State Bank Of India And Etc. v. Vijay Kr. Tayal And Others, Etc., Delhi High Court, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

Suit Nos. 2806 to 28 11 of 1993, 493 and 150 of 1994

Advocates

Ishwar Sahai
Sr. Advocate with Sanjeev Kakra and Atul Kumar
H. C. Dhall
for Respondents

Judges

M Sarin

Acts

Section 120, I.P.C. and Section 120, I.P.C. read with Section 13(2) and 13(1d) of the Prevention of Corruption Act
Financial Institutions Act, 1993" hereinafter referred to as the Act.

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Smart Summary

Factual and Procedural Background

This is an order deciding the question of transfer of suits instituted by banks and financial institutions to the Debt Recovery Tribunal (DRT) under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (the Act). The opinion summarises the statutory jurisdiction conferred on the DRT (notably Section 17) and the mechanics for transfer of pending cases (Section 31). The court classifies recurring factual situations that arise on transfer applications (set-off/adjustment pleas, counter-claims, cross suits consolidated with bank suits, and suits by banks against employees for embezzlement) and applies these principles to a set of suits between the State Bank of India (SBI) and the Tayal Group and associated parties. The court ultimately directs transfer of specified SBI suits to the Debt Recovery Tribunal and leaves certain suits instituted by the Tayal Group to continue in this Court.

Legal Issues Presented

Whether suits instituted by banks and financial institutions (of value exceeding Rs. 10 lakhs) must be transferred to the Debt Recovery Tribunal under Section 31 of the Act, particularly when defendants raise pleas of adjustment or set-off in their written statements.
Whether counter-claims or cross suits filed by defendants (which may be founded on the same or different causes of action, and which may be less than, equal to, or in excess of the bank's claim) must be transferred along with the bank's suit to the Debt Recovery Tribunal.
How to deal with consolidated proceedings where the bank's recovery suit has been consolidated with cross suits or separate suits for declaration, damages or injunction filed by defendants.
Whether suits by banks against employees for alleged embezzlement or misappropriation fall within the definition of "debt arising during the course of business" under the Act and thus are transferable to the Debt Recovery Tribunal.

Arguments of the Parties

Mr. H. C. Dhall (representing the Tayal Group / defendants)

Argued against transfer of the bank suits to the DRT because several suits are cross-filed: seven suits by SBI and five suits by the Tayal Group and associates, including claims for damages, declarations and injunctions.
Submitted that the Tayal Group seeks adjustment of the bank's claims against losses alleged to have been caused by the bank; if SBI's suits are transferred and decided expeditiously, SBI could effect coercive recoveries while the Tayal Group's suits remain in this Court, creating potential contradictory judgments and unjust enrichment for SBI.
Pointed to pending criminal allegations (Section 120 IPC and Prevention of Corruption Act provisions) against a former SBI senior officer and a director of the Tayal Group; contended that because fraud/criminal proceedings exist, the bank's amounts should be excluded from the statutory definition of "debt" and the bank suits should be stayed.
Noted that applications for stay of the bank suits on these grounds were pending adjudication.

Mr. Ishwar Sahai (Senior Advocate for State Bank of India)

