Shri Gautam Govindlal Shah vs Bank Of Baroda

The present Appeal No. 192 of 2014 has been filed by the Appellant/Defendant No. 2 Gautam Govindlal Shah under Section 20 of the “Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the RDDB & FI Act”)” challenging the Judgment and Order dated 06.06.2006 passed by the Learned Presiding Officer, Debts Recovery Tribunal-I, Ahmedabad (hereinafter referred to as "DRT") in Original Application (O.A.) No. 10 of 1997.

The Respondent Bank of Baroda had filed O.A. No. 10 of 1997 before DRT-I, Ahmedabad, for recovery of a sum of ₹44,22,993.88p from the Appellant/Defendant No.2 [sole proprietor of M/s Polytex Synthetics (Defendant No. 1)] and other defendants. The claim was in respect of multiple credit facilities sanctioned by the Bank to the proprietorship firm of the Appellant/Defendant No. 2 after creation of an equitable mortgage of personal property and against guarantors Defendant Nos. 2 to 5. Defendant Nos. 6 to 8 were drawees of bills of exchange drawn by Defendant No. 1.

The Appellant/Defendant No. 2 availed of multiple credit facilities from the Bank since 1991. The liabilities were reviewed, sanctioned and renewed in the year 1994, and fresh documents were executed. Defendants Nos. 3 to 5 executed guarantee agreements. Appellant/Defendant No. 2 deposited title deeds of his property as collateral security. Since Appellant/Defendant No. 2 defaulted in repayment, the Bank filed O.A. No. 10 of 1997 seeking a recovery certificate and enforcement of securities.

Before the DRT-I, Ahmedabad, Appellant/Defendants No. 2 appeared and filed reply (Exhibit R/13) admitting the sanctioning and disbursement of multiple credit facilities and execution of documents as security but denied that interest charged was proper and alleging that the Bank had not released the full sanctioned amount, thereby causing loss to the business. The remaining defendants remained ex-parte. The DRT-I, Ahmedabad, by its Judgment and Order dated 06.06.2006, allowed O.A. No. 10 of 1997 with costs.

It is pertinent to note that even in the O.A. proceedings, Mr. Praful J. Bhatt appeared for the Appellant/Defendants Nos. 1 and 3 before the DRT. Thereafter, Mr. Devesh Bhatt filed a fresh vakalat for the Appellant/Defendant Nos. 1 to 3. On 15.02.2006, the Appellant/Defendant No. 2 himself applied for adjournment stating his counsel was not available. The DRT adjourned the matter to 17.03.2006. On that date the Learned Presiding Officer was on leave and the matter was adjourned to 26.04.2006. On 26.04.2006, the DRT heard the Applicant/Bank’s counsel in O.A. and noted that none appeared for Appellant/Defendant No. 2. The O.A. was thereafter fixed for judgment on 06.06.2006, however in the intervening period neither the Appellant/Defendant No. 2 nor his counsel sought any opportunity to be heard.

After issuance of the Recovery Certificate, Respondent Bank of Baroda filed Recovery Proceedings No. 220 of 2006 before the Recovery Officer, DRT-I, Ahmedabad. A demand notice was issued on 23.08.2007 to all certified debtors including the Appellant/Defendant No. 2. The Appellant/ Defendant No. 2 participated in the recovery proceedings. When the mortgaged property was put up for sale by the Recovery Officer, the Appellant/Defendant No. 2 challenged the auction. The Recovery Officer refused to entertain the challenge and that order was challenged by the Appellant/ Defendant No. 2 under Section 30 of the RDDB & FI Act before the Presiding Officer in Appeal No. 10 of 2011, which was dismissed.

Aggrieved by the order dated 06.06.2006, the Appellant/Defendant No. 2 filed CMA No. 57 of 2009 under Section 26 of the RDDB & FI Act before DRT-I, Ahmedabad, seeking to set aside the final order and to be allowed to be heard in the O.A. However, the CMA No. 57 of 2009 was dismissed by DRT-I vide its order dated 01.05.2012.

Simultaneously, SARFAESI Act proceedings were also initiated by the Bank in 2008. The Bank obtained an order under Section 14 of the SARFAESI Act to take possession of the secured asset. The Appellant/Defendant No. 2 filed a review application before the Magistrate but did not file an application under Section 17 of the SARFAESI Act before DRT to challenge the order of possession obtained from the Magistrate.

