AI Structured Summary
Not yet generated for this judgment
Judgment
I.A.NO. 951/2019
This is an application filed by the appellant Bank seeking condonation of delay of 36 days in filing of this appeal against the order dated 20.07.2019 passed by the Tribunal Below(DRT) whereby the respondent no.1 L. Madhusudan Rao was permitted to leave the country only with prior intimation to the DRT. The reason for this delay allegedly was caused firstly in taking necessary sanction internally within the organization, secondly by the advocate in drafting the appeal and then in vetting the same by officials of the Bank.
This application has been opposed on behalf of respondent no.1, who only is the contesting respondent, on the ground that the above noted reasons given by him do not constitute sufficient cause justifying condonation of delay which actually is of 42 days and not 36 days.
In my view, no mala fides can be attributed to the appellant or its officials in causing delay in the filing of this appeal and the same also cannot be said to be deliberate. In the facts and circumstances the judgment of the Hon'ble Supreme Court in the case of "Ram Lalvs Rewa Coalfields', AIR 1962 SC 361 cited by the counsel for the respondent no.1 does not apply. Subsequently the view of the Apex Court has been to the effect that the approach of Courts while considering applications for delay of condonation in the filing of appeals etc. should be liberal. One such decision where this view was taken by the Apex Court was in the case of "Collector Land Acquisition vs Mst. Katiji & Ors" reported in 1987 AIR 1353. The relevant observations are as under:-
"The legislature has conferred the power to condone delay by enacting Section 51 of the Indian Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaning- ful manner which subserves the ends of justice--that being the life-purpose for the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:-
"Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908. may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period."
Ordinarily a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is con-doned the highest that can happen is that a cause would be decided on merits after hearing the parties.
"Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so."(emphasis supplied)
This application is accordingly allowed and the small delay in the filing of this appeal is condoned.
APPEAL NO. 399/2019
The appellant Bank has filed this appeal since the Tribunal below (DRT) has permitted respondent no.1 herein to go abroad ignoring the contractual term in the guarantee deed executed by him in favour of the appellant Bankwhich requires him to seek prior permission of the Bank if he has to go abroad for business or employment purposes.
Respondent no. 1 is one of the guarantors for the re-payment of moneys which the appellant had advanced to one Company by the name of M/s Lanco Hydro Power Ltd. ('the borrower Company'), which is a part of 'Lanco Group of Companies'. The borrower Company having defaulted in re-payment of the loans/financialfacilities availed of by it the appellant Bank has filed an Original Application(O.A.) under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993 for recovery of hundreds of crores of rupees against the said borrower Company and guarantors, mortgagors including respondent no.1 herein. Initially the DRT while issuing notice of the O.A. to the defendants had passed an order directing the respondent no.1 herein to seek its prior permission if he has to travel abroad during the pendency of the O.A. but subsequently vide impugned order dated 20.07.2019 the DRT has modified that direction by requiring him to simply give intimation to DRT one week before his date of departure on a foreign visit.
This appeal filed by the lending Bank has been opposed by respondent no.1, who has to travel abroad frequently for business purposes, on the ground that DRT cannot put any restrictions on his right to travel anywhere he wants. In support of this submission which was raised by the learned counsel for the respondent no.1 during oral arguments as well as in his written submissions, strong reliance has been placed upon a judgment dated 8th March,2018 rendered by a Division Bench Hon'ble Delhi High Court in "ICICI Bank Ltd. vs Kapil Puri & Others",(CWP No. 10765/2015).
It has not been disputed by respondent no.1 that he had executed a guarantee deed when the appellant Bank had sanctioned financial facilities under different Heads and one of the terms included in that guarantee deed was that if he has to go abroad for business purpose he will seek prior permission of the Bank. Thus, according to the respondent no.1 DRT cannot tell him to seek its prior permission or even to give prior intimation of his intended foreign travel.
Hon'ble Delhi High Court in Kapil Puri's judgment(supra) had taken note of the following Clause in the deed of guarantee executed by the guarantor of that case:-
"2. The Guarantors further agree that unless the said Banks shall otherwise previously approve in writing the Guarantors shall not: ......
