1. Heard Sri Keshri Nath Tripathi, learned Senior Advocate assisted by Sri V.D.Chauhan for the petitioner and Sri Bhanu Prakash Dubey, Sri Deepak Mishra holding brief of Sri A.K.Mishra, Advocates, for respondent No.1.
2. The respondents No. 2 and 3 being Debt Recovery Appellate Tribunal and Debt Recovery Tribunal are formal parties, and having no lis in the matter, need not be served. Learned counsel for respondent No.1 states that since the issue raised before this Court in this writ petition is purely legal and therefore he does not propose to file counter and the matter be heard and decided finally at this stage under the Rules of the Court. As agreed and requested by learned counsel for the parties, I proceed accordingly.
3. By means of the impugned order dated 13th July, 2011, Debt Recovery Appellate Tribunal (hereinafter referred to as "Appellate Tribunal") has rejected the appeal preferred by petitioners against order dated 01.12.2006 of Debt Recovery Tribunal (hereinafter referred to as "DRT") decreeing the suit of State Bank of India (hereinafter referred to as "Bank") ex parte. The Appellate Tribunal has rejected the appeal holding that it is not maintainable.
4. The facts of this case though little chequered but for the issue raised in the writ petition quite simple and may be stated in brief as under.
5. The petitioner company got financial assistance by means of loan from the Bank, which it could not repay. The Bank accordingly filed Original Application No.112 of 2005 under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "1993 Act") for Rs.1,50,53,248=80. The Original Application was allowed ex parte by DRT vide judgment dated 01.12.2006 holding that Bank is entitled for issuance of recovery certificate against the present petitioners who were all defendants in the said original application for recovering a sum of Rs.1,50,53,248.80 together with pendentelite and future interest @ 15% per annum with monthly rest with effect from 21.11.2005 till full realisation is made. The defendants petitioners were also restrained from transferring or alienating or creating any third party interest in the property mortgaged and hypothecated with the Bank, as detailed in Original Application without first paying the claim of the Bank.
6. The petitioners filed an application for recall of the ex parte order dated 01.12.2006 by filing an application dated 07.02.2007 under Section 22(2)(g) of 1993 Act seeking following relief:
"Wherefore, it is most respectfully prayed that in the interest of justice this Hon'ble Tribunal may kindly be pleased to recall the ex-parte judgment and order dated 1.12.2006 passed against the applicants in Original Application no.112 of 2005.
Hon'ble Tribunal may further be pleased to grant an opportunity to the applicants to place his case before the Hon'ble Tribunal so that the case may be decided on merit and substantial justice may be done between the parties.
Hon'ble Trinunal may pass such other order or directions as are deemed just and proper in circumstances of the case."
7. The said application was rejected by DRT vide order dated 9th May, 2007. The petitioners preferred an appeal against order dated 9th May, 2007 before Appellate Tribunal under Section 20 of 1993 Act. The relief sought in the said appeal reads as under:
"(i) To set aside/quash the order dated 9.5.2007 passed by the Debts Recovery Tribunal, Lucknow in M.A. Case No.22 of 2007 (Annexure No.7 to this appeal) by which the application for recall of the order has been dismissed by the Debt Recovery Tribunal.
(ii) To issue any other suitable order or direction which this Hon'ble Appellate Tribunal may deem fit and proper in the circumstances of the case to meet the ends of justice.
(iii) Award costs of this appeal to the appellants."
8. Memo of this appeal is on record as Annexure 8 to the writ petition. The aforesaid appeal, registered as Appeal Serial No.110/07 against the order dated 9th May, 2007 of DRT, was dismissed on 14th May, 2009. A copy of the order is Annexure 13 to the writ petition. The petitioners filed a review application before Appellate Tribunal which was also rejected vide order dated 7th July, 2009 (Annexure 17 to the writ petition). The appellate Tribunal in para 5 said, "The application for review is sans merits and the same deserves dismissal in limine, which I hereby direct."
9. Not satisfied, the petitioners proceeded further and filed a writ petition No.56612 of 2009 seeking following reliefs:
i) issue a writ, order or direction in the nature of certiorari quashing the judgments and orders dated 7.7.2009, 14.5.2009 and 9.5.2007 (Annexure No.1, 2 and 3 respectively) passed by the Debts Recovery Appellate tribunal, Allahabad with a further direction to the respondent no.3 to consider and decide the proposal for One Time Settlement srictly in accordance with the guidelines of the Reserve Bank of India;
ii) issue any other writ, order or direction which this Hon'ble Court may deem fit and proper in the circumstances of the case;
iii) award costs of the petition to the petitioners."
