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2017 DIGILAW 1365 (KER)

Indira R. Pillai @ Indiramma v. Federal Bank Ltd.

2017-11-01

DEVAN RAMACHANDRAN, P.N.RAVINDRAN

body2017
JUDGMENT : Devan Ramachandran, J. 1. The absolute need and imperative requirement for implicit care and prudence to be employed by Banks and financial institutions while sanctioning loans and executing security documents have been restated by courts including our courts several times before. In spite of this, it is distressing that we come across cases where, purely on account of oversight or on account of deliberate design - which points suspiciously to the banks and its officials, sometimes litigations are set in motion with respect to loans and creation of security interest on the allegation that they have been done with malafides employing confutative and questionable means. 2. The case that we see here and the facts presented are virtually a text book example of what we have just said now. This is a case where the appellant alleges that her signatures were forged and security interest created against her name, even though she was not involved in the transaction at all. The modus operandi, which she alleges is employed in this case, is asserted to have been conceived by her brother, who is arrayed as a defendant in the suit who, according to the appellant, had created a power of attorney shown to be executed by her in his name and then availed of a loan from the bank by executing security documents, including guarantees and equitable mortgage of the property in her name. This led to the bank obtaining an ex parte decree against her and then proceeding against her property, in execution proceedings, alleged to be the secured asset and bringing it to sale, which she says she was not aware at all for a long time thereafter. According to the appellant, on being aware of all this, she filed an application before the court below praying that the ex parte decree against her be set aside along with another application to have the delay of more than 10 years in filing it condoned, on the averment that she was not aware of the various proceedings against her and on the singular ground that she was not served with the summons by the court below in the suit before it was decreed. 3. 3. The compendious facts that led to this appeal is that the appellant who is stated to be residing in Bombay became aware that her property, comprised of 50.60 Ares in Re.Sy No.6/4 in Block No.14 (Sy.No.30/5), had been purchased by the Federal Bank of India, the first respondent herein, under a court sale on the strength of a decree that they had obtained against her. The appellant alleges that it was only on 10.8.2013, when her husband came to Kerala for some other reason that she came to know that her property had been sold. On being so aware, she says she made enquiries to find that the bank had obtained a decree against her ex-parte, which is dated 21.1.2003. She says that on further enquiry she understood that the properties have been sold through a court auction and that it were purchased by the bank itself as early as in 2008. She says that, therefore, she was forced to file an application before the court below, numbered as I.A.No.1981 of 2013, to have the ex-parte decree set aside along with another application namely, I.A.No.1980 of 2013 praying that the delay of 10 years, one month and 20 days be condoned in filing the application to have the ex-parte decree set aside. 4. The court below permitted the appellant to lead evidence in the I.A., but eventually found, by the order impugned in this appeal, that she has not been able to show sufficient cause for seeking condonation of delay for the large period of 10 years, one month and 20 days and therefore, consequentially dismissed the application for condonation of delay, namely I.A.No.1980 of 2013, leading to the dismissal of I.A.No.1981 of 2013 also. This order, which was issued by the court below on 29.11.2014 has been impugned by the appellant in this appeal. 5. We have heard the learned counsel for the appellant, Sri. A.R. Dileep and the learned counsel appearing for the first respondent. 6. Even though notices issued from this Court to respondents 2 and 4 were accepted by them, they have not chosen to enter appearance. The third respondent Smt.P.Gomathi Amma died pending this appeal and as per order dated 14.2.2017, the appellant and the 2nd respondent have been recorded as her legal heirs. 7. The suit before the Sub Court, Kottarakkara, namely, O.S.No.93 of 2002 was instituted by the Federal Bank Limited. The third respondent Smt.P.Gomathi Amma died pending this appeal and as per order dated 14.2.2017, the appellant and the 2nd respondent have been recorded as her legal heirs. 7. The suit before the Sub Court, Kottarakkara, namely, O.S.No.93 of 2002 was instituted by the Federal Bank Limited. In the suit, there were 4 defendants, namely the 2nd respondent herein, Sri. K. Rajagopal, the 3rd respondent herein, Smt. P. Gomathiamma, the appellant herein and the 4th respondent namely Smt.Amrutharani P.S. The relationship of the parties in this case are also relevant. The 2nd respondent Sri. K. Rajagopal is the brother of the appellant and the 4th respondent, Smt. Amrutharani is the wife of the 2nd respondent. Therefore, the relationship of the appellant with respondents 2 and 4 is that of her brother and sister-in-law. 8. The appellant alleges that the 2nd respondent, her brother, had fraudulently created a power of attorney, which had been marked in evidence as Ext.B1, as early as in the year 1999, with the intent of allegedly depriving her of her property. According to the appellant, a loan was availed of by the 2nd respondent from the Federal Bank on the strength of this power of attorney and that he had created an equitable mortgage over the properties belonging to her making use of the title deed that were available with him, because it is a settlement deed in which he himself had rights apart from his mother and the appellant. The appellant alleges that the 2nd respondent did not care to service the loan satisfactorily, which led the bank to institute O.S.No.93 of 2002 on the files of the Sub Court Kottarakara. She says that she was not aware of these proceedings at all and that she had applied for a copy of the B-diary from the court after she became aware of the decree against her. 9. At this point, we must say that some of her averments in the application to have the decree set aside would appear to be incongruous to the averments contained in the application she had filed before the court below, while applying for the B-diary of the proceedings. 