Debt Recovery Appellate Tribunal - Madras
Nagarjuna Construction Co. Ltd. vs South Indian Bank Ltd. And Ors. on 8 December, 2004
Equivalent citations: II(2005)BC104
ORDER
Pratibha Upasani, J. (Chairperson)
1. Both these appeals can be disposed of by this common order as they are arising out of the common order dated March 17, 2004, passed by the learned presiding officer of the DRT, Bangalore, in I. A. No. 1 and I. A. No. 568 of 2003 in O. A. No. 604 of 2001. The parties are also the same and the issues are inter-connected.
2. I. A. No. 1 of 2003 is taken out by the applicant-bank praying for adding the present appellant M/s. Nagarjuna Construction Company Ltd., as defendant No. 4 in the main original application while the other I. A. No. 568 of 2003 is taken out by the applicant-bank for carrying out certain amendment in terms of the Schedule in the original application itself which proposes to incorporate the amendments concerning the proposed defendant No. 4/Nagarjuna Construction Ltd. By the impugned order, the learned presiding officer allowed both these applications and in pursuance to that order the amendment, in fact, has been carried out also. But the appellants are aggrieved by the impugned order whereby they were joined as party defendant No. 4 and amendment with respect to incorporating certain formalities was permitted to be carried out. Hence, these appeals.
3. I have heard Mr. R. Chandrasekaran, advocate for the appellant and Mr. v. Girish Kumar, advocate for respondent No. 1-bank.
4. I have also gone through the proceedings and having given my thoughtful consideration to the submissions made by both parties at the Bar, in my view, the learned presiding officer has not committed any error.
5. In Miscellaneous Appeal M. A. No. 172 of 2004, the case of the appellant is that they are neither the borrowers nor the guarantors and unnecessarily they have been dragged into this litigation by joining them as party defendant No. 4. It is further their contention that the original application was filed by the bank against the other three defendants on December 11, 2001, and application to implead defendant No. 4/present appellant as party defendant No. 4 was made by the bank on December 23, 2002. It is submitted that cause of action, if at all, arose by virtue of the power of attorney executed by the original defendants in favour of the bank on December 19, 1998 and because of this, the application for impleading the appellant as party defendant is barred by limitation. It is further contended that the power of attorney, which authorised the bank to collect the money from the appellant, which was due and payable by them to original defendants was equitably assigned, which was not permissible. On these grounds, it is submitted that the learned presiding officer committed error in allowing the applicant-bank to implead the appellant as defendant No. 4 in the main original application.
6. As far as the second Miscellaneous Appeal M. A. No. 173 of 2004, with 6 respect to amendment is concerned, it is submitted by Mr. Chandrasekaran, advocate appearing for the appellant that the amendment which was permitted to be carried out was time barred and such an amendment ought not to have been permitted. It is further submitted that a valuable right has accrued to the appellant by lapse of time which was taken away by allowing the amendment to be carried out. On these grounds, this order has been also assailed by the appellant.
7. Mr. Girish Kumar, advocate appearing for respondent No. 1-bank, how- ever, at the outset, submitted that the contention of the appellant that the amendment application or application to implead the appellant to the main original application was time barred, was misconceived. He pointed out that by letter dated December 19, 1998, written by the appellant M/s. Nagarjuna Construction Co. Ltd., and addressed to the manager of South Jndian Bank Ltd., Mysore, it was promised by the appellant that payments issued in favour of M/s. Shariff Constructions (of which defendant No. 1 Mrs. Salma Shariff is the proprietrix), acknowledgement receipt of the power of attorney issued by M/s. Shariff Constructions, and it was informed by M/s. Nagarjuna Construction Co. Ltd. that all payments due to M/s. Shariff Constructions in respect of the work referred to in the said letter would be made to M/s. Shariff Constructions A/c., South Indian Bank Ltd., Mysore. Mr. Girish Kumar, for respondent No. 1-bank drew my attention to the copy of the said letter, which is annexed at page 52 of the appeal memo. Mr. Girish Kumar, further argued that defendant No. 1 had executed a power of attorney authorising the South Indian Bank Ltd., to collect all payments mentioned in their letter, mentioned in the power of attorney and in pursuance to the authority conferred by virtue of this power of attorney, Nagarjuna Construction Co. Ltd., was in fact making payments to the South Indian Bank and continued to do so till March, 2000. It was further submitted by the learned advocate appearing for respondent No. 1-bank that it was only after March, 2000, that M/s. Nagarjuna Construction Co. Ltd., stopped making any payment to the bank and started routing the bill amounts through another bank, clearly in breach of the power of attorney given by defendant No. 1. Mr. Girish Kumar submitted that, therefore, the cause of action indeed arose after March, 2000, and, therefore, the application made by the bank on December 23, 2002, by making a request for impleading M/s. Nagarjuna Construction Co. Ltd. as a party defendant No. 4, was clearly within time.
