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2011 DIGILAW 2735 (ALL)

Sawaria Agarwal v. State Bank Of India

2011-12-01

R.K.GUPTA

body2011
JUDGMENT : R.K. GUPTA (Chairperson) 1. Learned Counsel for both the parties are heard. This is an Appeal preferred by the appellant under Section 20 of the RDDBFI Act, 1993, by which the judgment passed by the D.R.T. on 28th July, 2011, has been challenged. By this order the application submitted by the appellant alleging fraud to set aside the judgment and decree dated 11th October, 2002, which was passed in O.A. No. 106/2002 has been rejected. The learned Counsel for the appellant very fairly submitted that the appellants came to know about the ex-parte judgment and decree in the month of January, 2009 (Para 13 of the application before the D.R.T.). Thereafter, an application for setting aside the ex-parte judgment and decree was moved on 8th September, 2010. 2. Before the Tribunal an objection on behalf of the Bank was raised that Smt. Uma Gupta, who was also one of the applicants in the M.A. No. 75/2010 has already lodged an objection before the Recovery Officer on 15th January, 2010 and also 2-3 years earlier to the said date an objection was lodged by her. On the basis of the same, it is apparent that so far as Smt. Uma Gupta is concerned, she was already aware about 2-3 years back from 15th January, 2010 that an ex-parte judgment and recovery certificate has been directed to be issued by the Tribunal by its order dated 11th October, 2002. It was passed in the Original Application No. 106/2002. 3. The appellant, has not explained any delay. According to them, they were aware of the ex parte judgment and decree in the month of January, 2009 and what was the reason for delay in moving the application for setting aside the ex-parte judgment and decree on 8th September, 2010. No application for condonation of delay was even moved by the appellant for setting aside the ex-parte judgment and Recovery Certificate dated 11th October, 2002 before the D.R.T. 4. Before the D.R.T., the learned Counsel for the appellant Mr. V.D. Chauhan very fairly submitted that application was moved for setting aside the ex-parte judgment and decree by alleging fraud against Shree Gopal Oil Mills (P) Ltd., who was the borrower. Before the D.R.T., the learned Counsel for the appellant Mr. V.D. Chauhan very fairly submitted that application was moved for setting aside the ex-parte judgment and decree by alleging fraud against Shree Gopal Oil Mills (P) Ltd., who was the borrower. The mortgagor was Shree Vishnu Agarwal, who was arrayed as defendant No. 2 and it was the submission of the appellant before the D.R.T. in M.A. No. 75/2010 that since fraud was practised by Mr. Vishnu Agarwal in connivance of the officers of the Bank, therefore, the judgment and issuance of recovery certificate by an order dated 11th October, 2002 was bad in law. 5. For the purpose of the said application, the appellant claimed the limitation as prescribed under Article 59 of the Indian Limitation Act, 1963. Article 59 provides a period of three years to cancel or set aside an instrument or decree or for the rescission of a contract and time for which the period begins to run, when the facts entitling the plaintiff to have the instrument or decree cancelled or set aside or the contract rescinded first become known to him. 6. According to the learned Counsel for the appellant, the appellants came to know about the judgment and decree in the month of December, and according to the respondent-Bank, 2-3 years before 15th January, one of the applicants Smt. Uma Gupta was aware of the judgment and decree and in spite of the same, no application was lodged by her for setting aside the ex-parte judgment and decree. 7. In the present case, this fact is to be noted that the present appellants are the legal heirs of deceased Shri Sita Ram Agarwal. Mr. Vishnu Agarwal was the son of late Sita Ram Agarwal. The appellant Nos. 3 to 5 are the daughters of deceased Sita Ram Agarwal and appellant No. 1 is son of deceased Sita Ram Agarwal. As far as the appellant No. 2 is concerned, she is wife of deceased Sita Ram Agarwal. Thus, all of them have the blood-relationship. 