VBC 1 wp3395.10-3.3 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.3395 OF 2010 Lucy Ayline Jacinto. ..Petitioner. versus Union Bank of India & Ors. ..Respondents. ..... Mr.Aspi Chinoy, Sr.Advocate with Mr.P.Janardhanan i/b. Mr.Atul G.Damle for the Petitioner. Mr.N.V.Vimadalal i/b. Vimadalal & Co. for Respondent No.1. ..... CORAM : DR.D.Y.CHANDRACHUD & ANOOP V. MOHTA , JJ. March 3, 2011. ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) : The challenge in these proceedings under Article 226 of the Constitution is to an order of the Debts Recovery Appellate Tribunal dated 1 April 2010 and to an order passed by the Tribunal in Original Application 3158 of 2000. By an order dated 29 April 2010, the Division Bench directed that since arguable questions are raised, instead of admitting the petition, the proceedings will be placed for final disposal at the stage of admission. Accordingly, the petition has been heard for final disposal at the stage of admission. VBC 2 wp3395.10-3.3 The First Respondent, which is the contesting party, being the Applicant before the Debts Recovery Tribunal, has appeared through Counsel. 2. On 31 March 1995, the Tahsildar, Andheri, passed an order recording the name of the Petitioner in the ‘other rights’ column of the record of rights in respect of the property in question, admeasuring 9467 sq.mtrs. at Kole Kalyan. 3. In 1999-2000, inspection had revealed that one M.B. Tawadia, who was then a DGM of the First Respondent at the M.S.Marg Branch of the Bank, had discounted certain bills for a proprietary concern by the name of M/s.R.D.Swamy with discrepant documents. The inspection noted that though the buyers had refused payment of earlier bills, Tawadia had opened Letters of Credit for non-existing transactions resulting in an overdue of Rs.25 crores in the account of the firm. 4. On 15 February 2000, Vilas Thale and Mohd Shaikh purported to execute a substitute Power of Attorney in favour of VBC 3 wp3395.10-3.3 Rajesh Baheti (the Seventh Respondent), who was one of the guarantors of the amount due by the firm, R.D.Swamy to the Bank, purporting to appoint him as a Constituted Attorney for the Petitioner. The Power of Attorney recited that on 22 January 1992, the Petitioner had executed an irrevocable Power of Attorney in favour of Thale and Shaikh. The Power of Attorney was executed on 15 February 2000 and was notarised on 16 February 2000. The endorsement of the Notary does not bear a notarial registration number. The substitute Power of Attorney was executed by Thale and Shaikh on the basis of a Power of Attorney alleged to have been executed by the Petitioner on 22 January 1992 in respect of the property at Kole Kalyan, admeasuring 9467 sq.mtrs. Under clause 19, a power was conferred upon Thale and Shaikh to substitute any other party. The Power of Attorney was notarised on 31 March 1992 over two months after its execution. The Power of Attorney does not bear a notarial registration number. Evidently, it was eight years after the alleged execution of the Power of Attorney by the Petitioner, on 22 January 1992 that the substitute Power of Attorney was executed on 15 February 2000. VBC 4 wp3395.10-3.3 5. On the basis of the substitute Power of Attorney, which is executed on 15 February 2000 and notarised on 16 February 2000, a memorandum was recorded with the First Respondent on 17 February 2000 stating that Rajesh Baheti (the Seventh Respondent) as Constituted Attorney for the Petitioner had delivered the title deeds of the property over which the Petitioner claimed rights (i.e. a certified copy of an order of the Tahsildar, Andheri, dated 31 January 1995, a certified copy of Village Extract Form No.6 and a valuation report dated 1 February 2000) with an intent to create an equitable mortgage of the property in favour of the Bank to secure facilities granted and to be granted by the Bank to the firm M/s.R.D.Swamy. 6. The case of the Petitioner is that on 29 June 2000 a note was addressed by the Bank Manager to the Chief Vigilance Officer recording that in May and October 1999 inspections revealed that Shri Tawadia, DGM of the M.S.Marg Branch had discounted bills for the firm with discrepant documents. Despite the buyers having refused the payment of earlier bills, he had opened L.Cs. for non- existing transactions resulting in an overdue of Rs.25 crores in the VBC 5 wp3395.10-3.3 account. The note inter alia records that additional collaterals in the form of property belonging to a third party of a value of Rs. 28.40 crores (the property in dispute) had been obtained by way of equitable mortgage. 