IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 23.03.2010 Coram THE HONOURABLE MR.JUSTICE C.NAGAPPAN AND THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P. No.44516 of 2006 & M.P.No.1 of 2006 1. M/s Zeron Electronics (P) Ltd., Chennai 33. 2. S.R.Baskaran 3. P.R.Radhakrishnan 4. B.Sundari ..Petitioners vs. 1. State Bank of India Guindy Branch, Chennai 32. 2. The Registrar Debts Recovery Appellate Tribunal Indian Bank Building, 4th Floor Commander-in-Chief Road Chennai 106. 3. Susethakumar Dev 4. Devi 5. S.Girija 6.T.Paramasivam ..Respondents (R3 TO R6 IMPLEADED AS PER ORDER OF THIS COURT DATED 10.03.2010 AND MADE IN MP 1/07 IN WP 44516/06) Petition filed under Article 226 of the Constitution of India, praying for the issuance of a writ of certiorarified Mandamus to call for the records relating to M.A.No.96/06 dated 8.9.2006 on the file of the Debts Recovery Appellate Tribunal, Chennai, the second respondent herein confirming the orders of the DRT in M.A.No.134/03 in O.A.No.1639 of 1998 dated 24.3.2006 and to quash the same. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr. S.Vijayakumar for Mr.G.Bharadwaj For Respondents : Mr.S.Sethuraman – R1 Mr.G.Vijayakumar – R3 Tribunal - R2 No appearance – R4,5,6 O R D E R T.S.SIVAGNANAM J. The petitioners, a Private Limited Company, its two Directors and a Guarantor to a loan transaction have filed this Writ Petition praying for issuance of a Writ of Certiorari to quash the order passed by the Debts Recovery Appellate Tribunal in M.A.No.96 of 2006 dated 8.9.2006, confirming the order of the Debt Recovery Tribunal in M.A.No.134 of 203 in O.A.No. 1639 of 1998 dated 24.3.1006. 2 (a) The case of the petitioners are that the first petitioner, a Private Limited Company, was carrying on business in the manufacture of Uninterrupted Power System in their factory premises at Thuraipakkam, Chennai 96, and the Company had its Office at No.69/9, Arya Gowda Road, West Mambalam, Chennai 33. The first petitioner availed credit facilities from the first respondent Bank and the second, third and fourth petitioners stood as guarantors. In order to secure the loan, an equitable mortgage was created in favour of the Bank in respect of four items of property owned by the petitioners 2 to 4. Since there was default in repayment, the Bank filed O.A.No. 1639 of 1998 before the Debts Recovery Tribunal No.I, Chennai, for issuance of a Recovery Certificate for Rs.16,30,228.71 ps. According to the petitioners, summons were issued to a wrong address with Door No.69/3, Arya Gowda Road, instead of Door No.69/9. Subsequently, it appears that substituted service by publication was ordered by the Tribunal on 27.2.1999 and even in such publication, the address of the petitioners was wrongly shown as Door No.69/3, Arya Gowda Road. Thereafter, an exparte decree came to be passed against all the petitioners in O.A.No.1639 of 1998 on 13.7.1999 and Recovery Certificate was also issued in favour of the first respondent. (b) It is further submitted by the petitioners that in the Lawyer's Notice sent by the first respondent Bank on 14.3.1998, the address was correctly shown as Door No.69/9 and except service of such pre-suit notice, no other notice/summon was served on the petitioners. Whileso, the fourth respondent received a letter dated 19.2.2003 on 20.02.2003 in her college address, where she was working as a faculty, and the said letter was immediately brought to the notice of the second petitioner, who in turn approached the first respondent Bank and sought for particulars and since the Bank did not furnish any details, thereafter the second petitioner made a search https://hcservices.ecourts.gov.in/hcservices/ in the Registry of the Debts Recovery Tribunal and it came to light that the Debts Recovery Tribunal had passed a decree on 13.7.1999. The second petitioner applied for certified copies of such decree and other connected papers before the Tribunal and the same were furnished by the Tribunal on 21.04.2003 and 24.04.2003. Being aggrieved by the said exparte decree, the petitioners filed an application to set aside the exparte decree and an application to condone the delay in filing such application. These Applications were numbered as M.A.Nos. 113 and 134 of 2003 respectively. (c) In the common affidavit filed in support of the above application, it was contended that the summons was sent to the wrong address and exparte decree obtained based on such wrong address is a nullity. It was further contended that service of summons to the wrong address is not proper service as contemplated under law. That the value of the mortgaged property is more than Rupees Fifty lakhs and the Bank could not have been sold the property for a paltry sum and it is a distress sale. (d) The Debts Recovery Tribunal by an order dated 24.3.2006, dismissed M.A.No. 134 of 2003, filed for condoning the delay in filing the