Debt Recovery Appellate Tribunal - Mumbai
Western Ministil Limited vs The Bank Of Rajasthan Ltd. And Ors. on 31 July, 2001
JUDGMENT
V.R. Datar, Chairperson
1. The appeals are filed by the same party but arise out of two different applications filed in two Original Applications of the Bank of Rajasthan, which are disposed of by common judgment by the Presiding Officer, Debts Recovery Tribunal-III, Mumbai, on 16.07.2001. Orders are passed on applications Exhibit 58 in O.A. No. 3202 of 2000 and Exhibit 92 in O.A. No. 1808 of 2000. Both these applications were made by the defendant No. 3 in the original applications namely Western Ministil Limited, a company.
2. In order to understand controversy brief facts are required to be stated. The respondent No. 3 M/s. Virgo Steel, partnership firm registered under the Indian Partnership Act was from time-to-time purchasing various semi-finished steel products such as RCS billets of various descriptions, size and other products from the appellants. In respect of the said transactions, the payments were made occasionally by the respondent No. 3, M/s. Virgo Steel under various letters of credit established by it through United Commercial Bank, the respondent No. 2 herein. Some time in June 1991, the respondent No. 3 placed orders with the appellant for supply of approximately 2000 mts. of RCS billets of the size 100 x 100 mm at the rate of Rs. 10,000/- per mt. These materials were agreed to be purchased by M/s. Virgo Steel, the respondent No, 3 herein "Ex-works" and price was inclusive of 180 days of credit. The payment was to be made by way of 5 confirmed irrevocable letters of credit which were without recourse to the drawers of the bills of exchange. At the request of the respondent No. 3 M/s. Virgo Steel, the UCO Bank, the respondent No. 2 established 5 letters of credit all of which were dated 05.08.1991. Aggregate sum of these bills was not exceeding Rs. 5.25 crores. The said letters of credit without recourse to the drawer, that is the appellant, were negotiable through any Bank. Payments were to be made by the Bank under the said letters of credit, if the same were produced in the original together with bill of exchange for 100% of the value of the proforma invoices. These letters of credit and bills of exchange were duly accepted by the respondent No. 3. In respect of the goods so sold by the appellant to the respondent No. 3, the appellant drew upon respondent No. 3 two bills of exchange dated 5.8.1991 and three bills of exchange dated 07.08.1991 for aggregate sum of Rs. 5,23,79,355/-. The bills clearly provided that the same were drawn under the respective irrevocable letters of credit of UCO Bank, Mandvi Branch, Mumbai. The said bills of exchange were duly accepted by the respondent No. 3 by signing the same and confirming the acceptance. The appellant claims to have discounted/negotiated the said bills of exchange and documents set out under the letters of credit which were duly accepted by the respondent No. 2 UCO Bank through M/s. Narhem Mercantile Finance Pvt. Limited. The documents were thereafter rediscounted by M/s. Narhem with the respondent No. 1 herein. The respondents thus having confirmed and accepted documents acting on the instructions of M/s. Narhem paid to the appellant herein sum of Rs. 4,48,000/- being discounted value of the said five bills drawn under the said letters of credit. The appellant sold and delivered to the respondent No. 3 the goods which were unconditionally accepted by the respondent No. 3.
3. The respondent No. 1 Bank of Rajasthan when presented bills of exchange, those were dishonoured and, therefore, the Bank of Rajasthan filed summary suit No. 226 of 1994 in the High Court of Bombay. In respect of similar other transactions of Rs. 1,69,78,319.45 the Bank of Rajasthan filed Summary Suit No. 4513 of 1993 in the High Court of Bombay.
4. Both the suits were pending when the Debts Recovery Tribunal came to be set up at Bombay in July, 1999 and, as such, both the suits came be transferred to Debts Recovery Tribunal, Mumbai. Further, two more additional Tribunals came to be transferred to the file of D.R.T.-II1, Mumbai. In DRT, Mumbai, Suit No. 4513 of 1993 came to be numbered as O. A. No. 3202 of 2000, while other suit No. 226 of 1994 came to be numbered as O. A. No. 1808 of 2000. When the pleadings were complete and matters were being argued on the basis of affidavits and documents, on behalf of the defendant No. 3 that is the present appellant, applications came to be filed for permission to cross examine the persons who had sworn claim affidavit on behalf of the Bank of Rajasthan. In each of the applications filed by the appellant, it is indicated how the appellant had good defence since letters of credit were without recourse to the drawer. In paragraph 5 of the said application, a case how permission to cross examine witness is necessary is set out. Contents of this paragraph are of general nature with two specific points namely correctness of the accounts and reference to M/s. Narhem Mercantiles and also in regard to failure of the applicant Bank to issue notice of dishonour as required by Negotiable Instruments Act to the appellant.
