Research › Search › Judgment

Madras High Court · body

2010 DIGILAW 3979 (MAD)

R. Latha v. The Authorised Officer

2010-09-03

S.MANIKUMAR

body2010
Judgment :- 1. Communication of the Chief Manager and Authorized Officer of the Andhra Bank, Chennai, dated 12.01.2008, rejecting the request of the petitioner for rescheduling the outstanding loan amount of Rs.5,07,309.12ps., due as on 31.12.2007, together with further interest till the date of payment in full and a further direction to deliver vacant physical possession of the secured asset (symbolic possession of which was already taken on 24.10.2005), and a further direction that if the petitioner does not deliver, the respondent would be constrained to take appropriate steps to secure physical vacant possession of the secured asset and to sell the same for recovering their dues, as per the provisions of SARFAESI Act, without any further reference to him, is under challenge in this writ petition. 2. Following disciplinary action, the petitioner was inflicted with a penalty of compulsory retirement on 16.08.2004. Legality of the enquiry and the punishment imposed is under challenge in W.P.No.9720 of 2005. 3. It is the further case of the petitioner that in the year 2000, she availed staff Housing Loan to the tune of Rs.3,00,000/-and two years thereafter, she availed another sum of Rs.1,50,000/-. Housing loan was provided as one of the service benefits of employment with the respondent Bank. As per the schedule, the loan amount has to be repaid on monthly instalments of Rs.2700/-, for a period of 20 years. With the housing loan, she purchased a house and the instalments were deducted periodically. The petitioner was suspended from service on 12.09.2003. Due to mental agony, she could not pay attention to the loan transaction and the bank also did not deduct any amount from the subsistence allowance. The petitioner bona fide believed that the subsistence allowance would be adjusted against the repayment of housing loan. 4. While that be so, in July 2005, the petitioner received a notice from the Authorized Officer, Andhra Bank, Chennai, the first respondent herein, purportedly issued under the provisions of SARFAESI Act, by which, the petitioner was directed to pay a sum of Rs.4,95,381.81/-, within a period of 60 days and in default, the Bank would take over possession of the house. The petitioner was entitled to Leave Encashment amount together with retirement benefits. Therefore, she bonofidely believed that the said amount would have been adjusted to clear the arrears of loan. The petitioner was entitled to Leave Encashment amount together with retirement benefits. Therefore, she bonofidely believed that the said amount would have been adjusted to clear the arrears of loan. In such circumstances, she filed a Writ Petition in W.P.No.9721 of 2005, challenging the notice dated 14.10.2005 of the first respondent purportedly issued under the provisions of SARFAESI Act. The writ petition was admitted on 27.10.2005 and during the pendency she continued to deposit Rs.2,000/-per month and now for the past six months, the petitioner has been depositing a sum of Rs.2,700/-,from the date of filing of the present writ petition. 5. The above said writ petition was disposed of on 18.07.2007, with a direction to the respondents therein to consider her entitlement of leave encashment and for rescheduling of loan amount without going into the merits of the case. But, by letter dated 29.08.2007, the respondents informed the petitioner that as per the Regulations, an officer whose exist by way of punishment is not entitled leave encashment and hence, she made another representation dated 01.01.2004 to the first respondent dated 01.01.2008 to the first respondent, requesting for rescheduling of loan. The said request has been rejected by a letter dated 12.01.2008, with a further direction to the petitioner to pay an alleged outstanding loan of Rs.5,70,309.12p., immediately and in default, vacant possession would be taken. 6. Taking this Court through the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and in particular to Section 3(g) of the Recovery of the Debts due to the Bank and Financial Institution Act, 1993, Mr.Prabu Rajadurai, learned counsel for the writ petitioner submitted the staff housing loan granted exclusively for the employees working in the respondent Bank, at a concessional rate of interest, arrived at between the Employees Union and the Management, which is an incentive, cannot be brought under the definition of debt, as provided in Section 3(g) of the above said Act, 1993. 7. 7. According to him, the provisions of Securitisation Act can be invoked only if a loan is advanced during the course of any business activity of the Banks or Financial Institutions, and that in the absence of any profit motive, while granting loans to the employees of the bank, the respondents are precluded from taking recourse to the Provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. According to him, the element of banking activity should correlate with the purpose for which the financial institution is established. 8. Learned counsel for the petitioner further submitted that Housing loan is a benefit granted to the employees of the Bank and if there is any default in repayment, then, the only remedy open to the respondent Bank is to invoke a common law remedy and the Provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, cannot be invoked to realise any staff loan. In sum and substance, he submitted that staff loan cannot be termed as debt within the meaning of Section 3(g) of the Act, 1993. 9. Learned counsel for the petitioner further submitted that the respondents could have deducted periodical instalments from the subsistence grant, which was not availed by the writ petitioner or from the encashment amount, Earned Leave, and in which case, there would not have been any arrears towards the housing loans. According to him, as the respondents have failed to deduct the loan amount from the above heads, that resulted in accumulation of the loan amount, for which, the petitioner ought not to have been penalised with a draconian action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 10. Based on the counter affidavit filed by the Manger, Andra Bank, Madurai, Mr.Pala Ramasamy, learned counsel for the respondent made a preliminary objection to the maintainability of the Writ Petition. According to him, if the petitioner is aggrieved over the impugned communication, he ought to have approached the Debt Recovery Tribunal, constituted for recovery of the amount of debt less than 10 lakhs due to any Bank, for redressal. 