ORDER
K.S. Kumaran, J. (Chairperson)
1. Miscellaneous Appeal 281/2002 has been filed by defendant 5 and 6 (namely, Smt. Krishna and Smt. Lalita and hereinafter referred to as ‘the appellants-defendants 5 and 6’) in O.A. 697/95 against the order dated 12.7.2002 passed by the Debts Recovery Tribunal-Ill, Delhi (hereinafter referred to as ‘the DRT’) dismissing their application to set aside the ex parte final order dated 30.10.2001.
2. Miscellaneous Appeal 282/2002 has been filed by the 4th defendant (namely, Pritam Singh, and hereinafter referred to as ‘the appellant-4th defendant’) against the order dated 19.7.2002 passed by the said DRT, Delhi dismissing his application also to set aside the same ex parte final order dated 30.10.2001.
3. The learned Counsel for both the sides stated that the points that arise for consideration in both the appeals arc similar, and advanced same arguments in both the appeals. Therefore, I am disposing of both the Miscellaneous Appeals 281/2002 and 282/2002 by this common order.
4. Respondent-Bank of Baroda filed Suit 202/95 before the Hon’ble High Court of Delhi against, (1) Shri Sai Industries, (2) Mr. Rajesh Bajaj, (3) Manoj Kumar, (4) Mr. Pritam Singh (appellant in Miscellaneous Appeal 282/2002), (5) Smt. Krishna, (6) Smt. Lalita (appellants in Miscellaneous Appeal 281/2002, (7) Smt. Sarita and (8) Mr. N.K. Bajaj. The said suit was transferred by the Hon’ble High Court to the Debts Recovery Tribunal, Delhi by order dated 6.9.95, with a direction to the parties to appear before the DRT on 9.10.95. This suit was taken on the file of the DRT as O.A. 697/95 on 27.10.95.
5. Ultimately, the ex pane final order in the said O.A. was passed by the DRT on 30.10.2001. The appellant-4th defendant (Pritam Singh) filed an application to set aside the ex parte final order, and appellants-defendants 5 and 6 filed another application for setting aside the ex parte final order as against them. The application filed by the appellant-4th defendant was dismissed on 19.7.2002, while, the application filed by the appellants-defendants 5 and 6 was dismissed on 12.7.2002 by the said DRT. That is why the appellants-defendant 5 and 6 have filed Miscellaneous Appeal 281/2002, and appellant-4th defendant has filed Miscellaneous Appeal 282/2002. The respondent-Bank has filed suitable replies to these appeals opposing them, and rejoinders have also been filed by the appellants/ appellant accordingly in these appeals.
6. I have heard the Counsel for both the sides, and perused the records.
7. The learned Counsel for the appellants-defendants contends that when the matter was pending before the Hon’ble High Court as a suit the respondent-Bank had also moved two applications, namely, LA. 624/95 for restraining the 2nd defendant from transferring, parting with possession or in any manner creating any charge on the hypothecated machinery etc., and LA. 625/95 for restraining, the defendants 3 to 8 from transferring, alienating or in any manner encumbering the mortgaged property. The learned Counsel for the appellants-defendants contends that on 23.1.95. when the matter came up for hearing before the Hon’ble High Court, summons/notices were ordered to the defendants in the suit and on these I.As. for the hearing dated 24.4.95 and restraining the defendants as prayed for by the respondent-Bank. He contends that notice with regard to LA. 625/2004 only, intended for the appellant-6th defendant was served upon her husband-Sushil Kumar on 2.2.95 but summons in the suit were not served upon the appellant-6th defendant. He also contends that the appellants 4 and 6 were not served at all with any notice or summons in the suit
8. The learned Counsel for the appellants-defendants points out from the order dated 25.4.95 passed by the Hon’ble High Court that while defendants 3 and 6 were served, the other defendants had not been served. He points out that while defendants 3 and 6 were set ex parte, notice was ordered for the other defendants through ordinary process/Registered Post for the hearing dated 6.9.95. The learned Counsel for the appellants-defendants also points out from the order dated 25.4.95 passed by the Hon’ble High Court that before the said order could be signed Mr. M. Verma, an Advocate had put in appearance on behalf of the defendants 3 and 6, and had stated that he has instructions to appear on behalf of the other defendants, and four weeks’ time was granted to file the written statement,
