SUPREME COURT OF INDIA

Before:- Y.K. Sabharwal and Tarun Chatterjee, JJ.

Civil Appeal No.7300 of 2003. D/d. 6.4.2005.

Andhra Bank - Appellant

Versus

M/s. Bhanu Engineering Corporation & Ors - Respondent

Civil Procedure Code, 1908, Order 9, Rule 13 - Exparte decree - Setting aside of - Suit filed by appellant Bank for recovery of amounts due - Debts Recovery Tribunal (DRT) passed an ex parte order against the respondent-defendants - Respondents sought setting aside of ex parte order by way of filing an application along with application for condonation of delay - Right from the initial stage of the case respondent was negligent and did not take care to appear in spite of last opportunity granted to appear and adduce evidence - Vague averment made in respect to leg fracture suffered by Managing Director (Respondent No. 21 of Respondent 1 borrower firm by way of a ground for absence on that day - Having regard to the nature of evidence taken by them it was evident that intention of respondent was to delay the matter - In the meanwhile property of the respondents had been purchased and its possession taken in auction-sale giving rise to the interest of third parties - Respondents filed writ petition in High Court in which while taking a liberal view delay was condoned and direction issued to the DRT to take up the application for setting aside of ex parte order on merits - DRT dismissed the application and appeal there against was also dismissed by Appellate Tribunal - Respondents again filed writ petition assailing the dismissal orders of DRT and Appellate Tribunal - Orders containing concurrent finding of fact were set aside by High Court only on the ground that there was an earlier order of High Court whereby delay had been condoned - Held - Earlier order of High Court could not be the basis for setting aside the orders of DRT and Appellate Tribunal since it was limited to the question of condonation of delay - Under such circumstances order of High Court setting aside the well considered order of DRT was unsustainable.

[Paras 2 to 4]

ORDER

Y.K. Sabharwal, J. - Respondent No. 1 is the borrower firm of which Respondent No.2 is the managing director. The loan was taken from the appellant-Bank. The claim of the appellant was allowed by the Debt Recovery Tribunal [for short, "the D.R.T.] by ex-parte order dated 31st October, 2000. The application for its setting aside was dismissed by the Tribunal on 3rd January, 2003 and the appeal was dismissed by the Debt Recovery Appellate Tribunal [for short, "the Appellate Tribunal"] on 10th April, 2003.

2. The High Court, by the impugned judgement and order dated 1st May, 2003, in a petition filed under Article 226 of the Constitution of India by the borrower-firm and its managing director, has set aside the orders dated 3rd January, 2003, and 10th April, 2003. The Bank is in appeal on grant of leave. In brief, the facts are that the appellant-Bank filed a suit against the borrower firm, its managing director and other partners in the year 1993 for recovery of more than Rupees fifty six lakhs. The written statement was filed in November, 1995. The suit was transferred to the D.R.T. at Bangalore and ereafter to the D.R.T. at Hyderabad. In the written statement, only vague pleas were taken. Before the D.R.T., on 12th October, 2000, one witness was examined and certain documents were exhibited and the case was adjourned to 19th October, 2000. On this date, Mr. D.K. Murthy, Advocate, appeared and filed fresh Vakalatnama on behalf of the borrowers. Mr. G.V. Shivaji, Advocate, had earlier filed the Vakalatnama. On request of the counsel, the case was adjourned to 27th October, 2000 giving last opportunity to the borrowers. On 27th October, 2000, neither the counsel nor any of the defendants appeared. The evidence was closed and the matter was posted for 31st October, 2000 on which date the application of the Bank was allowed on the basis of the material on record. The order dated 31st October, 2000 is said to have been received by the Managing Director of the borrower on 28th November, 2000. On 3rd January, 2001, application for setting aside the ex-parte order dated 31st October, 2000, was made with a delay of thirty two days. The said application was returned by the Registry with objections. It was re-submitted on 9th May, 2002 with a delay of 472 days after removing the objections. On re-submission, the Registry pointed out that the application for setting aside the ex-parte order was not accompanied by an application for condonation of delay. That application was filed on 16th July, 2002. In the intervening period between 3rd January, 2001 and 16th July, 2002, demand notices had been served on the respondents on 28th August, 2001 and 1st October, 2001 and attachment order was served on 19th April, 2002. The sale proclamation was issued on 5th August, 2002 and publication for sale appeared in the newspaper on 8th August, 2002. The application filed for condonation of delay was dismissed by the D.R.T. on 9th September, 2002 and, consequently, application for setting aside the ex-parte order was also dismissed. On 18th September, 2002, the property was auctioned for Rs. 2.86 crores. The respondents filed a writ petition in the High Court challenging the auction sale. The High Court directed them to deposit Rupees fifty lakhs in two instalments but the order was not complied with. Be that as it may, the Appellate Tribunal dismissed the appeal filed against the order dated 9th September, 2002. The sale was confirmed by the Recovery Officer of the D.R.T. on 20th November, 2002. Respondent Nos.1 and 2 challenged the orders of the D.R.T. and the Appellate Tribunal, whereby the application seeking condonation of delay had been dismissed, in a writ petition filed before the High Court. The High Court, by order dated 27th November, 2002 passed in the said writ petition, taking a liberal view, condoned the delay and directed the D.R.T. to take up the application for setting aside the ex-parte order on merit. Pursuant to the aforesaid order dated 27th November, 2002, the application for setting aside the ex-parte order dated 31st October, 2000, was taken up and, ultimately, was dismissed by the D.R.T. on 3rd January, 2003. The D.R.T. has examined in detail the application and the conduct of the respondents. It has been noticed in the order that, apart from the earlier non-appearance of the respondents, except on one date, i.e., 19th October, 2000, they did not take any step for either appearance of other defendants or for appearance of the counsel despite the fact that, on 19th October, 2000, last opportunity had been granted to them. The appeal filed against the order dated 3rd January, 2003, as already noticed, was dismissed by the Appellate Tribunal on 10th April, 2003.

