This case concerns the transfer of a long-pending commercial recovery suit from the Commercial Court to the Debts Recovery Tribunal (DRT), Aurangabad, following the amalgamation of HDFC Limited (a non-banking entity) with HDFC Bank Limited (a banking company).
The principal legal issue was whether a civil suit, filed by a non-banking entity before its amalgamation with a bank, could be transferred to the DRT even though the DRT lacked jurisdiction when the suit was instituted.
Title of the Case: M/s Ashwini Trading Co. v. Housing Bank Ltd. & Ors.
Court: High Court of Judicature at Bombay, Bench at Aurangabad
Citation: Writ Petition No. 7008 of 2024
Coram: Justice Rohit W. Joshi
Date of Judgment: 11th August 2025
Parties
Petitioner: M/s Ashwini Trading Co., through proprietor Mrs. Sushiladevi Rameshkumar Bagariya (Defendant No. 11 in the original suit)
Respondents:
- Housing Bank Ltd. (original plaintiff; later HDFC Ltd.)
- 2–12. Borrowers/partners/associates, including Krishna Constructions and individuals connected to the loan transactions.
Procedural Background
- 2007: HDFC Ltd. filed Special Civil Suit No. 46/2007 seeking recovery of ₹3,14,85,223 against the petitioner and others in respect of two loan accounts.
- 2015: After enactment of the Commercial Courts Act, the case was transferred to the Commercial Court, Aurangabad, and re-registered as Commercial Suit No. 12/2019.
- 2023: NCLT, Mumbai approved amalgamation of HDFC Ltd. with HDFC Bank Ltd. (Order dated 17 March 2023 in Company Scheme Petition No. 240/2022). All assets/liabilities of HDFC Ltd. vested in HDFC Bank Ltd., a banking company under the Banking Regulation Act, 1949.
- Post-amalgamation: HDFC Bank Ltd. was substituted as plaintiff.
- Application (Exh. 230): HDFC Bank sought transfer of the case to the Debt Recovery Tribunal (DRT), Aurangabad under Sections 17 and 18 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act).
- 04 April 2024: District Judge-2 allowed the application and ordered transfer to DRT.
- Petition: Defendant No. 11 challenged this transfer order before the High Court.
Issues for Determination
- Whether DRT has jurisdiction to entertain a suit originally filed by a non-banking entity (HDFC Ltd.) which, during pendency, amalgamated with a bank (HDFC Bank Ltd.).
- Whether Section 31 of the RDB Act permits transfer of such a case to DRT, given that on the date of filing, DRT would not have had jurisdiction.
- Whether the definition of “Debt” under Section 2(g) covers amounts advanced by a non-banking company but subsequently claimed by a bank post-amalgamation.
- Whether amalgamation is equivalent to assignment for jurisdictional purposes.
Petitioner’s Arguments
- Jurisdiction at filing date matters: On the date of suit (2007), HDFC Ltd. was not a bank; thus, DRT had no jurisdiction. Under Section 31, only suits that would have fallen under DRT’s jurisdiction at filing can be transferred.
- Definition of “Debt” (Section 2(g)): Only amounts advanced by a bank qualify; loans by non-banking entities are excluded.
- Amalgamation ≠ automatic transfer of jurisdiction: Subsequent amalgamation cannot divest the Commercial Court of jurisdiction.
- Effect of Assignment: Even if rights are assigned/amalgamated, the case continues in the same court as if no assignment occurred (citing Dhurandhar Prasad Singh v. Jai Prakash University).
Case Laws Cited:
SBI v. Raman Kapur (2009)
State Bank of Bikaner & Jaipur v. Ballabh Das (1999) 7 SCC 539
Oriental Bank of Commerce v. Mohan Gupta (1996)
Bank of India v. Ramniklal Kapadia (AIR 1997 Guj 75)
Dhurandhar Prasad Singh v. Jai Prakash University (2001) 6 SCC 534
Respondent’s Arguments
- Post-amalgamation status governs jurisdiction: Once HDFC Bank Ltd. (a bank) became plaintiff, the suit became one for recovery of debt by a bank, falling exclusively within DRT’s jurisdiction under Sections 17 and 18 RDB Act.