9. The learned Counsel for the appellants-defendants points out from the order dated 6.9.95 passed by the Hon’ble High Court (in the presence of the Counsel for the respondent-Bank and Mr. Mr. M. Verma for the defendant) transferring this suit to the Debts Recovery Tribunal, with a direction to the parties to appear before the Tribunal on 9.10.95. But, the learned Counsel for the appellants-defendants 4 to 6 contends that they had neither engaged Mr. M. Verma nor instructed him to appear on their behalf. He also points out that Mr. M. Verma had not even filed the Vakalatnama on their behalf before the Hon’ble High Court. The learned Counsel for the appellants-defendants 4 to 6 contends that the husband of the appellant-6th defendant received notice only in LA. for restraining the appellants-defendants and others from transferring or encumbering the mortgaged property, whereas, the appellants-defendants and other had sold on 14.8.89 itself to Mr. Mohinder Singh Ruhil and others the property allegedly mortgaged. The learned Counsel for the appellants-defendants contends that this was done even before 1990, when the loan was sanctioned to the 1st defendant. The learned Counsel for the appellants-defendants, therefore, contends that Mr. Sushil Kumar, the husband of the appellant-6th defendant had entrusted the matter to Mr. Mohinder Singh Ruhil, who had also assured that he will look after the matter. Therefore, the learned Counsel for the appellants-defendants contends that the appellant-6th defendant was not served with any summons in the suit, and she had not authorised Mr. M. Verma to appear on her behalf. He also contends that the appellants-defendants 4 and 5 had not been served with any notice or summons from the Hon’ble High Court, and they had also not engaged or authorised Mr. M. Verma to appear on their behalf before the Hon’ble High Court.
10. The learned Counsel for the appellants-defendants 4 to 6 contends that after the suit was transferred to the file of the DRT the appellants-defendants were not served with any notice in the O.A., and that they had no knowledge of the proceedings before the DRT. The learned Counsel for the appellants-defend ants 4 to 6 points out from the order dated 27.10.95 passed by the DRT that the DRT had directed issuance of default notice to the Counsel for the defendants by Registered Post and ordinary process, with a direction to file the written statement on 11.1.96.
11. He also points out the order dated 11.1.1996 passed by the DRT, which shows the presence of the Counsel for the respondent-Bank, but indicates that there was none present on behalf of the defendants. He further points out that on this date fresh default notice to the Counsel for the defendants as also the defendants by Registered Post/ordinary process was ordered by the DRT with a direction to file the written statement, and the O.A. was adjourned to 7.3.96. The learned Counsel for the appellants-defendants points out that from 7.3.96 the O.A. was adjourned to 7.6.96 as the Presiding Officer was on leave. He points out the order dated 7.6.96 passed by the DRT, which indicates the presence of the Counsel for the respondent-Bank and the absence of anybody on behalf of the defendants. He also points out from the said order that the DRT observing that the default notice on the Counsel for the defendants had not been served, directed issuance of fresh default notice to the Counsel for the defendants as also the defendants, with a direction to the defendants to file the written statement in six weeks, and to list the O.A. on 27.8.96.
12. The learned Counsel for the appellants-defendants 4 to 6 points out the order dated 27.8.96 passed by the DRT, which notes the presence of the Counsel for the respondent-Bank and Mr. Tarun Bajaj for the defendants. He further points out that this order indicates that while Mr. Tarun Bajaj had filed the memo of appearance for all the defendants, power of attorney was directed to be filed on the next date of hearing, with a direction to file the written statement by 17.10.96.
13. The learned Counsel for the appellants-defendants 4 to 6 points out the order dated 17.10.96 which takes note of the presence of the Counsel for the respondent-Bank and Mr. Sushil Kumar Salwan as appearing for defendants 1, 2 and 8. He also points out from this order that rest of the defendants have been shown to be “not present.” He further points out the observation made therein that on the last hearing Mr. Tarun Bajaj had appeared for all the defendants, and had even filed the memo of appearance. The learned Counsel for the appellants-defendants also points out from the order that while defendants 1, 2 and 8 were directed to file the written statement, the O.A. was adjourned for appropriate orders to 7.11.96 regarding the absence of defendants 3 to 7.
14. The learned Counsel for the appellants-defendants 4 to 6 points out that the O.A. was adjourned from 7.11.96 till 2.6.97 without any effective orders. He points out from the order dated 2.6.97 passed by the DRT that the DRT had taken note of the absence of anybody on behalf of the defendants, though written statement had been filed on behalf of the defendants 1, 2 and 8. He also points out from this order that the DRT had granted three weeks’ time to the other defendants to file the written statement, and had adjourned the matter to 22.7.97. He also points out from the order dated 22.7.97 of the DRT that the DRT had observed that there was none present on behalf of the defendants 3 to 7, that the written statement had not been filed, and the right to file the same stood closed. He points out that the O.A. was adjourned to 30.7.97 and from 30.7.97 to 3.11.97. The learned Counsel for the appellants-defendants 4 to 6 contends that ultimately the ex parte final order dated 30.10.2001 was passed.
