Debt Recovery Appellate Tribunal - Delhi
Hitaishi Electronics Pvt. Ltd. And Ors. vs Canara Bank on 21 February, 2003
Equivalent citations: I(2004)BC178
ORDER
Justice K.S. Kumaran,J. (Chairperson)
1. This is an appeal against the order dated 26.4.2002 passed by the learned Presiding Officer of the DRT-I, Delhi (hereinafter referred to as 'the DRT') dismissing the application filed by the appellants herein to set aside the ex parte final order passed on 22.10.2001 in O.A. 312/98. Aggrieved, the appellants, who are defendants 1 to 3 in the O.A., have filed this appeal. The respondent Bank has filed a suitable reply opposing this appeal.
2. I have heard the Counsels for both the sides, and perused the records.
3. The respondent/plaintiff Bank filed O.A. 312/98 against the appellants (who are defendants 1 to 3) and two others, and the learned Presiding Officer of the DRT observed in his final order that the defendants have been served by publication of the notice in the newspaper 'Stateman', but despite service, the defendants did not appear and, therefore, were proceeded ex parte. Accordingly, he passed the ex parte final order against the appellants and others for Rs. 66,83,928/- with interest and costs.
4. The 1st defendant is a private limited company, and the other appellants are said to be its directors. The contention of the appellants is that the Uttar Pradesh Financial Corporation which had the first charge on the land, building, plant and machinery of the 1st appellant/defendant-company, took physical possession of the same on 7.5.1995, sold them in or around October 1995, and after appropriating its dues, had also paid over Rs. 17 lakhs to the respondent/plaintiff Bank. The further contention of the appellants is that the respondent Bank has also taken possession of the stocks in full and final settlement of its dues.
5. The appellants also contend that though at the time of the execution of the documents, the 2nd appellant/defendant was residing at 72, Uday Park, New Delhi, he thereafter shifted to B-26, Sector-26, Noida, and had subsequently shifted to C-1/33, Sector-36, Noida, which he did not inform to the Bank as nothing was due. The learned Counsel for the appellants also contends that the 2nd appellant had even furnished to the Bank the address for correspondence as Section 36, Functional Industrial Estate for Electronics, Okhla Industrial Area, Phase-II, New Delhi (a copy of the communication is also on the file of the appeal, which also contains, the seal of the respondent Bank).
6. The learned Counsel for the appellants points out that on 3.2.1999 the O.A. was taken up before the Registrar, who passed the following order:
"3.2.1999 O.A. No. 312/99 Present: Mr. A.K. Sharma, Counsel for the applicant Bank None for the defendants Call was made no one is present on behalf of the defendants. The Counsel for the applicant Bank has filed affidavit of service stating that the notices were sent to Defendant No. 1 'refused to accept', No. 2 'No such person', No. 3 'left without address', No. 4 'no such person', No. 5 notice has not been received back till date. The affidavit along with the postal receipts filed by the applicant Bank is taken on record. Further he seeks permission to serve the notice by way of publication. His request has been allowed.
The office is directed to issue "Dasti" notice for publication in the Statesman and file the affidavit of service on or before the next date.
List on 26.3.1999."
7. Pointing out the above, the learned Counsel for the appellants contends that no further attempt was made to serve the appellants/defendants by the ordinary mode of service, i.e. by Registered/Speed Post, but publication of the notice in the newspaper was ordered on the mere request of the learned Counsel for the respondent Bank. The learned Counsel for the appellants contends that the order dated 3.2.1999 referred to above shows that the learned Counsel for the respondent/plaintiff Bank had merely sought for permission to serve the notice by way of publication without even stating that the appellants/defendants are avoiding service, and cannot be served by any other mode of service except by way of publication in the newspaper. He further contends that there is nothing in the order to show that the registrar who directed the publication of the notice in the newspaper has satisfied himself about the fact that the appellants/defendants are avoiding service and could not be served by any other mode and, therefore, he was directing the publication. He also contends that no application in the nature of one under Order 5 Rule 20, IPC for effecting substituted service had also been filed.
8. The learned Counsel for the appellants contends that the order dated 3.2.1999 proceeds on the basis that the 1st defendant/Ist appellant had refused to accept the notice, that notice to the 2nd defendant had returned with the remark that there was no such person, and the notice to the 3rd defendant (3rd appellant) returned with the remarks 'left without any address'. But, the copy of the affidavit dated 18.1.1999 regarding service reads as if the registered envelopes had returned back with remarks as under:
"Respondent No. 1 - Refused to accept
also at (2nd address) - No such company as informed by the
owner of other Company.
