Debt Recovery Appellate Tribunal - Mumbai
Mrs. Manjula C. Sheth And Anr. vs Indian Bank And Ors. on 11 March, 2004
Equivalent citations: III(2005)BC131
ORDER
Pratibha Upasani, J. (Chairperson)
1. This Misc. Appeal is filed by the appellants/proposed defendants being aggrieved by the order dated 3.1.2003 passed by the learned Presiding Officer of Debts Recovery Tribunal-Ill, Mumbai on Exhibit No. 16 in Original Application No. 2203 of 2000. By the impugned order, the learned Presiding Officer allowed the application filed by the applicant Bank and ordered that heirs of the original defendant No. 3 (since deceased) be taken on record. By the impugned order, the learned Presiding Officer reviewed his earlier order dated 30.5.2002 whereby he had allowed the application Exh. No. 12 filed by the present appellants for deleting their names from the claim petition and directing the Registrar to enquire into the matter and decide afresh whether the applicants could be added as defendants or not.
2. This matter has got rather a checkered history and few relevant facts have to be stated to appreciate the disputed point involved.
The appellants are heirs of the deceased defendant No. 3 Chimanlal P. Sheth who expired on 25.1.1997. The appellant No. 1 Manjula, Chimanlal Sheth is the widow and the appellant No. 2 Chandrakant Chimanlal Sheth is the son of the deceased defendant No. 3. The appellant No. 2 Chandrakant was the party in the original suit filed by the applicant Bank against four defendants namely M/s. Colo Writing Instrument Limited, Kumar Sheth, Chimanlal P. Sheth and Chandrakant Sheth. This suit being a Suit No. 4745 of 1996 was filed by the Indian Bank against these defendants for recovery of Rs. 59,94,951.91 paise and for enforcement of the hypothecated/mortgaged securities against the defendants. The defendant No. 3 Chimanlal was sued in the capacity of guarantor having guaranteed repayment of the amount sanctioned DM way of various credit facilities by the Bank in the name of the said proprietary concern M/s. Colo Writing Instrument Limited, This defendant No. 3 namely Chimanlal expired on 25.1.1997.
Now it is the case of the appellants in this Misc. Appeal, that fact of death of Chimanlal was intimated orally at one of the hearings of the interim proceedings before the High Court. Further the respondent No. 3 in the present appeal, namely Kumar Sheth, director of the defendant No. 1 firm by his letter dated 2.7.1997 addressed to the Court Receiver, High Court, Bombay in the said High Court Suit No. 4745 of 1996 conveyed in writing about the death of the original defendant No. 3 and duplicate copy thereof was endorsed to the Indian Bank's Advocates M/s. M. Dhruva & Co. Copy of the said letter dated 2.7.1997 is annexed to the appeal memo. It is further contended by the appellants that in the affidavit in support of Notice of Motion No. 974/1999 in Suit No. 4745/1996 the Bank had admitted to have been informed about the death of the defendant No. 3 on 3.8.1998 which death they admitted to have taken place on 25.1.1997. Copy of the affidavit is also annexed to the appeal memo. It is further contended by the appellants that the appellant No. 2 Chandrakant in his affidavit dated 20.4.1999 in reply to the applicant Bank's Notice of Motion No. 974/1999 had also pointed out about the death of original defendant No. 3 on 25.7.1997 in para 2(e), copy of which was directed to the Bank's Advocate. This copy also is annexed to the appeal memo.
It is the contention of the appellants that on 5.1.1999, the Bank took out Chamber Summons being Chamber Summons No. 14/1999 in Suit No. 4745/1996 for amendment of the plaint and in paragraph 4 of the affidavit in support thereof, the Bank admitted and averred specifically about the death of original defendant No. 3 on 25.1.1997, but didn't choose to pray for any amendment to bring on record heirs of deceased Chimanlal and instead the application was moved for amendment of the plaint shown in Schedule-I giving particulars of flat Nos. 7 and 8 in Chandra Milan CHS Ltd. This Chamber Summons was not prosecuted further nor copy of the schedule in terms of amendment was served upon the appellants. Copy of the Chamber Summons No. 14/1999 is annexed to the appeal memo.
3. It is further the contention of the appellants that thereafter when the proceedings were transferred from High Court to DRT-III, Mumbai, the respondent No. 2 firm was served with the said notice dated 17.7.2001. Thereafter the above matter appeared on 8.10.2001 and was further adjourned to 20.11.2001. As per the contention of the appellants on 26.12.2001, they were served with amended application in this matter, wherein they had been described as proposed defendant Nos. 3-A and 3-B in place of Chimanlal Sheth/ original defendant No. 3 since deceased. It is contended that there was no averment made in the above application nor the application appeared to have been redeclared. According to them, order allowing the amendment and bringing appellants on record was passed on 8.10.2001 though no proceedings were served upon any of the defendants including original defendant Nos. 2 and 4 who were parties to the suit in the High Court.