Contended that the plaints in the suits by the Tayal Group effectively admit liability in respect of amounts claimed by SBI; relied on the wording of prayers (example given from Suit No. 493/94) which seek adjustment and a balance, not a standalone adjustment suit.
Argued that adjustment/set-off must be claimed in the written statement to the bank's suit; it is not permissible to seek unilateral adjustment in a separate suit along with damages.
Denied that the bank's suits were based on allegations of fraud; noted the FIR relied upon was lodged by a third person and concerned other matters (enhanced financial limits), not the specific transaction in the bank suits.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Canara Bank v. Coffee Export (Pvt. Ltd.), Order dated 19-7-1995 (N. G. Nandi, J.)	Illustrative instance where a learned judge transferred a counter-claim along with a bank's recovery suit on the ground that the counter-claim sought only reduction of the bank's claim.	The court considered this order but respectfully disagreed with treating it as authority for transferring all counter-claims. The present court noted that that order did not address counter-claims based on separate causes of action or where the counter-claim amount exceeds the suit amount.
State Bank of India v. Samnell Engineering Companies (R. C. Lahoti, J.)	Establishes that suits for recovery of mortgage debts fall within the competence and jurisdiction of the Debt Recovery Tribunal; sale of mortgage suits are to be transferred.	The court relied on this judgment to hold that suits for recovery including claim for sale of mortgaged property must be transferred to the DRT and that the earlier position that sale of mortgage suites are not transferable is no longer open.
Oriental Bank of Commerce v. Sh. Mohan Gupta, OA 7/95 in Suit No. 550/94	Holdings on whether suits by banks against employees for misappropriation/embezzlement constitute a "debt arising during the course of business" under the Act.	The court referenced this holding to conclude that suits by banks against employees for misappropriation or embezzlement would not fall within the Act's definition of "debt" and therefore are not liable to be transferred to the DRT.

Court's Reasoning and Analysis

The court started from the statutory framework: Section 17 of the Act confers jurisdiction on the Debt Recovery Tribunal to try and entertain applications for recovery of debts due to banks and financial institutions, and Section 31 provides for transfer of pending suits to the Tribunal where the cause of action would fall within Tribunal jurisdiction if instituted after its establishment.

The court classified typical situations that arise on transfer applications into four categories: (i) set-off/adjustment pleaded in defense, (ii) counter-claims (with varying relation and quantum to the suit claim), (iii) cross suits consolidated for trial (declaration, damages, injunction), and (iv) suits by banks against employees for embezzlement.

For category (i) — set-off or adjustment pleaded in the written statement — the court treated such pleas as purely defensive: if the requirements for invoking set-off/adjustment are satisfied (ascertained amount, legally recoverable, same character between parties), they are to be considered in the suit itself. Consequently, these suits (where the defendant's claim is by way of set-off/adjustment confined to wiping out or reducing the plaintiff's claim) are liable to be transferred to the DRT.

For categories (ii) and (iii) — counter-claims and cross suits — the court held that the Debt Recovery Tribunal has jurisdiction only to entertain claims from banks and financial institutions and lacks jurisdiction to pass any decree or order for recovery against a bank or financial institution. Therefore:

If a counter-claim or cross suit is founded on a separate cause of action, or seeks relief independent of merely reducing the bank's claim, or seeks an amount in excess of the bank's claim, the DRT would not have jurisdiction over such claims.
In such cases, the court directed that counter-claims should be separately registered as independent suits (if not already done) and delinked from the bank's suit file, even though for convenience the trials may proceed together. The bank's recovery suit should be transferred to the DRT without the counter-claim.
Where suits instituted by defendants for declaration, injunction or damages have been consolidated with bank recovery suits for expedient trial, those defendant suits should be delinked and tried by Civil Courts; the registry must place on record, in the delinked suits, the pleadings, orders, recorded evidence and documents necessary.

For category (iv) — suits by banks against employees for embezzlement/misappropriation — the court, following its prior holding in Oriental Bank of Commerce v. Sh. Mohan Gupta, concluded that such suits do not fall within "debt arising during the course of business" under the Act and hence are not liable to be transferred to the DRT.

Turning to the specific dispute between SBI and the Tayal Group, the court considered factual pleadings and the parties' arguments. The court found Mr. Dhall's submissions (fearing contradictory decrees, unjust enrichment, and exclusion of claim from "debt" because of criminal proceedings) to be devoid of merit. The court accepted Mr. Sahai's submissions that the Tayal Group's separate suits seeking adjustment and damages could not unilaterally seek adjustment outside the bank's suit and that the bank suits were not based on fraud allegations relevant to exclude the claim from the Act's definition of "debt". The court emphasized that where adjustment is to be claimed it can be taken up as a defense in the bank's suit and that the existence of criminal investigation would be a matter for the Tribunal to consider in adjudication of any stay application.

