PNP 1 WP9296-24.6.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.9296 OF 2010 Hiren Aluminium Limited and another ..Petitioners. versus Asset Reconstruction Co. (India) Limited and others ..Respondents. ..... Mr. Nitin Thakkar, Senior Advocate with Mr. M.M. Merchant i/b K.V. Aiyar and Associates for the Petitioners. Mr.Berjis Colabawala with Mr. Vinod Kothari i/b Apex Law Partners for Respondent No.1. ...... CORAM : DR.D.Y.CHANDRACHUD & ANOOP V. MOHTA, JJ. 24 June 2011. P.C. : 1. Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Petition is taken up for hearing and final disposal. 2. The Petition arises out of an order passed by the Debts Recovery Appellate Tribunal by which an order of the Tribunal declining an application for amendment of the written statement has been confirmed. 3. The Bank of India filed in July 2006 an application for the recovery of its dues under the banking facilities sanctioned by a PNP 2 WP9296-24.6.sxw consortium to the Second Respondent who is the principal borrower. The Petitioners have been impleaded in the application before the Debts Recovery Tribunal in their capacity as guarantors. Two other applications have also been filed before the Tribunal by Axis Bank and by the Bank of Baroda. The Petitioners filed their written statement on 4 October 2007. At that stage none of the other Defendants had filed their written statements. The affidavit of claim was filed in November 2007 while in April 2008 the Petitioners filed their own claim affidavit together with documents. The debt owing to the Bank of India was assigned to the First Respondent on 22 January 2009 whereupon an application for substitution was allowed by the Tribunal. 4. The Petitioners filed an application for inspection of documents before the Tribunal on 19 February 2009. The application was dismissed by the Tribunal on 2 April 2009. An appeal against the order of the Tribunal was dismissed on 30 September 2009 and a petition challenging that order was dismissed by a Division Bench of this Court on 15 March 2010. In proceedings which took place before the Supreme Court on a Special Leave Petition being filed, an order was passed by the Supreme Court on 13 September 2010 recording that in the meantime the First Respondent had already furnished copies of the documents demanded by the Petitioners. In view of this no further directions were necessary and the Special Leave Petition was accordingly dismissed. 5. On 2 July 2009 the Petitioners filed an application for amendment of the written statement before the Tribunal. The PNP 3 WP9296-24.6.sxw Tribunal dismissed the application on 11 August 2009 holding that the amendment was not necessary for deciding the lis between the parties. The Tribunal furnished the following reasons for dismissing the application: It is to be noted that this Tribunal had while disposing of “ application (Exh.58) by order dated 02.04.2009 taken a view that the present Defendants contention that the L/Cs were opened ’ in dummy name cannot exonerate the Guarantors from their liability and, therefore, giving inspection of certain documents was not necessary. The Tribunal had also taken a view that the Applicants (as Guarantors) are not entitled to question the withdrawal of Rs.11 Lacs from Cash Credit Account. The same reasons equally apply for saying that the amendment to the aforesaid effects are not necessary.” 6. The reasons adduced by the Tribunal would indicate that in declining the application for amendment the Tribunal substantially relied upon its earlier order declining the application for inspection. The order of the Tribunal was carried in appeal and was confirmed by the Debts Recovery Appellate Tribunal. A Division Bench of this Court by its judgment dated 8 June 2010 set aside the order passed by the Debts Recovery Appellate Tribunal and remanded the proceedings back for fresh consideration. Thereupon, the Appellate Tribunal passed the impugned order dated 21 July 2010 once again dismissing the appeal. The Appellate Tribunal was of the view that the original application was listed for arguments on 5 June 2009 while the application for amendment of the written statement was filed on 2 July 2009. The Appellate Tribunal held that the Petitioners filed an application for amendment only when their attempt to obtain an order for inspection of documents failed and hence, there was an PNP 4 WP9296-24.6.sxw absence of due diligence on their part. Considering the rigors of Order 6 Rule 17 of the Code of Civil Procedure 1908 the application was dismissed. 