Debt Recovery Appellate Tribunal - Madras
V. Gopal Kini vs Central Bank Of India on 8 November, 2002
Equivalent citations: I(2004)BC28
ORDER
A. Subbulakshmy, J. (Chairperson)
1. Final Order was passed by the PO, DRT, Ernakulam, in TA-1169/97 on 1.12.2000. While passing final Order the PO, DRT has observed in Clause (c) of the Decree/Order that "As the Counsel for D4 reports that D4 is only a guarantor and that only in case the sale proceeds of A and B scheduled properties is inadequate to satisfy the debt above, C and D scheduled properties may be proceeded against, as far as possible sale of C and D scheduled properties is ordered to be invoked only after proceeding against the A and B scheduled properties. The sale of the properties he held with all possible speed." Subsequently, the Bank filed IA-734/2001 to correct the Order in TA-1169/97 granting a Certificate for realisation of the amounts from the A to D scheduled properties of the defendants simultaneously. In the IA, the hank has stated that since the liability of the principal debtor and guarantor is coextensive, the decree holder is entitled to proceed against the principal debtor and the guarantor simultaneously and the Tribunal did not appreciate that point and passed Order to proceed against the property of the principal debtor first and then against the guarantor and it is an error apparent on the face or the record. It is further stated in the petition that the decree holder is entitled to realize the amount from all the properties of the parties simultaneously. On the petition filed by the Bank and after receiving the counter filed by D-4, the Tribunal passed Order in the IA slating that the Order has been treated as an Order suo motu made, though in furtherance of this IA since the mistake in Clause (e) of the Order came to notice only now and the PO, DRT, is inclined to correct the mistake in the decree/Order passed on 1.12.2000 and Clause (e) is treated as deleted forthwith. Aggrieved against that Order the 4th defendant appellant has come forward with this appeal (MA 103/2002).
2. Counsel for the appellant submitted that the original order was passed on 1.12.2000 and the Bank filed the petition to review that Order, on 22.6.2001 and under the RDDB & FI Act the period allowed for filing review petition is 60 days as per Rule 5A of the Act and as the Review petition was filed after the period of 60 days, the review will not lie and it is barred by limitation and the Order passed by the PO, DRT, is not proper and it is liable to be set aside and if at all the Bank has to seek any remedy it must come only by way of an appeal. Counsel for the appellant submitted that in the Order originally passed, in Clause (e), the PO, DRT has provided for proceeding against the principal debtor's property in the first instance and then to proceed against the guarantor and there is nothing wrong in passing that Order and it does not require any correction.
3. Counsel for the respondent Bank submits that it was mistake in the Order passed and the liability of the principal debtor and guarantor is co-extensive and no provision in the Order at all can be made to proceed against the property of the principal debtor in the first instance and then to proceed against the property of the guarantor and so what is observed by the PO, DRT, in Clause (e) of the decree has to be deleted and the PO, DRT, has rightly deleted it and treated it as suo motu Order and there is nothing to interfere in the Order passed by the PO, DRT. He further submitted that since it is a mistake committed by the PO, DRT while passing the Order, it has to be taken suo motu and Order has to be passed and the question of limitation does not arise since the Order itself has been passed by the PO, DRT taking it as suo motu matter even though the Bank has filed the review petition after the period of limitation. He relies upon the decision of the Supreme Court in State Bank of India v. Indexport Registered, II (1992) BC 243 (SC)=AIR 1992 SC 1740, wherein the Apex Court has held that "Decree-holder cannot be forced to first exhaust remedy by way of execution of mortgage decree alone and then to proceed against guarantor".
4. The Supreme Court in the above said decision has held that the decree-holder cannot be forced to first exhaust remedy by way of execution of mortgage decree alone and then to proceed against the guarantor. The position of law is that the guarantor is jointly and severally liable for the debt along with the principal debtor. The PO, DRT has observed in her Order in IA that the mistake in the Order being one to be corrected by her and the position of law being that the surety is jointly and severally liable for the debt, among other debtors, the properties offered as security by the guarantor are also liable for the debt and no reservation is called for in respect of the properties owned by the guarantor i.e. the plaint 'C' and 'D' scheduled property and so she is inclined to correct the mistake in the Order passed on 1.12.2000 deleting Clause (c) and treating that Order as an Order suo motu made. Even though the Bank filed the IA for correction of that mistake, the PO, DRT has found that according to the position of law the guarantor is jointly and severally liable for that debt and she is inclined to delete Clause (c) of the decree/order even though there is some delay in filing that IA. She has found it as an error apparent on the face of the record as it is contrary to the settled position of law. She has deemed it fit to correct that Order by deleting Clause (c) and treating it as suo motu Order. Of course, under the Act the review petition has to be filed within 60 days from the date of passing of that Order. Admittedly, this petition was filed beyond the period of 60 days. She has clearly stated in her Order that disregarding the delay in filing the IA, she is inclined to correct the mistake in the Order passed on 1.12.2000 taking into consideration the settled position of law. She has deleted the Clause (c) since it is an error in the Order passed as it is against the settled position of law. As the PO, DRT, mo motu passed that Order by correcting the error in that Order invoking the principles of natural justice, I find that the Order passed by the PO, DRT, is proper. Further, the Bank also filed the IA only for correction of the Order and it is not a review petition for correction of the Order and the application filed by the Bank is also not a review application and it was filed to correct the Order as per the settled position of law. The PO, DRRT, also suo motu corrected that mistake as per the settled position of law and passed the Order. Hence, I find that the Order passed by the PO, DRT, is proper and does not warrant any interference.