Applying the principles and precedent (notably the decision in State Bank of India v. Samnell Engineering Companies regarding mortgage debt suits), the court directed transfer of the SBI recovery suits (which include claims for sale of mortgaged property) to the DRT, while leaving certain suits instituted by the Tayal Group to continue in this Court.

Holding and Implications

Core Ruling: Directed transfer of the specified suits instituted by the State Bank of India to the Debt Recovery Tribunal.

Direct effects on the parties (as directed in the order):

Suits of the State Bank of India ordered transferred to the Debt Recovery Tribunal: Suit Nos. 2806/93, 2807/93, 2808/93, 2809/93, 2810/93 and 2811/93.
Suits instituted by the Tayal Group ordered to continue before this Court: Suit No. 150/94 (M/s. Tayal Sales Corporation Pvt. Ltd. v. State Bank of India) and Suit No. 493/94 (Geeta Ram Gupta v. State Bank of India).
Counter-claims that raise independent causes of action or seek relief beyond mere reduction of the bank's claim should be separately registered and delinked from the bank's suit (even if trials may be conducted together for convenience); the bank's suit is to be transferred without the counter-claim.
Suits by banks against employees for embezzlement/misappropriation do not fall within the Act's definition of "debt" and are not to be transferred to the DRT.

Broader implications:

The decision applies statutory transfer rules (Section 31) and existing case law (as discussed) to delineate what goes to the DRT and what remains with Civil Courts. It clarifies that purely defensive set-off/adjustment pleas should move with the bank's recovery suit to the DRT, while independent counter-claims and cross suits should remain within the Civil Court domain unless properly constituted as suits transferable under the Act.
The opinion does not purport to lay down a novel legal principle beyond applying the Act and relevant precedents; its effect is to order transfers and set procedural directions in the specific matters before the Court.

Order: Transfer of the specified State Bank of India suits to the Debt Recovery Tribunal; other specified suits by the Tayal Group to remain in the Court. (Order accordingly.)

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State Bank Of India And Etc. v. Vijay Kr. Tayal And Others, Etc.

ORDER

1. By this common order, I would be deciding the question of transfer of suits instituted by Banks and Financial Institutions to the Debt Recovery Tribunal, constituted under "the Recovery of Debts due to Banks and Financial Institutions Act, 1993" hereinafter referred to as the Act.

2. By virtue of Section 17 of the Act, the Debt Recovery Tribunal has been conferred the jurisdiction to try and entertain an application for Recovery of Debts due to Banks and Financial Institutions. An appellate Tribunal has also been constituted to entertain appeals from orders of the Debt Recovery Tribunal. The jurisdiction of the Civil Courts has been excluded in relation to matters falling within jurisdiction of the Tribunal except under Articles 226 and 227 of the Constitution of India. Reference may usefully be made to Section 31, which deals with transfer of pending cases. Section 31 of the Act is as under:--

Transfer of pending cases.-- (1) Every suit or other proceeding pending before any court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action whereon it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal :

Provided that nothing in this sub-section, shall apply to any appeal pending as aforesaid before any court.

(2) Where any suit or other proceedings stand transferred from any court to a Tribunal under sub-section (1),--

(a) the court shall, as soon as may be after such transfer, forward the records of such suit or other proceeding to the Tribunal; and

(b) the Tribunal may, on receipt of such records, proceed to deal with such suit or other proceedings, so far as may be, in the same manner as in the case of an application made under Section 19 from the stage which was reached before such transfer or from any earlier stage or de novo as the Tribunal may deem fit.

3. Suits instituted by Banks and Financial Institutions of value exceeding the sum of Rs. 10 lacs are liable to be transferred to the Debt Recovery Tribunal from the appointed day. This has given rise to several questions regarding transfer of suits, wherein cross suits have been instituted or counter-claims are filed. Additionally, there are cases where set-off or adjustment is claimed. These situations may broadly be classified as under :

(i) Suits for recovery filed by the Banks and Institutions wherein the defendant raises a plea of adjustment or set-off to wipe or reduce the plaintiff's claim.

