IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated 10.10.2007 CORAM THE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYA AND THE HONOURABLE MR.JUSTICE R.SUDHAKAR Writ Petition No.49011 of 2006 and Miscellaneous Petition No.1 of 2006 Indian Bank, represented by its Chief Manager, Chrompet, Chennai-600 044. ... Petitioner -Vs.- 1.P.Vijayakumari, Prop., Sakthi Industries, No.134, Nemilicherry village, Chrompet, Chennai-60 0044. 2.V.Padmanabhan. 3.The Registrar, Debt Recovery Appellate Tribunal, Madras-6. ... Respondents Writ Petition is filed under Article 226 of Constitution of India praying to issue a writ of certiorari to call for records on the file of the third respondent dated 30.11.2006 passed in M.A.No.203 of 2006 and quash the same as illegal, incompetent, irregular and without jurisdiction. For appellant : Mr.V.Raghavachari For respondents 1 and 2 : Mr.Prasanth ----- https://hcservices.ecourts.gov.in/hcservices/ JUDGMENT R.SUDHAKAR,J. The bank has filed this writ petition to set aside the order of the Debt Recovery Appellate Tribunal extending the time given to the respondents 1 and 2 to pay the bank as per the award of the Lok Adalat dated 30.11.2006 in M.A.No.203 of 2006. 2. The facts of the case for disposal of the writ petition is as follows:- The first respondent, who is the proprietrix of Sakthi Industries availed loans from the petitioner bank for four different purposes, viz., (1) Open Cash Credit; (2) Supply Bills Purchase; (3) Medium Term Loan (building) and (4) Medium Term Loan (machinery) with interest at 20.25%. There was an hypothecation agreement in respect of movables, plant and machinery and the first respondent also deposited the documents of title deeds of properties by way of equitable mortgage. The loan amount, according to the bank, was not properly settled and therefore, notice was issued for recovery of the same and on the failure on the part of the first respondent to settle the claim, Original Application No.450 of 2000 was filed by the bank against the first respondent Proprietrix of the company and V.Padmanabhan, the guarantor, the second respondent for recovery of a sum of Rs.62,96,582.68 with interest at 19.8% per annum with quarterly rests from the date of application till date of realisation. The other reliefs sought for are as follows:- "(b) directing the Recovery Officer to sell the property more particularly described in the schedule "A" & "B" hereunder and apply the sale proceeds to the certificate amount, after defraying the expenses for sale. (c) in the event of deficiency, directing the respondents 1 and 2 to pay the balance amount after appropriation of sale proceeds with further interest at 19.89% per annum compounded quarterly upto the date of payment by passing a personal decree. (d) directing the respondents to pay cost of this application and granting a recovery certificate in favour of the applicant for the above reliefs and further reliefs as this Hon'ble Tribunal may deem fit and proper and render justice." https://hcservices.ecourts.gov.in/hcservices/ From the pleadings, it appears that the matter was taken up by the Debt Recovery Tribunal in March, 2002 for trial. Respondents 1 and 2 filed proof affidavit and before documents were marked, at the request of the parties the case was referred to the Lok Adalat to be held on 10.9.2004. Before the Lok Adalat, it appears, the respondents 1 and 2 submitted that they are also willing to settle the outstanding in respect of another company, M/s.Sivan Precision Works, run by the second respondent for which loan was availed and extended by the petitioner bank. A proposal for settlement of claim, on behalf of both the respondents were made and a sum of Rs.34.5 lakhs was arrived at as one time settlement. 