TaxTMI 
TaxTMI 
2008 (1) TMI 830
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.... floated by the Directors of Adhunik Detergent Ltd. According to the appellants, initially, Adhunik Detergent Ltd. had seven Directors, namely, (1) Satyanarayan Jalan, (2) Krishna Jalan, (3) Chakrapani Jalan, (4) K.K. Jalan, (5)Sunil Poddar, (6) Sushil Kumar Kanodia and (7) Radhey Shyam Poddar. Adhunik Detergent Ltd. had taken loan from the respondent-Bank. The appellants herein as Directors of Adhunik Detergent Ltd. at the relevant time became guarantors for repayment of loan and executed certain documents in favour of the respondent-Bank. It is the say of the appellants that there was division of business among the Directors of Adhunik Detergent Ltd. and Adhunik Synthetics Ltd. Consequent upon the division, the appellants herein, who were Directors 5, 6 and 7 had resigned as Directors from Adhunik Detergent Ltd. on August 18, 1989 and they got exclusive control over Adhunik Synthetics Ltd. From that date onwards, the appellants no more remained as Directors of Adhunik Detergent Ltd. 4. It was alleged by the respondent-Bank that since Adhunik Detergent Ltd. did not repay the loan amount, a civil suit came to be filed by the Bank in the Court of District Judge, Raipur, Madhya Prad....
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.... suit filed by the respondent-Bank came to be transferred to the Debt Recovery Tribunal, Jabalpur (DRT for short). The appellants had no knowledge about the transfer of the suit to DRT nor summonses were issued by DRT to the appellants at the new address. In the circumstances, nobody appeared before the DRT and the DRT vide its ex parte judgment and order dated December 15, 2000 decreed the suit filed by the plaintiff-Bank holding that the Bank was entitled to recover 1,07,17,177/- with interest and cost from the defendant Nos. 1-9 jointly and severely. The defendants were also restrained from transferring, alienating or otherwise dealing with or disposing off the hypothecated/mortgaged properties without the prior permission of DRT. 6. It is asserted by the appellants that they were not aware of the proceedings before the DRT and no summonses were served upon them. In the circumstances, they could not remain present before the DRT. It was on December 16, 2000 when Mr. G. Karmakar, who was working for the appellants, happened to visit the office of M.P. Audyogik Vikas Nigam Ltd. at Bhopal for some official work that the officials of the Nigam informed him that a suit pending in th....
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....of address. Summonses were then published in a Hindi newspaper which had no wide circulation. That action was also taken with a view to deprive the appellants from knowing about the proceedings before the DRT so that they may not be able to appear and defend themselves and the Bank would be able to obtain ex parte order. The appellants had led the evidence in support of their say that they were not in Mumbai at the relevant time and they were not subscribers of Hindi newspaper Navbharat Times. They had produced necessary particulars and yet the DRT failed to consider the said evidence in its proper perspective and dismissed the application observing that the appellants must be deemed to be aware of the proceedings. According to the DRT, the appellants appeared in Civil Court, filed written statement but all those facts were suppressed by them while filing the application before the DRT for setting aside ex parte order. The same mistake has been repeated by the Appellate Tribunal as also by the High Court. It was submitted that all those facts were not relevant in the present proceedings. On all these grounds, the orders are liable to set aside by directing the Debt Recovery Tribuna....
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....tement. The application proceeded on the footing as if the appellants were never aware of any proceedings initiated against them by the plaintiff-Bank. The DRT was, therefore, wholly right in dismissing the application and the said order was correctly confirmed by the DRAT and by the High Court. No case can be said to have been made out by the appellants to interfere with those orders and the appeal deserves to be dismissed. 11. Having heard the learned counsel for the parties, in our opinion, the appellants have not made out any ground on the basis of which the order passed by the DRT, confirmed by the DRAT and by the High Court can be set aside. From the record, it is clearly established that the suit was instituted by the plaintiff-Bank as early as in August, 1993. The appellants who were defendant Nos. 7 to 9 were aware of the proceedings before the Civil Court. They appeared before the Court, engaged an advocate and filed a written statement. They raised preliminary objections as also objections on merits. They filed applications requesting the Court to raise certain issues and try them as preliminary issues. It was, therefore, obligatory on their part to appear before the DR....
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.... was disbursed. As stated in the main order, the Court is satisfied that summons were properly published and summons has been properly served. 13. But the fundamental objection which had been raised by the respondent-Bank and upheld by the Tribunals is legally well- founded. In the application filed by the appellants before the DRT, Jabalpur under Section 22(2)(g) of the Act, there is no murmur that the applicants were defendants in the suit instituted in Civil Court; they were served and they appeared through an advocate and also filed a written statement and other applications requesting the Court to try certain issues as preliminary issues. It was expected of the appellants to disclose all those facts. Apart from suppression of fact as to service of summons and appearance of defendants before the Court, even on legal ground, it was not obligatory that the appellants should have been served once again. 14. In this connection, we may refer to the provisions of Section 22 of the Act which lays down procedure to be followed by the Tribunals. The relevant part of the said section reads thus; 22. Procedure and powers of the Tribunal and the Appellate Tribunal.(1) The Tribunal and ....
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....endants also. 16. Original Rule 13 of Order IX of the Code thus provided that when a decree had been passed ex parte against the defendant who satisfied the Court that summons was not duly served upon him, the Court was bound to set aside the decree. It was immaterial whether the defendant had knowledge about the pendency of suit or whether he was aware as to the date of hearing and yet did not appear before the Court. The Law Commission considered that aspect and the expression duly served. In its Twenty-seventh Report, the Commission stated; 1. Under Order IX, rule 13, if the court is satisfied either that the summons has not been served, or that the defendant was prevented by sufficient cause from appearing, etc., the ex parte decree should be set aside. The two branches of the rule are distinctive and the defendant, whatever his position may be in respect of one branch, is the court that he has made good his contention in respect of the other branch. 2. Now, cases may arise where there has been a technical breach of the requirements of due service, though the defendant was aware of the institution of the suit. It may well be, that the defendant had knowledge of the suit ....
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.... was amended by the Code of Civil Procedure (Amendment) Act, 1976. Rule 13 of Order IX with effect from February 1, 1977 now reads thus; 13. Setting aside decree ex parte against defendantIn any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit; Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also: Provided further that no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiffs claim. ....
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.... an advocate. An impression was sought to be created by the defendants/appellants as if for the first time they came to know in December, 2000 that an ex parte order had been passed against them and immediately thereafter they had approached the DRT. The Debt Recovery Tribunal, Jabalpur, therefore, in our opinion was right in dismissing the said application. In an appeal against the said order, the DRAT observed that the appellants had willfully suppressed the fact that they were not in the know of the proceedings when the same was proceeding in the Civil Court. The DRAT correctly stated that even if it is taken to be true that the appellants did not receive notice from the DRT, it was their duty to make necessary inquiry in the proceedings when the case had been transferred to the DRT. The Appellate Tribunal rightly concluded; In the present case, the appellants very artistically have suppressed the fact of their filing of written statement in the case while it was proceeding in the Civil Court and were being represented by their lawyer till the date of its transfer to the Tribunal at Jabalpur. 21. The High Court, in our judgment, was equally right in dismissing the petition c....