7. In July 2000, the Chief Vigilance Officer of the First Respondent lodged a complaint against Tawadia, R.D.Swamy and others. The Central Bureau of Investigation registered a case on 19 July 2000. A chargesheet was filed on 29 January 2002. The chargesheet refers to Rajesh Baheti, Constituted Attorney under the Power of Attorney dated 15 February 2000 as being a partner with M/s. R.D.Swamy in another partnership firm. 8. On 6 October 2000, the First Respondent filed an Original Application before the Debts Recovery Tribunal against R.D.Swamy and six others, including them the Petitioner, who was impleaded as the Seventh Defendant. The address of the Petitioner in the Original Application was stated to be as follows : “Mrs.Lucy Alwine Jacinto having her address at Koliwada Gaothan, Kalina, Santacruz (E), Mumbai-400 055 VBC 6 wp3395.10-3.3 and also at 7/111, Geeta, Sion (W), Mumbai-400 022.” Defendant Nos.3 to 6 to the application were stated to be guarantors. As regards the Petitioner, it was stated that she had through her Constituted Attorney deposited title deeds in respect of the property with the Bank with an intent to create an equitable mortgage. Between December 2000 and August 2001, the proceedings came up before the Tribunal. The Tribunal recorded that RPAD addressed to the Petitioner, the original Seventh Defendant, had been duly served. On 16 August 2001, M/s.Bhave & Co., Advocates purported to file a Written Statement on behalf of Defendant Nos.2 to 7. However, as a matter of fact, the Written Statement was signed and verified only by Defendant Nos.2 to 5 and the names of Defendant Nos.6 and 7 were struck off. Though the names of Defendant Nos.6 and 7 were scored off, R.S.Baheti signed the Written Statement alongside. Below the verification clause, M/s.Bhave & Co. had signed as Advocates only for Defendant Nos.2 to 5. VBC 7 wp3395.10-3.3 9. On 15 May 2002, the Debts Recovery Tribunal allowed the application and directed that the properties which had been mortgaged be sold. The order of the Tribunal records that Defendant Nos.2 to 7 had filed a Written Statement. The Tribunal came to the conclusion that the documents executed showed that Defendant Nos.2 to 7 had executed a memorandum recording the deposit of title deeds by way of equitable mortgage in respect of the properties mentioned in the respective documents and that the immovable properties in question, were validly mortgaged with the Bank. The application was consequently allowed. 10. On 28 February 2002, a notice of the recovery proceedings was despatched to the Petitioner to the address at Sion (West), which has been noted earlier. On 27 December 2003, the Petitioner purported to execute an agreement for the sale of her rights in the property to M/s.Dinshaw Trapinex. The Petitioner claims that on 16 February 2004 she learnt from some persons who came to the property that it was being attached in pursuance of the order of the Debts Recovery Tribunal. On 16 March 2004, the Petitioner filed a Miscellaneous Application for setting aside the VBC 8 wp3395.10-3.3 order of the Tribunal. The application was dismissed by the Tribunal by an order dated 30 July 2004. The Tribunal held that: (i) A comparison of the signatures of the Petitioner on the application made by her before the Tribunal with the disputed signatures on the acknowledgment card showed that the Petitioner had been duly served; (ii) There appears some substance in the statement of the Petitioner that she had herself never instructed any Advocate to appear on her behalf, but it appears that Baheti on the basis of the Power of Attorney executed in his favour had engaged the Advocate; (iii) In the event that the summons had been despatched to an incorrect address, the envelop would have been returned by the postal authorities with the remark that the address was insufficient or that the addressee was not found; (iv) The roznama of the recovery proceedings showed that the Petitioner had been served at an address at Sion (West). Though the acknowledgment was not signed by the Petitioner, the Petitioner had not explained whose signature was borne on the acknowledgment; (v) In the event that the stand of the Petitioner is incorrect and it is found that all the alleged documents were false and fabricated and that the persons against whom allegations are VBC 9 wp3395.10-3.3 made are convicted, it would be open to the Petitioner to seek damages from them. Merely because a Police complaint had been lodged, the restoration of the Original Application is not necessary. 11. The Petitioner carried the decision of the Tribunal in appeal. The Debts Recovery Appellate Tribunal dismissed the appeal by a judgment dated 1 April 2010. The Appellate Tribunal held that: (i) The only difference between the correct address of the Petitioner and the address to which summons were sent was the house number; (ii) The letter of the Post Office showed that the summons had been delivered to the Petitioner on 21 April 2001; (iii) A demand notice dated 28 August 2002 issued by the Recovery Officer had been served on the Petitioner at the Sion address; (iv) The Tribunal had compared the signatures which it was competent to do so under Section 73 of the Evidence Act; (v) The Petitioner had received the summons as well as the demand notice at the Sion address and she had hence, knowledge of the proceedings. 