State Bank of India and Etc. Vs. Vijay Kr. Tayal and Others, Etc. - Court Judgment

Excerpt:
a) the case examined the suit filed by the plaintiff where he claimed for adjustment against the bank or the financial institution which was likely to result in wiping out the entire claim - it was held that such suit was liable to be transferred to the tribunal.b) in the instant case the plaintiff filed a suit where he counter claimed against the institution under section 31 of the recovery of debts due to banks & financial institutions act, 1993 - it was held that the suit was liable to be transferred to the tribunal while the counterclaim was required to be delinked and tried independently - similarly the cross suits were also required to be delinked and tried independently. - section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts - the minor girl child of 3 1/2 years was brought to india by her mother. the minor girl was a citizen of u.k. being born in u.k. her parents had set up their matrimonial home in u.k. and had acquired status of permanent residents of u.k. the child with her mother was supposed to return to u.k. but the mother cancelled her tickets and remained behind in india. the husband thereupon started procededings before the high court of justice, family division. u.k. praying for an order that the minor child be made a ward of the court and for a direction upon the wife to return the minor child to the jurisdiction of the said court. a further direction was given for the passport and other international travel documents of the minor child to be handed over to the solicitors of the husband. a petition seeking protection of minor child was thereupon filed by father of the husband before delhi high court. a direction for handing over custody of child to father of husband was also sought. the high court considering fact that the u.k. court was already in seisin of matter and had passed an interim order and by relying on principle of comity of nations and comity of judgments of the courts of two different countries in deciding the matter directed the wife to take the child of her own to u.k.or hand it over to father of husband to be taken to u.k. as measure of interim custody and that it would be for the u.k. court to decide the question of custody - order was challenged by wife - held, the order of high court was not liable to be interfered with. although, on first impression, it would appear that the interests of the minor child would best be served if she is allowed to remain with the wife, the order of u.k. court cannot be lost sight of., the order of u.k. court except for insisiting that the minor be returned to its jurisdiction, the english court did not intend to separate the child from the mother until a final decision was taken with regard to the custody of the child. the ultimate decision in that regard has to be left to the english court having regard to the nationality of the child and the fact that both the parents had worked for gain in the u.k. and had also acquired permanent resident status in the u.k. english court has not directed that the custody of the child should be handed over to the father but that the child should be returned to the jurisdiction of the courts in the u.k. which would then proceed to determine as to who would be best suited to have the custody of the child. the high court has taken into consideration both the questions relating to the comity of courts as well as the interest of the minor child, which, no doubt, is one of the most important considerations in matters relating to custody of a minor child. - (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. 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. 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. 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. 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.order1. 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 theconstitution of india. reference may usefullybe made to section 31, which deals withtransfer of pending cases. section 31 of theact 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 extentof 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 thereforee, 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 there under 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, thereforee, 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 bedelinked 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 betransferred 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 ofindia. (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 bythe 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 favor 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 virtuallyadmit 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 favor 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 favor 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 arecases, 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 favor 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.

Judgment:
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 theConstitution of India. Reference may usefullybe made to Section 31, which deals withtransfer of pending cases. Section 31 of theAct 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 extentof 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 thereforee, 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 there under 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, thereforee, 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 bedelinked 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 betransferred 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 ofIndia.

(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 bythe 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 favor 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 virtuallyadmit 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 favor 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 favor 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 arecases, 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 favor 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.