ORDER
K.S. Kumaran, J. (Chairman)
1. Appellant-Bank of Rajasthan filed O.A. No. 408/2000 before Debts Recovery Tribunal (hereinafter referred to as ‘the DRT’). Jaipur, for the recovery of money against defendants 1 to 4 therein. The 5th defendant is another Bank and is stated to have a charge over the property mentioned in Schedule ‘A’ to the original application (hereinafter referred to as ‘the O.A.’). The defendants 1 to 3 filed a written statement, alleging, among other things, that no cause of action arose within the jurisdiction of DRT, Jaipur, and, therefore, the appellant-Bank cannot maintain the proceedings before the said DRT. They had also moved an application challenging the jurisdiction of the DRT. Therefore, the Presiding Officer, DRT, Jaipur, considered thequestion of territorial jurisdiction and decided by the order dated 5.7.2001 that except the sanction, entire transaction took place at Chennai, and, therefore, the DRT had no jurisdiction to decide the O.A. He, therefore, directed the O.A. to be returned to the appellant-Bank for presentation before forum. It is against this order dated 5.7.2001, that the appellant has preferred this appeal.
2. The respondents 1 to 4 have not chosen to contest this appeal and the 5th respondent, though a formal party, and was represented by Counsel in the earlier stages, was not represented at the time of the final arguments. Therefore, I have heard the arguments of the learned Counsel for the appellant and perused the records on file.
3. The question that arises for consideration is whether the DRT, Jaipur has jurisdiction to entertain the O.A.
4. In order to take a decision on this question, it is necessary to refer to certain allegations in the O.A. with regard to the jurisdiction of the Tribunal. The appellant, as the applicant-Bank for the credit facilities, which were sanctioned by the applicant-Bank on 27.3.1995 at its Central Office situated in Jaipur, which was further revised on 12.5.1997 and 29.9.1998 at Jaipur, within the jurisdiction of DRT, Jaipur. The applicant-Bank has also stated that DRT, Jaipur has jurisdiction on the basis of the common law rule that the debtor should find the creditor and pay the debts where the creditor resides, that the Registered Officer of the applicant is situated at Udaipur while the Central office is situated at Jaipur and, therefore, DRT, Jaipur has jurisdiction over the subject-matter of the O.A. As pointed already, the defendants 1 to 3 pleaded before the DRT, Jaipur that it had no territorial jurisdiction to entertain the O.A.
5. The learned Presiding Officer of the DRT, Jaipur, observed that the entire transaction, except the sanction, took place at Chennai, that the documents were executed at Chennai, that the parties are residing and working at Chennai, that the loan was also disbursed at Chennai, and, therefore, the DRT, Jaipur, had no jurisdiction.
6. The learned Counsel for the appellant first of all referred to the provisions of Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as ‘the Act of 1993’) which reads as follows :
“19. Application to the Tribunal.–(1) Where a Bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction–
(a) the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or
(c) the cause of action, wholly or in part, arises.”
7. By relying upon the provisions of Clause (c) of Sub-section (1) of Section 19, the learned Counsel for the appellant contended that, however, small is the part, the DRT, within whose jurisdiction that part of the cause of action had arisen, will have jurisdiction to entertain the application.
8. He also referred to Rule 6 of the Debts Recovery Tribunal (Procedure) Rules, 1993 (hereinafter referred to as ‘the Rules of 1993’), which reads as under :
“Place offiling applications,–The application shall be filed by the applicant with the Registrar within whose jurisdiction the applicant is functioning as a Bank or Financial Institution, as the case may be, for the time being.”
9. By referring to the above said provisions in Rule 6 and Section 19(1)(c) of the Act of 1993, the learned Counsel for the appellant contended that a harmonious construction of these two provisions will lead this Tribunal to come to the conclusion that the place where the applicant is functioning as a ‘Bank’ will have jurisdiction as distinguished from the place from where the applicant’s Branch functions. According to learned Counsel for the appellant, the place where the applicant functions as a Bank is the Central Office at Jaipur, and, therefore, the DRT, Jaipur, will have jurisdiction to entertain the O.A.
