CWP No. 17252 of 2007 1 In the High Court of Punjab and Haryana at Chandigarh CWP No. 17252 of 2007 Date of Decision: 03.10.2008 Jit Singh and others ...... Petitioners Versus Central Bank of India and others ...... Respondents Coram: Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Ajay Tewari 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present: Mr.Amit Rawal, Advocate for the petitioners. Mr.R.S.Bhatia, Advocate for respondent No.1. Mr. C.S. Munjal, Advocate for respondent No.2. **** Ajay Tewari, J. The petitioners have challenged the order dated 15.10.2007 (Annexure P-17) passed by the Debt Recovery Appellate Tribunal, New Delhi (hereinafter referred to as 'the Appellate Tribunal') dismissing the appeal of the petitioners against the order dated 1.10.2003 (Annexure P-12) passed by the Debt Recovery Tribunal, Chandigarh (for short 'DRT'). The petitioners and respondents No.5, 6, 7 and 8 are all family members who are partners in a firm called M/s Rupal Enterprises (as well as CWP No. 17252 of 2007 2 M/s Rupal Industries and M/s Rupal Engineering), a debtor of the Central Bank of India-respondent No.1. In the year 1993 the respondent No.1 filed a suit for recovery of Rs.12,00,493.50 against the aforesaid Rupal Industries and the petitioners as well as respondents No. 5 to 8. In the said suit it was pleaded by the bank that the security for the loan was Time Deposit Receipts (TDRs) and that additional equitable mortgage of property bearing factory building of plot No. 728, Industrial Area-B, had been created even though the said property had earlier been mortgaged as security for a loan to M/s Rupal Industries. The above mentioned civil suit came up for hearing on 5.8.1993 after service was complete and was adjourned to 10.9.93 for filing written statement. It was subsequently adjourned to 11.10.93, 27.11.93, 10.1.94 and finally to 24.10.94 for the same purpose on which date ex parte proceedings were ordered against the defendants. On 24.1.1995 Government of India promulgated an ordinance which was ultimately passed as an Act called the Recovery of Debts due to Financial Institutions Act, 1993 as a result of which the suit was ordered to be transferred to the Debt Recovery Tribunal, Jaipur vide order dated 24.1.95. This ordinance was stayed and consequently the suit continued on the board of learned Senior Sub Judge, Ludhiana which passed ex parte judgment and decree dated 27.3.96. After the decree ultimately the stay on the Act was vacated and the matter was referred to the Debt Recovery Tribunal, Jaipur for execution and it was only from the execution notice that the petitioners came to know about the ex parte decree and within short time thereafter they moved an application for setting aside the said ex parte decree. Main allegation of the petitioners is that the document by which CWP No. 17252 of 2007 3 additional equitable mortgage had been created of the property in dispute in favour of the bank was forged. It is further averred that in respect thereof an FIR under Sections 420/467/468/471 read with Section 120-B IPC has been lodged against the bank officers and the trial thereof is pending. The subsidiary allegation is that it was incumbent upon the Civil Court to have issued fresh notice to the petitioners if the suit was to continue before it. During the pendency of the application U/O 9 Rule 13 CPC recovery proceedings continued and the mortgaged property was put to auction on 16.12.99. By order dated 1.10.2003 the said application for setting aside ex parte proceedings was dismissed and thereafter by order dated 7.10.2003 sale in favour of the auction purchaser, respondent No.2, was confirmed. In appeal against the said order the learned Appellate Tribunal while dismissing the same by the impugned order, held as follows:- “Otherwise also, the restoration application was bereft of any merit. It is crystal clear from the fact that the order to proceed ex parte had been passed on 24.10.1994. Though the defendants appeared on 24.1.1995, but they never moved any application for setting aside the ex parte order dated 24.10.1994 despite the fact that operation of the RDDBFI Act had been stayed by the superior court and the jurisdiction continued to be vested with the Civil Court which dealt with the matter and ultimately passed the ex parte decree on 27.3.1996. To say in other words, they allowed the case to proceed ex parte. It is notorious that a defendant with a weak case allows the case to proceed ex parte and then belatedly applies for restoration to linger on the litigation. The appellants/defendants have chosen CWP No. 17252 of 2007 4 the same course here too. No notice at all was necessary to be issued afresh to the defendants when the jurisdiction continued to be with the Civil Court which could proceed further in the matter till the vacation of the stay as to the operation of the RDDBFI Act by the superior court. The Civil Court rightly proceeded ahead and passed the ex parte decree dated 27.3.1996. The defendants/appellants have to blame themselves for the same. The ground advanced by them to set aside the ex parte decree is not backed by any justifiable cause or sufficient reason and the appeal has to fail.” In the present petition the petitioners have expanded the scope of the litigation before the Debt Recovery Tribunal as well as the Appellate Tribunal by including the allegation regarding forgery of the document creating additional charge. In our opinion the findings of the Debt Recovery Tribunal as well as the Appellate Tribunal on the application for setting aside ex parte decree are unexceptionable and no fault can be found therewith. Even before us learned counsel for the petitioner could not give any satisfactory explanation either for their absence on 24.10.94 or for their inaction in not filing the application for setting aside ex parte proceedings on 25.1.95- the date on which the suit was initially ordered to be transferred to the Debt Recovery Tribunal. Mr. Amit Rawal, learned counsel for the petitioners relied upon the case of Tea Auction Ltd. v. Grace Hill Tea Industry and another reported as (2006) 12 SCC 104, Lal Devi and another v. Vaneeta CWP No. 17252 of 2007 5 Jain and others reported as (2007) 7 SCC 200 and Varadaraja Perumal Temple v. Pattabiraman and another reported as (2005) 10 SCC 292 in support of his prayer for setting aside the ex parte decree. In our view none of the said authorities apply to the facts of this case. In the matter of Tea Auction Ltd.(supra), the dispute was regarding the initial service of summons whereas in the present case admittedly the petitioners had been appearing before the Civil Court. In the case of Lal Devi and another (supra), counsel for the defendants did not appear on one date and on the same day ex parte evidence was led, arguments were heard and judgment was pronounced. In the case of Varadaraja Temple (supra), the Hon'ble Supreme Court condoned the delay in filing the application to set aside ex parte decree since the appellant was a temple, delay being due to the transfer of its executive officer. As regards plea of the petitioners regarding the forgery and their contention that the decree having been obtained by fraud was void, learned counsel for the petitioners has relied upon the case of S.P. Chengalvaraya Naidu (Dead) by LRs v. Jagannath (Dead) by LRs and others, (1994) 1 Supreme Court Cases 1. The stark difference between the said matter and the present case is that there the trial Court had given a finding regarding fraud at the stage of passing of final decree and it was in that context that the Hon'ble Supreme Court held that the preliminary decree was liable to be set aside. In the present case it would not be possible for this Court to return any such finding in writ proceedings. Apart from this, it cannot be lost sight of that whichever hat the petitioners choose to wear they are defaulting borrowers of the bank and that in this interregnum the rights of respondent No.2, the auction purchaser, have supervened. CWP No. 17252 of 2007 6 In this view of the matter we are constrained to hold that no relief can be granted to the petitioners in the present case. It is, however, made clear that in case the Criminal Court upholds the allegation of forgery levelled by the petitioners, it would be open to the petitioners to sue respondent No.1 for damages and nothing mentioned in this judgment, or in the judgments of the Appellate Authority as well as the Debt Recovery Tribunal would be read against them. Accordingly this petition is dismissed with no order as to costs. (AJAY TEWARI) JUDGE (ADARSH KUMAR GOEL) JUDGE October 03, 2008 sunita