Nand Kumar Taneja And Ors vs Bank Of Baroda And Ors

The only question arising in these appeals for being answered by this Tribunal was whether in the facts and circumstances of the case the appellants of these appeals stood absolved of their liability towards the respondent Bank of Baroda in their capacity as the partners of Firm by the name of M/s Mercantile Construction Co., which Firm had been sanctioned some financial facilities and had also issued some bank guarantees in favour of Steel Authority of India Ltd.(SAIL) validity period whereof was being extended by the bank from time to time. The present case us concerned with the dues of the respondent bank which it claimed to have become payable by the borrower Firm and its partners including the two appellants out of whom one Smt. Mohini Somnath had expired during the pendency of the bank's O.A. and its guarantor, upon of the invocation of bank guarantees by SAIL and payment to it by the bank.

The relevant factual background leading to the filing of the Original Application(O.A.) by the respondent Bank against the said partnership Firm('borrower Firm') and its partners, including the appellant no.1, deceased Mohini Somnath represented by her legal representatives and respondent no. 3 to 5 herein,, under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993('RDDBFI Act' in short) for issuance of a Recovery Certificate for a sum of Rs. 40,85,054/- with pendente lite and future interest thereon as per the terms and conditions of sanction of financial facilities, had been noticed by the Tribunal below(DRT) in its order dated 15.10.2013 whereby the O.A. was originally decided.

Relevant portions of the order dated 15.10.2013 of the DRT in so far as the same pertain to the Case of the appellants herein are re- produced below:-

"The present Original Application has been filed by the Applicant Bank on 12.06.2000 under Section 19 of the Recovery of Debts Due to Bank and Financial Institutes Act., 1993 against the defendants for recovery of a sum of Rs.40,85,054/- (Rupees Forty Lacs Eighty Five Thousand Fifty Four only) along with cost, charges, pendent lite and future interest @ 16.75% per annum from the date of filing of this O.A till its realization.

The brief facts of the case are that at the request of defendant No. 1 which is a partnership company comprising four partner's viz., defendant's No. 2 to 5, carrying on business of mining and supply of lime stone. The defendants No. 2 to 5 are the partners of defendant No. 1 company, have approached the applicant bank for sanction of diverse credit facilities for their business purpose and the applicant bank considered the request and sanctioned the credit facilities in the shape of Bank Guarantees and issued the same in favour of Steel Authority of India (SAIL) on different amounts and dated as per the requirements. The defendant No. 6 stood as guarantor to the credit facilities granted to defendants No. 1 Company. The Bank Guarantees were duly secured by equitable mortgage of property viz., Plot No. 46, Block No. 4, Western Extension Area, Karol Bagh, New Delhi, admeasuring 266 sq.yrds, owned by defendant No. 6.

It is further submitted that during the pendency of this OA, the defendant No. 5 reported to be expired and her legal heirs were impleaded in the present O.A. The legal heirs of defendant No. 5 also submitted an affidavit stating that their mother has left nothing for them and they have not inherited any assets.

6 .It is further submitted that the said Bank Guarantees were renewed from time to time at the specific request of the partner/s on the existing terms and conditions and the security already provided i.e. mortgage of immoveable property owned by defendant No.6. The applicant bank received letter dated 05.03.1995 and the remaining one BG which was valid upto 28.02.1995 respectively. It is pertinent to mention here that initially the applicant bank objected to make the payment to Steel Authority of India as the same were not invoked in proper format / there was some communication gap, between the applicant bank and Steel Authority of India and thus the matter was referred to High Power Committee, who in turn by its order dated 08.05.1994 directed the applicant bank to make the payment under the invoked Bank Guarantees and the invoked Bank Guarantees were paid on 23.06.1997 by adjusting the margin money kept with the applicant bank.

The Ld. Counsel for the applicant bank submits that after availing the aforesaid credit facilities, the defendants No. 1 to 6 failed to comply with the terms and conditions of the credit facilities but despite several requests and reminders, the defendants failed to pay the outstanding dues to the applicant bank. Thereafter, the applicant bank served a legal demand notice dated 07.08.1997 through its counsel to all the defendants calling upon to pay the entire outstanding dues of the bank but the defendants failed to comply with the same.