11. According to him, if the petitioner is aggrieved over the impugned communication, he ought to have approached the Debt Recovery Tribunal, constituted for recovery of the amount of debt less than 10 lakhs due to any Bank, for redressal. 11. He further submitted that what is impugned in this writ petition is only a letter dated 14.10.2005, instructing the writ petitioner to pay the outstanding amount due to the Bank, with a note of caution that in if default of payment of the said sum, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, would be taken. According to him such communication would not give rise to any cause of action, under Article 226 of the Constitution of India, and inasmuch as the amount sought to be recovered pertains to a contractual obligations agreed upon by the petitioner the Writ Petition has to be rejected in limini. 12. He also submitted that the respondent Bank is entitled to recover the amounts due, and when Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, deals with the grievance expressed by the writ petitioner, the writ petition is not maintainable. 13. Without prejudice to the above preliminary objection on the maintainability, learned counsel for the respondents further submitted that the petitioner joined the Bank in the year 1989, as clerk. Thereafter, she was promoted as an Officer and transferred from Tuticorin to Tirunelveli Branch. For making fraudulent debts to various savings and current accounts of the customers between 28.06.2003 and 02.08.2003 and for misappropriation a sum of Rs.1,05,700/-by using the passwords of other officers, without their knowledge. Disciplinary action was initiated against the petitioner under Regulations 3(1) and 24 of Andhra Bank Officers Employees Conduct Regulations. After conducting a detailed enquiry, by proceedings dated 12.04.2004, she was dismissed from service. On appeal, by order dated 16.08.2004, the punishment of dismissal was converted into that of "compulsory retirement" and a sum of Rs.2,22,783/-, being the terminal benefits, were received/ adjusted against her loan amount, as per the Banks letter dated 18.11.2005 and dated 23.11.2005 respectfully. 14. After conducting a detailed enquiry, by proceedings dated 12.04.2004, she was dismissed from service. On appeal, by order dated 16.08.2004, the punishment of dismissal was converted into that of "compulsory retirement" and a sum of Rs.2,22,783/-, being the terminal benefits, were received/ adjusted against her loan amount, as per the Banks letter dated 18.11.2005 and dated 23.11.2005 respectfully. 14. Learned counsel for the respondents further submitted that after adjusting all the retirement benefits to the tune of Rs.2,22,782.10, the petitioner was due for a sum of Rs.4,95,381.96, as on 30.06.2005, which subsequent accrued interest, as per terms and conditions of the loan transaction. According to him, no amount was due from the Bank to the petitioner under the heads of subsistence allowance, leave encashment, medical allowance and arrears of wages and consequent to revision, a sum of Rs.23,877.54 was also adjusted towards housing loan liability. 15. According to the learned counsel, the interest on outstanding amount upto 15.02.2006 was Rs.5,023/-, when the petitioner was remitting only Rs.2,700/-per month, a sum which did not even satisfy the monthly interest. He further submitted that the outstanding loan amount was classified as Non-Performing Asset in the books of accounts, as the bank is the secured creditor and therefore, the bank is empowered to invoke the Provisions of SARFAESI Act. According to him, even the notice dated 27.08.2005, issued under Section 13(2) of the said Act, and acknowledged by the petitioner has not been challenged and therefore, it is not open to the petitioner to challenge the present communication. 16. Learned Counsel for the respondents further submitted that as long as there is a commercial activity undertaken by the bank in granting loan to an employee of the Bank or to any other customer in the course of business and if the said amount is due from any person, it is classified as Non-Performing Asset and action can be taken under the provisions of SARFAESI Act for realisation. The sanction of loan to the Bank employee with a concessional rate of interest, would not alter the commercial activity and merely because the rate of interest is less, the amount in outstanding would not fall outside the definition of debt. With the above submissions, he prayed for dismissal of the Writ Petition. 17. Heard the learned counsel for the parties and perused the material on record. 18. With the above submissions, he prayed for dismissal of the Writ Petition. 17. Heard the learned counsel for the parties and perused the material on record. 18. Before adverting to the facts of the case, it is necessary to extract few provisions of the SARFAESI Act, 2002 and the Recovery of Debts due to the Banks and Financial Institutions Act 1993. 19. As per Section 2(f) of Recovery of Debts due to Banks and Financial Institutions Act 1993, "borrower" means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance; 20. Section 2(j) defines Default, means non-payment of any principal debt or interest thereon or any other amount payable by a borrower to any secured creditor consequent upon which the account of such borrower is classified as non-performing asset in the books of account of the secured creditor in accordance with the directions or guidelines issued by the Reserve Bank. 21. As per Section 2(k) financial assistance means ay loan or advance granted or any debentures or bonds subscribed or any guarantees given or letters of credit established or any other credit facility extended by any bank or financial institution. 22. Section 2 (o) speaks of Non Performing Assets and it means:-"non-performing asset" means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss assets, in accordance with the directions or under guidelines relating to assets classifications issued by the Reserve Bank; 23. As per Section 2 (zc), secured asset means the property on which security interest is created. 24. Chapter 13 of Recovery of Debts due to the Banks and Financial Institutions Act, 1993, deals with enforcement of Security Interest Act. As per Section 2 (zc), secured asset means the property on which security interest is created. 