5. Miscellaneous Appeal (MA-103/2002) dismissed.
6. In respect of URA-10/2001, Counsel for the appellant submits that even the Pronote filed is not in proper forum and some of the documents also cannot be received and the Order passed by the PO, DRT, is liable to be interfered with and the guarantor also disputes some of the documents and the guarantor appellant has got a good case and the appeal has to be taken on file and the appellant is entitled for waiver of the deposit amount.
7. On a perusal of the Order, it is seen that all the documents signed by the defendants have been considered by the PO, DRT, and the PO has found that the guarantor the 4th defendant appellant has executed the documents and the appellant had specifically undertaken to pay all the dues from D-1 to the Bank and he had offered guarantee and also created equitable mortgage in respect of the schedule properties. Counsel for the Bank submitted that D-4 also did not go into the box and he did not whisper anything with regard to what is stated by the Counsel for the appellant now and on the documents filed, the PO, DRT has considered and has passed Order and has found that the guarantor D-4 is liable for the Suit claim. In Para 10 of the Order, the PO, DRT, has observed that Ex. A7 is allegedly a letter of guarantee dated 14.9.1987 executed by D2 to D6 and one Perumal Raja guaranteeing the repayment of all amounts find dues by D1 to the applicant Bank and there was no cross-examination of AW1 regarding Ex. A7 and no doubt D4 had guaranteed repayment of the dues from D1 by virtue of Ex. A7. The PO, DRT, has further found that Ex. A9 is proved to be the said acknowledgement of the debt by D1 to D7. She has also observed that D4 had also confirmed the re-deposit of title deeds and had declared that the mortgage shall continue as security for the loans granted to D1 and Ex.A18 is the said confirmation letter. On an overall analysis, she has found that D4 has specifically undertaken to pay the dues from him the Bank and had also offered guarantee and had also created equitable mortgage in respect of the properties. The PO, DRT, has found that the amounts claimed in the Suit is outstanding from, the defendants to the applicant Bank and also that the dues were duly guaranteed by D1 to D8 and also secured by equitable mortgage in respect of the plaint schedule properties including that of D4. Counsel for the respondent Bank submitted that on a careful analysis of all the documents filed, the PO, DRT has suo motu modified her Order with the conclusion that the appellant D4 is also liable for the Suit claim and the D4 is not entitled for waiver.
8. Counsel for the appellant submitted that the Power of Attorney filed by the Bank is also not proper and all these things have to be gone into and also with regard to the documents executed by the appellant, those things have to be gone in detail in the appeal and the appellant has got a good case. Counsel for the respondent Bank cited the decision in AIR 1997 SC 3, wherein the Apex Court has held that--
"It cannot be disputed that a company like the Bank can sue and be sued in its own name. Under Order 6 Rule 14 of the C.P.C. a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity it is obvious that some person has to sign the pleadings on behalf of the company. Order 29 Rule 1 of the C.P.C., therefore, provides that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the Corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6 Rule 14 together with Order 29 Rule 1 of Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person preferred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the Corporation. In addition thereto and de hors Order 29, Rule 1, as a company is a juristic entity, it can duly authorize any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14. A person may be expressly authorized to sign the pleadings on behalf of the company for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The Court can, on the basis of the evidence on record and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the Corporation had ratified the act of signing of the pleading by its officer."
9. With regard to the various contentions raised by the appellant in the appeal (URA-10/2001), that can be gone into only by deciding the appeal on merit. Now there is a decree as against this appellant also. The total amount involved is more than Rs. 1 crore even though the decree amount is Rs. 55 lakhs. There is no proper and sufficient reason for waiver of the deposit as contemplated in the Act under Section 21. Counsel for the appellant submitted that the appellant is only a guarantor and he has guaranteed only for Rs. 35 lakhs.
10. Both the principal debtor and the guarantor are equally liable for the Suit claim, their liability being co-extensive. Hence, the appellant is directed to pay Rs. 20,00,000/- (Rupees twenty lakhs only) within a period of two months i.e. by 8.1.2003, failing which the appeal (URA-10/2001) shall stand rejected.