KOTAK MAHINDRA BANK LTD Vs. STIEFEL UND

JUDGEMENT

(1.) BEFORE the promulgation of the Recovery of Debts Due to Banks and financial Institutions Act, 1993 (hereinafter referred to as the 'rdb Act'), civil remedy in the form of civil suits in the ordinary civil court was available the banks and financial institutions for recovery of the debts due to them. With the aforesaid enactment, the Parliament created special tribunal, known as Debts Recovery Tribunal (for short, 'drt' ). The banks and financial institutions are now required to institute proceedings against the debtors only before these DRTs created under the RDB Act. It is because of the reason that under Section 18 of the RDB Act, jurisdiction of civil courts to entertain such proceedings has been specifically barred. Provision is also made even in respect of existing cases pending in the civil courts. As per section 31 of the RDB Act, every suit or every proceeding pending before any court immediately before the establishment of a Tribunal under that act was to be transferred to the Tribunal. Thus, the Parliament took care by not only creating bar on the jurisdiction of the civil court or other authority to decide such matters, it also intended transfer of cases pending before any court or authority to the DRTs. Notwithstanding such a position contained in these two specific provisions, viz. Sections 18 and 31 of the RDB act, we are confronted with a situation, solution whereof is not provided by any specific provision in the RDB Act. It is, therefore, by the interpretative process we are supposed to gather the intention of the Legislature to answer the issue posed in this case.

(2.) BEFORE we delineate the issue involved, it is necessary to spell out factual backdrop in which such an issue has arisen.

(3.) STATE Bank of India Home Finance Ltd. (hereinafter referred to as the predecessor of the appellant bank) had granted certain loans to the respondent No. 1 herein. To secure the said loans, the respondent No. 1 mortgaged its property with the appellant's predecessor. When the amount, purportedly due, was not paid by the respondent No. 1 to the predecessor of the appellant, it filed a suit for foreclosure of the mortgage of immovable property and recovery of Rs. 2,53,76,136/- under Order XXXIV Rule 4 of the code of Civil Procedure (for short, 'cpc') on the Original Side of this Court. This suit was filed in the year 1996 and is registered as CS (OS) No. 2062/1996. By that time, the RDB Act had already come into force, which is of the year 1993. However, since the predecessor of the appellant was not a banking company or a financial institution, as described in the said Act, it was supposed to take recourse to civil proceedings before a civil court, which it did. Therefore, the civil suit, as on the date when filed, was properly filed in this Court and this Court had the requisite jurisdiction and competency to entertain and decide the same.