(ii) Suits for recovery instituted by the Banks or Financial Institution wherein the defendant raises a counter-claim, the extent of which is either lower than the amount claimed in the suit, equivalent thereto or higher than the amount in suit.

(iii) Suits instituted by the Banks and Financial Institutions for recovery, wherein the defendants have filed separate cross suits for seeking declaration, damages, for failure to honour its commitments, and such suits have either been consolidated with the suits filed by the Bank or Financial Institutions for purposes of trial and recording of evidence.

(iv) Suits instituted by the Banks against the employees for amounts embezzled or misappropriated.

4. At the very outset, it may be noted that the Debt Recovery Tribunal would not have any jurisdiction to entertain claims or suits instituted against a Bank or Financial Institutions. The questions therefore, that arise for consideration relate to suits where pleas of adjustment or set off is raised in written statement. Further directions would be required for the trial of cases, which are liable to be transferred to the Debt Recovery Tribunal and which involve a counter-claim, cross suit or separate suit for damages filed by the defendant and the two have been consolidated for the purposes of trial and recording of evidence,

5. Let us examine the first category of cases wherein adjustment is claimed or set off is claimed. The net effect would be to either wipe of or to reduce the plaintiffs claim. The plea being pure and simple in defense, subject to the conditions for invoking the claim for adjustment and set off namely the amount being an ascertained amount being legally recoverable and the parties filling in the same character in the claim for set off as that of in the plaintiffs suit being satisfied, are liable to be considered in the suit itself. In these cases, no relief independently of the claim if suit is being claimed. The defendant's claim in suit is by way of set off or adjustment is confined either to wipe out or reducing the plaintiffs claim in suit. The above class of suits wherein claims for adjustment and set off are made, would be liable to be transferred to the Debt Recovery Tribunal for trial.

6. The second and third class of suits are where either a counter-claim is filed on which Court-fee is paid or a cross suit is instituted claiming damages for alleged breach. The counter-claim or cross suits may be in respect of same or a different cause of action accruing to the defendant against the Banks or Financial Institutions either before or after the filing of the suit by the Banks or Financial Institutions. The counter-claim is registered as a separate suit. In my view the Debt Recovery Tribunal which has the jurisdiction to entertain only claims from Banks and Financial Institutions will not have the jurisdiction to entertain a cross suit or counter-claim that may be founded either on the same or a separate cause of action and/or the amount of which may even be in excess of the claim in suit. This is because the Debt Recovery Tribunal has no jurisdiction to pass any decree or order for recovery against the Bank or Financial Institutions. My attention has been drawn to an order dated 19-7-1995, passed by N. G. Nandi, J. in Suit No. 3193/92 titled Canara Bank v. Coffee Export (Pvt. Ltd.). While considering the transfer of a suit for recovery of Rs. 25,21,586/- instituted by the Bank, Learned Judge also transferred the counter-claim holding that in the counterclaim, the defendant seeks only the relief of getting claim reduced to the extent stated thereunder and no relief as such independent of the claim in suit had been prayed. With utmost respect, in case the above is taken to be an authority for the transfer of all counterclaims to the Debt Recovery Tribunal, I am unable to subscribe to the said view. Learned Judge did not have the occasion to consider cases of counter-claims, where the counterclaim is founded on a separate cause of action or may even be in excess of the amount claimed in suit. In such cases the Debt Recovery Tribunal would not have the jurisdiction to either entertain or pass an order or a decree against the Bank if the counter-claim is found to be correct. I am, therefore, of the view that cases wherein a counter-claim has been filed along with the suit, directions should be issued for separately registering the counter-claim as a suit if not already done. The counter-claim should be delinked from the suit file even though trial with the suit could be expedient and convenient. The suit instituted by the Bank be transferred to the Debt Recovery Tribunal without the counter-claim.

