Kunj Behari Hada vs Punjab National Bank And Ors.

Ranjit Singh, J

This case has a long chequered history. In the present appeal, the appellant has impugned an order dated 30.12.2010 whereby there application seeking review of the order passed on 19.6.2009 and of the final order dated 6.12.2007 passed in T.A. No. 551/2000 in O.A. No. 513/2000 has been rejected. By its order dated 6.12.2007, the Tribunal below had allowed the O.A./T.A. No. 551/2000 ex-parte for recovery of Rs. 65,25,677/- together with pendente lite and future interest as well as cost. The appellant having come to know about the ex parte final order, first filed an application under Order 9 Rule 13, CPC read with Section 22(g) of the Recovery of Debts Due to Banks and Financial Institutions Act (for short RDDBFI Act) for setting aside the ex parte final order passed on 6.12.2007.

The Bank contested the said application. The Tribunal, after hearing both the sides, dismissed the miscellaneous application on merit on 19.6.2009. The appellant then filed a composite application seeking review of both the orders dated 6.12.2007 and 19.6.2009. The plea was that the appellant is alleged to have executed the loan document on 16.1.1993 and thus the O.A. filed by the appellant was beyond the period of limitation. Additional plea raised was that the company in question was declared 'sick' within the meaning of Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, SICA) in the year 1988. As per the appellant BIFR had made efforts for its rehabilitation, but finally recommended winding up of the company in the year 1999. The winding-up order was subsequently upheld by the High Court of Delhi and provisional order of winding up was passed on 23.5.2001. The Bank statedly had filed the O.A. on 21.9.2000 alleging that the company had defaulted in the repayment of the loan. The O.A. was for recovery of the loan amount.

The appellant would claim that he did not receive any summons as he had resigned from the company and ceased to be its director on 25.7.1997. The appellant would also contend that the Bank was well-informed about its resignation and of his new address, but, still no steps were taken to serve the appellant in the O.A.

As per his own showing, the appellant then filed a miscellaneous application disclosing the cause of his non-appearance. The plea was that the O.A. filed by the Bank was hopelessly time-barred as is evident from the record itself, but still the Presiding Officer failed to notice this aspect while passing ex parte decree on 6.12.2007 against the appellant as well. To show that the O.A. was time-barred, the appellant states that the last documentation relied upon by the Bank qua the appellant was apparently executed on 16.1.1993 and the last confirmation statedly executed was on 10.1.1995. Thereafter, there had been no such confirmation and even no such plea had been made in the O.A. Since the O.A. was filed in September, 2000, it was urged that this was much beyond the period of limitation. The appellant would thus plead that the suit was hopelessly time-barred against the appellant.

Further plea raised was that there was no bar or limitation for filing suit against the appellant even under the provisions of SICA, but still the Tribunal had completely ignored this position, while passing the impugned order dated 6.12.2007. As per the appellant, the order dated 6.12.2007 has resulted in erroneous judgment against him and so a case for review or recall of the sale was made out. It was pleaded that because of this error which was apparent on the face of the record, the appellant has been subjected to the recovery certificate which, otherwise, deserves to be rejected on the ground of being barred by limitation. The appellant accordingly had pleaded before the Tribunal below to recall this order on the ground mentioned above.

The challenge against the order dated 19.6.2009 is made out on the ground that the actual fact had skipped the notice of the Tribunal while decided the application for recall of the order. The appellant, therefore, would plead that the O.A. being barred by limitation deserves to be dismissed qua the appellant and there would be no impediment against the appellant in this regard and so the order dated 19.6.2009 call for a review and consequence thereto, the final order was also liable to be recalled.

The respondent-Bank appeared and opposed the prayer made by the appellant. As per the Bank the application was not maintainable and was also time-barred. In its reply, the Bank justified the impugned orders and denied the assertion of the appellant that these orders were erroneous or were passed while committing material irregularity. The Bank would plea that there is no tenable ground made out for review of the order and accordingly prayed for dismissal of the application.

The Tribunal, after considering the various issues, has held that it did not find any error apparent on the face of the record and dismissed the application with cost. The appellant has filed appeal against the order.

The Counsel for the appellant would mainly stress that the O.A. filed by the Bank was barred by limitation and the presence or non presence of the appellant before the Tribunal to raise this plea would not absolve the Tribunal from the duty to consider this aspect once the same was made out from the documents placed on record. The Counsel states that the last document whereby the appellant had confirmed liability is dated 10.1.1995 whereas the O.A. was filed on 21.9.2000 and thus was barred by limitation. To counter this, the Counsel for the Bank would submit that it could not have been possible for the Bank to file the suit because of the pendency of the proceedings before BIFR in view of Section 22 of SICA. In response, the Counsel for the Bank would refer to the ratio of law emerging from Kailash Nath Agarwal & Ors. v. Pradeshiya Industrial & Investment Corporation of U.P. Ltd. & Anr., II (2003) SLT 81 : II (2003) BC 296 (SC) : (2003) 4 SCC 305. The Counsel would further plead that the Court or the Tribunal is duty-bound to see if the suit reveals a cause of action or is barred by any provisions of law irrespective of any such plea being raised before it.