Notice of this O.A were duly served and they/counsel for defendants appeared before this Tribunal and filed two sets of Written Statement for defendant Nos. 1,3,4 & LRs of D-6 and another on behalf of defendant Nos. 2 & 5, the contents of which are similar in nature.

-The fifth point raised by defendant Nos. 2&5 that at the initial stage they were the partners in the above firm and participated in completion of the formalities for the purpose of getting credit facilities from the applicant bank and the business of the firm was carried out only by defendant No. 4. They have resigned from the partnership and served the retirement notice upon defendants No. 3 & 4 as per clause 13 of the Deed of partnership and validly retired from the partnership firm on 01.11.1992. The basic point raised by defendants No. 2 & 5 that the present suit was filed after the retirement and they absolved from all the liabilities after the retirement and the said facts were also brought to the knowledge of the applicant bank. It is also submitted that they have published the public notice through various leading newspapers about their retirement from the above company. It is also submitted that Steel Authority of India Ltd., had no right to invoke the Bank Guarantees and defendants no. 2 & 5 have not signed any letter for renewal/extension of the said Bank Guarantees.

Heard the Ld. Counsel the applicant bank and perused the pleadings. The witnesses of the applicant bank have fully corroborated the averments made in this OA. The evidence lead by the applicant bank which consists of mainly written / typed documents has gone unchallenged and there is no question of disbelieving the same based upon the documents. This Tribunal has also observed that not an iota evidence has been lead by the defendants against the claim of the applicant bank and has made only submission on fact as stated in the written statement. That in the civil proceedings it is a cardinal principle, that whosoever alleges a fact he/she has to prove in the court of law by leading evidence mere assertion are not sufficient.

That the next plea taken by defendants no. 2 & 5 that they were retired from the partnership business on/from 01.11.1992. the applicant relied upon the judgement M/s. DCM Shri Ram India Ltd. Vs. Indo Organics 2003 (67) DRJ 256 and Syndicate Bank V.RSR Engineering Works (2003) 6 SCC 265, which hold that retirement of a partner would absolve him from the liability of the firm only if the creditor agrees to such arrangement and released him from the onus of discharge of liability. This is not the factual status in the instant case and the plea of the defendant nos. 2 & 5 have no merits in this case and hence rejected..................

In view of the above facts and circumstances, this Tribunal is of the view that the defendants have failed to convince this Tribunal and this Tribunal do not find any merit and reject the contentions of the defendants as baseless.

ORDER

I hereby allow this OA of the Application Bank and direct the defendants No. 1 to 6 to pay jointly or serverally to the applicant bank within 30 days, a sum of Rs. 40,85,054/- (Rupees Forty Lacs Eighty Five Thousand Fifty Four only), the liabilities of the legal heirs of defendants no. 5 & 6 to extent of the property/estate inherited by them, along with cost, expenses and interest @ 15.00% simple from the date of filing of this OA till the date of realization failing which the aforesaid amount shall be recovered from the sale of immoveable mortgaged property bearing Plot No. 46, Block No. 4 Western Extension Area Karol Bagh, New Delhi, admeasuring 266 sq. yrds.

2). If there is any shortfall, the same shall be recovered from the sale of other moveable and immoveable personal assets/properties of the defendants."(highlighting is mine)

This order was challenged by the two appellants vide Appeal No.173/2014. Another appeal by the other partners and the partnership firm was also filed separately which was registered as Appeal No. 311/2014. My learned predecessor Chairperson dismissed the appeals vide order dated 17.02.2015. The two appellants then filed Writ Petition in the Hon'ble Delhi High Court(being CWP No.2262/2016) and other partners also filed separate writ petition(being CWP No. 281/2016). Those writ petitions were decided vide common order dated 22.01.2016 which reads as under:-