15. The learned Counsel for the appellants-defendants 4 to 6 contends that after the suit was transferred to the DRT and the DRT had taken the same on its file as O.A. 697/95, the appellants-defendants were never served with any summons/notice from the said DRT, that the appellants-defendants 4 to 6 had not authorised Mr. Tarun Bajaj to appear on their behalf. He also contends that Mr. Tarun Bajaj, who had filed the memo of appearance, had not even filed any Vakalatnama on behalf of the appellants-defendants 4 to 6 before the DRT, and that he had appeared before the DRT only on one date, namely, 27.8.96, but ceased to appear thereafter. At the time of the hearing of these appeals the learned Counsel for the appellants-defendants even contended that Mr. Tarun Bajaj is not an Advocate at all, but is the brother of the 2nd defendant-Rajesh Bajaj, to whom the loan had been allegedly advanced by the respondent-Bank. The learned Counsel for the appellants-defendants 4 to 6 contends that in view of the fraud and collusion between Mr. Rajesh Bajaj, Mr. Tarun Bajaj and Mr. Mohinder Singh Ruhil and others the notice/summons by the DRT was not even allowed to be served on the appellants-defendants, and, therefore, these appellants-defendants 4 to 6 had no knowledge of the proceedings before the DRT. The learned Counsel for the appellants-defendants 4 to 6 contends that these defendants had no relationship with Mr. Rajesh Bajaj to whom the loan was sanctioned, that they had already sold the property, allegedly mortgaged, even before the loan is stated to have been sanctioned to the 2nd defendant – Rajesh Bajaj, and therefore, there was neither any need nor any authority to create mortgage of the property, or any need to execute any deed of guarantee in favour of the respondent-Bank. They contend that these are forged documents created by Rajesh Bajaj and others. The learned Counsel for the appellants-defendants 4 to 6 contends that even the original sale deed in favour of the defendants 4 to 6 and others were handed over to Mr. Mohinder Singh Ruhil, who had purchased the said property, and therefore, there is no question of crating a mortgaged by deposit of title deeds.
16. But, the learned Counsel for the respondent-Bank, on the other hand, contends that on 2.2.95 itself the appellant-6th defendant had been served through her husband with notice from the Hon’ble High Court, and along with the notice the copy of the plaint was also sent, and, therefore, it is clear that the appellants had the knowledge of the proceedings, whereas, the application to set aside the ex parte final order was filed on 3.7.2002 only. He points out that the appellants have kept quit for nearly 7 1/2 years without taking any action, and contends that there is absolutely no ground for setting aside the ex parte final order.
17. But, the contention of the learned Counsel for the appellant-defendants is that the husband of the appellant-6th defendant was served with the notice from the Hon’ble High Court in I. A. 625/95 restraining the defendants 3 to 8 from transferring/alienating or in any way encumbering the mortgaged property, and that there is nothing to show that any of the appellants-defendants were served with the summons in the suit from the Hon’ble High Court. The contention of the appellants-defendants is that even before the alleged grant of the loan to the 2nd defendant in the year 1990, the appellants-defendants and others had sold the property (stated to have been mortgaged to the respondent-Bank) to Mr. Mohinder Singh Ruhil and others in the year 1989 itself, and, therefore, the husband of this appellant-6th defendant handed over the notice to said Mr. Mohinder Singh Ruhil, who stated that he will look after the matter. The appellants-defendants contend that the property was purchased by them on 17.5.89 and sold on 14.8.89 (i.e. within three months) to Mr. Mohinder Singh Ruhil and others, and, therefore, there was no question of their mortgaging the property in favour of the respondent-Bank, and that is why the husband of the appellant-6th defendant had handed over the notice to Mr. Mohinder Singh Ruhil, who promised to look after the matter. I am of the view that in the circumstances the conduct of the husband of the appellant-6th defendant is natural. They also contend that they had not instructed Mr. M. Verma to appear on their behalf before the Hon’ble High Court. Though the order dated 25.4.95 passed by the Hon’ble High Court shows that Mr. M. Verma, Advocate, had put in appearance on behalf of the defendants 3 and 6 and also stated that he had instructions to appear on behalf of the other defendants, there is nothing to show that the Vakalatnama on behalf of any of the appellants-defendants had been filed by him. The matter was adjourned from 25.4.95 to 6.9.95, but on 6.9.95 the suit was ordered to be transferred to the DRT, with a direction to the parties to appear before the DRT on 9.10.95. The order dated 6.9.95 shows that Mr. M, Verma was present, but, as pointed out already, he had not filed any Vakalatnama, and there is nothing to show that he was engaged by the appellants-defendants,