Mr. Pallav Saxena, on the other hand, would refute the submissions made by the appellant's Counsel and would rather point an accusing finger at the appellant for invoking the jurisdiction of the Tribunal with phenomenal delay despite he being well aware of the proceedings pending before the Tribunal. To explain the entire issue, the Counsel for the Bank would point out that the credit was extended on 12.12.1978 and the mortgage was created on 13.12.1978. On 8.7.1987 reference was made before BIFR where it remained pending till 20.4.1999. As per the Counsel, the appellant had renewed the guarantee on 4.1.1995. Explaining further, the Counsel states that the ex-parte final order in the O.A. was passed on 6.12.2007. The appellant first moved an application under Order 9 Rule 13, CPC in the month of August, 2008. This application was dismissed on 19.6.2009. Thereafter, a composite review application was filed as M.A. 90/2009 which was dismissed on 30.12.2010.

Mr. Saxena would refer to that part of the order dated 19.6.2009 where the Tribunal has returned finding that the appellant being before BIFR was well aware of the pendency of the O.A. before the Tribunal and, therefore, it cannot be said that he had no knowledge of the same. Otherwise also, as per the Counsel, the appellant was duly served by way of publication when he had not left his changed address and notice had already been sent to the address given by the appellant while taking the loan.

The Counsel for the Bank would further confront the appellant with some viable and legal pleas. He appears justified in stating that the effect of this appeal is to seek setting aside of the final order and so the appellant has to cross the hurdle of the pre-deposit. The appellant neither has made any pre-deposit nor has he filed any application seeking waiver of the same. Mr. Saxena would rather allege that the appellant in fact has made a smart move by filing a review application seeking recall of the final order passed in O.A. after having failed in application under Order 9 Rule 13, which was dismissed. This apparently, as per the Counsel, is aimed at avoiding the requirement of pre-deposit.

The Counsel would further allege that no appeal would lie against the order passed in review application once such application is dismissed. In support of this submission the Counsel would refer to the cases of Vinod Kapoor v. State of Goa & Ors., VII (2012) SLT 484 : IV (2012) CLT 201 : AIR 2013 SC 3722, Asset Care Enterprise Ltd. & Anr. v. Ajay Goyal & Ors., I(2010)BC 105 : I (2010) BC 105, and Rekha Mukherjee v. Ashish Kumar Das & Ors., IV (2005) SLT 357 : I (2005) CLT 250 : AIR 2005 SC 1944. In Asset Care Enterprises case (supra) this Tribunal has held as under:

"2. The so-called assignee-appellants herein sought the review of the order dated 4.9.2008 which was declined by the Tribunal below by order dated 25.11.2008. The assignee filed an appeal No. 6/2009 before this Tribunal against the order dated 25.11.2008 passed by the Tribunal below. declining review of the earlier order dated 4.9.2008. This Tribunal by order dated 13.1.2009, dismissed the appeal as not maintainable, holding that an appeal against the rejection of review application does not lie as provided by Order 47 Rule 7, CPC. Now the present appeal is sought to be filed by the appellants against the order dated 4.9.2008 passed by the Tribunal below. As per office report, the appeal is delayed by 123 days."

In Rekha Mukherjee's case (supra), the Hon'ble Supreme Court has considered the scope of review. The suit filed by the respondent therein for grant of specific performance of contract of sale executed by landlady was dismissed. The Court considered Order 47 Rule 1, CPC which postulates filing of an application by a person considering himself aggrieved by a decree or order from which an appeal is allowed but from which no appeal has been preferred, to file an application if he desires to obtain a review from a decree passed against him. The Court has held that the appeal during the pendency of the review petition was, therefore, not maintainable. In terms of Order 47 Rule 4, the Court may either reject of grant an application for review. If a review is rejected, the order would not be appealable whereas an order granting an application may be objected at once by an appeal from the order granting the application or in an appeal from the decree or order finally passed or made in the suit. Rule 8 of Order 47 of CPC postulates that when an application for review is granted, a note thereof shall be made in the register and the Court may at once re-hear the case or make such order in regard to the re-hearing as it thinks fit. On this basis, M. Saxena would urge that the appeal itself is not maintainable.