"1. Mercantile Construction Company, a partnership firm, had four partners : (i) Nand Kishore Taneja, (ii) Mohini Somnath (since deceased and now represented by her legal heirs Aman and Neeta), (i) Surender Kapoor: and (iv) Sanjeev Kapoor. 2. The partnership firm had obtained a credit from Bank of Baroda. At the asking of the partnership firm various bank guarantees were issued by Bank of Baroda in favour of Steel Authority of India, which were invoked and after paying Steel Authority of India the guaranteed sum, Bank of Baroda debited the account of the firm. 3. The bank instituted recovery proceedings. 4. The partnership firm and its four partners were impleaded as defendants. 5. Amongst other pleas one plea taken was that the bank guarantees were invoked beyond the date of their expiry and thus the bank was not to make any payment to Steel Authority of India and any payment made could not be debited to the account of the firm. 6. Nand Kishore and Mohini Somnath took an additional plea of having retired from the partnership firm on November 01, 1992 with notice given to the bank and thus according to them they could not be liable for debts incurred by the firm after they had retired from the partnership firm. 7. Since the letters invoking the bank guarantee and the date of their receipt were not in the knowledge of the four partners and additionally for the reason initially the bank took the stand that the bank guarantees were not invoked in terms of the guarantee(s) and the matter was referred to a High Power Committee which took the decision that the bank guarantees were invoked as per the terms thereof, which documents were not in the possession of the four partners they filed an application seeking direction against the bank to discover on oath and produce the documents which they had listed in their application. The Debts Recovery Tribunal passed a very perfunctory order. 8. Since the Debts Recovery Tribunal was not understanding the law of discovery and production of documents, in W.P.(C) No.6307/2006, filed by Sanjeev Kapoor and Surender Kapoor a Division Bench of this Court directed that the provisions of Rule 13 of Order 11 required an affidavit to be filed concerning an order passed by a Court under Rule 12 thereof. 9. The claims being decreed; whereas the partnership firm, Surender Kapoor and Sanjeev Kapoor filed Appeal No.311/2014 against the order dated October 15, 2013 passed by the Debts Recovery Tribunal, Nand Kishore Taneja and the legal heirs of Mohini Somnath filed Appeal No.173/2014. Vide order dated February 17, 2015 the Debts Recovery Appellate Tribunal has dismissed both appeals. 10. We find that the aspect of the matter concerning the discovery to be made has been dealt with by the Debts Recovery Appellate Tribunal in a very perfunctory manner. The argument has been noted and dealt with in one paragraph in the following words:"The counsel for the appellant in Appeal No.311/2014 did not make much submission except for stating that invocation of the bank guarantees has to be in terms of the bank guarantee. In addition, the counsel would refer to an application filed by the said appellants under Order XI Rule 12 CPC requiring the bank to disclose the document relating to decision taken by the High Power Committee. Though this application was dismissed by the Tribunal and the Appellate Tribunal, but the High Court allowed the prayer made in the application, but still such document was not disclosed and thus in terms of Order XI Rule 21 the consequence is to follow. In response, the counsel for the bank would submit that affidavit of one Mr.Tika Ram was filed, which is available on record, and all the relevant documents were placed on record. In view of this there would not be any need or requirement to press for consequences arising out of Order XI Rule 21."

Whether the affidavit of Mr.Tika Ram is in compliance with the requirement of law has not been discussed at all.

We have been shown the affidavit filed by Mr.Tika Ram, but refrain from commenting thereon because we are remanding the matter to the Debts Recovery Appellate Tribunal to re-decide the two appeals before it with a direction that the Appellate Tribunal would note the provisions of Order 11 of the Code of Civil Procedure concerning discoveries sought and made. The Appellate Tribunal would look into the sweep of the span of the discoveries sought for in the application filed seeking discovery and production. The Appellate Tribunal would then decide whether a correct order was passed by the Debts Recovery Tribunal dealing with the relevance of the documents discovery and production whereof was sought and further whether it was ensured that all documents which were relevant were produced.

At the remanded stage the Debts Recovery Appellate Tribunal need not deal with the issue raised by Nand Kishore Taneja and legal heirs of Mohini because we find that the Debts Recovery Appellate Tribunal has dealt with the same concerning their plea of having resigned from the partnership firm under intimation to the bank.

As we proceeded to consider said part of the finding returned by the Debts Recovery Appellate Tribunal against Nand Kishore and legal heirs of Mohini we find complete waywardness in the pleadings which are loose and laconic. The issue raised by these two impacts the liabilities of the partners concerning debts incurred post retirement from a partnership firm.