18. The matter was taken up by the DRT on its file as O.A. 697/95 on 27.10.95. The details pointed out by me above go to show that though Mr. Tarun Bajaj had appeared before the DRT on 27.8.96 for the defendants, and had also filed the memo, he had not filed any Power of Attorney/Vakalatnama on behalf of the appellants-defendants in spite of the specific direction by the DRT. He had appeared only on one date, i.e. 27.8.96, and had not appeared on any other date. Though the DRT had directed on 11.1.96 and 7.6.96 issuance of default notice to the Counsel as well as to the defendants, there is nothing to show that any such notice was served on the appellants-defendants. The contention of the appellant-defendants is that they had not engaged Mr. Tarun Bajaj, and, in fact, Mr. Tarun Bajaj is the brother of Mr. Rajesh Bajaj, the 2nd defendant in the O.A. to whom the loan was allegedly granted. The learned Counsel for the appellants-defendants even contends that Mr. Tarun Bajaj is not even an Advocate. In these circumstances, I am of the view that the fact that a person by name Tarun Bajaj had filed memo on behalf of the defendants before the DRT on only one date cannot show that he was engaged by the appellants-defendants. There is nothing to show that he had filed the Vakalatnama on behalf of the appellants-defendants. There is also nothing to show that the appellants-defendants were served with any notices from the DRT after the suit was transferred to and was taken on file by the DRT. Even though the husband of the appellant-6th defendant had been served with the notice from the Hon’ble High Court, no notice or summons had been issued from the DRT to any of the appellants-defendants. After the transfer of the suit to the DRT it is obligatory on the part of the DRT to serve the appellants-defendants with the notice of the O.A., whereas, no such notice is shown to have been served on them by the DRT. In these circumstances, the contention of the appellants-defendants that a fraud had been committed on them, and the service of any notice from the DRT was prevented by Mr. Tarun Bajaj, the brother of the 2nd defendant appearing on one date, that too without filing the Vakalatnama on behalf of the appellants-defendants before the DRT, and thereafter failing to appear before the DRT, so that the appellants-defendants could be proceeded ex parte, is acceptable.
19. Therefore, I am of the view that the ex parte final order passed against the appellants-defendants has to be set aside, and the appellants-defendants have to be given opportunity to contest the O.A. on merits. Therefore, both the appeals have to succeed. But, in view of the unnecessary expenses and inconveniences to which the respondent-Bank has been put, each of the appellants shall pay a cost of Rs. 10,000/- to the respondent-Bank.
Miscellaneous Appeal 281/2002
20. The appeal is allowed setting aside the impugned order dated 12.7.2002 passed by the DRT. The application filed by the appellants to set aside the ex parte final order dated 30.10.2001 will stand allowed. The ex parte final order passed in O.A. 697/95 will stand set aside in so far as the appellants herein are concerned.
21. The learned Presiding Officer of the DRT will take the O.A. back to his file in so far as the appellants herein are concerned, give them opportunity to file the written statement, give both the sides opportunity to put forward their case, and then dispose of the O.A. in accordance with law.
22. But, as indicated earlier, each of the appellants shall pay a sum of Rs. 10,000/- (Rs. 20,000/- in total) as costs to the respondent-Bank.
23. The parties are directed through their Counsel to appear before the concerned DRT on 12.1.2005 for taking further directions in this matter.
Miscellaneous Appeal 282/2002
24. The appeal is allowed setting aside the impugned order dated 19.7.2002 passed by the DRT. The application filed by the appellant-4th defendant to set aside the ex parte final order dated 30.10.2001 will stand allowed. The ex parte final order passed in O.A. 697/95 will stand set aside in so far as the appellant-4th defendant is concerned.
25. The learned Presiding Officer of the DRT will take the O.A. back to his file in so far as the appellant-4th defendant is concerned, give opportunity to the appellant-4th defendant to file his written statement, give opportunity to both sides to put forward their case, and then dispose of the O.A. in accordance with law.
26. As indicated earlier, the appellant-4th defendant shall pay a cost of Rs. 10,000/- to the respondent-Bank.
27. Parties are directed, through their Counsel, to appear before the DRT on 12.1.2005 for taking further directions in this matter.
28. Copy of this order be furnished to both sides, and be also forwarded to the concerned DRT. Copy of this order be placed on both the appeals.