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Judgment
P.K. Bhasin, J
This appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ('the Act of 1993' in short) has been filed by the appellant against the order dated 4.11.2016 passed by the Debts Recovery Tribunal-II, Delhi (DRT) on Miscellaneous Application No. 27/2015 vide which the appellant's application for setting aside ex parte final order earlier passed by the DRT on 25.2.2013 in respondent No. 1 Bank's Original Application No. 51/2004 (O.A.) under Section 19 of the Act of 1993 for recovery of Rs. 58,81,786/- with interest @ 12.75% p.a. from 7.6.2004 from its borrower and guarantors/mortgagors, including the appellant herein, was rejected. The respondent No. 1 Bank had extended some financial facilities to a Firm by the name of M/s. Chhabra Sons, respondent No. 2 herein, and re-payment of the loan was secured by the appellant herein by creating equitable mortgage of his House No. 49A/50A, Malka Ganj, Delhi (hereinafter to be referred as the 'property in dispute'. Since the borrower Firm failed to repay the loan amount the respondent No. 1 Bank had to file recovery case under Section 19 of the Act of 1993. In that of the Bank the appellant was defendant No. 4 and he was directed to be proceeded against ex parte when on 13.1.2005 he failed to enter appearance despite having been served with the notice of the O.A. Service upon him was considered to have been effected when the notice despatched by Regd. AD post was not received back within 30 days of its despatch. Finally, an ex parte order came to be passed in the O.A. and recovery certificate was ordered, to be issued vide order dated 25.2.2013 as had been prayed for in the O.A. by the applicant Bank.
Though the appellant claims the final order passed in the O.A. to be an ex parte order but the Bank claims that the appellant in fact never wanted to contest the O.A. as was evident from the fact and which fact is even admitted by the appellant that he (the appellant) did appear in person before the DRT on 24.12.2012, during the pendency of the O.A. but at that time he never raised any protest that he had been wrongly ordered to be proceeded against ex parte in the year 2005. Thereafter the appellant vanished from the scene and allowed the O.A. to be allowed in favour of the Bank vide order dated 25.2.2013 which subsequently he has been trying to get recalled by filing one application after another firstly before the Recovery Officer to whom the DRT had forwarded the Recovery Certificate for execution and then before the DRT itself.
The Recovery Officer called upon the appellant to satisfy the decree in favour of the Bank being one of the certificate debtors in the proceedings registered as RC. No. 92/2013. At that stage the appellant moved an application before the Recovery Officer on 23.1.2014 for not selling his property in dispute and to sell the property of the principal borrower i.e. A-89, Gali No. 5, East Lakshmi Market, Khureji Khas, Delhi since the sale proceeds of that property would be sufficient to clear the decretal amount. He had also claimed in that application that he had not mortgaged the property in dispute. He, however, also pleaded that he had offered to settle the matter by paying Rs. 20 lacs to the Bank even before passing of the recovery certificate and in fact had also paid token money of Rs. 2 lacs alongwith his settlement proposal dated 23.1.2013. The offer was increased to Rs. 25 lacs and, therefore, the Bank had accepted the liability of the appellant to be Rs. 25 lacs and therefore, first the property of the principal borrower should be sold and in case its sale proceeds were not sufficient then balance could be recovered from the appellant subject to maximum of the settled amount which the Bank had agreed. He claimed the value of his property to be over two crores. The relevant averments in that application are as under:
"2. That the CD No. 4 has never mortgaged the property namely 49A/50, Malka Ganj, Delhi.
That the another property namely A-89, Gali No. 5, East Lakshmi Market Khureji Khaas, Delhi belonging to the principal borrower was mortgaged and the same is so held by the learned P.O. in final order.
That the Bank has filed valuation report in respect of property A-89, Gali No. 5, East Lakshmi Market, Khureji Khaas, Delhi and according to the same the property has market value of Rs. 1,00,00,000/- as per valuation report dated 12.9.2013. The value of the same ought to have increased after the date of valuation.
That the RC is issued for sum of Rs. 58,81,786/- with simple interest @ 12.75% per annum from 7.6.2004.
That the Bank will be able to recover the entire money by selling the property No. A-89, Gali No. 5, East Lakshmi Market, Khureji Khaas, Delhi.
For this reason the applicant has given a proposal to the Bank dated 23.1.2013 offering the payment of Rs. 20,00,000/- to satisfy the entire money to the Bank even before the RC was issued.
Along with proposal dated 23.1.2013, the applicant/CD No. 4 submitted the Cheque No. 834751 dated 25.1.2013 drawn on HDFC Bank for Rs. 2,00,000/-. The payment of Rs. 2,00,000/- was offered as token money in advance and thus subject to acceptance of proposal.
The Bank encashed the said Cheque on 8.2.2013 and the Bank is deemed to have accepted the proposal for which Bank cannot go back after encashment of this Cheque.
However, the Bank did not communicate anything and as asked by the Bank, the applicant/CD revised the proposal from Rs. 20,00,000/- to Rs. 25,00,000/- vide letter dated 9.3.2013.
Since no formal acceptance was received from the Bank, the applicant wrote another letter dated 9.9.2013. The said letter is stated as under:
Dated 9.9.2013
To,
Mr. V.K. Jha
Recovery Officer-I
DRT-III Delhi
RC No. 92/2013
In the matter of: Punjab National Bank v. Chhabra Sons
Sir,
Even much before your notice RC No. 92/20-13 Dated 7.8.2013 I was in constant meetings with PNB Bank officials regarding the guarantee of M/s. Chhabra Sons by me for Rs. 10 lakh (Documents Attached). The final agreement reached by Bank officials for me to pay Rs. 20 lakh (Documents Attached) including interest which was further enhanced by AGM of Punjab National Bank to Rs. 25 lakh (including interest). Agreeing to Pay Rs. 25 lakh (Documents Attached), I Have Already Issued a Cheque of Rs. 2 lakh (Documents Attached). As a Token Money Which They Have Cleared in Their Accounts Waiting From the Recovery DEPT. of PNB Head Office to Complete All The Formalities Regarding Releasing of All My Documents of Property A-49-50 Malka Ganj, Delhi-7. So That I Can Repay The Remaining Amount As Early As Possible. I Will be Very Thankful To You To Please Withdraw My Name From DRT in This Case.
