Kotak Mahindra Bank Limited vs Sushil Mantri and Others

N. Kumar, J.—Writ Appeal No. 1123/2015 is preferred against the order dt. 20-02-2015 and Writ Appeal No. 1201/2015 is preferred against the order dt. 27-02-2015 passed by the learned Single Judge in W.P. No. 29555/2013, by the third respondent in the writ petition.

The petitioner - Mr. Sushil Mantri, preferred W.P. No. 29555/2013 for issuance of an order or direction in the nature of writ directing the 2nd and 3rd respondents to delete the name of the petitioner being classified as a willful defaulter as reflected in the website hosted by the 2nd respondent - CIBL in their web page and for a writ or any order in the nature of Mandamus declaring that the petitioner is not a willful defaulter. In the said writ petition, he also prayed for an interim prayer to direct the second respondent -CIBL to remove the name of the petitioner from its website which shows that he is a willful defaulter in the interest of justice.

There was no interim order granted at the time of issuing of notice in the writ petition.

After service of notice, the respondents entered appearance and the third respondent filed a detailed statement of objections contesting the claim. When the learned Single Judge took up the matter for consideration of the interim prayer on 25-06-2014, the Counsel for the petitioner made certain submissions which are noted by the learned Single Judge in the order sheet. As is clear from the order sheet dt. 04-07-2014, the Court recorded that the parties have started discussing about negotiating terms for settlement. Hence, the writ petition was adjourned for further hearing. On 01-08-2014 it was recorded that the matter is completely heard, matter be relisted in October, 2014 as part heard. On 16-12-2014 it was submitted that the settlement was on the anvil and to list on 16-01-2015. On 16-01-2015, it is stated that the learned Counsel for the 3rd respondent submitted that the matter could be settled if petitioner pays Rs. 15 crores and the Court informed the learned Counsel for the petitioner to take instructions as to whether petitioner would settle for at least Rs. 11 crores. However, when the case was called on 20-02-15, the learned Single Judge passed the following order:

"Recording the submission of learned Counsel for the petitioner that a sum of Rupees three crores, which is the admitted sum would be deposited with the respondent - bank, if granted a weeks time, there shall be an interim order of stay as prayed for.

Issue Rule".

At the request of learned Counsel for respondent No. 3 who submits that Counsel from Bombay would come and make some further submissions.

Re-list on 27-02-2015."

On 27-02-2015 he has passed the following order:

"Today learned counsel for respondent bank submits that petition was to be listed on 13.02.2015 for parties to report settlement, nevertheless, was listed on 20.02.2015. According to the learned counsel for petitioner and learned senior counsel for respondent, the matter was completely heard on 25.06.2014 and was listed on 04.07.2014 for the say of learned counsel for respondent and there afterwards on 04.07.2014 the Court recorded that parties have started discussing about negotiation and hence adjourned for further hearing. On 01.08.2014 it was recorded that the matter is since completely heard and be re-listed in October 2014 as part-heard. Learned counsel further submits that on 16.12.2014 it was stated that settlement was on the anvil and to list on 16.01.2015 on which date learned counsel for respondent suggested that the matter could be settled, if petitioner pays Rs. 15 crores and this Court did inform the learned counsel for petitioner to take instruction as to whether petitioner would settle for atleast Rs. 11 crores.

It is in this backdrop of facts, this Court on 20.02.2015, having regard to the order dated 25.06.2014 extracted above recorded the submission of learned counsel for petitioner and granted a week''s time to deposit Rs. 3 crores and directed interim order as prayed for.

In that view of the matter, submission of the learned counsel for respondent bank that the matter be heard and disposed of cannot be accepted. Since rule is issued the petition will have to come up for hearing in usual course. It is open for the parties to continue to discuss over settlement and if a meaningful settlement is arrived at, to

Time is extended to the petitioner to make the deposit by 02.03.2015.

Oral request of learned counsel for 3rd respondent to vacate the interim order dated 20.02.2015 is rejected.

Release from part heard".

It is these two orders which are challenged in these two writ appeals.

The learned Senior Counsel appearing for the appellant submitted that both the parties have submitted their arguments on merits and they were expecting an order to be passed if the compromise is not possible in the manner suggested by them, the learned single Judge recording the submission of the learned Counsel for the petitioner that a sum of Rs. 3 crores which is the admitted sum would be deposited in the respondent - Bank granted a week''s time, he could not have passed an interim order as prayed for in the writ petition. Further when a request was made to hear the writ petition and dispose it off, the said request was not acceded to on the ground that it cannot be accepted and he ordered that, since Rule is issued, the petition will have to come up for hearing in the usual course. Therefore he submits, when both the parties are heard on merits, the learned Single Judge ought to have passed an order either granting an interim order or refusing to grant the interim order on merits. He could not have passed an interim order purely on the submission of the learned Counsel for the petitioner merely because he agreed to deposit Rs. 3 crores. In fact, a request was made to hear the same. Therefore he submits, the impugned order requires to be set aside on the short ground and the matter be remanded to the learned Single Judge for fresh consideration and on merits and in accordance with law.

