Delhi High Court

Sh. Tarlochan Singh & Ors. vs Union Bank Of India & Ors. on 13 August, 2009

Author: Manmohan Singh

.*                  HIGH COURT OF DELHI : NEW DELHI

+            I.A No. 4175/2007 in CS (OS) No. 99/2004

 %                        Judgment reserved on :            6th August, 2009

                          Judgment pronounced on :          13th August, 2009

 Sh. Tarlochan Singh & Ors.                                        ...Plaintiffs
                   Through :     Mr. Manish Sharma, Adv. with
                                 Mr. Amit Bhardwaj and
                                 Mr. Vishal Malhotra, Advs.

                   Versus
 Union Bank of India & Ors.                                  ...Defendants
                   Through :     Mr. J.K. Chaudhary, Adv. with Mr. Aditya
                                 Madan, Advs. for D-1

 Coram:

 HON'BLE MR. JUSTICE MANMOHAN SINGH

 1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                No

 2. To be referred to Reporter or not?                            No

 3. Whether the judgment should be reported                       No
   in the Digest?

 MANMOHAN SINGH, J.

1. I.A No. 4175/2007 was filed on April 16, 2007 by the defendant no. 1

herein under Order IX Rule 7 read with Section 151 of the Civil Procedure

Code, 1908 read with Section 5 of the Limitation Act, 1963 for recalling of

the order dated September 8, 2004. By this order, I propose to dispose of the

above-mentioned applications.

2. The present suit was filed by the plaintiffs for declaration and specific

performance for execution of the agreements to sell dated September 12,

1994 and September 13, 1994. The facts leading up to the suit and the

present application are as follows.

3. Vide two agreements to sell dated September 12th and September

13th, 1994, defendant nos. 2 and 3 handed over the physical and vacant

possession of property no. A-6/2 Vasant Vihar, New Delhi admeasuring 209

sq. metres (hereinafter referred to as the „suit property‟) along with common

passages etc. and undivided ownership to the plaintiff for a total sale

consideration of Rs. 36,00,000/-. Defendant nos. 2 and 3 also have separate

receipts acknowledging the payment made to them by the plaintiff. Prior to

the execution of the said two agreements, the plaintiff verified the freehold

status of the aforesaid property with the DDA, MCD and office of the sub-

registrar in order to ensure that there is no charge, lien, mortgage or

encumbrance on the said property. As per the said authorities, there were no

encumbrances in the suit property. The plaintiffs have been in possession

and enjoyment of the suit property as their residential house since then.

4. After a lapse of eight years, on December 7, 2002, the plaintiffs came

across a notice of attachment in respect of the suit property addressed to

defendant nos. 2 and 3 amongst others. As per the notice, the Certificate

Debtors were liable to pay Rs. 2,05,21,047/- with respect to Certificate Nos.

573/1997 and 1385/1997 drawn on them by the Recovery Officer DRT,

Delhi. The Certificate Debtors were further prohibited from transferring or

creating any charge on the suit property. The plaintiff made investigations

into the said attachment order and found that the suit property had been

mortgaged with the defendant No.1/bank. The plaintiff had no knowledge of

this transaction previously. Further, the plaintiff was apprised of the fact that

though the defendants had various correspondences inter se, the same had

always been concealed from the plaintiff.

5. The plaintiff brought to the DRT‟s notice that he was a bona fide

purchaser of the suit property and the same had been sold to him by

defendant nos. 2 and 3 against duly acknowledged receipts. Further, the

plaintiff stated that the attachment of the suit property is a violation of

natural justice as the plaintiff owns and possesses the same and the plaintiff

has nothing to do with the money owed by the defendant nos. 2 and 3 to the

bank. The persons owing the money are not in possession of or the owners

of the suit property.

6. The defendant No.1/bank, in the present application, has prayed for

recalling/setting aside of the ex-parte order dated September 8, 2004 and

taking on record of the written statement filed on its behalf. The present suit

was listed before this court on May 11, 2004 when it was held that the

defendant no. 1 should be served. By order dated August 23, 2004 it was

noted that the defendant had been served on June 8, 2004 and as none

appeared for the same, by order dated September 8, 2004 the defendant bank

was proceeded against ex-parte.

7. The defendant bank has stated that in I.A No.9318/2005 under Order

39 Rule 1 and 2 read with Section 151 CPC, 1908 for ex-parte ad-interim

injunction restraining the defendants from dispossessing the plaintiff from

the suit property, notice was accepted on behalf of the defendant bank by

one Mr. Hemal Kumar Seth and in fact, on February 23, 2006 the said Mr.

Hemal Kumar Seth appeared on behalf of the defendant bank. The defendant

bank has submitted that Mr. Hemal Kumar Seth is neither a panel advocate

engaged by the defendant bank nor in any other way known by the same and

that the said Mr. Seth has appeared on behalf of the defendant bank without

having any authority to do so from the latter. Further, it is also submitted

that the defendant bank had been served at the Gandhi Nagar Branch at

Banglore instead of its Regional office at New Delhi and it is because of this

reason that no one appeared on its behalf.

8. The defendant bank has averred that though an execution proceeding

was pending in DRT-I Tribunal, Delhi and was being taken care of by the

Delhi office of the defendant bank, the notice of the present suit was served

upon the defendant bank in its Banglore office. Due to this act of the

plaintiff, the Delhi office was under the assumption that the Banglore office

would take care of the matter whereas the Banglore office assumed that as

the matter was listed in Delhi, the Delhi office would be dealing with the

same. The Banglore office even sent a letter in this regard to the Delhi office

but unfortunately, nothing of the sort was received by the Delhi office.

