Bombay High Court

M/S Ashwini Trading Co. Thr Its ... vs Housing Bank Ltd., Thr Its Manager And ... on 11 August, 2025

2025:BHC-AUG:21712
                                                 1
                                                                 7008.2024WP.odt

                          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                     BENCH AT AURANGABAD

                                 WRIT PETITION NO. 7008 OF 2024

                     M/s Ashwini Trading Co.,
                     Having its Office at 5/105,
                     Nityanand Marg, Opp. Andheri,
                     Railway St ation, Andheri, Mumbai,
                     Through its proprietor
                     Mrs. Sushiladevi Rameshkumar Bagariya,
                     Age : 66 years, Occ : Business,
                     R/o C/o Bagaria Vegetables Ltd.,
                     Jafargate, Near Abhinay Talkies,
                     Aurangabad.
                                                              ..PETITIONER
                                VERSUS

                     1.   Housing Bank Limited,
                          Registered under the Companies Act, 1956
                          and having its registered office at
                          Ramon House, 169, Backbay Reclamation,
                          H.T. Parekh Marg, Mumbai - 400 020
                          and having one of its branches at
                          Jalna Road, Aurangabad,
                          Through its Manager and Power of Attorney Holder
                          Shri Manda Madhavah

                     2.   Krishna Constructions
                          A registered partnership firm
                          having its office at Shop Nos.56,
                          57 and 58, Jai Towers, Padampura,
                          Station Road, Aurangabad
                          Through its Partners

                     3.   Shri Sanjay Manoharrao Dashetwar
                          Age : Major, Occ : Business,
                          R/o C/o Waghehoure, D-2,
                          Sahyadri Garden, Vedantnagar,
                          Aurangabad
                          And plot No.54, Khivsara Park,
                          Ulkanagari, Aurangabad.
                             2
                                           7008.2024WP.odt

4.   Shri Venkatesh Manoharrao Dashetwar
     Age : Major, Occ : Business,
     R/o Flat No.7, Rukhmini Apartments,
     Chetnanagar, Aurangabad.

5.   Shri Ravindra Rangnathrao Dikshit
     Age : Major, Occ : Business,
     32, Sahakarnagar, Aurangabad
     and Flat No.4, Krishna Apartments,
     Plot No.122, Jyotinagar,
     Aurangabad.

6.   Mrs. Anupama Ravindra Dashetwar
     Age : Major, Occ : Business,
     R/o 31, Rajnagar, Aurangabad.

7.   Mrs. Gayatri Sanjay Dashetwar
     Age : Major, Occ : Business,
     R/o C/o Waghchoure, D-2,
     Sahyadri Garden, Vedantnagar,
     Aurangabad
     And
     Plot No.54, Khivsara Park,
     Ulkanagari, Aurangabad.

8.   Mrs. Nilima Venkatesh Dashetwar
     Age : Major, Occ : Business,
     R/o Flat No.7, Rukhmini Apartments,
     Chetna Nagar, Aurangabad
     And
     Plot No.84, Khivsara Park,
     Ulkanagari, Aurangabad.

9.   Shri Batiah Manoharrao Dashetwar
     (name in petition)/
     Shri Satish Manoharrao Dashetwar
     (name in Special Civil Suit)
     Age : Major, Occ : Business,
     R/o Flat No.2, Shivneri Apartment,
     Ulkanagari, Aurangabad
     And
     Plot No.54, Khivsara Park,
     Ulkanagari, Aurangabad.
                               3
                                                7008.2024WP.odt

10.   Mrs. Renu Ravindra Dikshit
      Age : Major, Occ : Business,
      32, Sahakarnagar, Aurangabad
      And
      Flat No.4, Krishna Apartments,
      Plot No.122, Jyotinagar,
      Aurangabad.

11.   Ms. Bhargavi Rangnathrao Dikshit
      Age : Major, Occ : Business,
      32, Sahakarnagar, Aurangabad
      And
      Flat No.4, Krishna Apartments,
      Plot No.122, Jyotinagar,
      Aurangabad.

