Case: Southern Petrochemicals Industries Corporation Limited Vs. Administrator of Specified Undertaking of Unit Trust of India &amp; Others

substance and has no merit. The provisions of section (2) of Section 4A can only be invoked in cases where a financial institution is not specifically specified under sub section (1) of Section 4A of the Companies Act 1 of 1956. In the light of the view we have taken that sub clause (v) of sub section (1) of Section 4A of the Companies Act 1 of 1956 stood amended by substituting the name of Unit Trust of India with that of Respondent Nos.1 and 2 herein, we are of the opinion that the said respondent being specifically specified as a financial institution under the said sub section (1), the question of issuing notification under sub section (2) of Section 4A cannot and does not arise. Sub section (2) gives a power to the Central Government to declare any entity as financial institutions which are not specified under sub-section (1) of Section 4A of the Companies Act 1 of 1956, and therefore, in the present case, the sub-section (2) of Section 4A has no application whatsoever. We thus reject the submission of the learned counsel for the petitioner in that behalf.16. Mr. Aney, the learned counsel for the petitioner has thereafter relied upon a judgment of the Division Bench of this Court in the case of Krishna Filaments Ltd. vs. Industrial Development Bank of India & Ors. reported in 2004 (2) Bombay Cases Reporter, 16, particularly paragraph 24 of the said judgment and contended that the respondent Nos.1 and 2 even if they are financial institution they are not entitled to maintain the original application before the Debt Recovery Tribunal. Before we consider the aforesaid submission, it would be proper to reproduce paragraph 24 of the said judgment of the Division Bench of this Court in the case of Krishna Filaments Ltd. v. Industrial Development Bank of India& Ors, (supra) which reads as under:-"24. On the other hand, it was pointed out that the fact remains that the amount contributed to the debentures was that of the subscribers and the debenture trustees had an obligation to act faithfully. It was submitted that this arrangement was made principally to secure the capital required by the company. At the same time, it was not required to face a litigation by each and every debentures holders. On the other hand, the debenture holders were given a protective mechanism by mortgaging the property of the company to the financial institutions and giving them the power, impliedly coupled therewith a duty to act in the interest of the debenture holders. In the present case, the predominant debenture holders were either banks or financial institutions or mutal funds or insurance companies. The respondent No.1 was acting on their behalf. Having considered the kind of arrangement that is created, it is very clear that though certain rights and responsibilities are given to the debenture trustees, that does not mean that they become the owners of the amounts contributed. They continue to remain trustees and the amounts contributed continue to be the claims of the contributors. There can be no doubt that the suit is not for recovery of any debt due to a financial institutions. An emphasis was led on behalf of the appellant on the aspect as to who has lodged the claim in the suit and on a part of the definition of "debt" under section 2(g) of the RDB Act which sates that it is liability claimed by a bank or a financial institution. It was also emphasized that the transaction has arisen during the course of a business activity which is undertaken under a law for the time being in force. As far as this aspect is concerned, there can be no dispute about this. However, if the phrase "any liability claimed by a bank or a financial institution." Is read to mean any claim by such a body even for others, then in that case all sorts of claim by such bodies would get covered under this definition. It was therefore rightly emphasized on behalf of the respondent No.1 that under section 6(h) of Banking Regulation Act undertaking and executing trusts and section 6(1) thereof undertaking and administration of estates as executor, trustees or otherwise is a permissible business for the banking companies. Thus if a bank is collecting rents as a trustee of if it is an executor under a Will and it would be collecting the amount due to the estate, such claims would also come under the definition of a "debt".17. In our view the said judgment has no application to the facts of the present case. In the said judgment Industrial Development Bank of India was admittedly a public financial institution and there was no dispute as to the status of the IDBI as the financial institution. The dispute in the said case was that when the IDBI is performing a mere role of the debenture trustee holders whether it will be right to assign a role of financial institution when the application is made by it only as debenture trustees and whether such an application would lie under the provisions of Section 19 of the said DRT Act 1993. The claim by the Debenture Trustee holders is not of recovery of dues payable to the financial institution in their capacity as a financial institution and therefore Division Bench has in the aforesaid judgment held that an application by debenture trustees even if it is a financial institution would not lie in Debt Recovery Tribunal but they have to file a civil suit in civil Court. In the present case, the respondent Nos.1 and 2 are not suing the petitioner in their capacity as the debenture trustee holders but they are claming their amount towards the dues payable under the loan agreement and, therefore, the present application under section 19 of the DRT Act, 1993 is legal and maintainable.18. In the aforesaid view that we have taken, we do not find any merit in the present writ petition.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]17. In our view the said judgment has no application to the facts of the present case. In the said judgment Industrial Development Bank of India was admittedly a public financial institution and there was no dispute as to the status of the IDBI as the financial institution. The dispute in the said case was that when the IDBI is performing a mere role of the debenture trustee holders whether it will be right to assign a role of financial institution when the application is made by it only as debenture trustees and whether such an application would lie under the provisions of Section 19 of the said DRT Act 1993. The claim by the Debenture Trustee holders is not of recovery of dues payable to the financial institution in their capacity as a financial institution and therefore Division Bench has in the aforesaid judgment held that an application by debenture trustees even if it is a financial institution would not lie in Debt Recovery Tribunal but they have to file a civil suit in civil Court. In the present case, the respondent Nos.1 and 2 are not suing the petitioner in their capacity as the debenture trustee holders but they are claming their amount towards the dues payable under the loan agreement and, therefore, the present application under section 19 of the DRT Act, 1993 is legal and maintainable.18. In the aforesaid view that we have taken, we do not find any merit in the present writ petition.