Ms Shoes East Ltd. And Ors. vs Debt Recovery Appellate Tribunal ...
2000 Latest Caselaw 856 Del

JUDGMENT

Arun Kumar, J.

1. Rule D. B.

2. We have heard the learned counsel for the parties at length and with their consent, the matter is taken up for final disposal at this stage.

3. This petition under Article 226 of the Constitution of India is directed against an order of the Debt Recovery Appellate Tribunal (for short "Appellate Tribunal") dated 18th August, 2000 (whereby an appeal filed by petitioners was dismissed. Briefly the facts are that the respondent No. 2 i.e. the Canara Bank had filed an action for recovery of a sum of Rs. 14.5 crores plus interest and costs against the petitioners herein in the year 1996. The proceedings have been pending before the Debt Recovery Tribunal (for short "Tribunal") since then and the respondent-bank is naturally interested in speedy disposal of the application for recovery. The learned counsel for the respondent No. 2 has given us certain material dates of proceedings in the O.A. (Original Application) pending before the Tribunal. It is pointed out that the written statement was filed by the petitioners only in May, 1997. On 3rd July, 1997, the parties on both sides were directed by the Tribunal to file affidavits by way of evidence. Thereafter the matter proceeded for cross-examination of the Bank's witnesses who had filed the affidavits. The cross-examination of the witnesses of the Bank was completed and Bank's evidence was closed on 8th March, 1999. The case was thereafter fixed for the evidence of the petitioners herein on 15th March, 1999. On 15th March, 1999 the Presiding Officer of the Tribunal was on leave. The case was listed on 17th March, 1999. As the petitioners had not filed any affidavits by way of evidence till then, (although the order to this effect was passed way back on 3rd July, 1997) their evidence was closed on the said date. At this stage Tribunal was required to hear the argument in main OA. However, on 22nd March, 1999 the petitioners applied for permission to further cross-examine one of the witnesses of the Bank whose cross-examination had already been concluded earlier. This application was allowed on 12th April, 1999 and the matter was directed to be listed on 15th April, 1999 for the further cross-examination of the said witness. However, on 15th April, 1999 or on the next date i.e. 16th April, 1999 to which the case was adjourned no cross-examination of the witness was conducted though the witness was present. The case was ultimately adjourned to 20th April, 1999 for this purpose. Instead of going ahead with cross-examination of the witness even on 20th April, 1999, the petitioners filed two new applications. One was for amendment of the written statement. Amendment was sought mainly on two counts : (a) a plea was sought to be taken that the defendants had suffered losses on account of acts of the Bank, and (b) credit for the claims received by the Bank from the Export Credit and Guarantee Corporation should be given to the defendants. The amendment was allowed on 21st April, 1999. This order of allowing the amendments was challenged by the bank before this Court by way of a petition (CM (Main) No. 295/99) under Article 227 of the Constitution and the said petition is pending in this Court. The learned counsel for the respondent-Bank submits that the petition was, inter alia, directed against the Presiding Officer of the Tribunal particularly in view of the manner in which he was conducting the proceedings. Therefore, the Bank had prayed for stay of further proceedings as well. This Court stayed further proceedings before the Tribunal in the said petition by order dated 6th May, 1999. Soon after the new Presiding Officer of the Tribunal took over, the Bank moved an application for getting stay of proceedings vacated which was allowed by this Court on 2nd May, 2000.

4. Proceedings accordingly started before the Tribunal again and the Tribunal passed certain orders on 15th May, 16th May and 17th May, 2000. Against these orders, petitioners herein filed CM (Main) No. 321/2000 in this Court. In this petition the main grievance of the petitioners was that their right to file reply/defense to the Bank's OA No. 784/96 was closed without giving sufficient and reasonable opportunity and Tribunal had fixed the matter for 9th June, 2000 for pronouncing the judgment/ orders. This Court by order dated 26th May, 2000 issued notice in the said petition and stayed the operation of the impugned orders and further proceedings in the aforesaid OA, Bank moved an application for vacation of order dated 26th May, 2000. Ultimately the said CM (Main) 321/2000 was disposed of by order dated 22nd June, 2000. This order reads as under :

"I heard Dr. Sarbjit Sharma, the learned counsel for the petitioner and Shri Y. P. Narula, the learned counsel for the respondents.