12.    Shri Ravindra Manoharrao Dashetwar
       Age : Major, Occ : Business,
       R/o 31, Rajnagar, Aurangabad.
                                            ..RESPONDENTS
                               ...
Mr. S.P. Shah, Advocate for the petitioner
Mr.S.V. Adwant a/w Mr. H.S. Adwant and Mr. Aarya
Deshpande, Advocates for respondent No.1.
                               ...
             CORAM              :      ROHIT W. JOSHI, J.
            RESERVED ON       :        25th JULY, 2025
            PRONOUNCED ON:             11th AUGUST, 2025


JUDGMENT :

The present petition takes exception to order

dated 4th April, 2024 passed by the learned District Judge-2,

Aurangabad, on an Application Exhibit-230 in Commercial

Suit No.12/2019, thereby ordering transfer of the said suit to

Debts Recovery Tribunal, Aurangabad (hereinafter referred to

as "DRT, Aurangabad").

7008.2024WP.odt

2. A Company, named HDFC Limited had filed a

suit, being Special Civil Suit No.46/2007 for recovery of

amount of Rs.3,14,85,223/- against the petitioner and

respondent nos.2 to 12. The suit is pertaining to recovery of

amount advanced in two separate loan accounts. The

outstanding amount in two loan accounts as per respondent

no.1/plaintiff was Rs.2,32,28,013/- and Rs.82,62,210/- as on

the date of filing of suit. After commencement of Commercial

Courts Act, 2015, the said suit was transferred to Commercial

Court and was registered as Commercial Suit No.12/2019.

Pending the said suit, HDFC Limited came to be amalgamated

with HDFC Bank Limited, vide order dated 17 th March, 2023

passed by the National Company Law Tribunal, Mumbai

(NCLT, Mumbai) in Company Scheme Petition No.240/2022,

granting approval to the scheme of amalgamation. HDFC Bank

Limited is a Banking Company under the Banking Regulation

Act, 1949. In view of amalgamation of HDFC Limited with

HDFC Bank Limited, all the assets and liabilities of HDFC

Limited stood vested with HDFC Bank Limited. Under the

scheme, HDFC Bank Limited is also entitled to continue to

prosecute all litigations initiated by HDFC Limited prior to its

amalgamation with HDFC Bank Limited. Accordingly, name of

7008.2024WP.odt

HDFC Bank Limited is impleaded as plaintiff in the suit and

the suit is being prosecuted by HDFC Bank Limited.

3. In this backdrop, HDFC Bank Limited filed an

Application, vide Exhibit - 230 in Commercial Suit

No.12/2019 praying for transfer of the said suit to DRT,

Aurangabad in view of Sections 17 and 18 of the Recovery of

Debts and Bankruptcy Act, 1993 (hereinafter referred to as

"RDB Act").

4. The petitioner, who is defendant no.11 in the said

suit opposed the application by filing detailed reply on 20 th

February, 2024. After hearing rival submissions, the learned

Trial Court has allowed the Application filed vide Exhibit-230

vide order dated 4th April, 2024 holding that the suit was

required to be transferred to DRT, Aurangabad in view of

amalgamation of HDFC Limited with HDFC Bank Limited.

Accordingly, the learned Trial Court ordered the matter to be

placed before the learned Principal District Judge,

Aurangabad for appropriate administrative action. The said

order dated 4th April, 2024 is challenged by defendant

7008.2024WP.odt

no.11/petitioner by filing the present petition.

