bank to the company and that the suit by the company was really in the nature of a counter claim or set off, as against the claim of the bank for recovery of a sum of Rs. 833.06 lakhs on the loan account. The prayer of the bank was resisted by the company contending that the cause of action for its suit was different from the cause of action put in action by the bank in the Recovery Tribunal, that the suit for damages was not in the nature of a counter claim or set off, but that it was an independent action that the Civil Court alone had jurisdiction to try and that the transfer prayed for was not liable to be granted. The Trial Court took the view that the suit filed by the company did not come with the purview of Section 19(9) of the Recovery of Debts Act and it could not be treated as a counter claim in O.A. No. 18 of 2002 and hence the prayer was liable to be rejected. On a challenge by the bank of the above said order before the High Court of Patna, that Court held that there was no bar created by the Recovery of Debts Act or any other law, which could prevent a person from filing a suit in the civil Court or making any claim, much less, one for damages which was even otherwise, completely alien to the claim based on the loan made by the bank before the Tribunal. Since the suit was not hit by Section 18 of the Recovery of Debts Act, the jurisdiction of the civil Court was not affected and the Court had full authority to proceed with the suit for damages which was filed earlier and which was unconnected with the loan transaction. The Revision was thus dismissed.... This order is challenged in this appeal.