24. Chapter 13 of Recovery of Debts due to the Banks and Financial Institutions Act, 1993, deals with enforcement of Security Interest Act. Section 13 of "(1)Notwithstanding anything contained in section 69 or section 69-A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. 25. Section 13(4) states that in case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; (b) take over the management of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realise the secured asset; (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. 26. Section 17 of the Act, 2002 speaks of the right to appeal and it reads as follows:-"17. Right to appeal-(1) any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorized officer under this Chapter, may prefer an appeal to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken. Where an appeal is preferred by a borrower, such appeal shall not be entertained by the Debts Recovery Tribunal unless the borrower has deposited with the Debts Recovery Tribunal seventy-five per cent. Where an appeal is preferred by a borrower, such appeal shall not be entertained by the Debts Recovery Tribunal unless the borrower has deposited with the Debts Recovery Tribunal seventy-five per cent. Of the amount claimed in the notice referred to in sub-section (2) of section 13: Provided that the Debts Recovery Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section. (3) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 193 (51 of 1993) and rules made thereunder. 27. The focus of the learned counsel for the petitioner is with reference to two aspects viz., as to whether a loan obtained by an employee, such as, housing loan, vehicle loan etc., and if any amount is unpaid, can be brought under the definition of debt, as per Section 2(g) of the Recovery of Debt Due to the Banks and Financial Institution Act, 1993, and if so recovery can be made by taking recourse to the provisions of Section 2(f) of the Securitisation Act, 2002, or Recovery of Debt Due to the Banks and Financial Institution Act, 1993. 28. As regards the second contention raised by the petitioner that granting loan to an employee with a lesser interest is not a business activity and therefore, the provisions of Debt laws cannot be invoked, let me consider the dictionary meaning of the word "Business" and some of the decisions. 29. In Blacks Law Dictionary, 6th edition, Page 198, the term business is defined as, business, employment, occupation, profession or commercial activity engaged in for gain or livelihood. Activity or enterprise for gain, benefit, advantage or livelihood. 30. According to Chambers Twentieth Century Dictionary, business means: (a)employment; b).trade, profession or occupation; (c) a task or errand incumbent or undertaken; (d)matter requiring attention; e) dealings, commercial activity, a commercial or industrial concern, 31. Activity or enterprise for gain, benefit, advantage or livelihood. 30. According to Chambers Twentieth Century Dictionary, business means: (a)employment; b).trade, profession or occupation; (c) a task or errand incumbent or undertaken; (d)matter requiring attention; e) dealings, commercial activity, a commercial or industrial concern, 31. Oxford English Dictionary defines "business", as (a) A task appointed or undertaken; a persons official duty, part or province; function; occupation; b) A persons official or professional duties as a whole; stated occupation, profession or trade; (c) A pursuit or occupation demanding time and attention; a serious employment as distinguished from a past time; (d) A particular occupation; a trade or profession; commercial transactions or engagement. 32. In Kesavan Nair Vs. CK Babu Naidu ( AIR 1954 Mad 892 (1954) 2 Mad LJ 149, 67 Mad LW 408, this court held that the term business includes every trade, occupation and profession. The word business has no technical meaning, but is to be read with reference to the subject and intent of the Act in which it occurs. The term business means an affair requiring attention and labour as the chief concern; mercantile pursuits, that one does for livelihood, occupation, employment. 33. In Narain Swadeshi Weaving Mills Vs. CEPT AIR 1955 SC 176 , (1955) SCR 952, (1954) 26 ITR 765 Dass, the Supreme Court observed that the word business connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. 34. The issues raised in this Writ Petition are no longer res integra, as the same has been elaborately dealt with by this Court, in Palat Achuthan v. Management, Citibank N.A., reported in 11 (2004 BVC 46 : (2003) 117 CompCas 716 (Mad). 35. In Palat Achuthan v. Management, Citibank N.A., reported in II(2004) BC 46 : (2003) 117 CompCas 716 (Mad), the petitioner herein was initially appointed as a management trainee and gradually promoted as a Vice-President. Subsequently, he was terminated from service and he had challenged the same by way of a Writ Petition. While so, the Management of City Bank Branch, moved the Debt Recovery Tribunal, Chennai, claiming a sum of Rs.58,93,284,74 with interest. The said sum was allegedly due from the petitioner towards various loans sanctioned in his favour, while he was in service of the bank. He had received various amounts towards purchase of many household articles, car, apartment at various places. The said sum was allegedly due from the petitioner towards various loans sanctioned in his favour, while he was in service of the bank. He had received various amounts towards purchase of many household articles, car, apartment at various places. Seeking for a writ of Prohibition, prohibiting the Debt Recovery Tribunal, second respondent therein, from proceeding with the adjudication of the claims made by the Bank, the petitioner therein contended that the said amounts were received only by way of availing loan facilities extended to the employees of the bank and that the same does not amount to any business activity or transaction of the bank like the one with the regular customers of the bank. The petitioner had further contended that amounts due to the bank cannot be termed as a loan or debt within the meaning of the provisions under the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993, so as to approach the Debt Recovery Tribunal and hence, the Debt Recovery Tribunal has no jurisdiction to adjudicate on the said claims. 