Documents Attached
Thank You
(Anil Narang)
When the notice was issued by learned RO this issue was brought to the attention of the learned RO by the CD No. 4 and the learned ROI directed the Bank to file reply to the statement made by the applicant/CD.
On 24.12.2013 when there was a resolution of the DRT Bar Association that no adverse order will be made, the Bank taking advantage of absence of the Counsel for applicant/CD made a statement that proposal has been rejected without filing any letter of rejection as applicant never received such intimation.
That otherwise also the Bank could not reject the proposal once having accepted the token money. If the Bank wanted to reject the proposal they could not and should not encashed the cheque given with proposal as token money.
In these circumstances the Bank cannot go back and reject the proposal which is deemed to have already been accepted.
It is further stated that the demand notice dated 7.8.2013 is wrong in as much as it claims a wrong amount and a separate application has been moved in this respect.
Keeping in view the above facts:
(a) The learned RO may direct the Bank to sell the property bearing No. A-89, Gali No. 5, East Lakshmi Market, Khureji Khaas, Delhi.
(b) The applicant/CD No. 4 will pay the balance amount if any left after sale of above property subject to maximum of agreed amount Rs. 23,00,000/- i.e. agreed amount.
Further it is stated that the property No. 49A/50, Malka Ganj, Delhi is valued as Rs. 2,62,00,000/- in terms of valuation dated 5.9.2013 against RC of Rs. 59 lacs approx. It is well settled law that the sale of property should commensurate with the amount outstanding.
It is further well laid Law that the sale of property should be proportional to the amount outstanding.
Since the property at A-89, Gali No. 5, East Lakshmi Market, Khureji Khaas, Delhi belongs to borrower and is sufficient to pay the outstanding amount and applicant/CD is ready to pay the agreed amount, the sale of property bearing No. 49A/50, Malka Ganj, Delhi is disproportionate to the amount outstanding and is illegal and unlawful.
In view of the same the said property namely 49A/50, Malka Ganj, Delhi cannot be sold as sought by the Bank for RC of Rs. 59 lacs.
PRAYER
In the facts and circumstances stated hereinabove, it is most respectfully prayed to pass directions to
Stay the sale of property No. 49A/50, Malka Ganj, Delhi belonging to CD 4.
Sell the property bearing No. A-89, Gali No. 5, East Lakshmi Market, Khureji Khaas, Delhi belonging to principal borrower.
Direct the CH Bank to accept the balance payment of balance amount of RC after appropriation of sale proceeds of property bearing No. A-89, Gali No. 5, East Lakshmi Market, Khureji Khaas, Delhi subject to maximum of Rs. 23,00,000/- (Rs. 2,00,000/- already paid) and release the applicant CD and hand back the title documents to the CD No. 4.
Any other relief which this Court may give to the applicant in the fact and circumstances of case."
The CH Bank had opposed that application of the appellant herein. The Recovery Officer, however, did not allow the appellant's request not to sell the property in dispute and rejected his application vide Order dated 9.4.2014. Against that order the appellant filed an appeal under Section 30 of the Act of 1993 before the learned Presiding Officer of the DRT challenging the order of the Recovery Officer and also prayed for revocation of the recovery certificate qua him in exercise of the power under Section 26 of the Act of 1993. That appeal was contested by the Bank and finally rejected also vide order dated 3.2.2015 of the learned Presiding Officer.
Some of the relevant averments made in that appeal and the order dated 3.2.2015 may also be noticed. The relevant averments in the appeal are as under:
"(2) That this learned Tribunal passed the ex parte final order dated 25.2.2013 as under:
In the result the application is allowed.
(i) The applicant shall be entitled to recover the sum of Rs. 58,81,788/- from the defendant Nos. 1 to 4 jointly and/or severally with simple interest @ 12.75% p.a. from 7.6.2004 onwards until recovery with cost.
(ii) The applicant shall be entitled to recover the debt by sale of mortgaged properties of D3 and D4.
(iii) The recovery certificate be issued on the above terms.
This order is illegal, unlawful, unjustified and based on the misrepresentations and falsehood of the Bank which fabricated and manipulated the facts before this Court. The RC issued under this order is liable to be withdrawn under Section 26 of the DRT Act.
(3) That the learned Tribunal also held that D3 and D4 also created equitable mortgage in respect of the properties owned by them to secure the loan availed and enjoyed by D1 and D2.
(4) The neither the Bank claimed in OA nor the learned PO held in final order that the defendant No. 4 was guarantor. As much the order of recovery jointly and severally could not have been passed against the defendant No. 4.
(5) That otherwise also without guaranteeing the advance there could not be any liability of third party mortgagor. However, in this case even the defendant No. 4 did not mortgage the property and Bank produced no document to show that the defendant No. 4 mortgaged the property to secure advance of defendant Nos. 1 and 2.
(9) That as regard the present applicant/defendant No. 4 has been mentioned as mortgagor of the property namely bearing No. 49-A & GO-A, Malkaganj, Delhi. The value of the said property is Rs. 2.62 crores in terms of valuation report filed by the Bank before learned RO. The same is annexed as Annexure-B.
(10) That the property bearing Nos. 49-A & 50-A, Malkaganj, Delhi has mortgaged by the applicant/defendant No. 4 in the account of M/s. Oberoi Marketing which also business entity of Shri Deepak Kumar Rana, defendant No. 2.
(11) That the said property was mortgaged for a sum of Rs. 10 lacs in account of M/s. Oberoi Marketing with the same branch which has filed the present case i.e. Anand Vihar Branch. This fact was confirmed by the said branch vide letter dated 13.9.2000. Copy of the said letter is annexed as Annexure C.
(12) That it is pertinent to mention that the Bank has not claimed in the O.A. that defendant No. 4/applicant has executed any guarantee to secure the credit facilities and as matter of fact the defendant No. 4 never signed any such guarantee in favour of the Bank.
