Telangana High Court
M/S. Sarvaraya Textiles Employees ... vs The Debt Recovery Tribunal Ii on 13 June, 2025
*THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
+ WP.No.12009 OF 2019
% 13--06--2025
# M/s. Sarvaraya Textiles Employees Group Gratuity Trust and other
... Petitioners
vs.
$ The Debt Recovery Tribunal - II, rep. by its Registrar,
Hyderabad and other ... Respondents
!Counsel for the Petitioners: M/s. Bharadwaj Associates
^Counsel for Respondent No.2: Sri Srinivas Chitturu
<Gist :
>Head Note :
? Cases referred:
(1998) 8 SCC 1
AIR 1964 SC 477
(2013) 10 SCC 136
(1989) 4 SCC 1
(2024) 4 S.C.R. 541 : 2024 INSC 297
(2010) 6 SCC 193
2/14
MB,J & BRMR,J
W.P.No.12009 of 2019
IN THE HIGH COURT FOR THE STATE OF TELANGANA
HYDERABAD
****
WP.No.12009 OF 2019
Between:
M/s. Sarvaraya Textiles Employees Group Gratuity Trust and other
... Petitioners
And
The Debt Recovery Tribunal - II, rep. by its Registrar,
Hyderabad and other ... Respondents
JUDGMENT PRONOUNCED ON: 13.06.2025
THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments? : No
2. Whether the copies of judgment may be
Marked to Law Reporters/Journals? : Yes
3. Whether His Lordship wishes to
see the fair copy of the Judgment? : Yes
_____________________
B.R.MADHUSUDHAN RAO,J
3/14
MB,J & BRMR,J
W.P.No.12009 of 2019
THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
WP.NO.12009 OF 2019
ORDER:
(per Justice B.R.Madhusudhan Rao)
1. The Writ of Certiorari is filed by the petitioners to quash the
judgment passed by the respondent No.1 in OA.No.2832 of 2017,
dated 31.05.2019.
2. Respondent No.2 - Life Insurance Corporation of India
(hereinafter referred to as LIC henceforth) has filed OA.No.2832 of
2017 (Old OA.No.1381 of 1999 of DRT-1, Hyderabad) under Section
19 of the Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 (for short 'the Act, 1993') for recovery of Rs.44,04,025/-
from the defendants/petitioners herein jointly and severally together
with costs and future interest @ 14% per annum with quarterly rests
from the date of filing O.A. till the date of realization.
3. LIC has examined Sri R.Murali, Assistant Secretary (L & HPF)
as AW.1, got marked Exs.A1 to A27. Defendants have examined
Sri S.B.P.S. Krishna Mohan, Managing Director of defendant No.2-
company as DW.1.
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4.1. The Tribunal after going through the evidence and documents
has allowed the O.A. directing the defendants jointly and severally
liable to pay to the Applicant Corporation a sum of Rs.44,04,025/-
with future interest @ 14% per annum simple from the date of filing
the O.A. till the date of realization. The Applicant Corporation is
entitled to proceed against the properties of the defendants towards
the realization of its debt and also entitled for costs, directed to issue
recovery certificate accordingly.
4.2. The Tribunal came to a conclusion that the over drawn amount
falls within the definition of 'debt' as defined in Section 2(g), the
applicant falls within the meaning of 'Financial Institution' as defined
under Section 2(h)(i) and that the Tribunal has jurisdiction to try the
O.A. under Section 19 of the Act, 1993.
5.1. Learned counsel for the petitioners submits that there is no
debt between LIC and the petitioners in terms of Section 2(g) and
question of recovery of debt under RDDB Act, 1993 is without
jurisdiction. Alleged excess amount is neither a debt nor a liability
and except on the principle of unjust enrichment/Restitution the
question of initiation of a recovery proceeding for such an amount
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would not lie not only in DRT but also in Civil Court even under
Section 72 of Contract Act, 1872.
5.2. Counsel submits that the DRT has recorded perverse findings
since there is no quantification and itemization of the claim amount
by LIC and at any rate the claim is totally misdirected against the
petitioners when the excess payment has been made to the retiring
employees, who are not before the DRT, and no amount much less
excess amount was ever paid to the petitioners company even as per
the pleadings in the OA and there cannot be any recovery proceedings
against the petitioners, non-payment of the Policy premium amount,
payment of the alleged excess amount of the retiring employees and
the alleged overdrawal of the policy amount are all self-contradictory
claims made by LIC and hence the certificate ought not have been
granted to the 2nd respondent-LIC.
