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2009 DIGILAW 3767 (ALL)

CHANDRA PRAKASH v. STATE BANK OF INDIA

2009-12-15

J.M.MALIK

body2009
JUDGMENT J.M. MALIK, CHAIRPERSON.—This order shall dispose off two appeals which arise out of the same order dated 9.9.2009 passed by the Presiding Officer, DRT. The Appeal No. R-1137/2009 has been filed by Shaila Crown Pvt. Ltd. Through its Executive Director Mr. Sanjay C. Prakash and the Appeal No. R-1136/2009 has been filed by the Directors of the said Company, namely, Mr. Chandra Prakash, Mrs. Bina S. Sahai, Mrs. Rekha and Mr. Sanjay C. Prakash. 2. State Bank of India had filed an Original Application (O.A.)against Shaila Crown Pvt. Ltd. And its five directors/guarantors, namely, Mr. Sanjay C. Prakash, Mr. Chandra Prakash, Mrs. Bina S. Sahai, Mr. Jai Prakash and Mrs. Rekha Sanjay. An ex parte judgment was passed in favour of the bank and against the above said defendants/appellants. A recovery certificate in the sum of Rs. 57,74,762.72 together with pendente lite and future interest @ 17.75% p.a. with quarterly rests with effect from 20.2.2002 till full realization was issued. 3. Aggrieved by that order, the appellants preferred an application under section 22 (2) (g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'RDDBFI Act') on 14.8.2007. The said application was dismissed vide impugned order. 4. I have heard Mr. Chandra Prakash for the appellants and Mr. D.K. Pathak for the respondent No. 1 Bank. It may be mentioned here that Mr. Chandra Prakash, one of the appellants, who himself is an advocate, argued the case in person. 5. The appellants vehemently argued that the decree passed by the Lower Court is a nullity as the same is barred by time. He explained that the instant case is not covered by Article 1 of the Limitation Act as there are no reciprocal demands between the parties. He invited my attention towards Ext. A-26 and pointed out that there are no receiprocal demands between the parties. Consequently, he argued that this cannot be stated to be a mutual and open current account. He vehemently argued that this fact gives rise to a triable issue. He argued that the loan was obtained in April, 1993 and the O.A. was filed after nine years in the year 2002. It was also argued on behalf of the appellants that statements of accounts were not proved in accordance with law. He vehemently argued that this fact gives rise to a triable issue. He argued that the loan was obtained in April, 1993 and the O.A. was filed after nine years in the year 2002. It was also argued on behalf of the appellants that statements of accounts were not proved in accordance with law. The same were supported by an affidavit of a bank officer who was not aware of the facts of the case and was not present at the time of the above said transaction/execution of the documents. 6. In order to brig his point home, he has cited a few authorities before this Court. In Chandradhar Goswami v. Gauhati Bank,1 it was held: 1. 1966 INDLAW SC 260. "... Assuming this is a case of an open, current and mutual account, the last payment was made in November, 1949. Article 85 gives limitation of three years from the close of the year in which the last item admitted or proved is entered in the accounts (such year to be computed as in the account). The account in this case shows that the year was the calendar year. The mutuality in this case came to an end in 1949, for we find from the account that thereafter there are only entries of interest due to the bank, upto 31.10.1952. So the bank would get three. years from the end of 1949 under Article 85 and as the suit was filed on 9.4.1953, this entry will be of no help to the Bank...." 7. It was also contended that the Court had no jurisdiction, it being a time-barred case, and as such the order passed by the DRT is a nullity. In support of his case, he has cited an authority reported in Chief Engineer, Hydel Project v. Ravinder Nath.2 The relevant portions of paras 17 and 19 are reproduced as follows:- 2. 2008 (1) Supreme 544 . "17. ....Jurisdiction as to subject-matter, however, is totally distinct and stands on a different footing. Where a Court has no jurisdiction over the subject-matter of the suit by reason of any limitatiop imposed by statute, charter or commission, it cannot take up the cause of matter. As order passed by a Court having no jurisdiction is a nullity.... "17. ....Jurisdiction as to subject-matter, however, is totally distinct and stands on a different footing. Where a Court has no jurisdiction over the subject-matter of the suit by reason of any limitatiop imposed by statute, charter or commission, it cannot take up the cause of matter. As order passed by a Court having no jurisdiction is a nullity.... ....It is well settled and needs no authority