(13) That otherwise also merely mortgage without any personal liability is illegal and unlawful for want of consideration. Since the defendant 4 did not stand as guarantor to secure the advance of defendant Nos. 1 and 2, defendant No. 4 is not liable for any liability in as much as there is no consideration for such mortgaged property as no mortgage money was paid to the defendant No. 4 by the Bank. In view of the same the said mortgage cannot be enforced upon the defendant.
(14) That otherwise also the Bank has claimed that the defendant No. 4 created mortgaged to secure the credit facilities of the Principal borrower on 10.9.2012 and 27.4.2013 but Bank did not file any document by which the said facts are proved in as much as no document has been filed by the Bank showing that the defendant No. 4/applicant created any mortgaged in respect of property bearing No. 49-A & 50-A, Malkaganj, Delhi in favour of the Bank in case of loan account of M/s. Chhabra Sons. The Title deeds of property were with Bank in another account and the same were unauthorizedly and illegally used by the Bank to claim that the property is mortgaged in this account as well.
(15) That the Bank has also filed a loan application dated 29.4.2003 by which the borrower requested the Bank for sanction for credit facilities. The said loan application filed by the Bank as Diary No. 3021 on 29.10.2007 alongwith an application seeking permission of the Court to lead the secondary evidence in the Court as the document has taken by the CBI.
(16) That it is clear from the above the application also that the property No. 49-A & 50-A, Malkaganj, Delhi was never sought to be kept as security in the present case.
(18) That the defendant No. 4 never mortgage property either for the credit facilities of Rs. 10 lacs or Rs. 50 lacs sanctioned in favour of the borrower in present case. Bank has wrongly claimed that the property was mortgaged in this case and obtained decree in its favour by misrepresentation and concealment of facts.
(19) That it is pertinent to mention that the order passed by this Court is an ex parte decree and the proper facts has not been placed before the Court by the Bank.
(20) That the Bank has played fraud upon the Court as the said property was not mortgaged to the Bank in the above mentioned account i.e. M/s. Chhabra Sons.
(21) That it is stated that the case has reported by the Bank to the CBI against the officers of the Bank namely Shri R.K. Verma and Shri R.K. Jain of Branch Office of Anand Vihar alongwith borrowers. All have been charge sheeted by the Court. The charges has been made on 16.5.2018 and learned Special Judge, PC Act, CBI Shri N.K. Kaushik has framed the following charges against officers of the Bank as well as others.....
(22) That although the property was mortgaged in the account of M/s. Oberoi Marketing the Bank has wrongly claimed this property as mortgaged in M/s. Chhabra Sons.
(23) That the officers of the Bank called the applicant/defendant No. 4 somewhere in the month of January 2013 and requested the applicant/defendant No. 4 to adjust account by settlement. The applicant gave letter dated 23.1.2013 as settlement of offer to the Bank and offer was enhanced to Rs. 20 lacs along with cheque of Rs. 2 lacs as token money with mistaken belief and wrong impression that the property was mortgaged in M/s. Chabbra Sons. The copy of the proposal is annexed as Annexure E. It is pertinent to mention that this mistake happened as the defendant No. 4 mortgaged the property in favour of Oberoi Marketing 13 years back and could not recollect the name of the account where property was mortgaged as there was not claim ever received by defendant No. 4 from the Bank in the account of Oberoi Marketing.
(24) That subsequently in the month of March 2013, the applicant/defendant No. 4 was advised to enhance the amount of offer which was enhance to Rs. 25 lacs under wrong impression and belief that the property was mortgaged for Rs. 10 lacs in case of M/s. Chabbra Sons. The letter dated 9.3.2013 was given to the Bank in this respect. Copy of the said letter is annexed as Annexure F.
(25) Since no reply was given by the Bank another reminder was sent on 9.9.2013. The copy of the said letter is annexed as Annexure G. The proposal was rejected by Bank vide letter 17.12.2013. Copy of the rejection letter is filed as Annexure H.
(26) That since the applicant/defendant No. 4 has created mortgaged in the year 2000 in respect of the property No. 4-A & 50-A, Malkaganj, Delhi in the account of M/s. Oberoi Marketing, the applicant/defendant No. 4 by mistake gave these letters to the Bank mentioning the name of the borrower above as notice was received from Recovery Officer in above account.
(27) That the applicant also filed an application before learned RO for seeking direction the property of the defendant No. 3 be sold before property of defendant No. 4 and the balance amount offered as settlement paid by the defendant No. 4/applicant. The copy of the said application is annexed as Annexure I. The Bank filed reply to the same and the copy of the reply of Bank is annexed as Annexure J.
(28) That the said application was filed by mistake in the title case of PNB v. Chhabra Sons. However, the learned RO dismissed the said application vide order dated 9.4.2014 and copy of said order was supplied on 22.4.2014. Copy of said order is annexed as Annexure K. The said order of the learned RO was illegal and unlawful and not justified.
(29) That hence the present application is seeking for the following relief:
(a) The Recovery Certificate against defendant No. 4 be withdrawn.
(b) The RC No. 92/13 be modified/withdrawn under Section 26 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
(c) The order of learned RO dated 9.4.2014 be set aside and the applicant be discharged.
(30) That after the said order was passed on 9.4.2014 the copy of the said order which was received on 22.4.2014. The defendant No. 4 referred the letter dated 13.9.2000 written by the Bank to the applicant for confirmation the creation of mortgage for sum of Rs. 10 lacs in the account of M/s. Oberoi Marketing.
(31) That thereafter applicant/defendant No. 4 directed the Counsel to inspect the OA file which was done on 29.4.2014 and the fact that the property was not mortgaged in above mentioned account was confirmed."
The order dated 3.2.2015 reads as under:
"1. That appellant is defendant No. 4 in TA No. 07/2013 (OA No. 51/04) in which a final judgment was passed and RC No. 92/13 was drawn as per final judgment dated 25.2.2013. As per the final judgment the applicant is entitled to recover the sum of Rs. 58,81,786/- from defendant Nos. 1 to 4 jointly and/or severally with simple interest @ 12.75% p.a. from 7.6.2004 onwards until recovery with cost and it was also directed that the applicant shall be entitled to recover the debt by sale of mortgaged properties of defendant Nos. 3 and 4.