36. The respondent-Bank, inter alia, contended that under various Schemes, loans were granted for the purchase of furniture, home appliances, repair/modification of the house, purchase of car and two wheeler, marriage of the children of the employee, etc., and that the loan was repayable with interest at the rate of 4.12% per annum. It was further contended that as the petitioner therein had failed to perform his obligations under the contract and neglected to repay the loan amount, despite the request, the Bank had initiated recovery proceedings to preserve and enforce its security, by taking re-course under the provisions of the above said Act. According to the Bank, the loans granted to the employees were not different from the loans granted to the other individuals/customers of the bank and therefore, the Debt Recovery Tribunal has ample jurisdiction to decide, as to whether the dues amounted to "debt" and including the issue of its own jurisdiction. It was also contended on behalf of the Bank that the amounts lent to the petitioner therein were nothing more or less than the bank granting loans to its customers and it does not cease to be a business transaction with the bank was also submitted that concessions shown in the rate of interest or mode of recovery cannot convert it into a non-business transaction. 37. 37. Per contra, it was contended on behalf of the borrower that the Debt Recovery Tribunal cannot have jurisdiction to adjudicate the claim of the amounts due to the Bank, as it is not a liability arising under any commercial or business activity with the bank, but only service benefits, which had accrued to the borrower under the terms of employment. It was also contended that any recovery thereon would arise only as against the salary of the employee before the Civil court and not before the Debt Recovery Tribunal, as the loans and advances were made available, as per the banks beneficial welfare schemes. 37. On the above pleadings and after a thorough examination of the definition "Debt" as provided in 2(g) of the Act and after considering the judgments of the Supreme Court in United Bank of India v. Debts Recovery Tribunal reported in 1999 (4) SCC 69 and State Bank of Bikaner and Jaipur v. Ballabh Das and Co., reported in 1999 (7) SCC 539 and on perusal of the terms under which loans were sanctioned in favour of the employee. The Honble Mr. Justice K.P. Sivasubramaniam (as he then was), observed that the terms and conditions of the loans sanctioned to the petitioner therein were not different from the terms and conditions of the loans that were sanctioned to the customers of the bank. At Paragraph 11, learned Judge held that, "The nature of the transaction is thus a simple case of advance or grant of loan by the bank to any of their customer public. The fact that some concession is shown in the rate of interest or payment schedule to the employees, will not render the transaction a non-business transaction of the bank. The transaction is not different from other transactions with the general public who transact with the bank. Therefore, I am unable to view the transaction as a simple grant by the employer to the employee which could be termed as due under the service condition of the employee. The banks action to recover the amount from the petitioner is not a claim towards any excess payment of salary or allowances or such other amounts like provident fund, gratuity, bonus, incentive payment etc., which are referable to the service conditions of an employee. The banks action to recover the amount from the petitioner is not a claim towards any excess payment of salary or allowances or such other amounts like provident fund, gratuity, bonus, incentive payment etc., which are referable to the service conditions of an employee. The amounts which are sought to be recovered is due towards the loans obtained from the bank by the petitioner. 38. After extracting the definition of the word "Debt", the learned Judge further held that, "The above expression has to be given a very wide meaning and amplitude as applicable to any transaction with a bank, financial institution, bearing in mind the objects of the Act, viz., the need to recover dues to these institutions which deal with money and assets of the depositors and the customers of the bank. The money belonging to a bank or a financial institution is not to be compared with an asset of a company being the property and asset of the company and can dispose of the assets at its pleasure to its employees as loans and advances. Money at the disposal of these institutions belongs to the various depositors and it is only to protect their interest, the Act was enacted. The fact that the loan or advances are given by the bank to the employees cannot convert the nature of the loan transaction and place it beyond the scope of the Act. Such an interpretation would violate the objects of the Act. In fact, such undue concession shown by the banks and finance companies to their employees are highly questionable as they affect the interest of the depositors and also the corresponding heavier burden which is placed on the borrowing customers of the bank. Therefore, the attempt on the part of the employee/petitioner to treat the loans and amounts received by him as not a "debt" due to the bank, cannot at all be permitted." 39. Useful reference can be made to the judgment in United Bank of India v. Debts Recovery Tribunal reported in 1999 (4) SCC 69 , where the Supreme Court held that the expression "debt" has to be given a widest amplitude and objects of the Act have to be taken into consideration to interpret the provisions of the Act. Useful reference can be made to the judgment in United Bank of India v. Debts Recovery Tribunal reported in 1999 (4) SCC 69 , where the Supreme Court held that the expression "debt" has to be given a widest amplitude and objects of the Act have to be taken into consideration to interpret the provisions of the Act. In the proceedings before the Supreme Court the claim by the bank was towards damages arising out of a breach of contract with the bank. 40. In State Bank of Bikaner and Jaipur v. Ballabh Das and Co., reported in 1999 (7) SCC 539 , the respondents under the export credit facility, had obtained advances from the bank against pre-shipment and post-shipment export of certain categories of goods. The foreign buyers defaulted in payment due to the bank. The bank filed two suits against the respondents and during the pendency of the suit, the Act came into force and suits were transferred to the Tribunal. The Supreme Court held that the expression "alleged as due" has to be taken note of and what was necessary to be considered was whether the bank had alleged in the suits that the amounts are due to the bank from the respondents and that the liability of the respondents had arisen in the course of their business activity. 