Broad meaning of debt under bank recovery law sustains Tribunal jurisdiction, but liability stays limited to goods wrongfully sold.

The expression "debt" under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was treated as broad enough to cover a bank's claim against a non-borrower who, with knowledge of the bank's hypothecation, wrongfully sold the secured goods. The Tribunal's jurisdiction was therefore upheld for such a claim. Liability was not treated as extending to the entire decretal claim: it was confined to the value of the hypothecated stock and machinery actually proved to have been sold, together with interest. The decision distinguishes jurisdiction over a wrongful-dealing claim from liability as if the non-borrower were the original debtor.

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Issues: (i) Whether a claim by a bank against a non-borrower who, with knowledge, sold hypothecated goods could fall within the expression "debt" and within the jurisdiction of the Debt Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. (ii) Whether the appellant's liability was limited to the hypothecated stock and machinery actually dealt with by it, or whether the entire decretal claim could be sustained against it.

Issue (i): Whether a claim by a bank against a non-borrower who, with knowledge, sold hypothecated goods could fall within the expression "debt" and within the jurisdiction of the Debt Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis: The expression "debt" was held to be of wide import, covering any liability claimed as due from any person during the course of business activity, whether secured or unsecured and whether payable under a decree or otherwise. The statutory language was treated as intentionally broad, and the object of the enactment was to ensure expeditious recovery and preservation of bank securities. Since the appellant had knowledge that the goods were hypothecated and still dealt with them without the bank's consent, the claim against it was not outside the Tribunal's jurisdiction merely because it was not the original borrower.

Conclusion: The Tribunal had jurisdiction to entertain the bank's claim against the appellant to the extent of the hypothecated goods wrongfully dealt with by it.

Issue (ii): Whether the appellant's liability was limited to the hypothecated stock and machinery actually dealt with by it, or whether the entire decretal claim could be sustained against it.

Analysis: The record showed that the appellant had taken possession with knowledge of the bank's charge and had sold the hypothecated assets, but the plaint and evidence did not establish any basis to fasten the whole claimed debt upon it as if it were a borrower. The Court therefore confined liability to the value of the hypothecated stock and machinery proved to have been sold, with interest, and declined to sustain the full money claim against the appellant.

Conclusion: The appellant was liable only for the value of the hypothecated goods sold by it, with interest, and not for the entire suit claim.

Final Conclusion: The appeal succeeded only in part by reducing the appellant's liability to the value of the hypothecated assets proved to have been sold, while affirming the Tribunal's jurisdiction over that limited claim.

Ratio Decidendi: Under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the expression "debt" bears a broad meaning and extends to claims against any person who, with knowledge of the bank's security, wrongfully deals with hypothecated property; however, liability must be confined to the extent of the proved wrongful dealing.

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