Vijaya Bank v. A.n. Tewari

Jaspal Singh, J.

1. Vijaya Bank, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 has instituted this suit against Shri A.N. Tiwari, Advocate for the recovery of Rs. 10,21,960. In response to the suit Shri Tiwari has moved an application to the effect that since the amount claimed is not on account of or as a result of any business activity undertaken by the plaintiff-Bank as stipulated under Section 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter called the Act), therefore, the Tribunal constituted under the Act would have no jurisdiction to try the suit and that consequently, the suit be not transferred to it.

2. The question, as would be borne out from the preceding paragraph, revolves around the meaning of the term debt as defined in Section 2(g) of the Act. However, before I proceed to examine that definition let me first refer to the essentials of plaintiffs claim.

3. It appears that the defendant, who is a practicing Advocate of this Court, was on the panel of lawyers of the plaintiff-Bank and in that capacity he had been entrusted from time to time with some of its legal cases. It so happened that some disputes arose between M/s. Hindco Rotractron Pvt. Ltd. and M/s. Ramkrishna Temple Trust in respect of premises at P-6/90, Connaught Circus, New Delhi. The plaintiff-Bank is a tenant in respect of the said premises and has its Divisional Office there. In view of the claims and counter claims set up by the rival camps with regard to the said premises, the plaintiff-bank thought it prudent to deposit rent in Court from May, 1987 and engaged the services of the defendant for the purpose and a cheque for Rs. 4,13,483.66 was issued in his name. The grievance of the plaintiff-bank is that out of the said amount, the defendant has furnished a receipt only for Rs. 1,73,483.66 and that the balance amount of Rs. 2,40,000 has not been deposited. This, however, is still not the end of the story. The plaintiff-Bank alleges that it had also paid the defendant a sum of Rs. 61,800 for depositing the same in Court towards arrears of rent of Premises No. 52/38 Old Rajinder Nagar, New Delhi which was in occupation of its Senior Manager Shri Suresh Hegde and that the said amount had also not been deposited. Hence this suit for the recovery of Rs. 2,40,000 plus Rs. 61,680 (totalling Rs. 3,01,680towards principal and Rs. 7,20,280 towards interest).

4. Is this a suit for the recovery of debt as defined in Section 2(g) of the Act

5. The term debt is defined in Section 2(g) of the Act as under:

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 of any business activity undertaken by the bank or the financial institutions 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.

6. What does the definition of debt show It shows that debt means any liability in cash or otherwise whether secured or unsecured or whether payable under a decree or order of any Civil Court or otherwise and includes interest. Such liability must be subsisting and legally recoverable on the date of the application. It is further essential that the liability which is alleged as due by a bank or a financial institution etc. must have been during the course of any business activity undertaken by the said bank etc. and that the business activity so undertaken must have been under any law for the time being in force.

7. As already noticed, in the application moved by the defendant his challenge is confined only to the point that the so-called liability is not on account of or as a result of any business activity of the plaintiff-Bank. Is it so

8. The word business is a word of large signification, and would include any trade, commerce or any adventure or concern in the nature of trade or commerce. It is a word which has a more extensive meaning than trade. All trade is business but all business is not trade. However, when Section 2(g) uses the expression business it would only mean the business of Banking in India. But then what is more to be noticed is that Section 2(g) does not use the word business alone. It talks of business activity undertaken under any law for the time being in force. What is the meaning of activity in this context Before I venture to answer it, let me emphasise that when the provision talks of activity, it means much more than object. True, it may not itself be an object of the Bank to take premises on rent either for its own office or for the residence of its officers but then banking business cannot be run without an office and its staff cannot perform its duties efficiently without residential accommodation. The provision for such accommodation would thus be a necessary part of business activity of the Bank. And, once this position is accepted, the deposit of rents with regard to such premises would also necessarily form part of business activity. Since the amount claimed had been allegedly handed over to the defendant for deposit towards such rent, the entire transaction would fall within the ambit of the words business activity.

The result is that the application moved by the defendant is dismissed.