Respondent No. 2 - Left without address
also at (2nd address) - Addressee not available to the Postman
even after informing
Respondent No. 3 - Left without address
also at (2nd address) - Addressee not available to the Postman
even after informing
Respondent No. 4 - No such person at the address
Respondent No. 5 - Not received back till date.
(Returned Registered A.D. covers and Postal receipts enclosed)."
9. The learned Counsel for the appellants contends that this being the report made in the affidavit regarding service itself, the order dated 3.2.1999 reads as if the notice sent to the 2nd defendant (2nd appellant) returned as no such person, and the notice sent to the 3rd defendant (3rd appellant) returned with the remarks 'left without address'. He also contends that though the affidavit regarding service mentions that the returned envelopes have been filed along with the affidavit, the order dated 3.2.1999 does not say so, but merely says that the postal receipts were filed. He, therefore, contends that even the returned envelopes had not been filed for enabling the Registrar to come to the conclusion that the defendants 2 and 3 (appellants 2 and 3) could not be served by ordinary means or that they were avoiding service deliberately. Therefore, the learned Counsel for the appellants contends that without even making an attempt to serve them once again by either Registered Post or Speed Post, publication of the notice in the newspaper had been ordered, that too, without even recording the satisfaction that the appellants were avoiding service and could not be served by any other mode, and, therefore, the appellants 1, 2, 3 could not be stated to have been served. In these circumstances, he contends that the ex parte final order should have been set aside since the appellants were not served legally or validly. In support of his contentions, the learned Counsel for the appellants relies upon the decision of the Hon'ble Punjab and Haryana High Court in Kuldip Rai v. Sharan Singh, AIR 1989 Punjab & Haryana 319, wherein it has been held as follows :
"Before ordering substituted service the Court should be satisfied that the conditions on which alone it can be ordered exist, namely, that the defendant is keeping out of the way to avoid service or that for any other reason service cannot be effected in the ordinary way. The interim orders reproduced supra do not indicate that there was any material before the Court on the basis of which it could record its satisfaction that the respondents were keeping out of the way to avoid service or that for any other reason service cannot be effected in the ordinary way. Before resorting to the provision of Order 5, Rule 20 of the Code of Civil Procedure (for short "the Code"), it is obligatory for the Court to record its satisfaction as enjoined under the statute. The substituted service cannot be ordered in the routine manner. The perusal of the interim orders does not justify issuance of order for substituted service. It indicates lack of applicability of judicial mind to the fact of the case. Moreover, it was obligatory for the respondent landlord to prove that the newspaper through which substituted service was ordered was in daily circulation in the locality in which the petitioner was last known to have actually and voluntarily resided, carried on business or personally worked for a gain. Once it is disputed that there was no valid service, it is for the respondent to establish that the petitioner was validly served and valid service presupposes service in accordance with the procedure prescribed by law."
10. This decision relied upon by the learned Counsel for the appellants fully supports the contentions raised by him. A perusal of the affidavit regarding service (verified on 18.1.1999) shows that the two notices each sent to each of the defendants 2 and 3 (appellants 2 and 3) have been returned with the remarks 'left without address' and 'addressee not available to the postman even after informing'. There is nothing to show that the defendants 2 and 3 (appellants 2 and 3) were avoiding service, nor was it even stated by the learned Counsel for the Bank before the Registrar of the DRT on 3.2.1999 that these defendants were avoiding service. The Registrar had also not recorded his satisfaction that these defendants 2 and 3 (appellants 2 and 3) were either avoiding service or could not be served by any other mode. Service by publication was ordered for the mere asking.
11. So far as the 1st appellant/Ist defendant company is concerned, the case of the appellant, as pointed out already, is that the plant, machinery, land, building, etc. had been sold by the Uttar Pradesh Financial Corporation in the year 1995 itself, and a sum of Rs. 17 lakhs had also been paid by the Uttar Pradesh Financial Corporation to the respondent/ plaintiff Bank itself, and the Bank had also taken possession of the stocks of the 1st defendant (1st appellant) company in full and final settlement of its claim. Averments to this effect are found not only in the application to set aside the ex parte final order filed before the DRT but also in Ground (e) of the appeal. In the reply to this Ground (e), the respondent Bank has merely stated that the contents are wrong and denied, though it admitted that some of the stocks (having no value) are with the Bank. The fact that the land, machinery, plant, etc. of the 1st defendant (1st appellant) company have been sold by the Uttar Pradesh Financial Corporation has not been specifically denied by the respondent. Therefore, if the company had been sold in the year 1995 itself, the effect of the endorsement as 'Refused to accept' has to be considered.