10. Learned Counsel for the appellant contended that as per Section 20(d) of the Act of 1993 the ‘Bank’, among other things, means a ‘Banking Company’. He also referred to Section 2(e) of the Act of 1993 as per which, the term ‘Banking Company’ shall have the meaning assigned to it in Clause (c) of Section 5 of the Banking Regulation Act, 1949. He then referred to Section 5(c) of the Banking Regulation Act, 1949, according to which, a Banking Company means any company which transacts the business of Banking in India.
11. He then referred to Section 5(b) of the said Act which provides as follows–
“Banking means the accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise.”
12. The learned Counsel for the appellant also referred to Section 5(cc) of the Banking Regulation Act, 1949 which provides as follows :-
” ‘Branch’ or ‘branch office’, in relation to a Banking Company, means any branch or branch office, whether called a pay office or sub-pay office or by any other name, at which deposits are received, cheques cashed or moneys lent, and for the purposes of Section 35 includes any place of business where any other form of business referred to in Sub-section (1) of Section 6 is transacted.”
13. By referring to these provisions the learned Counsel for the appellant contended that it will be clear from these provisions that there is a difference between a Bank carrying on Banking business and a Branch of the said Bank. The learned Counsel for the appellant contended that Rule 6 of the Rules of 1993 provides that the application can be filed at a DRT within whose jurisdiction the applicant is functioning as a Bank. He further contended that in view of the various provisions referred to above, it will be clear that the place where the Central Office of the Bank is situate, will be the place from where the Bank functions as a Banking Company, as distinguished from its Branch, and, therefore, the DRT within whose local jurisdiction the Bank functions as a Banking Company will have jurisdiction to entertain the O.A. He also pointed out Annexure-2, the copy of the application for loan made by the defendants to the Bank of Rajasthan, which has its Registered Office at Udaipur. According to the learned Counsel for the appellant, though the loan application was forwarded from Chennai, the appellant Bank received it, processed it and the loan was sanctioned by the Board of Directors of the Bank which, in their case, is the Managing Director. He also pointed out that Annexure-3 will show that the loan was sanctioned by the Committee of Executives i.e. by the Managing Director, at Jaipur. The learned Counsel for the appellant contended that since the loan was sanctioned within the jurisdiction of the DRT at Jaipur, and if the provisions of Section 19(1)(c) of the Act of 1993 and Rule 6 of the Rules of 1993 are read harmoniously, then it will be clear that not only that a part of the cause of action arose within the jurisdiction of DRT, Jaipur but also that the application can be filed where the appellant-Bank functions as a Banking Company and not merely as a Branch. According to the learned Counsel for the appellant, the sanction of the loan is one thing and the operation of the sanction is yet another thing. He contended that sanction is given only at Jaipur whereas the documents of security are executed atChennai. He contended that simply because documents of security were executed at Chennai, it cannot be said that only the DRT at Chennai will have jurisdiction. According to him, the DRT at Jaipur will have jurisdiction inasmuch as part of the cause of action, namely, sanction of the loan, was made within the jurisdiction of the DRT at Jaipur.