9. At this point, we must say that some of her averments in the application to have the decree set aside would appear to be incongruous to the averments contained in the application she had filed before the court below, while applying for the B-diary of the proceedings. She had made an application namely, I.A.No.1250 of 2013 before the Sub Court, Kottarakara on 5.7.2013 wherein she says that she had come to Kerala on 5.6.2013 and that it was then that she knew that a decree has been passed against her. The averments in the I.A filed before the court below to have the decree set aside, however, says that it was her husband who came to Kerala on 10.8.2013, who then became aware of the said decree. This inconsistency, which perhaps is on account of lack of care at the instance of the appellant while making pleadings before court would, however, not vitiate her case against the decree because it is a fact that the decree was passed against her, ex-parte, as early as on 21.1.2003. 10. The question before us is whether before passing the decree, the court below had ensured that the appellant had been served. For this purpose, we have examined the records of the court below and also made an assessment as to the manner in which the service of notice against her had been recorded. 11. The materials before us, specially that relating to the proceedings before the court below, would show that summons was issued by the court below in the name of the appellant, but to the address shown of that of the 1st respondent, who was described as her power of attorney. We also see that summons was issued to respondents 2, 3 and 4, who were defendants 1, 2 and 4 in the suit, in one form which again was sent to the same address in which the 2nd respondent was residing. It appears that all these summons, including that of the appellant, were received by the 2nd respondent on 19.7.2002 and the endorsements contained in the duplicate copy of the summons would show that the 2nd respondent accepted the summons on behalf of the appellant, showing himself to be her power of attorney. As regards the summons to the other defendants, he is seen to have accepted that also on their behalf. 12. As regards the summons to the other defendants, he is seen to have accepted that also on their behalf. 12. The recordings in the B-diary maintained by the court below would indicate that on 26.8.2002, some counsel appeared on behalf of the appellant and sought time till 19.10.2002. However, the records would not show that any vakalath or appearance memo had been filed on behalf of the appellant any time thereafter. On 16.12.2002, the court below, on the basis of the endorsements made on 26.8.2002, went on to declare the defendants ex-parte and listed the case to 21.1.2003 for trial. On 21.1.2003, accepting the evidence led by the plaintiff Federal Bank alone, an ex-parte decree was passed. Just short of 7 months thereafter, on 18.8.2003, E.P.No.43 of 2003 was filed by the bank which, in about 2 ½ years time, led to an auction sale being conducted by the court of the property belonging to the appellant. On 18.3.2006, the court conducted the auction and the plaintiff, namely, the Federal Bank itself bid the property. The court below thereafter, confirmed the sale on 14.3.2008 and the case was listed to 23.7.2008, on which day a sale certificate was also issued. Of course, there are certain other allegations that have been made by the appellant to which we will deal with presently. 13. The proceedings, as we have noticed above, make it virtually indubitable that, at no point of time had the court below served summons on the appellant personally. Service on the appellant was recorded to have been completed because it was received by the 2nd respondent who claimed to be her power of attorney holder. We do not think that the court below was wrong in recording that the service of summons had been concluded against the appellant, because, under the provisions of Order V Rule 12 of the Code of Civil Procedure, where an agent is empowered to accept service, it can be served on such agent and not on the defendant in person. In this case, the assertion of the plaintiff bank and that of the 2nd respondent appears to be that the latter is the power of attorney holder of the appellant. If this had been the truth, then the service of notice on the 2nd respondent under the provisions of Order V Rule 12 would have been sufficient. 14. In this case, the assertion of the plaintiff bank and that of the 2nd respondent appears to be that the latter is the power of attorney holder of the appellant. If this had been the truth, then the service of notice on the 2nd respondent under the provisions of Order V Rule 12 would have been sufficient. 14. However, the question is whether the power of attorney, that is alleged to have been executed by the appellant in favour of the 2nd respondent, is valid or otherwise. This is pertinent because, the appellant asserts very vehemently that she had at no time executed such a power of attorney. This, therefore, compels us to an examination as to the validity of the power of attorney, because, if the power of attorney is valid, then the entire edifice of the appellant's case, built on the allegation of lack of proper service would fall; but on the other hand, if the power of attorney is found to be not genuine, then she would have a valid cause which she can then prosecute further. 