Case: Hdfc Bank Limited Vs. Vasudeo Shripad Belvalkar (Deceased), Through His Legal Heir Vidyanand Vasudeo Belvalkar

2. Facts of the case :The petitioner a Banking Company, a Private Sector Bank had filed Original Application No. 51 of 2011 against the respondents seeking issuance of Recovery Certificate under Section 19(4) of the said Act, on account of default on the part of the respondent in repayment of security deposit in the sum of Rs.37,67,731/- paid from time to time as per the terms of deposit agreement.3. It is the petitioners case that, respondents are the owners of office premises on the second floor of a building known as Netrali Apartments at Pune (said premises for short). The petitioners and the respondents entered into a Leave and License Agreement dated 27th November, 1998 whereby the respondents granted unto the petitioners, a license to use and occupy the office premises in the said building. Besides, the parties entered into a deposit agreement in the month of December, 1998. The respondents thus, have received Rs.37,67,731/- as and by way of refundable security deposit against the license granted unto the petitioners to occupy the said premises.4. The Leave and License Agreement expired on 30th November, 2008 by efflux of time. That, vide letter dated 7th October 2009, petitioner demanded refund of the security deposit and requested the respondents to take possession of the licensed premises in terms of Leave and License Agreement and deposit Agreement dated 27th November, 1998. The respondents refused to refund security deposit as well, refused to take back possession of the licensed premises.5. It is the petitioners case that, they have removed their belongings from the licensed premises and expressed their readiness and willingness to handover possession of the premises to the respondents against the refund of entire security deposit.6. That since the respondents refused to return the security deposit, they were constrained to file Original Application No. 51 of 2011 before the DRT, Pune claiming that amount of security deposit constituted a debt over Rs.10,00,000/- due to the Banks during the course of business activities undertaken by the Bank.7. The respondent (owner) filed an application on 15th April, 2011 challenging the jurisdiction of the DRT to adjudicate upon the disputes between the parties on the ground that the amount of security deposit due and payable to the Bank did not fall within the purview of the term debt as defined under Section 2(g) of the said Act.8. The Honble Tribunal vide order dated 17th December, 2013 allowed the application challenging its jurisdiction to adjudicate upon the disputes between the parties and directed return of Original Application to the petitioner for its presentation before the judicial forum.9. The petitioner, being aggrieved and prejudiced by the order dated 17th December, 2014 has preferred Misc. Appeal No. 19 of 2011 before the Debt Recovery Appellate Tribunal (DRAT) under Section 20(1) of the said Act.10. The Learned Chairperson vide order dated 2nd November, 2017 dismissed the Appeal and as such upheld the order dated 17th December, 2013 passed by the DRT.11. Aggrieved by the orders passed by the DRT and by the DRAT as aforesaid, this petition is preferred under Articles 226 and 227 of the Constitution of India.

Court's reasoning:
25. Therefore, the expression debt is to be assigned meaning and understood in reference to the object and subject matter of scheme of the Act and further it is to be interpreted consistently with the objects and other provisions of the Act. Undisputedly, the Recovery Act was enacted primarily for the reasons that, the Banks and financial institutions should be able to recover their dues without unnecessary delay, so as to avoid any adverse consequences in relation to the public funds. The Statement of Objects and Reasons of this Act clearly state that Banks and financial institutions were experiencing considerable difficulties in recovering loans and enforcements of securities charged with them. The then existing procedure for recovery of dues of the Bank and the financial institutions blocked significant portion of their funds in un-productive assets, the value of which deteriorated with the passage of time. The Act provided for the establishment of Tribunals and Appellate Tribunals and modes for expeditious recovery of dues to the Banks and financial institutions.Thus, in the case of Eureka Forbes (supra), as well as, in United Bank of India (supra), liability as due arose in course of core banking business. It is in this context of the facts in the given cases, expression Debt has been interpreted which is in tune with object and scheme of the Act. In the case in hand, if petitioners contention is accepted, then, every liability claimed as due in the course of business activity in the terms of Section 6(1) of the Banking Regulation Act has to be adjudged in the proceedings under Section 17 of the said Act. To test the arguments of the petitioners, let us take a hypothetical case, where a Bank in the course of its business activity acquires right or agrees to acquires rights in immovable property. May the right be proprietary in nature or otherwise for consideration and Bank has paid substantial amount to the owner in terms of the Agreement. Say, if the dispute arises and if the Bank seeks to recover the amount, question would arise, where proceedings would lie  If we uphold the contention of Learned Senior Counsel, Mr. Tulzapurkar then the consideration or part consideration, paid to the owner would constitute a debt and for its refund, claim has to be filed under Section 17 of the said Act before the DRT. In our view, this would run counter to the object and scheme of the said Act. The object and scheme of the said Act, is to ensure attainment of legislative object i.e. expeditious recovery and provisions of taking such measures, which would prevent wastage of securities available with Banks and Financial Institutions (emphasis supplied). This proposition, if accepted, would invest the Tribunal with all powers of Civil Court, which is not intended by the Legislature.29. The expeditious recovery; Providing provisions for taking such measures which would prevent wastage of securities available with the Bank and enforcement of such securities is the object of the Act. Thus, whole object of the said Act is to recover debts by enforcing available security by a mechanism provided under the Act.30. In our view, if we uphold petitioners contention, it may not attain the object of the said act. This, may also, enlarge the jurisdiction of thethe case in hand, the issue is altogether different which we have dealt with in the foregoing paras. Mr. Tulzapurkar, Senior Counsel may be right in saying that, acquiring the premises on leave and license basis for the temporary period is one of the forms of businesses contemplated under Section 6 of the Banking Regulation Act but unpaid security amount for acquiring Licensed premises is certainly not a debt within the meaning of Section 2(g) of the said Act for the reasons stated hereinabove.In the said proceedings, the application was rejected by the Tribunal and held that the subject amount constitutes a debt within the meaning of Section 2(g) of the said Act. We respectfully do not agree with the findings recorded by the Learned Judge of the Tribunal. We have recorded the reasons as to why it would not be a debt.37. That for the reasons aforesaid, we hold and conclude that the unpaid security deposit is not a debt within the meaning of Section 2(g) of the said Act and therefore the proceedings instituted under Section 17 of the said Act by the Bank for recovery of the said amount were not maintainable.