M/S Continental Construction ... vs State Bank Of India & Ors
2014 Latest Caselaw 4434 Del

$~29

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

                                            Date of Decision: September 15, 2014
+                         W.P.(C) 6090/2014 & CM No. 14812/2014

         M/S CONTINENTAL CONSTRUCTION LTD. & ANR..... Petitioners

                                Through:    Mr.Dhruv Mehta, Sr.Advocate with
                                            Mr.BhoumikNayyar, Advocate

                                versus

         STATE BANK OF INDIA & ORS                                   .... Respondent

                                Through:    Mr.S.L.Gupta, Mr.J.P.Gupta,
                                            Advocates

         CORAM:
         HON'BLE MR. JUSTICE SANJIV KHANNA
         HON'BLE MR. JUSTICE V. KAMESWAR RAO

                                         ORDER

% 15.09.2014

1. At the outset, we may record that petitioner No.2, M.S. Bassi, is

not a defendant in O.A. No. 37 and 39/1998. M.S. Bassi has been arrayed

as petitioner No.2 as he is the Director of the petitioner No.1 company.

Therefore, we will treat the present petition filed by petitioner No.1 only,

as we are only concerned with proceedings in O.A. Nos. 37 and 39/1998

2. Pursuant to the last order, copy of the order dated 02.09.2014

passed by the Debt Recovery Tribunal-II, Delhi (DRT) has been placed

before us. The said order does not record the presence of the counsel for

the respondent-bank. It also records that matter has been adjourned from

time to time and was posted for final hearing on 20.08.2014 and adjourned

for 02.09.2014. On the said date, counsel for the parties were required to

address arguments, but again, request for adjournment had been made as

the counsel for the respondent bank and the petitioner i.e. principal

borrower/guarantor were not present. The Tribunal has reserved the

judgment to be pronounced on 18.09.2014, after noticing the legislative

mandate under Section 19(5)(A) and Section 19(24) of the Recovery of

Debts Due to Banks and Financial Institutions Act, 1993.

3. We are not required to comment on the order dated 02.09.2014

of DRT as this order is not a subject matter of the present writ petition, but

the counsel for the petitioner and the respondent-bank state in unison, that

the DRT may be requested and asked to hear arguments in O.A. No. 37

and 39 of 1998 as it would be in the interest of justice. We take the said

statement on record and ask the DRT to hear the counsel for the parties, on

18.09.2014, on merits, the date which is fixed for pronouncement of

orders.

4. The aforesaid reprieve has been recorded at the request of the

counsel for the parties before us. While giving aforesaid direction, it is

noticed that the counsel for the respondent-bank has stated that he had

addressed arguments on 02.09.2014 after the order reserving judgment had

been passed and at that time, counsel for the petitioner and the guarantor

were not present.

5. The main issue raised in the present petition emanates from the

order dated 20.08.2014 passed by the DRT, directing that O.A. Nos. 37

and 39 of 1998 should be delinked from O.A. No. 38/1998. This order

was challenged before the Debt Recovery Appellate Tribunal (DRAT) and

the said appeal stands dismissed by the impugned order dated 01.09.2014

of the DRAT.

6. Learned counsel for the petitioners submits that the order dated

01.09.2014 should to be set aside as by an earlier dated 15.01.2014, DRT

had directed that O.A. Nos. 37/1998 and 39/1998 should be listed and

simultaneously tried and disposed of along with O.A. No. 38/1998. It is

further submitted that order dated 15.01.2014 is subject matter of another

appeal filed by the respondent bank, still pending before the DRAT. Our

attention is drawn to the fact that in O.A. No. 38/1998, an application has

been filed for cross examination of the witnesses, who have filed affidavits

in support of the claim of the respondent-bank. Decision on the said

application is to be pronounced on 22.09.2014.

7. Learned counsel for the respondent bank, has submitted that the

claims raised by the respondent-bank in three O.As are based upon the

separate transactions and to this extent, the O.As are not connected, though

the respondent bank and the principal borrower are the same. He submits

that parties in three O.As are also different, because in O.A. No. 37/1998,

there is only one guarantor and in O.A. No. 39/1998, there is no guarantor.