7. Regarding the third category i.e. cases where defendants have filed cross suits or separate suits for claiming damages and seeking declaration and injunction against the Banks. The injunctions could well be against sale of hypothecated assets or property and the declaration may be sought challenging the notice for recall of loan or seeking damages for the alleged failure of the Bank or Financial Institution to perform their obligations. The above suits could have been consolidated with the suit instituted by the Bank or Financial Institutions for recovery, for an expeditious trial. The suits instituted by the Banks and Financial Institutions are liable to be transferred to the Debt Recovery Tribunal, while the suits instituted by the defendants either for declaration, injunction or damages are liable to be delinked and tried by Civil Courts. The Registry in all these cases, where the suits were consolidated shall place on record of the other suit, copies of the orders passed and evidence recorded, pleadings and documents wherever necessary.

8. Arguments were addressed by the parties against transfer of the suits instituted by the Bank or Financial Institutions to the Debt Recovery Tribunal wherein the said suits had been consolidated with the suit filed for damages, declaration and injunction by the parties. These have been considered and separately dealt with.

9. As regards suits instituted by the Banks and Financial Institutions against employees for amount misappropriated or embezzled, reference may be invited to OA 7/95 in Suit No. 550/94 titled Oriental Bank of Commerce v. Sh. Mohan Gupta. I have held that the suit for recovery of misappropriated or embezzled amounts by the Banks or Financial Institutions against the employee, would not be one which would come within the definition of a "debt arising during the course of business" as contemplated under the Act. Hence the said suits would not be liable to be transferred to the Debt Recovery Tribunal.

10. Having considered the broad categories and situations in which the question of transfer of pending cases has arisen. Let me now deal with specific cases, wherein questions of transfer arise.

11. The State Bank of India has filed the undermentioned suits against the Tayal Group and their associate concerns, partners and family members. These are :

(i) Suit No. 2806/93 titled State Bank of India v. Mr. Vijay Kumar Tayal and others for recovery of Rs. 2,44,17,286.34 paise. It includes a claim for the sale of mortgage property.

(ii) Suit No. 2807/93 titled State Bank of India v. Sandeep Plywood Pvt. Ltd. and others for recovery of Rs. 2,13,2S,596/-. It includes a claim for the sale of mortgage property.

(iii) Suit No. 2808/93 titled State Bank of India v. Geeta Ram Gupta and others for recovery of Rs. 1,05,38,614/-. It includes a claim for the sale of mortgage property.

(iv) Suit No. 2809/93 titled State Bank of India v. Kusum Gupta and others for recovery of Rs. 95,06,800.92 paise. It includes a claim for the sale of mortgage property.

(v) Suit No. 2810/93 titled State Bank of India v. Tayal Sales Corporation Pvt. Ltd. and others for recovery of Rs. 2,58,69,053/-. It includes a claim for the sale of mortgage property.

(vi) Suit No. 2811/93 titled State Bank of India v. Tayal Plywood Industries Pvt. Ltd. and others for recovery of Rs. 3,84,89,483.41 paise. It includes a claim for the sale of mortgage property.

12. Apart from the foregoing suits filed by the State Bank of India, Mr. H. C. Dhall urged that the following suits have been filed by the Tayal Group and their Associate Companies and its partners/family members.

(i) Suit No. 150/94 titled M/s. Tayal Sales Corporation Pvt. Ltd. v. State Bank of India, Delhi, The suit is for recovery of Rs. 10 lacs, for declaration with consequential relief and for injunction. The plaintiff in this suit is seeking adjustment of the claim in Suit No. 2812/93 said to have been instituted by the State Bank of India against the plaintiff for Rs. 1,48,38,922.75 paise and has sought in addition a decree in the sum of Rs. 10 lacs as damages apart from the relief and declaration.