12. Further, there is nothing at this stage to show that the notices to the 1st defendant/ appellant were sent by the Registry of the DRT, because notices arc sent to the parties by either Counsel or the Bank. Unless it is found that notice was sent by the DRT itself, and there was some indication on the envelope containing the notice to the effect that the said envelope was sent by the DRT, it cannot be stated that the 1st defendant refused to receive it knowing that it was a notice sent by the DRT. Then only a presumption can be raised that the 1st defendant had refused to accept the notice knowing the contents to be a notice to appear before the DRT. In the absence of the same, such a presumption cannot be made. The notice sent to the 2nd address of the 1st defendant is stated to have been returned as 'no such company as informed by the owner of another company".
13. In these circumstances, the contention of the appellants is that attempt should have been made to serve these defendants 1 to 3 by issuing fresh notice for service by another mode before directing substituted service.
14. The learned Counsel for the respondent Bank contends that if the appellants had no knowledge of these proceedings, then, how was it that they happened to file the application to set aside the ex parte final order. But, in the application filed before the DRT to set aside the ex parte final order, the defendants/appellants have stated that on 1.3.2002 the 2nd defendant (2nd appellant) came to know about the proceedings and the ex parte final order from the officers of the Bank on 1.3.2002. According to the appellants, the 2nd defendant (2nd appellant)-Ajay Aggarwal has a Savings Bank Account with the same branch of the respondent Bank, and has been visiting that branch. The averments in this regard are found in the application filed before the DRT to set aside the ex parte final order as also in ground (f) of the appeal. The fact that he had an account is conceded in the reply to the appeal filed by the respondent Bank. Therefore, it is quite possible that the 2nd defendant (2nd appellant) could have come to know about the proceedings from the officers of the Bank.
15. Taking into consideration all these facts. I am of the view that the contentions put forward by the appellants are worthy of consideration. If the several factors pointed out by the learned Counsel for the appellants are accepted, then the ex parte final order may have to be set aside. But, I find from the records that the appellants had filed the application to set aside the ex parte final order along with an application for condoning the delay in filing the said application. Therefore, before ever the application to set aside the ex parte final order is considered, the application to condone the delay in filing the said application will have to be considered and decided. The impugned order dated 26.4.2002 does not indicate that this application to condone delay was considered or decided. No other order has been pointed out by the learned Counsel for the appellants to show that.
16. Taking into consideration all these factors, I am of the view that the impugned order rejecting the application to set aside the ex parte final order has to be set aside, and the matter has to be remanded back to the concerned DRT.
17. Accordingly the appeal is allowed setting aside the impugned order dated 26.4.2002, and remanding the matter back to the concerned DRT for disposal of the application for setting aside the ex parte final order. The learned Presiding Officer of the DRT will take back the application to set aside the ex parte final order in file, and then dispose it of in accordance with law and in the light of the observations contained in this order, and subject to what has been mentioned below.
18. The learned Presiding Officer of the DRT will first take on his file the application for condoning the delay in filing the application to set aside the ex parte final order before ever considering the application to set aside the ex parte final order. The learned Presiding Officer will issue notice of that application for condoning the delay to the respondent/ plaintiff Bank, and dispose it of in accordance with law after giving opportunity to Bank to file reply, and a reasonable opportunity of hearing to both sides.
19. In case he decides to condone the delay, then he will take up the application for setting aside the ex parte final order, give opportunity to the respondent Bank to file the reply, consider the said application, after giving opportunity to both sides to put forward their case and then dispose of the said application in accordance with law.
20. For this purpose, the appellants and the respondent Bank are directed through their Counsel to appear before the DRT concerned 21.4.2003, and take further instructions from that Tribunal in this regard.
21. However it is made clear that the observations made herein above shall not be considered as expressions of any final opinion on the merits of the case by the DRT.
Miscellaneous Application 495/2000
22. In view of the decision above, I am of the view that it will be in the interests of justice to stay the execution of the ex parte final order till the disposal of the applications for condoning the delay and setting aside the ex parte final order by the DRT. But in order to safeguard the interests of the respondent/plaintiff Bank, I am also of the view that it will be open to the respondent Bank to seek attachment of the properties, either movable or immovable, belonging to the defendants/appellants. Subject to this, execution of the ex parte final order shall stayed.
23. Accordingly this application is allowed. Till the disposal of the applications to condone the delay and to set aside the ex parte final order by the DRT, there will be stay of execution of the ex parte final order subject to the right of the respondent Bank to keep the movable and immovable properties of the appellants/defendants under attachment.
24. Copy of this order be furnished to the Counsel for the appellants and the respondent Bank. Copy of order be also forwarded to the concerned DRT and the Recovery Officer.