Kerala High Court
Unit Trust Of India And Anr. vs Indian Overseas Bank And Ors. on 25 January, 2005
Equivalent citations: I(2006)BC92, [2005]127COMPCAS219(KER)
Author: K. Thankappan
Bench: K. Thankappan
JUDGMENT K. Thankappan, J.
1. This revision petition is filed by a public limited company against the order passed by the Sub-Court, Kottayam, in I. A. No. 512 of 2000 in O. S. No. 455 of 1993. The revision petitioners are defendants Nos. 4 and 5 in the suit. The suit was filed by the first respondent for realisation of an amount of Rs. 1,27,984 from the defendants. As per the plaint averments, the plaintiff wanted to realise the amount due from defendants Nos. 1 and 2. Defendants Nos. 1 and 2 availed of a loan of Rs. 75,000 from the first respondent-bank, plaintiff in the suit, for domestic purpose on May 10, 1990, on executing a demand promissory note in favour of the plaintiff, promising to pay off the said amount on demand with interest at the rate of 17.5 per cent, per annum. It is also averred in the plaint that as security for the loan, defendants Nos. 1 and 2 secured Unit Certificate No. 872307690 of the revision petitioners, valued for Rs. 1,00,000 as constituted by 1,000 units of Rs. 100 each. Since defendants Nos. 1 and 2 made default in repayment of the loan amount, the plaintiff-bank informed the matter to the revision petitioners. Thereafter, the certificate pledged by defendants Nos. 1 and 2 along with authorisation letter were forwarded to Unit Trust of India, Madras, defendant No. 5, under registered post requesting them to repurchase the units and to remit the proceeds to the plaintiff-bank for liquidating the outstandings in the loan account of defendants Nos. 1 and 2. The authorisation made in favour of the plaintiff by defendants Nos. 1 and 2 was witnessed by the plaintiffs assistant manager and another senior staff. Since the proceeds were not forthcoming from the fifth defendant, the plaintiff reminded them on various dates such as April 23, 1991, August 4, 1991, April 15, 1992 and May 19, 1992. Even after the reminders, there was no reply from the fifth defendant or any remittance of proceeds by them. Hence, the then senior manager of the plaintiff visited the office of the fifth defendant at Madras and it was found that the authorisation made in favour of the Indian Overseas Bank was scored off cross-wise and the name of Canara Bank, Kottayam, the sixth defendant, with Savings Bank Account No. 21094/37 was interpolated.
2. Defendants Nos. 1 and 2 were introduced to the plaintiff by Mr. Aniyan Athikayam, the third defendant. He is the father of the second defendant Mrs. Anitha Abraham John. Mr. Aniyan Athikayam is dealing with the plaintiff for the past several years and he is credit worthy also. The plaintiff informed the above incidents to the third defendant and he promised to adjust the account shortly. Hence, for the definite repayment of the loan with interest, on September 29, 1992, he executed a guarantee letter in favour of the plaintiff guaranteeing the payment of all monies which shall at any time thereafter during the continuance of the said guarantee be due from defendants Nos. 1 and 2. Since the authorisation/endorsement was witnessed by the plaintiff's assistant manager and another senior staff with IOB address, that portion is seen left undisturbed. Since no authentication or alternation was made by the plaintiff, the interpolation was made by the Unit Trust of India, Madras, the fifth defendant, within the connivance of defendants Nos. 1 and 2 for getting unlawful gain. It was further understood that the Unit Trust of India, Madras, had issued four cheques numbering 20/4188 to 4191 for Rs. 23,000 each and despatched on February 7, 1992, vide registered post. The cheques were drawn on Canara Bank, Kottayam, marked payable at par in the name of the beneficiaries, namely, defendants Nos. 1 and 2, quoting SB Account No. 21094/37. Only to establish the said fact, Canara Bank, Kottayam, is made a formal party in this suit. It was further understood from Canara Bank, Kottayam, the sixth defendant, that the four cheques referred above amounting to Rs. 1,00,000 were credited in defendants Nos. 1 and 2 SB Account No. 21094/37 on February 12, 1992 and the proceeds were withdrawn by defendants Nos. 1 and 2. Since the Unit Trust of India, Madras, the fifth defendant has also joined in committing fraud, fourth and fifth defendants are jointly and severally liable for the plaint amount along with defendants Nos. 1, 2 and 3. Hence the plaintiff-bank filed the suit for recovery of a total amount of Rs. 1,24,636 as the amount outstanding in the name of defendants Nos. 1 and 2.
