SOUTHERN PETROCHEMICALS INDUSTRIES CORPORATION LTD. versus ADMINISTRATOR OF SPECIFIED UNDERTAKING OF UNIT TRUST OF INDIA AND ORS

Citation: [2006] SUPP. 10 S.C.R. 932 · Decided: 13-12-2006 · Supreme Court of India · Bench: B.P. SINGH · Disposal: Dismissed

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Judgment (excerpt)

A
SOUTHERN PETROCHEMICALS INDUSTRIES CORPORATION LTD.
B
v.
ADMINISTRATOR OF SPECIFIED UNDERTAKING OF UNIT TRUST OF
INDIA AND ORS
DECEMBER 13, 2006
[RP.SINGH AND AL TAMAS KABIR, JJ.]
Recovery of Debts Due to Banks and Financial Institutions Act, 1993:
C Sections 2(g), (h), 17, 19(1), (2) and 34.
Financial institutions-Under a common loan agreement executed
between the UT!, IDBI, IFCI and /CIC/ and the company a sum of Rs. 101-
crores was advanced to the company for its project-UT/ also advanced a
sum of Rs. 25 crores against privately placed debentures-The company
D accumulated liabilities exceeding Rs. I, 0001- crore and defaulted in its
obligation to the UT/ under the common agreement-UT! filed a claim under
the DRT Act-Company filed an objection alleging that the Administrator of
Specified Undertaking of Unit Trust of India and UT/ Trustee Company
Private Limited (''specified company"), not being "financial institutions"
within the meaning of the DRT Act, the Debt Recovery Tribunal (DRT) had
E no jurisdiction to decide the claim-DRT dismissed the objection-The
Appellate Tribunal held that they were "financial institutions" as defined by
Section 2(h)(i) of the DRT Act-The High Court rejected the writ petition
filed by the company-Correctness of-Held: The "Specified Company" and
the ''Administrator of the Specified Undertaking" are financial .institutions-
F Hence, both are entitled to sue as financial institutions-The DRT had,
therefore, undoubted jurisdiction to entertain their claims-The Administrator
and the Specified Company were not acting either as agents of the Central
Government or as trustees-UT! (Tra11sfer of Undertaking and Repeal) Act,
2002, S.18--Companies Act, 1956, S. 4-A.
G
Words & Phrases:
"Financial institutions"-Meaning of-In the context of Section 2(h)(i)
of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Under a common loan agreement executed between the Unit Trust
II
932
-
SOUTHERN PETROCHEM. INDUS. CORPN, LID.'" ADMIN. OF SPECIFIED UNDERTAKING OF U.TJ. OF INDIA
93 3
of India (UTI), the Industrial Development Bank of India QDBI), IFCI and ICICI A
Ltd. and the appellant, a sum of Rs. 10/- crore was advanced to the appellant
for its project The UTI also advanced a sum of Rs. 25 crores against privately
placed debentures. The appellant-company accumulated liabilities exceeding
Rs. 1,000/- crore and defaulted in its obligation to the UTI under the common
agreement.
B
The UTI filed a claim under the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (DRT). The appellant filed an application for
dismissal of the said claim on the ground that respondents Nos. 1 and 2, not
being "financial institutions" within the meaning of the DRT Act, the Debts
Recovery Tribunal had no jurisdiction to decide the claim. The Debts Recovery C
Tribunal dismissed the said application. The Appellate Tribunal held that
respondents Nos. 2 and 3 were "financial institutions" as defined by Section
2(h)(i) of the DRT Act The writ petition filed by the appellant was also rejected
by the High Court. The High Court held that the action brought against the
appellant-company by respondents Nos. 1 and 2 for recovery of debts due to
them was rightly entertained by the Debts Recovery Tribunal constituted under D
the DRT Act Hence the appeal.
The following questions arose before the Court:-
(1) Whether respondents Nos. 1 and 2, namely, the Administrator of
Specified Undertaking of Unit Trust oflndia and UTI Trustee Company Private E
Limited are "financial institutions" within the meaning of that term in the
Recovery of Debts due to Banks and Financial Institutions Act, 1993?
(2) If the answer is in the affirmative, whether the action brought by
them before the Debts Recovery Tribunal is for recovery of debts due to them
from the appellant and not due to any other person on whose behalf the aforesaid F
respondents are suing?
Dismissing the appeal, the Court
HELD: 1.1. By reason of the deemed amendment of Section 4-A of the
Companies Act, 1956, the "Specified Company" and the "Administrator of G
the Specified Undertaking" come with the definition of "financial institutions"
as defined under Section 2(h) of the Recovery of Debts due to Banks and
Financial Institutions Act, 1993 (DRT Act). (948-F, GI
1.2. By reason of section 18 of the UTI (Transfer of Undertaking and H
934
SUPREME COURT REPORTS [2006] SUPP. JO S.C.R.
A Repeal

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