5. Mr. Subodh Shah, learned Advocate for the

petitioner contends that DRT will not have jurisdiction to try

the suit, which is ordered to be transferred to it by the

impugned order. The learned Advocate has referred to Section

19 of the RDB Act, to contend that an Application under

Section 19 of the said Act can be filed by a Bank or a Financial

Institution to recover debt from any person. He contends that

a proceeding for recovery of any amount other than debt

cannot lie before Tribunal. He refers to definition of term

"Debt" as defined under Section 2(g) of the Act to contend

that the term "Debt" means only such amount, which a bank

claims to be due to it from any person during the course of

any business activity undertaken by the Bank. The contention

is that in the present case, the loan was advanced by HDFC

Limited, which was not a bank, and therefore, DRT will not

have the jurisdiction to entertain the controversy forming

subject matter of the suit. Mr. Shah contends that the date on

which the suit was filed by HDFC Limited, the Civil Court was

having jurisdiction to try and decide the suit on merits. He

contends that the suit is filed in the year 2007, after

7008.2024WP.odt

establishment of DRT. Referring to the aforesaid undisputed

facts, Mr. Shah draws attention to Section 31 of the RDB Act

and contends that in view of the said provision only such suits

or proceedings pending before the Court can be ordered to be

transferred to DRT, which would have otherwise been within

the jurisdiction of DRT, if DRT was established on the date on

which the suit or proceeding was filed. In other words, the

contention of Mr. Shah is that in case where the cause of

action in a suit is such that if DRT had been in existence on

the date of filing of suit, it would have the jurisdiction over

the subject matter of the suit, only then such suits can be

ordered to be transferred to DRT after establishment of DRT.

Mr. Shah contends that a suit which as on the date of filing

would not lie before the DRT, cannot be ordered to be

transferred to DRT only because it falls within the jurisdiction

of DRT because of certain subsequent development. Mr. Shah

contends that since the original plaintiff/HDFC Limited was

not a Bank or a Financial Institution, the Civil Suit filed by it

was maintainable before the Civil Court and DRT did not have

jurisdiction to entertain the said suit. He, therefore, contends

that such a suit cannot be ordered to be transferred to DRT in

view of Section 31 of the RDB Act. This contention is raised

7008.2024WP.odt

without prejudice to the first contention that DRT does not

have the jurisdiction over the subject matter of the suit even

today since the money advanced by HDFC Limited, which was

neither a Bank nor Financial Institution, cannot be termed to

be debt within the meaning of Section 2(g) of the RDB Act.

Mr. Shah contends that merely because the original plaintiff

stood amalgamated with another company resulting in

assignment of loans, the Commercial Court will not lose

jurisdiction over the suit. He contends that when subject

matter of suit is assigned and devolves upon another person,

the person in whose favour assignment is made or interest is

devolved steps into the shoes of assigner and that even after

assignment the suit has to continue in the same manner as if

there was no assignment.

6. Mr. Shah, learned Advocate for the petitioner

places reliance on the following judgments :-

(a)    Definition of Debt :-

(i)    SBI Vs. Raman Kapur and others, 2009 SCC OnLine Del.

(ii) State Bank of Bikaner & Jaipur Vs. Ballabh Das and Co., (1999) 7 SCC 539

7008.2024WP.odt

(iii) Oriental Bank of Commerce Vs. Shri Mohan Gupta, 1996 SCC OnLine Del 202

(iv) Bank of India Vs. Ramniklal Kapadia, AIR 1997 Guj 75

(b) Effect of Assignment :-

(i) Dhurandhar Prasad Singh Vs. Jai Prakash University and others, (2001) 6 SCC 534.

7. Per contra, Mr. S.V. Adwant, learned Advocate for

respondent no.1/plaintiff contends that since the plaintiff is a

Banking Company registered under the Banking Regulation

Act, 1949, suit is rightly transferred by the learned Trial Court

to DRT. He contends that suit for recovery by a Banking

Company against any borrower would essentially lie before

DRT. Mr. Adwant contends that the term debt means any

amount that is claimed as due by the Bank or the Financial

Institution and since the amount is now being claimed by a

Banking Company, which is a Bank within the meaning of

Section 2(d) of the Act, proceeding will lie only before the

DRT. Mr. Adwant refers to Sections 17, 18 and 19 of the Act to

contend that jurisdiction of Civil Court and Commercial Court

is now barred. With respect to contention of Mr. Shah as

7008.2024WP.odt

regards interpretation of the term debt, Mr. Adwant counters

that the term debt does not mean any amount advanced by a

Bank and claimed by it as due but any amount, which is

claimed by the Bank as due. He further contends that it is

express intention of the Legislature that suits for recovery of

debt by Banks should be decided by DRT alone, and therefore,

Sections 17 and 18 will override Section 31 of the RDB Act.

He contends that Section 31 is included in the Act only to

ensure that even suits for recovery filed by the Banks before

the appointed day should be transferred to DRT. He contends

that Section 31 reinforces the mandate of Section 18 that no

Court shall have jurisdiction to try and decide proceeding for

recovery of debts by a Bank.

8. Mr. Adwant, learned Advocate for respondent

no.1 has placed reliance on the following judgments :-

(i) Kotak Mahindra Bank Limited Vs. Stiefel Und Schuh India Ltd., and others, 2009 SCC OnLine Del 32.