The Debt Recovery Tribunal, Delhi shall hear the learned counsel for parties on 3-7-2000 and shall dispose of the OA and IAs after hearing the learned counsel for the parties.

CM (M) disposed of."

5. The tenor of the aforesaid order shows that the petitioners had confined their grievance to the effect that petitioners should be heard before the OA is decided by the Tribunal and that is why this Court had directed that the Tribunal shall dispose of OA and IAs after hearing counsel for the parties. Ingenuity of the petitioners is boundless. After obtaining this order, three more IAs were filed by the petitioners before Tribunal on 27th June, 2000. When the matter came up before the Tribunal on 3rd July, 2000 as per directions contained in order dated 22nd June, 2000. The counsel for the petitioners herein, however, refused to argue on OA and IAs pending before Tribunal and submitted that he would argue only the three IAs which were filed on 27th June, 2000. Two IAs filed by the petitioners were under Section 22 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Rule 18 of the Debt Recovery Procedure guide and third application was under Section 5 of the Limitation Act, for condensation of delay in filing the two IAs. Counter-claims were also filed before the Tribunal on 13th July, 2000. Out of the two IAs under Section 22 of the Act, 1993, in one application petitioners sought an opportunity to cross-examine Bank's witness Mr. M. G. Karamchandani as permitted vide the Tribunal's order dated 12th April, 1999. By second application permission was sought to lead evidence in view of the amendment of the written statement and for recall of order dated 17th March, 1999 by which Tribunal had closed the evidence of the petitioners. The attempt was somehow to see that the main OA is not disposed of on 3rd July, 2000.

6. Tribunal passed order dated 3rd July, 2000 referring to order dated 22nd June, 2000. The Tribunal observed that opportunity to the petitioners was given only for hearing on OA and IAs which were listed for orders on 9th June, 2000, and therefore, IAs filed by the petitioners on 27th June, 2000 required no consideration at this stage nor it was permissible for the petitioners to file counter-claims at that point of time. These IAs as well as counter-claims were accordingly rejected, since petitioners' counsel refused to argue OA and IAs filed by the Bank, the Tribunal heard the arguments of the Bank and fixed the case for final disposal on 31st July, 2000. At this stage, petitioners again rushed to this Court and filed yet another CM (Main) No. 414/2000 under Article 227 of the Constitution challenging order dated 3rd July, 2000 passed by the Tribunal. This petition came up for hearing on 25th July, 2000 and the petitioners withdrew the said petition which was dismissed as withdrawn. Thereafter on 26th July, 2000 petitioners filed appeal by approaching the Debt Recovery Appellate Tribunal against order dated 3rd July, 2000 passed by the Tribunal. This appeal having been dismissed by the impugned order dated 18th August, 2000, petitioners have preferred the instant writ petition.

7. A perusal of the impugned order passed by the Appellate Tribunal would show that the appeal was held to be not maintainable on the ground that petitioners preferred CM (Main) 414/2000 under Article 227 of the Constitution which was withdrawn by the petitioners and thereafter same order dated 3rd July, 2000 on same grounds was challenged before the Appellate Tribunal which was not permissible inasmuch as while dismissing the CM (Main) 414/2000 as withdrawn no permission was granted to the petitioners to file any appeal. However, the Appellate Tribunal considered the case on merits as well and did not find any fault with the impugned order dated 3rd July, 2000 passed by the Tribunal and dismissed the appeal. However, while concluding the matter certain observations were made by the Appellate Tribunal with the remarks that Tribunal may take the same into account before passing final orders in the OA.

8. Mr. Rajiv Nayyar, learned senior counsel for the petitioners argued that the order of the Appellate Tribunal deciding that appeal was not maintainable is not tenable. We will advert to this aspect later in the judgment inasmuch as Appellate Tribunal had dealt with the matter on merits and we also heard the counsel for both the parties at length and are inclined to dispose of this petition on merits.

