INDIAN BANK versus ABS MARINE PRODUCTS PVT. LTD.

Citation: [2006] SUPP. 1 S.C.R. 52 · Decided: 18-04-2006 · Supreme Court of India · Bench: AR. LAKSHMANAN · Disposal: Dismissed

Judgment (excerpt)

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B 
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INDIAN BANK 
v. 
ABS MARINE PRODUCTS PVT. LTD. 
APRIL 18, 2006 
[DR. AR. LAKSHMANAN AND R.V. RAVEENDRAN, JJ.] 
Recove1y of Debts Due to Banks and Financial Institutions Act, 1993--· · 
Sections 17, 18, 19 and 31. 
Suit by borrower against bank-Held-Jurisdiction of civil courts is 
barred only in regard to applications by bank/financial institution for recovery 
of its debts-It is not barred in regard to any suit filed by a borrower or 'Jther 
person against a Bank---On facts, jurisdiction of civil court held not be 
barred in a borrower's suit for damages against bank for non-disbursement 
D of a sanctioned loan--The suit found not be a counter claim to an earlier 
Original Application (0.A.) of Bank before D.R. T for recovery of an amount 
advanced to the borrower under another loan-Subject matter of O.A and 
suit were not connected and decision in one did not depend un other--Such 
a suit was not required to be transferred to D.R. T-lt was more so as the suit 
was fil-ed afier establishment of latter and the provisions of the Act did not 
E support transfer of such swt. 
Counter claim by borrower/defendant in Bank's Original Application 
before D.R. T-Forum for-Held--Counter claim is not the only remedy, but 
an option available to borrower/defendant-If they have an independent 
claim against Bank, they cannot be compelled to make their claim against 
F Bank only by counter-claim before D.R. T-Such a claim made by them by an 
independent suit in a court having jurisdiction cannot be transferred to 
D.R. T against their wishes. 
Constitution of India, 1950- Article 142- Afier declaration Gj law, 
G Supreme Court in operative part of judgment relaxing application of !hat law 
under Article 141--/n such a case, the precedent value is that of ratio 
decidendi, and not the relaxation given on ~pecial facts· -One solution to 
avuid a situation where relaxation itself comes to be treated as law, is for 
the Supreme Court to clarifY that it was given in exercise of power under 
Article 142. 
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INDIAN BANK v. ABS MARINE PRODUCTS PVT.LTD. 
53 
Appellant-bank sanctioned ad hoc packing credit facilities to the A 
respondent company: According to appellant, respondent utilised the said 
credit facilities but committed default in repaying the amounts advanced. 
Therefore, they flied a~ Original Applieation (0.A.) before the Debt Recovery 
Tribunal (D.R.T.) under Section 19 'or the. Recov.ery of Debts Due to Banks. 
and Financial Institutions Act, 1993 seeking a certificate of recovery thereof B 
with interest. During pendency of the O.A. wherein trial was yet to commence, 
appellant sanctioned another loan and credit facilities to the respondent, but 
the sanctioned amounts were not released. For this, respondent filed a suit 
against the appellant in High Court for recovery of damages with interest. 
Recording of evidence in the suit had been completed and it was ripe for 
arguments. At this stage, appellant pleaded that the suit could not be tried by C 
the High Court and it should be transferred to the D.R.T. on the ground that 
it was broadly in the Mttire·of a couiiter-claim to appellant's O.A and was 
integrally connected with .. it. For this they relied on Sections 19(6) to (11) of 
the Act. High Court rejected these· claims of appellant. Hence the present· 
appeals. 
. On the contentions of the parties, following questions arose for 
consideration of.the Court: . 
. (a) Whe~her the. subjechmatter of the borrower's suit before the High 
Court and Ban.k's 0.A. before D.R.T. were inextricably linked? 
(b) Whether the' provi~ions of tlie Act requir~ the tran~fer o'f aii 
indepe~iient suit filed by a borrower against a Bank before a ci~il court to 
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D.R: t. in tlie· event of the Bank filing a recovery application against the 
borro~er before D.R.T. to be tried. as a counter-claim in the Bank's o:A.? . 
Dismissing the appeal, the Court' 
•HELD: t. It.is evident from Sections 17 and 18 of the Debts Recovery 
Act that-civil court's jurisdiction is barred only in regard to applications by 
a bank or a financial institution for recovery of its debts. The jurisdiction of 
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civil courts is not barred in regard to any suit filed by a borrower or any G. 
other person against a bank for any relief. [68-F] 
'~ . '' '. . 
. . 1.2. :fhe Debts Recovery Act, as it orginally stood, did not contain any 
provision enabling a defendant in application filed by the bank/.financial 
institutio

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