(ii) Vivek Narayan Sharma Vs. Union of India, 2023(3)SCC 1

(iii) Harshad Chiman Lal Modi Vs. DLF Universal Ltd., and another, (2005) 7 SCC 791

7008.2024WP.odt

(iv) Saraswati Industrial Syndicate Ltd., Vs. Commissioner of Income Tax, 1990 (Supp) SCC 675

(v) Allahabad Bank Vs. Canara Bank and another, (2000) 4 SCC 406

(vi) United Bank of India, Calcutta Vs. Abhijit Tea Co. Pvt.

Ltd., and others, (2000) 7 SCC 357

(vii) Indiabulls Housing Finance Limited Vs. Deccan Chronicle Holdings Limited and others, (2018) 14 SCC

783.

9. As regards judgments referred by Mr. Shah at Sr.

Nos.1, 3 and 4, in the said cases the Bank had filed a suit for

recovery of amount, which was siphoned off by its employees

by resorting to unlawful means, such as forgery, falsification of

accounts and other acts of fraud. In this context, the learned

Single Judges of Delhi and Gujarat High Courts have held that

the amount claimed to be due by the Bank cannot be

recovered by initiating the proceeding under the RDB Act

since the amount due and payable does not fall within the

definition of term debt, as defined under the Act. In this

context, it is held that the scheme of the RDB Act is to provide

for recovery of loan advanced by Banks to borrower during

the course of banking business. These judgments have to be

read and interpreted in the context of the peculiar facts of the

7008.2024WP.odt

said cases. The said judgments will not be applicable to the

facts of the present case. The said judgments do not deal with

situation, which arises for consideration in the case at hand

where the original lender/plaintiff which was not a bank has

merged/amalgamated with a Bank after advancing the loan

while suit for recovery was pending. The ratio of the

judgments is not that on amalgamation of original lender with

a Bank, the Bank cannot prosecute the proceeding for

recovery before DRT and/or that DRT will not have the

jurisdiction to entertain the proceeding for recovery of amount

due to a Bank which was initially advanced by a non-banking

entity, which has subsequently merged with the Bank on

amalgamation.

10. As against this, the Division Bench judgment of

Delhi High Court in the matter of Kotak Mahindra Bank Ltd.,

(supra) relied upon by Mr. Adwant is squarely applicable to

the facts of the present case. In the said matter also, loan was

advanced by a non-banking entity to the defendant/borrower

and while suit for recovery filed by the original lender was

pending, the debt was assigned to a Bank. In the backdrop of

such facts, Delhi High Court has held that once the debt was

7008.2024WP.odt

assigned by a non-banking company in favour of a Bank,

jurisdiction to entertain the suit was vested exclusively with

DRT and that in such circumstances, the suit was rightly

transferred to the DRT. The Division Bench has also dealt with

Section 31 of the Act to hold that although, the situation was

not squarely covered by Section 31 yet having regard to the

overall scheme of the Act, the suit was required to be

transferred to DRT after assignment of the suit claim to a

Bank. It was held that after the assignment, the suit filed

before Delhi High Court on its Original Side was not

maintainable since the High Court lost jurisdiction to try the

same in view of the assignment. The present case stands on a

better footing, in as much as, here the debt is not assigned in

favour of a Bank but the original plaintiff stands amalgamated

with the Bank.

11. At this juncture, it will be appropriate to refer to

the judgment of the Hon'ble Supreme Court in United Bank of

India, Calcutta (supra). In the said case, the plaintiff bank had

filed a suit for recovery of amount before commencement of

RDB Act, 1993. The matter went in Appeal and was remanded

back for fresh adjudication. The remand was after the RDB

7008.2024WP.odt

Act, 1993 came into force. In this backdrop of facts when the

question of transferring the suit to DRT arose, the defendant

filed an application that suit should be retained on the file of

High Court exercising its Original Jurisdiction and should not

be transferred to DRT. The High Court allowed the application

filed by the defendant. The Bank challenged the said order

before the Apex Court. In this context, the Apex Court has

considered the provisions of RDB Act and particularly, Section

18 thereof. The Hon'ble Apex Court was pleased to allow

appeal preferred by the Bank. The relevant observations of the

Hon'ble Apex Court are extracted hereinbelow for ready

reference :-

"26. That principle has been applied to this very Act by this Court recently in Allahabad Bank V. Canara Bank. If the said principle is applied, it is clear that the provision in Section 31 must be construed in such a manner that, after the Act, no suit by the Bank is decided by the civil court and all such suits are decided by the Tribunal."

