Raksha Narula vs Bank Of Baroda And Ors

P.K. Bhasin, J

The appellant, who is one of the defendants in an Original Application (O.A.) filed by respondent No. 1 Bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for recovery of Rs. 15,52,12,673.61 plus interest thereon. She had been impleaded as one of the guarantors/mortgagors for repayment of loan granted by the Bank to a Company by the name of M/s. Chawla Iron Traders (P) Ltd., respondent No. 2 herein and which Company having defaulted in repayment of the loan amount the Bank had to file O.A. before the Debts Recovery Tribunal (DRT). All the defendants, including the appellant herein, were proceeded against ex parte in the O.A. on 12.8.2016 since they had not entered appearance despite service of notices by way of publication in a newspaper. The O.A. is still pending decision. The appellant alone had filed an application (being I.A. No. 1478/2016) for recall of order dated 12.8.2016 passed in the O.A. whereby O.A. she was directed to be proceeded against ex parte. The DRT, however, dismissed that application vide impugned order dated 11.1.2017 and that order is now under challenge in this appeal. The order dated 11.1.2017 is being re-produced below:

"I.A. No. 1478/2016

Heard on this I.A. Present I.A. has been filed on behalf of defendant No. 6 for setting aside ex parte order dated 12.8.2016 passed by this Tribunal and to grant an opportunity to defendant No. 6 to contest the captioned matter.

Learned Counsel for applicant Bank submits that since defendants could not be served in ordinary manner hence he moved an application for substituted service which was allowed by this Tribunal on 13.6.2016 and despite service through publication, defendants did not appear before this Tribunal and hence the case was directed to proceed ex parte against defendants including defendant No. 6.

Learned Counsel for defendant No. 6 submits that since defendant No. 6 was never informed about the pendency of the O.A. He further submits that in the order dated 13.6.2016 it was specifically mentioned that published newspaper containing the notices be despatched to the defendants, at the given address but the same was not done, therefore, service upon defendant No. 6 is insufficient. He also informed that he has filed an S.A. bearing No. 133/2016 (Mrs. Raksha Narula v. BOB & Ors.) against the applicant and other defendants herein and he came to know about the pendency of present case on 29.7.2016 from the reply of applicant Bank in the above said SA.

Record reveals that applicant Bank filed its affidavit of service on 3.5.2016 along with Dasti Service Report (Annexure-B). It is revealed from Dasti Service Report that defendant No. 6 refused to accept the notice and thereafter despite publication defendant No. 6 did not chose to appear before this Tribunal and on the other hand defendant No. 6 is pursuing his SA with due diligence. This Tribunal is of the view that defendant No. 6 was well aware about the proceedings of present O.A. and he was deliberately avoiding the service of O.A. I am also supported with a judgment of Hon'ble Apex Court in the case of Appeal (Civil) No. 86 of 2008 (Arising out of SLP (C) No. 3935 of 2006) titled as Sunil Poddar & Ors. v. Union Bank of India decided on 8th January, 2008. In the said judgment, Hon'ble Apex Court has observed as under:

"Once a summons is published in a newspaper having wide circulation in the locality, it does not lie in the mouth of the person sought to be served that he was not aware of such publication as he was not reading the said newspaper. That ground also, therefore, does not impress us and was rightly rejected by the Tribunals."

Furthermore Order 5 Rule 20(2) of CPC speaks as under:

20(2): Effect of substituted service-Service substituted by order of the Court shall be as effectual as if it had been made on the defendant personally

In the light of above, I am convinced that service upon defendant No. 6 through publication was sufficient service and despite having knowledge of the proceedings, he did not chose to appear before this Tribunal. Even otherwise he is pursing the S.A. with due diligence but did not appear in the O.A. which shows that he deliberately chosen not to appear in the present O.A. Hence I find no merit in the present I.A. and same is hereby dismissed.

O.A.

Let applicant Bank file its evidence by way of affidavit, if not filed as yet.

Case be listed before learned Registrar on 15.2.2017 for exhibition of documents on behalf of applicant Bank and thereafter before this Tribunal on 19.4.2017 for ex parte final arguments."

Vide first order dated 4.2.2016 passed in the O.A. by the learned Presiding Officer notice of the O.A. was directed to be issued to the defendants and the matter was to be taken up by the Registrar of the DRT. On 6.5.2016 the Registrar of DRT recorded the following proceedings:

"The matter is listed today for completion of pleadings. The learned Counsel for the applicant Bank submitted that the proof of service has been filed vide Dy. No. 4014 dated 3.5.2016 and further submitted that effective service has not been done upon the defendants. The learned Counsel for the applicant Bank submitted that he would move an application for substituted service of the defendants and requested to list the matter before the Hon'ble P.O. for further appropriate orders. Request allowed.

However, the matter is already listed before the Hon'ble P.O. on 18.5.2016.

Let the matter be listed before the Hon'ble P.O. on 18.5.2016, the date already fixed."

Order dated 13.6.2016 passed by the learned Presiding Officer reads as under:

"IA No. 744/2016

This application has been filed on behalf of applicant Bank praying therein to permit the applicant Bank to serve the defendants by way of publication.

