Indian Bank vs Aman Goel

Ranjit Singh, J

Thought this order three separate appeals field by the appellant Indian Bank are being disposed of as they relate to the same transaction of loan recovery thereof.

Respondents Aman Goel & Other availed certain credit facilities from the appellant bank. They could not repay the loan in terms of the agreement. The appellant bank according field O.A. No. 173 of 2008 for recovery of an amount of Rs. 15,43,814.56 as on 30.09.2006which was payable alongwith interest accrued thereon While the OA was pending the appellant ban initiated proceedings against the respondents under the Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act 2002 ( hereinafter referred to as the SARFAESI Act) to recover money from the secured of the borrowers.

Respondent No. 1 Mr. Aman Geol (defendant no. 4 in the OA) challenged this action initiated by the bank by filing a Securitization Application Under Section 17(1) of the SARFAESI Act being SA No. 39 of 2009. The OA and SA came up for hearing before the Debts Recovery Tribunal-1, Chandigarh on 1st August, 2011. The cryptic order without noticing the facts or legal ground on the basis of which the Tribunal thought it appropriate to allow the SA and dismiss the OA. As can be seen from the impugned order dated 01 August, 2011 the OA was dismissed on the statement made by the counsel appearing for respondent no. 1 that full outstanding amount as claimed in the OA has been paid by the said respondent. When this statement was made no one was present on behalf of the appellant bank before the Tribunal. Still it was recorded by the Tribunal below that the Bank had not controverter the claim of the said respondent in SA regarding payment and had also not filed any statement of account in the OA in compliance of the order dated 04 February 2011. The Tribunal below accordingly chose to dismiss the OA and allow the SA on this short ground. The impugned order reads as under:

OA No 173/08

Indian Bank Vs Sai Mart Bank & Ors.

SA No. 39/09

Aman Goel Vs Indian Bank

Item No. 16

01.08.2011

Present: None for the applicant bank

None for defendant no. 1 to 3

Mr. Diwan Sharma, counsel for the defendant No. 4

The learned counsel for the defendant no. 4 stated that full outstanding amount as claimed in OA has been paid by the defendant no. 4.

In the connected SA No. 39/09, It is stated by the learned counsel for the applicant that Rs. 6.90 lakh was deposited on different dates. Bank has not controverted the claim of the applicant in and regarding payment and also not filed by statement of account in OA No. 173/08 in compliance of order dated 4.02.2011. Accordingly, OA No. 173/2008 stands dismissed and SA No. 39/09 stands allowed.

The respondent bank is directed to return the original title deed of the property in question to the applicant within one week. Copy of this order be given to all concerned free of cost. Thereafter, file of OA No. 173/08 be consigned to the Record Room Order dasti.

(A.K. Jain)

Presiding Officer

DRT-1, Chandigarh

The manager in which the Tribunal below has allowed the SA and dismissed the OA could not be appreciated by this Tribunal when the said appeals were taken up for hearing on 8th May 2014. This Tribunal expressed itself in the following manner:

Heard counsel for the parities and have gone through the impugned order. If anything can be said, Tribunal has chosen to dismiss the OA and allow the S.A. without recording any fact or without recording any reason. It seems that the order has been passed on the asking counsel appearing before the Tribunal for respondent no. 4. Without considering the plea raised in the pleading, the OA absence of counsel appearing and that too in the allowed on the statement made by the counsel judicial approach is expected from judicial from. Such an Order may tend to convey uncalled for impression which is not good sign for an institution.

Nevertheless the counsel for the respondents still states that he is ready to settle the issue with the bank on the terms acceptable to the bank. The counsel for the appellant bank prays for time to have instructions in this regard.

Since the counsel for the respondent in the appeal expressed willingness to settle the issue with the bank on the terms acceptable to the bank the appeals were adjourned to enable the appellant bank to have instructions. The counsel for the appellant bank today states that a sum of Rs. 11,70,845/- approximately is still due from the respondents. The counsel for the respondents has now backed out from his offer which he had made for settlement in this regard on the terms acceptable to the bank. Accordingly, the counsel have now been heard on merits.

The bank had filed Appeal No. 353 of 2011 against the order date 01st August 2011 passed by the Debts Recovery Tribunal-1, Chandigarh and had simultaneously filed an application seeking review of the absence of the counsel for the bank. The Tribunal below has even dismissed the application for review vide its order dated October 14, 2011 by holding that there is no. mistake apparent in the order dated 01.08.2011 ant that observations given by the Hon'ble Supreme Court in A.V. Papayya Sastri & Ors. Government of A.P. & Ors. AIS 207 Supreme Court 1546 are not applicable in this case. Counsel for the respondents; therefore would plead that the reasons which were absent in support of the finding returned by the Tribunal below in order dated 1.8.2011 have now been recorded in the order while dismissing the review application and hence infirmity, if any, in the order dated 01st August, 2011 would stand rectified.

