Bombay High Court
M/S. Deluxe Cotton Corporation ... vs Bank Of Baroda on 18 March, 2016
dss 1 JUDGMENT-WP-2533-14..doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2533 OF 2014
M/s. Deluxe Cotton Corporation and ors. .. Petitioners.
vs.
Bank of Baroda .. Respondent.
Mr. Sharan Jagtiani a/w. Ms Sheetal Shah i/b Mehta & Girdharlal
for the petitioners.
Mr. Nasikwala a/w. Ms Gaurangi Pujara, Utsav Ghosh i/b Little
and Co. for respondent-bank.
ig CORAM: D.H. WAGHELA, C.J. AND
M.S.SONAK, J.
DATE : 18 MARCH 2016.
ORAL JUDGMENT : (Per : M. S. SONAK, J.)
1] The question which arises in this petition is whether
the provisions relating to pre-deposit contained in section 21 of
the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (said Act) are attracted at the stage of consideration of an
application for condonation of delay in the institution of an appeal
under section 20 of the said Act?
2] The challenge in this petition is to the order dated 14
July 2014 made by the Debt Recovery Appellate Tribunal (DRAT),
Mumbai refusing to condone the delay of 1009 days on the part of
the petitioners in instituting appeal against the order dated 19
November 2013 made by the Presiding Officer, Debt Recovery
Tribunal (DRT) in O.A. No. 2494 of 1999.
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3] Mr. Jagtiani, learned counsel for the petitioners, by
reference to provisions contained in sections 20 and 21 of the said
Act has contended that the bar under section 21 of the said Act is
to the 'entertainment of the appeal' by DRAT. He submitted that
only after the delay in the institution of appeal is condoned, does
the stage for entertainment of appeal arises. He submitted that
an order, either condoning or refusing to condone the delay, is not
an order in appeal itself and therefore, there is no question of the
applicability of the provisions contained in section 21 of the said
Act, at the stage of deciding an application for condonation of
delay in institution of an appeal under section 20 of the said Act.
In this regard, Mr. Jagtiani placed reliance upon the decision of
learned Single Judge of the Madhya Pradesh High Court in
Chhitu Vs. Mathuralal and ors1, decision of the Division Bench
of the Madras High Court in M/s. Kasturi & Company and ors.
Vs. The Manager, Tamil Nadu Mercantile Bank and ors. 2 and
the decision of the Division Bench of this Court in Dwarkadish
Sakhar Karkhana Ltd. Vs. Commr. Of Central Excise3.
4] Mr. Jagtiani, further submitted that the delay in
institution of the appeal in the present case was of hardly 26 days
and not 1009 days as held by DRAT. Mr. Jagtiani submitted that
after suit no. 1353 of 1998 instituted by the respondent bank was
transferred to DRT, for a period of almost two to three years, the
1 AIR 1981 Madhya Pradesh 13
2 Writ Petition No. 29177 of 2013 decided on 29.10.2013
3 2014 (308) ELT 47 (Bom.)
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respondent-bank took no steps to serve proper notices upon the
petitioners. The DRT's order dated 19 November 2003 was made
ex-parte and the petitioners acquired knowledge of the same only
upon being served with attachment warrant by the Recovery
Officer on or about 18 August 2006. The appeal was instituted by
the petitioners soon thereafter and the delay if construed from the
date of knowledge, is of hardly 26 days, for which, sufficient cause
has been duly shown. For all these reasons, Mr. Jagtiani submitted
that the impugned order may be set aside and DRAT be directed
to hear the petitioners' appeal against ex-parte order dated 19
November 2003 on merits.
5] In order to determine whether the provisions of
section 21 of the said Act are attracted even at the stage of
consideration of an application seeking condonation of delay in
institution of an appeal before DRAT, brief reference is necessary
to the provisions contained in sections 20 and 21 of the said Act
for the purposes of appreciating their import in the context of the
question raised.
