(B) Banking & Finance - Practice & Procedure - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Banking Companies (Acquisition and Transport of Undertakings) Act, 1976 - Jurisdiction of Debt Recovery Tribunal - Appellant company entered into an agreement with respondent nos. 2 and 3, granting licence in their favour to use premises along with plant and machinery - Later, respondents requested appellant to take over possession of said premises alongwith closing stock lying therein as respondent nos. 2 and 3 had not paid licence fee for use and occupation of premises, goods etc. as agreed - Respondent-Bank had granted financial assistance to respondent nos. 2 and 3, who in turn had hypothecated goods, plants and machinery in favour of Bank - Respondent-Bank claimed that they had a charge over movable assets machine - However, appellant stated that he had no knowledge that these stocks had been hypothecated by respondent nos. 2 and 3 and goods in question were sold by appellant - Respondent-Bank filed a suit against appellant and respondent nos. 2 and 3 - In furtherance to ex-parte judgment, a Recovery Certificate was issued by competent authority under provisions of Act - Order of Tribunal declining to set aside ex-parte decree attained finality - Challenged - Appellant argued that, there was no privity of contract and they were not covered under definition of `debt', and as such, recovery proceedings could not be initiated, much less, effected from them under provisions of Act - Whether claim raised by Bank falls well within ambit and scope of s. 2 (g) of Recovery Act? - Held, without consent of Bank, no person can utilize hypothecated goods for his own benefit or sale by borrower or any person connected thereto - Physical domain over hypothecated goods is no way a sine qua non for enforcing Bank's rights against borrower - It was obligatory upon appellant to deal with goods only with leave and permission of Bank - Absence of such consent in writing would obviously result in breach of Bank's rights - Documentary and oral evidence on record clearly established that Bank has raised a financial claim upon principal debtor, as well as upon person who had intermeddled and/or at least dealt with charged goods without any authority in law - Appellant had sold hypothecated goods and stocks by public auction, despite the fact that appellant had due knowledge of fact that goods were charged in favour of Respondent-Bank - Claim raised by Respondent-Bank falls well within ambit and scope of s. 2(g) of Recovery Act and jurisdiction of Tribunal cannot be ousted on this ground - Further, claim of Bank relatable to hypothecated goods was well within jurisdiction of Tribunal exercising its power u/s. 17 of Recovery Act - Thus, to that extent, liability of appellant cannot be disputed - HC order accordingly modified to extent that, appellants would be liable to pay to respondent Bank a sum (approximate value of hypothecated stock sold by appellants) with interest at rate of 6% per annum - Appeal partly allowed.

(C) Banking & Finance - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Applicability of principles of public accountability - Conduct of respondent-Bank and its officers/officials - Despite the fact that respondent nos. 2 and 3 have a leave and license agreement with appellant, heavy loan sanctioned and disbursed to respondents - Bank and its officers/officials took no serious steps to ensure that goods hypothecated to Bank were not disposed off without its consent - Held, scheme of Recovery Act and language of its various provisions imposes an obligation upon Banks to ensure a proper and expeditious recovery of its dues - There is a public duty upon all such officers/officials to act fairly, transparently and with a sense of responsibility to ensure recovery of public dues - Concept of public accountability and performance is applicable to present case as well - These are instrumentalities of State and thus all administrative norms and principles of fair performance are applicable to them with equal force as they are to Government department, if not with a greater rigor - There is certainly ex facie failure of statutory obligation on part of Bank and its officers/officials - There is no explanation as to why effective steps were not taken and why interest of Bank was permitted to be jeopardized - Chairman of Allahabad Bank directed to take appropriate action against erring officers/officials in accordance with law - Appeal partly allowed.

(A) Contention was raised that advances made by HM to the appellants for the purpose of purchase of properties would amount to benami transactions whereof s. 4(1) of Act shall apply, and not s. 3(1) - Contention whether acceptable? - Held, No - Provisions perused, nature and object of Act noted and deliberated upon - S. 4(1) applies to the third parties and not to any notified party; it is only when a property has been purchased in the name of a third party by a notified party from the tainted funds acquired by him during the window period, that the provisions of s. 4(1) would apply; but in a case where the properties have been purchased by the notified parties themselves as members of a group in the name of one or the other, the rigours of s. 4(1) shall not apply - S. 3 on the other hand, postulates automatic statutory attachment of the properties of the notified party -

(B) S. 4(1) applicable to 'third parties', s. 3(1) as applicable to 'notified parties' - HM, whether is third party vis-a-vis appellants? - Held, no - Appellants were members of an HUF and were seen to be working in tandem -

(C) Nexus of the properties with the illegal securities transaction - Contention was raised that fact that the properties had been purchased much before the securities scam would go on to show that they had no nexus with the funds diverted therefrom - Contention whether acceptable? - Held, No - As per s. 3(3) attachment of all the properties is automatic; sub/s. (3) of s. 3 does not provide for any qualification that the properties which are liable to be attached should relate to the illegal securities transactions in respect of which the Act was enacted; when the meaning of the words used in an Act is plain and clear, effect must be given thereto -

(D) S. 3(2) and 3(3) - How to be read? - Contention was raised that properties in question was purchased much before the window period, thus Court would not have power to investigate and give any findings pertaining to any transactions entered into prior to the window period - Contention whether acceptable? - Held, No - Provisions of s. 3(2) should not be read into s. 3(3); though s. 3 (3) is dependent on s. 3(2) for its operation, but once s. 3(2) comes into operation, s. 3(3) becomes independent of it and accordingly the qualifications of s. 3(2) cannot be read into s. 3(3); window period is only a relevant criterion for application of s. 3(2) and therefore has no bearing on the application of s. 3(3) - A plain reading of s. 3(3) would suggest that all properties of the notified persons on the date of the said notification would automatically stand attached irrespective of the fact as to whether they had been acquired before, during or even after the statutory period; however property acquired by a notified person after the notification under the Act cannot be attached; that property does not come within the purview of s. 3(3) - Thus window period is irrelevant for the attachment of the property - Contention was raised by appellants as to non-application of mind on part of Judge of Special Court - Whether acceptable? - Records perused - Held, yes - Matter remitted back for consideration afresh taking into consideration Audited Reports and objections, and in the light of earlier judgment of the Court and present observations - Impugned judgment, set aside - Appeal allowed.