that where a Court takes upon itself to exercise a jurisdiction it does not possess, its decision amounts to nothing. A decree passed by a Court having no jurisdiction is non est and its invalidity can be set up whenever it is sought to be enforced as a foundation for a right, even at the stage execution or in collateral proceedings. A decree passed by a Court without jurisdiction is a coram non judice....." "19. Once the original decree itself has been held to be without jurisdiction and hit by the doctrine of coram non judice, there would be no question of upholding the same merely on the ground that the objection to the jurisdiction was not taken at the trial, First Appellate or the Second Appellate State....." Another case cites as reported in Mafatlal Industries Ltd. v. Union of India.3 The relevant extract in para No. 338. is reproduced as follows :- 3. (1997) 5 SCC 536 . ".....(3) Cased of nullity may also arise during the course or at the conclusion of the enquiry. These cases are also cases of want of jurisdiction if the word "jurisdiction" is understood in a wide sense. Some examples of these cases are: (a) when the Tribunal has wrongly determined a jurisdictional question of fact or law; (b) when it has failed to follow the fundamental principles of judicial procedure e.g., has passed the order without giving an opportunity of hearing to the party affected; (c) when it has violated the fundamental provisions of the Act e.g., when it fails to take into account matters which it is required to take into account or when it takes into account extraneous and irrelevant matters; (d) when it has acted in bad faith; and (e) when it grants a relief or makes an order which it has no authority to grant or make; as also, (f) when by misapplication of the law it has asked itself the wrong question...." 8. It was argued for the appellants that consent does not give jurisdiction to any Court. The learned Counsel opined that the acknowledgements produced by the bank are not admissible for the above mentioned reason. He contended that all these acknowledgement notes did not extend the limitation and no cause of action had arisen as Article 19 of the Limitation Act was not attracted. Again, no addition or subtraction find prominence in the revival letters so as to denote the actual liability. He has also cited the following authority. 9. In the case reported in State of Uttar Pradesh v. Hindustan Aluminium,1 it was held that rules violative of provisions of the principal Act or any other existing statute are unsustainable. The said judgment is based on no evidence and as such it is a nullity. It was argued that since the entries in the books of accounts were not proved, therefore, the judgment passed by the Tribunal is a nullity. 1. AIR 1979 SC 1459 . 10. Instead of touching the heart of the problem, the learned Counsel for the appellants just skirted it. He has cited far fetched authorities which are inapplicable to the instant case. The appellants have signed a number of revivalletters. It may be recalled that loan was obtained on 14.7.1993. There are revival letters signed on 22.4.1996 for a sum of Rs. 10 lacs in the name of Mr. Chandra Prakash, Mr. Sanjay C. Prakash, Mrs. Bina S. Sahai, Mr. Jai Prakash, Mrs. Rekha Sanjay. The second is in. the name of Shaila Crown Pvt. Ltd. signed through its Directors for a sum of Rs. 10 lacs. The third is for a sum of Rs. 10,50,000/- by Mr. Chandra Prakash, Mr. Sanjay C. Prakash, Mrs. Bina S. Sahai, Mr. Jai Prakash and Mrs. Rekha Sanjay dated 22.4.1996. The fourth one is for a sum of Rs. 10,50,000/- in respect of Shaila Crown Pvt. Ltd. through its Directors. 11. There are other revival letters signed by all the aforesaid four persons. These four acknowlegement letters are of 15.4.1999. The case was filed on 19.2.2000. Under these circumstances, it is difficult to fathom as to how the present case is barred by time. As a matter of fact, the appellants have no crow to pluck with the bank. 12. 11. There are other revival letters signed by all the aforesaid four persons. These four acknowlegement letters are of 15.4.1999. The case was filed on 19.2.2000. Under these circumstances, it is difficult to fathom as to how the present case is barred by time. As a matter of fact, the appellants have no crow to pluck with the bank. 12. Even if the fact that account between the parties was neither mutual nor open and current or there were no reciprocal demands, the case was still filed within time. 13. The argument advanced on behalf of the appellants that acknowledgements tantamount to consent and consent does not give jurisdiction to the Court is lame of strength. There can be no conflictions on the point that acknowledgements do extend the time. In Wandoor Jupiter Chits (P) Ltd. (in