The appellant has stated that this is an appeal under Section 30 as well as an application under Section 26 of the RDDB&FI Act. The final judgment was passed on 25.2.2013. The appellant has prayed for setting aside the order dated 9.4.2014 and he has prayed for withdrawing RC No. 92/13. There is no prayer to set aside the final judgment from which the recovery certificate was drawn. In the absence of any relief prayed for setting aside the final judgment, the final judgment cannot be set aside and when the final judgment is available the RC drawn in terms of the final judgment cannot be set aside. Defendant No. 4 had all the opportunity to contest the case and he preferred not to contest the case and at this stage he cannot make any contentions on the merits of the case in an appeal filed under Section 30 of the Act. The Counsel for the appellant tried to take me to the various discrepancies in relation to the documentation he wanted to establish a case that there is no mortgage at all by defendant No. 4 but I cannot entertain those contentions in this appeal and therefore cannot go to the merits of the case in OA as against defendant No. 4.
The Counsel for the appellant placed reliance on judgment of Hon'ble Supreme Court in Ram Chandra Singh v. Savitri Devi & Ors., in Civil Appeal Nos. 9216 and 9217 of 2013 decided on 9.10.2003. The Hon'ble Supreme Court in that case held that fraud and justice never dwells together, fraud as is well known vitiates every solemn act, misrepresentation itself amounts to fraud and a fraudulent misrepresentation is called deceit. The appellant's Counsel prayed for setting aside the judgment as against defendant No. 4 on the ground of fraud. When there is an allegation of fraud to set aside the judgment and decree the fraud must be specifically pleaded and proved in separate action and not as a corollary to an appeal filed under Section 30 of the RDDB&FI Act. Therefore, the judgment relied upon by the appellant has no relevance to the case on hand.
The defendant appeared before the Recovery Officer and filed his objections against sale of property bearing No. 49A/50A, Malkaganj, Delhi. He further stated that other property bearing No. A-89, Gali No. 5, East Lakshmi Market, Khureji Khas, Delhi could be sold and entire money due could be recovered. He took the contention in his objection that he had never mortgaged the property. The Recovery Officer cannot interfere with the finding of this Tribunal about the valid mortgage. The appellant then challenged the valuation report and stated that the value of the property ought to have been increased. Appellant had made a proposal for a settlement and he had offered a payment of Rs. 2 lacs and the Bank had encashed the cheque for Rs. 2 lacs. He says thereafter the Bank could not have gone back from the proposal and therefore the order of Recovery Officer for sale of the property is not justified.
The Recovery Officer has considered all the objections raised by the defendant No. 4 in his order dated 9.4.2014. The Recovery Officer has also stated in his order that defendant No. 4 had made a proposal of Rs. 20 lacs for settlement, he had submitted a revised proposal of Rs. 25 lacs and this proposal has been rejected by the Bank under intimation to defendant No. 4. The Recovery Officer has also given reason why property of defendant No. 4 has been kept for sale. The reason is that if the other property is sold the entire debt could not be recovered. The Recovery Officer has always to see that only so much of the property that is required to recover the debt alone could be sold.
Thus, on considering the order passed by the Recovery Officer on 9.4.2014 I find that the Recovery Officer has considered all the contentions raised by the appellant in the right perspective and he had declined to interfere with the final judgment passed by this Tribunal for valid reasons. The proposed sale as against the property is also valid and I don't find any merit in this appeal. The appeal is dismissed. I direct the parties to suffer their respective cost."
Then, on 16.2.2015 the appellant moved an application (being M.A. No. 27/2015) before the DRT in the disposed of O.A. seeking re-call of order dated 13.1.2005 passed during the pendency of the O.A. whereby he was directed to be proceeded against ex parte in the O.A. because of his having failed to appear in the matter despite service of notice of the O.A. and re-call of final order dated 25.2.2013 was also sought. That application was accompanied by an application for condonation of delay in filing of that application. The learned DRT vide order dated 12.6.2015 condoned the delay in the filing of the application, which according to the appellant was an application under Order 9 Rule 13 of the Code of Civil Procedure (CPC).
The relevant averments made in that Application No. 27/2015 are as under:-
"(4) That the learned PO could not have passed order holding defendant No. 4 as jointly and severally liable to pay the liability as this was not case of the Bank that the defendant No. 4 guaranteed the said advance.
(5) That on perusal of the O.A., the list of documents filed with OA, the documents filed with OA and the evidence of the witnesses of the Bank revealed that no document showing mortgage of the property bearing No. 49A/50-A situated at Malkaganj, Delhi was filed by the Bank or was so proved.
(6) Thus the said mortgage is illegal and cannot be enforced as there is no consideration. Applicant being neither borrower or guarantor and thus not personally liable to pay the borrowed amount.
(8) That the present application is filed to set aside the order and judgment dated 25.2.2013 which was passed ex parte by this Court and order dated 13.1.2005 by which the applicant was declared ex parte.
(9) That in the present case a fraud has been played by the Bank upon the Court.
(15) That it is case of fraud and the same was specifically alleged by the appellant in various para and after narrating the facts, it was stated in para 20 wherein it was stated as under:
That the Bank has played fraud upon the Court as the said property was not mortgaged to the Bank in the above mentioned account i.e. M/s. Chabra Sons.
(16) That the Court took technical view of the matter and held in para 3 of the judgment that although the Counsel for the appellant relying on judgment in Ram Chandra Singh v. Savitri Devi & Ors., decide by the Hon'ble Supreme Court prayed for setting aside the judgment as against defendant No. 4 on the ground of fraud, the Court observed that when there is an allegation of fraud to set aside the judgment and decree, the fraud must be specially pleaded and proved in separate action and not as a corollary to any appeal filed under Section 3 of the Act.
(17) That in view of the above the Court refused to go through the facts and documents and dismissed the application.
(24) That the Bank did not file any document for proving that the appellant has deposited title deeds of the property either for Rs. 10 lacs to the borrower and Rs. 50 lacs on enhancement of the credit facilities by the Bank to the borrower. On the contrary the appellant filed documents by way of loan application for enhancement in which the property No. 49A/50A, situated at Malkaganj, Delhi owned by the applicant/defendant No. 4 was not shown as offering the mortgage of the same.