3. We have heard the learned counsel for the parties and have perused the record, including the application which was filed seeking to set aside the ex-parte order dated 31st October, 2000. On 19th October, 2000, last opportunity was granted to the respondents to appear and adduce evidence on 27th October, 2000. Assuming that the managing director suffered leg fracture, as claimed, that by itself could not be a ground for absence on 27th October, 2000. It may be noticed that the alleged fracture had, in fact, taken place, according to the managing director himself, on 29th September, 2000, i.e., before 19th October, 2000. Therefore, the fracture which took place on 29th September, 2000, could not be a ground for absence on 27th October, 2000. Further, a perusal of the application does not state any reason, except a vague averment about the leg fracture suffered by the managing director; no date has been given; it has not been stated as to why other defendants were not asked to appear. It has also not been stated as to why the advocate was not informed about the leg fracture and why advocate was absent. In fact, the date of fracture has, for the first time, come up in the order of the Appellate Tribunal.

4. The only ground on which the High Court has set aside the orders in question, which contain the concurrent findings of fact, is the order dated 27th November, 2002, whereby delay had been ordered to be condoned. We are afraid, that by itself could not be the basis for setting aside the orders dated 3rd January, 003 and 10th April, 2003. That order was limited to the question of condonation of delay. The High Court, taking liberal view, had come to the conclusion that delay deserves to be condoned and the application for setting aside the order deserves to be considered on merit. We are unable to sustain the view of the High Court that the spirit of the said order was to set aside the order dated 31st October, 2000. The record clearly demonstrates that the respondents have been utterly negligent right from the initial stage of the case and did not take care to appear even despite the last opportunity having been granted and it seems evident that the intention was to delay the matter, having regard to the nature of defence that had been taken. In the meanwhile, the interest of third party has cropped up. They have purchased the property in question and are in possession of it. Be that as it may, having regard to the facts and circumstances, above noticed, we see no reason to sustain the order of the High Court setting aside the well-considered order dated 3rd January, 2003. We may also note that on 27th October, 2000, admittedly, no application for adjournment was filed bringing to the notice of the D.R.T. the reasons for the absence of the respondents or their counsel.

5. In view of the aforesaid, we set aside the impugned judgement and order of the High Court and restore the order of the Tribunal dated 3rd January, 2003 and that of the Appellate Tribunal dated 10th April, 2003.

6. The civil appeal is, accordingly, allowed with costs.

Appeal Allowed with Costs