Liquidation) v. K.P. Mathew,2 it was held :- 2. AIR 1980 Ker. 190 . "acknowledgement of the debt under section 18 of the Limitation Act provides for a fresh period of limitation would itself be sufficient, in the context of a contract of guarantee, to keep the surety's liability alive. Surety's contract, being separate and, collateral could not be equated to that of a co-debtor or joint contractor within the meaning of section 20 (2) of the Limitation Act so that the surety could not plead that the written acknowledgement by the debtor could not keep his (surety's) liability alive. The surety could not also plead discharge under section 133 of the Contact Act since the debtor's acknowledgement would not create contract different from the one the performance of which the surety had guaranteed. The acknowledgement does not involve the making of another contract under sections 134 and 135 of the Contract Act whereby the creditor, discharges the debtor or makes a composition with him. Nor is section 137 of the Contract Act attracted because mere forbearance to sue even for a time beyond the period of limitation does not oparate to discharge the surety. An acknowledgement does not also impair the remedy of the surety against the debtor, under section 139." This view also draws support from another authority reported in Mrs. Margaret Lalita Semuel v. Indo Commercial Bank Ltd..1 1. AIR 1979 SC 102 . 14. The instant case was filed well within time. 15. On the other hand, the Counsel for the respondent bank has invited my attention towards Ext. Margaret Lalita Semuel v. Indo Commercial Bank Ltd..1 1. AIR 1979 SC 102 . 14. The instant case was filed well within time. 15. On the other hand, the Counsel for the respondent bank has invited my attention towards Ext. A-27 which is a statementof account. It was explained that Ext. A-26 is only the, statement of Bill accounts. The actual statement of accounts is Ext. A-27 and even there is an entry in Ext. A-26 of 15.11.1993 and the credit and debit entries go to show that this is an open, mutual and current account. The statement of account at Ext. A-27 runsmto 28 pages. The Counsel for the appellants did not try to discuss the same. Moreover, otherwise too, the case came up before the learned D.R.T. within time. The entries from 26.10.1999 to 29.9.2000 show that the appellants had mutual and running accounts. 16. The requirement of law as per Rule 12 (7) of the Debts Recovery Tribunal (Procedure) Rules, 1993 is "if the defendant denies his liability to pay the claim made by the applicant, the Tribunal may act upon, the affidavit of the applicant who is acquainted with the facts of the case or who has no verification of the record sworn the affidavit in respect of the contents of application and the documents as evidence". The affidavit filed on behalf of the respondent Bank remains unrebutted on the record. 17. The next submission made by the Counsel for the appellants was that the appellants were not properly served in this case. It was explained that denial of opportunity is patent, explicit and in violation of the principles of natural justice. The ex parte order was recorded on 11.5.2007. No notice was given to the defendants. It is explained that as per Order IX, Rule 6 (1)(a) of CPC, notice of ex parte, hearing sbould have been given to the appellants. In support of his case he has cited a case reported in Sumtibai v. Para Finance Co. Mankanwar W/o Parasmal Chordia (D).2 Its para 7 and 8 are reproduced as follows:- 2. 2007.(7) Supreme 201=2007 (69) ALR 497 (SC)=2007 (59) AIC 247 (SC). "7. In support of his case he has cited a case reported in Sumtibai v. Para Finance Co. Mankanwar W/o Parasmal Chordia (D).2 Its para 7 and 8 are reproduced as follows:- 2. 2007.(7) Supreme 201=2007 (69) ALR 497 (SC)=2007 (59) AIC 247 (SC). "7. Before adverting to the question involved in this case, it may be noted that in the registered sale deed dated 12.8.1960 the shop in dispute has been mentioned and the sale was shown in favour of Kapoor Chand and his sons, Narainlal, Devilal and Pukhraj. Hence, the registered sale deed itself shows that the purchaser was not Kapoor Chand alon, but also his sons as co-owners. Hence, prima facie, it seems that the sons of Kapoor Chand are also co-owners of the property in dispute. However, we are not expressing any final opiniun on the question whether they are co-owners as that would be decided in the suit. But we are certainly of the opinion that the legal representatives of late Kapoor Chand have a right to take this defence by way of filing an additional written statement and adduce evidence in the suit. Whether this defence is accepted or not, of course, is for the Trial Court to decide. Hence, in our opinion, the Courts below erred in law in rejecting the applications of the heirs of Kapoor Chand to file an additional written statement. 