5.3. Counsel submits that the alternative remedy is not a bar for
maintaining a writ petition, hence the entire recovery proceedings are
misdirected against the petitioners and resultantly the impugned
judgment of the DRT is liable to be set aside, in the absence of details
relating to the alleged excess payment made to the retiring
employees/retired employees of the petitioners company, the money
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claim is impermissible in law, the findings recorded by the DRT that
whenever there was a running account, constituted a debt under the
RDDB Act, 1993 and that the petitioners company has made some
payments towards the alleged excess amount or unpaid/part
paid/short paid policy amounts, does not legally entitle LIC to make
the present claim, neither the principle amount nor the interest
amount decreed by the DRT have any legal basis much less legal
sanctity. In support of his contentions has relied on the decisions in
(1) Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and
Others 1 , (2) Syed Yakoob Vs. K.S. Radhakrishnan and Others 2 ,
(3) Jagmittar Sain Bhagat and Others Vs. Director, Health Services,
Haryana and Others 3, (4) Mahabir Kishore and Others Vs. State of
Madhya Pradesh 4, (5) PHR Invent Educational Society Vs. UCO Bank
and Others 5 , (6) Eureka Forbes Limited Vs. Allahabad Bank and
Others 6.
6. Learned counsel for the respondent No.2 submits that Writ
Petition is not maintainable in view of Section 20 of Recovery of Debts
and Bankruptcy Act, 1993. The Appellate Tribunal has become
(1998) 8 SCC 1
AIR 1964 SC 477
(2013) 10 SCC 136
(1989) 4 SCC 1
(2024) 4 S.C.R. 541 : 2024 INSC 297
(2010) 6 SCC 193
MB,J & BRMR,J
functional immediately after filing the Writ Petition and the petitioners
have not made out any case which falls within the exceptions
enumerated by the Apex Court in PHR Invent Educational Society.
LIC is a Financial Institution under RDB Act, 1993 and it is Public
Financial Institution within the meaning of Section 4A of the
Companies Act, 1956 and that LIC is legally entitled to invoke the
provisions of RDB Act for recovery of its dues. Claim of LIC is a debt
and which falls under Section 72 of the Contract Act, 1872. Counsel
further submits that the petitioners have addressed letters admitting
the excess payments made by the LIC and they requested time for
clearing the over dues i.e., Exs.A14, A19, A23 and A25, and also
relied on the decision in Eureka Forbes Limited Vs. Allahabad Bank6.
7. Heard learned counsel for the parties, perused the records in
detail.
8. By the date of filing the Writ Petition (i.e., 17.06.2019), there
was no provision in Act, 1993 for an Appeal. Section 20 of the Act,
1993 was instituted by the Act 30 of 2004 (w.r.e.f: 11-11-2004). Even
thereafter writ petition was pending.
9.1 Writ petition was listed on 18.06.2019 on which date interim
stay is granted by the Co-ordinate Bench. Interim order granted on
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18.06.2019 is modified vide I.A.No.1 of 2019, dated 07.01.2020 as
"There shall be interim stay of execution of judgment and decree
dated 31.05.2019 in O.A. No.2832 of 2017 passed by first
respondent-Tribunal on condition of the petitioners depositing 50% of
the decreetal amount before the first respondent within a period of
eight weeks and on such deposit, the second respondent is permitted
to withdraw the same without furnishing any security".
9.2. Petitioners have challenged the impugned order dated
07.01.2020 in I.A.No.1 of 2019 in W.P.No.12009 of 2019 before the
Supreme Court vide Special Leave to Appeal (Civil) No.15177 of 2020.
The Supreme Court vide order dated 02.02.2024 disposed of the
matter ''As the order impugned is interim in nature, we are not
inclined to interfere with the impugned judgment passed by the High
Court. Hence, the Special Leave Petition is dismissed. However, we
would request the High Court to dispose of the Writ Petition as
expeditiously as possible."
9.3 Petitioners have not complied with the orders passed by the
Co-ordinate Bench in I.A.No.1 of 2019, dated 07.01.2020 directing to
deposit 50% of the amount.