5. These applications were opposed on behalf of Bank of Rajasthan, applicant (original plaintiff) by filing affidavit of Mr. Mahesh Thakkar, Manager. Therein it is contended that there is no dispute on the question of facts and the case is basad on the documentary evidence. The documents along with written statements filed by the other defendants are self-explanatory and the matter is only of arguments. As such, there is no necessity of any cross examination. It was contended that such application is made only with a view to protract the applications and there is absolutely no need of any cross examination.
6. The Presiding Officer, Debts Recovery Tribunal HI. Mumbai on hearing parties rejected the applications. In doing so, he has dealt with submissions of the appellant that cross examination was necessary on the correctness of the accounts maintained by the applicant Bank and rejected the same observing that no plea was taken in the written statement of the appellant about correctness of the accounts maintained by the Bank. It is also observed that no objection has been raised about existence of irrevocable of letters of credit established between the parties. On the other hand, it is observed that there is admission of the appellant about the said transaction. Rest of the pleas taken on behalf of the appellant were negatived on the basis that same can be decided by referring to the documents produced on record and, furthermore, Sections 91 and 92 of the Evidence Act prohibit oral evidence when there is written agreement between the parties. Reliance was placed upon decision in Tamil Nadu Electricity Board v. N. Raju, II (1996) BC 1 (SC), Lastly, it is observed that applications were filed only with a view to delay the proceedings and that is how, the application came to be rejected in each of the original applications.
7. Mr. Thakkar appearing for the appellant fairly admits that factual aspect is not in dispute and matter mainly depends upon documentary evidence. However, according to him opportunity of hearing which is a basic feature of Recovery of Debts Due to Banks and Financial Institutions Act. 1993 has in itself all in-built right of cross examination. He emphasised how vital is utility of cross examination and how credit of party can be shaken and trustworthiness or veracity of his evidence can be tested. In his submission, a party is entitled to fair and reasonable opportunity to put forth his case and principles of natural justice, therefore, require that party should haveright tocross examine witness of the opposite side. Mr. Thakkar relied upon certain decisions to which I would refer during the course of this judgment. On behalf of the respondent No. 1 Bank, order of the Presiding Officer has been supported and it is contended that the terms "reasonable opportunity" or "principles of natural justice" do not cover in its ambit right of cross examination. It is contended that such right would depend upon facts and circumstances of each case and there is no absolute right of cross examination vested in a party. Having regard to the provisions of particular statute, there can be spelt out right of cross examination, Even in case where there is no such provision, such right can be exercised or permitted to be exercised. On behalf of the respondent No. 1 also, certain decisions are relied upon to which reference would be made.
8. I had occasion to consider this type of question in Appeal No. 44/2001, V.C. Moghe v. Bank of Maharashtra and Ors., decided on 17th May, 2001, 2001(4) ALL M.P. (Journal) 23. Therein I have elaborately dealt with this aspect of the matter and I have held that there is no absolute right vested in party to claim permission to cross examine the witness whose affidavit has been filed on behalf of other party and same would depend upon facts and circumstances of each case. In the course of the judgment, it has been observed that parly has to put forth points on which cross examination is required and that can be examined by the Tribunal or the Appellate Tribunal to find out whether permission to cross examine the witness can be granted or not. In therefore feel it unnecessary to refer to all the submissions advanced by both the parties in this appeal because most of them are dealt with in that judgment by me. In particular. I have reproduced history of legislation and object for enacting Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Therefore, in this appeal I would advert only to the questions of principles of natural justice and reasonable opportunity, which have been canvassed at length but are not so exhaustively dealt with by me in the judgment of Appeal No. 44/2001. So also I will touch factual aspects in this case in order to see whether any case is made out by the appellant for grant of permission to cross examine the witness.