8. There was nothing stated in the application that deceased Vishnu Agarwal was not residing with his brothers, sisters and the mother and also was not residing with deceased Shri Sita Ram Agarwal, but a bare statement was made that there were no talking terms amongst them. The appellants have not adduced any evidence before the Tribunal to prove this. 8. There was nothing stated in the application that deceased Vishnu Agarwal was not residing with his brothers, sisters and the mother and also was not residing with deceased Shri Sita Ram Agarwal, but a bare statement was made that there were no talking terms amongst them. The appellants have not adduced any evidence before the Tribunal to prove this. 9. The appellants even have not deposited any amount under Section 21 of the “Act” and have also not claimed waiver of the amount of deposit, as per Section 21 of the “Act” to maintain a valid Appeal. 10. Learned Counsel for the appellants submitted that earlier judgment and decree was passed by the Civil Court on 13th February, 2003 in Civil Suit No. 26-A/2000 decided by the Additional District Judge, Bilaspur. Copy of the said judgment and decree has been placed on record. By reading the said judgment, the learned Counsel for the appellants submitted that finding was recorded in the said Civil Suit that the property belongs to Hindu Undivided Family and therefore, on this basis, it is submitted by him that since the property was belonging to H.U.F., therefore, the property could not have been mortgaged by late Shri Vishnu Agarwal, hence there is a fraud in the transaction. 11. The fact remains that the said Civil Suit was filed in the year 2000 and decree was passed on 13th February, 2003. Late Shri Vishnu Agarwal was the Managing Director of Gopal Oil Mills Pvt. Ltd., who was the principal-borrower. 12. On the basis of the aforesaid, this is to be seen that late Shri Vishnu Agarwal and his wife Smt. Meera Agarwal were the mortgagors of the property, and Vishnu Agarwal was the Managing Director of Shree Gopal Oil Mills Pvt. Ltd., who was the principal borrower and was also plaintiff in the Civil Suit i.e., 26-A/ 2000. Shree Gopal Oil Mills Pvt. Ltd. was sued through the Managing Director Shri Vishnu Agarwal. Shri Vishnu Agarwal was arrayed as respondent No. 2 before the D.R.T. in the Original Application No. 106/01. The Tribunal has recorded that Original Application under Section 19 of the RDDBFI Act, 1993 was decided without contest, Shri Vishnu Agarwal expired on 10th March, 2004. Shree Gopal Oil Mills Pvt. Ltd. was sued through the Managing Director Shri Vishnu Agarwal. Shri Vishnu Agarwal was arrayed as respondent No. 2 before the D.R.T. in the Original Application No. 106/01. The Tribunal has recorded that Original Application under Section 19 of the RDDBFI Act, 1993 was decided without contest, Shri Vishnu Agarwal expired on 10th March, 2004. Ex-parte judgment and decree was passed on 11th October, 2002 in O.A. No. 106/2002 by the D.R.T. In spite of the fact that late Shri Vishnu Agarwal was arrayed as defendant No. 2 before the D.R.T., he was noticed, but he has not cared to contest the application or to bring into the notice of the Tribunal about the pendency of the civil suit, which was filed before IInd Additional District Judge, Bilaspur, which was registered as 26-A/2000. 13. If Shri Vishnu Agarwal was alive on the date when the ex-parte judgment and Recovery Certificate was directed to be issued by the D.R.T. by its order dated 11th October, 2002, then it was for him to have taken a defence before the Tribunal by taking appropriate plea that Civil Suit is pending before the Additional District Judge, Bilaspur with regard to the status of the property, whether the property mortgaged by him was of H.U.F. or was of the Company. Since Shri Vishnu Agarwal and other defendants were proceeded ex-parte, therefore, the Debts Recovery Tribunal concluded that a mortgage was created by Shri Vishnu Agarwal and directed to issue the Recovery Certificate to recover the debt from the secured asset, which was mortgaged by deceased Vishnu Agarwal. 14. The findings so recorded in a civil suit, with regard to the fact that the property mortgaged was of H.U.F., was not binding on the Bank, because, the Bank was not a party/defendant in the said civil suit before Civil Court. More so, it could also be said that the said Civil Suit at Bilaspur, was purposely filed by Gopal Oil Mills, through Managing Director late Shri Vishnu Agarwal, the mortgagor, to frustrate the transaction of the Bank, that the property was of H.U.F. and could not have been mortgaged. More so, it could also be said that the said Civil Suit at Bilaspur, was purposely filed by Gopal Oil Mills, through Managing Director late Shri Vishnu Agarwal, the mortgagor, to frustrate the transaction of the Bank, that the property was of H.U.F. and could not have been mortgaged. On the contrary the Civil Suit should have been filed by the deceased Shri Sitaram Agarwal, who was the defendant in the said Civil Suit, to declare the mortgage as illegal, as no mortgage could have been created by Late Shri Vishnu Agarwal on H.U.F. property. 