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Fraud-Linked Liability Treated as ‘Debt’ Under RDB Act; DRAT Dismisses Appeal

Case Law Details

TaxGuru Citation
2026 taxguru.in 105
Case Name
Vijay Kumar Kushwaha Vs South Indian Bank Ltd. (DRAT Allahabad)
Date of Judgement/Order
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Vijay Kumar Kushwaha Vs South Indian Bank Ltd. (DRAT Allahabad)

The present appeal was filed under Section 20 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) against the order dated 29.05.2019, in which the Tribunal had rejected preliminary objections regarding the maintainability of Original Application (O.A.) No. 428/2018 filed by the respondent-Bank. The O.A. was initially filed before DRT Lucknow and later transferred to DRT Dehradun. After issuance of summons, the appellants appeared and raised objections challenging the maintainability of the O.A. filed by the Bank. The Tribunal below rejected these objections, prompting the appellants to file the present appeal.

The appellants contended that the O.A. filed by the Bank combined multiple causes of action that were not inter-connected, rendering a single O.A. against multiple defendants unsustainable. They noted that separate O.A. No. 224/2015 had already been filed and decreed against other defendants. It was argued that the O.A. claimed an amount of over Rs. 50 crores against a principal loss of Rs. 30.85 crores, and that defendants 5 to 27 had allegedly acted in collusion with defendants 1 and 2. The appellants questioned why separate O.A.s were filed for defendants 5 to 27, while claims against defendants 3 and 4 were handled in a different O.A. They also contended that the Bank had failed to respond to fraud allegations, claiming the matter was under CBI investigation. Further, the appellants argued that filing an O.A. against a customer holding a savings account was not maintainable.

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Author Info

CA Sandeep Kanoi
Qualification: CA in Job / Business
Company: Taxguru Consultancy
Location: Mumbai, Maharashtra
Articles Published: 21,220

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