(25) That the title deeds of the property came in possession of the Bank as the applicant stood as guarantor and mortgaged the property in account namely M/s. Oberoi Marketing to secure the loan of Rs. 10 lacs in that account.
(26) That Bank has claimed in its OA that the CD No. 4 has mortgaged its property to secure loan of Rs. 50 lacs to the respondent No. 1. But the Bank did not place any document executed by the defendant No. 4 which show and prove that the applicant/respondent mortgaged the property which how that applicant mortgaged the property for either limit of Rs. 10 lacs or Rs. 50 lacs to the applicant Bank.
(27) That when the applicant filed an application/appeal before the Court to release the applicant from the liability and discharge from the RC, the applicant Bank filed following documents alongwith its reply to show that the property bearing No. 49A & 50A, Malkaganj, Delhi had been mortgaged with the Bank in the account of M/s. Chhabra Sons to the tune of Rs. 10 lacs.
(i) Alleged letter signed by Shri Anil Narang dated 10.9.2002 confirming deposit of title deeds with the Bank in respect of the said property in the following two accounts:
(a) CC hypothecation: Rs. 10 lacs in M/s. Oberoi Marketing.
(b) CC hypothecation: Rs. 10 lacs in M/s. Chhabra Sons.
(ii) Letter dated 13.9.2002 written by Bank to Shri Anil Kumar Narang property No. 49-A/50-A, Malkaganj, Delhi confirming deposit of title deeds on 10.9.2002 in respect of the following 2 accounts:
(a) CC hypothecation : Rs. 10 lacs in M/s. Oberoi Marketing.
(b) CC hypothecation : Rs. 10 lacs in M/s. Chhabra Sons.
(28) That these documents were available with Bank when the OA was filed. But Bank choose not to file the same at that stage.
(29) The Court could not have passed an order of recovery of either Rs. 10 lacs or Rs. 50 lacs when the Bank itself failed to prove that the respondent No. 4 mortgaged the property for Rs. 50 lacs.
(33) Otherwise also on simply scrutiny of the above documents revealed that they were filled in to include the name of M/s. Chhabra Sons after they had been executed.
(34) That no reason has been given by the Bank as to why these documents were not filed at the time of filing of the OA and thereafter.
(35) That the conclusion is obvious that these documents has been now forged and fabricated and placed before this Court to show liability of Rs. 10 lacs (whereas the loan sanctioned was Rs. 12 lacs) in respect of the mortgaged property. Still admittedly there is no personal guarantee which is being proved by the Bank viz-a-viz. applicant.
(36) That even now the Bank has not produced any document to show that the applicant/defendant No. 4 was surety in the account of M/s. Chhabra Sons and it is settled law that without personal surety the property claimed as mortgaged, owned the surety does not survive for recovery of the dues.
(38) That it is clear that Shri Anil Narang had not offered property in M/s. Chhabra Sons or M/s. Chhabra Saree Sangam nor stood as guarantor in these accounts and Bank has obtained decree by misrepresentation, false statement on oath and concealment of facts.
(41) Thus the Bank has played fraud upon the Court and has obtained the final judgment by fraud, misrepresentation, suppression of facts deliberately and knowingly and misleading the Court.
(46) That the applicant Bank filed the O.A. being No. 51/2004 which was taken up on 25.6.2004. After 3 adjournments sought by the Bank on 26.6.2004, 31.8.2004 and 5.10.2004 the notice was issued to the defendants on 8.10.2004.
(47) On 2.12.2004 the learned Registrar presumed service to the defendant No. 4 stating as under:
"Defendant No. 4 (2nd Address) "Left without Address Return to the Sender"
(48) That this is the address of the mortgage property and the applicant could not have left it.
(49) That the said order further recorded that the notice to the defendant No. 4 at first address was dispatched on 10.11.2004. Neither the envelop nor AD card has been received back or unserved. As the period of 30 days is not yet over, the service of defendant No. 4 at first address is awaited.
(50) That the learned Registrar held on 22.12.2004 that since 30 days has passed the defendant No. 4 had been served. As a matter of fact the appellant did not receive any notice at any address nor any O.A.
(51) That it is matter of record the notices were sent by the Bank on their own and not on behalf of the Court.
(52) In these circumstances there was no service to the applicant/defendant No. 4.
(54) That the matter was first listed before the learned PO, DRT-II, on 26.10.2012 the notices were issued to defendants and the matter was listed for 24.12.2012.
(55) That the matter was then posted on 24.12.2012 to 11.2.2013 where it was recorded that the notices given to all the defendants and Shri Anil Narang, defendant No. 4 present in person. However, the matter was registered as TA vide order dated 11.2.2013 and the matter was reserved for judgment to be pronounced on 25.2.2013.
(56) That the appellant appeared before the DRT II personally on 24.12.2014 and sought time to engage Advocate. The appellant is a Senior Citizen and is of around 63 years of age and suffering from hearing deficiency.
(58) That further when the applicant received notice from Court it approached the Bank as to why the said notice was issued, then the Branch Manager informed that the applicant had mortgaged the property for Rs. 10 lacs in present case and he asked the applicant that the matter could be sorted out if the applicant make payment for Rs. 20 lacs for which he took letter from the applicant. Thus even these letters were obtained by the Bank by misrepresentation and fraud.
(59) The said letters were given in the misconception that the applicant has given guarantee for this account and mortgaged the property for the same. The Bank officials assured the applicant that the matter will be sorted out. In view of the same the applicant did not pursue the matter before the Court. As already stated the said letters were obtained by the Bank by misrepresentation and fraud.
(60) That applicant is a witness in the Criminal Case filed by the Bank which is pending before the CBI Court at Dwarka. It is during the meeting with the Counsel in regard to criminal case, the applicant came to know about the fact that he indeed mortgaged the property and stood as guarantor in respect of account M/s. Oberoi Marketing and not the present case. This happened around time when the learned RO passed the order in the IA filed by the applicant. It was thus, for the first time the applicant came to know that the Bank has committed the fraud with the Court and also misrepresented and fraudulently took letters from the applicant for settlement. Thus the applicant filed the IA/Appeal No. 20/2014 before this Court.
(61) Thus non-appearance was not intentional and matter of fraud came to knowledge of the appellant recently.
