Apex Law Journal
Apex Law Journal
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Editor

Neha Goel, Advocate

Advisory Board

S.C. Khunger, Advocate

Rohit Bansal, Advocate

Varinder Singh Kanwar, Advocate

Hittan Nehra, Advocate

Judgments on Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Thursday, May 27, 2010
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Section 2(g) — The plain reading of the Section suggests that legislature has used a general expression in contra distinction to specific, restricted or limited expression — This obviously means that, the legislature intended to give wider meaning to the provisions — Larger area of jurisdiction was intended to be covered under this provision so as to ensure attainment of the legislative object, i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions.

 
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Section 2 (g) — Expression ‘debt’ — Held, expression ‘debt’ has to be given general and wider meaning, just to illustrate, the word ‘any liability’ as opposed to the word ‘determined liability’ or ‘definite liability’ or ‘any person’ in contrast to ‘from the debtor’.

 
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Section 2(g) — Expression ‘any person’ — Held, the expression ‘any person’ shows that the framers do not wish to restrict the same in its ambit or application — The legislature has not intended to restrict to the relationship of a creditor or debtor alone.

 
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Section 2(g) — Word ‘debt’ — Held,  the word ‘debt’ under Section 2 (g) of the Recovery Act is incapable of being given a restricted or narrow meaning. The legislature has used general terms which must be given appropriate plain and simple meaning.

 
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Section 2(g) — There is no occasion for the Court to restrict the meaning of the word ‘any liability’, ‘any person’ and particularly the words ‘in cash or otherwise’.

 
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Section 2 (g) — Under Section 2 (g), a claim has to be raised by the Bank against any person which is due to Bank on account of/in the course of any business activity undertaken by the Bank.

 
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Section 17 — Jurisdiction — Illustration to demonstrate the case where the Tribunal may not have jurisdiction.Some persons commit a theft in the Bank and take away the money and/or the goods hypothecated to the Bank or the goods in the custody of the Bank. Upon Bank’s lodging a first information report (FIR) to the police, those persons are traced, arrested and tried in accordance with law for theft. In such a case, the Tribunal may not have jurisdiction to entertain and decide an application for recovery of money or value of goods in terms of Section 17 of the Recovery Act.

 
Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 — Sections 2 (g) and 17 — Where a party which had pledged or mortgaged properties in favour of the Bank, transfers such properties in favour of a third party, the third party, held, cannot sell such properties without the written permission of the Bank — If, however, the third party sells such properties without the written permission of the Bank, the Bank can take action under the provisions of the Recovery Act — The claim raised by the Bank against the third party in such a  situation will fall within the ambit and scope of Section 2(g) of the Recovery Act — The third party cannot contend that it was  neither a borrower nor was there any kind of privity of contract between the two. As such, money claimed from them was not a ‘debt’ and, therefore, rigors of the recovery procedure under the provisions of the Recovery Act could not be enforced against them — Further held, tribunal will have jurisdiction to decide the claim.

 
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