41. Thus, reading of the provisions as well as the law laid down by Courts makes it abundantly clear that grant of loan to any person, including an employee for the purchase of vehicles, marriage of children of an employee, home appliances, etc., are not different than the loans granted to any other individual/customer and when the word, "business" employed in the statute, cannotes commercial activity with some real, substantial and systematic or organised course of activity, a transaction of the Bank with the employee, granting loan with the concessional rate of interest, would not render as a same as, non-business transaction of the bank and it cannot be said that there is no business activity. Merely because a concessional rate of interest is allowed on the loan granted to the employee, it is not open to the petitioner to contend that there is no business activity. 42. Merely because a concessional rate of interest is allowed on the loan granted to the employee, it is not open to the petitioner to contend that there is no business activity. 42. Whether legislature has placed any restriction on the definition of the word, debt in Debt Due to the Banks and Financial Institution Act, 1993 or in Section 2(f) of the Securitisation Act, 2002 has been elaborately dealt with in a recent judgment of the Supreme Court in Eureka Forbes Ltd., V. Allahabad Bank reported in ( 2010 (6) SCC 193 ). 43. The second contention of the learned counsel for the petitioner is that granting loan to an employee is not a business activity, as there is no profit motive. 44. After considering the main contentions raised therein that the appellant was neither a borrower nor was they are any kind of privity of contract between them and as such, the claim by the bank was not a debt and therefore, the recovery procedure under the provision of the Recovery Act could not be enforced against the appellant therein. The Supreme Court at paragraph Nos.47 to 52, 57 to 65 and 70 and 73 held as follows:-47. The next question of law, that we are called upon to consider, is the ambit and scope of the provisions of Section 2(g) of the Recovery Act, on which the entire case of the parties hinges. We have already noticed that the appellant has argued with great vehemence that, there was no privity of contract and they were not covered under the definition of “debt”, and as such, recovery proceedings could not be initiated, much less, recovery could be effected from them under the provisions of the Act. 48. Section 2(g) of the Recovery Act reads as under: “2. 48. Section 2(g) of the Recovery Act reads as under: “2. (g) ‘debt’ means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application;” 49. The Recovery Act of 1993 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 states that banks and financial institutions at present, experience considerable difficulties in recovering loans and enforcement of securities charged with them. The existing procedure for recovery of dues of the Bank and the financial institutions block significant portion of their funds in unproductive assets, the value of which deteriorates with the passage of time. Introduction of similar procedure was suggested by the Tiwari Committee. The Act provided for the establishment of the Tribunals and Appellate Tribunals and modes for expeditious recovery of dues to the banks and financial institutions. 50. In this background, let us read the language of Section 2(g) of the Recovery Act. The plain reading of the section suggests that the legislature has used a general expression in contradistinction to specific, restricted or limited expression. This obviously means that, the legislature intended to give wider meaning to the provisions. Larger area of jurisdiction was intended to be covered under this provision so as to ensure attainment of the legislative object i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions. 51. This obviously means that, the legislature intended to give wider meaning to the provisions. Larger area of jurisdiction was intended to be covered under this provision so as to ensure attainment of the legislative object i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions. 51. We may notice some of the general expressions used by the framers of law in this provision: (a) any liability; (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. 52. All the above expressions used in the definition clause clearly suggest that, the expression “debt” has to be given general and wider meaning; just to illustrate, the word “any liability” as opposed to the word “determined liability” or “definite liability” or “any person” in contrast to “from the debtor”. The expression “any person” shows that the framers do not wish to restrict the same in its ambit or application. The legislature has not intended to restrict to the relationship of a creditor or debtor alone. General terms, therefore, have been used by the legislature to give the provision a wider and liberal meaning. These are generic or general terms. Therefore, it will be difficult for the Court, even on cumulative reading of the provision, to hold that the expression should be given a narrower or restricted meaning. What will be more in consonance with the purpose and object of the Act is to give this expression a general meaning on its plain language rather than apply unnecessary emphasis or narrow the scope and interpretation of these provisions, as they are likely to frustrate the very object of the Act. 57. Before we advert to the discussion while applying these principles of interpretation to the provisions of Section 2(g) of the Recovery Act, and also examine the merit of the contention raised on behalf of the respondent, it may be interesting to know as to how the word “debt” has been defined and explained by this Court in different judgments, with different context and under different laws. 58. Years back this Court in Ramanathan Chettiar v. Ramanathan Chettiar explained the expression “debt” as defined in the Madras Agriculturists Relief Act, 1938. 