12. The Hon'ble Supreme Court in the matter of

Allahabad Bank Vs. Canara Bank and another, (2000) 4 SCC

406 has observed as under :-

7008.2024WP.odt

"21. In our opinion, the jurisdiction of the Tribunal in regard to adjudication is exclusive. The RDB Act requires the Tribunal alone to decide applications for recovery of debts due to banks or financial institutions."

13. Mr. Shah contends that Kotak Mahindra Bank

Ltd., (supra) proceeds on an assumption that upon

assignment of debt by a non-banking entity to a Bank, DRT

will have the jurisdiction. He submits that the contention

raised in the present petition that DRT will not have

jurisdiction over a case in which loan was initially advanced

by a non-banking entity and the suit was filed for recovery of

the same and subsequently, when loan assigned to a Bank,

DRT will not have jurisdiction since the said loan, which is

advanced by a non-banking entity will not fall within the

definition of the term "debt" under Section 2(g) of the Act. It

is true that the judgment proceeds on the assumption that

upon assignment of debt as aforesaid, DRT will have

jurisdiction since the amount is claimed as due by the Bank.

14. The contention of Mr. Shah that DRT will not

have jurisdiction to decide the suit since the amount allegedly

7008.2024WP.odt

payable by the defendants to respondent no.1 Bank does not

fall within the definition of the term debt, as defined under

Section 2(g) of the RDB Act, though it is attractive at the first

blush does not withstand a deeper scrutiny. The definition of

term "debt" in RDB Act reads as under :-

"2(g) "debt" means any liability ...... which is claimed as due from any person ...... by a bank ..... during the course of any business activity undertaken by the bank ...... whether secured or unsecured or assigned....."

15. The contention of Mr. Shah is that unless the

amount is advanced by a Bank as a loan, the amount due will

not partake the character of debt, as defined under Section

2(g) of the Act. In this regard, it needs to be seen that the

provision contemplates that the amount must be claimed as

due by a Bank and this amount must be claimed as due during

the course of any business activity undertaken by the Bank.

The provision does not contemplate that the Bank must claim

amount due which is advanced by it during the course of any

business. Recovery of amount claimed as due during the

course of banking business will also meet the parameters of

definition of the term debt, as defined under Section 2(g). If

the contention of Mr. Shah is to be accepted, the word

7008.2024WP.odt

"advanced" as will have to be added in the provision and the

words, "claimed as due" shall have to be read as "advanced

and claimed as due". A plain grammatical meaning of the

definition indicates that what is contemplated is that the

amount should be claimed as due during the course of

business activity and not that the amount must be advanced

and then claimed as due during the course of business activity.

When loan advanced by any entity is assigned to a Bank or in

the present case an entity which has advanced loan is

amalgamated with the Bank, the Bank is entitled to claim the

outstanding amount as due during the course of its business

activity. To recover such amount also will be a part of business

activity of the Bank, although the amount may not have been

advanced by the Bank itself as a loan. On a plain reading of

the provision, interpretation as offered by Mr. Shah cannot be

accepted.

16. Mr. Shah contends that the impugned order of

transfer of suit cannot be sustained in view of Section 31 of

RDB Act, which provides for transfer of suits to DRT. Section

31 of the Act provides that every suit and other proceeding

filed before any Court immediately before establishment of

7008.2024WP.odt

DRT shall be transferred to DRT, if the cause of action on the

basis of which suit is filed would fall within the jurisdiction of

DRT and the matter would have been filed before DRT. The

contention of Mr. Shah is that in the present case, date on

which suit was filed DRT was already in existence and that the

cause of action in the suit did not fall within the jurisdiction of

DRT. His contention is that both contingencies contemplated

under Section 31 are not satisfied, and therefore, the suit

cannot be transferred to DRT.