9. The main grievance of the petitioners was against refusal on the part of the Tribunal or the Appellate Tribunal to entertain the counter-claims of the petitioners. The contention of the learned counsel in this behalf is that the foundation for the counter-claim had already been laid by way of amendment of the written statement. Earlier the position in law was that the Tribunal was not competent to entertain counter-claims. However, by way of an amendment of the relevant Statute w.e.f. 17th January, 2000, a right had been conferred on the defendant to make a counter-claim. The amendment is contained in Section 19(8) of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000. The provision contained in Section 19(8) is reproduced as under :

"Section 19(8) :

A defendant in an application may, in addition to his right or pleading a set-off under Sub-section (6), set up, by way of counter-claim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defense or before the time limited for delivering his defense has expired, whether such counter-claim is in the nature of a claim for damages or not.

9A. At this stage, we may also reproduce Sub-section (9) which may have some relevance :

"Section 19(9) :

A counter-claim under Sub-section (8) shall have the same effect as a cross-suit so as to enable the Tribunal to pass a final order on the same application, both on the original claim and on the counter-claim."

10. These provisions introduced by way of amendment are part materia with the provisions contained in Order VIII, Rule 6-A of the Code of Civil Procedure. The Appellate Tribunal rejected the counter-claim by making observations on merit as well as on the ground that the amendment conferring a right to file counter-claim came into effect only on 17thJanuary, 2000 and the present proceedings having been instituted earlier, the defendants did not get a right to file the counter-claim. We have reservations about the later part of the (order of the) Appellate Tribunal, therefore, we have considered the question about the petitioners' right to file the counter-claim at this stage on merits.

11. In this behalf it is to be noted that the intention of the Legislature in providing a right to defendant to file the counter-claim is that the entire controversy between the parties Js disposed of in the same litigation. For this it is important that the counter claim should be filed at the earliest so that it can be tried along with the suit of the plaintiff and no delay is caused in the trial on account of the counter-claim. This intention of the Legislature is clearly brought out by Sub-section (9) of Section 19 of the Act which provides that the counter-claim shall have the same effect as the cross-suit and the Tribunal should dispose of both i.e. original claim as well as counter-claim together. In this connection, due emphasis has to be given to the following words occurring in Sub-section (8) "....but before the defendant has delivered his defense or before the time limited for delivering his defense has expired, ...." These words show that the counter-claim ought to be filed at the earliest stage. There is some controversy as to whether these words debar filing of a counter-claim after the defense has been delivered or before the time limited for delivering the defense has expired. The learned counsel for the petitioners relied on , Mahendra Kumar v. State of Madhya Pradesh and contended that it was permissible for the petitioners to rise counterclaims even after filing written statement. On the other hand, learned counsel for the respondent relied upon two subsequent judgments. One judgment is of Supreme Court in the case of Jagmohan Chawla v. Dera Radha Swami Satsang, and other is that of Karnataka High Court in the case of Smt. Parvathammav. K. R. Lokanath, . It may be mentioned that judgment of Karnataka High Court has referred to the judgment of the Supreme Court in the case of Mahendra Kumar (supra) relied upon by the petitioners. In the case of Mahendra Kumar (supra) the Supreme Court held, interpreting provision of order VIII, Rule 6-A(1) of the Code of Civil Procedure that counter-claims could be filed even after defendant had filed written statement. However, up to what stage the counter-claims can be filed was not decided by the Supreme Court in this judgment as that aspect did not arise for consideration in that case. This point came specifically for consideration before the Karnataka High Court and in this case the Court, after interpreting the provisions of Rule 6-A (1) and (2) of Order VIII of the Code of Civil Procedure held that although counter-claims could be filed by the defendant after filing the written statement, it should be filed before the issues are framed or in any case before the commencement of the evidence. This opinion was formed by Karnataka High Court on the basis of following reasoning :