7. Counsel appearing on behalf of the Petitioners submits that by the proposed amendment the Petitioners have sought to set up a case that there was collusion on the part of the officers of the bank with the principal borrower in regard to the opening of the letters of credit and there was therefore a want of bona fides. Counsel submitted that the Debts Recovery Tribunal had virtually commented upon the merits of the amendment in declining to allow it, which was not permissible having regard to the well settled position of law. As regards the order of the Debts Recovery Appellate Tribunal, it was urged that by virtue of the provisions of Section 22 of the Recovery of Debts Due to Banks and Financial Institutions Act 1993 the Tribunal and the appellate tribunal shall not be bound by the procedure laid down in the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice. The Tribunal and the appellate tribunal, it was urged, have powers to regulate their own procedure. In the present case, though the application for inspection was originally dismissed, inspection has eventually been granted by the First Respondent during the pendency of the proceedings before the Supreme Court. Hence, it would be in the interests of justice if the application for amendment were to be allowed. 8. On the other hand, it has been urged on behalf of the First Respondent that the application for amendment was filed only after the Debts Recovery Tribunal had initially rejected the application for PNP 5 WP9296-24.6.sxw inspection of documents. Learned counsel submitted that though the provisions of the Code of Civil Procedure, 1908 are per se not applicable to the Tribunal or the appellate tribunal, it is open to the Tribunal to regulate its own procedure. Therefore, no fault can be found with the order of the Debts Recovery Appellate Tribunal insofar as it declined to grant the application on the ground that the trial had commenced. 9. We have perused the record and have heard the learned counsel appearing on behalf of the contesting parties. 10. The material on the record before the Court indicates that initially an application for inspection of documents was filed by the Petitioners. That application for inspection was dismissed and the dismissal of the application eventually led to proceedings before the Supreme Court. In the meantime, an application for amendment was moved before the Debts Recovery Tribunal by the Petitioners seeking to set up a case that there was collusion between the bank and the principal borrower in the operation of the letters of credit. At this stage, it would neither be appropriate nor proper to comment upon the merits of the case which is sought to be set up by the Petitioners. Undoubtedly the Tribunal is entitled to consider as to whether an amendment is necessary for determining the real questions in controversy between the parties. The Tribunal while declining the amendment substantially relied upon the circumstance that it had by its earlier order dated 2 April 2009 rejected the application for inspection. In the meantime, as we have noted earlier, inspection of documents was granted to the Petitioners in the course of the PNP 6 WP9296-24.6.sxw proceedings before the Supreme Court. In this view of the matter, we are of the view that the ends of justice would be met if an order were to be passed directing that the Debts Recovery Tribunal should reconsider the application for amendment afresh. The Debts Recovery Tribunal was substantially impressed with the point that the application for inspection had already been dismissed by the Tribunal by its earlier order. There is a material change in the factual position insofar as that aspect is concerned in view of the fact that inspection of documents has since been granted. Hence, we are of the view that in the interests of fairness, the Petitioners should have an opportunity to make fresh submissions before the Tribunal on the application for amendment since the Tribunal would now have to be uninfluenced by the consideration that the earlier application for inspection had been rejected. We are therefore of the opinion that the interests of justice should warrant that the Tribunal have a fresh look at the application for amendment. We, however, make it clear that in the view which we have taken, we leave it open to the Tribunal to consider the application for amendment having due regard to all the objections which the Respondents may have including on the question of the stage at which the application has been moved. All the rights and contentions of the parties are kept open in that regard. 11. To facilitate a fresh decision, we set aside the impugned order of the Debts Recovery Appellate Tribunal dated 21 July 2010 and the order of the Tribunal dated 11 August 2009 and remit the proceedings back to the Tribunal for fresh consideration. In the meantime, the Court is informed that another application for amendment has also PNP 7 WP9296-24.6.sxw been filed by the Petitioners which is pending before the Tribunal. The Tribunal would be at liberty to hear and dispose of both the applications for amendment so as to ensure expedition and to obviate any delay in the conduct of the proceedings. Rule is made absolute in the aforesaid terms. There shall be no order as to costs. (Dr. D.Y. Chandrachud, J.) (Anoop V. Mohta J.)