The Appellant/Defendant No. 2 filed the following appeals before the DRAT, Mumbai, seeking to challenge various orders arising from the same subject-matter:

Appeal No. 162 of 2012 – challenging the DRT order dated 01.05.2012 dismissing CMA No. 57 of 2009;

Appeal No. 163 of 2012 – challenging the DRT order dated 25.05.2012 dismissing Appeal No. 10 of 2011;

Appeal No. 192 of 2014 [Appeal (Lodging) No. 312 of 2012] along with M.A. No. 561 of 2012 for condonation of delay – filed challenging the DRT order dated 06.06.2006 in O.A. No. 10 of 1997

It is pertinent to note that the Appeal Nos. 162 and 163 of 2012 were both dismissed as withdrawn by the Appellant/Defendant No. 2.

However, Appeal No. 192/2014 is being disposed of by this order/judgment.

The Appellant/Defendant No. 2 also filed Commercial Suit No. 578 of 2021 before the Commercial Court, Ahmedabad, claiming damages from the Bank. That suit was dismissed for default. The Appellant/Defendant No. 2’s application for restoration of that suit together with an application for condonation of delay was also dismissed by the Commercial Court. The Civil Revision Application No. 375 of 2023 was preferred to challenge the same before the Gujarat High Court was also dismissed as withdrawn. The Appellant/ Defendant No. 2 thereafter filed SCA No. 18394 of 2023 before the Gujarat High Court, which also appears to have been disposed of.

Now coming to the present Appeal No. 192 of 2014, it is pertinent to mention that this was filed with a delay of 2159 days.

To condone this enormous delay, the Appellant/ Defendant No. 2 filed M.A. No. 561 of 2012 (originally). By order dated 21.08.2015, the DRAT, Mumbai, allowed the application for condonation of delay of 2159 days directing the Appellant/Defendant No. 2 to deposit ₹5,00,000/- as a pre-condition, which was further reduced to ₹2,00,000/- vide order dated 01.10.2015. The Appellant/ Defendant No. 2 deposited ₹2,00,000/- before the DRAT.

By order dated 23.11.2022, the DRAT observed that since 2012 the appeal was pending, the delay of 2159 days having been condoned on deposit of ₹2,00,000/-, it was apposite that the Respondent Bank files reply to the appeal as expeditiously as possible. No further time was to be granted.

However, in shocking manner, at the stage of rebuttal arguments the Appellant/Defendant No. 2 filed yet another application I.A. No. 656 of 2023 in Appeal No. 192 of 2014 again seeking condonation of delay of 2159 days that had already been condoned.

It is apparent that second application for condonation of delay, was filed to mislead the DRAT. Misled by the machinations of Appellant/Defendant No. 2, the DRAT heard the second delay condonation application also and by the order dated 08.07.2024 in I.A. No. 656/2023 (CoD), rejected the application. The Learned Predecessor Chairperson DRAT recorded that despite the appeal having been kept at the stage of rebuttal arguments, the Appellant/Defendant No. 2 had filed a fresh application for condonation of delay of 2159 days which had already been condoned and in respect of which an amount had already been deposited and the WoD application (M.A. No. 632/2012) was also filed. The Learned Predecessor Chairperson DRAT further noted that the Appellant/Defendant No. 2 had successfully protracted the litigation for about 27 years. It was also observed that given the dismissal of the application for condonation of delay, the main appeal (Appeal No. 192 of 2014) also stands dismissed.

Aggrieved by the order dated 08.07.2024, the Appellant/ Defendant No. 2 filed R/Special Civil Application No. 15342 of 2024 before the Hon'ble High Court of Gujarat, at Ahmedabad, praying for quashing and setting aside the order dated 08.07.2024 passed by the DRAT, Mumbai, in I.A. No. 656 of 2023 in Appeal No. 192 of 2014, and directing the DRAT, Mumbai, to hear the final hearing of Appeal No. 192 of 2014 within a stipulated period of time.

The Hon'ble High Court of Gujarat by its judgment dated 26.06.2025, after considering the nature of the litigation and the dilatory tactics adopted by the Appellant/ Defendant No. 2 to delay the recovery, decided the matter observing as under:

Heard.

The learned counsel for the Appellant/Defendant No. 2 submitted that the DRT-I, Ahmedabad erred in passing the order dated 06.06.2006 ex-parte, inasmuch as neither the Appellant/ Defendant No. 2 nor his counsel was present on the date of judgment, and no opportunity was afforded to make submissions. It was further contended that the order was never communicated to the Appellant/Defendant No. 2 or his counsel by the Registry of the DRT. The Appellant/ Defendant No. 2 allegedly came to know about the decree only through a public notice published in the newspaper Divya Bhaskar dated 24.05.2009 by the Recovery Officer.

He would further submit that the interest charged by the Bank was not legal and proper, as the Bank had failed to release the full sanctioned amount, resulting in a severe setback to the business of the proprietorship firm; that, it was also contended that there was inaction on the part of the Bank officials and that the debit entries in the accounts were made without justification.