10. This Court did not find any such error as warrants interference with the orders dated 9th May, 2007 of the DRT and 14th May, 2009 and 7th July, 2009 of Appellate Tribunal and therefore declined to interfere therein. It, however, observed that so far as order dated 1st December, 2006 deciding Original Application No.112/2005 on merits is concerned, a regular appeal under Section 20 of 1993 Act can be filed and therefore the merits of the said order shall not be examined by the Court since the petitioners have a statutory alternative remedy and may avail the same.
11. It is in these circumstances, petitioners filed appeal Serial No.14 of 2010 before Appellate Tribunal which has been rejected as not maintainable by means of the impugned order dated 13th July, 2011 observing that since the application challenging ex parte order has attained finality and therefore the appeal against the main order is not maintainable.
12. During this process there are several other stages where the petitioners claims to have approached Bank at different level claiming for one time settlement etc. and in his efforts, for deferring the recovery proceedings has travelled up to Supreme Court though, as a matter of fact, has failed but the said facts, in my view, would have no impact on the question involved in this writ petition.
13. Sri B.P. Dubey learned Counsel appearing for the Bank vehemently tried to pursue this Court to decline to exercise its jurisdiction under Article 226 looking to the conduct of the petitioners.
14. Since there is a legal issue involved as to the maintainability of the appeal. Considering the fact that right of appeal is a substantive right and cannot be denied only on the basis of conduct etc., I do not find it expedient to look into these aspects of the matter which would have no impact on the question in issue.
15. Sri K.N.Tripathi, Senior Advocate appearing for the petitioners, contended that earlier proceedings and appeal emanated from the order dated 9th May, 2007 whereby the petitioner's application under Section 22(2)(g) of 1993 Act was rejected by DRT and therefore the same would not make the regular appeal against the order dated 1.12.2007 under Section 22(2)(g) of 1993 Act before the Appellate Tribunal non maintainable. He drew support from the Apex Court's decision in Bhanu Kumar Jain Vs. Archana Kumar and Anr., AIR 2005 SC 626 and a full Bench judgment of M.P. High Court in Smt. Archana Kumar & Anr. Vs. Purendu Prakash Mukherjee & anr., AIR 2000 MP 279.
16. Sri B.P.Dubey, Advocate appearing for the Bank on the contrary submitted that the petitioners had throughout been eager to obstruct recovery of dues of Bank though admittedly they have committed default in payment of huge amount outstanding against them. He drew my attention to the fact that besides the proceedings before the Tribunal under the provisions of 1993 Act, the Bank also initiated proceedings under the Securitization, Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "2002 Act") by issuing a notice under Section 13(2) on 16th October, 2004 alleging that petitioners have failed to pay a sum of Rs.87,64,549.42. They had created security by mortgage of equitable land bearing Khasra No.550/3 and 550/4 admeasuring 10,036 sq.ft. Situated at village Jagjitpur, Pargana Jwalapur, Tehsil and District Haridwar. The notice also sought to invoke personal guarantee given by petitioners No.2, 3 and 4. They were called upon to deposit the amount mentioned in the notice with interest, expenses and costs failing which the Bank would exercise power under Section 13(4) of 2002 Act. The Bank thereafter proceeded under Section 13(4) of 2002 Act where against these petitioners filed writ petition before High Court of Uttaranchal at Nainital which was dismissed in limine on 29th March, 2005. The petitioners approached Apex Court in Civil Appeal No.3827 of 2007 [arising out of S.L.P. (Civil) No. 9409 of 2005). The Apex Court while issuing notice granted a conditional interim order but the petitioners committed default even in thereof. The Apex Court ultimately dismissed the appeal vide dated 20th August, 2007.
17. It is contended that with this background, petitioners ought not be allowed to challenge the order of Tribunal dismissing their appeal and this Court may not grant indulgence in equitable jurisdiction under Article 226 of the Constitution of India.
18. Having heard learned counsel for the parties and perusing the record, I have no manner of doubt that so far as proceedings, if any, relating to 2002 Act are concerned, that have nothing to do with the dispute which has engaged attention of this Court in the present writ petition. Therefore, neither it is justified nor appropriate for this Court to touch upon those proceedings which have no connection with the proceedings under 1993 Act, subject matter of this writ petition.
19. The only question up for consideration before this Court hereat is, whether an appeal against the main order deciding a suit on merits is maintainable after dismissal of an application for recalling ex parte order under Order IX, Rule 13 C.P.C. read with Section 22 (2) (g) of 1993 Act.
20. Learned counsel for the Bank fairly stated that in view of certain authorities of Apex Court as well as High Courts, it would be difficult to defend such an order that even an appeal against main order challenging the same on merits would be barred, if application for recalling ex parte order is rejected and has attained finality.