In O.A. No. 38/1998 there are multiple guarantors including M.S.Bassi

who is not a party to O.A. Nos. 37 and 39 of 1998. Learned counsel for

the petitioners does not dispute the factual position with regard to the

parties to the O.As, but, submits that the transactions are inter-connected

and the defence is common.

8. The order dated 15.01.2014 passed by the DRT reads as under:

"Defendant No. 4 has filed IA No. 28/14 for consolidation of OA No. 37/98, OA No. 38/98 and OA No. 39/98. The transactions are independent, the applicant is the same and the principal borrower is the same. Instead of consolidation there could be a simultaneous trial and disposal of all the cases and the parties can be permitted to lead evidence in one case which can be read in all the cases. This includes documents as well. OA No. 38/98 shall be treated as the lead case. IA is allowed as above. Defendants have filed the evidence. For completion of exhibition of documents posted before Registrar to date already fixed i.e. 17.1.2014".

(emphasis supplied)

9. The aforesaid order specifically records that the transactions

which are subject matter of the three OAs are independent but the

applicant-bank and the principal borrower are the same. Therefore, instead

of consolidation, there could be simultaneous trial and disposal of all the

cases and the parties can be permitted to lead evidence in one case which

can be read in all the cases, and this includes documents as well.

10. It is pointed out and not disputed before us that evidence in O.A.

No. 37/1998 was filed by the respondent-bank in March 2012 and by the

petitioners and the guarantor in May 2012. In O.A. No. 39/1998, the

respondent bank had led evidence by way of affidavits more than ten years

back in April, 2002 and the petitioner i.e. the principal borrower, the only

opposing party in the said O.A. had filed evidence by way of affidavit in

April, 2004. The evidence in O.A. No. 38/1998 was filed by the

respondent bank in 2011 and thereafter, evidence was filed by the principal

borrower and the guarantors including M.S.Bassi in 2012. We have

quoted the order dated 15.01.2014 which states that the defendant No. 4

had filed IA No. 28/14 for consolidation of O.A. Nos. 37/1998, 38/1998

and 39/1998. The said defendant, M.S.Bassi, who is the stated guarantor

in O.A. No. 38/1998 is not a party against whom the respondent-bank has

sought any decree or relief in O.A. Nos. 37/1998 and 39/1998. The

application for consolidation which is noticeable was filed only in 2014 by

the said M.S.Bassi as the application was numbered IA No. 28/14. This

factual position is not disputed and accepted/admitted.

11. Thus, it is clear that the application for consolidation and for

leading evidence in one case was not filed from 1998 till 2014 by any of

the parties. It was filed after evidence by way of affidavits had been filed

by the parties.

12. The petitioner has not filed any application for cross-

examination of deponents who have filed affidavits in support of the claim

made by the respondent bank. M.S. Bassi, it is stated, has filed an

application in 2013 in O.A. No.38/1998. M.S. Bassi as noted above is

defendant No.4 in O.A. No.38/1998 and is not a defendant in other cases.

Orders on the application seeking cross-examination have been reserved to

be pronounced on 22.9.2014. The application, for consideration as noted

above, was filed in year 2013 and not before. We did not think it will be

appropriate and correct at this stage to accept the contention of petitioner

that the application, filed in 2013 by M.S. Bassi, for cross-examination in

O.A. No.38/1998 was with object and purpose that cross-examination of

deponents should and would be allowed in O.A. Nos.37 and 39/2009. This

argument is farfetched and fallacious.

13. At this stage, we may notice that O.A. Nos. 37 and 38 of 1998

were allowed vide order dated 26.05.1999. The petitioner i.e. the principal

borrower, had thereupon, filed appeals against the decision in O.A. Nos.

