Debt Recovery Appellate Tribunal - Delhi
Motia Rani And Ors. vs Punjab National Bank And Ors. on 12 March, 2003
Equivalent citations: I(2004)BC170
ORDER
K.S. Kumaran, J. (Chairperson)
1. The appellants herein were defendants 5, 2 and 6 respectively in O.A. 836/95 before the Debts Recovery Tribunal-I, Delhi (hereinafter referred to as 'the DRT). The O.A. was originally a civil suit before the Hon'ble High Court of Delhi, and was subsequently transferred to the DRT after the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act') came into force. The suit was filed by New Bank of India which has subsequently amalgamated with the respondent-Punjab National Bank (hereinafter referred to as 'the respondent-Bank').
2. On 17.7.1997, the learned Presiding Officer of the DRT passed the final order against the appellants/defendants and others. The appellants/defendants filed an application on 28.8.2000 before the DRT for setting aside the ex parte final order. This application was considered and dismissed by the learned Presiding Officer of the DRT holding that the said application was filed beyond the period of limitation, but, there was application for condoning the delay and, therefore, it was liable to be dismissed on that score alone. The learned Presiding Officer also held that even on merits also no grounds have been made out for setting aside the ex parte final order. Aggrieved, the appellants have preferred this appeal.
3. I have heard the Counsels for both the sides, and perused the records.
4. In this appeal also the learned Counsel for the respondent Bank urged that the application filed before the DRT by the appellants/defendants for setting aside the ex parte final order was barred limitation, and was rightly dismissed on this score also by the learned Presiding Officer of the DRT. The learned Counsel for the appellants/defendants contends that the appellants/defendants were never served with any notice in O.A., and that they had no knowledge of the proceedings in O.A. 836/95. According to the learned Counsel for appellants/defendants, it was only on 14.5.2000 that the appellant/6th defendant informed the other appellants that a notice from the Recovery Officer (attached to the DRT, Delhi) under Section 25 to 28 of the Act, and the 2nd Schedule to the Income-tax Act, 1961 had been served upon him (6th defendant), wherein the names of the other appellants had also appeared. The learned Counsel for the appellants/defendants contends that the appellants immediately instructed their advocate to inspect the records, and that on 28.7.2000 while inspecting Court records, it was revealed that the respondent-Bank had filed the present case against the appellants and others. The learned Counsel for the appellants/defendants further contends that it was thereafter the application to set aside the ex parte final order was filed on 28.8.2000. He, further contends that since the appellants had no notice of the proceedings in the O.A., they had to apply for the inspection of the records relating to this case on 29.5.2000, but the records were made available for inspection only on 28.7.2000, and that thereafter an application was made for getting certified copies of the records on 31.7.2000. He further contends that the certified copies were made available on 14.8.2000 after which the application to set aside the ex parte final order was filed on 28.8.2000. He, therefore, contends that in these circumstances, it cannot be stated that the said application is barred by limitation.
5. But, the learned Counsel for the respondent-Bank, on the other hand, contends that even according to the case of the appellants/defendants as set out in the application to set aside the ex parte final order, the appellants/6th defendant had received the notice of execution in this case from the Recovery Officer on 14.5.2000, which contained the names of the other appellants also, and that he had informed the other appellants also about the same immediately. The learned Counsel for the respondent-Bank, therefore, contends that the appellants herein became aware of the final order on 14.5.2000 itself, but had not filed the application to set aside the ex parte final order within 30 days thereof. The learned Counsel for the respondent Bank also points out from para 5.41 of the Memorandum of Appeal that even, according to the appellants, they had asked for the inspection of the records of the DRT in this case by an application dated 29.5.2000. He contends that still the appellants/defendants did not, immediately after receipt of the notice on 14.5.2000, apply for the inspection of the records, and there is no explanation for not doing it immediately. He, further, points out that in the same paragraph of the Appeal it has been stated that the records were made available for inspection on 28.7.2000, and contends that it is highly improbable inasmuch as it has been stated that the request for inspection was allowed after more than two months. Even otherwise, the learned Counsel for the respondent-Bank contends that the appellants/defendants should have filed the application to set aside the ex parte final order within 30 days of coming to know about the final order, i.e., from 14.5.2000, and these grounds mentioned by the appellants/defendants that they had to seek inspection of the records, and that inspection was granted only 28.7.2000, will not be of any avail in this regard. The learned Counsel for the respondent-Bank also points out that concededly no application for condoning the delay in filing the application was also filed by the appellants/defendants. Though the learned Counsel for the appellants/defendants contends that even an oral request to condone delay would have been sufficient, he concedes that no such oral request was even made. If the appellants/defendants had made an application for condoning the delay in filing the application for setting the ex parte final order, and if in that application they had stated the above mentioned reasons for the delay, the respondent-Bank would have had an opportunity to meet the same, and the learned Presiding Officer would also have been in a position to consider and decide as to whether there was any ground for excusing the delay. But, the appellants/defendants had not filed any such application.