(v) Leave India for employment or business or for long term stay abroad so long as any amounts remain outstanding under the Facility together with interest and other dues and charges including prepayment charges as per the rules of the said Banks then in force. Whether the stay is long term or not shall be decided solely by the said Banks."
It is undisputed that similar clause exists in the guarantee deed executed by respondent no.1 herein to the effect that as and when he has to travel abroad for business/employment purposes and there are outstanding dues of the Bank prior permission of the Bank has to be sought by him. Hon'ble High Court had come to the conclusion in Kapil Puri's case that in view of such a Clause in the guarantee deed if the guarantor has to travel abroad for business/employment purposes the DRT cannot restrict the right of the guarantor to undertake foreign travel. In a way the High Court has confirmed the validity of such a clause in the guarantee deed which has to be followed by a guarantor whenever he is to travel abroad for business/employment purposes and there are outstanding dues of the Bank. In this regard the following paras from the judgment in Kapil Puri's judgment may usefully be noticed:-
It is the case of the petitioner Bank that it had sanctioned various facilities to the respondent No.3 Company, including credit facilities in the form of working capital limits, comprising fund based and non-fund based limits aggregating to Rs.1100.00 million. Respondents 1 and 2 executed Deeds of Guarantee dated October 21, 2011 and October 29, 2012 containing inter-alia the following term:
"2. The Guarantors further agree that unless the said Banks shall otherwise previously approve in writing the Guarantors shall not: ......
(v) Leave India for employment or business or for long term stay abroad so long as any amounts remain outstanding under the Facility together with interest and other dues and charges including prepayment charges as per the rules of the said Banks then in force. Whether the stay is long term or not shall be decided solely by the said Banks."
Without prejudice, it is his contention that one of the distinguishing feature in the case in hand, is that the Deeds of Guarantee executed between respondents 1 and 2 and the petitioner contain a specific Covenant, whereby the said respondents have themselves agreed not to leave India for employment or business or for long term stay abroad so long as any amounts remain outstanding under the Working Capital Facility without the permission of the ICICI. He states that freedom to enter into a contract cannot be curtailed or curbed relying on fundamental rights under the Constitution against State action. This proposition of law has been laid down by the Supreme Court in the case reported as (2005) 5 SCC 632 Zoroastrian Cooperative Housing Society Ltd v. District Registrar Cooperative Societies (Urban).
In substance, it is his submission that the respondents herein entered into contract on their own volition and considering their commercial interest. Thus, like in Zoroastrian Cooperative Housing Society Ltd (supra), the respondents cannot claim breach of fundamental rights by the said Covenant. Further, he would submit that the argument on behalf of the respondents to the effect that the aforesaid Covenant contained in the Deeds of Guarantee dated October 21, 2011 and October 29, 2012 is in violation of the fundamental rights of the respondents, does not hold water in view of the legal position that fundamental rights in Part III of the Constitution are enforceable against State action only and not against private individuals. In that regard, he would rely upon P.D. Shamdasani vs. Central Bank of India 1952 SCR 391 (CB).