9. Mr. Thakkar relied upon Khem Chand v. Union of India and Ors., AIR 1958 Supreme Court 300; State of Kerala v. K.T. Shaduli Grocery Dealer, etc., AIR 1977 Supreme Court 1627; Managing Director, U.P. Warehousing Corporation and Others v. Vijay Narayan Vajpayee, AIR 1980 Supreme Court 840 and Barium Chemicals Ltd. and Anr. v. Company Law Board and Ors., AIR 1967 Supreme Court 295. Cases of Khem Chand and Managing Director, U.P. Warehousing Corporation Ltd. related to dismissal of all employee and in that connection the Supreme Court found in facts and circumstances of those cases that, "the reasonable opportunity envisaged to the Government servant by the provision contained in Article 311(2) includes (a) an opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based; (b) an opportunity to defend himself by cross examining the witnesses produced against him and by examining himself or any other witnesses in support of his defence; and finally (c) an opportunity to make his representation as to why the proposed punishment should not be inflicted on him. which he can only do if the competent authority, after the enquiry is over and after applying his mind to the gravity or otherwise of the charges proved against the Government servant tentatively proposes to inflict one of the three punishments and communicates the same to the Government servant."
Thus, these decisions will have to be restricted to the facts of those cases and further in view of Article 311(2) of the Constitution of India. In particular Managing Director, U.P. Warehousing Corporation's case, Para 14 of the judgment of the Supreme Court, shows from the observations namely "the rules of natural justice in the circumstances of the case, required that the respondent should be given a reasonable opportunity to deny his guilt.....(emphasis supplied), that the facts and circumstances of the case required an opportunity of cross-examining the witnesses who were relied upon by the corporation and also an opportunity to lead evidence in defence of the charge as also a show-cause notice for the proposed punishment."
10. Case of State of Kerala v. K. T. Shaduli Grocery Dealer, (supra), discloses following facts :
"In the assessments of the assesses to sales tax for three assessment years, the returns filed by him on the basis of his books of account appeared to the Sales Tax Officer to be incorrect and incomplete since certain sales appearing in the books of account of certain wholesale dealer as having been effected by the assessee in his favour were not accounted for in the books of account maintained by the assessee. The assessee applied to the Sales Tax Officer for affording him an opportunity to cross examine the wholesale dealer in regard to the correctness of his accounts, but this opportunity was denied to him and the Sales Tax Officer proceeded to make a best judgment assessment under Section 17(3)".
On these facts, it has been held that, "the act of the Sales Tax Officer in refusing to summon the wholesale dealer for cross examination by the assessee clearly constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the orders of assessment made against the assessee".
Proviso below Section 17(3) in that case was to the following effect:
"Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard and where are turn has been submitted, to prove the correctness, completeness of such return."
Thus, on the facts of that case, when assessee had no other means to rebut accounts book of the wholesale dealer, it was found that right of cross examining wholesale dealer was reasonable opportunity which was required to be given to the assessee in that case.
11. As far back as, in The State of Jammu & Kashmir and Ors. v. Bakshi Gulam Mohammad and Anr., 1967 Supreme Court 122, the Supreme Court had occasion to consider question as to what rules of natural justice require. In para 20 of this judgment, it is held that, rules of natural justice require that a party against whom allegation is being inquired into should be given a hearing. Right of hearing does not include right to cross examination. Right of cross examination must depend upon circumstances of each case and also on the statute under which the allegations are being inquired into (emphasis supplied). In this paragraph, the Supreme Court referred to its earlier decision in Meenglas Tea Estate v. Their Workman, AIR 1963 SC 1719, to the extent that "all that was said was that when evidence is given viva voce against a person he must have the opportunity to hear it and to put the witnesses questions in cross examination"
It is further indicated that provisions of Jammu and Kashmir Commission of Inquiry Act and that of Recovery of Debts Due to Banks and Financial Institutions Act, 1993, so far as certain provisions are concerned, are identical. In para 21 of the said judgment Section 4 of Jammu and Kashmir Commission of Inquiry Act is reproduced to the extent relevant and it reads as under:
"The Commission shall have the power of a Civil Court, while trying a suit under the Code of Civil Procedure Svt. 1977, in respect of the following matters, namely :
(a) summoning and to enforce the attendance of any person and examining him on oath;
(b) .....
(c) receiving evidence on affidavit".
Similar is the provision under Sections 22(2)(a) and (c) of Recovery of Debts Due to Banks and Financial Institutions Act, 1993. In this case, the Supreme Court negatived right of cross-examination which was claimed by the respondent Bakshi Gulam Mohammad. Mr. Thakkar for the appellants, however, tried to distinguish this decision on factual aspect that hundreds of affidavits were filed and because of that, the Supreme Court negatived right to cross examine persons whose affidavits are filed but permitted cross examination of those who were examined before the Commission. I am unable to accept this distinction made by Mr. Thakkar.
