Jawahar Lal Gupta, C. J. (Oral)

The Recovery of Debts of Banks and Financial Institutions Act, 1993 was promulgated by the Parliament to provide for the "expeditious adjudication and recovery

of debts due to banks...." The present case is a classic example of the manner in which a litigant can delay the proceedings and use the process of law to defeat its purpose. A few facts as relevant for the decision of this case may be briefly noticed.

2. On June 20, 2000, the Federal Bank Limited filed a petition under S.19 of the for the recovery of an amount of Rs. 10,28,56,710.39 from the petitioner. An objection with regard to the maintainability of the petition was raised. It was alleged that the financial arrangements had been made with a Consortium of Banks. The 1st respondent was one of the three Banks, which had provided financial facilities. Thus,

the petition under S.19 was not competent. The objection was considered by the Tribunal. Vide Order dated February 27,2002, a copy of which has been produced as Ext. P-5, the objection was overruled. The petitioner challenged the order by filing a petition under Art.226 of the Constitution viz. O.P. No. 2848/2002. However, it was dismissed as not pressed. A copy of the Order dated March 20, 2002 passed by a learned Single Judge of this Court has been produced as Ext. P-8. Thereafter, the petitioner filed an appeal before the Debt Recovery Appellate Tribunal at Chennai. The Order dated February 27,2002 was challenged. The Appellate Tribunal examined the matter and found that the objection had been rightly overruled. Thus, the appeal was dismissed. A copy of the Order dated October 25, 2002 passed by the Appellate Tribunal has been produced as Ext. P-17. Aggrieved by the orders at Exts. P-5 and P- 17, the petitioner has approached this Court. It alleges that the petition filed by the 1st respondent viz. the Federal Bank Limited was incompetent. Thus, the two orders are vitiated. It prays that both the orders be quashed.

3. The first respondent has filed a counter-affidavit. The averments in the petition have been controverted. It has been inter alia pointed out that the petition is competent. The Bank is not precluded from making a claim for recovery of the money advanced to the borrower. The instructions issued by the Reserve Bank of India are directory. In the application filed by the respondent-Bank, the petitioner-Company had made a counter claim. The loan transactions and the documents executed by the petitioner in favour of the Bank were not denied. Thus, the respondent prays that the writ petition be dismissed with costs. The petitioner has filed a reply affidavit reiterating its claim.

4. Learned Counsel for the parties have been heard. Mr. V. Ramachandran, learned Counsel for the petitioner, has contended that only the Consortium of Banks could have filed a petition for recovery. The individual Bank, viz. the 1st respondent, was not competent to file a petition by itself. The claim as made on behalf of the petitioner has been controverted by Mr. George Varghese, learned Counsel for the 1st respondent.

5. The short question that arises for consideration is-Was the petition filed by the respondent-Bank not in conformity with S.19 of the

6. A few provisions of the, which are relevant for the purposes of this case, may be noticed. S.2 embodies the definitions. Clauses (d) and (g) are relevant. These provide as under:

"2(d) bank means- .

(i) a banking company;

(ii) a corresponding new bank;

(iii) State Bank of India;

(iv) a subsidiary bank; or

(v) a Regional Rural Bank.

(g) debt means any liability (inclusive of interest) which is claimed 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 institution or the Consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a Decree or Order of any civil court or any Arbitration Award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application."

S.19 provides for the submission of application to the Tribunal. It inter alia provides that "where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction any of the defendants at the time of making the application, actually and voluntarily resides or carries on business or the cause of action, wholly or in part arises". Clause (2) of S.19 permits a Bank or a financial institution to join another Bank or institution in proceedings before the Tribunal. Under clause (3), the application has to be submitted in the prescribed pro forma. Clause (4) onwards embody the procedure, which has to be followed by the Tribunal.