17. Literal meaning of Section 31 will imply that a

suit can be transferred to DRT only when a suit is filed in a

Court before establishment of DRT and the cause of action in

suit is such that had DRT been in existence on the date of

institution of suit, DRT would have had jurisdiction over

subject matter of the suit. In the present case, the suit was

admittedly filed after DRT had come into existence and as on

the date of filing of the suit, the subject matter of the suit was

not amenable to jurisdiction of DRT since the plaintiff (HDFC

Limited) did not fall within the definition of the term "bank"

as defined under the RDB Act.

7008.2024WP.odt

18. However, Section 31 cannot be interpreted in a

vacuum. It has to be read with other provisions of the Act,

particularly, Sections 17 and 18, which confer jurisdiction

upon DRT and bar jurisdiction of all Courts with respect to

matters which fall within jurisdiction of DRT.

19. Section 17 provides that on and from the

appointed day, DRT shall have jurisdiction, power and

authority to entertain and decide applications from Banks and

Financial Institutions for recovery of debt. As per Section 2(c),

the term "appointed day" means the date on which DRT is

established. As per Section 2(b), the term "application" means

an application made for recovery of debt by a Bank before the

Tribunal. What is relevant to be noted is that the jurisdiction is

conferred by using two words, "entertain and decide". Section

18 creates an express bar on authority of any Court to exercise

jurisdiction, power or authority in relation to any matter

specified under Section 17. It needs to be mentioned that

Section 18 is a substantive provision, which bars jurisdiction

of all the Courts to deal with matters which can be

adjudicated by DRT. On merger of original plaintiff(HDFC

Limited) with respondent no.1 (HDFC Bank Limited),

7008.2024WP.odt

respondent no.1 - Bank is entitled to claim the outstanding

amount as due and proceed with the matter for recovery of

the said amount. This act of recovery will be in the course of

business activity of the Bank. The proceeding, therefore,

satisfies the ingredients of an application within the meaning

of Section 2(b) and Section 19 of RDB Act. In view Section 18,

the jurisdiction of Commercial Court will be barred to decide

the, "application". In view of the scheme of Sections 17, 18

and 19 of RDB Act, the matter must lie before DRT. Section 31

needs to be interpreted in the light of these provisions. Section

17 speaks about subject matter jurisdiction of DRT. Section 18

provides bar on jurisdiction of all Courts to decide matters

which fall within jurisdiction of DRT under Section 17 of the

RDB Act. Section 31 is a procedural provision for transfer of

matters, which fall within the jurisdiction of DRT from a Court

where the suit is pending to DRT for adjudication of the same

on merits. In the considered opinion of this Court, Section 31

further emphasizes that the bar under Section 18 is absolute

and on and from the appointed day, no Court other than DRT

shall have jurisdiction to deal with any matter, which falls

under the jurisdiction of DRT. The provision is incorporated in

the statute with an object to ensure that even pending suits

7008.2024WP.odt

are transferred to DRT if the subject matter of the suit is

amenable to jurisdiction of DRT. The provision reinforces

mandatory nature of Section 18. It needs to be mentioned that

Section 18 is couched in negative terms, which implies that it

is absolutely mandatory.

20. It is a well settled legal principle that attempt

shall be made to harmonise two different provisions which

appear to be in conflict with each other. However, when they

cannot be reconciled attempt should be made to identify the

dominant purpose of the Statute and find out which provision

should override the other.

21. While dealing with the said legal principle,

Justice G.P. Singh in his book, "Principles of Statutory

Interpretation", has referred to Institute of Patent Agents V.

Lockwood, (1894) AC 347 (HL), which reads as under :-

"You have to try and reconcile them as best as you may. If you cannot, you have to determine which is the leading provision, and which the subordinate provision and which must give way to the other."

7008.2024WP.odt

22. Provisions of Sections 17, 18 and 31 of the

RDB Act are required to be interpreted in the light of

aforesaid legal principle. In this context, when Section 17

of the Act is perused, it is found that jurisdiction upon DRT

is conferred to entertain and decide the applications by the

banks for recovery of debt due to them. As stated above,

Section 18 bars jurisdiction of any Court or Authority to

deal with a matter, which falls within the jurisdiction of

DRT under Section 17. Bar under Section 18 as can be seen

from reading of the provision operates against exercising

any jurisdiction. The bar does not operate only at the stage

of institution of the suit. Section 18 clearly implies that the

bar is applicable to pending suits as well. This

interpretation is further reaffirmed by Section 31 of the

Act.

