TaxTMI 
TaxTMI 
2006 (10) TMI 227
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....a term loan to M/s. Ranjan Chemicals Ltd. (hereinafter referred to as the 'company') of Rs. 30 lakhs. The bank further extended a cash credit facility to the company. The company failed to meet its obligations under the account. Thereupon the bank issued a notice calling upon the company to repay the amounts due under the loan transactions and to close its accounts. On receipt of that notice, the company filed a suit before the Court of Subordinate Judge-I, of Patna as suit No. 168 of 2001 claiming that the bank had failed to fulfil its obligations while making available the cash credit facility and has not honoured its commitments in time to release the working capital which was agreed to as part of a rehabilitation process of the company and because of the delay on the part of the bank in fulfilling its obligations, the company had suffered losses leading to the Board of Industrial and Financial Reconstruction, recommending its winding-up and in view of the fact that the losses were incurred because of the failure of the bank to fulfil its obligations, the company was entitled to recover a sum of Rs. 1739.15 lakhs as damages with interest thereon. The bank in its turn approached ....
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....n the nature of the respective claims arising out of the loan transaction, it was just and proper to order a joint trial of the two causes and whether there was anything in the Recovery of Debts Act which prevented the Debt Recovery Tribunal from entertaining the claim made by the plaintiff in the suit. A question of joint trial arises when the rival parties file independent actions but based on the same cause of action; for enforcement of rights or obligations springing out of that cause of action. Here, the bank had approached the Recovery Tribunal for recovery of amounts paid on the basis of the loan transaction and the cash credit facility extended to the company. The company had gone to the civil court claiming that it had suffered damages because the bank had failed to fulfil its obligations based on the cash credit facilities and the rehabilitation package extended to it. The question, therefore, was whether it could be said that both claims arose out of the same cause of action giving rise to different rights of action. The elements of a cause of action are: first, the breach of duty owing by one person to another and; second, the damage resulting to the other from the brea....
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.... package as a counter-claim in the application filed by the Bank before the Debt Recovery Tribunal. 7. Learned Senior Counsel for the company, relied on the decision in Indian Bank v. ABS Marine Products (P.) Ltd. [2006] 5 SCC 72 in support of the preposition that the Civil Court continued to have jurisdiction to try the suit filed by the company and it could not be said that the subject-matter of the bank's claim before the Recovery Tribunal and the suit filed by the company against the bank are inextricably connected, in that the decision in one, would affect the decision in the other. He also urged that unless both the parties agreed for the independent suit being considered as a counter-claim in the bank's application before the Tribunal, the suit could not be transferred to the Tribunal. Counsel particularly relied upon the discussion in paragraph 9 of the judgment suggesting that when the claim of the bank was for an ascertained sum due from the borrower and the claim of the borrower was for damages, it could not be said that there was any connection between the subject-matter of the two actions and that a decision in one would depend on the other. Nor could there be any a....
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.... the company. The decree to the one or the other would depend upon an ascertainment of the rights and obligations arising out of the loan transaction and the state of the loan account. We are therefore of the view that the two claims are inextricably interlinked. The consequences arising out of the respective claims are referable to the cause of action arising out of the vary transactions between the bank and the company. We have already indicated that the claim of the company is in essence a claim for set off and/or a counter-claim, which could be tried by the Debt Recovery Tribunal in view of the amended section 19 of the Act. 10. A joint trial can be ordered by the court if it appears to it that some common question of law or fact arises in both proceedings or that the right to relief claimed in them are in respect of or arise out of the same transaction or series of transactions or that for some other reason it is desirable to make an order for joint trial. Where the plaintiff in one action is the same person as the defendant in another action, if one action can be ordered to stand as a counter-claim in the consolidated action, a joint trial can be ordered. An order for join....