12. On behalf of the Petitioner, the Learned Senior Counsel submitted that: (i) Admittedly, in the present case, the writ of VBC 10 wp3395.10-3.3 summons was not despatched to the correct address of the Petitioner. In the circumstances, there could be no presumption of valid service since the address to which the summons was despatched was not the address of the Petitioner; (ii) The address at Sion (West), is an address at which the Petitioner does not have any connection and had no connection whatsoever at any time in the past. Upon enquiries, it was found that the address at Sion was an address of an Advocate who has filed an affidavit stating that he had no connection or contact whatsoever with the Petitioner and that the postal packet had been acknowledged by his sister without any authority; (iii) The facts and circumstances of the case are such as would require that the Petitioner should be allowed an opportunity to contest the proceedings on merits by being permitted to defend the proceedings. These facts and circumstances of the case include that: (a) There was an admitted fraud in the present case, concerning the Bank and its Manager. Following an investigation by the CBI, a complaint was filed against the Bank and its Manager and a chargesheet has since been filed; (b) The substitute Power of Attorney was executed allegedly on 15 February 2000, notarised on the next day and the VBC 11 wp3395.10-3.3 memorandum recording the deposit of title deeds was executed on the third day; (c) No action was admittedly taken on the basis of the alleged Power of Attorney stated to have been executed by the Petitioner in 1992 for a period of over eight years; (d) The Power of Attorney purported to have been executed by the Petitioner does not even ex-facie state that it is for consideration, nor is it an irrevocable Power of Attorney. Despite this, a substitute Power of Attorney of 2000 purportedly contained the statement that the document of 1992 was irrevocable; (e) Neither of the two Powers of Attorney were executed before a Notary. The first was notarised two months after it was executed while the second a day later. Neither bears a notarial registration certificate; (f) The person who signed the memorandum evidencing the creation of anequitable mortgage by deposit of title deeds was the Manager of the Bank, M.B.Tawadia against whom an investigation was made by the CBI and a chargesheet was filed; (g) The Petitioner is admittedly not a debtor of the First Respondent and has no connection whatsoever with the transactions; (h) The address on the A.D. Card was admittedly wrong and no one stepped in the witness box to prove service upon the Petitioner. On this basis, it was submitted that VBC 12 wp3395.10-3.3 the property of a value of over Rs.25 crores belonging to the Petitioner is sought to be sold on the basis of a Power of Attorney which the Petitioner denies having executed and the Petitioner is held to be bound by the decree on the basis of an alleged comparison by the Learned Trial Judge with the signature on the writ of summons with admitted signatures. 13. On the other hand, Counsel appearing on behalf of the First Respondent has supported the view of the Appellate Tribunal that the Petitioner was, in fact, served with the writ of summons. Learned Counsel submitted that the admitted signatures of the Petitioner were duly compared by the Presenting Officer with the disputed signature on the postal acknowledgment, something which was permissible under Section 73 of the Evidence Act. Hence, it is urged that no interference at the behest of the Petitioner is warranted particularly having regard to the fact that the Petitioner had by an agreement of 27 December 2003 entered into a transaction for the sale of her rights in favour of a third party. VBC 13 wp3395.10-3.3 14. In evaluating the rival submissions, the Court cannot be unmindful of the circumstance that a fraud is alleged to have been perpetrated upon the First Respondent by its then DGM Tawadia, who was at the material time, the Manager at the M.S.Marg Branch. The fraud pertains to the discounting of bills in favour of a proprietary concern by the name of M/s.R.D.Sawmy. The Seventh Respondent, R.S. Baheti, is alleged to have been the partner of R.D.Swamy in another partnership firm. The Petitioner is alleged to have executed a Power of Attorney on 22 January 1992 and it is in pursuance of that document that on 15 February 2000, a substitute Power of Attorney was executed in favour of Rajesh Baheti, purporting to appoint him as a Constituted Attorney of the Petitioner. The case of the Petitioner is that there is no debtor- creditor relationship between the Petitioner and the First Respondent. The Petitioner denies the execution of the Power of Attorney of 1992. Several circumstances which have been noted earlier have been adverted to on behalf of the Petitioner which according to her, would have a material bearing on the genuineness and authenticity of the alleged Power of Attorney. At this stage, we are not called upon to evaluate the merits of that VBC 14 wp3395.10-3.3 defence, but we have adverted to the submission in some