DRT has jurisdiction over mortgage prayers under Section 19 of Recovery of Debts Act

Hindusthan Laminators (P.) Ltd. Versus Central Bank of India

Hindusthan Laminators (P.) Ltd. Versus Central Bank of India - [2000] 27 SCL 571 (CAL) Issues Involved:
1. Jurisdiction of the Debt Recovery Tribunal (DRT) under Section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
2. Interpretation of the term "debt" under Section 2(g) of the Act.
3. Application of the Transfer of Property Act in proceedings before the DRT.
4. Jurisdictional and procedural aspects under Section 19 of the Act.
5. Specific cases addressing the above legal questions.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Debt Recovery Tribunal (DRT) under Section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993:
The primary issue was whether the DRT has the jurisdiction to entertain prayers for mortgage in a substantive petition under Section 19 of the Act. The court held that the DRT, as constituted under Section 3, is conferred with jurisdiction to entertain and decide applications from banks and financial institutions for the recovery of debts. This jurisdiction includes the authority to proceed with any pending proceedings before any court, which are transferred to the Tribunal under Section 31 of the Act. The court concluded that the DRT does have the jurisdiction to entertain matters involving mortgages, as these are considered secured debts, which fall within the scope of the Act.

2. Interpretation of the term "debt" under Section 2(g) of the Act:
The court undertook a detailed analysis of the term "debt" as defined in Section 2(g) of the Act. The definition includes any liability (inclusive of interest) alleged as due from any person by a bank or financial institution, whether secured or unsecured. The court emphasized that the term "debt" encompasses liabilities that are legally recoverable, including those secured by mortgages. The court referenced various legal precedents and interpretations to elucidate that the term "debt" has a wide import and includes mortgage debts.

3. Application of the Transfer of Property Act in proceedings before the DRT:
The court examined the applicability of the Transfer of Property Act, particularly Chapter IV, which deals with mortgages. It was noted that Section 22 of the Recovery of Debts Act specifies that the DRT is not bound by the procedure laid down by the Code of Civil Procedure but should be guided by principles of natural justice. The court concluded that while the DRT follows a summary procedure, it can still adjudicate matters involving mortgages, applying the substantive law of the Transfer of Property Act where necessary.

4. Jurisdictional and procedural aspects under Section 19 of the Act:
The court clarified that proceedings for recovery of debts under Section 19 of the Act are primarily for the recovery of money. However, if the debt is secured by a mortgage, the DRT can entertain the prayer for mortgage within the same proceeding. The court emphasized that the jurisdiction of the DRT under Section 19 is distinct from that of civil courts under Section 16 of the Code of Civil Procedure, focusing instead on the location of the defendant and the cause of action.

5. Specific cases addressing the above legal questions:
The judgment addressed multiple petitions under Article 227 of the Constitution, each challenging the jurisdiction of the DRT on similar grounds. In each case, the court upheld the DRT's jurisdiction to entertain prayers for mortgage within the context of debt recovery proceedings. The court also provided specific directions and modifications to the orders of the DRT in individual cases, ensuring that the proceedings align with the principles established in the judgment.

Conclusion:
The court concluded that the DRT has the jurisdiction to entertain prayers for mortgage in substantive petitions under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. This includes the authority to adjudicate and decide on matters involving secured debts, applying the relevant provisions of the Transfer of Property Act where necessary. The judgment provided a comprehensive interpretation of the term "debt" and clarified the procedural aspects under the Act, ensuring that the DRT can effectively address the recovery of debts, including those secured by mortgages.