Royal Bank of Scotland N.V. v. Surajit Sen (Cal HC)

The Hon’ble High Court of Calcutta in Royal Bank of Scotland N.V. v. Surajit Sen (GA No.3611 of 2011) held that if a court did not have jurisdiction at the time of institution of the suit, but is bestowed with jurisdiction at the time of deciding the matter, the suit would be maintainable in such court. Facts Royal Bank of Scottland N.V (“plaintiff company”) held a foreign decree against the defendant. To enforce the foreign decree, the plaintiff company filed a suit in 2005 before the High Court of Calcutta (“the Court”), as the defendant had properties within the jurisdiction of the Court. The original plaintiff company, known as ABN AMRO Limited , was a banking company within the meaning of Section 5 (1)(c) of The Banking Regulation Act, 1949 and was carrying on its banking business in India on the basis of a license granted by the Reserve Bank of India. After its merger with the Royal Bank of Scottland N.V. in 2007, and amendment of its articles of association, the plaintiff company stopped carrying on banking business at all in India. At the time of institution of the suit, the plaintiff company was a scheduled bank under Section 42 and Section 2(e) of the Reserve Bank of India Act, 1934 (“Act”) until its name was excluded from the second schedule to the Act by reason of a notification dated February 28, 2017. The defendants prayed for the rejection of the plaint, as on the date of institution of the suit, the Court did not have any jurisdiction. Such an argument was basis the fact that, Section 2(g) of the Recovery of Debts due to Bank and Financial Institution Act, 1993 (“1993 Act”) defined ‘debt’ to include ‘decree’ within it, and as per Section 34 of the 1993 Act, the appropriate forum would be the Debts Recovery Tribunal. They argued that the rights of the parties have to be decided on the date when a proceeding is initiated by the forum created for adjudication of the dispute and any subsequent legislation by which such forum is denuded of its jurisdiction would not cure the initial defect of lack of jurisdiction. The plaintiffs argued that, because of the subsequent exclusion of the name of the plaintiff company from the second schedule to the Act, the Court was now vested with the jurisdiction and this fact should be taken into account in the interest of justice. Observations of the High Court The High Court of Calcutta upheld the arguments of the plaintiff company and noted as follows “In fact, when a lis commences, all rights and obligations of the parties get crystalised on that date... It is equally settled that no party can have a vested right in the procedure. The plaintiff as on date can very well maintain the present suit in this court as the Debt Recovery Tribunal would not have any jurisdiction over the subject matter of the suit anymore by reason of the aforesaid notification. The defendant does not dispute the existence of the notification. In the instant case, the nature of the relief is not altered by any subsequent events but only the forum that were not available to the plaintiff at the time of institution of the suit has now by reason of the notification dated 28th February, 2017 restores the jurisdiction of this court to continue with the plaint. Since the subsequent events would resuscitate the suit and makes it maintainable in this court, ex debito Justitiae, it is the duty of the court to take note of such subsequent events and keep the suit alive and on record. It is now quite evident that as on date the suit is maintainable in this court.” Download Pdf