8. Every party in a case has a right to file a written statement. This is in accordance with, natural justice. The Code of Civil Procedure is really the rules of natural justice which are set out in great and elaborate detail. Its purpose is to enable, both the parties to, get a hearing. The appellants in the present case have already been made parties in the suit, but it would be strange if they are not allowed to take a defence. In our opinion, Order XXII, Rule 4 (2) of Code of Civil Procedure cannot be construed in the manner suggested by learned Counsel for the respondent." 18. Counsel for the appellants also argued that this is a mistake on the part of the Court and the appellants should not be made to suffer from this mistake. In our opinion, Order XXII, Rule 4 (2) of Code of Civil Procedure cannot be construed in the manner suggested by learned Counsel for the respondent." 18. Counsel for the appellants also argued that this is a mistake on the part of the Court and the appellants should not be made to suffer from this mistake. He has cited the case reported in Rosali V. v. Taico Bank,1 wherein reliance was placed on well-known legal maxim, "Actus Curiae neminem gravabit (an act of Court shall prejudice no man)..." 1. 2007 (66) ALR 798 (SC)=2007 (51) AIC 102 (SC). 19. The facts of authority reported in Sumtibai v. Para Finance Co. (supra) are peculiar, different and hardly dovetail with the facts of the instant case. 20. I have perused the order-sheets of the Lower Court. The case started before the DRT on 6.3.2002. On 11.7.2003 postal receipts were filed before the Court. Notices sent to the defendants were not received back. After the expiry of 30 days it was deemed to be proper service. The Registrar of the Court ordered that the matter be put up before the learned Presiding Officer on 12.9.2003. Further, on 12.9.2003, one Mr. Prashant Kumar, advocate appeared on behalf of defendant Nos. 1 and 3, namely Shaila Crown Private Limited and Mr. Chandra Prakash. Defendants Nos. 2, 4, 5 and 6 were proceeded against ex parte. Written statement was filed by defendant Nos. 1 and 3 on 5.1.2004. Defendant Nos. 4 and 6, namely, Mrs. S. Sahai and Mrs. Rekha Sanjay also appeared. Their application for setting aside ex partewds accepted subject to payment of costs of Rs. 900/-. (emphasis supplied). Thereafter, for some time the Presiding Officer did not hold the Court. 21. Vide order dated 13.9.2005, the Registrar ordered the matter to be put up before the learned Presiding Officer on 5.10.2005. On 5.10.2005 and on 13.1.2006, the Presiding Officer was on leave. The case was put up for further proceedings on 4.5.2006. 22. On 4.5.2006, none appeared on behalf of the defendants. Again, on 2.8.2006 and 4.10.2006 none appeared on behalf of the defendants. On 4.10.2006 the case was fixed for pronouncement of judgment. On the same day, Mr. Prashant Kumar, advocate, appeared on behalf of defendant Nos. 1 and 3. Applicalion for recalling the ex parte proceedings was filed. 22. On 4.5.2006, none appeared on behalf of the defendants. Again, on 2.8.2006 and 4.10.2006 none appeared on behalf of the defendants. On 4.10.2006 the case was fixed for pronouncement of judgment. On the same day, Mr. Prashant Kumar, advocate, appeared on behalf of defendant Nos. 1 and 3. Applicalion for recalling the ex parte proceedings was filed. The learned Presiding Officer observed that the application submitted at such stage though cannot be entertained, however; in the interest of justice asa special case it was taken on record subject to certain conditions viz. they were directed to serve copy of the recall application along with copy of that order on the Manager of applicant bank/its learned Counsel against acknowledgement and submit the same (acknowledge/receipt) in the registry by 11.10.2006 and to file written statement by that date. On 11.10.2006 written statement was filed on behalf of defendants before the Assistant Registrar, and he ordered the parties to appear before the Presiding Officer on 12.10.2006. On 12.10.2006, the ex parte order was set aside and the case was fixed for hearing arguments on 13.10.2006. On 13.10.2006 the case was adjourned to 18.12.2006. It was adjourned to 7.2.2007 and again to 19.4.2007. On 19.4.2007 Mr. Prashant Kumar sought further time to argue the case and the case was fixed for 11.5.2007. On 11.5.2007, none appeared on behalf of the defendants and they were proceeded against ex parte. The case was adjourned to 1.6.2007 for hearing ex parte arguments. On 1.6.2007 none appeared on behalf of the defendants and the case was adjourned for pronouncement of judgment on 9.7.2007. The ex parte judgment, was pronounced on 9.7.2007. 