Since the claim of the bank has been allowed in proceedings initiated under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, parties led evidence. Documentary evidence was led. The findings against the two on the issue is that they have failed to prove having intimated to the bank that they had retired from the partnership firm on November 01, 1992, the writ petition must have specific pleadings with reference to the evidence led and documents proved by referring to the exhibit marks of the documents with reference to the testimony of the witnesses. The reason is obvious. On questions of fact findings returned by specialised Tribunals, writ jurisdiction concerning facts is restricted. Unless it is shown that a material document has been overlooked by a Tribunal it would be impermissible for the writ court to re-appreciate the evidence; of course issues of perversity of findings of fact returned is in a different domain. 16. We therefore permit learned counsel for the petitioners of W.P.(C) No.5790/2015 to withdraw the writ petition with right reserved to file a properly drafted writ petition laying a challenge to the order dated February 17, 2015 passed by the Debts Recovery Appellate Tribunal in Appeal No.311/2014 but limited to the aspect of the two partners having retired on November 01, 1992 under intimation to the bank. 17. Lest there be any confusion we make it clear that any decision at the remanded stage by the Debts Recovery Appellate Tribunal concerning liability of the partnership firm could be challenged by the writ petitioners of W.P.(C) No.5790/2015 while laying a challenge to the decision should they be aggrieved therefrom. They would be permitted to file a fresh petition limited to the impugned order in its sweep embracing only the finding that they have failed to prove having retired from the partnership firm on November 01, 1992. 18. W.P.(C) No.281/2016 is disposed of setting aside the order dated February 17, 2015 passed by the Debts Recovery Appellate Tribunal to redecide the two appeals keeping in view the present order and in particular paragraph 12 above."

Thereafter the two appellants had filed a fresh writ petition pursuant to the liberty granted to them in the order dated 22.01.2016. That writ petition being CWP No. 2262/2916 was disposed of by the Hon'ble High Court vide its order dated 17.03.2016 which reads as under:-

"1. Learned counsel as above appears for the contesting respondent No.1. As per Rules of this Court advance copy of the writ petition had been served upon the respondent No.1 and learned counsel for respondent No.1 says that the writ petition could be heard today itself for final disposal because counter affidavit is not warranted. Accordingly, we have heard learned counsel for the parties. 2. Case of Nand Kumar Taneja and Late Mohini Somnath, whose son and daughter have stepped into her shoes as her legal heirs, was that they had resigned as partners of the firm M/s.Mercantile Construction Company and thus they would not be liable for any debts of the partnership firm post date of their retirement. 3. Order dated October 15, 2013 passed by the Debts Recovery Tribunal has jettisoned the plea by recording as under:

"19. That the next plea taken by defendants No.2 and 5 that they were retired from the partnership business on/from 01.11.1992. The applicant relied upon the judgment M/s.DCM Shri Ram India Ltd. Vs. Indo Organics 2003(67, DRJ256 and Syndicate Ban Vs. RSR Engineering Works (2003) 6 SCC 265, which hold that retirement of a partner would absolve him from the liability of the firm only if the creditor agrees to such arrangement and released him from the onus of discharge of liability. This not the factual status in the instant case and the plea of defendant Nos.2 & 5 have no merits in this case and hence rejected. As regards to the point raised that the present application is based upon forged fabricated documents is also not tenable as no material is placed on record to controvert the same."

The appellate order dated February 17, 2015 passed by the Debts Recovery Appellate Tribunal has jettisoned the plea observing as under:

