ALMANIA FOODS Vs. CATHOLIC SYRIAN BANK
LAWS(DR)-2003-7-10
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on July 21,2003

Appellant
VERSUS
Respondents

JUDGEMENT

K.S. Kumaran, Chairperson - (1.)RESPONDENT-Catholic Syrian Bank ( hereinafter referred to as 'the respondent-Bank') filed Suit No. 2356/93 before the Hon'ble High Court of Delhi in October 1993 against the appellants herein as defendant I to 6 (hereinafter referred to as 'the appellants/defendants') and Mrs. Krishna Kakkar as the 7th defendant for the recovery of Rs. 1,22,38,369.29 with interest and costs. After the passing of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act'), by order dated 1.12.1995 the suit was transferred to the Debts Recovery Tribunal, Delhi (hereinafter referred to as 'the DRT')wherein it was taken on file on 15.1.1996 as O.A. 1221/95. On 15.1.1996 itself the learned Counsel for the respondent Bank stated that the defendants have been served by the mode of substituted service. Since the defendants were not present, they were proceeded against ex parte. Ultimately on 16.6.1,997, the learned Presiding Officer of the DRT passed the ex parte final order.
3. Aggrieved, the appellants/defendants have preferred this appeal.

4. The respondent-Bank did not file any reply, and the learned Counsel for the respondent-Bank has stated that he will advance arguments. Heard arguments of both the sides, and perused the records.

5. The learned Counsel for the appellants/defendants contends that the appellants/ defendants have not been personally served with any notices/summons in the O.A. and are stated to have been served by the mode of substituted service for the hearing before the Hon'ble High Court, but, have been set ex parte by the DRT. He contends that after the transfer of the suit to the DRT, no notice or intimation was served upon the appellants/ defendants, about the transfer of the suit to the DRT. He also contends that they were not served with the copy of the Final Order passed in the O.A. Therefore, he contends that the ex parte final order should have been set aside. The records of the Suit/O.A. have been called for from the DRT, and I have persued the records of the DRT. A persual of the day-to-day orders passed by the DRT reveals the following :

6. Though the O.A. was taken on file as a suit before the Hon'ble High Court, on 15.10.1993 and summons were ordered to be served for 5.1.1994, the appellants/defendants had not been served. The summons to appellants/defendants 1 to 6 had returned unserved on the ground that they were out of station, and fresh notices were ordered to be issued for 27.4.1994. For the same reason the summons intended for the hearing dated 27.4.1994 also were not served, and fresh summons were ordered to be issued for the hearing dated 14.4.1994. From 14.9.1994 the matter was adjourned to 20.10.1994. The summons had returned unserved for the same reason, i. e. the appellants/defendants were out of station and, therefore, on 20.10.1994 also fresh summons were ordered to be issued for 24.1.1995.

7. But, on 24.10.1994 an application for serving the appellants/defendants by the mode of substituted service was filed, and the Joint Registrar of the Hon'ble High Court had directed that the service be effected by affixation and publication in the newspaper 'Statesman' for the same date of hearing, namely 24.1.1995.

8. The suit was being adjourned from time-to-time and on 1.12.1995 the suit was ordered to be transferred to the DRT with direction to the parties to appear before the Tribunal on 15.1.1996. It is seen from the order dated 1.12.1995 passed by the Joint Registrar of the Hon'ble High Court that none had appeared on behalf either the plaintiff or the defendants. It is also evident that the appellants/defendants had not been served with summons personally.

9. On 15.1.1996 the suit was taken as O.A. 1221/95 on the file of the DRT, and the learned Counsel for the respondent-Bank had stated that the defendants were served by the substituted service, and had also filed a copy of the newspaper. On finding that the defendants were absent, they were set ex parte. After some adjournments, ultimately the ex parte final order was passed on 16.6.1997.

10. The learned Counsel for the appellants/defendants contends that the appellants/ defendants were away from Delhi, and were staying at Jaipur during 1994-96, and that this fact has been mentioned in the affidavit dated 27.11.2001 filed by R.N. Arora. He points out that the appellants/defendants are stated to have been served by the mode of substituted service for appearance before the Hon'ble High Court on 24.1.1995, but, the suit was transferred from the Hon'ble High Court and taken on the file of the DRT on 15.1.1996, and in spite of that, the ex parte final order has been passed against the appellants/defendants by the DRT, without any further notice or intimation of the O.A. i.e., about the transfer of the suit to the DRT. He points out that it is only on the basis of the publication ordered by the Hon'ble High Court for the appearance of the appellants/defendants before the Hon'ble High Court, that the appellants/defendants have been proceeded against ex parte by the DRT. Therefore, the learned Counsel for the appellants/defendants contends that the ex parte final order should have been set aside.

11. The learned Counsel for the appellants/defendants relies upon the decision in (Appeal 79/99)- Precision Metal Works (India) Pvt. Ltd. and Ors. v. Canara Bank, rendered by the Hon'ble Debts Recovery Appellate Tribunal, Mumbai on 8.2.2000 in support of his contention that fresh notice ought to have been issued after the transfer of the suit to the DRT. That was also a case where the Bank had instituted a suit before the Civil Court. The defendants in that suit had even entered appearance, but the suit was subsequently transferred to the Debts Recovery Tribunal. It was held that notice should have been sent after the transfer of the suit. This decision supports the contention of the learned Counsel for the appellants/defendants.