15. The aforesaid findings have been recorded with regard to the legality and validity of the mortgage. Every illegal mortgage cannot be treated to be a fraudulent mortgage, therefore, with respect to the alleged fraudulent mortgage, separate findings are being recorded in the following paragraphs. 16. Though, while moving an application before the D.R.T., the limitation was claimed by the appellants for a period of three years as prescribed under Article 59 of the Indian Limitation Act, 1963. It was alleged that the same was a result of fraud practised against the H.U.F. and the allegations were made. Since the property is belonging to H.U.F., no mortgage would have been created by deceased Vishnu Agarwal. It was alleged that deceased Vishnu Agarwal in connivance of the Bank Officers practised fraud with the result, decree was obtained by the Bank by practicing fraud and is liable to be set aside. It was also submitted before the D.R.T. on the basis of certain documents that the property was not belonging to the Company, and the property not belonging to the Company was fraudulently mortgaged by Shri Vishnu Agarwal in connivance with Bank Officers. 17. On the basis of such fraudulent transaction, the question has to be decided, if the application is moved for setting aside the ex-parte judgment and decree by alleging fraud against the mortgage in connivance of the Officers of the Bank, whether Civil Court will have the jurisdiction to entertain such plea or the D.R.T. will have the jurisdiction to decide the fraud? 18. In this reference, the judgment passed by the Apex Court in 263526, would be relevant. Paragraph 143 of the said judgment is relevant and the Apex Court on para 143 is referable. 18. In this reference, the judgment passed by the Apex Court in 263526, would be relevant. Paragraph 143 of the said judgment is relevant and the Apex Court on para 143 is referable. The Apex Court placed on reliance on the earlier judgment passed by the Apex Court in 274056, which would be relevant. Para 143 is reproduced as under: 143. One of the contentions which have been raised is whether the transactions under derivative agreements would come within the purview of the RDDBFI Act. Of course, a Tribunal will have a jurisdiction to decide the issue being a jurisdictional issue. Furthermore, the Company has alleged fraud and misrepresentation. This Court in Mardia Chemicals Ltd. v. Union of India has also held that even in such an event, the jurisdiction of the Civil Court can be invoked. Several other issues of complicated nature may arise before the Civil Court. We, therefore, are of the opinion that it may not be a fit case where we should exercise our jurisdiction under Article 142 of the Constitution of India. 19. On the basis of the aforesaid judgment, for the purposes of setting aside the judgment and decree and to apply the Article 59 of the Indian Limitation Act, 1963 would have no application, if the judgment and decree is sought to be quashed by alleging fraud and the limitation under Article 59 available for setting aside the ex-parte judgment and decree would apply for filing of Suit before the Civil Court within a period of three years as stipulated under Article 59 of the Indian Limitation Act to set at naught the judgment and Recovery Certificate obtained by fraud. 20. In the present case, as the facts reveal that no application was moved by the appellant for setting aside the ex-parte judgment and decree by taking recourse to the Order 9 Rule 13 of the C.P.C., but the judgment and issuance of Recovery Certificate was sought to be quashed by alleging fraud and for which the appellant is claiming limitation of three years as contemplated under Article 59 of the Indian Limitation Act. 21. Since the D.R.T. has no jurisdiction to decide in relation to the fraud alleged by the persons, therefore, it was incumbent on part of the legal heirs of the present appellants to have moved before the Civil Court, which admittedly has not been done. 21. Since the D.R.T. has no jurisdiction to decide in relation to the fraud alleged by the persons, therefore, it was incumbent on part of the legal heirs of the present appellants to have moved before the Civil Court, which admittedly has not been done. In view of the aforesaid discussions, I do not find any substance in the present case and, accordingly, the Appeal is without any merit, hence the same is dismissed subject to cost of Rs.50,000/-, which will be included in the Recovery Certificate.