(ii) Suit No. 493/94 titled Sh. Geeta Ram Gupta v. State Bank of India. This is a suit for recovery of Rs. 4 lacs, for declaration with consequential relief and for injunction. The plaintiff in this suit is seeking a sum of Rs. 4 lacs after adjustment of the defendants/ bank alleged claim in Suit No. 2808/93.

(iii) Suit No. 711/94 titled M/s. M. T. Plywood Trader Pvt. Ltd. v. State Bank of India.

(iv) Suit No. 837/94 titled M/s. Sandeep Plywood Pvt. Ltd. v. State Bank of India.

(v) Suit No. 2085/94 titled M/s. Tayal Plywood Industries Pvt. Ltd. v. State Bank of India.

Suit at S. Nos. (i) and (ii) above were on my board. Suit at S. Nos. (iii) to (v) are said to be pending before other benches.

13. Mr. H. C. Dhall, appearing for the defendants in the suit instituted by the State Bank of India and for the plaintiff in the suits listed above and instituted against State Bank of India, has argued against the transfer of the suits filed by the Bank to the Debt Recovery Tribunal. Mr. Dhall submitted that the Bank has instituted seven suits against Tayal Group of Companies and concerns, while five suits have been instituted by the Tayal Group and their associate concerns and family members against the State Bank of India for recovery of damages, declaration and consequential relief of injunction etc. has not been sought. It is submitted by Mr. Dhall that in all cases filed against the Bank, a prayer has been made that the amounts claimed by the Bank in the suit instituted by the Bank has been adjusted against the losses suffered by the Tayal Group and even thereafter the Bank is liable to pay the amount claimed in the suit instituted by the Tayal Group and its associate concerns. The claims in the suit instituted by the Tayal Group arise out of alleged acts of commission and omission committed by the Bank and its officers which caused the lapses to the group and its concerns. The submission of Mr. Dhall is that if the suits instituted by the State Bank of India are transferred to the Debt Recovery Tribunal and decided cxpediti-ousiy, the Bank would resort to coercive process and make recoveries from the Tayal Group and its concerns while the suit instituted by the Tayal Group would still be pending in this Court. It is argued that if this Court ultimately holds in favour of Tayal Group and decrees the suits against the Bank, it would result in contradictory judgments being given one by the Debt Recovery Tribunal and other by this Court. Further it would result in unjust enrichment for the Bank. To further butress arguments, Mr. Dhall submitted that former Senior Officer of the State Bank of India and Director of the Tayal Group of Companies are facing charges. Under Section 120, I.P.C. and Section 120, I.P.C. read with Section 13(2) and 13(1d) of the Prevention of Corruption Act in respect of the subject matter of the claims in suits. Mr. Dhall contended that because of the allegation of fraud and criminal offences the amounts claimed by the Bank in the suits would be excluded from the definition of "Debt". Mr. Dhall submitted that since either criminal cases pending investigation or prosecutions have been launched the suit of the Bank was liable to be stayed. In this respect, it was submitted that application for stay of the suits filed by the Bank had been moved by the defendants which was pending adjudication. In these circumstances, Mr. Dhall contended that the suit instituted by the Bank as well as suit instituted by the Tayal Group are liable to be tried together and thus the suit instituted by the Bank should not be transferred to the Tribunal and be tried by this Court.

14. Mr. Ishwar Sahai, Senior Advocate, appearing with Mr. Sanjeev Kakkra and Atul Kumar for the State Bank of India has refuted these arguments. Mr. Sahai argued that a perusal of the plaint in the suits instituted by the Tayal Group would show they virtually admit their liability in respect of the amount claimed by the State Bank of India in the suit filed by it. It would be worthwhile to reproduce the prayer Clause in Suit No. 493/94 filed by Sh..Geeta Ram Gupta against State Bank of India.

