Telangana High Court

The Prudential Cooperative Bank Ltd. vs The State Of Telangana on 3 May, 2024

Author: Nagesh Bheemapaka

Bench: Nagesh Bheemapaka

                                    1



         THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA

             WRIT PETITION Nos.2228 and 2240 of 2020



COMMON ORDER:

Writ Petition No.2228 of 2020 is filed seeking a Writ of Certiorari,

calling for the record from the 2nd respondent-Tribunal, relating to

I.A.No.94 of 2019 in O.P.No.104 of 2011 and set aside its order dated

29.11.2019, as it contravenes the law laid down in Air 1974 AP Pge 1(FB)

and so also suffers from non-application of mind, as such, it is arbitrary

and violative of Articles 14 and 300-A of the Constitution of India; and

consequently dismiss the said I.A.No.94 of 2019 in O.P.No.104 of 2011.

2. Writ Petition No.2240 of 2020 is filed seeking a Writ of Certiorari,

calling for the record from the 2nd respondent Tribunal relating to

I.A.No.150 of 2019 in O.P.No104 of 2011 and set aside its order dated

29.11.2019 as it contravenes the law laid down by this Hon'ble Court in a

plethora of cases and suffers from non-application of mind, as such it is

arbitrary and violative of Articles 14 and 300-A of the constitution of

India, and consequently allow I.A.No.150 of 2019 in O.P.No.104 of 2011.

3. As these two writ petitions are connected, they are analogously

heard and are being disposed of by this Common Order. For convenience

of discussion, the averments in W.P.No.2228 of 2020 are taken.

4. Heard Sri Anand Kumar Kapoor, learned counsel for the petitioner-

Prudential Bank; and learned Government Pleader for Cooperation, and

Sri Ch. Janardhan Reddy, learned counsel for respondent No.3.

5. Brief facts of the case as per the writ affidavit in W.P.No.2228 of

2020 are that the petitioner-The Prudential Cooperative Bank Ltd., has

filed O.P.No.104 of 2011 against respondent Nos.3 to 12 for recovery of

money based upon loan granted inter alia under a registered mortgage

before the 2nd respondent-Tribunal constituted under the A.P. Mutually

Aided Cooperative Societies Act, 1995. The present proceedings arise out

of an interlocutory application vide I.A.No.94 of 2019 in O.P.No.104 of

2011 filed by 3rd respondent herein praying for rejection / return of

evidence affidavit filed on 08.05.2019 on behalf of the petitioner-Bank

under Section 151 of Code of Civil Procedure. Even though the issue

raised before the 2nd respondent-Tribunal relates to whether de novo trial

has to commence or existing evidence can be relied upon and despite

bringing to the notice of the said Tribunal the law in this regard, yet the

said Interlocutory application vide I.A.No.94 of 2019 in O.P.No.104 of

2011 was allowed by its order dated 29.11.2019, which order is

impugned herein. The petitioner-Bank prior to undergoing liquidation

process was registered as a Cooperative Society under the A.P. Mutually

Aided Cooperative Societies Act, 1995 and was in the business of

banking. The petitioner-Bank filed the Original Petition No.104 of 2011

before the Tribunal against respondents 3 to 12 seeking repayment of a

total of Rs.75,00,000/- taken as overdraft loan by the respondents for

their business; and respondents 2 to 10 stood as guarantors for the said

loan in their personal capacity and also jointly and severally. The said

O.P.No.104 of 2011 was decreed ex parte on 19.08.2013 based on the

evidence let in on 20.06.2013 of the then liquidator. Thereafter, the

Liquidator of the petitioner-Bank filed Execution Petition vide E.P.No.33

of 2013 seeking execution of decree/Award dated 19.08.2013. While so,

on receipt of the Demand Notice under Form-6 in E.P.No.33 of 2013, the

respondent No.3 approached the Hon' ble High Court by filing

W.P.No.4329 of 2014 and the same was dismissed on 18.02.2014;