"The primary plea for discharge of the appellants in Appeal No.173/2014 is based on Section 32 of the Partnership Act. As noticed above, retiring partner may be discharged from the liability of the act done before his retirement by an agreement with such third party and partners of the reconstituted firm. This agreement may be implied by course of dealing with such third party and reconstituted firm after it had the knowledge of retirement. The appellants have not pleaded any agreement to seek discharge of their liability under Section 32(2) of the Partnership Act. They, however, would plead that such agreement may be implied as the bank continued to deal with the reconstituted firm after the knowledge of appellants' retirement. The bank has not only refuted having any knowledge on their part about the retirement of the appellants, but has even pleaded that the document available on record would show that no limitation in this regards was ever given to the bank. The reference to the notice etc. is only of their intention to retire and that too in respect of late Ms.Mohini Somnath. The arbitration award is also in regard to the dispute between appellants Mr.N.K.Taneja and Ms.Mohini Somnath on the hand and Mr.Sanjeev Kapoor and Ms.Surinder Kapoor on the other with regard to the retirement of Ms.Mohini Somnath, thus, no clear cut case of knowledge of retirement of the appellants from this partnership concern on the part of the bank is forthcoming from the material and evidence on record. The plea by the counsel for the bank is that no partnership deed of reconstituted firm was never brought on record and this could have easily been done to prove the act of discharge of the appellants.

Once it is held that the bank had no knowledge or the bank cannot be attributed with the knowledge of the retirement of the appellants, the agreement cannot be implied by course of dealing with such third party or the reconstituted firm. The dealing of the bank was with the company and the appellants have not been able to establish that there was any dealing between the bank and the reconstituted firm. Thus, the appellant cannot be discharged of their liability even if they have retired. If the appellants wanted to prove their discharge, they ought to have entered into an agreement with the bank and the reconstituted firm. The appellants could be expected to inform the creditors individually as the retiring partners were dealing with various creditors who might enter into transaction with the partnership firm."

We have been lamenting repeatedly that orders passed by the Debts Recovery Tribunal as also the Debts Recovery Appellate Tribunal are extremely loosely worded. Hardly we come across any order where reference is made to the documentary evidence proved at the trial.

In the instant case Ex.RW-2/4, Ex.RW-2/7 and Ex.RW-2/8A dated May 27, 1992, August 26, 1992 and September 07, 1992, which have been duly proved show that the bank was informed that Nand Kumar Taneja and Mohini Somnath have resigned as partners of the partnership firm. It is unfortunate said documentary evidence has not even been considered either by the Debts Recovery Tribunal or the Debts Recovery Appellate Tribunal.

The documents proved by the Debts Recovery Tribunal have been filed along with the writ petition and the same would evince that two bank guarantees were issued by the bank at the asking of the partnership firm after the date Nand Kumar Taneja and Mohini Somnath claimed to have resigned as partners. Ten bank guarantees, though issued when they were partners, were extended on March 11, 1994 i.e. after the two had resigned from the partnership firm. Since the bank had to honour the bank guarantees it debited the account of the partnership firm. In this context it would assume importance whether Nand Kumar Taneja and Mohini Somnath proved having resigned from the partnership firm under intimation to the bank.

Since the Debts Recovery Appellate Tribunal as also the Debts Recovery Tribunal has done a shoddy job, and it being the duty of the Appellate as well as the Tribunal of original jurisdiction to discuss all relevant evidence, we dispose of the writ petition quashing the order dated February 17, 2015 passed by the Debts Recovery Appellate Tribunal and allow the appeal filed by the petitioners and as a consequence set aside the order dated October 15, 2013 passed by the Debts Recovery Tribunal-III. We restore TA No.561/2002 qua the writ petitioners filed by respondent No.1-bank with a direction to the Debts Recovery Tribunal to note each and every exhibited document relevant to decide whether Nand Kumar Taneja and Mohini Somnath have proved to have resigned from the partnership firm under intimation to the bank. Thereafter, giving reasons with reference to the documents exhibited, the Debts Recovery Tribunal would decide the liability of said two persons as partners of the firm."

Thereafter the learned DRT passed order dated 23.01.2018 in the newly registered appeal no. 71/2018 giving its findings on the issue highlighted by the High Court in its order dated 17.03.2016.

The order dated 23.01.2018 of the learned DRT reads as under:-

"In the present matter, the order was passed by the Hon'ble High Court at Delhi on 23.09.2016 in W.P (C) NO. 281/2016 and remanded back to this Tribunal the matter with the direction to decide the limited issue;

'Whether Nand Kumar Taneja and Late Mohini Somnath resigned as partners under initimation to the bank. If yes to what effect'.

In view of the said order, the arguments have been heard on this issue of both the Ld. Counsels.