(i) a judgment and decree of declaration be passed in favour of the plaintiff and against the defendant-bank, declaring :--

(a) that the defendant-bank is not entitled to interest on any debits up to Rs. 61.47 lacs from 1-3-1990;

(b) that the defendant-bank has no interest left in the stock-in-trade of the plaintiff that was stated to have been hypothecated to the defendant-bank and further the defendant-bank has no interest left in the collateral security of the plaintiff alleged to have been mortgaged with the defendant-bank;

(ii) that a judgment and decree for a sum of Rs. 4 lacs in respect of its claim, after due adjustment of the sums claimed by the defendant-bank, be passed in favour of the plaintiff and against the defendant-bank;

(iii) that a judgment and decree of permanent injunction be granted, restraining the defendant bank from approaching other Banks of the plaintiff or making any complaints against the plaintiff; and

(iv) Or such other orders be passed or reliefs be granted as this Hon'ble Court deems fit and proper under the circumstances of the case.

Mr. Sahai urged that it was not permissible for the Tayal Group, to claim adjustment in a separate suit along with damages. The claim for adjustment, if any, had to be made in the written statement to be filed in the suit instituted by the Bank. As regards, investigation and criminal proceedings having been instituted, it was pointed out by Mr. Sahai that the suit instituted by the Bank are not based on any allegation of fraud. The FIR that has been filed is by a third person and is concerned with the enhanced financial limits granted to the various Tayal Group of concerns and not with the transaction in the suit.

15. I have considered the rival contentions, I find that the submission made by Mr. Dhall are devoid of merit. These are cases, in which the Bank has instituted suits for recovery which include claim for the sale of mortgage property. Following the judgment of R.C. Lahoti,J. in State Bank of India v. Samnell Engineering Companies, it is now well settled that suits for recovery of mortgage debts would fall within the competence and jurisdiction of the Tribunal. The sale of mortgage suits not being liable to be transferred is no longer open. In these suits, the defendants have not yet filed the written statement or raised any defense by way of adjustment or set off. On the other hand, separate suits wherein adjustment of the amount claimed in the present suit in addition to damages is sought. Mr. Sahai rightly pointed out that it is not permissible as adjustment cannot unilaterally be sought in a separate suit.

The mere fact that the Debt Recovery Tribunal may allow the claim of the B?.nk prior to disposal of the suit filed by the Tayal Group and pending in this Court is not a ground for declining transfer of the suit instituted by the Bank to the Tribunal. It goes without saying that this Court has no jurisdiction to continue with the trial of the suit instituted by the Bank, which arc required to be transferred forthwith. Further it would be open for the defendant to claim and take up all pleas of adjustment in the suit filed by the State Bank of India. As regards the stay of the suits on the ground that criminal investigation and proceedings are pending, the defendant-- Tayal Group have filed separate application in the suits and the same would be dealt with by the Tribunal in accordance with law. Assuming for the sake of arguments that the suits instituted by the Bank are decreed by the Debt Recovery Tribunal and subsequently the Tayal Group/defend ant gets a decree for damages in the suit instituted by it against the Bank, it would be entitled to have the same executed or adjusted against the claim allowed in favour of the Bank. I further find no merit in the contention that the claim of the Bank ceases to be a "Debt" because of either prosecution or investigation is pending against the officials of the Bank for cheating or criminal conspiracy.

In these circumstances, I allow and direct the transfer of the suits instituted by the State Bank of India (sic). Suit Nos. 2806/93, 2807/93, 2808/93, 2809/93, 2810/93 and 2811/93 to the Debt Recovery Tribunal. The suits instituted by the Tayal Group namely Suit No. 150/94 titled M/s. Tayal Sales Corporation Pvt. Ltd v. State Bank of India and Suit No. 493/94 titled Geeta Ram Gupta v. State Bank of India would continue to be tried by this Court.

16. Order accordingly.

State Bank Of India And Etc. v. Vijay Kr. Tayal And Others, Etc.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Mr. H. C. Dhall (representing the Tayal Group / defendants)

Mr. Ishwar Sahai (Senior Advocate for State Bank of India)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

State Bank Of India And Etc. v. Vijay Kr. Tayal And Others, Etc.

Comments