Application to set aside the exparte decree dated 13.7.1999 in O.A.No. 1639 of 1998. Aggrieved by the said order, the petitioner preferred an appeal before the Debts Recovery Appellate Tribunal, the second respondent herein. The second respondent by an order dated 8.9.2006, dismissed the appeal and as against the said order, the petitioner is before this Court. (e) It is submitted by the petitioners that the order of the Debts Recovery Tribunal as well as Debts Recovery Appellate Tribunal are unsustainable and have been rendered without following the decisions of the Hon'ble Apex Court in (1998) 7 SCC 123 [N.BLAKRISHNAN Vs. M.KRISHNAMURTHY]. It is further contended that in the absence of service of summons on the petitioners, the exparte decree obtained is nullity in law and the petitioners came to know of such exparte decree only in 2003 and after obtaining the certified copy, they applied for setting aside the exparte order and the delay is only twenty days and the Tribunal ought to have condoned the delay by exercising its discretion. It is further submitted that the order of the Appellate Tribunal is perverse, unsustainable and without application of mind and liable to be quashed. 3 (a) The first respondent Bank resisted the contention raised by the petitioners by filing a counter affidavit, inter alia contending that this Court cannot act as an Appellate Forum to go into the validity of the orders passed by the Debts Recovery Tribunal and Debts Recovery Appellate Tribunal and the Writ of Certiorari cannot be maintained and this Court exercising jurisdiction under Article 226 of the Constitution would only go into the aspects as to whether the order passed by the Tribunal is without jurisdiction or https://hcservices.ecourts.gov.in/hcservices/ in excess of its jurisdiction, whether there is any error in the decision making process and whether there is any error apparent on the face of the record. (b) On facts it is contended by the first respondent Bank that the Bank filed the Original Application before the Tribunal for recovery of Rs.16,30,228.71 with further interest and costs. The first petitioner is the borrower Company, the second petitioner is the Managing Director of the Company, the third petitioner its Director and the fourth petitioner is the guarantor. The fourth petitioner is none other than the wife of the second petitioner and the petitioners are jointly and severally liable. It is further submitted that after the Bank filed the Original Application, the petitioners contacted the Bank for settlement, but the terms were not acceptable and the petitioners deliberately did not enter appearance before the Tribunal and allowed the matter to be decided exparte. It is further contended that the petitioners have erroneously proceeded on the basis that the Writ Petition has been directed against the exparte order of the Tribunal dated 13.07.1999, when in fact the Writ Petition is filed against the order refusing to condone the delay in filing an application for setting aside the exparte order. The allegation made by the petitioners that they were aware of the decree only on 20.3.2003, when it was communicated to the fourth petitioner at her work place, has been denied. (c) It is contended that as early as on 21.2.2001, the Bank wrote a letter to the fourth petitioner in connection with the order passed by the Tribunal and requested her to call at the Bank as Recovery Certificate has been issued by the Debts Recovery Tribunal. The Bank also sent letter dated 21.2.2001, about the order passed against the fourth petitioner. The second petitioner by letter dated 20.3.2001, sent a detailed reply to the Bank proposing to settle the matter and offered to pay Rs.1.50 lakhs immediately and the balance of Rs.6.50 lakhs by way of compromise, within a period of six months. Therefore, it is contended by the Bank that as early as on 21.2.2001, the petitioners were aware of the decree and therefore the contention that they came to know about the same only on 20.3.2003 is false. (d) It is further contended that the order of attachment dated 23.02.2001 issued by the Recovery Officer was personally served on the fourth petitioner on 24.3.2001. It is further submitted that even on 16.4.2001, the Bank wrote to the second petitioner referring to the personal discussion in connection with his proposal to settle the matter. Since there was no response to the letter dated 16.4.2001, a reminder was sent on 6.6.2001 calling upon the second petitioner to pay Rs.1.50 lakhs. In the said letter dated 06.06.2001 a reference was also made to the letter written by the second petitioner dated 20.03.2001 offering a compromise proposal. Even for the said communication, there was no reply, therefore another letter was sent by the Bank on 21.6.2001 by RPAD by referring to the https://hcservices.ecourts.gov.in/hcservices/ letter of the second petitioner dated 