3. The revision petitioners being entrusted with the certificates, they were made parties to the suit. The revision petitioners were represented before the lower court by counsel. But the revision petitioners were declared exparte and a decree against the revision petitioners and other defendants was passed on November 30,1995. The decree holder filed E. P. No. 177 of 1997 in O. S. No. 455 of 1993 for execution of the decree. On receiving notice in the execution petition, the revision petitioners filed I. A. No. 510 of 2000 for setting aside the ex parte decree and I. A. No. 512 of 2000 for condoning the delay in filing the petition for setting aside the ex parte decree. I. A. No. 512 of 2000 was dismissed by the court below. Consequently, I. A. No. 510 of 2000 was also dismissed. Against the dismissal of I. A. No. 512 of 2000, the revision petitioners filed this revision.
4. Learned counsel for the revision petitioners submits that the reason stated by the court below for dismissing the petition for condoning the delay in filing the petition to set aside the ex parte decree is not justifiable. There are sufficient reasons stated in the affidavit filed in support of the petition for condoning the delay of more than four years in filing the application for setting aside the ex parte decree. The fact that the revision petitioner institution is a public limited company by itself is not a ground for condoning the long delay occurred in filing the application for setting aside the ex parte decree.
5. Admittedly, defendants Nos. 1 and 2 had taken loan from the first respondent-bank on securing UTI certificate worth Rs. 1,00,000 and defendants Nos. 1 and 2 made default in repayment of the loan amount. It is also to be noted that the certificate issued by the revision petitioners was valid and alive till it was forwarded for encashment. But defendants Nos. 1 and 2 committed fraud and cheated the bank with the connivance and consent of some of the officers of the revision petitioners. That apart it is stated in the affidavit filed in support of the petition for condonation of delay that counsel appearing for the revision petitioners had not informed the revision petitioners about the order passed by the court below. In this context evidence of PW1 is relevant. PW1 stated before court that when summons were served on the revision petitioners, they engaged counsel. PW1 had given further evidence to the effect that till the date of receipt of notice in the execution petition the revision petitioners were not aware of the ex parte decree. When they contacted counsel at Kottayam on receipt of notice in the execution petition, it was informed that counsel left India and his junior refused to file an application for setting aside the ex parte decree. It is also to be noted that the evidence given by PW2, who is representative of the fifth respondent, is that counsel to whom the case was entrusted has not informed anything about the posting of the case or about the ex parte decree passed by the court below till notice was received in the execution petition. Because of the laches occurred on the part of counsel or some of the officers of the revision petitioners the grievance of the revision petitioners cannot be brushed aside. It is to be noted that the apex court as per the judgment in Ram Nath Sao alias Ram Nath Sahu v. Gobardhan Sao, , held that while considering an application under Section 5 of the Limitation Act the court should see that there are sufficient reasons to condone the delay in filing the application for setting aside the ex parte order. The expression "sufficient cause" stated in Section 5 of the Limitation Act could be interpreted as "sufficient cause to administer justice or to mitigate the grievance of the petitioner" and sufficiency of the reasons or cause could be interpreted from the facts and reasons stated in the application for invoking the judicial discretion of the court under Section 5 of the Limitation Act. The apex court further stated as follows (page 1204) :
"11. Thus it becomes plain that the expression 'sufficient cause' within the meaning of Section 5 of the Act or Order 22, Rule 9 of the Code or any other similar provision should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fide is imputable to a party. In a particular case whether explanation furnished would constitute 'sufficient cause' or not will be dependant upon facts of each case. There cannot be a straitjacket formula for accepting or rejecting explanation furnished for the delay caused in taking steps. But one thing is clear that the courts should not proceed with the tendency of finding fault with the cause shown and reject the petition by a slipshod order in over jubilation of disposal drive. Acceptance of explanation furnished should be the rule and refusal an exception more so when no negligence or inaction or want of bona fide can be imputed to the defaulting party. On the other hand, while considering the matter the courts should not lose sight of the fact that by not taking steps within the time prescribed a valuable right has accrued to the other party which should not be lightly defeated by condoning delay in a routine like manner. However, by taking a pedantic and hyper technical view of the matter the explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom the lis terminates either by default or inaction and defeating valuable right of such a party to have the decision on merit. While considering the matter, courts have to strike a balance between resultant effect of the order it is going to pass upon the parties either way."
6. Considering the entire facts and circumstances of the case, this court is of the view that the delay occurred in filing the application for setting aside the ex parte decree can be condoned. However, only on the reason that the matter is of so importance and the revision petitioners are public officers, it is not possible to take a view in favour of them ignoring the difficulties and undue expenses met by the respondents. Hence the delay can be condoned on payment of cost of Rs. 3,000 and this court ordered accordingly. Consequently, the impugned order is set aside and the delay in filing the petition for setting aside the ex parte decree is condoned. The court below shall take in file the petition to set aside the ex parte decree, I. A. No. 510 of 2000, and consider the same afresh. The cost now ordered by this court shall be deposited by the petitioners before the trial court within one month from today.
7. The civil revision petition is allowed.