TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 54
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....223/- against the petitioner and respondent nos.2 to 12. The suit is pertaining to recovery of amount advanced in two separate loan accounts. The outstanding amount in two loan accounts as per respondent no.1/plaintiff was Rs. 2,32,28,013/- and Rs. 82,62,210/- as on the date of filing of suit. After commencement of Commercial Courts Act, 2015, the said suit was transferred to Commercial Court and was registered as Commercial Suit No.12/2019. Pending the said suit, HDFC Limited came to be amalgamated with HDFC Bank Limited, vide order dated 17th March, 2023 passed by the National Company Law Tribunal, Mumbai (NCLT, Mumbai) in Company Scheme Petition No.240/2022, granting approval to the scheme of amalgamation. HDFC Bank Limited is a Banking Company under the Banking Regulation Act, 1949. In view of amalgamation of HDFC Limited with HDFC Bank Limited, all the assets and liabilities of HDFC Limited stood vested with HDFC Bank Limited. Under the scheme, HDFC Bank Limited is also entitled to continue to prosecute all litigations initiated by HDFC Limited prior to its amalgamation with HDFC Bank Limited. Accordingly, name of HDFC Bank Limited is impleaded as plaintiff in the suit and the....
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.... proceedings pending before the Court can be ordered to be transferred to DRT, which would have otherwise been within the jurisdiction of DRT, if DRT was established on the date on which the suit or proceeding was filed. In other words, the contention of Mr. Shah is that in case where the cause of action in a suit is such that if DRT had been in existence on the date of filing of suit, it would have the jurisdiction over the subject matter of the suit, only then such suits can be ordered to be transferred to DRT after establishment of DRT. Mr. Shah contends that a suit which as on the date of filing would not lie before the DRT, cannot be ordered to be transferred to DRT only because it falls within the jurisdiction of DRT because of certain subsequent development. Mr. Shah contends that since the original plaintiff/HDFC Limited was not a Bank or a Financial Institution, the Civil Suit filed by it was maintainable before the Civil Court and DRT did not have jurisdiction to entertain the said suit. He, therefore, contends that such a suit cannot be ordered to be transferred to DRT in view of Section 31 of the RDB Act. This contention is raised without prejudice to the first contenti....
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....s intention of the Legislature that suits for recovery of debt by Banks should be decided by DRT alone, and therefore, Sections 17 and 18 will override Section 31 of the RDB Act. He contends that Section 31 is included in the Act only to ensure that even suits for recovery filed by the Banks before the appointed day should be transferred to DRT. He contends that Section 31 reinforces the mandate of Section 18 that no Court shall have jurisdiction to try and decide proceeding for recovery of debts by a Bank. 8. Mr. Adwant, learned Advocate for respondent no.1 has placed reliance on the following judgments :- (i) Kotak Mahindra Bank Limited Vs. Stiefel Und Schuh India Ltd., and others, 2009 SCC OnLine Del 32. (ii) Vivek Narayan Sharma Vs. Union of India, 2023(3) SCC 1 (iii) Harshad Chiman Lal Modi Vs. DLF Universal Ltd., and another, (2005) 7 SCC 791 (iv) Saraswati Industrial Syndicate Ltd., Vs. Commissioner of Income Tax, 1990 (Supp) SCC 675 (v) Allahabad Bank Vs. Canara Bank and another, (2000) 4 SCC 406 (vi) United Bank of India, Calcutta Vs. Abhijit Tea Co. Pvt. Ltd., and others, (2000) 7 SCC 357 (vii) Indiabulls H....
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....ld that although, the situation was not squarely covered by Section 31 yet having regard to the overall scheme of the Act, the suit was required to be transferred to DRT after assignment of the suit claim to a Bank. It was held that after the assignment, the suit filed before Delhi High Court on its Original Side was not maintainable since the High Court lost jurisdiction to try the same in view of the assignment. The present case stands on a better footing, in as much as, here the debt is not assigned in favour of a Bank but the original plaintiff stands amalgamated with the Bank. 11. At this juncture, it will be appropriate to refer to the judgment of the Hon'ble Supreme Court in United Bank of India, Calcutta (supra). In the said case, the plaintiff bank had filed a suit for recovery of amount before commencement of RDB Act, 1993. The matter went in Appeal and was remanded back for fresh adjudication. The remand was after the RDB Act, 1993 came into force. In this backdrop of facts when the question of transferring the suit to DRT arose, the defendant filed an application that suit should be retained on the file of High Court exercising its Original Jurisdiction and shoul....