20.3.2001 and personal discussions were held with the second petitioner and the Bank Officials at Guindy on 24.4.2001 and 3.5.2001 and that on 6.7.2001, one Mr.Srinivasa Shankar, friend of the second petitioner came to the Bank and assured that as the second petitioner has got a job in Jam Nagar, Gujarat, the second petitioner will directly send a letter to the Bank in three days time. It is stated that there was no response either from the second petitioner or his friend. e) It is the repeated assertion of the respondent Bank that the petitioners have approached the Bank only after coming to know of the final order passed by the Debts Recovery Tribunal dated 13.7.1999. Therefore, it is submitted that the petitioners had knowledge of the order passed by the DRT in 2001 itself and have chosen to file the application to set aside the order only in 2003 and the contentions raised by the petitioners is false and the DRT and DRAT, after carefully appreciating the facts, concurrently held that the application filed by the petitioner is not tenable and therefore, the Writ Petition is devoid of merits and is liable to be dismissed. 4. Heard Mr.S.Vijayakumar, learned counsel appearing for the petitioners, Mr.S.Sethuraman, appearing for the first respondent and Mr.G.Vijayakumar, appearing for the third respondent and though notice has been served on the respondents 4 to 6, none appears for them. 5 (a) The learned counsel appearing for the petitioners after reiterating the facts stated in the affidavit filed in support of the Writ Petition and after relying upon the averments made in the affidavit filed before the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal, would contend that this is a case where admittedly notice in the proceedings came to be issued to a wrong address and therefore the resultant decree is a nullity. (b) The learned counsel would refer to the cause title in the Original Application before the Debts Recovery Tribunal in O.A.No.1639 of 1998 and stated that it is mentioned as Door No.69/3, when the correct address is Door No.69/9 to which pre-suit notice dated 14.3.1998 was served. Even in the order passed by the Tribunal dated 13.7.1999, the Door Number has been wrongly given as 69/3 and the Debts Recovery Tribunal while passing order has not whispered anything as to whether summons has been served and as to the stage of the matter. Likewise, there is no proof to show that the letter dated 21.2.2001 was served in the College where the fourth petitioner is working. It is further contended that the Original Application Number also has been wrongly given as O.A.No.1693 of 1998 instead of 1639 of 1998. Further, even in the order of attachment, Door No. has been wrongly given as 69/3. https://hcservices.ecourts.gov.in/hcservices/ (c) As regards the letter dated 20.3.2001, written by the petitioners submitting a compromise proposal, the learned counsel for the petitioners would submit that the Bank had communicated the guidelines issued by the Reserve Bank of India and the petitioners without being aware of the exparte decree passed by the Tribunal, submitted the proposal with an intention to settle the dues. (d) Though in the several communications, the Bank has stated in the reference column as “Suit filed account”, the case number and other details have not been furnished. It is further submitted that the date of knowledge about the exparte decree is only on 20.3.2003, when the fourth petitioner was served with the copy of the letter written by the Bank. Therefore the petitioners were justified in approaching the Tribunal at the earliest point of time after they had knowledge of the exparte decree, the delay is marginal, and that the petitioners have shown sufficient cause for not having been able to approach the Tribunal earlier and the Tribunal ought to have condoned the delay. (e) The learned counsel placed heavy reliance on the dates and events furnished before the Tribunal in the form of written arguments, copy of which is appended in the typed set of papers. By relying upon the said dates, the learned counsel would submit that it is obvious that the petitioners were not served with any notice prior to the passing of the decree, after the decree was passed and prior to the conduct of the auction or thereafter. Therefore, the learned counsel would submit that the Debts Recovery Tribunal erred in rejecting the petitioners application for condonation of delay. (f) It is submitted that when the matter came up for consideration before the Debts Recovery Appellate Tribunal, the Appellate Tribunal also erroneously confirmed the decision of the DRT. The learned counsel by pointing out to paragraph No.8 of the order passed by the Appellate Tribunal, submitted that the Appellate Tribunal accepted the fact that in the Original Application, the Door No. furnished was 69/3 and on that ground itself, the Appellate