8. As far as the point of equitable assignment was concerned, Mr. Girish Kumar for respondent No. 1-bank argued that the power of attorney executed by defendant No. 1 in favour of the applicant-bank amounted to a binding equitable assignment by way of security which was an actionable claim against the defendants and, therefore, it was in the fitness of things that defendant No. 4 was impleaded as a party defendant No. 4.
9. On the point of limitation, Mr. Girish Kumar for respondent No. 1-bank submitted that the Hon'ble Supreme Court in its decision reported in Pankaja v. D. Yellappa [2004] 4 CTC 231; AIR 2004 SC 4102, has categorically observed that jurisdiction of the court to allow amendment of pleadings is very wide enough to permit amendments even in cases where there has been substantial delay in filing such applications.
10. Having heard both the advocates at length, I find myself in agreement with the submissions made by Mr. Girish Kumar, advocate appearing for the respondent-bank.
11. First of all, it has to be stated that though the power of attorney is dated December 18, 1998, the cause of action arose after March, 2000, when, in breach of the directions and authority given in the power of attorney, the appellant namely, M/s. Nagarjuna Construction Company Ltd., stopped making payment to respondent No. 1-bank towards the account of the defendants and started routing the bill amounts through another bank. Thus, the cause of action arose only after March, 2000, and not earlier. Therefore, the application made by the bank on December 23, 2002, was clearly within limitation.
12. As such, it is a well settled position now that amendment applications are to be dealt with liberally. In fact, the Supreme Court has stated in the case of Ragu Thilak D. John v. S. Rayapan [2001] 2 SCC 472, that even where there is a dispute as to the bar of limitation, the amendment which is sought should not be declined and the plea that relief sought by way of amendment was barred by time is arguable in the circumstances of the case and the plea of limitation which is disputed can be made a subject-matter of the issue after allowing the amendment prayed. Ragu's case [2001] 2 SCC 472 was cited with approval by the Supreme Court in Pankaja's case [2004] 4 CTC 231 ; AIR 2004 SC 4102, wherein following observations were made by the Supreme Court (page 4104):
"So far as the court's jurisdiction to allow an amendment of pleadings is concerned there can be no two opinions that the same is wide enough to permit such amendments even in cases where there has been substantial delay in filing such amendment applications. This court in numerous cases has held that the dominant purpose of allowing the amendment is to minimize the litigation, therefore, if the facts of the case so permit, it is always open to the court to allow applications in spite of the delay and laches in moving such amendment application."
13. The observations of the hon'ble Supreme Court in Ragu's case [2001] 2 13 SCC 472 also can be reproduced below which are as follows (page 474) :
"The amendment sought could not be declined. The dominant purpose of allowing the amendment is to minimize the litigation. The plea that the relief sought by way of amendment was barred by time is arguable in the circumstances of the case . . . The plea of limitation being disputed could be made a subject-matter of the issue after allowing the amendment prayed."
14. Considering the above position, it cannot be said that the learned presiding officer committed error in allowing the application for amendment and for impleading the appellant as defendant. As such, if one goes through the factual aspect, it is revealed that there was no delay at all as the cause of action arose after the breach committed by the appellant when they failed to pay the amount in terms of the power of attorney to respondent No. 1-bank after March, 2000. In such a situation, the application made by the applicant-bank on which the impugned order dated December 23, 2002, has been passed is clearly within limitation and cannot be assailed on any ground.
15. The submission made by the appellant's advocate with regard to non-permissibility of the assignment of payment also is erroneous. Recourse can be had to the judgment of this very Appellate Tribunal in which my predecessor the late Justice A. Subbulakshmy, in the case of Union of India v. Canara Bank [2002] 2 ISJ (Banking) 467 (SAT), has made observations in para. 7 with respect to assignment made through the power of attorney. She has observed that when the borrower executed power of attorney in favour of the bank to receive all the money due and payable by the appellant (Union Bank of India), this amounted to a binding equitable assignment which is an actionable claim and/therefore, the appellant was not entitled to withhold the entire amount covered under the four bills for a sum of Rs. 90,055.74.
16. In view of the aforesaid discussion, no fault can be found with the impugned order. The said order, therefore, is upheld and both the appeals fail. Accordingly, the following order is passed.
ORDER
17. Miscellaneous Appeals M. A. No. 172 of 2004 and M. A. No. 173 of 2004 are dismissed.