INDIAN OVERSEAS BANK Vs. REGISTRAR

JUDGEMENT

(1.) PETITIONER is a nationalized Bank to which an amount of Rs. 6. 94 lakhs is due from the 8th respondent in O. A. No. 66 of 2004 filed by the second respondent before the Debt Recovery Tribunal, Ernakulam. According to the petitioner the application filed by it under Section 19 (2) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, hereinafter called the "act", is returned by the Registrar of DRT on the ground that application is not maintainable by virtue of Section 1 (4) of the Act, as the claim amount is less than Rs. 10 lakhs. Another objection raised for declining the application is that the petitioner is already impleaded in O. A. No. 66 of 2004 filed by the second respondent herein as additional 9th respondent. Even though appeal against rejection of application by the Registrar of the DRT is maintainable before the DRT under Rule 5 of the Debts Recovery Tribunal Procedure Rules. 1993, petitioner has approached this Court to avoid delay and to have an authoritative pronouncement on an issue arising in several cases concerning Banks. Having regard to the recurring nature and importance of the issue raised, an authoritative pronouncement is called for. Therefore this W. P. is entertained, overlooking the alternate statutory remedy available by way of appeal to the DRT. I have heard Sri. P. B. Sahasranaman, counsel appearing for the petitioner, Sri. C. Varghese Kuriakose, counsel appearing for the second respondent and Sri. John Varaghese, SCGSC appearing for the first respondent.

(2.) IN order to appreciate the nature of issue raise, Section 19 (1) to (4) have to be gone into and for easy reference the said Section is extracted hereunder: 19. Application to the Tribunal:- (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:-

(3.) AN objection is raised by the second respondent that a second application under Section 19 (2) is not maintainable unless the petitioner established that the security furnished to it is the same as the one furnished to the second respondent which has filed application under Section 19 (1) of the Act. "i am unable to accept this because Section 19 (2) does not make it a condition that the security furnished to second or subsequent Applicant-Bank or Financial Institution which files application under Section 19 (2) of the Act should be the same as furnished to the Bank or financial institution which filed application under Section 19 (1) of the Act. This is because a decree can be against the property mortgaged and against the debtor personally in which case decree can be executed against other assets as well. Therefore the purpose of consolidation of applications filed by banks or financial institutions under Section 19 (2) with the first application by another bank or financial institution is to ensure passing of a common decree by the DRT against same defendant covering preferential claims of all the applicant-Banks and financial Institutions. In other words, DRT is vested with exclusive jurisdiction under Section 19 (1) and (2) to take care of the interests of all the claimant-Banks and Financial Institutions against the same debtor. Therefore in order to file an application under Section 19 (2) there is no requirement that the security offered for the claim amount should be the same as that of the security given for the claim amount covered in the application pending under Section 19 (1) of the Act.