Jacob P. Joseph & Ors vs Bank of Baroda & Anr

Ashok Menon, Chairperson

This appeal impugns the judgment dated 17.09.2014 in Original Application (O.A.) 30 of 2006 by the Debts Recovery Tribunal-I, Mumbai (DRT) allowing it and directing the appellants to pay ₹20,55,975/- together with simple interest at the rate of 12% per annum with effect from the date of filing of the O.A. till realisation from out of the mortgaged property and the costs in the O.A. The appellants are aggrieved and hence in appeal.

The facts and brief are thus:

The third appellant, which was formerly, a firm and presently a company had borrowed money from the respondent bank appellants Nos. 1 and 2 were the partners of the firm and are now the directors of the company. Payments were made initially but after that defaulted further payments. A demand notice was issued demanding the outstanding balance. Since there was no response, the O.A. was filed to recover the amount due. The appellants had raised several contentions to challenge the claim in the O.A. It was contended that the claim is barred by limitation as the guarantee was obtained by misrepresentation and concealing facts, and the alleged acknowledgement of debt was created on blank papers signed by the appellants.

The appellant had filed Interlocutory Application (I.A.) No. 306/2010 before the D.R.T. under Rule 12 (6) of the Debts Recovery Tribunal (Procedure) Rules, 1993, (‘Rules’, for short) seeking to cross-examine the then manager of the respondent bank to challenge the acceptability of the acknowledgement and the other documents. By order dated 20.10.2010, I.A. No. 306/2010 was dismissed by the DRT and cross-examination of the witness was declined. Thereafter the O.A. was considered on its merits and is allowed by the DRT.

Heard the Ld. Counsel appearing for the appellants and the respondent bank. Records perused.

The thrust of the challenge by the appellants in this appeal is about the DRT declining, the cross-examination of the bank manager. The written statement contends that the document relied upon by the bank as an acknowledgement of debt was not written by the appellants and that they had signed blank papers on 27.01.2003. It is for that reason that the appellant wanted to cross-examine the manager of the bank which was erroneously declined. The Ld. Counsel appearing for the appellants submits that the only manner in which the appellant could have challenged the claim put forth by the bank in the O.A. was by cross-examining the manager who had filed the affidavit. Hence, it is urged that the appeal may be allowed in the O.A. restored to file allowing the appellants to cross-examine the manager.

The Ld. Counsel appearing for the respondent bank submits that I.A. No. 306/2010 filed by the appellants before the DRT for cross-examining the witness was rejected by the DRT on 20.10.2010. However, the appellants did not challenge that order in appeal. The O.A. was disposed of on 17.09.2014. It is also contended that the plea of limitation would not be sustainable because part payments were made by the firm and the company. Moreover, it is also pointed out that the proof affidavit filed by the appellants on 16.07.2009 does not affirm that the acknowledgement was signed on a blank paper and later misused by the bank. It is pointed out that the only intention of the appellants is to protract the litigation.

There is no doubt that the plea of limitation would not lie for the reason that there is an acknowledgment of the debt. There are payments made towards the loan which would also save limitation. The contention of the appellants is that the acknowledgment was concocted by the bank. Hence, the appellants filed I.A. No. 306/2010 for cross-examination of the bank’s witness. The prayer was declined by the DRT.

The only question that would arise for consideration is whether the DRT was justified in declining cross-examination of the bank’s witness. A reading of Rule 12(6) of the Rules as stood then would be relevant. It reads thus:

“(6) The Tribunal may at any time for sufficient reason order that any particular fact or facts shall be proved by affidavit, or that the affidavit of any witness shall be read at the hearing, on such conditions as the Tribunal thinks reasonable:

Provided that after filing of the affidavits by the respective parties where it appears to the Tribunal that either the applicant or the defendant desires the production of the witness for cross-examination and that the witness can be produced and it is necessary to do so, the Tribunal shall for sufficient reasons to be recorded, order the witness to be present for cross-examination, and in the event of the witness not appearing for cross-examination, then, the affidavit shall not be taken into evidence and further that no oral evidence other than that given in this proviso will be permitted.”