Tribunal ought to have allowed the appeal. Failure to do so has resulted in the mis-carriage of justice. (g) The learned counsel for the petitioners relied upon the following decisions in support of his contentions: i)(1998) 7 SCC 123 [N.BALAKRISHNAN Vs. M.KRISHNAMURTHY] ii)(2005) 10 SCC 635 [ SURINDER KUMAR Vs. HARBHAJAN SINGH] iii)2007(4) CTC 449 [ ARUN ALEXANDER LAKSHMAN Vs. A.P.VEDAVALLI] https://hcservices.ecourts.gov.in/hcservices/ iv)2008(1) CTC 785 [RAVI ENTERPRISES Vs. INDIAN BANK] v)2008(1) CTC 816 [ AMMANIAMMAL Vs. DHANALAKSHKMI BANK LTD., TIRUPPUR] vi)(2008) 4 MLJ 1038 [B.GANESAN Vs. STATE BANK OF INDIA AND OTHERS] vii)2009(2) SUPREME 271 [D.M.PREMKUMARI Vs THE DIVISIONAL COMMISSIONER, MYSORE DIVISION AND ORS.] 6(a) Per contra, the learned counsel appearing for the first respondent Bank would submit that the Bank concedes that no notice was served on the petitioners in the Original Application. But the question to be considered in the present case is whether the petitioners had knowledge of the decree and if that be the case, whether the reason assigned by the petitioners for not approaching the Tribunal earlier is justified. (b) The learned counsel would rely upon the contentions raised in the affidavit filed in support of the Writ Petition and would submit that the petitioners have not contested the matter on merits, in the sense that the petitioners have not denied the liability to the Bank. Therefore, the only aspect which has to be established by the Bank is that the petitioners had prior knowledge of the decree passed by the Tribunal and the date given as 23.3.2003 is incorrect. (c) By referring to the communication sent by the Bank to the official address (College address) of the fourth respondent dated 21.2.2001, the learned counsel would submit that all the details were furnished and in the said letter, a copy of the Recovery Certificate issued by the Presiding Officer was also forwarded and the petitioners were directed to pay the amount, failing which they were informed that recovery shall be effected in accordance with the provisions of Section 25 of 1993 Act. (d) It is further submitted that the order of attachment dated 23.2.2001, was personally delivered through the Debts Recovery Tribunal and this fact cannot be denied by the petitioners. That apart, the learned counsel would submit that the compromise proposal given by the petitioners on 20.3.2001 itself is “without prejudice” to the petitioners rights and this was given only after the petitioners were aware of the decree and in fact in the representation also it has been stated that the value of the mortgaged properties have increased in the past five years. https://hcservices.ecourts.gov.in/hcservices/ (e) The learned counsel referred to the endorsement made in the letter dated 21.6.2001, wherein one Mr.Srinivasa Shankar, friend of the second petitioner met the Bank Officials and stated that the second petitioner has secured a job at Jam Nagar and would get back with compromise offer of Rupees eight lakhs within three days and requested not to take any auction proceedings. (f) The learned counsel would submit that the Bank has clearly stated that in the Circular dated 19.2.2003, regarding the scheme for one time settlement that it is without prejudice to the out come of any Court proceedings. The learned counsel by relying upon the order passed by the Debts Recovery Appellate Tribunal, more particularly in paragraph Nos. 5 to 8 would submit that the Appellate Tribunal carefully analysed the factual aspects and came to a conclusion that the petitioners were aware of the decree much earlier than stated by them. (g) It is further contended that service of notice in the Original Application is of no consequence for deciding the present dispute, since the matter which has to be looked into is only as to whether the petitioners had prior knowledge of the proceedings/decree. It is submitted that though Application was filed by the petitioners for setting aside the exparte decree and for condonation of delay in filing such application, no steps were taken for obtaining appropriate orders for modifying the earlier order. Further, no steps were taken to seek for any interim order from the Tribunal. (h) Finally, the learned counsel would submit that the question of fact determined by the Tribunal and the Appellate Tribunal should not be interfered by this Court by exercising its power of judicial review under Article 226 of the Constitution of India. The learned counsel would further submit that after the sale was concluded, the Sale Certificate has been issued and the property has also been conveyed to the third respondent and the third respondent being a bonafide third party purchaser pursuant to the Court auction is entitled for his purchase being protected and at this stage the orders passed by the Debts Recovery Tribunal as confirmed by the Debts Recovery