I am unable to accept this line of reasoning as canvassed by the counsel for the respondents. In this regard, the counsel for the parties were made to go through the contents of the review application filed by the bank which is available as Annexure-N at page 94 of the appeal paper book No. 238/2013, which is filed by the application bank to challenge the order passed on the review application. A perusal of the findings made in this review application would show that the Tribunal below has failed to attend the assertions and averments contained in the said application and as such no one is made any wiser in regard to the reasons which were found totally absent in the impugned order dated 01st August, 2011. Order dated 01st August, 2011 was passed ex parte, in the absence of counsel for the bank, which had filed OA. Strangely enough the OA of the bank has been dismissed on a statement made by and ob behalf of the counsel for the respondent-borrower namely Mr. Diwan Sharma. If the OA are to be dismissed only on the statement of the counsel appearing for the respondents and that too in the absence of the counsel for the applicant bank the whole purpose of fair adjudication will stand compromised. The statement which the counsel for the respondents made that he has deposited a sum of 6.90 lacs. In the review application this statement made by Mr. Diwan Sharma counsel for respondent no. 4 is turned as completely erroneous. In support of this plea the bank has pointed out to the statement of account as well to show that the amount due to be much more. It is further stated that the Tribunal below had solely relied upon the statement made by counsel for respondent no. 4 appearing before the Tribunal below and had accepted the same on its face value that no amount was dismissed. Statement of account now produced alongwith the review application revealed that an amount of 6.90 had been paid by respondent no. 4 on various dates but still an amount of Rs. 7,68,968/- was outstanding on the date this statement was made interest @ 14.75% had been charged as per the agreement which was also appended as Annexure P-3 with the OA. It is also averred that the terms and conditions of the agreement were known to the borrower as well as guarantor respondent no. 1 and thus he could not have been absolved of this liability in any manner. Since the statement made by the counsel was termed erroneous and misleading and was shown to be so on the basis of documents placed on record with the review application, the Tribunal below ought to have considered these as earlier action to the Tribunal had led to denial to fair adjudication to the bank.

There is yet another very important plea raised in the review application which is not dealt with by the Tribunal. It is stated that in the review application that the counsel for the bank had reached the DRT at 10.30 A.M. but the court had commenced its proceedings at 12 O' Clock by which time the counsel for the bank had left for the High Court to attend some other case. On return the counsel found that the order had been reserved by the Tribunal. This is a serious issue which ought to have been deal with by the Tribunal. If indeed, it is a fact that the Tribunal did not sit at 10.30 am, which is the timing provided under the Rules and had set at 12'O clock (afternoon) then obviously absence of the counsel for the appellant bank cannot be taken against her. If this was not the factual position then the Tribunal below ought to have made comment on this aspect in its impugned order. When no mention is made to this aspect it may give an impression that these facts were correctly stated in the application. Ignoring all these facts, the Tribunal below has rejected the review application by recording observations which are not at all relevant to the issue raised in the review application. This reason at least required of the Tribunal below has rejected the review application bay recording observations which are not at all relevant to the Tribunal to consider the plea that the statement made by Counsel Mr. Diwan Sharma was wrong or misleading. The counsel for the appellant was not much of the mark when it urged before the Tribunal below that the respondent no. 4 in connivance with his counsel Mr. Diwan had obtained this order by playing fraud and the same cannot be sustained in view of the decision render in the case of A.V. Papayya Sastry & Ors. (Supra). Even if this was not a case of fraud in strict sense, yet it can be seen that counsel Mr. Diwan Sharma appearing for respondent no. 4 before the Tribunal below had made misleading statement to obtain this order. Appropriate course with the Tribunal below was to consider the serious issue raised in the review application instead of dismissing the same in the manner it has been done.

I feel that the Tribunal below has not dealt with the case in a satisfactory manner. The Tribunal below has not only dismissed the OA and allowed the SA but has also issued directions to the appellant bank for return of the original title deed of the property in question to the applicant respondent herein, within one week. Why was this hurry shown in issuing such direction? If this is the fate of the case pleaded in the OA which was under challenge in the SA and that too after reserving order upon hearing the arguments then it will not lend any credence to system of imparting justice.

Recording the order in such a brief and cryptic manner leaves the party grouping in dark about the reason for which its plea is rejected. Requirement of passing a speaking of reasoned order may not need any emphasis. Whenever, it is found that the cases are dismissed or allowed without recording any reason the courts have not hesitated to set aside such an order. Right to reasons is indispensable part of sound judicial system. An affected party can know why the decision of the issue which is formed. The order passed by the tribunal below indeed is very cryptic. It gives no reason whatsoever and is based only on statement made by the counsel for the party which had filed OA before the Tribunal below. Recording of reasons for the passing of an order is held not only desirable but also necessary in the passing of the order. It also enables the higher Courts or Tribunal while considering the matter in exercise of appellate or constitution jurisdiction to find out whether the decision arrived at was justly and fairly reached after a due consideration of all facts bearing on the matter uninfluenced by any extraneous consideration. Thus, recording of reasons is an essential part of adjudicatory process and cannot be dispensed with. The Courts insist upon disclosing the reasons in support of the order is based were erroneous. The other ground is that obligation to record reasons operates as a check against the possible arbitrary action by an executive authority vested with exercise of quasi-judicial powers.

In view of this legal position and facts as noticed in detail the impugned order dated 01st August, 2014 challenged in Appeal No. 353 of 2011 and the order passed in the review application which is under challenge in Appeal No. 238 of 2013 cannot be sustained and are set aside. Consequently the order allowing the SA though through the same order dated 01st August, 2011 is also set aside. Both the OA and the SA would now go back to the Tribunal below to consider the pleas raised therein detail and thereafter the Tribunal will pass a well-reasoned order on the basis of evidence after giving due opportunity to the counsel for the respective parties.

According these three appeals are allowed in the above terms.