Counsel would also contend that there was a phenomenal delay in filing the review application. As already noted, the ex parte order was passed on 6.12.2007 but the appellant did not seek review thereof till the year 2009. The first move made by the appellant was to file an application under Order 9 Rule 13, CPC for setting aside the ex parte decree which was dismissed on 19.6.2009. It is thereafter the review application was filed, which was also dismissed on 30.12.2010. In fact, the appellant had been proceeded ex parte in the year 2001. In support of his submission that the delay in such a situation would be fatal, the Counsel has referred to some observation made by this Tribunal in the case of Sh. Hari Singh Madan v. Punjab & Sind Bank & Ors., [Inward No. 205/2009 in O.A. No. 242/97 (Delhi-I), decided on 13.11.2009]. This Tribunal made reference to the case of Sunil Poddar & Ors. v. Union Bank of India, I (2008) SLT 521 : I (2008) CLT 135 (SC) : AIR 2008 SC 1006, where the question of non-appearance before the DRT after transfer arose before the Apex Court. Mr. Saxena would refer to that part of the observation made by the Apex Court where it is observed that if the Court is convinced that the defendant had otherwise knowledge of the proceedings and he could have appeared and answered the plaintiff(s) claim, he cannot put forward a ground of non-service of summons for setting aside ex parte decree passed against him by invoking Rule 13, Order 9 of the Code. It is further observed that since he said provision applied to Debts Recovery Tribunals and Appellate Tribunals under the Act in view of Section 22(2)(g) of he Act, both the Tribunals were right in observing that the ground raised by the appellant could not be upheld. The Counsel, thus, would contend that the appellant being aware of the proceedings of the O.A., cannot take advantage of this delay in making the approach for seeking setting aside of the ex parte decree even if he pleads that he was not served with summons. As held by the Apex Court, if it can be shown that he had knowledge of the proceedings, he cannot put forward a ground of non-service of summon. In any event, in this case the appellant was served through publication as well, says the Counsel.

The observation of the Apex Court noted above would show that even if a person has a knowledge of the proceedings, then he cannot put forward the ground of non-service of summons while seeking setting aside the ex parte decree.

To explain the delay on the part of the Bank, which has been highlighted by Mr. Malhotra, the Counsel for the Bank would rely upon the fact that the proceedings were pending before BIFR till 2009 and as per the then prevalent law the remedy for proceeding against the guarantor was barred and so the cause of action for the Bank to file O.A. arose only in the year 1999. In support of his plea, the Counsel for the Bank has referred to the case of Patheja Bros. Forgings & Stamping &Anr. v. ICICI Bank Ltd. & Ors., V (2000) SLT 665 : (2000) 6 SCC 545. The Court in this case has observed that the words of Section 22 are crystal clear and there is no ambiguity therein. The Court, thereafter, has held that no suit for the enforcement of a guarantee in respect of a loan or advance granted to the industrial company concerned will lie or be proceeded with, without the sanction of the Board or the appellate authority under the said Act. The Court has also held that it is not possible to read the relevant words in Section 22 as meaning that only a suit against the industrial company would not lie without such consent. There is no requirement in Section 22 that to be covered thereby, a suit for the enforcement of a guarantee in respect of a loan or advance to the industrial company should be against the industrial company.

To this, Mr. Malhotra would respond by making reference to the case of Kailash Nath Agarwal (supra) wherein a different view has been expressed. That may be so, but, in my view, Mr. Saxena appear justified in making the submission that the law prevalent in the year 1999-2000 was what is held in Patheja Bros. case (supra) and on that basis the action of the Bank may appear justified in filing the suit only once the proceedings before BIFR were concluded.

The Counsel for the Bank would further point out that this was a case of personal guarantee and the fact that the appellant had resigned as director would be immaterial. In addition, he would also contend that this loan was secured by mortgage and the period of limitation for such suit would be 12 years and not three years as is being canvassed by the appellant. I have considered the submissions made by both the Counsel. There is a substance in the plea raised by the Counsel for the Bank. There is a substance in the plea that the appeal is not maintainable on account of it being filed against an order which was passed on the review application, which was rejected. The Counsel for the appellant also could not effectively respond to the plea that the appellant would be required to cross the hurdle of pre-deposit and the fact that the appellant has not till date filed any application either to seek waiver of this requirement or to take any appropriate action for making any such deposit. The plea that appellant filed application under Order 9 Rule 13 when he came to know about the impugned judgment cannot be accepted in view of the factual finding returned by the Tribunal below that the appellant was well-aware of the O.A. proceedings as this fact was in their knowledge because of the pendency of the proceedings before BIFR. The Counsel for the appellant also could not explain the aspect that it was a personal guarantee and he cannot be absolved simply because of his resignation from the directorship of the company. There is serious doubt about the maintainability of the application filed by the appellant to seek review of the orders dated 19.6.2009 and 16.12.2007 and then filing a composite appeal when his review application was dismissed on 30.12.2010. The final order was passed by the Tribunal below on 6.12.2007 which was ex parte. The appellant filed an application under Order 9 Rule 13 for setting aside of this ex parte final order, which application was dismissed on 19.6.2009. Instead of filing appeal against this order, the appellant chose to file a composite application for review of both the orders dated 6.12.2007 and 19.6.2009. This obviously was a misconceived approach on the part of the appellant. The review of the order dated 6.12.2007 filed in the year 2009 was much beyond the period of limitation. The only proper course open to the appellant was to file an appeal against this order if it otherwise was permissible under law. Seeking review of these two orders, which was dismissed on 30.12.2010, then filing of the present appeal would mean that this mode is adopted by the appellant to circumvent the inordinate delay on his part to challenge the ex parte order passed against him on 16.12.2007. This move by the appellant would not extend the period of limitation by filing a review application, as per the law laid down and referred to, was not maintainable. There is a serious doubt if a composite appeal against both the orders could be filed and maintained. Taking all the matters into account, I am of the considered opinion that this appeal lacks in merit and is, therefore, dismissed.