37 and 38 of 1998 before the DRAT. Two separate appeals were

preferred. One of the issues raised in the appeals was whether DRT was

justified in disposing off the original applications without recording or

permitting the parties to lead evidence. The DRAT passed an order

directing that the parties should led evidence before them and the matter

need not be remanded. The order passed by the DRAT dated 29.09.2010

in an appeal arising out of O.A. No. 38/1998 was made subject matter of

the Writ Petition (C) No. 7758/2010. The said writ petition was allowed

and it was directed that the parties should lead evidence before the DRT

and the O.A. No. 38/1998 should be disposed of within a period of six

months. The said order was passed by consent. In view of the said order,

the other appeal was also disposed of and the adjudication order dated

27.05.1999 in O.A. No. 37/1998 was set aside and the DRT was asked to

dispose of the said O.A. after giving the opportunity to the parties to lead

evidence. The direction was given that the decision should be rendered

within a period of six months.

14. We have referred to the aforesaid position to highlight that both

the High Court as well as DRAT had directed that O.A. Nos. 37 and 38 of

1998 should be disposed of within six months. It is apparent that during

the period of six months or till 2014, no application for consolidation etc.

was filed. The application for consolidation of O.As by one of the

guarantor in O.A. No. 38/1998 who was not a party or defendant in O.A.

Nos. 37 and 39 of 1998, therefore, should not have been allowed. The

parties throughout had been treating the three O.As as separate and distinct

and in spite of the orders and directions issued by the High Court and the

DRAT, it was never the contention that the three O.As should be dealt with

and evidence should be led together. The order dated 05.09.2011 passed

by the High Court, in the opening paragraph itself, indicates that the

petitioner herein had filed two appeals i.e. Appeal No. 155/2000 and

156/2000 arising out of O.A Nos. 37 and 38 of 1998. It had preferred the

said writ petition only qua the proceedings arising out of O.A. No. 37/1998

(sic., 38/1998). Thus, it is clear that the petitioners were treating the

aforesaid O.As as separate and distinct and not one connected proceeding

where common evidence could be recorded/lead.

15. The learned counsel for the petitioners has submitted that the

order dated 15.01.2014 passed by the DRT has been made subject matter

of an appeal before DRAT and the said appeal is pending. We perceive

that the said appeal should have been taken up along with Miscellaneous

Appeal No. 327/2014, which was preferred by the petitioner before the

DRAT. However, the said error or mistake does not make any difference

as the issue was examined by the DRAT in its order dated 01.09.2014,

while dealing with the appeal preferred by the petitioner herein. The

effect of the said order is that the appeal preferred by the respondent bank

against order dated 15.01.2014 is rendered infructuous. We have also

examined the merits and whether or not, order dated 15.01.2014 should

have been passed in the facts of the present case. We have decided the

question in favour of the respondent bank.

16. At this stage, learned counsel for the petitioners borrowers

submits that there is no power of review and the order dated 15.01.2014

would operate as res judicata. He submits that the order dated 20.08.2014

is not a speaking order. We are not inclined to accept the said submissions

for the reason that the order dated 15.01.2014 was a procedural order and

as such, question of "review" would not arise. The order does not deal with

the merits. Order dated 15.01.2014 was passed for convenience, and with

the object to avoid duplicacy and to expedite the disposal of the O.As. It

was specifically recorded in the order dated 15.01.2014 that the

transactions were independent, though the bank and the principal borrower

were same. DRT did not direct consolidation and erroneously did not

notice that evidence has already been led by the parties in O.A. Nos. 37

and 39 of 1998. Had the said fact been noticed, direction to lead evidence

in one case, would not have been made. The order was passed on a wrong

and factually incorrect premise. Thus when it was noticed that proceedings

in O.A. Nos. 37 and 39/1998 are getting stalled and delayed, appropriate

and fair order has been passed.

17. The writ petition is dismissed after recording the consent of the

counsel for the parties for arguments to be addressed before the DRT on

18.09.2014.

18. At this stage, learned counsel for the petitioner submits that they

would like to move an application for cross examination of the deponents,

who have furnished affidavits. This is seriously objected to and opposed

by the counsel for the respondent bank on various grounds, as this would

delay the matter and this is not the subject matter of the writ petition. We

are not examining the said issue or making any observation in this regard.

If any such issue or contention is raised, the DRT can deal with the said

contention.

Dasti under signature of the Court Master.

SANJIV KHANNA, J

V. KAMESWAR RAO, J

SEPTEMBER 15, 2014/akb