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10. Section 2(h) of the Act, 1993 says Financial Institution means
(i) a public Financial Institution within the meaning of Section 4A of
the Companies Act, 1956 (1 of 1956). Section 4A of the Companies
Act, 1956 says that (1) Each of the Financial Institutions specified in
the sub-section shall be recorded for the purpose of this Act as a
Public Financial Institution namely: (iv) Life Insurance Corporation of
India, established under Section 3 of the Life Insurance Corporation
Act, 1956 (31 of 1956). In view of the definition of the Companies Act,
1956, Life Insurance Corporation falls under Financial Institution
within the meaning of Section 2(h)(i) of the Act, 1993.
11. The word 'debt' is defined in Section 2(g) of the Act, 1993, it says
debt means any liability, which is claimed as due from any person by
a Bank or Financial Institution in cash or otherwise whether secured
or unsecured or assigned or whether payable under a decree or order
of a Civil Court.
12.1. Ex.A1 is the Master Policy No.62333. Scheduled conditions,
Part-II, premiums at paragraph No.4 deals with gratuity, which reads
as under:
"When gratuity becomes payable to a Member on his retirement or
cessation of service, the Corporation shall pay to the Grantee the
benefits according to the Schedule IV of the Policy out of the
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accumulated balance remaining in the running account. Upon death of
a Member, the Corporation shall draw from the running account
necessary amount which together with the sum assured under the Term
Assurance Plan in respect of the Member will make up the gratuity
payable to the Nominee."
12.2. Similar condition is also shown in Ex.A2 Master Policy
No.62722.
13. As per Exs.A1 and A2 the word running account is used.
Running account does constitute a debt, it is an open, unsettled
account between two parties where they regularly exchange goods or
services and the outstanding balance fluctuates. While it is a one
continuous account and each individual transactions still represents
a debt owned by the one party to the other party. A running account
is characterized by ongoing transactions and a constantly shifting
balance. Each transaction on the running account represents a debt
incurred by the party receiving the services. Hence it falls under
Section 2(9) of the Act, 1993.
14. Section 72 of the Indian Contract Act, 1872 deals with the
liability of a person to whom money is paid, or something is delivered
by mistake or under coercion. The mandate is that such a person
must repay or return the money or thing. As rightly contended by
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learned counsel for respondent No.2 that the debt falls within the
definition of Section 72 of the Contract Act.
15. Section 19 of Act, 1993, says a Financial Institution has to
recover any debt from any person, it may make an application to the
Tribunal within the Local Limits of its jurisdiction. LIC has rightly
invoked the jurisdiction of the Tribunal.
16. LIC has got marked Exs.A1 to A27 during the course of
evidence of PW.1. Those documents are pertaining to the
communications between the parties i.e., LIC, with that of the
petitioners in respect of the master policy - Remittance towards
arrears of premium.
17.1. Ex.A14 is the letter of the petitioners dated 19.01.1995,
wherein it is stated that they will be clearing the gratuity claims
pending with LIC as mutually agreed.
17.2. Ex.A19 is the letter dated 26.07.1995 addressed by the
petitioners to LIC, wherein they admitted that they will be clearing
substantial amounts due to the LIC.
17.3. Ex.A23 is the letter dated 12.12.1995 addressed by the
petitioners to the LIC stating that considering the reputation of the
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Company they sought time till 31.03.1996 before which date they will
try to repay the amount of about Rs.32,00,000/- by installments and
will be sending the cheques to the Visakhapatnam Branch in token of
sincere efforts to fulfill the obligations.
17.4. Petitioners have also addressed letter to the LIC on
08.04.1996 under Ex.A25 requesting to extend the time up to
30.06.1996 on or before which date they will be able to refund the
amount payable to the LIC against the Master Policies (Exs.A1 and
A2).
18. Exs.A14, A15, A19, A23 and A25 letters goes to show that the
petitioners having admitted about the amounts and sought extension
to repay the same. The amounts due to the LIC are reflected in
Exs.A26 and A27. Now the petitioners cannot go back and say that
they are not liable to pay any amount to the Respondent No.2/LIC.
Petitioners have made payment of Rs.2,00,000/- and Rs.5,00,000/-
in the month of January and March, 1995 in furtherance of their
liability and also paid Rs.2,00,000/- by way of Cheque on
15.11.1996, Rs.2,00,000/- by way of Demand Draft vide letter, dated
13.12.1996.