Appellate Tribunal calls for no interference. (i) In support of his contentions, the learned counsel for the respondent Bank relied upon the following decisions of the Supreme Court: i)2002(II)BC 194 [ UNION OF INDIA & ANR Vs. DELHI HIGH COURT BAR ASSOCIATION ANA ORS] https://hcservices.ecourts.gov.in/hcservices/ ii)CDJ 1975 SC 320 [SAWARN SINGH AND ANOTHER Vs. STATE OF PUNJAB AND ORS] iii)CDJ 2010 SC 202 [BHAGWAN DAS & OTHERS Vs. STATE OF UP & ORS] iv)1990 (I) LLN 457 [TAMIL NADU MERCANTITLE BANK LTD., Vs. APPELLATE AUTHORITY UNDER THE TAMIL NADU SHOPS AND ESTABLISHMENTS ACT, MADURAI AND ORS.] 7. The learned counsel appearing for the third respondent, auction purchaser, would contend that he is in no way concerned with the transactions between the Bank and the borrower and the third respondent participated in the auction conducted on 6.11.2002 and a Sale Certificate has been issued on 2.6.2004 and the third respondent has also developed the property after he has been put in possession. It is further submitted that no petition has been filed to set aside the sale certificate and in such circumstances, the petitioners are not entitled for any relief before this Court. The third respondent being a bonafide purchaser for valid consideration, his rights are to be protected. 8. In reply to these submissions, the learned counsel for the petitioners would submit that there is no proof to show that the Recovery Certificate was communicated to the borrowers and that section 19(2) of the RDDB Act stipulates that the Tribunal shall send a copy of every order passed by it and there has been a clear infraction of the Rule and consequently the proceedings itself has to be held to be nullity. It is further contended that the sale is a distress sale and if notice has been served on the petitioners, they would have contested the same on merits and after the decision of the Hon'ble Supreme Court in L.CHANDRAKUMAR V. UNION OF INDIA AND OTHERS, (1997) 3 SCC 261, this Court has sufficient jurisdiction to go into the facts and appreciate the contentions of the parties. 9. We have given our anxious consideration to the submissions of the learned counsel appearing for the petitioners and the respondents and perused the materials available on record. 10. Though elaborate submissions have been made on the factual aspects, the controversy in the present case lies in a narrow campus i.e. on the petition for condonation of delay of twenty days in filing a petition to set aside an exparte decree passed by the Debts Recovery Tribunal which came to be rejected by the Tribunal and confirmed in appeal by the DRAT. The validity of such orders is to be decided by this Court in the present Writ Petition. https://hcservices.ecourts.gov.in/hcservices/ 11. Before going into the various factual and legal submissions made by the parties, it is essential to first look into the aspect as regards the jurisdiction of this Court under Article 226 of the Constitution of India in such matter, which contention has been raised by the first respondent Bank as their preliminary submission. 12. In the case of SAWARN SINGH AND ANOTHER Vs. STATE OF PUNJAB AND OTHERS, referred supra, the Supreme Court was considering the validity of orders passed by the original authority and the appellate authority under the provisions of the Punjab Security of Land Tenancy Act ,1953. Initially, these orders were impugned before the High Court in a Writ Petition and the Division Bench of the High Court having dismissed the appeal, the parties were before the Hon'ble Supreme Court. One of the contentions which was canvassed was that the High Court under Article 226 /227 of the Constitution of India has no jurisdiction to interfere even with an erroneous finding of fact however grave the error may be. While dealing with the said contention, the Hon'ble Supreme Court held that the general principles indicating the limits of jurisdiction of the High Court in a Writ Petition proceedings are well settled that certiorari jurisdiction can be exercised only for correcting the errors of jurisdiction committed by inferior Courts or Tribunals and such right can be issued only in exercise of the supervisory jurisdiction which is different from the Appellate jurisdiction and the Court while exercising special jurisdiction under Article 226 is not entitled to act as an Appellate Court. 13. It is true that this Court exercising its jurisdiction under Article 226 of the Constitution of India cannot be converted into an Appellate or Revisional Forum to substitute its reasons inlieu of the reasons assigned by the fact finding Tribunal and the First Appellate Tribunal. As rightly pointed out by the learned counsel for the respondent Bank, this Court is vested with sufficient jurisdiction to examine as to whether the decision of the Tribunal is erroneous, unsustainable and if it relates to a jurisdictional error or