Sheo Murat Yadav & Another vs Debts Recovery Appellate ...
2013 Latest Caselaw 7478 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR 
 
Court No.2
 
Civil Misc. Writ Petition No.67335 of 2013
 

 
Sheo Moorat Yadav & another		   ........     Petitioner
 

 
Vs.
 

 
Debts Recovery Appellate Tribunal 
 
Thru' Chairman &  Others                         ........    Respondents
 

 
******************
 

 
Hon'ble Tarun Agarwala,J.

Since a pure question of law arises for consideration, the writ petition is disposed of at the admission stage itself after hearing the counsel for the parties without calling for a counter affidavit.

It transpires that the bank filed original application for recovery of Rs.43 Lacs before the Debts Recovery Tribunal from the petitioner, who is the borrower. Notices were issued, which were duly served and, the petitioner entered appearance by filing a vakalatnama of an Advocate, who was granted time to file written statement. It transpires that the Advocate did not appear nor filed the written statement and, accordingly, the Tribunal issued an order dated 8th November, 2012 to proceed ex parte against the petitioner. The petitioner filed a recall application under Section 22(2)(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the Act of 1993)for the recall of the ex parte order. The Tribunal, by an order dated 6th July, 2013 allowed the application and recalled its order dated 8th November, 2012 but, while doing so, imposed certain conditions, namely, that the petitioner would deposit 30% of the total amount claimed by the bank within 15 days in the shape of fixed deposit receipts and, only on the deposit of this amount, the petitioner would be permitted to file the written statement.

Since the conditions were not accepted by the petitioner, as being onerous, the petitioner preferred an appeal under Section 20 of the Act of 1993, which was rejected by the Appellate Tribunal holding that the Tribunal had the power to impose such terms and conditions other than cost and that the order was in consonance with the judgment of the Supreme Court in Arjun Singh Vs. Mohindra Kumar and others, AIR 1964 SC 993, Vijay Kumar Madan and others Vs. R.N. Gupta Technical Education, AIR 2002 SC 2082 and Tea Auction Ltd. Vs. Grace Hill Tea Industry and another 2006 (9) Scale 223. The Appellate Tribunal held that imposition of such terms of depositing part of the proposed decreetal amount was not to penalize the petitioner but to prevent dilatory tactics. The Appellate Tribunal accordingly, rejected the appeal. A review application was filed, which was also rejected. The petitioner, being aggrieved, has filed the present writ petition.

Having heard the learned counsel for the parties at some length, the Court finds that the Tribunal as well as the Appellate Tribunal fell in error in interpreting the provision of Order 9, Rule 7 with that of Order 9, Rule 13 of the Code of Civil Procedure. Section 22(2)(g) of the Act of 1993 gives power to the Tribunal as well as the Appellate Tribunal to recall an order passed by it ex parte, which provision is pari materia with the provisions of Order 9, Rule 7 of the Code of Civil Procedure. The distinction between Order 9, Rule 7 and Order 9, Rule 13 of the Code of Civil Procedure has to be drawn out and, for facility, the said provision are extracted hereunder:-

"Order 9, Rule 7.- Procedure where defendant appears on day of adjourned hearing and assigns good cause for previous non-appearance.- Where the Court has adjourned the hearing of the suit ex parte, and the defendant, at or before such hearing, appears and assigns good cause for his previous non-appearance, he may, upon such terms as the Court directs as to costs or otherwise, be heard in answer to the suit as if he had appeared on the day fixed for his appearance.

Order 9, Rule 13.-Setting aside decree ex parte against defendant.- In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit;

Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also:

[Provided further that no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, it it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim]"

The words used in Order 9, Rule 7 of the Code of Civil Procedure is "good cause" whereas the words used in Order 9, Rule 13 indicates "sufficient cause". The difference is subtle yet distinct. The Court is of the opinion that the burden to discharge under Order 9, Rule 7 of the Code of Civil Procedure is lighter than the burden under Order 9, Rule 13. Further, Order 9, Rule 13 of the Code of Civil Procedure provides not only for payment of cost but "payment in the Court or otherwise as it thinks fit". The words "payment in the court" is other than cost, which is not spelt out in Order 9, Rule 7. The words "or otherwise as it thinks fit" is also not existing under Order 9, Rule 7 of the Code of Civil Procedure, though the word "otherwise" is indicated under Order 9, Rule 7.

Consequently, the words "upon such terms as the Court directs as to cost or otherwise" as depicted under Order 9, Rule 7 has a narrower meaning than the words "upon such terms as to costs, payment into Court or otherwise" as it thinks fit" as depicted under Order 9, Rule 13 of the Code of Civil Procedure.

The Supreme Court in Arjun Singh Vs. Mohindra Kumar and others, AIR 1964 SC 993 held that the Court cannot exercise its power to put the defendant on such terms as may have the effect of prejudging the controversy involved in the suit and virtually decreeing the suit though the ex parte order has been set aside or to put the parties on such terms as may be too onerous. The Supreme Court held that cost should be assessed that would reasonably compensate the plaintiff for the loss of time and inconvenience caused by relegating back the proceedings of the case to an earlier stage. The Supreme Court held that the provision of Order 9, Rule 7 of the Code of Civil Procedure is basically to ensure the orderly conduct of the proceedings by penalizing improper dilatoriness calculated merely to prolong the litigation. Ensuring orderly conduct of the proceedings by penalizing improper dilatoriness can only be done by imposition of cost or otherwise but it cannot be interpreted to mean that the word "otherwise" would also include imposition of the amount claimed, which has not as yet fructified by way of a decree or order. The decision of the Supreme Court in Arjun Singh's case (supra) was reiterated in Vijay Kumar Madan and others Vs. R.N. Gupta Technical Education, AIR 2002 SC 2082 and in Tea Auction Ltd. Vs. Grace Hill Tea Industry and another 2006 (9) Scale 223 has followed the same view.

In Moin Leather Wear Exports and others Vs. Oriental Bank of Commerce, Chennai, 2012 (2) DRTC 829 (Mad.) a Division Bench of the Madras High Court was faced with a similar situation. The Division Bench held that such conditions of predeposit could not be exercised while setting aside an ex parte order, inasmuch as such conditions is onerous and that an attempt was being made to recover the amount without taking up the matter on merits. Similar view was again reiterated by another Division Bench of the Gwalior Bench of Madhya Pradesh High Court in Alok Saboo and others Vs. State Bank of India and others in Writ Petition No.1987 of 2013 decided on 13th September, 2013.

In the light of the aforesaid, the Court finds that the direction of the Tribunal imposing a predeposit of 30% of the claimed amount, which has not as yet been adjudicated on merits nor any decree has been passed  could not be imposed upon the petitioner. Such onerous conditions is contrary to the provisions of Section 22(2)(g) of the Act of 1993. Such onerous conditions is wholly arbitrary and harshly excessive quite apart from being unreasonable and, therefore, the impugned order cannot be sustained.

For the reasons stated aforesaid, the order of the Tribunal, the order of the Appellate Tribunal and the order passed in review application are patently erroneous and are quashed. The writ petition is allowed. The recall application of the petitioner is also allowed subject to payment of cost of Rs.20,000/-, which shall be paid by the petitioner to the respondent-bank on or before the 31st December, 2013. If such amount is paid and proof is filed before the Debts Recovery Tribunal, the petitioner would be permitted to file the written statement on or before 15th January, 2014. It is made clear that no further time would be allowed to the petitioner.

Date:16.12.2013

Bhaskar

(Tarun Agarwala, J.)