6] Sub-section (1) of section 20 of the said Act provides
that save as provided in sub-section (2), any person aggrieved by
an order made, or deemed to have been made, by a Tribunal
under the said Act, may prefer an appeal to an Appellate Tribunal
having jurisdiction in the matter. Sub-section (3) of section 20 of
the said Act provides that every appeal under sub-section (1) shall
be filed within a period of forty-five days from the date on which
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a copy of the order made, or deemed to have been made, by the
Tribunal, is received by him and it shall be in such form and be
accompanied by such fee as may be prescribed. The proviso to this
sub-section provides that the Appellate Tribunal may entertain an
appeal after expiry of the said period of forty-five days if it is
satisfied that there was sufficient cause for not filing it within that
period.
7] Section 21 of the said Act, reads thus :
"21. Deposit of amount of debt due, on filing
appeal.- Where an appeal is preferred by any person
from whom the amount of debt is due to a bank or a
financial institution or a consortium of banks or
financial institutions, such appeal shall not be
entertained by the Appellate Tribunal unless such person
has deposited with the Appellate Tribunal seventy-five
per cent of the amount of debt so due from him as
determined by the Tribunal under section 19:
Provided that the Appellate Tribunal may, for
reasons to be recorded in writing, waive or reduce the
amount to be deposited under this section."
8] The provisions contained in section 21 do not apply to
all types of appeals contemplated under section 20 of the said Act.
The provisions contained in section 21 apply only where an appeal
is preferred 'by any person from whom the amount of debt is due to
a bank or a financial institution or a consortium of banks or
financial institutions.' There is a statutory bar to the entertainment
of appeal instituted by such a person, unless, such a person has
deposited with DRAT 75% of the amount of debt so due from him
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as determined by the Tribunal under section 19 of the said Act.
The proviso to said section empowers the DRAT to, for reasons to
be recorded in writing, waive or reduce the amount to be
deposited under section 21 of the said Act.
9] As rightly contended by Mr. Jagtiani, the bar
contained, in section 21 of the said Act is to the 'entertainment of
the appeal'. The question therefore arises is whether an appeal
instituted by a person referred to in section 21 of the said Act,
when accompanied by an application for condonation of delay in
filing the appeal, is at all 'an appeal in the eyes of law', in order
that the bar, as contained in section 21 of the said Act, is attracted.
10] At the very outset, we must note that we have perused
the decisions, upon which reliance was placed by Mr. Jagtiani and
we find that such issue neither arose for consideration, nor was
the same decided by the Division Benches of this Court and the
Madras High Court in Dwarkadish Sakhar Karkhana Ltd.
(supra) and M/s. Kasturi and Company (supra). It must be
noted upon the authority of the decision of the House of Lords in
Quinn vs. Leatham4 that a judgment is authority for the
proposition, which it decides and not what can be deduced
therefrom. This principle has been accepted by the Hon'ble
Supreme Court in Arasmeta Captive Power Company Private
Limited vs. Lofarge India Private Limited.5, Ambica Quarry
4 1901 AC 495
5 (2013) 15 SCC 414
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Works vs. State of Gujarat and ors. 6 and Laxmi Devi vs. State
of Bihar and ors. 7. Further, as held by the Hon'ble Supreme
Court in Mittal Engineering Works (P) Ltd. Vs. Collector of
Central Excise, Meerut8, a judgment is not a precedent on a
proposition which it did not decide. Therefore, the decisions in
the said cases offer no assistance to the proposition advanced by
Mr. Jagtiani.
11] The decision in Chhitu (supra) delivered by learned
Single Judge of the Madhya Pradesh, does, to a certan extent,
support the proposition advanced by Mr. Jagtiani that unless delay
is condoned, there is no occasion for entertainment of an appeal.
However, with respect, we are unable to subscribe to the view
taken in the said decision, as, we are of the opinion that the view
taken therein is in direct conflict with the decisions of the Hon'ble
Supreme Court and this Court on the subject.
12] The question as to whether an appeal accompanied by
an application for condoning the delay in filing the appeal, is at all
an appeal in the eyes of law, arose for consideration in Shyam
Sundar Sarma vs. Pannalal Jaiswal and ors.9 Upon analysis of
several decisions on the subject, the Hon'ble Supreme Court has,
in no uncertain terms, held that an appeal accompanied by an
application for condoning delay in filing the appeal, is
6 (1987) 1 SCC 213
7 (2015) 10 SCC 241
8 1997 (1) SCC 203
9 (2005) 1 SCC 436
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nevertheless an appeal in the eyes of law and when the
application for condoning delay in filing the appeal is dismissed
and consequently the appeal itself is dismissed as being time
barred by limitation, such a dismissal order, is one made in the
appeal itself. In paragraph 8, the Hon'ble Supreme Court has
approved the decision of Privy Council in Nagendra Nath Dey vs.