6. Of course, the learned Counsel for the appellants/defendants relies upon the decision of the Hon'ble Supreme Court in L/Naik Mahabir Singh v. Chief of Army Staff, 1990 (Supp.) SCC 89(1), in support of his contention that even an oral prayer for condonation of delay could be accepted. This decision shows that the Hon'ble Supreme Court has accepted the oral request to condone the delay in filing the petition before it. But, in the case on our hand, as pointed out already, no such oral request was made to condone the delay. On the other hand, the learned Presiding Officer has, in his order impugned in this appeal, specifically held that on the face of it the application has been filed beyond the period of limitation but no application for condonation of delay has been filed, and so the application is liable to be dismissed on this score alone. Therefore, the appellants/defendants in this case cannot draw any support from the decision of the Hon'ble Supreme Court referred to supra in view of the fact no oral request was made to condone the delay.
7. As pointed out already, there was no application for condonation of delay in filing the application to set aside the ex parte final order. Concededly, the appellants/defendants had come to know about the ex parte final order on 14.5.2000 when they received the notice in the execution proceedings from the Recovery Officer. The application to set aside the ex parte final order was filed on 28.8.2000 only, whereas, the application ought to have been filed within 30 days at least from the date of knowledge, i.e. 14.5.2000.
8. Since the appellants/defendants had not filed the application within 30 days as mentioned above, and had not also applied either orally or in writing for condonation of the delay in filing the said application, I am of the view that the application to set aside the ex parts final order is clearly barred by limitation, Therefore, the application had to be rejected on this ground alone, and the learned Presiding Officer of the DRT has also rightly held that the application had to be dismissed on this score alone,
9. Therefore, in these circumstances, I hold that the application to set aside the ex parte final order was not filed before the DRT in time and, therefore, was liable to be dismissed on that ground only. Consequently, the appeal also fails, and is dismissed on this grounds.
10. But, the learned Counsel for the appellants/defendants contends that the learned Presiding Officer of the DRT has considered the merits of the application also and therefore, he should be deemed to have condoned the delay. This contention of the appellants/defendants cannot be accepted because, as pointed out already, the learned Presiding Officer has, in his order, specifically pointed out that the application is beyond the period of limitation, that no application for condonation of delay was filed and, therefore, the application was liable to be dismissed on the score alone. It is only after holding so, that the learned Presiding Officer of the DRT proceeded to consider the merits and has held that even on merits the appellants/defendants did not make out a good case for setting aside the ex parte final order.
11. Though I have also held that the appeal has to fail on this grounds, and is dismissed on account of the fact that the application to set aside the ex parte final order was barred by time, for the sake of completeness I have also hereunder discussed the merits of the case put forward by the appellants/defendants for setting aside the ex parte final order.