12. It has been rightly contended by Mr. Kahar for the respondent Bank that there is no provision in Recovery of Debts Due to Banks and Financial Institutions Act, 1993,conferring right of cross examination upon a party. In terms, therefore, statute does not confer any such right. Section 22(2)(c) empowers the Tribunal and Appellate Tribunal to receive evidence on affidavits. Courts or the other Tribunals where Civil Procedure Code is applicable, oral evidence is a general rule and receiving evidence on affidavits is an exception. In para 22 of the judgment of Bakshi Gulam Mohammad, the Supreme Court has stated that Order 19, Rule 1 of the Code of Civil Procedure which is in the nature of Rule 12(6) of the Debts Recovery Tribunal (Procedure) Rules, 1993, is an exception to Order 18 Rule 4 of the Code of Civit Procedure. So also Jammu and Kashmir Commission of Inquiry Act does not contain provision similar to Order 18 Rule 4 of the Code of Civil Procedure. Likewise, Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not contain similar provision. Thus, Section 22(2)(c) gives independent power to the Tribunal to receive evidence on affidavits and such power is, therefore, not by way of exception to the general rule of taking evidence viva voce in open Court. If this is the position, it is clear that statute does not confer any specific right to cross examine the witnesses.
13. Mr. Kahar then contended, relying upon K.L. Tripathi v. Stale Bank of India and Ors., (1984) 1 Supreme Court Cases 43, that in the absence of any lis as to facts, allegation having been not disputed, proceedings cannot be challenged on the ground that opportunity of cross examination was not given, This decision is applicable to the present case so far as fact that there is no its or controversy, is concerned. Whatever controversy is there can be resolved on the basis of the documents. For example, Mr. Thakkar submitted that notice of dishonour of bills of exchange was not given by the Bank of Rajasthan to the appellant. That would be matter of record and not a matter of cross examination. Similar is the position in regard to his submission about Mr. Narhem being agent of the appellant or independent transaction between them. Further, if at all any factual aspect is pleaded by the Bank and that is denied by the appellant and the evidence in the form of affidavits and documents falls short of proving that particular fact, the Bank may fail, but certainly that would not confer any right of cross examination.
14. Some decisions in regard to earlier litigation when the matter was pending before the High Court have been produced, but I do not wish to refer to them since those relate to merits of the matter. For example, in both the summary suits conditional leave was granted to defendant Nos. I to 3 by the High Court, but when the matter was taken to the Supreme Court, the defendant Nos. 3, the present appellant, was granted unconditional leave and order of the High Court was modified to that extent. Whether there was triable issue or not, was the question considered while granting conditional leave to the appellant. But the Supreme Court modified that order and on that basis, it was contended that there was no triable issue between appellant and the Bank. However, I refrain from expressing any opinion in this respect because all those were made at prima facie interim stages when the matter was considered and would not be conclusive at the final hearing of the matter. Certain other decisions are relied upon by Mr. Kahar but I do not wish to burden this judgment any further by referring to them.
15. Mr. Thakkar for the appellant tried to explain that under Section 30 of Negotiable Instruments Act, liability of drawer is defined and in that section, there are two factual aspects over which the appellant could cross examine the witnesses of Rajasthan Bank. This section requires that person must be holder of bill of exchange, that notice of dishonour of bill of exchange must be given and he must be holder for consideration, According to Mr. Thakkar, whether Bank of Rajasthan is holder of bills of exhange or not and whether notice of dishonour is given or not, are the questions for which cross examination of the witnesses is necessary. I do not think that these can be said to be factual aspects for which cross examination is necessary and documents would speak for themselves.
As a result of above discussion as well as for the reasons given while deciding Appeal No. 44 of 2001. I am of the opinion that there is no merit in either of these appeals and those are accordingly dismissed.
At this stage, however, Mr. Thakkar for the appellant submits that the appellant may be at least granted leave to file affidavit in the form of reply to the claim affidavit filed on behalf of the Bank as well as affidavit supporting case of the appellant. I think that this limited liberty should be granted to the appellant. Accordingly. I pass the following order:
ORDER I. Both the appeals are dismissed. However, the appellants are given 10 days' time to file affidavit in reply to the claim affidavit filed by the respondent Bank and in support of their case. Earlier, this appellate Tribunal had directed Debts Recovery Tribunal to dispose of the matter within 4 months and that period expired on 20.6.2001. However, that period is extended by 2 months further from 20.6.2001. Let this order be communicated to Debts Recovery Tribunal, Mumbai forthwith.