Learned counsel for the Respondent Bank would vehemently oppose the appeal submitting following grounds:

That the appeal has a delay of 2159 days which is unwarranted, unexplained and inordinate; that, the Appellant/Defendant No. 2 had himself applied for adjournment on 15.02.2006 and thereafter neither appeared nor caused his counsel to appear before the DRT-I until the pronouncement of the judgment; that, the Appellant/Defendant No. 2 had participated in the recovery proceedings and had full knowledge of the order from 2007 onwards when the demand notice was served; that, all parallel proceedings – including Appeals before the DRAT and Writs before the High Court as well as the commercial suit were filed by Appellant/Defendant No. 2 only to delay and protract the recovery; that, the underlying claim of the Bank has been conclusively proved before the DRT-I, Ahmedabad, and the Recovery Certificate has been lawfully issued; that, the Appellant's appeals challenging the DRT's order in the Appeal No. 162/2012 and Appeal No. 163/2012 were both withdrawn.

This Tribunal has carefully considered the submissions made by the learned counsels for both the parties, perused the record, and taken into account the orders of the DRT-I, Ahmedabad, dated 06.06.2006; my predecessor’s order dated 08.07.2024 and the judgment of the Hon'ble High Court of Gujarat dated 26.06.2025.

After perusal of the record in the light of the arguments of the Learned Counsel for the parties, the DRAT is of considered view that order/judgment dated 06.06.2026 passed by the DRT-I, Ahmedabad in O.A. No. 10 of 1997 is well reasoned, correct and based on correct appreciation of the law and facts on record.

There is no dispute that the Bank of Baroda is a Banking Company as defined in Section 2(c) of the Act.

There is no dispute that the loan facilities were sanctioned and disbursed; the Appellant/Defendant No. 2 executed the documents as security for repayment. The documents are Promissory Notes, Instrument of Hypothecation of Goods, Letter of Sole Proprietorship, Letter of Continuing Security, Letter of Guarantee etc. Appellant/Defendant No. 2 deposited title deeds as collateral security.

The defence of the Appellant/Defendant No. 2 that the Bank did not release the sanctioned amount and committed malfeasance is nothing but no reliable evidence was led to support this contention.

The interest charged by the Bank is legal and proper as there is specific reference to the rate of interest in the documents executed by Defendant Nos. 1 to 5 as well as in the commercial documents accompanying the bills.

The O.A. No. 10 of 1997 is within limitation and the total amount of ₹44,22,993.88 is due and payable.

The Appellant/Defendant No. 2, as a matter of fact, had himself applied for an adjournment before the DRT on 15.02.2006 stating that his counsel was unavailable, and an opportunity was duly granted. Thereafter, the Appellant/Defendant No. 2 chose not to appear or cause any appearance before the DRT at any subsequent date. The O.A. was heard and judgment was pronounced on 06.06.2006 in the self-designed absence of the Appellant/Defendant No. 2 and his counsel. There is, therefore, no merit in the contention that no opportunity was afforded.

Furthermore, the Appellant/Defendant No.2 himself admits having received a demand notice from the Recovery Officer in October 2007. He was also actively participating in the recovery proceedings before the Recovery Officer and challenged the auction sale. Simultaneous SARFAESI proceedings were also known to the Appellant/Defendant No. 2 from 2008. Therefore, the Appellant/Defendant No. 2 was fully aware of the order dated 06.06.2006 well before 2009 and certainly not later than October 2007.

The Appellant/Defendant No. 2 filed as many as the following proceedings to protract the recovery initiated by the Respondent Bank of Baroda from 1997 onwards: (i) CMA No. 57/2009 before DRT-I; (ii) Appeal No. 10/2011 against Recovery Proceedings; (iii) Appeal No. 162/2012 before DRAT; (iv) Appeal No. 163/2012 before DRAT; (v) Appeal No. 192/2014 (present) with a delay of 2159 days; (vi) Commercial Suit No. 578/2021 before Commercial Court, Ahmedabad; (vii) Civil Revision Application No. 375/2023 before High Court; (viii) SCA No. 18394/2023 before High Court; (ix) I.A. No. 656/2023 before DRAT; and (x) SCA No. 15342/2024 before High Court. All these proceedings, collectively, reflect a deliberate and motivated attempt to keep the public money of a nationalized bank locked in litigation for nearly three decades.

On a careful re-examination of the entire evidence on record, this DRAT is of considered view that the Bank's claim is fully proved by documentary evidence comprising promissory notes, hypothecation instruments, guarantee letters, title deeds, bills of exchange and statements of account. Accordingly, the impugned order dated 06.06.2006 passed by Learned DRT-I, Ahmedabad in O.A. No. 10 of 1997 is hereby affirmed and the Appeal No. 192 of 2014 is dismissed. All pending applications, if any, in Appeal No. 192 of 2014 stand disposed of.