4. In view of this, the appellants took out miscellaneous application praying inter alia that, it be declared that the Bank's application being O.A. No. 2203/2000 had abated and the same be dismissed and that the order allowing the application of amendment by deleting the name of the original defendant No. 3 and bringing on record the newly added defendants being defendant Nos. 3-A and 3-B be quashed and set aside. In the alternative, it was also prayed that the applicant Bank be directed to serve application for amendment on the defendants and opportunity of being heard in the matter be granted in accordance with principles of natural justice and after bearing, appropriate order be passed. On this application, the learned Presiding Officer of DRT-III, Mumbai on 30.5.2002 passed order, sort of partly allowing the application and sent the matter to the Registrar for making inquiry into the matter and deciding the same afresh as to whether the defendants could be added as defendants or not. It was this order which was sought to be reviewed by the Bank by their application made in June 2002, on which impugned order dated 3.1.2003 was passed by the learned Presiding Officer. The appellants are aggrieved by this order whereby they were ordered to be brought on record though according to them the application was time barred from every angle and though this was admitted by the learned Presiding Officer, still he went on to allow the application on the ground that "such things generally happen in public institutions" and because public fund was involved. It is this order, which is being challenged before this Appellate Tribunal.
5. I have heard Mr. Rishabh Shah for the appellants and Mr. Maniyar for the respondent No. 1 Bank. I have also gone through the proceedings including the order dated 30.5.2002 passed by the learned Presiding Officer allowing the application made by the appellants and directing the Registrar to further enquire into the matter and thereafter to decide afresh whether the appellants could be added as defendants or not. I have also gone through the impugned order dated 3.1.2003, which appears to have been passed on the review application made by the Bank and in my opinion, the learned Presiding Officer acted erroneously in allowing the application of the Bank whereby the appellants/heirs of the original defendant No. 3 Chimanlal Sheth were ordered to be brought on record.
6. Chronology of dates and events commencing from the date of death of the defendant No. 3 Chimanlal Sheth i. e. 25.1.1997 would reveal that though the Bank was informed about the death of said Chimanlal, they did not take any proper step to bring heirs of the said deceased Chimanlal on record. Even if one ignores averment made by the appellants that the fact of death of Chimanlal was intimated orally on one of the hearings of the interim proceedings before the High Court, written intimation conveying the information about the death of Chimanlal given by the respondent No. 3 in the present appeal who was defendant No. 4 in the original application, cannot be so ignored. It is a matter of record that the said Kumar Sheth who was a party to the said High Court suit, who was Director of the defendant No. 1 company, by his letter dated 2.7.1997 addressed to the Court Receiver, High Court, Bombay in the said Suit No. 4745/1996 conveyed in writing about the death of original defendant No. 3 and duplicate copy thereof was endorsed to the Advocate of the respondent No. 1 Bank M/s. M. Dhruva & Co. Copy of the said letter is annexed to the appeal memo. So it has to be said that the Bank had knowledge about the death of Chimanlal when they received copy of the said letter written in the month of July, 1997. In fact, in has been admitted by Bank in affidavit in support of Notice of Motion No. 974/1999 in the said High Court suit that they had been informed about death of original defendant No. 3 Chimanlal on 3.8.1998, which death they admitted to have taken place on 25.1.1997. Thus, their knowledge about the fact of death of Chimanlal has to be ascribed to them at least on 3.8.1998, but again no step was taken by the Bank to bring on record legal heirs of the deceased defendant No. 2 Chimanlal. The appellant No. 2 Chandrakant in his affidavit dated 20.4.1999 in reply to the applicant Bank's Notice of Motion No. 974/1999 had also pointed out about the death of original defendant No. 3 on 25.1.1997. In spite of all this, the Bank failed to take any step and did not show any alertness to move in the matter when such large public funds were involved. This is absolutely cursory and casual approach to the point of negligence by this public sector Bank.
7. Contention of Mr. Maniyar that the Bank had taken out Chamber Summons No. 49 of 1999 in the High Court and necessary steps were taken by the Bank to bring heirs of the deceased defendant No. 3 on record, is incorrect. If one looks at prayers of the said chamber summons, it will be immediately revealed that the said chamber summons was not taken out praying that the Bank be permitted to bring on record legal representatives of the deceased Chimanlal, who was original defendant No. 3. Prayers made in the said chamber summons can be reproduced as under:
(a) that the plaintiffs be permitted to join the respondent as the defendant No. 5 to the suit and carry out the consequential amendments.
(b) that the defendant No. 5, be restrained by an order of injunction of this Hon'ble Court from alienating, disposing of, or creating any third party rights in respect of immovable property described at Schedule I to the chamber summons, This is what is stated in para 4 of the affidavit in support of the said chamber summons.
Para 4. I say that the plaintiffs were informed by the defendant No. 1 on 3rd August, 1998, that the defendant No. 3 being, sued in this capacity as a guarantor had expired on 25th January, 1997. I say that the plaintiffs have now reliably learnt that the flat Nos. 7 and 8, in Chandramilan CHS Ltd., Vile Parle (East), Mumbai-400057 and standing in the name of the deceased defendant No. 3, now stand transferred in the name of Mrs. Manjulaben C. Sheth being the widow of deceased No. 3 and the respondent herein.