58. Years back this Court in Ramanathan Chettiar v. Ramanathan Chettiar explained the expression “debt” as defined in the Madras Agriculturists Relief Act, 1938. The Court held that the definition appearing in Section 3(iii) of the Act, despite the fact that it specifically states that “debt” would not include rent as defined in clause (iv), or “kanartham”, as defined in Section 3(1) (l) of the Malabar Tenancy Act, 1929, held that the definition is still of a very wide magnitude and would include “any liability” due from an agriculturist’s with the specified expressions. The Court held as under: (AIR p. 1049, para 5) “5. ‘Debt’ has been defined in Section 3(iii) of the Act as meaning ‘any liability’ in cash or kind, whether secured or unsecured, due from an agriculturist, whether payable under a decree or order of a civil or Revenue Court or otherwise, but does not include rent as defined in clause (iv), or ‘kanartham’ as defined in Section 3(1)(l) of the Malabar Tenancy Act, 1929.” 59. In Union of India v. Raman Iron Foundry this Court quoted as under: (SCC pp.240-41, para 9) “9. ... The classical definition of ‘debt’, is to be found in Webb v. Stenton9 where Lindley, L.J. said: ‘... a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation....’. There must be debitum in praesenti; solvendum may be in praesenti or in futuro—that is immaterial. There must be an existing obligation to pay a sum of money now or in future.” 60. Still, in another case titled as State Bank of Bikaner & Jaipur v. Ballabh Das & Co.the Court was concerned with the unamended provisions of Section 2(g) of the Recovery Act. The Court while setting aside the order of the High Court, while dealing with the word “debt” followed by the words “alleged as due”, held as under: (SCC p.544, paras 7-8) “7. According to the definition, the term ‘debt’ means liability which is alleged as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions. It should have arisen during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force. It should have arisen during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force. The liability to be discharged may be in cash or otherwise. It would be immaterial whether the liability is secured or unsecured or whether it is payable under a decree or an order of any civil court or otherwise. However, it should be subsisting and legally recoverable on the date on which proceedings are initiated for recovering the same. 8. The important words in the definition ‘alleged as due’ have been overlooked by the High Court and, therefore, it has erroneously held that unless the amounts claimed by the Bank are determined or decided by a competent forum they cannot be said to be due and would not amount to ‘debt’ under the Act. What was necessary for the High Court to consider was whether the Bank has alleged in the suits that the amounts are due to the Bank from the respondents, that the liability of the respondents has arisen during the course of their business activity, that the said liability is still subsisting and legally recoverable.” 61. As already noticed, the judgment in State Bank of Bikaner & Jaipur case10 was pronounced by the Court while dealing with the unamended provisions of Section 2(g) of the Recovery Act. This section was amended by Act 1 of 2000 and the words “alleged as due” stood substituted by the expression “claimed as due” with effect from 17-1-2000. This shows the intention of the legislature to significantly introduce definite expression and give emphasis to the claim of the Bank rather than, what is allegedly due or determinatively due to the Bank from its borrowers. In this case, the application of the Bank had been dismissed by the High Court on the ground that it was not maintainable as it was not covered under the definition of the word “debt”. While setting aside the order of the High Court, this Court held that, the High Court had gone wrong in holding that the application by the Bank was premature and till the Court determines the amount, such application could not be filed by the Bank. While setting aside the order of the High Court, this Court held that, the High Court had gone wrong in holding that the application by the Bank was premature and till the Court determines the amount, such application could not be filed by the Bank. This Court clearly stated the dictum that, such application would be maintainable and the amount payable to the Bank does not have to be a determined sum under the provisions of the Recovery Act. 62. Similar contention had been raised before us on the strength of the judgment of this Court in United Bank of India6 on behalf of the appellant. Firstly, we fail to understand as to what advantage the learned counsel appearing for the appellant wishes to draw from this judgment and secondly, this judgment has clearly returned the finding, even on the facts of that case, that application under the provisions of the Recovery Act was maintainable within the scope of Section 2(g) of the Act. The Court held as under: (SCC pp.72-73 & 75-76, paras 5-6 & 15) “5. In view of the rival stands of the parties, the short question that arises for consideration is, as to whether the said claim of the plaintiff can be said to be a claim for recovery of debts due to the plaintiff as provided under Section 17(1) of the Act. The answer of this question in turn would depend upon the meaning of the expression ‘debt’ as defined in Section 2(g) of the Act. Before we examine the two provisions referred to above, it is to be borne in mind that the procedure for recovery of debts due to the banks and financial institutions which was being followed, resulted in a significant portion of the funds being blocked. To remedy the locking up of huge funds, the Finance Minister introduced ‘the Recovery of Debts Due to Banks and Financial Institutions Bill, 1993’, which was passed by Parliament and the Act has come into existence. ... 