12. He also relies upon another decision of the Debts Recovery Appellate Tribunal, Mumbai in Dax Electronics and Ors. v. State Bank of India, II (1999) BC 49 (DRT), wherein it has been held that the principles of natural justice required that the Tribunal should issue fresh notice after the suit was transferred from the High Court. The learned Counsel for the appellants/defendants points out that in that case the defendants had even remained ex parte before the transfer, but it was found that they had no intent to protract the matter, and, it was ordered that on transfer to the Debts Recovery Tribunal fresh notice should have been ordered. This decision also supports the contention of the appellants/ defendants.

13. The learned Counsel for the appellants/defendants relies upon the decision in Kishore Kumar v. Basudeo Prasad, AIR 1977 Patna 131, wherein it has been held that the transferor Court must send notice to each party to the suit about the transfer for the simple reason that the party has to appoint a new lawyer in the transferee Court. He also points out that it is not contended by the respondent-Bank that such a notice was served from the Hon'ble High Court also to the defendants/appellants about the transfer.

14. The learned Counsel for the appellants also contends that in these circumstances where the appellants/defendants were ordered to be served by the mode of substituted service by the Hon'ble High Court, and when after the transfer of the suit to the DRT no notice or intimation was issued to the appellants/defendants but still on the basis of substituted service ordered by the Hon'ble High Court, the appellants/defendants have been proceeded ex parte, by the DRT and the Final Order has been passed, the Final order was liable to be set aside. He also contends that in the circumstances of the case it cannot be stated that the appellants/defendants have been negligent or that their intentions were mala fide and, therefore, a liberal view should be taken in deciding whether there was sufficient cause for their non-appearance. He even contends that the respondent-Bank can be compensated by costs. In this regard, he relies upon the decision of the Hon'ble Supreme Court in G.P. Srivastava v. R.K. Raizada, II (2000) SLT 568=(2000) 3 Supreme Court Cases 54. This decision also supports the contention of the appellants/defendants.

15. The learned Counsel for the appellants/defendants also contends that the appellants/ defendants had no knowledge at all about the proceedings either before the Hon'ble High Court or before the DRT, and that they became aware of the same only in the first week of January, 2000 when they received the demand notice. The learned Counsel for the appellants/defendants points out that it has been mentioned in the affidavit dated 27.11.2001 filed by R.N. Arora, that they did not receive any summons from the Hon'ble High Court or the DRT, and that for the first time they received this demand notice during the first week of January, 2000.

16. The learned Counsel for the appellants/defendants also relies upon the decision in Rajiv v. Madan, AIR 1989 All. 45, in support of his contention that where the appellants/ defendants did not have knowledge of the date of hearing, the application to set aside the ex parte order cannot be held to be barred by time. This decision also supports the appellants/ defendants.

17. If we take into consideration these factors pointed out by the learned Counsel for the appellants/defendants, and also the decisions relied upon by him, then it will be clear that this is a case where the ex parte final order against the appellants/defendants should have been set aside.

18. Of course, the learned Counsel for the respondent-Bank contends that the address of the appellants/defendants given in the O.A. and in the Appeal is the same, and that the defendants knew well about pendency of the proceedings. He also contends that the date on which the appellants/defendants gained knowledge about the proceedings has not been mentioned in the application to set aside the ex parte final order. But, as already pointed out, the appellants/defendants have not been served with summons/notices personally. There is nothing to show that they were otherwise aware of the proceedings. In the affidavit dated 27.11.2001 filed by R.N. Arora it has been stated that the appellants for the first time received the demand notice in the first week of January, 2000. The learned Counsel for the appellants/defendants points out from the copy of the Recovery Certificate that it was prepared only on 15.11.1999. He also points out that the appellants/defendants have not been served with the copy of the final order. The learned Counsel for the respondent-Bank has not been able to point out that the appellants/defendants have been served with the copy of the final order. Therefore, in these circumstances, the contentions of the appellants/ defendants that they came to know about the proceedings for the first time in January, 2000 merits acceptance. Therefore, the application filed by them to set aside the ex parte final order on 17.1.2000 cannot be stated to be barred by limitation inasmuch as it had been filed within 30 days from the date of their knowledge about the proceedings. The decisions relied upon by the appellants/defendants also support them. The appellants/defendants could not have been set ex parte by the DRT on the basis of the order for substituted service or service of notice by the said mode, because, the same were for their appearance before the Hon'ble High Court only. No notice/intimation was sent after the transfer of the suit to the DRT. The DRT did not send a separate notice or intimation to the defendants after the suit was taken on its file as O.A. Principles of natural justice required that the DRT should have issued fresh notices to the appellants/defendants after the suit was transferred to its file, which the DRT had not done. Therefore, interests of justice require that the final order passed against the appellants/defendants should be set aside.

19. Accordingly, the appeal is allowed setting aside the impugned order dated 3.12.2001, The application filed for setting aside the final order will stand allowed insofar as it relates to appellants/defendants 1 to 6. The ex parte, final order passed against the appellants/defendants 1 to 6 is set aside.

20. The Presiding Officer of the concerned DRT will restore the O.A. 1221/95 back to file and give an opportunity to the appellants/defendants 1 to 6 to file their written statement and putforth their case. If necessary, he may also give an opportunity to the respondent-Bank to file a rejoinder. The learned Presiding Officer shall then dispose of the O.A. in accordance with law after affording opportunity to both sides to put forward their case. For this purpose, the parties are directed through their Counsel to appear before the concerned DRT on 10.9.2003 for taking further directions from the said DRT in this matter.

21. However, in view of the unnecessary inconvenience and expenses to which the respondent-Bank has been put, the appellants/defendants shall pay a cost of Rs. 15,000/- to the respondent-Bank.

Copy of this order be given to the appellants/defendants 1 to 6 and respondent.



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