Exclusive Tribunal jurisdiction governs banking debt claims, while severable fraud allegations against borrower and employees may proceed in suit.

Banking disputes linked to disputed letters of credit and rival claims between banks were treated as falling within the exclusive jurisdiction of the Debts Recovery Tribunal, because liabilities arising out of banking business were covered broadly as "debt" and could be pursued by counterclaim there. The High Court therefore could not restrain or decide that part of the controversy, and the interim stay of Tribunal proceedings was vacated. By contrast, claims against the borrower and the bank's own employees, based on alleged fraud and collusion in internal transactions, were treated as severable and left open for adjudication in the suit, with maintainability and jurisdiction to be decided there.

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Issues: (i) Whether the claim relating to the disputed letters of credit and the rival claims between banks fell within the exclusive jurisdiction of the Debts Recovery Tribunal and outside the jurisdiction of the High Court; (ii) Whether the suit, so far as it related to the borrower and the bank's own employees, could proceed in the High Court notwithstanding the Tribunal proceedings.

Issue (i): Whether the claim relating to the disputed letters of credit and the rival claims between banks fell within the exclusive jurisdiction of the Debts Recovery Tribunal and outside the jurisdiction of the High Court.

Analysis: The reliefs against the negotiating banks were founded on the same transactions as the proceedings already initiated before the Tribunal. The expression "debt" under the special statute was treated broadly enough to include liabilities arising out of banking business, including a disputed or fraudulent debt, and the Act conferred exclusive jurisdiction on the Tribunal while barring other courts. The claim against the negotiating banks was held to be capable of being raised as a counterclaim and to have a direct nexus with the Tribunal proceedings. The High Court therefore could not grant interim restraint against those proceedings or adjudicate that part of the controversy.

Conclusion: The High Court had no jurisdiction over the third part of the suit against respondents 53 to 57, and the interim stay of the Tribunal proceedings was vacated.

Issue (ii): Whether the suit, so far as it related to the borrower and the bank's own employees, could proceed in the High Court notwithstanding the Tribunal proceedings.

Analysis: The claims against the borrower and the bank's own employees were based on alleged fraud and collusion in the internal banking transactions. Those claims were treated as distinct from the claims against the negotiating banks and were said not to fall neatly within the special statutory recovery forum. The Court held that this part of the matter could not be finally determined at the interlocutory stage and would require adjudication in the suit as an issue on maintainability and jurisdiction.

Conclusion: The suit was permitted to continue in the High Court to the limited extent of the first and second parts, subject to the jurisdictional issue being decided in the suit.

Final Conclusion: The application succeeded only in part: reliefs concerning the negotiating banks were refused and the Tribunal proceedings were allowed to continue, while the claims concerning the borrower and the bank's employees were left open for determination in the suit.

Ratio Decidendi: Where a banking dispute constitutes a liability arising out of banking business and is legally recoverable, the special recovery tribunal has exclusive jurisdiction and the civil court cannot restrain or decide that part of the dispute, even if fraud is alleged; however, severable claims based on distinct internal fraud allegations may remain for adjudication in the civil suit.

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