Decided on January 16,2004



Pratibha Upasani, - (1.) THIS Misc. Appeal is filed by the appellants W.S. Industries (India) Ltd./original defendant No. 2 being aggrieved by the order dated 19.4.2002 passed by the learned Presiding Officer of Debts Recovery Tribunal-1, Mumbai on Exhibit Nos. 57, 63, 65, 66, 69, 72, 83, 85 and 96 in Original Application No. 3625/2000. By the impugned order, the learned Presiding Officer rejected the application/ prayer of these defendants for discharging them and directed that the original application would proceed against all the defendants.
(2.) Few facts, which are required to be stated, are as follows: Present respondent No. 1, Industrial Development Bank of India (IDBI) had filed original application against the present respondent No. 2 namely Lloyds Finance Ltd., who were arraigned as defendant No. 1 to the original application. The present appellants were impleaded as party defendant No. 2 in the original application. The case of the applicant Bank in the original application is that Lloyds Finance Ltd. had approached them for seeking the financial assistance defendant No. 1 had executed the said amendrary agreement with the defendants. It is further the case of the applicant Bank that in view of the loan agreement, the applicants were entitled to collect the lease rentals from the lessees i.e. defendant Nos. 2 to 57, in the event of defendant No. 1 committing default in repayment of the amounts and amounts which is due and payable. It is contended that the defendant No. 1 has committed such defaults and therefore one of the interim reliefs that has been sought by the applicant Bank is to direct the defendant Nos. 2 to 57 to pay lease rentals due against each of them, to the applicant or to deposit the same in the Tribunal. In pursuance of the show cause notice issued by the Tribunal, the defendant Nos. 2, 5, 8, 9, 13, 19, 22, 23, 24, 25, 26, 29, 33, 39, 46, 47, 49, 50, 51 and 52 appeared and stated that they had paid all the dues to the defendant No. 1 and they did not owe anything to the defendant No. 1 and therefore nothing is recoverable from them and hence, they be discharged. According to them, they ought not to have been impleaded party defendants in the original application and not only that they be discharged forthwith, but compensatory costs be saddled against the applicant Bank for unnecessarily making them to appear before the Tribunal. It was further argued that no amendrary agreement was executed by and between the defendant No. 1 and these defendants. There is no privity of contract between all these defendants and the applicant Bank and therefore, they should not be required to lace the trial. Hence, application for discharging all these defendants. In reply, Counsel appearing for the Bank submitted that certain recitals of the loan agreement executed by the defendant No. 1 under which all the powers which were vested in the defendant No. 1 qua the defendant Nos. 2 to 57 were assigned to the applicant Bank and even power of attorney was executed in favour of the applicant Bank to take all necessary action on behalf of the defendant No. 1 against the defendant Nos. 2 to 57. It was also argued on behalf of the defendants that presuming for the sake of argument that the applicant Bank stood in the shoes of defendant No. 1, no better rights were derived by the applicant Bank than the defendant No. 1 and when defendant No. 1 could not take any action against these defendants, then question of the applicant Bank being entitled to take any action on behalf of the defendant No. 1 against these defendants would not arise at all.
(3.) THE learned Presiding Officer after hearing all the Advocates and considering the material placed before him observed that the question as to whether upon payment of entire lease rentals to the defendant No. 1, the title in respect of the said goods of these defendants should get transferred to them and whether in spite of such transfer of title the encumbrance created by the defendant No. 1 on those goods shall continue or not, were the questions which were required to be decided. He therefore observed that it was in the interest of these defendants themselves that they should be on record and they should prove to the satisfaction of the Court that all the rights and title in respect of the goods, machineries or properties in their hands stood transferred to them and these properties could not be attached for the satisfaction of the dues against the defendant No. 1. Observing this, he rejected the said application of all these defendants for discharge.;

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