(63) In view of the fact that the Court may set aside the ex parte order dated 13.1.2005 and final judgment dated 25.2.2013. Otherwise the applicant will suffer irreparable loss."
The Bank had opposed M.A. No. 27/2015 also and the learned Presiding Officer he dismissed that application vide impugned order dated 4.11.2016. Now, the appellant is challenging that order dated 4.11.2016 which is also being re-produced below:
"1. This is an application filed by defendant No. 4 Mr. Anil Narang for setting aside ex parte judgment and order passed by this Tribunal. Brief case of the applicant, as seen from this Miscellaneous Application (for short, the M.A.) is as follows:
An ex parte judgment was passed by this Tribunal in O.A. No. 7 of 2013 on 25th February, 2013. It is submitted that the learned Presiding Officer could not have passed the judgment holding the applicant/defendant No. 4 jointly and severally liable because a perusal of the O.A. and the documents attached therewith shows that there is no document showing mortgage in respect of property bearing No. 49A/50A situated at Malkaganj, Delhi (hereinafter referred to as the property in question). It is further submitted that the alleged mortgage is illegal and cannot be enforced and, as such, the present application is filed to set aside the said ex parte judgment dated 25th February, 2013 and the order dated 13th January, 2005 whereby the applicant was proceeded ex parte. It is also the case of the applicant he had filed an application/Appeal No. 20 of 2014 before this Tribunal alleging fraud played by the Bank and requested to withdraw the Recovery Certificate against him and further requested to discharge him from the liability, but the learned Presiding Officer refused to go through the facts and documents and dismissed the said application on 3rd February, 2015 on some technical grounds. The applicant/defendant No. 4 further submits that the Bank did not produce to prove that he was a guarantor in the account of M/s. Chhabra Sons and further that he never offered the property in question for mortgaging the same in the account of M/s. Chhabra Sons. The Bank played fraud and fraud vitiates everything and in this regard the applicant/defendant No. 4 has placed reliance on various citations. Hence, the present M.A. for setting aside of the ex parte judgment dated 25th February, 2013 and order dated 13th January, 2005.
(3) The respondent Bank has filed its rely contending that the applicant was defendant No. 4 in the O.A. It is further pleaded that defendant No. 4 created a mortgage by depositing the title deeds of the property in question on 10th September, 2002 and again on 29th April, 2013 and the said contention has remained un-rebutted. The answering respondent Bank has further pleaded that the applicant had joined the recovery proceedings and the contentions of the applicant before the learned Recovery Officer were limited to the extent that he had given guarantee to the tune of Rs. 10 lacs and further that the property of CD No. 3 may be sold first before putting the property in question to sale. It is further submitted that the applicant/defendant No. 4 had submitted a proposal for Rs. 25 lacs for settlement of dues in respect of his liability with upfront amount of Rs. 2 lacs and accordingly he had filed an application being I.A. No. 608 of 2014 before the learned Recovery Officer, but the learned Recovery Officer vide his order dated 9th April, 2014 dismissed his application. It is also the case of the answering respondent Bank that the applicant/defendant No. 4 was duly served with the notice but he failed to participate in the proceedings and allowed the final orders to be passed against him. The applicant/defendant No. 4 had also filed an application/Appeal No. 20 of 2014 in R.C. No. 92 of 2013 which was disposed of by this Tribunal on 3rd February, 2015 and the allegations of fraud alleged by the applicant/defendant No. 4 are belated and now he cannot be permitted to deviate from the stand earlier taken by him in the recovery proceedings and cannot be permitted to set up a new case. Accordingly, the answering respondent Bank submits that there is no merit in the present M.A. and the same is liable to be dismissed.
I have heard the Counsel for the parties and have gone through the record.
Now the point for determination is whether the applicant/defendant No. 4 is entitled for setting aside the ex parte order dated 13th January, 2005 and ex parte judgment dated 25th February, 2013 as prayed for in the M.A.?
In the present case, a perusal of the O.A. record would reveal that the applicant/defendant No. 4 was declared ex parte when the case was pending before the Debts Recovery Tribunal-III at Delhi. Subsequently, the case was transferred to this Tribunal and order dated 24th December, 2012 passed by my learned predecessor depicts that Mr. Anil Narang, who is the applicant/defendant No. 4 in this M.A. was present in person before the Tribunal. Had the applicant/defendant No. 4 had any contention with regard to alleged fraud, he would have filed a petition for setting aside ex parte order dated 13th January, 2005 and would have filed written statement contesting the claim of the respondent Bank. In the present M.A., the applicant/defendant No. 4 has alleged fraud as ground of defence for setting aside the ex parte final judgment. If really a fraud was played on him by the respondent Bank, the applicant/defendant No. 4 would have to plead fraud as the ground of his defence in the O.A. itself when summons were served upon him in the year 2004 and when he was present in person before this Tribunal on 24th December, 2012 but he kept quiet. Subsequently, during the recovery proceedings he had filed objections, which were dismissed by the learned Recovery Officer and further that an appeal filed by him against the order of dismissal of his objection was also dismissed by this Tribunal. Thereafter, the applicant/defendant No. 4 cleverly filed the present M.A. in the year 2015 after losing in his objectors before the learned Recovery Officer as well as in appeal before this Tribunal.
Learned Counsel for the applicant/defendant No. 4 has relied upon the judgments of Hon'ble Supreme Court in cases titled as C.N. Ramappa Gowda v. C.C. Chandregowda in Civil Appeal No. 3710/2012 and Balraj Taneja v. Sunil Madan, in Civil Appeal No. 4968/1999, decided on 8th September, 1999, as also the judgment of Hon'ble High Court of Delhi in case and judgment of Hon'ble Debts Recovery Appellate Tribunal, Delhi in case titled as Prithpal Kaur v. Central Bank of India, in Appeal No. 373/2013 (O.A. No. 282/1995, Delhi-II) in support of his contention that fraud vitiates everything and on this ground he has prayed for setting aside of the ex parte final order.