6. The Act and the relevant provisions will have to be construed bearing in mind the objects for which Parliament passed the enactment. The prime object of the enactment appears to be to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. *** 15. The prime object of the enactment appears to be to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. *** 15. In the case in hand, there cannot be any dispute that the expression ‘debt’ has to be given the widest amplitude to mean any liability which is alleged as due from any person by a bank during the course of any business activity undertaken by the bank either in cash or otherwise, whether secured or unsecured, whether payable under a decree or order of any court or otherwise and legally recoverable on the date of the application. In ascertaining the question whether any particular claim of any bank or financial institution would come within the purview of the Tribunal created under the Act, it is imperative that the entire averments made by the plaintiff in the plaint be looked into and then find out whether notwithstanding the specially created tribunal having been constituted, the averments are such that it is possible to hold that the jurisdiction of such a tribunal is ousted. With the aforesaid principle in mind, on examining the averments made in the plaint, we have no hesitation to come to the conclusion that the claim in question made by the plaintiff is essentially one for recovery of a debt due to it from the defendants and, therefore, it is the Tribunal which has the exclusive jurisdiction to decide the dispute and not the ordinary civil court.” 63. As is obvious from the above recorded findings, the Court while referring to Sections 2(g), 17(1) and 31(1) of the Recovery Act, observed that jurisdiction of the civil court was barred under the provisions of the Act and the suits or proceedings shall transfer to the Tribunal upon coming into force of the Recovery Act. The Court was primarily concerned with the matters being transferred from civil courts to the Tribunal, still while referring to the provisions of Section 2 (g), held that the claim of the Bank was covered under the provisions of the Act. The suit, as instituted in the year 1991, had claimed various reliefs including the claim for damages. The objection raised was that, there was undetermined amount and other relief could not be referred to the Tribunal for adjudication. The suit, as instituted in the year 1991, had claimed various reliefs including the claim for damages. The objection raised was that, there was undetermined amount and other relief could not be referred to the Tribunal for adjudication. The suit was subsequently transferred to the Tribunal under the provisions of the Act and the Court while giving wide meaning to the expression “debt”, clearly held that, this expression was of liberal amplitude and there was occasion for the Court to grant a restricted meaning. Thus, in our view, even the case of United Bank of India6 in no way supports the submissions made on behalf of the appellant. 64. On a plain analysis of the above stated judgment of this Court, it is clear that the word “debt” under Section 2(g) of the Recovery Act is incapable of being given a restricted or narrow meaning. The legislature has used general terms which must be given appropriate, plain and simple meaning. There is no occasion for the Court to restrict the meaning of the word “any liability”, “any person” and particularly the words “in cash or otherwise”. Under Section 2(g), a claim has to be raised by the Bank against any person which is due to the Bank on account of/in the course of any business activity undertaken by the Bank. In the present case, the Bank had admittedly granted financial assistance to Respondents 2 and 3, who in turn had hypothecated the goods, plants and machinery in favour of the Bank. There cannot be any dispute before us that the goods in question have been sold by the appellant without the consent of the Bank. Respondents 2 and 3 have hardly raised any dispute and resistance to the claim of the Bank. In fact, even before this Court there is no representation on their behalf. The documentary and oral evidence on record clearly established that the Bank has raised a financial claim upon the principal debtor, as well as upon the person who had intermeddled and/or at least dealt with the charged goods without any authority in law. Not only this, the appellant had sold the hypothecated goods and stocks by public auction, despite the fact the appellant had due knowledge of the fact that the goods were charged in favour of the Bank. 65. Not only this, the appellant had sold the hypothecated goods and stocks by public auction, despite the fact the appellant had due knowledge of the fact that the goods were charged in favour of the Bank. 65. Another aspect of this case which required to be considered by this Court is, what was intended to be suppressed by the legislature by enacting the Recovery Act, 1993 and thereafter, by amending various provisions, including Section 2(g) in the year 2000. Obviously, the mischief which was intended to be controlled and/or prevention of wastage of securities provided to the Bank, was the main consideration for such enactment. The purpose was also to prevent wrongdoers from taking advantage of their wrong/ mistakes, whether permissible in law or otherwise. These preventive measures are required to be applied with care and purposefully in accordance with law to ensure that the mischief, if not entirely extinguished, is curbed. 70. We have already noticed that the legislature has not used words of a restrictive or definite nature. It has intentionally made use of the expressions which are quite general and can be construed widely in their common parlance. There is no occasion for this Court to read the word other than the one intended by the legislature in the provisions of Section 2(g) of the Recovery Act. Wherever the legislature requires, it uses the expressions of definite connotations and consequences, for example, in the Interest Act, 1978, the word “debt” has been defined under Section 2(c) of that Act by using specific terms of restricted character. It means “any liability for an ascertained sum of money and includes a debt payable in any kind but does not include a “judgment debt”. In this definition, the “ascertained sum” obviously means a sum which has been determined under any methods of the adjudicative process while, on the other hand, the expression “payable in kind” is a general expression, again the excluding clause in relation to “judgment debt” is specific. Such is not the language or the purport of Section 2(g) of the Recovery Act. 73. Thus, in our opinion, the provisions of Section 2(g) have to be construed, so as to give it liberal meaning. The general expressions used in this provision will have to be understood generally. Such is not the language or the purport of Section 2(g) of the Recovery Act. 73. Thus, in our opinion, the provisions of Section 2(g) have to be construed, so as to give it liberal meaning. The general expressions used in this provision will have to be