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19. It is to be noted here that the petitioners by letter, dated
15.11.1996 had sent three Cheques, dated 19.11.1996 for
Rs.2,00,000/-; dated 30.11.1996 for Rs.2,00,000/- and dated
15.12.1996 for Rs.1,00,000/-, the first cheque is only cleared. As
the account between the petitioners and the LIC is running account,
Section 24 of the Limitation Act is applicable. It cannot be said that
the O.A. filed by the LIC is barred by limitation in view of the fact that
the petitioners made payments in the month of January and March,
1995.
20. The principles laid down in Whirlpool Corporation1 and Syed
Yakoob2 are not applicable to the case on hand in view of the fact that
the Tribunal has jurisdiction to try the O.A. under Section 19 of the
Act, 1993 and also the relationship of debtor and creditor and
existence of Debt under Section 2(g) of the Act, 1993 is established
and there is no perversity in the Judgment passed in the Tribunal.
21. In Jagmittar Sain Bhagath3, the Supreme Court held that the
findings of a Court or Tribunal becomes irrelevant and
unenforceable/inexecutable once the Forum is found to have no
jurisdiction. It is a coram non judic; when a special statute gives a
right and also provides for a forum for adjudication of the rights, the
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remedy has to be sought only under the provisions of that Act and the
common Law Court has no jurisdiction. The law does not permit any
Court/Tribunal/Authority to usurp Jurisdiction on any ground
whatsoever in case such as authority does not have jurisdiction on
the subject matter. In view of our findings in paragraph Nos.10 and
15 we hold that the Tribunal has jurisdiction to try the O.A.
22. We have already held that the transactions between the
petitioners and the respondent No.2/LIC falls under the definition of
Debt and covered under Section 72 of the Contract Act, 1872. Hence
the decision in Mahabir Kishore4 is not applicable to the case on
hand.
23. Petitioner's do not fall in any of the exceptions enumerated by
the Supreme Court in PHR Invent Educational Society5. Moreover, it
is dealt in Educational Institutions but whereas in the present Writ
Petition the matter is pertaining to the debt arising in between the
petitioners and respondent No.2.
24.1. In Eureka Forbes Limited6, the Supreme Court held at
paragraph No.51, which is as under:
"51. We may notice some of the general expressions used by the framers
of law in this provision:
a) any liability
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b) claim as due from any person
c) during the course of any business activity undertaken by the bank
d) where secured or unsecured
e) and lastly legally recoverable"
24.2. Learned counsel for the petitioners has also relied on Eureka
Forbes Limited6. In fact, it is applicable to LIC's case as the claim of
the respondent No.2/LIC falls under the expression 'a' to 'e' of the
above said judgment.
25. As rightly held by the Tribunal that the LIC is a Financial
Institution under Section 2(h)(i) and the transaction between the
parties is a debt as in Section 2(g) and under Section 19 of the Act,
1993, the Tribunal has jurisdiction to try the O.A. The findings of the
Tribunal need not be interfered in respect of the jurisdiction, debt,
Financial Institution.
26. The learned Tribunal has answered the points raised by the
petitioners in detail prospective and rightly held that the Tribunal has
jurisdiction to entertain the O.A. under Section 19 taking into
consideration the correspondence made between the parties i.e.,
Exs.A14, A15, A19, A23 and A25 and has also held that the LIC falls
within the ambit of Financial Institution. In view of Exs.A1 and A2
the transaction between the petitioners with that of LIC is a running
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account and falls within the definition of 'Debt' under Section 2(g) of
Act, 1993.
27. We are of the view that Writ Petition is not maintainable and
there is no perversity or illegality in the order passed by the learned
Tribunal and we are not inclined to interfere with the same.
28. In view of the reasons stated by us supra, the petitioners are not
entitled for Writ of Certiorari and the same is liable to be dismissed.
29. W.P. No.12009 of 2019 is dismissed. There shall be no order as
to costs.
All connected applications, if any, shall stands closed.
_________________________________
MOUSHUMI BHATTACHARYA, J
_____________________________
B.R.MADHUSUDHAN RAO, J
13th June, 2025
PLV
MB,J & BRMR,J
THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
WP.NO.12009 OF 2019
13.06.2025
PLV