Suresh Chandra Dey10, in which, it is observed thus :
"There is no definition of appeal in the Civil Procedure
Code, but Their Lordships have no doubt that any
application by a party to an appellate court, asking it to
set aside or revise a decision of a subordinate court, is an
appeal within the ordinary acceptation of the term, and
that it is no less an appeal because it is irregular or
incompetent."
[emphasis supplied]
13] In Mela Ram and Sons Vs. CIT11, the Hon'ble
Supreme Court held that an appeal presented out of time is an
appeal and an order dismissing it as time-barred is one passed in
an appeal. The Hon'ble Supreme Court not only followed the view
taken by the Privy Council, Nagendra Nath Dey (supra) but also
quoted with approval the observations of Chagla, C.J. in K.K.
Porbunderwalla v. CIT12 to the following effect :
"[A]lthough the Appellate Assistant Commissioner did
not hear the appeal on merits and held that the appeal
was barred by limitation his order was under Section 31
and the effect of that order was to confirm the
assessment which had been made by the Income Tax
10 AIR 1932 PC 165
11 AIR 1956 SC 367
12 (1952) 21 ITR 63 (Bom)
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Officer."
14] Again, in Sheodan Singh Vs. Daryo Kunwar13,
rendered by four Judges of the Hon'ble Supreme Court, one of the
questions that arose was whether the dismissal of an appeal from
a decree on the ground that the appeal was barred by limitation
was a decision in the appeal. The Court held that :
"We are therefore of opinion that where a decision is
given on the merits by the trial court and the matter is
taken in appeal and the appeal is dismissed on some
preliminary ground, like limitation or default in
printing, it must be held that such dismissal when it
confirms the decision of the trial court on the merits
itself amounts to the appeal being heard and finally
decided on the merits whatever may be the ground
for dismissal of the appeal."
[emphasis supplied]
15] The question was considered in extenso by a Full
Bench of the Kerala High Court in Thambi v. Mathew14. Therein,
after referring to the relevant decisions on the question, it was
held that an appeal presented out of time was nevertheless an
appeal in the eye of the law for all purposes and an order
dismissing the appeal was a decree that could be the subject of a
second appeal. It was also held that Rule 3-A of Order 41
introduced by Amendment Act 104 of 1976 to the Code, did not in
any way affect that principle. An appeal registered under Rule 9 of
Order 41 of the Code had to be disposed of according to law and a
dismissal of an appeal for the reason of delay in its presentation,
13 AIR 1966 SC 1332
14 (1987) 2 KLT 848 (FB)
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after the dismissal of an application for condoning the delay, is in
substance and effect a confirmation of the decree appealed
against.
16] Thus, the position that emerges upon a survey of the
authorities is that an appeal filed along with an application for
condonation of delay in filing that appeal, is nevertheless an
appeal in the eyes of law. Accordingly, such appeal, when
dismissed upon refusal to condone the delay, is nevertheless, a
dismissal of the appeal itself. Such dismissal, confirms the order
appealed against and therefore, amounts to disposal of the entire
appeal itself. As a corollary therefore, the appeal court, at the
stage when it is considering the application for condonation of
delay in institution of the appeal, is also, 'entertaining the appeal'
itself. The bar under section 21 of the said Act will therefore,
apply even at the stage of consideration of the application for
condonation of delay accompanying an appeal under section 20 of
the said Act.
