Bank of India vs Vijay Ramniklal Kapadia and Others

K.R. Vyas, J.—This appeal from order under Order 43, Rule 1(a) of the CPC is filed by the appellant-Bank of India challenging the order

passed below application, Ex. 12, in Special Civil Suit No. 242 of 1995 by the learned 3rd Joint Civil Judge (S.D.), Surat dated 8-1-1996

directing the appellant-Bank to take the plaint to submit to the Debt Recovery Tribunal on or before 19-1-1996.

The appellant instituted the said suit for recovery of Rs. 13,86,000/- from the respondents (original defendants). It is alleged that respondent

No. 1, who was the employee in the main branch of the appellant-Bank, committed fraud, in concert with respondents Nos. 2 and 3 (original

defendants Nos. 2 and 3), which resulted in the aforesaid loss. The suit was, therefore, filed to recover the ill-gotten gains from the respondents,

together with running interest and costs of the suit.

It appears that the suit was transferred to the Debt Recovery Tribunal at Ahmedabad purportedly u/s 31(2) of the Recovery of Debts Due to

Banks and Financial Institutions Act, 1993 (hereinafter referred to as ""the said Act""). It further appears that the Tribunal in turn returned the plaint

to the Court of Civil Judge (S.D.) Surat, inter alia, observing that the plaint of the suit seeking recovery of the debt could not be accepted by any

Civil Court. When the plaint, was returned to the Civil Court at Surat, it appears that the appellant submitted an application, Ex. 12, contending,

inter alia, that the suit is to be entertained by the Civil Court and not by the Debt Recovery Tribunal as the amount sought to be recovered is not

debt"" as, defined in S. 2(g) of the said Act. The said application, Ex.12, was rejected by the learned trial Judge against which the present appeal is

filed.

Section 2(g) of the said Act which defines ""debt"" is relevant for the purposes of this appeal. It reads as under:

In this Act, unless the context otherwise requires,--

(g) ''debt'' means any liability (inclusive of interest) which is alleged as due from any person by a bank or a financial institution or by a consortium of

banks or financial institutions during the course pf any business, activity undertaken by the bank or the financial institution or the consortium under

any law for the time being in force, in cash or otherwise, whether secured or unsecured, or whether payable under a decree or order of any civil

Court or otherwise and subsisting on and legally recoverable on the date of the application;

On the plain reading of the above definition, it is clear that any liability which is alleged and due from any person by a bank during the course of

any business activity undertaken by it in cash or otherwise, whether secured or unsecured, or whether payable under a decree or an order of any

civil Court or otherwise, and subsisting on and legally recoverable on the date of the application is ""debt"". Thus any liability due from any person by

a bank during the course of any business activity undertaken by the bank will constitute a ""debt"". Therefore, a fraud committed by an employee of

the Bank cannot or should not be construed a ""debt"". In the instant case, it is the allegation of the appellant bank in the plaint that respondent No. 1

being an employee of the appellant-Bank has committed fraud with the Bank to the extent of Rs. 13,86,000/- and the suit is filed to recover the

said amount. By no stretch of imagination the said misappropriation of the amount of the Bank by its employee can be construed as a ""debt"", the

learned trial Judge, in the instant case, unfortunately has referred to and reproduced only a limited part of the definition of the word ""debt"" and has

committed an error in holding that the debt is a liability which is alleged as due from any person by a Bank. The later part of the definition of the

word ""debt"" is clear which states that it is the liability due from any person during the course of any business activity undertaken by the bank which

can be said to be a ""debt"", meaning thereby that any transaction between a Bank and its customer with respect to the business activity undertaken

by the Bank, i.e. granting of loan etc. Misappropriation of the amount of the Bank by its employee and recovery thereof by way of suit can never

be construed as a ""debt"". In view of this, the appeal is required to be allowed.

In the result, this appeal is allowed. The impugned order dated 8th January 1996 passed by the 3rd Joint Civil Judge (S.D.), Surat below

application, Ex. 12, in Special Civil Suit No. 242/95 is set aside. The trial Court is directed to hear and decide the suit on merits and in accordance

with law as expeditiously as possible and preferably within one year from the date of receipt of the writ of this Court. No order as to costs. Writ to

be issued forthwith.

In view of the above, no order on CA No. 1138/96 and it stands disposed of accordingly.