INDUSTRIAL INVESTMENT BANK OF INDIA LTD. versus M/S JAIN CABLES PVF. LTD. & ORS.

Citation: [2011] 1 S.C.R. 82 · Decided: 05-01-2011 · Supreme Court of India · Bench: AFTAB ALAM · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2011] 1 S.C.R. 82 
A 
INDUSTRIAL INVESTMENT BANK OF INDIA LTD. 
B 
v. 
M/S JAIN CABLES PVf. LTD. & ORS. 
(Civil Appeal No. 8123 of 2004) 
JANUARY 05, 2011 
[AFTAB ALAM AND R.M. LODHA, JJ.] 
Industrial Reconstruction Bank of India Act, 1984 - s. 40 
-
Enforcement of claims by the Reconstruction Bank -
C Industrial concern defaulting in repayment of loan given by 
the Reconstruction Bank (/RBI) - Subsequent, transfer of 
undertakings of /RBI to Industrial Investment Bank of India Ltd. 
(I/BIL) in 1997 - Recalling of loan by I/BIL - Non-payment of 
loan by industrial concern - Application by I/BIL against 
D industrial concern uls. 40 of the 1984 Act before the High Court 
- Maintainability of- Held: Application is maintainable - Sub-
section (4) of Section 4 read with Sub-Section (2)(b) of Section 
13 of the 1997 Act makes it clear that any cause of action by 
/RBI in relation to its undertakings existing immediately before 
E March 27, 1997 may be continued and enforced by I/BIL as 
it might have been enforced by /RBI if the 1997 Act had not 
been enacted - Provisions of Chapter VIII of the 1984 Act, 
that include s. 40 would continue to be applicable in respect 
of the arrangements entered into by /RBI with an industrial 
concern u/s. 18 of the 1984 Act and the //BIL would be able 
F to enforce the same as fully and effectually as if the 1997 Act 
had not been enacted - Industrial Reconstruction Bank 
(transfer of Undertaking and Repeal) Act, 1997 - ss. 4(4), 
13(2)(b). 
G 
· . T •.• e Industrial Reconstruction Bank of India (IRBI) 
sanctioned certain loan in favour of respondent No. 1 who 
defaulted in repayment of the loan amount. The IRBI told 
respondent No. 1 to make payment as per an amended 
H 
82 
INDUSTRIAL INVESTMENT BANK OF INDIA LTD. v. 
83 
JAIN CABLES PVT. LTD. & ORS. 
schedule but respondent No. 1 did not adhere to the 
A 
same. Thereafter, the Industrial Reqonstruction ·Bank 
(Transfer of Undertaking and Repeal) Act, 1997 came into 
force and the undertakings of the IRBI were transferred 
to and vested in the Industrial Investment Bank of India 
Ltd. (llBIL). The llBIL gave a notice to respondent No, 1 ' B 
to make the payment but respondent No. 1 did not make 
the payment. The llBIL then filed an application before the 
High Court under Section 40 of the Industrial 
Reconstruction Bank of India Act, 1984. The High Court 
held that the application was not maintainable as it was c 
filed under the provision no longer in existence. 
Therefore, the appellant filed the instant appeal. 
Allowing the appeal, the Court 
HELD: 1.1 A plain reading of Sub-section (4) of D 
Section 4 coupled with Sub-Section (2) (b) of Section 13 
of the Industrial Reconstruction Bank (Transfer of 
Undertaking and Repeal) Act, 1997 would make it manifest 
and clear that any cause of action by the IRBI in relation 
to its undertakings existing immediately before March 27, 
E 
. ·. . 1$97 may be continued ang enforced by the llBIL as it 
'Wtfiht ll~v!3,been enforced by th~ l,RBI if the 1997 Act had 
not bee~ ·~,,.~S~f~: The provisions<(}t(:hapter VIII of the 
lndustriatl~ec611'slfuetiqn Bank of fntila Act, 1984, that 
include Sectfon 40, would continue to be applicable in 
respect of the arrangements entered into by the IRBI with 
an industrial concern under Section 18 of the. 1984 Act 
and the llBIL would be able to enforce the same as fully 
and effectually as if the 1997 Act had not been enacted. 
[Para 10) [92-G-H; 93-A-B] 
1.2 The High Court in the impugned judgment 
referred to Section 13 of the 1997 Act, but failed to notice 
the true import of Sub-section 2(b) of Section 13 as also 
overlooked the provisions of Sub-Section (4) of Section 
F 
G 
H 
84 
SUPREME COURT REPORTS 
[2011] 1 S.C.R. 
A 4 of the 1997. Act; and as a result arrived at a conclusion 
that is patently erroneous and cannot be sustained. On 
_,.. 
the basis of the provisions contained in Section 4 (4) and 
Section 13(2)(b) of the 1997 Act, there is no doubt that the 
application filed by the appellant under Section 40 of the 
B 1984 Act for the enforcement of its claim against 
respondent No.1 was perfectly maintainable before the 
High Court. The order passed by the High Court is set 
aside. [Paras 11 and 12] [93-C-F] 
4--
c 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
8123 of 2004. 
From the Judgment and Order dated 01.11.2002 of the 
High Court of Judicature of Rajasthan at Jodhpur in S.B.C. 
Misc. Application No. 40 of 1999. 
D 
Sanjay Bhatt and A
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