17] We therefore hold that an appeal accompanied by an
application for condonation of delay in filing the appeal, is
nevertheless, an appeal in the eyes of law and the order,
dismissing the application for condonation of delay in filing the
appeal, is nevertheless, a decision in the appeal itself. Section 21
of the said Act, as noted earlier, in peremptory terms provides that
an appeal instituted by a person from whom the amount of debt is
due to a bank shall not be entertained by the Appellate Tribunal
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unless such person has deposited with the Appellate Tribunal 75%
per cent. of the amount of debt so due from him as determined by
the Tribunal under section 19 of the said Act. No doubt, the
proviso to section 21 empowers the Appellate Tribunal, for
reasons to be recorded in writing, to waive or reduce the amount
to be deposited under section 21 of the said Act. Therefore, until
such person deposits the amount prescribed or secures a waiver or
reduction under the proviso, there is no question of Appellate
Tribunal entertaining the appeal under section 21. In view of the
legal position discussed earlier, an appeal accompanied by an
application for condoning the delay in filing the appeal, is itself an
application in the appeal for the purposes of section 20 of the said
Act. Accordingly, unless the predicates on section 21 of the said
Act were complied with, there was no question of DRAT even
entertaining the appeal or application for condonation of delay in
filing the appeal.
18] That apart, we are satisfied that in the present case,
the delay of 1009 days in filing the appeal was inordinate and in
the absence of sufficient cause being shown by the petitioners, the
DRAT was justified in not entertaining the appeal. There is no
merit in the contention of Mr. Jagtiani that the delay in the
present case was of only 26 days. The delay was of 1009 days and
there was no sufficient cause shown for the condonation of the
same.
19] The petitioners, in the present case, had appeared
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before this Court and filed written statement in Suit No. 1353 of
1988, which was eventually transferred to the DRT. The material
on record establishes that the counsel for the respondent-bank did
attempt to serve notice upon counsel for the petitioners once the
suit was transferred to the DRT, but the counsel for the petitioners
refused to accept such notice. The respondent-bank, thereafter
served a written notice to the petitioner, which was again refused
by the petitioners. The same was the fate of the notice issued by
way of R.P.A.D. Finally, the petitioners were served by way of
publication. The petitioners, however, refused to take part in the
proceedings before DRT, which finally made order dated 19
November 2003, which the petitioners now choose to style as an
ex-parte order.
20] If the petitioners were indeed serious in contending
that the order dated 19 November 2003 made by DRT was an 'ex-
parte order', the petitioners would have surely approached DRT
with an application for setting aside such ex-parte order. In terms
of section 22 (2)(g), DRT has been vested with the powers for
setting aside any order of dismissal of any application for default
or any order passed by it ex-parte. There was, in such a situation,
no necessity of instituting any appeal to DRT in terms of section
20 of the said Act. However, the petitioners, chose to institute an
appeal under section 20 of the said Act to DRAT after delay of
about 1009 days and desired adjudication upon the same, even
without compliance with the provisions prescribed under section
21 of the said Act.
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21] In terms of section 20(3) of the said Act, every appeal
under sub section (1) of section 20 of the said Act has to be filed
within a period of 45 days from the date on which a copy of the
order made or deemed to have been made, by DRT is received by
him and it shall be in such form and be accompanied by such fee
as may be prescribed. DRAT may entertain an appeal after the
expiry of the said period of 45 days if it is satisfied that there was
sufficient cause for not filing it within that period.
22]
In this case, after DRT made its order dated 19
November 2003, the respondent bank intimated the petitioners
about the making of such order by address of written notices.
The notices were however returned with the remark 'unclaimed'.
The respondent bank, thereupon, published notice in the
newspapers on 15 September 2004. The petitioners, however,
ignored such intimations and notices, but claimed to have
obtained knowledge about DRT's order dated 19 November 2003,
only after they were served with the warrant of attachment. The
petitioners cannot, in such a manner, take advantage of their own
negligence or seek indulgence by way of condonation of delay.
23] We are satisfied that the petitioners had virtually
abandoned the proceedings after same were transferred to the
DRT. The petitioners did not bother to make any enquiries as to
the progress of proceedings or make any attempts to find out
whether the proceedings have been concluded. In such
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circumstances, the petitioners cannot purport to reckon the period
of limitation from the date of alleged knowledge and on the said
basis claim that the delay in the institution of appeal is of only 26
days. The DRAT has correctly appreciated the facts and
circumstances as borne out of the records and has rightly refused
to condone such inordinate delay. There is neither any
jurisdictional error nor any legal infirmity in making the
impugned order.