15. The power of attorney allegedly executed by the appellant in favour of the 2nd respondent has been placed on record as Ext.B1. This power of attorney seems to be dated 23.7.1999 and executed before a certain Sri. R. Jayaprakash, Advocate and Notary, Kottarakara. This Notary has been examined by the court below as DW1. The evidence let in by this witness is of acme importance, because it throws considerable light on the question whether the power of attorney is genuine or otherwise. 16. Before we venture into an examination as to the genuineness of the power of attorney, we must place on record that our intention is not to make an extensive enquiry leading to a conclusive finding because our view is that if even a prima facie case is seen against the power of attorney, then the matter would have to be remanded to the court below to arrive at conclusive findings, based on the facts to be proved through detailed evidence. Our intent is only to test the contention that the power of attorney is not genuine in a prima facie manner. Our endeavour is only to that extent and nothing more. 17. Our intent is only to test the contention that the power of attorney is not genuine in a prima facie manner. Our endeavour is only to that extent and nothing more. 17. The power of attorney that we are referring to is shown to have been executed by Smt.Indira R. Pillai, the appellant herein, in the presence of the Notary Public, namely, DW1 Sri. R. Jayaprakash. DW1 in his evidence states categorically that Indira R. Pillai had appeared before him along with the 2nd respondent, her brother, when this power of attorney was executed. He has specifically deposed that Indira Pillai, the appellant was introduced to him by the 2nd respondent and that he had verified her signature from the documents presented before him, presumably the settlement deed and such other title documents. He, however, does not say that her identity was in any manner ascertained by him and he virtually admits that he had been told by the 2nd respondent that the person in front of him was the appellant, introducing her to be his sister. 18. The confidence reposed by DW1 on the 2nd respondent is also understandable, because, the 2nd respondent is said to have been a counsel practicing in the Sub Court, Kottarakara and obviously, therefore, the Notary had no reason to disbelieve the 2nd respondent at that point of time. However, it is indubitable from the materials available on record that the Notary Public had not independently verified the identity nor had he tried to ascertain the identity of the person presented before him as Smt. Indira R. Pillai. 19. The law relating to Notaries are governed in India by the Notaries Act, 1952. Under Section 8 of the said Act, a Notary may do all or any of the acts that are enumerated therein and one among them is to “verify, authenticate, certify or attest the execution of any instruments. As per the Rules made under Section 15 of the said Act, the Notaries are expected to maintain notarial registers in which all the details of the persons appearing before them are to be recorded. The Notary, DW1 had, in fact, brought the notarial register before the court below and in which he had record the attestation made on Ext.B1 on 23.7.1999. The Notary, DW1 had, in fact, brought the notarial register before the court below and in which he had record the attestation made on Ext.B1 on 23.7.1999. Of course, this register was never produced on record, nor was it marked, because, DW1 said that it was not possible to do so since it is a register that was required by him for daily reference. Even accepting the version of DW1 to be completely true, the only thing that become discernible from it is that a power of attorney was attested by him on 23.7.1999 and that he had entered all the details in that register. However, it does not show in any manner that he had ascertained the identity of the person before him, introduced to him as Indira R. Pillai by the 2nd respondent. This become relevant and pertinent on account of the fact that it is the specific case of the appellant that the 2nd respondent had concocted the document for availing certain loans from the bank with the intention of depriving of her property. 20. The standards of care and responsibility to be employed by Notaries while attesting and creating documents are specified in the circular issued by the Government of Kerala No.4169/H2/94/Law dated 17.3.1994. This circular contains the general instructions to the Notaries under the heading “IV. “General Directions”, the 5th paragraph of which mandates as under: “5. A Notary should do his work fairly and honestly. In this context attention is invited to the decision of High Court of Bombay, reported AIR 1992 Bombay 149, wherein it was observed:”....... the Notary is normally a responsible member of the legal profession and he is expected to take due care to satisfy himself about the identity of the party appearing before him. If the party appearing before the notary is not known to the notary, the notary must get the party identified by an advocate known to him and take signature of both of them in token thereof .... If the document is marked as true copy by the notary without taking due care and even making any entry in the notarial register and without taking signature of an Advocate identifying the executant or without taking other reasonable precaution, it cannot be said that the notary is discharging his duty in accordance with law as is expected of him” 21. The nature of the care and responsibility to be employed and exhibited by a Notary Public has engaged the attention