The Ld. Counsel for Nand Kumar Taneja and Late Mohini Somnath, it has been contended that both of them validly retired on 01.11.1992. Thereafter if arbitration award has been passed and subsequently public notice were also issue on 29.03.1993 in two vernaculars newspapers and even the matter was also published in public gazette, bank was also intimated in this regard. However, the bank continued to deal with the rests of the partners and also extended the bank guarantee to Sanjeev Kapoor and other remaining partners of the reconstituted firm.

Further, it is also submitted that the first letter was issued to the bank on 29.05.1982 informing that the partnership firm M/s Mercantile Construction Company has been dissolved in between all the partners and both of them were no more partners. The letter was also issued to the bank manager to be arbitrator , but with no response. Thereafter, the award was passed on 29.03.1983, but bank kept on continuing the fresh renewal in favour of Sanjeev Kapoor. The bank guarantee also invoked on 05.03.1995 and subsequently, wrong demand notice was issued, as the present applicants namely Nand Kumar Taneja and Late Mohini Somnath had retired as partners of the firm. The ld. Counsel for both of them stressed upon the arguments that both of them be discharged from their liability as they had already retired as partners on 01.11.1992.

On the other hand, the Ld. Counsel for the bank vehemently contended that no letter was even sent to the bank and public notice not given in proper form in view of the Partnership Act and the award was passed by sole arbitrator. The bank Manager was also not intentionally made party in the said arbitration proceedings. Besides that, the present applicants Nand Kumar Taneja and Late Mohini Somnath kept denoting themselves to be partners in the firm till 1993 and even their name remain existing the account of M/s Mercantile Construction Co. and the details of reconstituted firm also never intimated to the bank. Hence, both of them cannot be discharged from the liabilities towards the bank.

Heard the Ld. Counsels for both the parties and records has been thoroughly perused. In the present matter, Mohini Somnath issued a letter through her Ld. Counsel to the bank on 27.05.1992 stating that Shyam Sunder Chaudhary has been appointed as Arbitrator on her behalf, requesting other partners to either concur in the appeal of Shyam Sunder Chaudhary as "Sole Arbitrator" or appoint their own Arbitrator, in view of the clause 10 of partnership deed executed between all the partners.

Thereafter, the Sole Arbitrator Shyam Sunder Chaudhary passed an award on 29.03.1993, whereby it was held that claimants i.e. N.K. Taneja as well as Mohini Somnath will be deemed to have been retired from the partnership firm and M/s Mercantile Construction Co. shall stand dissolved on 01.11.1992, where as they (the remaining partners) were declared entitled to continue the business of the partnership either in con partnership or otherwise, as they may choose to do.

In the said award, it was also held that the claimant shall have in any manner, right, title, interest and possession, whatsoever in upon or over the assets, properties, contracts, benefits, licenses, whatsoever and whatsoever belonging to or pertaining to be partnership firm known as Mercantile Construction Company. Likewise, the claimants shall not be liable or responsible for any due or liability debts loans taxes, whatsoever on the said partnership firm and the respondents shall alone be liable and responsible to pay, redeem and discharge the same.

Subsequently, the notice was published regarding dissolving in the Hindi newspaper "Prabhat Khabar" Dhanbad dated 13.04.1993 and also in English newpaper "Statesman" New Delhi dated 15.4.1993. Notice of change in the constitution of the registered firm also mentioned in the Registration of the Firm and N.K Taneja and Mohini Somnath were stated to have been retired on 01.11.1992 and the remaining partners i.e. Surinder Kapoor and Sanjeev Kapoor are carrying out the business with all its liability and accessibility. Vide letter dated 07.09.1982 issued on behalf of N.K Taneja to the Manager, Bank of Baroda, it was mentioned that he will retire from said firm on expiry of one month from date of receipt of notice in terms of deed of partnership.