thereafter the respondent No.3 preferred appeal in W.A.No.224 of 2014,

however, the same was withdrawn on 28.02.2014. Thereafter the

respondent No.3 filed an application, I.A.No.84 of 2014, under Order IX

Rule 13 of Code of Civil Procedure, before the Tribunal praying to set

aside ex parte decree/Award dated 19.08.2013 along with a condone

delay petition seeking condonation of 45 days of delay. It is the case of

the petitioner-Bank that though respondent No.3 was set ex parte on

26.03.2012 and Award was passed on 19.08.2013 but respondent No.3

had not given any reason for non-participation in the proceedings, and

yet the 2nd respondent-Tribunal condoned the delay and also set aside

the ex parte decree vide its order dated 09.11.2016. It is also the case of

the petitioner that prior to the ex parte Award dated 19.08.2013, the then

Liquidator of petitioner-Bank had let in evidence on 20.06.2013 and had

also marked exhibits A1 to A34; and in accordance with the law as laid

down in Aziz Ahmed Khan v. I.A. Patel 1, the liquidator of the petitioner-

Bank has filed fresh evidence affidavit on 08.05.2019 and Exhibits A1 to

A35 were marked. Thereafter, respondent No.3 filed I.A.No.94 of 2019 in

O.P.No.104 of 2011 praying for rejection/return of evidence affidavit filed

on 08.05.2019 by the petitioner herein, under Section 151 of CPC.

Against the said application, the petitioner-Bank filed its counter on

26.06.2019 and specifically contended that de novo trial is to commence

in view of the prior award/decree being set aside, yet the 2nd respondent-

Tribunal allowed the I.A.No.94 of 2019 vide impugned order. It is the case

of the petitioner-Bank that the issue of de novo evidence after the prior ex

parte decree being set aside is no longer res integra and is clearly covered

by the full Bench judgment of the High Court in Aziz Ahmad Khan (1

supra) and therefore impugned order is unsustainable. It is the case of

the 2nd respondent-Tribunal that it had just recorded what is pleaded in

the petition and further the dates of prior recording of evidence, in the ex

parte trial and held that prior recorded evidence in the ex parte trial still

remains valid without giving any reasons and the said conclusion of the

Tribunal is in contravention of the law laid down in Aziz Ahmad Khan (1

AIR 1974 AP1 (FB)

supra). It is the case of the petitioner that the said petition was filed

under Section 151 of CPC while the evidence affidavit is filed under Order

18 Rule 4 of CPC and Order 18 of the code does not contemplate any

rejection of the evidence affidavit, as is provided for under Order XIII Rule

4 of CPC and as such the said petition with such a prayer ought not to

have been entertained and ought to have been rejected at the threshold.

Further, the application discloses that rejection of affidavit filed under

Order 17 Rule 4 which is false.