On the other hand, learned Counsel for the respondent Bank has submitted that the applicant/defendant No. 4 was a party to the proceedings and he was served with notice but when he failed to appear on 13th January, 2005 despite service, he was proceeded ex parte when the case was pending before the Debts Recovery Tribunal-III at Delhi and subsequently when this case was transferred to this Tribunal, he appeared in person before this Tribunal on 24th December, 2012 but failed to take any plea of fraud and kept quiet and thereby allowed the Tribunal to pass the final order. It is also proved from the record that the applicant/defendant No. 4 had appeared before the learned Recovery Officer during recovery proceedings and took plea that first the property of CD No. 3 may be sold and further with a proposal that he is ready to pay a sum of Rs. 5 lacs in full and final settlement of his liability, but both the said grounds were rejected. Thereafter, he preferred an appeal and finally has come up with this M.A. with a plea of fraud. There is no bona fide in the present M.A. as the applicant has failed to explain as to why he kept mum during the O.A. proceedings before this Tribunal in spite of his personal appearance on 24th December, 2012.
A perusal of the record of main T.A. (O.A.) No. 07 of 2013 titled as Punjab National Bank v. M/s. Chhabra Sons & Ors. reveals that the Tribunal holding service of notice on the applicant/defendant No. 4, as complete and proper declared him ex parte. Again when the matter was transferred to this Tribunal, he appeared in person on 24th December, 2012 but failed to take any plea. He also did not file any written statement pleading the alleged fraud now put forward by him in this M.A. Moreover, the reply filed by the respondent Bank reveals that after issuance of the Recovery Certificate, applicant/defendant No. 4 filed objections that first the property of CD. No. 3 may be sold and then the property in question and further that he was willing to pay Rs. 25 lacs for his complete discharge. Thus, it is clear that the applicant/defendant No. 4 has been taking different pleas from forum to forum. Hence, the applicant/defendant No. 4 has filed to make out any case as to why he kept quiet during the pendency of the O.A. proceedings without any contest in spite of his personal presence before this Tribunal on December 24, 2012.
The Hon'ble Madras High Court in its judgment in case titled as Dr. E. Prabhakaran & Anr. v. Lakshmi Vilas Bank Ltd., 2011(2) DRTC 695, at Para 47 of the judgment has held that, "It is true that acceptance of 'sufficient cause/good cause' is an essential condition for setting aside the ex parte decree. As far as the present case is concerned, as seen from the records, the registered notices with acknowledgement due have been duly sent to the revision petitioners/defendant Nos. 2 & 3 at the address at 25-A, Bardoa Street, West Mambalam, Chennai 600 033 and both the covers have been returned to the sender with an endorsement 'Not claimed'. Therefore, it is candidly proved that the respondent/Bank has taken notice through registered post to the revision petitioners/defendant Nos. 2 & 3 in the correct and given address. As such, it is not open to the revision petitioners to come up with a bald assertion that the registered notices have not been sent to them. In short, even though the registered cover with acknowledgement due sent to revision petitioners/defendant Nos. 2 & 3 was returned as 'not claimed', it is a valid notice and it is deemed to be proper service, in our considered opinion. Furthermore, a publication has been effected in Tamil Daily Dinamalar, Chennai and Erode Edition putting the defendant (including the revision petitioners) on notice that the O.A. No. 691 of 1999 is stated to come up for hearing on 21st October, 1999 at 10:30 a.m. Even in the said publication effected by the respondent/Bank, the address of the revision petitioners is mentioned as No. 25-A, Baroda Street, West Mambalam, Chennai-600033." Again at Para 56 of the said judgment, the Hon'ble High Court has held that "In the light of detailed discussions and on an overall assessment of the present facts and circumstances of the case in a cumulative manner, we are of the considered view that the petitioners have not shown any sufficient cause to set aside the ex parte order dated 20th November, 2000, in O.A. No. 691 of 1999 passed by the Debts Recovery Tribunal, Chennai and accordingly dismissed the revision petition."
Viewed from any angle, there is no merit in the present Miscellaneous Application and the same is accordingly dismissed.
No order as to costs."
From the foregoing narration it becomes clear that in the Bank's O.A. the appellant-defendant No. 4 did appear in person before the DRT on 24.12.2012 and this fact he has categorically admitted also before DRT and then before this Tribunal also. He, however, had not sought any opportunity from the DRT to file his defence statement at that time. So, subsequently he could not raise any grievance that he had not been served with the notice of the O.A. and his non appearance in the O.A. proceedings after 24.12.2012 shows his disinterestedness in the case since he knew that he had no opposition to the Bank's claim that he had mortgaged his property in favour of the applicant Bank to secure the repayment of the loan advanced to defendant No. 1 in the O.A., M/s. Chhabra Sons (respondent No. 2 herein), a proprietorship firm of respondent No. 2 herein, Mr. Deepak Kumar Rana. In fact, the appellant himself had even before the disposal of the O.A. and when it was pending offered a settlement proposal to the Bank.
The fact that the appellant never wanted to contest the case of the Bank is evident also from the fact that when after disposal of the O.A. the DRT had forwarded the recovery certificate to the recovery officer for execution and the Recovery Officer had taken steps to sell the property in dispute which the DRT had found to be equitable mortgaged with the CH Bank the appellant had appeared in those proceedings also and had moved an application once again offering to settle the matter for Rs. 25 lacs but wanted the mortgaged property of the principal borrower first to be sold and in case of any shortfall after he had agreed to pay the balance subject to his maximum liability of Rs. 25 lacs. However, the CH Bank had rejected that proposal and even the Recovery Officer had not accepted the same and he wanted to sell the appellant's property in dispute its value was over two crores and borrower's property was required to be sold to recover Bank's money in some other accounts of the Chhabra Group of Companies/Firms.
Thus, the orders dated 31.1.2015 and 23.2.2013 could not be set aside in the application of the appellant under Order 9 Rule 13, CPC.