A reading of the rule indicates that it does not make it mandatory that every witness whose affidavit is filed has to be tendered for cross-examination. However, for sufficient reasons to recorded, the Tribunal can order such witness to be present for cross-examination.

The Ld. Counsel appearing for the appellants has relied upon a few decisions in support of his argument that the application for cross-examination ought to have been allowed. In Writ Petition No. 1758 of 2007 (M/s Sonu Textiles & Ors. vs. Punjab National Bank). The Hon’ble High Court of Bombay has after considering the decision of the Hon’ble Supreme Court in Union of India & Ano. vs. Delhi High Court Bar Association & Ors AIR 2002 SC 1479 observed that there is no indefeasible right vested in the defendant before the DRT to ask for cross-examination of witness whose affidavits have been filed in exercise of the powers of the Tribunal under Rule 12(6) of the Rules. Equally true is that there is a right to file an application making a request for cross-examination of witnesses, which has to be considered and decided by the Tribunal in the light of the parameters set out by the Hon’ble Supreme Court.

The Hon’ble Supreme Court has in the decision of Delhi High Court Bar Association (supra) held thus:

“..........When the High Courts and the Supreme Court in exercise of their jurisdiction under Art.226 and Art. 32 can decide questions of fact as well as law merely on the basis of documents and affidavits filed before it ordinarily, there should be no reason as to why a Tribunal, likewise, should not be able to decide the case merely on the basis of documents and affidavits before it. It is common knowledge that hardly any transaction with the bank would be oral and without proper documentation, whether in the form of letters or formal agreements. In such an event the bonafide need for the oral examination of a witness should rarely arise. There has to be a very good reason to hold that affidavits, in such a case, would not be sufficient.”

The Ld. Counsel for the appellants has also relied upon the decision of the Hon’ble High Court of Allahabad in Sri. Prakash Kanudia & Ano. vs. Chairperson, Debts Recovery Appellate Tribunal, Allahabad 2014 SCC OnLine All. 14582 held that the Tribunal has to look into the fact as to whether the desire of the witness to cross-examine is bonafide or not and where there is no effort to prolong the case, it shall require the witness to be present for cross-examination.

Yet another decision relied upon is Maharashtra State Financial Corporation vs. Debts Recovery Appellate Tribunal, Mumbai 2016 (4) Mh.L.J. 458 wherein relying upon the decision of Delhi High Court Bar Association (supra) and Sonu Textiles (supra) it is held that leave to cross-examine the witness would primarily depend upon the facts and circumstances of each case. Relying on the decision of the Hon’ble Supreme Court in Standard Chartered Bank vs. Dharminder Bhohi & Ors. 2013 (12) Scale 124 it was observed that the intendment of the act is for speedy recovery of dues to the banks. In this backdrop, the Tribunals are expected to act in quite a promptitude regard being had to the nature of the lis and to see to it that an ingenious litigant does not take recourse to dilatory tactics. The principal purpose is to see that the recovery of the dues which is an essential function of any banking institution does not get halted because of procrastinated delineation by the Tribunal. It was also observed that it is worthy to note that the legislature by its wisdom under Sec. 22 of the said Act has provided that DRT and DRAT shall not be bound by the procedure laid down by the Civil Procedure Code, but shall be guided by the principles of the natural justice subject to the rules framed. The Tribunals have been conferred powers to regulate their own procedure, so that expedite disposal of the applications and appeals before them. They have the character of specialised institutions with expertise and confer jurisdiction to decide the lis in speedy manner so that the larger public interest, that is, the economy of the country does not suffer.

Applying the principles enunciated in the decisions cited above, to the facts and circumstances of the case in hand, I find that there is no error in DRT declining cross-examination of the bank’s witness. The plea of limitation can even otherwise be proved in favour of the bank. Hence, there was no need to allow cross-examination more particularly in view of the fact that the affidavit filed by the defendant does not indicate the misuse of a signed paper for acknowledgment of the debt.

The appeal has no merits and is, therefore, dismissed.