On behalf of the Mercantile Construction Co., Sanjeev Kapoor requested Senior Manager, Bank of Baroda vide letters dated 08.03.1994 and 19.02.1995 to renew the guarantees. Accordingly, the bank renews the same. However, on behalf of the bank certain documents have been placed on record i.e. statement of account for the year ending 31.03.1994 where the name of both N.K Taneja and Mohini Somnath existing as partners. One another letter dated 09.07.1993, which was written on behalf of all the partners including N.K Taneja and Mohini Somnath, wherein indebtiness was acknowledged on 09.07.1993 for a sum of Rs. 30,72,528/-. Of course, the award was passed and the wide publication regarding retirement of the partnership has been given on behalf of N.K Taneja and Mohini Somnath, but both of them also continued to hold themselves to be partners, which is apparent form the statement of account submitted and acknowledged dated 09.07.1993. vis-a-vis the award dated 29.03.1993 was never made 'Rule of Court'as per provision of Arbitration and Conciliation Act, 1940 which was requisite to be made before relying upon the same.

Apart from that, the Sole Arbitrator - Sh. Shyam Sunder Chaudhary was appointed. Though, the letter was issued to Bank of Baroda, but there was no clause in the partnership deep that the award passed by Sole Arbitrator shall be hiding upon the parties including the bank without its active participation therein in the proceedings regarding dissolution of the firm. The willingness to retire as partner was duly conveyed to the ban by both N.K Taneja And Mohini Somnath and as per Section 32 of Indian Partnership Act, 1932, a partner of his intention to retire, but there was no impression or implied agreement between the ban as well as the retiring partners and continuing partners that retiring partners shall discharge from the liabilities including prior to the date of intention/ willingness to retire from the partnership firm.

In this context, the citation Syndicate Bank Vs. R.S.R Engineering Works (2003) 6 Supreme Court Cases 265 has been relied upon by the ld. Counsel for the bank, wherein it is held as under"

" A. Liability of retiring partner-discharge from - held, can be discharged by an agreement between the retiring partners, third party and partners of reconstituted firm -such an agreement can also be implied from the course of dealing between the third party and the reconstituted firm after retirement of a partner-so if a creditor takes a new security for the debt from the continuing firm then it shows his intention to deal with the continuing partner for debts owed by the firm- In the absence of such agreement, express or implied, held, public notice is necessary.

B. Liability of a retiring partner against third party-In the absence of agreement discharging the retiring partners, held, they would remain liable towards their pre-retirement liability."

Similarly, Ld. Counsel for the respondent no. 2 and 5, i.e. Sh. Nand Kumar Taneja and Sh. Soni Kumar also relied upon citations i.e. Central Bank of India Vs. B. Venkataraman Naidu - AIR 1963 Madras 302, and George Vs. State Bank of Travancore - AIR 202 Kerala 2014, Paul Raj Vs. T.M. Maithaliya Nader Sons MANU/TN 311/ 2004.

Taking into consideration all the above citations, it is apparent that, in the absence of any agreement of discharging with the secured creditors with respect to previous liabilities of the retiring partners, they would remain liable to the pre-retirement liabilities. At the time of passing of the award as well as reconstituted a new partnership firm, bank was never informed and merely by giving a notice that the present respondents no. 2 and 5 i.e. N.K Taneja and Mohini Somnath are no more partners would not discharge them validly from the liability prior to 31.03.1994. Therefore, the present N.K Taneja and Mohini Somnath are liable to the bank for the guarantee extended to the firm prior to 31.03.1994 and not thereafter.

Accordingly, the issue as per the direction of Hon'ble the High Court to decide the limited issue stands decided.

The recovery certificate with respect to respondent's no. 2 & 5 be issued, accordingly, on filing the details with respect to liability fixed prior to 31.03.1994.

The matter be listed on 09.02.2018 for further proceedings."

Thereafter a fresh appeal was filed by the appellants challenging the correctness of these findings rendered by the learned DRT after remand by the High Court. Appeal No. 71/2018 is that appeal.