of courts before and Sri. Dileep, learned counsel for the appellant brings our attention to the judgment of the Hon'ble High Court of Bombay in Prataprai Trumbaklal Mehta v. Jayant Nemchand Shah & Another AIR 1992 Bombay 149. This is a judgment delivered by a learned single Judge and in paragraph 10 thereof the requirements expected of a Notary is stated very lucidly as under: “10. xxxx xxxxx The question in these matters can always crop up as to whether the proper person had executed the original document. Law takes judicial notice of seal of a notary. In ordinary course, an initial presumption may be made about genuineness of the notarised copy of the document. The underlying idea behind such presumption is that the notary is normally a responsible member of the legal profession and he is expected to take due care to satisfy himself about the identity of the party appearing before him. If the party appearing before the notary is not known to the notary, the notary must get the party identified by an Advocate known to him and take signature of both of them in token thereof. Notarised copies of power of attorney and other documents are filed with Banks, Courts and other public institutions. If documents are marked as true copy by the notary without taking due care and even making any entry in the notary register and without taking signature of an advocate identifying the executant or without taking other reasonable precaution, it cannot be said that the notary is discharging his duty in accordance with law as expected of him. "Good faith" implies due care and caution. xxxxxx” 22. The cumulative effect of the circular and the judgment referred above is that a Notary should act as a responsible person of the legal profession and is required to take adequate and due care to satisfy himself about the identity of the party appearing before him. Of course, if the party is known to him personally, then he will have to make an endorsement that he knows the person and in the alternative, he will have to show that the person was identified to him by another lawyer or by some other such method which will stand scrutiny of law. 23. Of course, if the party is known to him personally, then he will have to make an endorsement that he knows the person and in the alternative, he will have to show that the person was identified to him by another lawyer or by some other such method which will stand scrutiny of law. 23. In the case at hand, it is ineluctable that none of explicit requisites of care and responsibility had been sufficiently employed by the Notary Public namely, DW1. His evidence would only show that there was a person before him who had signed the power of attorney, but by no stretch of imagination can it be seen from his evidence that he knew that the person signing was 'Indira R. Pillai'. If that be so, it will be difficult for us to believe that Ext.B1 is a proper power of attorney. 24. As we already indicated above, the underpinning of our consideration in this case rests more or less on the validity of the power of attorney. As we also said above, if the power of attorney is genuine then the service of notice on the power of attorney would be valid under Order V Rule 15 of the Code of Civil Procedure. Even though it is not necessary for us to make a detailed consideration into this, we are aware that Sri. Dileep, learned counsel appearing for the appellant has a contention that even in the case of a valid power of attorney, service on such attorney can be done only under the provisions of Order III Rule 6 of the Code of Civil Procedure. We do not propose to go into a deep engagement of our mind on this issue, because, as is evident from the structure of the Code of Civil Procedure, Order III applies to cases after service is complete on the parties, whereas Order V relates to service of notice alone. Suffice to say, the character of an agent as mentioned in Order V is not the same as that is recorded in Order III of the C.P.C. Order III refers to registered agents who will be empowered to appear on behalf of the litigant in a court after service of notice, whereas Order V refers to agents who are empowered to accept summons in the manner provided either under Rule 12, 13, 14 or 15 thereof. We do not require to say anything further in this and we refrain ourselves from answering the contentions of Sri. Dileep affirmatively, because, it is not necessary to do so in this case, once we find that the power of attorney does not find favour, at least in our limited scope of enquiry here. 25. The learned counsel appearing for the bank, in answer to the various submissions made by Sri.Dileep, says that the bank still maintains that the power of attorney was executed by Smt.Indira R.Pillai, the appellant and he submits that this is obvious from the fact that the second respondent was in possession of the title deeds of the appellant, along with the power of attorney when he approached the bank for a loan. According to him, if the appellant had not entrusted the second respondent with the title deeds along with the power of attorney, it would not have been possible for him to get possession of the same, thus enabling him to deposit it with the bank with the intention of creating an equitable mortgage on behalf of the appellant. We are afraid that this submission is more in the nature of conjecture and surmises because the circumstances under which the second respondent came to be in possession of the documents have not been yet established. It is certainly possible that it was entrusted to him by the appellant but there is no conclusive evidence to establish this and it would not be, therefore, possible for us to take a definite view regarding this. However, we are definitely cognizant that the title deed in question is a settlement deed, in which the second respondent also has rights with respect to certain other schedules of properties and it is probable that he was thus in possession of the same, as contended by the appellant. That being so, the mere fact that the second respondent was in possession of the document would not, in our view, entail a presumption in law that it was entrusted to him by the appellant. This is purely a question of fact, which certainly will to be established one way or the other by the parties by adducing evidence in the court. 