The appellant's another grievance raised by him after passing of the final order in the Bank's O.A. was that in the absence of any averment in the O.A. that the appellant-defendant had given personal guarantee also for the re-payment of the loan money by the borrower Firm no liability could be fastened upon him much less of over fifty lacs of rupees merely on the basis of Bank's claim that he had mortgaged the property in dispute since without a guarantee there could not be a valid mortgage. It was also claimed by the appellant that the DRT was not justified in passing a recovery certificate against him and making him jointly and severally liable for the entire claimed amount on the O.A. when even the Bank itself had not prayed for a joint and several recovery certificate against the appellant for the entire amount claimed in the O.A. It was further claimed that the applicant Bank had not placed on record any document in support of its case that the appellant had created equitable mortgage in the case of M/s. Chhabra Sons and, therefore, the learned DRT despite the fact that the appellant was not participating the O.A. proceedings was under legal duty to require the Bank to produce all the relevant documents and then should have given any finding as to whether any mortgage stood created by the appellant in the account of M/s. Chhabra Sons or not. However, all these grievances could be raised in an appeal and cannot be urged in an application under Order 9 Rule 13, CPC. The appellant did not choose the route of statutory appeal and that appears to have been done to avoid payment of Court fee and mandatory pre-deposit of half of the amount of debt determined to be recoverable from him by the learned DRT.
Now the crucial question which remains to be answered is whether the final order dated 25.2.2013 passed against the appellant in the Bank's O.A. is liable to be set aside on the ground that the same had been obtained from DRT by the CH Bank by playing fraud upon the DRT and concealment of material facts/documents, as was the main point pressed into service by Shri Adarsh B. Dial, learned Senior Counsel for the appellant and in support of which argument he had also cited some judgments of the Hon'ble Supreme Court wherein the Apex Court had held as to what constitutes 'fraud' upon Court and what are the consequences which flow if it is as a matter of fact found by the concerned Court that 'fraud' had been played upon it by the successful litigant before it, like the respondent Bank in the present case is alleged to have played upon the DRT.
The appellant's case in this regard as highlighted by his learned Senior Counsel is that the Bank had placed on record copies of mortgage related documents which clearly showed the fraud practiced by the Bank upon the DRT.
The submission of Mr. R. Wali, learned Counsel for the Bank on the other hand was that this is really a case of 'the pot calling the kettle black'.
I am fully in agreement with the aforesaid submission of the learned Counsel for the Bank. The appellant can be said to be trying to mislead the DRT and then this Appellate Tribunal by concocting allegations of fraud upon DRT by the Bank officials. There is no doubt that allegations of fraud can be raised and established at any time and so I need not refer to the judgments cited in that regard by the learned Senior Counsel for the appellant. However, none of those judgments are applicable to the facts of the present case. As noticed already, the appellant had not even pleaded any kind of fraud, what to say of adducing proof of fraud, before the DRT when the O.A. was pending adjudication. He allowed the DRT to accept the case of the Bank in its entirety and to pass a final order holding him liable for the recovery of the amount claimed by the applicant Bank. It is also significant to note after the O.A. had been disposed of and when the property in dispute was going to be auctioned by the Recovery Officer the appellant at that stage had himself come out with the plea before the Recovery Officer and which plea he has been highlighting in the post O.A. decision only that even when the O.A. was pending he had himself started negotiating with the Bank for some settlement and according to his own case there was a settlement arrived at to the effect that he would pay Rs. 25 lacs to the Bank in discharge of his liability in the account of the borrower Firm, M/s. Chhabra Sons after mortgaged property of the borrower was sold and in case of any shortfall he were to pay the balance subject to the maximum amount of Rs. 25 lacs. Accordingly he had requested the learned Recovery Officer not proceed with the sale of his property first and should wait for the outcome of the sale of the mortgaged property of the said main borrower Firm. No fraud was alleged even before the Recovery Officer having been played upon his Presiding Officer by the Bank in obtaining a money decree against the appellant.
However, when the order dated 9.4.2014 passed by the learned Recovery Officer rejecting the appellant's said request to him was challenged in appeal before the learned Presiding Officer allegations of fraud etc. came to be levelled for the first time by the appellant. It was alleged that the appellant had in fact mortgaged his property not in the account of M/s. Chhabra Sons but titled deeds were deposited with the CH Bank in another account of M/s. Oberoi Marketing (which was also one of the Chhabra Group of Companies) and the Bank officials had fraudulently after the loan of M/s. Oberoi Marketing stood paid off, utilised the title deeds in the account of M/s. Chhabra Sons for which fraud the Bank officials involved were being prosecuted also by the CBI and trial was going on in CBI Court. That way the Bank officials had allegedly played fraud upon by the Bank officials by not bringing to the notice of the DRT when O.A. was pending that the CBI had charge-sheeted two Bank officials for the offences of forgery, cheating etc. and in the charge sheet filed in Court it had been mentioned by the CBI that the appellant herein had not created any mortgage of the property in dispute in the account of M/s. Chhabra Sons and it was only done in the account of M/s. Oberoi Marketing. However, on these facts also the final order dated 25.2.2013 cannot be set aside since no Competent Court has so far found the CBI case to be correct. In any event, as noticed already, the appellant himself had categorically admitted that he had offered to clear the account of M/s. Chhabra Sons by settling with the Bank for Rs. 25 lacs. Now he wants to wriggle out of that admission taking shelter under the CBI's investigation report which is yet to be accepted by the Court and none has been found guilty so far and has also come forward with another plea that his consent to settle the account of M/s. Chhabra Sons by Bank officials by misrepresentation of real facts. It is also the case of the appellant that the application which he moved before the Recovery Officer in the case of M/s. Chhabra Sons was in fact meant to be filed in the case of M/s. Oberoi Marketing but mistake was filed in the case of M/s. Chhabra Sons. Learned Counsel for the Bank was also right in submitting that this is also a cock and bull story thought of by the appellant to avoid his liability determined in the Bank's O.A. and that the DRT had also rightly observed that from forum to forum the appellant had been changing his version. The appellant has claimed that he was a witness for the CBI in the criminal case. That shows that he must be aware of the documents of mortgage which he claims to be forged and kept away from the DRT when the O.A. was pending long time back. The. Bank had sanctioned prosecution of its officers sometime in the year 2005 but still allegations of fraud upon DRT were raised only in the year 2014. There is no explanation in that regard forthcoming from the side of the appellant. In these circumstances it cannot be said that the Bank had obtained order in its O.A. by playing fraud upon the DRT.
As a result of foregoing discussion and conclusions, this Tribunal finds this appeal to be totally meritless and is consequently liable to be dismissed. It is dismissed accordingly.