Per contra, the learned Senior Counsel appearing for the petitioner in the writ petition, who is the first respondent in this appeal submits, in terms of the interim order passed, the petitioner has paid Rs. 3 crores to the respondents which they have received. It is not open to them to challenge the said impugned order. Further he submits, the petitioner has filed a suit against the respondent. Respondent also has filed a suit against the petitioner. The matters are pending before the competent Civil Courts. In fact the petitioner has resigned as Director from the Bank long before the default occurred. He is ready to address arguments on merits of the writ petition also in this appeal and therefore he submits, in the facts of this case impugned orders are just and do not call for any interference.

In the light of the aforesaid facts and rival contentions, the point that arises for our consideration is:

"Whether a case is made out for interfering with the impugned orders passed by the learned Single Judge?"

The facts are not in dispute. The third respondent - Bank has filed a Civil Suit No. 1342/1999 on the file of the Civil Judge (Sr.Dn.), Pune, for recovery of Rs. 7,30,96,337/-. The suit is being contested. Petitioner also has filed a suit for recovery of money from the Bank. After the filing of the suit, a show cause notice was issued to the petitioner to show cause as to why he should not be declared as a defaulter. He has sent a reply on 04-11-2008. It appears on 28-11-2008 he has been declared as a defaulter. The petitioner made a representation on 20-11-2012 requesting them to delete his name from the list of defaulters. In reply to that, on 25-04-2013 they brought to the notice of the petitioner, a meeting is fixed in this regard and it is open to him to attend the meeting and place his case before the authorities concerned. The petitioner by his letter dt. 07-05-2013 takes exception to the said act and thereafter he has filed this writ petition for the aforesaid reliefs. Now the name of the petitioner is in the defaulters list from 28-11-2008, for more than 5 years before filing of the writ petition. If his name has to be removed from the list, as requested by him in the writ petition, as the said request was opposed by filing a detailed counter, the learned Judge was justified in hearing the parties at length. In fact he has gone to the extent of making a note of the respective arguments. Having done all this, he should have passed a considered order, either allowing the prayer or rejecting the prayer. When the matter was being contested, he should not have passed an interim order merely because the petitioner agreed to deposit Rs. 3 crores, which according to him is not the admitted amount. Further when the said order was passed in the presence of the parties, when a request was made on behalf of the respondent to decide the matter itself, he could not have declined to hear the case on merits and directed the writ petition to be listed in its usual course on the ground that Rule has already been issued. This in our view is not proper. As the impugned order does not show any application of mind, the rival contentions are not considered, it is not a speaking order in that sense. No reasons are given for making the impugned order. Merely because the petitioner agreed to deposit a sum of Rs. 3 crores, which according to him is the admitted amount, the grant of an interim order is not proper. At this stage also, the respondent should have been heard. Whether respondent agreed to the said proposal is not forthcoming from the said order. As is clear from the order dt. 04-07-2014, the respondent said, the matter could be settled if 15 crores is paid. Further, the learned Judge makes a proposal to the petitioner to find out from his client whether he is willing to pay Rs. 11 crores. If that is the understanding of the parties and the rival claims, the learned Judge could not have granted an interim order merely because the petitioner agreed to pay Rs. 3 crores. The order passed on the face of it cannot be sustained.

In that view of the matter, without going into the merits of the respective claims, we deem it proper to set aside the orders dt. 20-02-2015 and 27-02-2015 and remit the matter back to the learned Single Judge giving him an option of either hearing the parties in question on the interim order or on the merits itself and pass appropriate orders and that would meet the ends of justice in this case. Once the impugned order is unsustainable and set aside, the benefit accrued to the third respondent under the interim order has to be restored back.

Hence, we pass the following order:

Both the writ appeals are allowed.

The impugned orders dt. 20-02-15 and 27-02-15 are hereby set aside.

The matter is remitted back to the learned Single Judge for hearing and disposing of the matter either on its merits or pass an interim order by a considered order.

The amount of Rs. 3 crores deposited by the petitioner in pursuance of the order dt. 27-02-15 with the Bank shall be returned to the petitioner forthwith.

Parties to bear their own costs.

Two weeks'' time is granted for re-payment of the amount.

List this matter before the learned Single Judge according to roster.