23. It was clearly recognized as early as 1866 in Ferguson v. Wilson,1 that directors are in the eyes of law agents of company. The Court said: 1. 1866 (2) Ch. App. 77 : 36 LJ Ch. 67: 15 LT 230. "The Company has no person; it can only through directors and the case is, as regards those directors, merely the ordinary case of principal and agent. " 24. The Apex Court in another case Mohan and Co. v. Wazir Jaiver Chandra,2 was pleased to observe :- 2. AIR 1989 SC 630 . "The proviso insists that before any amount of rent can be said to be in arrears, a notice has to be serve through post. " 24. The Apex Court in another case Mohan and Co. v. Wazir Jaiver Chandra,2 was pleased to observe :- 2. AIR 1989 SC 630 . "The proviso insists that before any amount of rent can be said to be in arrears, a notice has to be serve through post. All that a landlord can do to comply with this provision is to post a prepaid registered letter (acknowledgement due or otherwise) containing the tenant's correct address. Once he does this and the letter is delivered to the Post Office, he has no control over it. It is then presumed to have been delivered to the addressee under section 27 of the General Clauses Act." 25. The Hon'ble Afex Court in a recent authority reported in Sunil Poddar v. Union Bank of India,3 was pleased to hold: 3. 2008 (71) ALR 312 (SC)=2008 (64) AIC 166 (SC). "19. It is, therefore, clear that the legal position under the amended Code is not whether the defendant was actually served with the summons in accordance with the procedure laid down and in the manner prescribed in Order V of the Code, but whether (i) he had notice of the date of hearing of suit, and (ii) whether he had sufficient time to appear and answer the claim of the plaintiff. Once these two conditions are satisfied, an ex parte decree cannot be set aside even if it is established that there was irregularity in service of summons. 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 okummons for setting aside ex parte decree passed against him by invoking Rule 13, Order IX of the Code. Since the said provision applies to Debt Recovery Tribunals and Appellate Tribunals under the Act in view of section 22 (2) (g) of the Act, both the Tribunal were right in observing that the ground raised by the appellants could not be upheld. It is not even contended by the appellants that though they had knowledge of the proceedings before the DRT, they had no sufficient time to appear and answer the claim of the plaintiff-bank and on the ground, ex parte order deserves to be set aside. 26. It is not even contended by the appellants that though they had knowledge of the proceedings before the DRT, they had no sufficient time to appear and answer the claim of the plaintiff-bank and on the ground, ex parte order deserves to be set aside. 26. Punjab and Haryana High Court in case of Ajita Sharma v. Rakesh Kumar Sharma,1 held : 1. 1999 (1) SCC 363 (P&H). "If a person knows about a pending case and still ignores the said litigation, it would be wholly unfair for that person to urge that he had not been formally served." 27. Same view was taken by Chairperson, DRAT, Delhi in case reported in Inrays v. State Bank of India.2 2. 2008 BC 67. 28. It is thus clear that in this case the appellants have not approached the Court with clean hands and they have no qualms in telling untruth before this Court. The Hon'ble Supreme Court in the case in S.P. Chengalvaraya Naidu (dead) by LRs. v. Jagannath (dead) by LRs.3 was of the view :- 3. AIR 1994 SC 853 . "The principle of finality of litigation cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The Courts of law are meant for imparting justice between the parties. One who comes to the Court, must come with clean hands. We are constrained to say that more often than not, process of the Court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the Court process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person whose case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of litigation." 29. Similar view was taken by Apex Court in a recent authority as Prestige Lights Ltd. v. State Bank of India.4 4. (2007) 8 SCC 449 . 30. This appeal was filed against interlocutory order delivered under section 22 (2) (g) of the RDDBFI Act, 1993 and as such the appellants are not required to pay the Court-fees on the decreetal amount. They have already paid Court-fees in the sum of Rs. 250/-. 31. The whole gamut of the above said facts and circumstances leans on the side of the bank. They have already paid Court-fees in the sum of Rs. 250/-. 31. The whole gamut of the above said facts and circumstances leans on the side of the bank. The appellants have no case. Both the cases are dismissed in limine. 32. Another original judgment be placed on the cormected file. Appeals Dismissed.