7. A perusal of the above provision shows that a petition can be filed by a bank or any financial institution as defined under the.. The petition can be for the recovery of a debt, which means the amount inclusive of interest claimed "as due from any person by a bank or a financial institution or by a Consortium of Banks or financial institutions " Thus, it is clear that a claim for the recovery of money can be made by a bank or by a Consortium of Banks. The Act does not debar a single bank from amongst the members of a Consortium from making the claim. What is the position in the present case

8. A perusal of the order passed by the Tribunal shows that on examination of the matter, the Tribunal had found that the petitioner-Company was "on good terms with the second respondent and third respondent and there is no dispute between them" The 2nd and 3rd respondents were the South Indian B.ank Limited and the Indian Bank. These two Banks had no dispute with the present petitioner. Thus, they had not joined the Federal Bank in filing a petition under S. 19. Still further, it was also found that the Federal Bank had declared in the year 1999 that its account with the petitioner had become a non-performing asset. The 1st respondent was found to be "the lead bank". There was no transaction between the petitioner and the first respondent after 1999. This being the factual position, the bank was entitled to approach the Tribunal for the recovery of the amount due to it. On a consideration of the matter, the Tribunal had recorded a positive finding that the bank was entitled to file the petition. The objection raised by the present petitioner was consequently rejected.

9. Learned Counsel for the petitioner has not been able to refer to any material on the record, which may indicate that the finding is wrong or untenable in law. In fact, nothing has been pointed out from the statute, which may even remotely suggest that a member of the consortium is precluded from maintaining a claim for recovery despite the fact that the borrower has committed default in payment. Mr. Ramachandran has referred to the circular of 1994, an extract from which has been produced as Ext. P-1, to point out that the norms for lending under consortium arrangement have been laid down. It may be so. The norms for lending cannot preclude a lender for making a claim for recovery. Still further, it has been found by the Tribunal as a fact that the Reserve Bank of India had withdrawn the requirements of formation of Consortium in April 1997. Nothing has been pointed out from the record to show that the observations of the Appellate Tribunal in Paragraph 7 of the order are not factually correct. Thus, the contention that the financial facilities having been provided by a Consortium, an individual, bank is precluded from approaching the Tribunal cannot be sustained. In fact, it deserves mention that even though a borrower may be under debt to a Consortium of Banks, S.19 still entitles an individual bank to approach the tribunal through a petition for recovery. S.2(g) clearly contemplates a Consortium of Banks or financial institutions. However, S.19 clearly and categorically preserves the right of an individual bank or a number of banks to file a petition for the recover). In fact, even when one of the banks files a petition, the other bank/s are entitled to join the proceedings at a later stage. In the present case, the Federal Bank has clearly impleaded the other banks as defendants in the petition. Thus, neither on the basis of the statute nor on the basis of circulars, the claim of the petitioner can be sustained.

10. We had asked the learned Counsel for the petitioner if it was willing to pay the amount. The Counsel expressed inability to do so. In this situation, it is clear that the bank has made a claim for a substantial amount of more than Rs.10 crores. By now, with the addition of the interest, the amount must be more than double. The petitioner, by approaching this Court, has successfully delayed the proceedings for a considerable length of time. This has been so done despite the fact that the petitioner had used the respondents application as a lever for making a counter claim by more than double of what the respondent-bank had sought to recover. The making of the counter claim is an evidence of accepting the jurisdiction of the Tribunal and the maintainability of the petition. Despite having done that, the petitioner had stalled the proceedings before the Tribunal for a period of almost three years.

11. The purpose of the statute was to ensure speedy recovery of the public dues. The Act was promulgated to ensure that the financial institutions are able to recover the debts without avoidable delay. The petitioner, by resorting to different proceedings, has successfully defeated the object.

12. No other point has been raised.

In view of the above, we find no merit in this petition. It is consequently dismissed. The Tribunal is directed to proceed expeditiously with this case. It shall do so without any loss of time. It shall ensure that the petitioners efforts to delay the proceedings do not succeed. The 1st respondent shall be entitled to its costs which are assessed at Rs. 25,000.