Insofar as the plea of Mr. Vasisht in the alternative that even in terms of the Deeds of Guarantee dated October 21, 2011 and October 29, 2012, the respondents 1 and 2 have agreed not to leave India for employment or business or for long term stay abroad so long as any amounts remain outstanding under the Facility together with interest and other dues and charges including repayment charges as per the Rules of the said Bank then in force and by relying upon the judgment of the Supreme Court in the case of Zoroastrian Cooperative Housing Society Ltd (supra), is concerned there is no doubt on the proposition of law laid down by the Supreme Court. Surely, the Deeds of Guarantee being contractual in nature would bind the respondents 1 and 2 but a closure look of the stipulation would reveal that the respondents 1 and 2 have contracted not to leave India for employment or business or for long stay abroad, so long as any amount remain outstanding without the permission of the petitioner. The eventualities have been stipulated i.e employment or business or for long term stay abroad, surely reveals that as long as the visit is not for employment or for business or for a long stay abroad, they can leave India. The order of the Tribunal dated May 9, 2014 does not take into consideration these aspects but it is a general order that as and when they would go out of India, they will inform the Tribunal and seek permission of the Tribunal and such a blanket order is unjustifiable nor the Tribunal drew sustenance from the provisions of the Deeds of Guarantee as, the term of contract stipulates without the permission of ICICI, which surely would not empower the DRT to direct, that the respondents 1 and 2, would seek its permission. It is surely an order, which appears to have been passed by the DRT purportedly invoking its power under Section 19(25) of the Act of 1993 and in view of our aforesaid finding, could not have been passed."(emphasis laid)
Thus in Kapil Puri's case Hon'ble Delhi High Court, which is the jurisdictional High Court as far as Delhi DRAT in concerned, it has been held that a defaulting borrower can go abroad as long as foreign visit is not for business/employment purposes but if the visit is for business/employment the borrower has to honour the term in the contract of guarantee by seeking proper approval of the lending Bank. There is a purpose behind incorporation of such a Clause in the contracts between Banks and borrowers/guarantors. The lender of public money expects that its dues are repaid in time and also that while a debtor commits defaults in repayment of public money in his own country he does not after taking loans flee away to some other country and start making money there and keep the Indian Banks at bay. The lender Bank can always put the guarantor, when approached for permissionto travel abroad, to such terms as considered necessary to ensure that the borrower/guarantor seeking its permission does not go out if its reach in order to evade its financial liabilities. Thus, to ensure that that does not happen the Banks incorporate such a Clause in the contracts with their borrowers/guarantors. On the representation that he(respondent no.1 herein) will not go abroad for business without prior approval of the appellant Bank and the appellant Bank having extended financial help to the borrower Company on his solemn undertaking/guarantee he cannot now say that he will not approach the appellant Bank for its prior approval before leaving the country.Therefore, it is clear that if a guarantor, like the respondent no.1 herein, has to travel abroad he has to approach the Bank only for its prior permission(and not the DRT)as per the Clause to that effect in the Deed of Guarantee validity whereof has never been challenged by him as being violative of any of his fundamental rights or is being against public policy etc.
If the Bank is approached by the guarantor-respondent no.1 and permission is not granted by the appellant Bank arbitrarily and unjustifiably he can always have recourse to legal remedies against arbitrary rejection of his request for permission to travel abroad. Similarly, if the guarantor-respondent no.1 does not seek prior approval before leaving the country the appellant Bank is also always at liberty to take recourse to appropriateremedies available to it in law.
This takes care of the grievance of the appellant Bank that respondent no.1 is after getting loans sanctioned from the appellant Bank is treating the Bank as a total stranger which is not to be kept in the loop by him while leaving the country. The learned DRT ought to have examined the matter keeping in mind that the parties i.e. the appellant Bank and respondent no.1 have entered into a contract which provides that whenever respondent no.1 wants to go abroad for some business purpose he has to seek prior approval of the appellant Bank and the DRT cannot say that such a Clause in the contract between the parties is not binding upon DRT. Certainly that Clause is binding equally upon the appellant Bank as well respondent no.1.
Another grievance which was highlighted by the learned counsel for the appellant Bank is that the learned DRT is simply concerned with such like applications moved by respondent no.1 for travelling abroad without paying anything to the Bank towards even partial discharge of his liability towards the Bank while the prayers made by the Bank to call upon the defendants in the O.A. to furnish appropriate security for the payment of dues of the Bank in the event of Bank succeeding in its O.A. are not even being taken up for consideration. It was submitted that it is legislative mandate for the DRTs to direct defaulting borrowers to furnish adequate security where the security in the hands of the secured creditors is not sufficient enough to liquidate the banks' outstanding dues but the learned DRT in this case is simply not obeying the legislative mandate. As far as this grievance raised on behalf of the appellant Bank is concerned I am of the view that it should be left to the learned Presiding Officer at first instance to examine the prayer of the O.A applicant Bank for calling upon the defendants-borrowers to furnish adequate security and to pass appropriate orders in accordance with law. Only when the DRT passes an order which does not satisfy the legislative mandate that the Bank can ventilate its grievance before this appellate Tribunal in properly constituted proceedings in that regard. So, this point of furnishing of security by borrower-defendants should be taken up for consideration and appropriate orders after receipt of O.A. records which were summoned for the disposal of the present appeal.
Records of DRT benow sent back with a copy of this order.