understood generally. Neither there is scope to hold nor is the legislative intent that these provisions should be given a narrower or a restricted meaning. In our considered view, the claim of the Bank relatable to the hypothecated goods was well within the jurisdiction of the Tribunal exercising its power under Section 17 of the Recovery Act." 45. Admittedly, the petitioner is a borrower within the meaning of Section 2(f) of the Securitisation Act, 2002, which states that any "borrower" means, any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance. 46. The contention of the learned counsel for the petitioner that the loan availed was on account of a negotiation between the union and the management and therefore, availing of housing loan /vehicle loan etc., at the reduced rate of interest, is a concession given to the employees and that would not fall within a "debt" as defined in Section 2(g) of Debt Due to the Banks and Financial Institution Act, 1993 and therefore, it cannot be said to be due from any person by a bank or a financial institution during the course of business activity, cannot be countenanced for the reason that even if the petitioner avails loan, for any of the above said reasons, it would still fall under the definition of "debt" under Section 2(g) of the said Act, in view of the judgment of the Supreme Court in Eureka Forbes Ltd., Vs. Allahabad Bank reported in ( 2010 (6) SCC 193 ). As per Section 2(o) of the said Act, once the debt, is classified as a non-performing asset, the same can be recovered by resorting to the provisions of debt laws. 47. Allahabad Bank reported in ( 2010 (6) SCC 193 ). As per Section 2(o) of the said Act, once the debt, is classified as a non-performing asset, the same can be recovered by resorting to the provisions of debt laws. 47. The Notice dated 28.07.2005 issued by the authorized officer, Andra Bank, Chennai, under Section 13(2) of the enforcement of Security Act reads as follows:-"You have availed Housing Loan of Rs.4,50,000/-against mortgage of the following property:-* Land an extent of Ac.0.05 Cts comprised in R.S.No.494A/5B2 of Meelavitan marked as Plot No.1311 and building constructed there in with D.No.1A/1, situated in 9th Street, Briyant Nagar, Tuticorin. As you have defaulted in repayment of the loan in principal/interest and both, the account has been classified as NPA and you are liable to pay Rs.4,95,381.96 (Rupees four lakhs ninety five thousand three hundred eight one and paise ninety six only) as on 30.06.2005 with subsequent interest as per rules. You are hereby called upon to pay the said amount together with interest within 60 days from the date of this notice, failing which, the bank will be constrained to take any one or more of the following measures against the property mortgaged to the bank which is detailed above, to recover the amount without the intervention of the Court as provided under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 3 of 20023 – i.3., a. take possession of the secured asset of the borrower including the right to transfer by way of lease assignment or sale and realize the secured asset, b. take over the management of the secured asset of the borrower including the right to transfer by way of lease, assignment or sale and realize and secured asset, c. appoint any person (herein after referred as the manager) to manage the secured asset, the possession of which has been taken over by the secured creditor. Besides the bank may demand from any person who has acquired any interest in the properties secured to the bank and from whom any money is due or may become due to you to pay the said amount to the bank. Please take this notice that after receipt of this notice, you shall not transfer by way of sale, lease or otherwise any of the secured assets referred to in the notice, without prior written consent of the bank. Please take this notice that after receipt of this notice, you shall not transfer by way of sale, lease or otherwise any of the secured assets referred to in the notice, without prior written consent of the bank. The charges, expenses incurred for taking the said action shall be met out of the sale proceeds and if the sale proceeds is found insufficient to satisfy the entire amount due to the bank, for the balance amount appropriate legal action as provided in the ordinance will be taken against you, holding you liable for all costs and consequences thereof. This notice is issued without prejudice to the rights of the bank available under any other law." 48. Perusal of the material on record shows that by notice dated 14.10.2006, issued under Section 13(4) of the Securitisation Act, 2002, the petitioner has been reminded of a letter dated 28.05.2005, to pay a sum of Rs.4,95,781/-in respect of the housing loan availed by her and that she has been intimated that, in case of default, the Bank would enforce the Security offered without the intervention of the Court. 49. Perusal of the impugned communication shows that as on 12.01.2008, there was an outstanding of Rs.5,07,309.12 ps., as on 31.12.2007 and that the petitioner has been instructed to pay the said amount with further interest till the date of actual payment in full immediately, failing which, appropriate decision would be taken to secure the physical vacant possession of the secured assets and to sell the same, to recover the Bank due, as per the provisions of SARFAESI Act. Thus, it could been seen that the above mentioned property is a secured asset within the meaning of Section 2(2)(c) of Act-2002, and for recovery of any principal debt or interest thereon or any other amount payable by the borrower, the respondents are empowered to take recourse to the provisions of Act, 2002. 50. In view of the decision of the Supreme Court reported in Eureka Forbes case ( 2010 (6) SCC 193 ) (cited supra), there cannot be any restrictive meaning to the word, debt in Section 3(g) of the Recovery of the Debts due to the Bank and Financial Institution Act, 1993. For the foregoing reasons, this court is of the view that there is no manifest illegality in the action of the respondents. For the foregoing reasons, this court is of the view that there is no manifest illegality in the action of the respondents. The impugned order is sustained and consequently, the writ petition is dismissed. It is open to the respondents to take appropriate action under the Debt laws. No costs. Consequently, connected miscellaneous petition is also dismissed.