21. A full Bench of Hon'ble Madhya Pradesh High Court in Smt. Archana Kumar (supra) considered a similar controversy with reference to an appeal under Section 96(2) C.P.C. Against ex parte decree, application under Order IX, rule 13 was rejected and attained finality. Thereafter a regular first appeal against ex parte decree was filed under Section 96 C.P.C. The Full Bench in para 22 and 23 of the judgment held:
"22. Accordingly, we hold that even after dismissal of the application under Order 9 Rule 13 of the Code a regular first appeal under Sec. 96(2) of the Code is maintainable.
23. Having held that a regular appeal under Section 96(2) of the Code is maintainable against an ex parte decree, we further observe that a proceeding under Order 9 Rule 13 of the Code and a regular appeal can simultaneously be prosecuted. It would be open to the affected party to pray for stay of further proceedings in an appeal till the application under Order 9 Rule 13 of the Code is decided. It would be within the discretion of the appellate Court to pass appropriate order in this regard."
22. Referring to a Division Bench decision of Bombay High Court in Mangilal Rungta Vs. Maganese Ore (India) Ltd., Nagpur, AIR 1987 Bom. 87 the Madhya Pradesh High Court observed, if an application under Order IX, Rule 13 has been rejected in a regular appeal the same controversy cannot be re-opened but sustainability of the judgment can always be attacted.
23. The Apex Court also looked into this aspect of the matter and considered certain possible complications. Resolving all this, in Bhanu Kumar Jain (supra), in paras 26, 37 and 38, the Court said:
"26. When an ex-parte decree is passed, the defendant (apart from filing a review petition and a suit for setting aside the ex-parte decree on the ground of fraud) has two clear options, one, to file an appeal and another to file an application for setting aside the order in terms of Order 9, Rule 13 of the Code. He can take recourse to both the proceedings simultaneously but in the event the appeal is dismissed as a result whereof the ex-parte decree passed by the Trial Court merges with the order passed by the appellate court, having regard to Explanation appended to Order 9, Rule 13 of the Code a petition under Order 9, Rule 13 would not be maintainable. However, the Explanation I appended to said provision does not suggest that the converse is also true.
37. We have however, no doubt in our mind that when an application under Order 9, Rule 13 of the Code is dismissed, the defendant can only avail a remedy available there against, viz, to prefer an appeal in terms of Order 43, Rule 1 of the Code. Once such an appeal is dismissed, the Appellant cannot raise the same contention in the First Appeal. If it be held that such a contention can be raised both in the First Appeal as also in the proceedings arising from an application under Order 9, Rule 13, it may lead to conflict of decisions which is not contemplated in law.
38. The dichotomy, in our opinion, can be resolved by holding that whereas the defendant would not be permitted to raise a contention as regards the correctness or otherwise of the order posting the suit for ex-parte hearing by the Trial Court and/ or existence of a sufficient case for non-appearance of the defendant before it, it would be open to him to argue in the First Appeal filed by him against Section 96(2) of the Code on the merit of the suit so as to enable him to contend that the materials brought on record by the plaintiffs were not sufficient for passing a decree in his favour or the suit was otherwise not maintainable. Lack of jurisdiction of the court can also be a possible plea in such an appeal. We, however, agree with Mr. Choudhari that the 'Explanation' appended to Order 9 Rule 13 of the Code shall receive a strict construction as was held by this court in Rani Choudhury (supra), P. Kiran Kumar (supra) and Shyam Sundar Sarma v. Pannalal Jaiswal and Ors., [2004(9)SCALE 270]."
24. In view of the above exposition of law, I have no manner of doubt to hold that order of Appellate Tribunal, impugned in this writ petition cannot sustain. It is really disappointing to learn from entire order that Tribunal has decided the matter only by observing repeatedly that counsel for the appellant did not cite any authority showing that appeal against ex parte award was maintainable, even when the application for setting aside the ex parte order has been rejected in regular appeal in separate proceedings and has attained finality. It has not discussed relevant provisions on this aspect. Moreover ignorance of law cannot be an excuse for a Court of law or statutory adjudicatory forum since no such defence can be taken even by a common man. The Appellate Tribunal unfortunately has dealt with the matter in a little casual manner which has unnecessarily caused delay and has resulted in an avoidable litigation.
25. In the result, writ petition is allowed. The impugned order passed by Appellate Tribunal dated 13.07.2011 (Annexure 23 to the writ petition) is hereby set aside. The Appellate Tribunal shall consider appeal of the petitioner in accordance with law and shall endeavour to decide the same expeditiously preferably within a period of one month from the date of production of a certified copy of this order before it.
26. It is however made clear that neither on the merits of the issues raised in the appeal nor in respect to any other incidental issues like relating to limitation etc., this Court has expressed any opinion or made observations. The Tribunal shall look into all the aspects of the matter, as raised and argued by the parties, independently.
27. No Costs.
Order Date :- 27.7.2011 KA