MAFATLAL GAGALBHAI TEXTILES LTD Vs. CANARA BANK

JUDGEMENT

(1.) THIS miscellaneous appeal is directed as against the order passed by the learned Presiding Officer, Debts Recovery Tribunal (DRT), Bangalore, in dismissing the petition in impleading another party as 3rd defendant in the Original Application (OA).

(2.) The petition to implead M/s. Shamanur Estates, Bangalore, as defendant No. 3 was filed by the 2nd defendant. The 2nd defendant contends that the shares of the defendant were agreed to be sold for a nominal price to M/s. Shamanur Estates, which is to clear the debts due to the Bank and M/s. Shamanur Estates has also paid a sum of Rs. 9.95 crores to the Bank and the Bank has accepted the amount and so M/s. Shamanur Estates has to be impleaded as party 3rd defendant in the OA. The Bank filed objections contending that the proposed 3rd defendant is not a debtor and there is no privity of contract between the Bank and the proposed 3rd defendant. It further contends that the Bank is not a party to any of the lease agreements and M/s. Shamanur Estates is not expected to clear Rs. 5.35 crores to the applicant and several proceedings have gone on before the Company Court, BIFR and AIFR between the Bank and the defendants 1 and 2 and so the 3rd defendant is not a necessary party to this suit. The petition was heard by the Presiding Officer, DRT, Bangalore, and he dismissed that petition.

(3.) COUNSEL for the respondent-Bank submitted that there is no privity of contract between the Bank and the proposed party. No agreement has been entered into between the appellant and the proposed party and the Bank is not at all concerned with regard to any arrangement made between the defendants and the proposed party and the proposed party is not a debtor within the meaning of the Recovery of Debts Due to Banks and Financial Institutions (RDDB&FI) Act, 1993 (the Act) and there is no need to implead the proposed party as 3rd defendant. As rightly pointed out by the learned COUNSEL for the respondent Bank, the proposed party is not at all a debtor and there is no privity of contract between the Bank and the proposed party.