6. A counter affidavit has been filed by respondent No.3 stating that

whether fresh evidence has to be led in the matter, which was prior

decree/Award in an ex parte trial after the said ex parte decree/award

has been duly set aside in an application filed under Order IX Rule 213 of

CPC and in accordance with the law laid down in Aziz Ahmad Khan (1

supra) or the way 2nd respondent Tribunal held without even enunciating

the principle of law much less with any application of legal mind. It is the

specific contention of respondent No.3 in the counter that in reply to para

12 and 13 of the affidavit the contentions of the petitioner that the law

laid down in Aziz Ahmad Khan (1 supra) the liquidator of the bank has

filed the fresh evidence on 08.05.2019 and marked exhibit A1 to A35, is

completely false and in an evidence filed on 08.05.2013 nothing is

mentioned with regard to the judgments referred by the petitioner or with

regard to the earlier chief affidavits filed on 18.12.2012 and on

20.06.2013 are the order dated 19.08.2013 passed by Cooperative

Tribunal at all. It is also the contention of respondent No.3 that 2nd

respondent Tribunal rightly allowed the IA No.94 of 2019 in the

O.P.No.104 of 2011 by considering the both sides case. It is further

averred that the contention of petitioner-Bank that the order passed by

the Tribunal in I.A.No.94 of 2019 in OP.No.104 of 2011 is liable to be set

aside for the reason that the issue of de novo evidence prior ex parte

decree being set aside is no longer res integra, is false. In fact it is clear

that the said order was passed against respondents 1 to 10 in the

O.P.No.104 of 2011 whereas on behalf of respondent No.5 in the OP set

aside the order dated 19.08.2013, and with regard to the order passed

against the respondent Nos.1-4 and 6-10 are still in a force and the chief

evidence filed on behalf of the petitioner bank is still in force as such the

subsequent filing of the chief affidavit by the petitioner after setting aside

the ex parte order dated 19.08.2013 on behalf of respondent No.3 or on

behalf of the other respondents in the OP are not at all maintainable and

cannot be received on record and the petitioner cannot be allowed to

again file and mark the documents Exs.A1 to A35 as against the marking

of document in earlier chief affidavits Exs.A1 to A34 which itself is very

clear that the intention of petitioner-bank without any amendments of

pleadings in the main OP, the petitioner-bank is not entitled to exhibit

A35 by filing the new chief affidavit i.e., 08.05.2019, though the IA filed

by the petitioner to receive the exhibit A35 has been dismissed by the

Hon'ble Tribunal and without challenging the said order, the petitioner

by suppressing the said fact, filed the IA No.150 of 2019 to receive

Exs.A5 to A35, and the same was also dismissed by the Cooperative

Tribunal, and aggrieved by the same, the petitioner filed WP No.2240 of

2020. It is the further contention in the counter that the impugned order

lacks reasons and also reflects complete non-application of mind, is false

and incorrect. In fact the 2nd respondent after considering the legal pleas

pleaded in the respective cases came to the conclusion that the filing of

evidence by the petitioner along with Ex.A5 cannot be permitted and

dismissed and further contention that with regard to the law laid down in

Aziz Ahmad Khan (1 supra) supports the case of petitioner and filing of

fresh affidavit is correct is absolutely false and incorrect. It is further

contention that petition filed under Section 151 of CPC is a proper

provision of law, and in fact the petitioner in his counter filed I.A.No.94 of

2019 as not raised any ground and therefore now the petitioner cannot

be permitted to raise such grounds. It is also contended that the 2nd

respondent rightly allowed the application filed by the respondent No.3 to

return the Chief affidavit filed along with Ex.A35 by giving reasons. It is

the contention in the counter that the writ petition relief is to issue a Writ

of Certiorari seeking to calling for records from 2nd respondent relating to

IA No.94 of 2019 in OP No.104 of 2011 which is interrelated to the orders

dated 19.08.2013 passed by 2nd respondent and the evidences affidavit

filed by the petitioner dated 18.12.2012, 20.06.2013 and 08.05.2019 and

its docket orders, and without filing the relevant documents and papers,

the petitioner filed the above writ petition for the relief of Certiorari on the

same ground the writ petition is liable to be dismissed.

7. Having considered respective submissions, and the material on

record, it is pertinent to note that the crux of the issue is "whether fresh

evidence has to be led in the matter which was prior decree / Award in

an ex parte trial, after the said ex parte decree / award has been duly set

aside in an application filed under Order IX rule 13 of CPC and in

accordance with law laid down in Aziz Ahmad Khan (1 supra), or the

way the 2nd respondent Tribunal has held without even enunciating the

principle of law, much less without any application of legal mind.

8. A perusal of the judgment in Aziz Ahmad Khan (1 supra) would

show that the Full Bench of this Court had observed as under:

"The question therefore is: can the previous statement on oath of the plaintiff recorded in the absence of the defendant before the ex parte decree was passed be used per se as legal evidence against the defendant at a later stage after the ex parte decree is set aside. Of course, no such question would have arisen had the plaintiff been called once again and his statement recorded even though, it may be in the absence of the defendant as the proceedings were set ex parte. As already noticed, after the proceedings were set ex parte for a second time, the Court has not recorded any evidence in the case, but relied only the material including the testimony of the plaintiff which formed the

basis of the earlier ex parte decree which was set aside. The legal effect of setting aside the ex parte decree is that all that was done from the date of defendants non-appearance in Court becomes nonest as against him. Therefore it can no longer bind him.

The result would be that, that testimony cannot be used as evidence by its own force against the defendant unless it be so permitted under any of the provisions of the Evidence Act. Of course, the testimony of the plaintiff recorded when the proceedings were ex parte constituted evidence in the case. Inded it was the statement of a witness in a judicial proceedings. But the natural result of the ex parte decree being set aside was that the parties were relegated back to the same position as they occupied before the non-appearanc of the defendant. That testimony no longer remained as evidence in the case thereafter. Nevertheless it may be used as evidence if the Indian Evidence Act permits so. Section 33 of the Evidence Act is the relevant provision which deals with this aspect. ...."

9. In view of the legal proposition laid down in the Full Bench

judgment of this Court in Aziz Ahmad Khan (1 supra), the prior

evidence recorded in the ex parte decree does not remain valid once the

ex parte decree is set aside, and the parties are relegated back to the

stage of trial to the point before the ex parte decree. Therefore, the

impugned order passed by the Tribunal without giving cogent reasons by

holding that in an ex parte trial, the prior recorded evidence still remains

valid, is liable to be set aside.

10. Accordingly, the writ petitions are allowed, setting aside the

impugned order dated 29.11.2019 passed in I.A.No.94 of 2019 in

O.P.No.104 of 2011; and also setting aside the order dated 29.11.2019

passed in I.A.No.150 of 2019 in O.P.No104 of 2011. No costs.