12. The learned Counsel for the appellants/defendants contends that even while the matter was pending before the Hon'ble High Court as a Civil suit, the respondent-Bank did not take earnest steps to effect service on the defendants. The civil suit was subsequently transferred from the Hon'ble High Court to DRT, Delhi. The learned Counsel for the appellants/defendants has placed on record the copies of the day-to-day orders passed by the Hon'ble High Court and by the DRT. The learned Counsel for the appellants/defendants points out from the orders passed by the learned Registrar of the High Court that the plaint was registered as a suit by order dated 19.8.1993, and summons were ordered to be issued for 12.1.1994, that on 12.1.1994 summons were ordered to be issued for 18.7.1994 as the plaintiff had not paid the process fee; that in view of the fact that the New Bank of India had amalgamated with the Punjab National Bank the suit was being adjourned from 18.7.1994 to 1.8.1994, from 1.8.1994 to 1.9.1994, from 1.9.1994 to 12.1.1995, from 12.1.1995 to 16.5.1995 and from 16.5.1995 to 4.8.1995 for taking steps to amend the plaint. He points out that on these dates summons were not taken to the defendants but on 4.8.1995 a note was put up to transfer the case to DRT in view of the Act of 1993, and the matter was ordered to be placed before the Tribunal on 20.9.1995 for further proceedings. He further points out that before the DRT the matter was taken up on 11.10.1995, that on that date fresh summons were ordered to be issued by the DRT to the defendants for the hearing dated 29.12.1995, but on 29.12.1995, the learned Counsel for the respondent Bank stated before the Tribunal that the summons were sent by Registered Post with acknowledgement due, but the acknowledgement had not received back, that the defendants were deliberately avoiding the service of the summons and, therefore, prayed for substituted service. The copy of the order dated 29.12.1995 shows that the learned Presiding Officer, after observing that he was satisfied that the defendants cannot be served by ordinary means, directed service of notice by publication in the 'Stateman'. The learned Counsel for the appellants/defendants points out that actually notice was taken only once and thereafter no attempt was made to serve the appellants by any other mode. According to him, it is apparent that even the acknowledgments for service had not been produced (since they had not been received back). He also contends that no affidavit regarding service was also filed before the DRT, and no evidence was placed before the DRT to show that the defendants were deliberately avoiding the service. He also contends that there was also no material before the DRT to show that the defendants could to be served by ordinary means and, therefore, the learned Presiding Officer was also not justified in saying at that time that the defendants could not be served by ordinary means. In these circumstances, he contends that there was no valid or legal ground to order substituted service by publication in the newspaper.
13. In support of his contention the learned Counsel for the appellants/defendants relies upon the decision in Shanmukhi v. Venkatarami Reddy, AIR 1957 Andhra Pradesh 1, wherein it has been held as follows:
"It is seen that in the case of substituted service, there are two conditions prescribed before it can be resorted to, viz. that the Court must be satisfied either (1) that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or (2) that for any other reason the summons cannot be served in the ordinary way. The satisfaction of the Court in each of these cases is brought about by representations of the plaintiff usually made by an affidavit."
14. He also relies upon the decision in Tehroonchand v. Surajmull Nagarmull, AIR 1984 Calcutta 82, wherein it has been held as follows:
"Before issuing summons under Order 5, Rule 20 of the Code, the Court is to be satisfied that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason summons cannot be served in the ordinary way. Before such satisfaction, the Court has to consider the case carefully having regard to the nature of the earlier summons. Mere assertion of the plaintiff in this respect to attract the provisions of Order 5, Rule 20 of the Code will not be enough. Only when the Court is satisfied from the materials on record that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason summons cannot be served in the ordinary way, the Court will be entitled to order service of summons under Order 5, Rule 20 of the Code."
15. Relying upon these decisions, the learned Counsel for the appellants/defendants contends that there was absolutely no justification for ordering substituted service by publication, and, therefore, the order dated 13.6.1996 passed by the learned Presiding Officer of the DRT that he was satisfied about the service on the appellants/defendants by publication and, hence, the defendants are proceeded ex parte cannot be legally sustained. I agree with the learned Counsel for the appellants/defendants in this respect. Though the decisions relied upon by the appellants have been rendered in cases to which the CPC applied, the principles apply with equal force to the case under this Act also, since the basis for these decisions is the principle of natural justice which the DRT and this Tribunal will have to follow in deciding the matters before them.