degree of detail to emphasize that they would raise, at least prima facie, serious triable issues. The Petitioner contends that neither the Power of Attorney of 1992, nor the substitute Power of Attorney of 2000 were executed before a Notary and that neither bears the registration number of the Notary. The substitute Power of Attorney was executed nearly eight years after the Power of Attorney alleged to have been executed by the Petitioner in 1992. Though the substitute Power of Attorney contained a statement that the earlier Power of Attorney was irrevocable, it has been submitted before the Court that the Power of Attorney of 1992 does not bear any such statement. Moreover, according to the Petitioner, the Power of Attorney of 1992 does not even contain a statement to the effect that it was for consideration. 15. Now, in this background, the question which falls for determination is whether the Petitioner had made out sufficient cause for setting aside the order of the Tribunal allowing the Original Application against her. The contention of the First Respondent was that the Petitioner was duly served with the writ VBC 15 wp3395.10-3.3 of summons. The address of the Petitioner, who was the Seventh Defendant to the application before the Tribunal was stated to be as follows : “Mrs.Lucy Alwine Jacinto having her address at Koliwada Gaothan, Kalina, Santacruz (E), Mumbai-400 055 and also at 7/111, Geeta, Sion (W), Mumbai-400 022.” 16. Now, the address at Kalina is not admittedly the correct address of the Petitioner. The correct address of the Petitioner is as follows : “Municipal House No.102 A/E Kalina, Koliwari Village, Santacruz (East), Mumbai-400 055.” 17. The Debts Recovery Appellate Tribunal observed that the only difference in the address which was mentioned in the writ of summons and the correct address pertains to the house number. This again is not a correct reading of the factual position. Reading the address as it is mentioned on the writ of summons and the correct address of the Petitioner, it is evident that there is a clear discrepancy between the two. Both the Tribunal as well as the VBC 16 wp3395.10-3.3 Appellate Tribunal proceeded on the basis that the Petitioner was also served at an address at the Sion (West). Now, as regards the service at Sion (West) address, the Petitioner has filed an affidavit dated 29 September 2010 in these proceedings, recording that upon enquiry she had learnt that an Advocate by the name of Shri V.C.Singh resides at the premises at 7/111, Geeta, Sion (West). An affidavit of the Advocate has also been filed in these proceedings. In his affidavit, the Advocate states that he has been residing in those premises since 1954; that the rent receipts stand in the name of his late brother, who was a former Judge of the City Civil and Sessions Court and that the property in question has been occupied by his family and has never been alienated at any time during the previous 46 years. Advocate Singh has stated that one of the A.D. cards produced by the First Respondent bears the signature of his sister, who had unknowingly accepted the postal packet. The Advocate has clarified that the Petitioner has never had any connection with him either as a client or otherwise. 18. Having regard to this factual background, we are of the view that the Petitioner had made out a sufficiently credible case in VBC 17 wp3395.10-3.3 support of her contention that she has not received the writ of summons. The address to which the writ of summons was despatched at Kalina is not the correct address of the Petitioner. The address at Sion (West) is an address which does not even remotely bear any connection to the Petitioner. The Learned Trial Judge in the DRT proceeded to arrive at the conclusion that the Petitioner has been served purely on the basis of a visual comparison of the signature on the acknowledgment card with the admitted signatures. Undoubtedly, in an appropriate case Section 73 of the Evidence Act does contemplate such a comparison being made. This, however, must in the facts and circumstances of this case, be one circumstance which must be evaluated together with all the material on the record and the background of the case. The Petitioner does have a seriously triable defence to urge before the Tribunal and we are of the view that there would be a manifest miscarriage of justice if the Petitioner was denied that opportunity. 19. For these reasons, we set aside the impugned order of the Debts Recovery Appellate Tribunal dated 1 April 2010. We also set aside the order of the Debts Recovery Tribunal dated 15 May VBC 18 wp3395.10-3.3 2002 in so far as it pertains to the Petitioner. Original Application 3158 of 2000 shall accordingly stand restored to the file of the Tribunal as regards the Petitioner. The Petitioner would be at liberty to file a Written Statement within a period of four weeks from today. 20. The Petition is disposed of in the aforesaid terms. There shall be no order as to costs. ( Dr.D.Y.Chandrachud, J.) ( Anoop V. Mohta, J.)