26. This is purely a question of fact, which certainly will to be established one way or the other by the parties by adducing evidence in the court. 26. The learned counsel appearing for the bank, faced with our view above, attempts to garner forensic support for the power of attorney and its validity by referring to Section 85 of the Indian Evidence Act. He says that there is a presumption drawn with respect to documents, purporting to be powers of attorney, which have been executed and authenticated in the manner mentioned therein. Since these submissions are edified on the specific provisions of Section 85 of the Evidence Act, we deem it necessary to read the same in full, for which purpose, we extract it as under: “85. Presumption as to powers-of-attorney- The Court shall presume that every document purporting to be a power of attorney, and to have been executed before, and authenticated by, a Notary Public, or any Court, Judge, Magistrate, (Indian) Consul or Vice-Consul, or representative of the (Central Government) was so executed and authenticated.” 27. On a reading of the Section, it is certain that the courts will have to presume that every document purporting to be a power of attorney and which is executed or authenticated by a Notary Public or any Court, Judge or Magistrate or such other Officers mentioned therein was so executed and authenticated. However, contrary to the submissions of the learned counsel, the Section does not declare that all such powers of attorney are genuine or legitimate. The Section only provides for a presumption as regards the execution and authentication of the document. Even assuming that the power of attorney was executed by someone and authenticated by DW1, it does not mean that the same is genuine unless and until the bank or the second respondent is able to prove that it was executed by the appellant in the manner as is required under law. Therefore, the submissions made by the learned counsel drawing support of Section 85 of the Evidence Act would, therefore, find no favour in law and we are of the firm view that the said Section would not come to the aid of the bank's assertion that Ext.B1 power of attorney is genuine. 28. There is one ancillary issue that troubles us in this case. 28. There is one ancillary issue that troubles us in this case. The appellant alleges in the averments made by her in the interlocutory application before the court below that the property was sold by the bank about 4½ months after they obtained it in the court auction to the daughter of the second respondent which proves the illegal collaboration of the second respondent, his wife-the fourth respondent and the officials of the bank in the complot hatched to deprive her of her property. There appears to be some force in this allegation, though we do propose to say affirmatively about this. However, this is certainly a circumstance that would warrant a suspicion that something is amiss and that all is not above board as is asserted by the bank. We fail to comprehend why the bank should have bid the property in the court auction and then to have sold it to the daughter of the second respondent, who is alleged to be the mastermind of the entire conspiracy, at least as per the allegations of the appellant. The further fact that the second respondent chose to remain ex parte in the court below thus inviting the decree and thereafter to have the sale confirmed in the name of the bank so as to have the property thereafter transferred to the name of his daughter would be sufficient circumstance to kindle suspicion which, of course, will have to be now rebutted by the second respondent in proper proceedings. The appellant, we must add, further alleges that the daughter of the second respondent has since sold the property with a large pecuniary profit to certain other third parties and that they are in possession of the same. These transactions, if true, certainly would add to the suspicion we have mentioned above 29. In the summation of our findings and conclusions above, it becomes inescapable that the order of the court below, assailed in this appeal, would obtain no legal sustenance. We are, therefore, constrained to set aside the sale and to allow I.A.Nos.1980 of 2013 and 1981 of 2013 in O.S.No.93 of 2002 on the files of the Sub Court, Kottarakkara, thus restoring the suit by setting aside the ex parte decree passed by the court below on 21.01.2003. The court below will have to, therefore, take the suit to trial again and dispose it of in terms of law. The court below will have to, therefore, take the suit to trial again and dispose it of in terms of law. 30. In order to facilitate an expeditious trial of the suit, we direct the parties to be present through their respective counsel before the court below on 27.11.2017, on which day, the court below shall afford an opportunity for filing a written statement to the appellant. The court will thereafter endeavor to dispose of the suit, as expeditiously as possible. 31. Needless to say, the appellant will be entitled to apply for restitution of her property, which has been sold by the court below in execution of the decree that we have already set aside in this appeal and we leave the appellant to pursue the appropriate remedies for this purpose under the provisions of the Code of Civil Procedure. This appeal is thus allowed. We, however, make no order as to costs and leave the parties to suffer their respective costs in this appeal.