24] In the facts and circumstances of the present case,
there is really no explanation as to why the petitioners stopped
participating in the proceedings before the DRT and thereafter,
chose to make no enquiry whatsoever with regard to the orders
made by the DRT in the said proceedings. The petitioners,
obviously, cannot draw some mileage from out of their own
negligence. The Hon'ble Supreme Court in Madhya Pradesh
Matsya Mahasangh Vs. Sudheer Kumar and another 15, upheld
orders declining to condone delay of about 948 days, when it was
established that the applicant being aware of the proceedings
consciously chose not to participate in them and the cause shown
for the delay was wholly inadequate and unsatisfactory, bordering
on suppression and misrepresentation of facts.
25] In order to test the bona fides of the petitioners, we
had made a query to the learned counsel for the petitioners as to
whether petitioners are willing to deposit the amount as
15 (2010) 15 SCC 179
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determined by the DRT before the DRAT. Mr. Jagtiani, on the basis
of instructions from the petitioners, candidly stated that the
petitioners will not deposit any amounts. No doubt, Mr. Jagtiani
did make submission to the effect that the respondent-bank had
withheld certain fixed deposits and further, the respondent-bank
has failed to give credit to the petitioners for certain amounts
deposited in the past and if the same are taken into consideration,
there may be no requirement for deposit of any amounts. From
the amounts stated, however, we are satisfied that the petitioners
would be required to deposit substantial amounts in terms of the
order made by the DRT. It was quite apparent therefore that the
petitioners were not willing to make any deposits.
26] The proceedings against the petitioners commenced
before DRT at least in the year 1999 and were disposed of by
DRT's order dated 19 November 2013. After the petitioners were
served with warrant of attachment by way of execution, the
petitioners, instituted appeal before DRAT along with application
seeking condonation of delay. The delay, as we have noted earlier,
was of about 1009 days, though, the petitioners, without any
basis, have urged that the delay was of only 26 days. The
application for condonation of delay and consequently, the appeal,
came to be dismissed by the impugned order dated 14 July 2014.
Thus, the petitioners, have successfully dragged the proceedings
for about 15 years, thereby frustrating the very purpose for
enactment of the said Act.
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27] In Standard Chartered Bank vs. Dharminder Bhohi
& Ors.16 the Hon'ble Supreme Court, in the context of delay in
disposal of applications by DRT's and DRAT's, at paragraph 1 has
observed thus :
"Leave granted. The present appeal depicts a factual score
where this Court is constrained to say that delay in disposal
of the application by the Debts Recovery Tribunal and the
appeal by the Debts Recovery Appellate Tribunal have the
effect potentiality of creating corrosion in the economic spine
of the country. It exposits a factual expose which is not only
perplexing but ushers in a sense of puzzlement which in the
ultimate eventuate compels one to ask: "How long can the
financial institutions suffer such procrastination? How far
the public interest be put to hazard because of small, and
sometimes contrived indivudal interest? To what extent the
defaulters be given protection in the name of balancing the
stringent powers vested in the banks and the statutory
safeguards prescribed in favour of loanees? Even assuming
there are legal lapses and abuses, how long the statutory
tribunals take to put the controversy to rest being oblivious
of the fact that the concept of flexibility is insegregably
associated with valuation of any asset? One is bound to give
a wake-up call and we so do by saying "Tasmat Uttistha
Kaunteya", "Awake, Arise, 'O' Partha."
28] In the aforesaid decision, the Hon'ble Supreme Court has
emphasised the necessity of speedy disposal of matters by DRT
and DRAT as such speedy disposal is the fundamental object of
the said Act and 'time factor' has inextricable nexus with the
sustenance of economy. In the same judgment, the Hon'ble
Supreme Court has explained that the purpose of enacting section
16 (2013) 15 SCC 341
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22 in the said Act, was to ensure that the DRT and DRAT are not
bogged down by undue procedural restraints, stalling the speedy
disposal of such matters.
29] For all the aforesaid reasons, we dismiss this petition
with costs quantified at Rs.10,000/- (Rupees Ten Thousand). The
costs to be paid to the respondent within a period of four weeks
from today.
ig (CHIEF JUSTICE)
(M.S. SONAK, J.)
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