16. A perusal of the order dated 29.12.1995 passed by the DRT shows that even the unserved notices were not produced before it. The learned Counsel for the respondent-Bank had merely submitted that the defendants were deliberately avoiding service of summons, and had prayed for ordering substituted service. The order does not indicate that the envelopes containing the notices sent had returned due to any reason, and were placed before the Tribunal for the purpose of taking a decision as to whether substituted service should be ordered or not, The mere statement of the learned Counsel for the respondent-Bank that the defendants were avoiding service will not be sufficient. Placing on record the affidavit regarding service as also the unserved envelopes containing the notices is necessary. It is only on perusal of the affidavit regarding service as well as the reason mentioned on the envelopes as to the non-service on the defendants the Court would be in a position to consider and appreciate the request for substituted service. It is conceded by the learned Counsel for the respondent-Bank that the envelopes had not returned at that time. That being so, the statement of the learned Counsel for the respondent Bank made before the DRT was not supported by any material nor was he justified in stating that the defendants were deliberately avoiding service. Further, while the learned Counsel for the respondent Bank stated that the defendants were deliberately avoiding service, the learned Presiding Officer proceeded to hold that the defendants could not be served by ordinary means, and ordered substituted service. Evidently, they are two different aspects. Avoiding service is the deliberate action or omission on the part of the defendants not to receive the notice. But not being able to serve notice by ordinary means may be due to various reasons like the defendants being not available, the address being not correct and the plaintiff being unable to give any other address for service. So, we find that the reason given by the learned Counsel for the respondent Bank was one, and the view taken by the learned Presiding Officer was a different one. But, for both the conclusions (either of the learned Counsel for the respondent Bank or of the learned Presiding Officer) there was no material to support. Therefore, as rightly contended by the learned Counsel for the appellants/defendants, there was no sufficient material before the DRT for the learned Counsel for the Bank to state that the appellants/defendants were avoiding service or for the DRT to come to the conclusion that the defendants could not be served by ordinary means.
17. Of course, the learned Counsel for the respondent Bank points out firm the photocopies of the envelopes (and the endorsements made thereon) addressed to the appellants/defendants 5 and 6 that these envelopes have been subsequently received as refused, and that addressed to the appellant/2nd defendant has been returned unserved. He contends that if these notices had returned on 29.12.1995 and had been placed before the Tribunal, the Tribunal would have decided that there was sufficient service. But, the learned Counsel for the appellants/defendants contends that even this contention cannot be accepted. He points out that the envelopes containing the notices were not sent by the Registry of the DRT to these defendants, but, it is seen from the address given in these envelopes that they were sent from the office of the respondent Bank. The learned Counsel for the respondent Bank also concedes that these notices were sent from the office of the respondent Bank. Therefore the learned Counsel for the appellants/defendants contends that even if the contention of the learned Counsel for the respondent Bank that these notices had been refused by the appellants/defendants is assumed to be correct, the DRT would not have been in a position to hold that the service is sufficient inasmuch as it cannot be stated that the defendants were aware that the envelopes contained notices from the DRT, since they were sent only by the respondent Bank. The learned Counsel for the appellants/defendants also points out that there is nothing on the face of these covers indicating that these were notices issued by the DRT relating to any case, He, therefore, contends that in the absence of my such thing on the face of the envelopes to show that they contained a notice sent by the DRT, the appellants/defendants cannot be held to have refused or returned the notice without accepting it knowing that it was a notice from the DRT. He, therefore, contends that the DRT could not have come the conclusion that the appellants/defendants should be deemed to have been served, I agree with the learned Counsel for the appellants/ defendants in this respect also. The mere fact that the notices addressed to the appellants/ defendants had either returned unserved or returned with the endorsement 'refused' would not have been sufficient to hold that they are deemed to have been served with the show cause notices in the O.A., because, there is nothing on the face of the envelopes to indicate that these were notices sent by the Registry of the DRT, Concededly, the notices were sent from the office of the Punjab National Bank. But, even the name of the Bank has not been mentioned there. If the appellants/defendants had not accepted, and returned such a notice or even refused to accept the notice from the Punjab National Bank, it cannot be held that they knew that the notice was from DRT summoning them to appear before the DRT, and knowing that it was such a notice they had refused to accept it or returned it without accepting it. Therefore, it cannot be held that they should be deemed to have been served.
