Same banking transaction claims may be treated as counter-claim and set-off, supporting transfer for joint trial.

Claims arising from the same loan and cash credit transaction may be treated as a set-off or counter-claim when the borrower's damages claim and the bank's recovery claim stem from reciprocal obligations under the same relationship. The statutory scheme under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, read with the broad approach to counter-claims under the Code of Civil Procedure, allows the Tribunal to entertain the borrower's cross-claim even if framed as an independent suit. Where both proceedings involve common facts, common accounts, and overlapping evidence, transfer for joint trial is appropriate to avoid duplication and enable effective adjudication.

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Issues: (i) whether the company's suit for damages and the bank's recovery application arose out of the same transaction so as to be treated as a set-off or counter-claim under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993; (ii) whether the civil suit ought to be transferred to the Debt Recovery Tribunal for a joint trial with the bank's application.

Issue (i): whether the company's suit for damages and the bank's recovery application arose out of the same transaction so as to be treated as a set-off or counter-claim under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis: The claims of both sides sprang from the same loan transaction and cash credit facility, and from the alleged breach of reciprocal obligations arising out of that relationship. The statutory scheme under Section 19, read with the width of counter-claim and set-off recognised in the Code of Civil Procedure, permitted the Tribunal to entertain a cross-claim of the borrower even where it was framed as an independent suit for damages. The claim was therefore not alien to the recovery proceedings but was capable of being treated as a counter-claim and/or set-off.

Conclusion: Yes. The company's claim was capable of being treated as a set-off and counter-claim within the meaning of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Issue (ii): whether the civil suit ought to be transferred to the Debt Recovery Tribunal for a joint trial with the bank's application.

Analysis: A joint trial is warranted where the proceedings arise from the same transaction, involve common questions of fact and law, and are likely to require substantial overlapping evidence. Here, the determination of the bank's claim and the company's damages claim would depend upon the same accounts, the same facility, and the same set of operative facts. Trying the matters together would avoid duplication of evidence, save time and expense, and enable an effective adjudication by the Tribunal, which had jurisdiction over the company's cross-claim.

Conclusion: Yes. The suit was liable to be transferred to the Debt Recovery Tribunal for being treated as a cross-suit and tried jointly with the bank's application.

Final Conclusion: The refusal of transfer was erroneous, and the suit had to be brought before the Tribunal so that both disputes arising from the same banking transaction could be adjudicated together.

Ratio Decidendi: Where rival claims arise from the same transaction and the Tribunal has jurisdiction to entertain the borrower's cross-claim as a set-off or counter-claim, the court may order transfer and joint trial to avoid multiplicity of proceedings and overlapping evidence.

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