LexSTATE BANK OF INDIA versus M/S. RANJAN CHEMICALS LTD. AND ANR.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
• - STATE BANK OF INDIA A v. M/S. RAN.JAN CHEMICALS LTD. AND ANR. OCTOBER 11. 1006 [H.K. SEMA AND P.K. BALASUBRAMANY AN. JJ.] B Recove1:v of Debts Due to Banks and Financial Institutions Act, 1993: Sections 19(6) to (//) . Set off and/or counter claim-Clai111 for-Debt Recovel)' Tribunal- C Joint trial for recovery of debts-Bank grallled a ter111 loan and also extended a cash credit facility to the companJ~The company failed to 111eet its obligalions under the accou111 and, therefore, the Bank issued a notice calling upon the company lo repay the a111oun/s due under the loan transaclions-Company filed a suil before !he civil cour/ c!ai111ing that /he Bank had failed to fi1lfil its D obligarions while 111aking available /he cash credit facility and therefore, the company had suffered losses-The co111pany also claimed da111ages wilh interest-Bankjiled an original application before !he Debt Recove1:v Tribunal for recove1)' of loan-In !he civil suit, the Bank filed an applica/ion praying 1ha1 the said suit be /rans/erred to the Debt Recovel)' Tribunal for being fried jointly with /he original application-The trial court refi1sed to /rans/er !he E suil-High Cour/ affirmed the decision-Correclness of-Held: The two claims are inextricably inter linked-The consequences arising ou/ of !he respective claims are referable to the cause of ac/ion arising out of the veJ)' transactions between !he bank and the co111pany-The claim of the company is in essence a claim for set off and/or a counter claim, which could be tried by the Debt F Recovery Tribunal-Civil suit /rans/erred to Debt Recovel)' Tribunal for being jointly tried with the original application filed by the Bank-Code of Civil Procedure, 1908, Order VIII Rule 6A. The appellant-Bank granted a term loan to the respondent-company and also extended a cash credit facility to the respondent. The respondent- G company failed to meet its obligations under the account and, therefore, the appellant-Bank issued a notice calling upon the respondent to repay the amounts due under the loan transactions. On receipt of the notice, the respondent-company filed a suit before 1~ H 146 SUPREME COURT REPORTS /2006] SUPP. 7 S.C.R. A the Civil Court claiming that the appellant-Bank had failed to fulfil its obligations while making available the cash credit facility and, therefore, the respondent-company had suffered losses. The respondent-company had also claimed damages with interest. The appellant-Bank, in its turn, filed an original application for B recovery of the loan before the Debt Recovery Tribunal constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. In the civil suit, the appellant-Bank filed an application praying that the said suit be transferred to the Debt Recovery Tribunal for being tried jointly with the original application since both the proceedings arose out of the same cause of action, namely, the grant of loan and the providing C of a cash credit facility by the appellant-Bank to the respondent-company and that the suit by the respondent was really in the nature of a counter- claim or set off as against the claim of the appellant for recovery of the loan. The trial court took the view that the suit filed by the respondent- D company did not come within the purview of Section 19(9) of the Recovery of Debts Act and refused to transfer the suit to the Debt Recovery Tribunal. The High Court affirmed the decision of the trial court. Hence the appeal. E The following question arose before the Court:- Whether the cause of action put in the suit by the company could be considered to be one in the nature of a set off or a counter claim within the meaning of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993? F Allowing the appeal, the Court HELD: I. A question of joint trial arises when the rival parties file independent actions but based on the same cause of action; for enforcement of rights or obligations springing out of that cause of action. The elements of a cause of action are: first, the breach of duty owing by G one person to another and; second, the damage resulting to the other from the breach, or the fact of combination of facts which gives rise to a right to sue. Viewed thus, it cannot but be said that both the claims han arisen out of the same transaction or out of the same relationship that came into existence between the ban
Excerpt shown. Read the full judgment & AI analysis in Lexace.