14. I agree with the learned Counsel for the appellant. In view of the provisions of Section 19(1)(c) of the Act of 1993, it is clear that the application for recovery of a loan can be filed by a Bank before the Tribunal within whose jurisdiction the cause of action had arisen either wholly or in part. It may be that the defendants applied for the loan from Chennai. But the loan was sanctioned at Jaipur. Therefore, it is evident that the defendants’ offer or request was accepted at Jaipur, and, therefore, part of the cause of action had arisen within the jurisdiction of DRT, Jaipur. As rightly pointed out by the learned Counsel for the appellant, Rule 6 also provides that the application for recovery can be filed before a Tribunal within whose jurisdiction the applicant is functioning as a Bank. In view the provisions contained in Sections 2(d) and 2(e) of the Act of 1993, and Sections 5(c) and 5(d) of the Banking Regulation Act, 1949, it is clear that the term ‘Bank’ referred to in Rule 6 is only the ‘Banking Company’ and not its Branch. The terms ‘branch’ and ‘branch offices’ have also been separately defined in Section 5(cc) of the Banking Regulation Act, 1949, Therefore, if we bear in mind the difference between a Banking Company and a Branch in relation to a Banking Company, then it will be clear that the contention put forward by the appellant that DRT, Jaipur has also jurisdiction to entertain the matter. As per Rule 6 of the Rules of 1993, the application for recovery can be filed at the DRT within whose jurisdiction the Bank functions as a Bank, i.e. as a Banking Company. A Branch cannot be stated to function as a Banking Company. It is only the Central Office of the Bank which sanctions the loan and also has control over its Branches can be termed as the Banking Company. The various provisions of the Banking Regulation Act, 1949, clearly maintain the difference between the Banking Company and its Branches. Therefore, when Section 6 of the Act of 1993 refers to a ‘Bank’, it can only mean the Banking Company and not its branches. Therefore, it can be stated that the applicant-Bank which functions as a Banking Company from its Central Office at Jaipur, can file the O. A. for the recovery of the debt before the DRT, Jaipur.
15. Further, the learned Counsel for the appellant also contended that the common law rule that debtor is to seek the creditor has been recognised by the provision contained in Rule 6 of the Rules 1993 and, therefore, also, the DRT at Jaipur will have jurisdiction. He contended that the loan amount is repayable to the ‘Banking Company’ which is situated at Jaipur and not merely at its Branch at Chennai. The Central Office of the appellant-Bank situated within thejurisdiction of the DRT, Jaipur, is the place from where the appellant-Bank functions as a Banking Company. Therefore, also, it has to be held that the DRT, Jaipur has jurisdiction to entertain the O.A.
16. This contention of the appellant also is supported by the provisions referred to already. In view of the special definition of the word ‘Bank’ the repayment to the Bank could be only at a place where the Bank functions as a Banking Company. In this case, Bank of Rajasthan functions as a Banking Company within the jurisdiction of DRT, Jaipur, It may be that repayments are made at the Branch also but it does not mean that the Bank has no right to insist for repayment of the loan at a place where it functions as a Banking Company. As rightly contended by the learned Counsel for the appellant, the Branch of a Bank has no separate legal entity. It may be that the Branch Manager is authorised by means of a Power of Attorney to do certain acts, but he is authorised to do so by the Board of Directors, and in the absence of such an authorisation, Branch Manager cannot act on behalf of the Bank.
17. Therefore, taking into consideration all these aspects, I am of the view that the view taken by the learned Presiding Officer of DRT, Jaipur, that except sanction, no part of cause of action arose within the jurisdiction of DRT, Jaipur, and, therefore, DRT, Jaipur had no jurisdiction to entertain the O.A., cannot be sustained. Even that part of the cause of action, namely, the sanction of loan by accepting the request of the borrowers, will give the right to the appellant-Bank to file the O.A. before DRT, Jaipur. There is no dispute that the loan was sanctioned at Jaipur, Therefore, the DRT, Jaipur, will have jurisdiction to entertain the O.A. Even otherwise, in view of the provisions contained in Rule 6 of the Rules of 1993 also, the appellant-Bank would be entitled to file the O.A. for recovery before the DRT within whose jurisdiction it functions as a ‘Banking Company’.
18. Resultantly, the appeal is allowed. The impugned order dated 5.7.2001 passed by the learned Presiding Officer, DRT, Jaipur, is set aside.
19. If the O.A. had been taken back by the appellant, it will be open to the appellant to represent the same before the DRT, Jaipur. If the O.A. is represented back, the DRT, Jaipur will receive it and proceed further with the said O.A. in accordance with law. If the O.A. had not been taken back by the appellant and is still with the DRT, Jaipur, the learned Presiding Officer, DRT, Jaipur, will issue notice to the parties to appear before it and proceed further in accordance with law.
20. Copy of this order be furnished to the appellant and to all the respondents though they have not taken part in these proceedings. A copy of this order be also forwarded to the DRT concerned.