Heard. This application is allowed. Applicant Bank to take steps within 15 days. Notice of this O.A. be published in newspaper 'Hindustan Times'. Published newspaper containing notices be despatched to the defendants at the given address. The postal receipt along with affidavit of officer of Bank deposing this fact be also filed.

Case be listed on 12.8.2016."

Order dated 12.8.2016 when the defendants were proceeded against ex parte reads as under:

"Despite sufficient service, none appeared on behalf of defendants nor filed any W.S. as yet. Hence, the case is directed to proceed ex parte against the defendants.

Case be listed before learned Registrar on 22.9.2016 for filing evidence and exhibition of documents on behalf of applicant Bank and thereafter before this Tribunal on 18.11.2016 for ex parte final arguments."

It is significant to note that on 12.8.2016 the appellant's S.A. No. 133/2016 which she had filed under Section 17(1) of SARFAESI Act was also listed before the same DRT.

The grievance of the appellant-defendant is that she was never served with any notice of the O.A. nor was she delivered the copy of the newspaper in which notice was published as was directed to the Bank by DRT vide order dated 13.6.2016 while permitting the Bank to saver the appellant and other defendants by way of publication. Further that even though both S.A. and O.A. were listed on 12.8.2016 the Bank Counsel never informed either her Counsel or even the learned Presiding Officer when O.A. was being taken up that the case of defendant No. 6 (appellant herein) was also listed that day and so both matters should be taken up together and if he had done that the appellant's Counsel would have appeared in the O.A. as well. Thus the Bank was not fair either towards the appellant or towards the DRT and had succeeded in getting ex parte order against the appellant fraudulently.

On the other hand, Counsel for the Bank had submitted that the appellant had come to know about the O.A. on 29.7.2017 as admitted by her in her application for setting aside ex parte order passed on 12.8.2016 but Respite that she did not move any application in the O.A. till October, 2017 which shows that she was simply watching the proceedings of O.A. but not participating in the O.A. proceedings only to delay the proceedings by moving an application as per her own convenience.

I have considered the submissions and also the orders passed in the O.A. copies of which were are available on record of this appeal. The order dated 6.5.2016 of the Registrar of DRT shows that even as per the Bank's own lawyer there was no effective service of notices upon the defendants. The Bank's Counsel after first unsuccessful attempt itself to get defendants served requested for substituted service of notices and vide order dated 13.6.2016 the learned Presiding Officer accepted that request and ordered service by way of publication without even recording any satisfaction that the defendants were avoiding to accept notices. In any event, there was no justification to order service by publication without first exhausting normal modes of service. There was nothing on record to justify the conclusion which was arrived at by the learned Presiding Officer that defendant No. 6 (appellant herein) had the knowledge about the pendency of the O.A. So, the permission granted by DRT to the applicant Bank to get service upon defendants effected by way of publication was not proper exercise of discretion by the DRT.

Hon'ble Supreme Court of India had in Smruti Pahariya v. Sanjay Pahariya, Civil Appeal No. 3465 of 2009, decided on 11th May, 2009, had considered the legality of Court order directing publication of Court summons and it was observed as under:

"12. From the sequence of events, it appears that on 19.11.2007 when the matter came up before the Court, the first day after the mandatory period of six months, the husband was absent. The Court directed service of summons on the husband on the request of the wife. The service return was before the Court on 1.12.2007. Looking at the service return, the Court found that service was not a proper one and the Court was also not satisfied with the endorsement of the courier. Under such circumstances, the Court's direction on the prayer of the appellant-wife, for substituted service under Order 5 Rule 20 of the Civil Procedure Code is not a proper one. Direction for substituted service under Order 5 Rule 20 can be passed only when Court is satisfied "that there is reason to believe that the defendant is keeping out of the way for the purpose of evading service, or that for any other reason the summons cannot be served in the ordinary way."

In the facts of this case, the Court did not, and rather could not, have any such satisfaction as the Court found that the service was not proper. If the service is not proper, the Court should have directed another service in the normal manner and should not have accepted the plea of the appellant-wife for effecting substituted service. From wife's affidavit asking for substituted service, it is clear that the servant of the respondent-husband intimated her Advocate's clerk that respondent-husband was out of Bombay and will be away for about two weeks. However, the appellant-wife asserted that the respondent-husband was in town and was evading. But the Court on seeing the service return did not come to the conclusion that the husband was evading service. Therefore, the Court cannot, in absence of its own satisfaction that the husband is evading service, direct substituted service under Order 5 Rule 20 of the Code."

In view of these observations of the Apex Court the decision of the DRT to proceed ex parte against the appellant on 12.8.2016 cannot be sustained.

I also find merit in the submission of the learned Counsel for the appellant that on 12.8.2016 the Bank's Counsel ought to have brought to the notice of the Presiding Officer that even appellant's S.A. was also fixed that day and if he had done that the appellant-defendant would not have been ordered to be proceeded against ex parte. But the Bank's Counsel does not appear to have done that and succeeded in getting an adverse order against the appellant herein. The order dated 12.8.2016 passed in the O.A. qua the appellant only is accordingly set aside. This appeal is allowed. The appellant shall now be entitled to file her written statement alongwith affidavit of evidence on the date already fixed in the O.A. and for that purpose no further time will be granted to the appellant-defendant. A copy of this order be forwarded to the DRT.