9. The defendant bank contended that if it is not allowed to defend itself,

it being a body under the Banking Companies Act, the present matter would

adversely affect a huge amount of public funds. Further, as this Court has

already passed orders dated November 21, 2005 directing the parties to

maintain status quo, if the defendant is allowed to defend itself by setting

aside of the ex-parte order it would not amount to prejudice.

10. The plaintiff in its reply to the present application has contended that

the same is time barred as it is delayed by nearly 27 months. The plaintiff

continues to state that the defendant bank knew of the present proceedings

but did not appear. The submissions made by the bank are vague and after

thoughts as both the Delhi and Banglore offices knew of the suit and

knowingly abstained from appearing in the proceedings thereof. The

plaintiff has also questioned that if the said Mr. Hemal Kumar Seth was not

known to the defendant bank and acted on its behalf without its authority,

why did it not take any appropriate action with the Bar Council of India?

Allegedly, the court records were inspected at the end of March 2007.

Clearly, the defendant bank‟s non-appearance is due to sheer negligence. In

light of these contentions, the plaintiff has contended that the defendants are

collusively harassing him.

11. I have perused the contentions of both parties. By order dated

February, 2004, summons were directed to be served on the defendants.

Again, by order dated May 11, 2004 it was held that defendant no. 1 be

served afresh and the written statement be filed by all defendants within a

period of four weeks. By order dated August 23, 2004 this court noted that

the defendant bank had been served on June 8, 2004. Since a period of 60

days had elapsed from the date of the above-mentioned service, the matter

was put up before the court for appropriate orders. On the next date of

hearing, i.e. on September 8, 2004, it was observed that as the defendants

had still not filed the written statement, the same would be proceeded ex-

parte. The plaintiff was directed to lead his evidence by affidavit and for this

purpose, the matter was listed before the Joint Registrar on October 14,

2004. It is the setting aside of this last order that the defendant bank is

seeking. The direction to parties to maintain status quo was made by order

dated November 21, 2005. It was on this date and on the next hearing on

February 23, 2006 that a counsel appeared for Defendant no. 1, i.e. the

defendant bank. Thereafter, the present matter was listed seven times before

this court from May 23, 2006 to January 19, 2007 wherein

adjournments/observations were made and wherein no one appeared on the

defendants‟ behalf. Thereafter, from March 21, 2007 up to now, the

defendant bank has been represented by its counsel and the same has been

actively participating in the present suit proceedings.

12. As far as the legal position on the defendant bank‟s application for

setting aside of the order dated September 8, 2004 is concerned, the same

has been set out comprehensively in Finolex Cables Ltd. v. Finolux Auto

Private Ltd. 2007 (35) PTC 680 (DEL) (DB), wherein it has been observed

as follows:

"10. The legal position which is not in dispute and which can be extracted from the conjoint reading of the Supreme Court Judgment in the case of Sangram Singh Vs. Election Tribunal, Kotah, AIR 1955 SC 425 and Division Bench judgment of this court in M/s. Lotus International and Ors. vs. Chaturbhujadas Karnani Textiles (P) Ltd., 65 (1997) DLT 300 (DB) is this :

(a) if the defendant does not appear on the date of hearing

fixed by the court, the court has power to proceed ex parte against him;

(b) when the defendant joins and participates in the proceedings at a stage when the plaintiff is yet to examine his witnesses, the defendant shall have right to cross examine the plaintiff‟s witnesses, provided such cross examination has not already been foreclosed. In that event, the court has also the power to permit the defendant to adduce evidence on his side. It really depends as to at what stage the defendant was set ex parte under Order IX Rule 6 CPC and at what stage he has chosen to seek permission to participate in the proceedings;

(c) the defendant can appear later and move application for setting aside the ex parte order by showing sufficient cause for non appearance on the date the defendant was proceeded ex parte. If sufficient cause is shown, the court can set aside the ex parte order and in that case it shall restart the proceedings from the stage when the defendant was proceeded ex parte on the premise that no proceedings were held at all on the date when the defendant was proceeded ex-parte and/or on subsequent dates; and

(d) even if the defendant is not able to show good cause, he has right to participate in the proceedings from the stage when he started appearing.

However, in that event he has no right to set back the clock and, therefore, if any advantage accrued to the plaintiff on the dates when the defendant had not appeared, that advantage would continue to accrue in favour of the plaintiff."

13. In consideration of the facts of the present suit and the circumstances

under which I.A No. 4175/2000 has been filed, I am of the opinion that the

defendant bank‟s application for setting aside order dated September 8, 2004

cannot be allowed. The defendant bank was served summons on June 8,

2004. Thereafter, on November 21, 2005 and February 23, 2006 one Mr.

Hemal Kumar Seth appeared on behalf of the defendant bank and the latter

has denied authorizing the former‟s appearance on its behalf. It was on and

after March 21, 2007 that the defendant bank has been represented by its

duly authorized counsel. The evidence of the plaintiff has already been taken

on record by way of affidavit. The counsel on behalf of defendant no. 1

appeared after a period of almost three years since it was first served. The

submission of defendant no. 1 as regards the confusion between the Delhi