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...." means any liability ...... which is claimed as due from any person ...... by a bank ..... during the course of any business activity undertaken by the bank ...... whether secured or unsecured or assigned " 15. The contention of Mr. Shah is that unless the amount is advanced by a Bank as a loan, the amount due will not partake the character of debt, as defined under Section 2(g) of the Act. In this regard, it needs to be seen that the provision contemplates that the amount must be claimed as due by a Bank and this amount must be claimed as due during the course of any business activity undertaken by the Bank. The provision does not contemplate that the Bank must claim amount due which is advanced by it during the course of any business. Recovery of amount claimed as due during the course of banking business will also meet the parameters of definition of the term debt, as defined under Section 2(g). If the contention of Mr. Shah is to be accepted, the word "advanced" as will have to be added in the provision and the words, "claimed as due" shall have to be read as "advanced and claimed as due". A plain grammatical meaning of the definition indicates that what is contemplated is ....
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....in jurisdiction of DRT. 19. Section 17 provides that on and from the appointed day, DRT shall have jurisdiction, power and authority to entertain and decide applications from Banks and Financial Institutions for recovery of debt. As per Section 2(c), the term "appointed day" means the date on which DRT is established. As per Section 2(b), the term "application" means an application made for recovery of debt by a Bank before the Tribunal. What is relevant to be noted is that the jurisdiction is conferred by using two words, "entertain and decide". Section 18 creates an express bar on authority of any Court to exercise jurisdiction, power or authority in relation to any matter specified under Section 17. It needs to be mentioned that Section 18 is a substantive provision, which bars jurisdiction of all the Courts to deal with matters which can be adjudicated by DRT. On merger of original plaintiff(HDFC Limited) with respondent no.1 (HDFC Bank Limited), respondent no.1 - Bank is entitled to claim the outstanding amount as due and proceed with the matter for recovery of the said amount. This act of recovery will be in the course of business activity of the Bank. The proceeding, ther....
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....tertain and decide the applications by the banks for recovery of debt due to them. As stated above, Section 18 bars jurisdiction of any Court or Authority to deal with a matter, which falls within the jurisdiction of DRT under Section 17. Bar under Section 18 as can be seen from reading of the provision operates against exercising any jurisdiction. The bar does not operate only at the stage of institution of the suit. Section 18 clearly implies that the bar is applicable to pending suits as well. This interpretation is further reaffirmed by Section 31 of the Act. 23. Section 31 is included to ensure that even pending suits should go before DRT. Contingency of amalgamation of a non-banking entity with a bank though is not considered while enacting the said provision. However, having regard to the mandate of Section 18, in the considered opinion of this Court, it will be appropriate to resort to purposive interpretation while dealing with Section 31. Sections 17 and 18 are substantive provisions and Section 31 is a provision dealing with procedure. In view of the above, in the considered opinion of this Court, rather than literal interpretation purposive interpretation should be a....
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....er. In this regard, it must be stated that the present case is not one of assignment but of amalgamation. The erstwhile plaintiff has not assigned the rights in the suit in favour of the present plaintiff/petitioner. The present case is a case of amalgamation where the erstwhile plaintiff has completely merged with the present plaintiff (HDFC Bank Limited). In this regard, it will be profitable to refer to the judgment of the Hon'ble Supreme Court in the matter of Saraswati Industrial Syndicate Ltd. (supra), wherein it is held as under:- "5. ...... Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity." 6. ..... The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there can be any doubt that when two companies amalgamate and merge into one the transferor Company loses its entity as it ceases to have its business. However, their respective rights or liabiliti....