18. The learned Counsel for the appellants/defendants contends that even the publication of the notice was not proper, and no copy of the publication in the newspaper was also despatched to the last known addresses of the appellants/defendants. The learned Counsel for the appellants/defendants points out that though publication was ordered to be made for the hearing dated 8.3.1996, the same was not done, and once again, on 8.3.1996, publication was ordered to be made fixing the date of hearing as 13.6.1996. The learned Counsel for the appellants/defendants contends that even the publication was made only on 31.5.1996 giving of hearing as 13.6.1996. He, therefore, contends that only 13 days' time had been given, whereas, the show-cause notice, as per Sub-section (4) of Section 19 of the Act, should give 30 days' time to the defendants to show cause. A perusal of the photocopy of the notice published in the newspaper produced along with the appeal shows that this publication was made on or after 1st June, 1996 because another notice (relating to some other matter) appearing at the same page (where the notice with which we are concerned is published) the date of notice has been given as 1st June, 1996. Therefore, it is evident that the publication must have been made on or after 1st June, 1996. If only 13 days' time is given to the defendants, then it will be violation of the provisions of Sub-section (4) of Section 19 of the Act, which provides that the defendants should be given 30 days' time to show-cause against the claim.
19. If we take into consideration all the factors mentioned above, it will be clear that the appellants/defendants were not served with notice of the O.A., and that they cannot also deemed to have been served by the reason of the fact that the envelopes sent to the defendants either returned unserved or were refused. It is also clear that there was no legal or valid or justifiable ground for ordering substituted service and, therefore, these defendants cannot be stated to have been validly served by the publication of the notice in the newspaper. It is also seen that the Service by publication did not satisfy the requirements of Sub-section 4 of Section 19 of the Act. Therefore, the finding of the learned Presiding Officer of the DRT in the impugned order that the appellants/defendants had been properly served cannot be sustained.
20. But, the learned Counsel for the respondent Bank contends that the appellants/ defendants have not complied with the provisions of Section 21 of the Act, nor have they prayed for waiver of the pre-deposit as contained in that section, and, therefore, the appeal has to fail. Section 21 of the Act provides as follows:
"Deposit of amount of debt due, on filing the appeal Where an appeal is preferred by any person from whom the amount of debt is clue to a Bank or a financial institution or a consortium of Banks or financial institutions, such appeal shall not be entertained by the appellate Tribunal unless such person has deposited with Appellate Tribunal seventy-five per cent of the amount of debt so due from him as determined by the Tribunal under Section 19:
Provided that the appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section."
21. The learned Counsel for the respondent Bank contends that the amount due from the appellants has been determined by the Tribunal, and: so even in an appeal against the order declining to set aside the ex parte final order, the appellants/defendants have to comply with this provision. But, the learned Counsel for the appellants relies upon the decision of this Tribunal in Almania Foods and Ors. v. Catholic Syrian Bank (Miscellaneous Application 292/2002 in Miscellaneous Appeal 256/2001, decided on 26.6.2002) in support of his contention that in an appeal of this sort there is no need to comply with the provisions of Section 21 of the Act. This Tribunal, after elaborately discussing the matter, held that an application to set aside the ex parte final order docs not challenge the merits of the final order, and while considering such an application the Tribunal does not go into the merits of the application for recovery, but only considers whether the ex parte decree was passed without service on defendants, or whether on the date when the ex parte decree was passed, the defendants were absent for some justified reasons and, therefore, in the appeal also the merits of the application for recovery or the merits oft determination of the debt are not in consideration. This Tribunal held that Section 21 applies to those appeals where the order determining the debt either under Section 19(2) of the Act or under Rule 12(5) of the Rules directing the defendants to pay the amount has been challenged. Ultimately, this Tribunal held that provisions of Section 21 of the Act are not attracted to the appeal of that sort. This decision supports contention of the learned Counsel for the appellants/defendants and, therefore, this objection by the respondent Bank cannot be accepted.
22. But, in view of my finding that the application to set aside the ex parte final order was barred by the limitation, the appeal has to be dismissed.
Accordingly the appeal is dismissed.
A copy of this order be furnished to both the sides.