- Definition of “Debt” broad enough: Section 2(g) covers any liability claimed as due by a bank during its business, whether or not the bank originally advanced the loan, and includes assigned debts.
- Sections 17 & 18 override Section 31: Section 31 is procedural; the substantive bar under Section 18 is absolute and applies to pending cases.
- Amalgamation ≠ assignment: Unlike assignment, amalgamation extinguishes the transferor company’s existence.
Case Laws Cited:
Kotak Mahindra Bank Ltd. v. Stiefel Und Schuh India Ltd. (2009) (DB, Delhi HC) – assignment from NBFC to bank warranted DRT transfer.
United Bank of India v. Abhijit Tea Co. (2000) 7 SCC 357
Allahabad Bank v. Canara Bank (2000) 4 SCC 406 – DRT jurisdiction is exclusive.
Saraswati Industrial Syndicate Ltd. v. CIT (1990 Supp SCC 675) – effect of amalgamation.
Indiabulls Housing Finance Ltd. v. Deccan Chronicle Holdings Ltd. (2018) 14 SCC 783
Court’s Analysis
(a) On Definition of “Debt” – Section 2(g)
- The term covers any liability claimed as due by a bank during its business, including debts assigned or vested in it post-amalgamation.
- No requirement that the bank itself must have originally advanced the loan.
- Adding such a requirement would be judicial rewriting.
(b) Section 31 vis-à-vis Sections 17 & 18
- Section 18 bars all courts from exercising jurisdiction over matters within DRT’s domain; the bar applies to pending suits as well.
- Section 31 ensures transfer of pending suits to DRT; though it literally applies to suits filed before DRT’s establishment, purposive interpretation must be adopted to uphold Section 18’s mandate.
(c) Effect of Amalgamation
- Amalgamation results in the dissolution of the transferor company (HDFC Ltd.) and vesting of all rights/liabilities in the transferee (HDFC Bank Ltd.).
- Unlike assignment, amalgamation extinguishes the original entity; the new entity prosecutes the suit in its own capacity as plaintiff.
- Cited Saraswati Industrial Syndicate Ltd. to emphasise loss of separate identity post-amalgamation.
(d) Applicability of Precedents
- Petitioner’s cited cases involved fraud/misappropriation claims not fitting “debt” definition; distinguishable from present facts.
- Kotak Mahindra Bank (DB, Delhi HC) was directly relevant—if assignment to a bank warrants DRT jurisdiction, amalgamation with a bank does so a fortiori.
Decision
- The amalgamation transformed the plaintiff into a bank; the suit now falls within DRT’s exclusive jurisdiction.
- The Commercial Court’s transfer order was correct.
- Petition dismissed; no order as to costs.
Interim Relief
- At petitioner’s request, the High Court continued the interim order for six weeks despite respondent’s objection, noting it had already been in operation since 09 July 2024.
Key Legal Principles
- Jurisdiction under RDB Act is dynamic: Post-filing changes (like amalgamation with a bank) can shift jurisdiction to DRT.
- Definition of “Debt” is broad: Covers assigned debts and those vested by operation of law, not limited to loans originally disbursed by the bank.
- Sections 17 & 18 override procedural limitations: The substantive bar on civil court jurisdiction applies to pending matters.
- Amalgamation ≠ Assignment: Amalgamation extinguishes the transferor company’s legal existence.
- Purposive Interpretation: Section 31 must be read to further the Act’s object of channelling bank debt recovery to DRT.
Conclusion
The Bombay High Court upheld the transfer of a recovery suit to the DRT after HDFC Ltd. merged with HDFC Bank, holding that post-amalgamation the claim became a “debt” recoverable exclusively by DRT under the RDB Act, and the civil court’s jurisdiction stood barred.