This is what is stated in para 5 of the affidavit in support of the said chamber summons.
Para 5. I say that since the deceased defendant No. 3, was a guarantor, having personally guaranteed the due repayment of the defendant No. 1, and since his above said immovable property now stands transferred in the name of the respondent, grave and irreparable harm and injury shall be caused to the plaintiffs, if the said respondent is not made a party defendants to the suit.
In Para 6, it is prayed that by an order of injunction the respondent (Manjula Sheth) be restrained, in any manner from dealing with, disposing of or creating third party rights with respect to the immovable property.
8. Thus, it is crystal clear from the prayers of the chamber summons and affidavit in support thereof that the said chamber summons was taken out by the Bank for joining the said respondent Manjula Sheth as original defendant No. 5 to the suit and for injunction that she be restrained in any manner from dealing with, disposing of or creating third party rights with respect to the immovable property, i.e. two flats in Chandmilan CHS Ltd., which stood transferred in her name after the death of Chimanlal. The said chamber summons, as contended by Mr. Maniyar was not taken out praying that Manjula Sheth be brought on record as legal heirs of the deceased defendant No. 3. The contention of the Bank to that effect therefore is false.
9. Since Chandrakant Sheth was already party defendant to the suit, there is no question of the suit being abated because he represents estate of the deceased. Thus, the suit is not abated and, therefore, the original application cannot be dismissed on that ground. However, all the same the fact remains that the heirs and legal representatives of the deceased Chimanlal were not brought on record within the prescribed timelimit.
10. In the present case at hand, such an application was not made by the applicant Bank even within a period of three years from the date of death of deceased as per the provisions of Article 137 of the Limitation Act. Since Chimanlal was already on record as party defendant, limitation for applying to bring remaining legal heirs on record is governed by Article 137 of the Limitation Act. Three years are to be counted from the date of death of defendant No, 3, to bring the case within the scope of Article 137 of the Limitation Act, Therefore, three years expired on 25.1.2000. It is thereafter that the present application on which the impugned order has been passed, was made by the applicant Bank on 8.10.2001, which was beyond period of three years from date of death of Chimanlal i.e. 25.1.1997. Therefore, chamber summons for bringing legal heirs of the deceased Chimanlal ought to have been taken out by the Bank on or before 25.1.2000.
11. When application Exhibit No. 9 was made by the appellants to the learned Presiding Officer of Debts Recovery Tribunal-III, Mumbai, praying that their names be deleted from the petition as they were brought on record as per the order of the Registrar without they being heard in the matter, the learned Presiding Officer allowed the said application on 30.5.2002, but further directed the Registrar, again to make enquiry and thereafter to decide afresh whether applicants/appellants herein could be added as defendants or not. This direction itself was erroneous inasmuch as under the DRT (Procedure) Rules, 1993, the Registrar is only empowered to grant formal amendments and he is not empowered to decide the application on merit. In fact it was the learned Registrar who, knowing his, limitations, by her order dated 22.8.2002, directed the matter to be placed before the learned Presiding Officer for deciding it on merit. The learned Presiding Officer in the impugned order admitted that there was error so as to allow the Registrar to enquire into the matter and thereafter decide afresh as to whether heirs of the deceased could be added as defendants in view of the limited powers given to the Registrar of DRT. He, however, in his further discussion observed that since the applicant Bank was public institution, it could not be considered at par with individuals and went on further to observe that "such things generally happen in public institutions and such officers are not interested in intimating about the death to their Counsel as they do not have any personal interest," etc., etc. and allowed the application of the Bank and further ordered that the heirs be taken on record. In my view, this observation is also erroneous. In fact, entire thing has proceeded and culminated in error.
12. First of all it was an error to allow the application when it was clearly barred by limitation and no sufficient cause was shown by the applicant Bank. It was utter inaction and lethargy on the part of the Bank, that in spite of knowledge, it acted negligently and did nothing to bring on record heirs of the deceased defendant No. 3 Chimanlal. The statement that leniency is to be shown to the Bank because public funds are involved cuts at both ends, because when public funds are involved the Banks are also supposed to act in a responsible way as they are accountable to the public at large. Unfortunately, there is complete absence of this accountability on the part of the respondent Bank in this case. By this negligence of the Bank, a specific right has been accrued in favour of the appellant and it will be unfair and illegal to deprive them of this right. The appeal therefore will have to be allowed and the impugned order passed by the learned Presiding Officer will have to be set aside. Hence, following order is passed.
ORDER Misc. Appeal No. 29 of 2003 is allowed in terms of prayer Clause 6(a) and the impugned order dated 3.1.2003 is hereby set aside.
In view of the above, Misc. Application No. 45 of 2003 does not survive and is disposed of accordingly.