I have heard the counsel for the parties and also gone through the files of DRT pertaining to the O.A. out of which this appeal has arisen. While going through the record of DRT today necessity was felt to peruse record of O.A. No. 1254/95(pending in DRT-I, Delhi) which was also filed by the respondent Bank against the borrower Firm and its partners for the recovery of its dues other than the dues covered under various bank guarantees which became the subject matter of litigation after filing of the said other recovery case since by that the bank had not made payments to SAIL under the bank guarantees in question issued in its favour. That O.A. is still pending before DRT-I, Delhi. Narinder Kumar Taneja and late Smt. Mohini Somnath claimed to have placed on record of that other case correspondence between them and the bank regarding their retirement from the partnership Firm which letters had been referred to by the Hon'ble High Court in its order dated 17.03.2016, already re-produced by me. However, in view of the order I propose to pass today, I need not go into the correctness of any of the observations including the observation that Narinder Kumar Taneja and late Smt. Mohini Somnath had not led any evidence to show that they had informed the Bank about their retirement as partners of borrower Firm w.e.f. 1.11.1992.

From the aforesaid narration it becomes clear that after the Hon'ble High Court had set aside the original order dated 15.10.2013 passed by the DRT, which order has already been noticed, and remanded the matter back to DRT for deciding the controversy as to whether Nand Kishore Taneja and late Smt. Mohini Somnath had informed the respondent Bank that they had retired as partners of borrower Firm. After the remand of the case back to DRT the learned Presiding Officer of DRT-III, Delhi has returned a finding that these two partners of the borrower Firm were not entitled to the benefit of Section 32 of the Partnership Act This provision of law provides for the effect of retirement of partners of a partnership Firm as far as their liability towards third parties is concerned. This observation was made as far as the transactions between the respondent Bank and the borrower Firm pertaining to the period prior to 31.03.1994 was concerned. They have thus been absolved of the liability in respect of the bank guarantee transactions which took place after 31.03.1994. After holding so the learned Presiding Officer of the DRT also directed issuance of a recovery certificate against the Narender Kumar Taneja and late Smt. Mohini Somnath(represented by her LRs) upon furnishing of necessary details (by the Bank). However, the learned Presiding Officer has not himself arrived at any figure of the liability of the appellants. It is not clear as to whom the task of arriving at that figure has been entrusted. It is the duty and responsibility of the Presiding Officer to pass the final order declaring as to for what amount for which the appellants in the present case were being held liable. It was not proper for the DRT to first give a simple declaration that the appellants-defendants were liable to clear the dues in respect of the transactions upto 31.03.1994 and then the keep the case pending for final determination of exact amount for which recovery certificate was to be issued regarding which it was observed that "The recovery certificate with respect to respondent's no. 2 & 5 be issued, accordingly, on filing the details with respect to liability fixed prior to 31.03.1994".

Thus, before expressing any opinion at present about the findings already arrived at by the learned Presiding Officer, which have been challenged by the appellants as wrong and which are supported by the respondent Bank, he(Presiding Officer of DRT) needs to called upon to give his finding regarding the exact liability of the appellants also for which purpose he has already kept the matter on his board. Thereafter only this Tribunal will examine the correctness of all the findings, including the finding to be given regarding the recoverable amount from the appellants which amount this Tribunal is not aware of at present. It is, however, clarified that this Tribunal has not gone into the findings already arrived at by the learned Presiding Officer of the DRT and all parties will be at liberty to press into service their contentions either in opposition to the same or in support thereof once the DRT returns its finding regarding the exact amount recoverable from the appellants.

This Tribunal, therefore, directs limited remand of the matter to the DRT with a direction to return its finding regarding the exact liability of the appellants upto 31.03.1994 and only then to direct issuance of the recovery certificate for that amount. This exercise should be completed after hearing the parties within three months from the date of communication of this order. In case the next date there is already fixed beyond the period of three months the learned Presiding Officer shall prepone the date and fix fresh dates in such a way that the fresh decision on the limited point noted above is taken with three months. It is needless to state that any party aggrieved by the finding to be given by DRT on the limited remand will always be at liberty to file its objections against that finding before this Tribunal. Records of the O.A. No.561/2002 pending in DRT-III, Delhi shall be sent back to the DRT but the same shall be returned back to this Tribunal alongwith the copy of the order to be passed in compliance of the aforesaid direction of this Tribunal. The Record pertaining to O.A. No.1254/95, which was summoned today from DRT-I, Delhi and where it is still pending shall also be sent back so that the DRT can proceed to dispose of that case also at the earliest being a very old case.

This matter shall be listed now before this Tribunal on 30.07.2020 whether or not by that time the order of the DRT, as directed above, is received.