"In both the decisions of the Supreme Court referred to above there is no indication as to when the counter-claim can be set up. Both the decisions are only to the effect that the counter-claim must relate to the cause of action which had arisen before the filing of the suit or before the filing of the written statement or the last date fixed for filing the written statement. Therefore, it is necessary to determine as to what is the time-limit for setting up a counter-claim. A reading of Rules 6-A and 6-G of Order 8 of the C.P.C. makes it clear that the counter-claim has to be treated as a cross-suit and it has to be tried along with the original claim made in the suit. When the counter-claim has to be tried along with the original claim and all the rules of pleading apply to a counter-claim of the defendant, it necessarily follows that a counter-claim, if not set up in the written statement, it has to be set up before the issues are framed, at any rate, before recording of the evidence commences. If a counterclaim is permitted to be set up after the evidence is adduced, it would cause great prejudice to the plaintiff in the suit because at the time of adducing evidence, he will not be aware of the counter-claim, as it will not be on record. Therefore, he cannot be expected to, and he is not required to, adduce evidence having a bearing on the counterclaim. Further allowing the counter-claim to be set up after the evidence is recorded would be doing nothing but ignoring Rules 6-A to 6-C of Order VIII of the C.P.C. It would also result in protracting the trial and would defeat the very object of treating the counter-claim as a cross-suit and trying the issues arising therefrom along with the issues arising in the suit. The object of this is to avoid delay not only in the trial of the suit but also to decide all the controversies arising between the parties to the suit before filing the written statement or before the last date fixed for filing the written statement inasmuch as by directing the counter claim to be tried along with the main suit, the controversies or the disputes between the parties can be settled in one proceeding. Therefore, even though the Rules do not specifically lay down that a counter-claim should be filed with a particular date but, reading of Rules 6-A and 6-G together would make it clear that the counter-claim cannot be permitted to be filed when once recording of evidence commences."

12. We are in respectful agreement with the view taken by the Karnataka High Court.

13. We have to see whether it will be in accordance with law and in the interest of justice to allow the petitioners to raise a counter-claim at this stage. The learned counsel for the respondent-bank has pointed out that the alleged counter-claim is hopelessly barred by time. It is further pointed out that even on the date when the petitioners sought amendment of the written statement where it was for the first time sought to be pleaded that the petitioners had suffered losses on account of actions of the bank, the claim for alleged losses would be hopelessly barred by time. Secondly, it is to be seen that the trial in the suit which has already been pending since 1996 has reached a final point. The bank had completed its evidence in 1998. The defendant did not lead any evidence inasmuch as no affidavits by way of evidence were filed. The evidence of the defendants (petitioners herein) was closed on 17th March, 1999. If the counter-claim is to be entertained at this stage and it is to be tried as a suit as envisaged in the above quoted sub-sections of Section 19 of the Act it will amount to reopening the entire trial of the suit which may also possibly mean that indirectly the petitioners will be able to overcome the order regarding closure of their evidence. In our view allowing the counter-claim to be entertained at this stage will amount to gross injustice to the respondent-Bank. As noted earlier by an order dated 22nd June, 2000 in CM (Main) 321/ 2000 filed by the present petitioners in this Court, this Court had directed the Debt Recovery Tribunal to hear the learned counsel for the parties on 3rd July, 2000 and dispose of the OA and IAs after hearing the learned counsel for the parties. The preemptory directions of this Court contained in an order on a petition filed by the petitioners themselves will have to be thrown overboard because the petitioners have now woken up to raise a counter-claim.

14. We would also like to note that this petition is filed by the petitioners under Article 226 of the Constitution of India invoking extraordinary Jurisdiction of this Court. The issuance of writ under Article 226 is discretionary. Petitioners cannot claim the relief as a matter of right. In the facts and circumstances of the case detailed above, we are of the view that petitioners have failed to make out any case of interference by this Court under Article 226 of the Constitution. They are not entitled to any discretionary relief in the present facts. The conduct of the petitioners shows that they have tried every tactics to see that disposal of the OA is held up. For this purpose one after other applications are being filed before the Tribunal. We cannot help entertaining a view that the entire exercise in raising the counter-claims appears to be mala fide. It is in line with earlier similar attempts of the petitioners. The object of the petitioners is clear. They want to delay the main case by involving the Bank in a fresh trial on the basis of the counter-claims. The petitioners are abusing the process of the Court.

15. The result of the above discussion is that we find no merit in the contention of the petitioners that they should be allowed to raise counter-claims against the Bank in the OA.

16. The other point urged by the learned counsel for the petitioners, as noticed earlier, is that the Appellate Tribunal was wrong in holding that the appeal filed by the present petitioners before it against the order of the Debt Recovery Tribunal was not maintainable in view of order dated 25th July, 2000 dismissing CM (Main) 414/2000. So far as this aspect is concerned, it need not detain us because after having observed that the appeal was not maintainable, the Tribunal has in fact considered the case on merits and made observations in the concluding part of the order.

17. This petition is dismissed with costs quantified at Rs. 10,000/-.

18. Copy of the order be given DASTI to counsel for parties.