BANK OF INDIA Vs. DEWAN RUBBER INDUSTRIES LTD

JUDGEMENT

(1.) THE present petition is by a trust seeking leave under Clause 12 of the Letters Patent. The amount as claimed are over Rs.10 lakhs. One of the trustees is the Bank of India. The trust is known as Bank of India Mutual Fund. Under Section 18 of 'The Recovery of Debts due to Banks and Financial Institution Act, 1993" hereinafter referred to as "the Debt Recovery Act", on and from the appointed date no Court or other Authority shall have or be entitled to exercise any jurisdiction powers or authority in relation to matters specified in Section 17. Under Section 17, the Tribunal constituted under the Act shall exercise on and from the appointed date the jurisdiction, powers and authority to entertain and decide application from Banks and financial institutions for recovery or debts due to such bank and financial institutions. Section 2(d) defines the bank to mean a banking company, a corresponding new bank, State Bank of India, a subsidiary bank of a Regional Rural Bank. Banking Company has a same meaning assigned to it in clause (c) of Section 5 of the Banking Regulation Act, 1949. Financial Institution is defined by Section 2(h) which means a public financial institution within the meaning of Section 4A of the Companies Act or such other institution as the Central Government may having regard to its business activities and the area of its operation in India by notification, specify, Section 4A of the Companies Act has for the purpose of the Act specified the public financial institution which are (1) ICICI, (2) IFCI, (3) IDBI, (4) Life Insurance Corporation, (5) Unit Trust of India and (6) IDSC. Under Section 5(c) bank company means any company which transacts the business of banking in India. Under Section 5(c) banking means the accepting for the purpose of lending or investment of deposits of money from the public repayable on demand or otherwise and withdrawal by cheque, draft order or otherwise. It is, therefore, clear that to fall within the definition of a banking company, the company must transact the business of banking in India. The Company has been defined as a company defined in Section 3 of the Companies Act,1956 and includes a foreign company. Section 5 of the Indian Companies Act defines the company to mean a company formed and registered under this Act or in execution as defined in Clause 2. There are some other definitions which we are not concerned with.

(2.) IT is, therefore, clear that for the purpose of falling within the jurisdiction of the Debt Recovery Act, the institution/ establishment must be one of those falling within the definition of either a bank or a financial institution. In the instant case, admittedly, the Plaintiffs are a trust. By virtue of the Banking Regulations Act to be covered by the definition of a banking company, such banking company must mean a company. Admittedly, the present Plaintiffs are not a company. Once it is held that the Plaintiffs are not a Company, the provisions of Debt Recovery Act will not apply and consequently this Court will have jurisdiction to hear and decide the suit.