23. Section 31 is included to ensure that even

pending suits should go before DRT.Contingency of

amalgamation of a non-banking entity with a bank though is

not considered while enacting the said provision. However,

having regard to the mandate of Section 18, in the considered

opinion of this Court, it will be appropriate to resort to

7008.2024WP.odt

purposive interpretation while dealing with Section 31.

Sections 17 and 18 are substantive provisions and Section 31

is a provision dealing with procedure. In view of the above, in

the considered opinion of this Court, rather than literal

interpretation purposive interpretation should be adopted

while interpreting Section 31. Section 31 must submit to a

mandate of Section 18 read with Sections 17, 2(d) and 19 of

the Act. It will be appropriate to honour the scheme of the

Act, which clearly bars jurisdiction of all Courts to exercise

jurisdiction with respect to matters which fall within

jurisdiction of DRT by directing that the suit must be

transferred to DRT, although strictly speaking present case is

not squarely covered by Section 31 of the RDB Act.

24. After filing of the suit the original plaintiff (HDFC

Limited) has been amalgamated with the present petitioner

(HDFC Bank Limited), which is undisputely a banking

company and as such, a bank within the meaning of the Act.

After amalgamation, the suit answers description of the term

"application" as defined under Section 2(b) of the Act and is of

the nature of a proceeding referred under Section 19 of the

Act. Therefore, DRT will have jurisdiction to entertain and

7008.2024WP.odt

decide the suit and jurisdiction of other Courts will be barred

in view of Section 18 of RDB Act.

25. As regards the contention of Mr. Shah pertaining

to the assignment of right in favour of respondent no.1,

Mr.Adwant contends that the said argument will not hold

good in the present case since this is not a case of assignment

of right to continue to prosecute the suit by one person in

favour of another but a case of complete amalgamation of the

original plaintiff with another Company. Mr. Adwant contends

that after the amalgamation, the original plaintiff/HDFC

Limited ceases to exist, and therefore, the principles relating

to assignment will not be applicable to the case at hand. He

contends that amalgamation should not be confused with

assignment.

26. The learned Advocate for the petitioner has

placed reliance on judgment of the Hon'ble Supreme Court in

the matter of Dhurandhar Prasad Singh (supra), wherein it is

held that when a person acquires interest by obtaining a leave

to proceed with the suit, the suit in his hands is not a new suit

but the old suit is carried at the instance of such person and

7008.2024WP.odt

he is bound by all the proceeding upto the stage when he

obtains a leave to prosecute the proceeding. Referring to the

said judgment, Mr. Shah contends that nature of suit will

continue to be a suit filed by a non-banking company and as

such the Commercial Court shall continue to have jurisdiction

over the subject matter. In this regard, it must be stated that

the present case is not one of assignment but of

amalgamation. The erstwhile plaintiff has not assigned the

rights in the suit in favour of the present plaintiff/petitioner.

The present case is a case of amalgamation where the

erstwhile plaintiff has completely merged with the present

plaintiff (HDFC Bank Limited). In this regard, it will be

profitable to refer to the judgment of the Hon'ble Supreme

Court in the matter of Saraswati Industrial Syndicate Ltd.

(supra), wherein it is held as under:-

"5. ...... Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity."

6. ..... The true effect and character of the

7008.2024WP.odt

amalgamation largely depends on the terms of the scheme of merger. But there can be any doubt that when two companies amalgamate and merge into one the transferor Company loses its entity as it ceases to have its business. However, their respective rights or liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor Company ceases to exist with effect from the date the amalgamation is made effective.

27. As against this, the term "assignment" implies

transfer or making over of property by one entity to another. It

involves transfer of property. The judgment in the matter of

Dhurandhar Prasad Singh (supra), which deals with

assignment will therefore not apply to the present case, which

is not a case of assignment of subject matter of the suit. The

present plaintiff (HDFC Bank Limited) is not continuing with

the suit as assignee but because the original plaintiff (HDFC

Limited) has lost its existence upon amalgamation with the

present plaintiff (HDFC Bank Limited).

28. It must also be stated that the definition of the

term "debt", as defined under Section 2(g) also means liability,