3. The petitioner bank and the respondents 1 and 2 settled their claim, before the Lok Adalat on 10.9.2004 and an Award was passed by the Lok Adalat as follows:- "The claim amount for O.A.No.450/2000 is Rs.62.97 Lakhs. The claim amount for Sivan Precision Works is Rs.7.80 Lakhs. The total claim for Sivan Precision Works is 7.80 Lakhs. The parties have settled the both the matters on the following terms and conditions: (1) The defendant agrees to settle in both the matter for a sum of Rs.34.5 lakhs. (2) The defendant agrees to pay the said amount on or before 10.12.2004 with PLR interest. If the defendant pays the entire amount on or before 11.10.2004, the said amount shall not carry any interest. If the defendant fails to pay the entire amount as per the above compromise, the bank is at liberty to claim the entire claim amount as per OA 450/2000 without reference to this compromise." On the same day, i.e., on 10.9.2004, the Debt Recovery Tribunal, Chennai, Presided by Member, passed an order in Original Application No.450 of 2000 as follows:- "1. The case is taken up today on the basis of the Joint Memo of Compromise presented at by both parties before DRT-1 Lok Adalat (15th Lok https://hcservices.ecourts.gov.in/hcservices/ Adalat) held on 10th September, 2004. The Lok Adalat panel has reported settlement and has passed the Award as per the terms and conditions contained in the Memo of compromise recorded before the Lok Adalat. As per Award, both the parties have arrived at for settlement of this case. 2. The above stated memo of settlement is duly approved and recommended by the panel of Lok Adalat consisting of Presiding Judge Shri A.S.Khan (Retd. Judicial Member, CAT, Chennai) and Members Shri T.Veeraraghavan, (Retd. DGM) and Smt.Sudharashana Sundar, Advocate, under their Signatures. The orders passed/observation made by the Lok Adalat (the Panelists) is reproduced here below: "When the matter was taken up for hearing the party represented by Thiru K.Balasubramani, Advocate and the Bank is represented by Thiru L.Mohan, Advocate and Thiru R.N.Giriloganathan, Chief Manager, Indian Bank, Chromepet Branch, Chennai. When the matter was taken up, the parties wanted to settle another connected matter M/s.Sivan Precision Works. The claim amount for OA No.450/2000 is Rs.62.97 Lakhs. The claim amount for M/s.Sivan Precision Works is Rs.7.80 Lakhs. The total claim for Sivan Precision Works is Rs.7.80 Lakhs. The parties have settled both the matters on the following terms and conditions:- 1) The Defendant agrees to settle both the matters for a sum of Rs.34.5 Lakhs. 2) The Defendant agrees to pay the said amount on or before 10.12.2004 with PLR interest. If the defendant pays the entire amount on or before 11.10.2004, the said amount shall not carry any interest. If the defendant fails to pay the entire amount as per the above the compromise, the Bank is at liberty to claim the entire claim amount as per O.A.No.450/2000 without reference to this compromise. https://hcservices.ecourts.gov.in/hcservices/ Court fee is ordered to be refunded u/s 21(1) of Legal Service Authorities Act. 3. The Memo of Compromise and Award passed by the Lok Adalat appears to be legally in order and therefore, is accepted and taken on record. Consequently, the O.A. stands finally disposed as settled in Lok Adalat as per the Award and strictly in terms and conditions contained in the Memo of Compromise. (emphasis supplied) 4. Final order is passed in terms of Award passed by the Lok Adalat as per the terms and conditions contained in the Memo of Compromise. A copy of Adalat's award shall form part of this order as well as the Recovery Certificate if issued. 5. Recovery Certificate may be issued in case of default or if deemed necessary. The Recovery Certificate be prepared and issued strictly as per the terms of compromise and Award passed by the Lok Adalat. 6. Inform all the parties concerned. Ordered accordingly." 4. At the request of the respondents 1 and 2 by letter dated 8.12.2004, the petitioner bank extended the time for payment of the amount in terms of the award of the Lok Adalat till 21.1.2005. Respondents 1 and 2, however, did not pay the amount by 21.1.2005. It is thereafter stated that the respondents 1 and 2 sought for extension of time and they made part payment of Rs.3 lakhs on 8.2.2005. 5. From February, 2005, the matter was in a stalemate and from the affidavit of second respondent, particularly in M.A.Nos.295 and 296 of 2005 filed in O.A.No.450 of 2000, it appears that in September, 2005, the bank had moved for early hearing of the matter. Thereafter, on 18.10.2005, a Recovery Certificate was issued in O.A.No.450 of 2000 as follows:- https://hcservices.ecourts.gov.in/hcservices/ "O.A.No.450 of 2000 RECOVERY CERTIFICATE In the matter of M/s. Indian Bank 10, Bashyam Street, Radha Nagar, Chromepet, Chennai 600 044. .... Applicant Bank -versus- 1.Mrs.P.Vijayakumari, Prop. Sakthi Industries, No.134, Nemilicherry village, Chromepet, Chennai 600 044. 2.Mr.V.Padmanaban, No.07, Krishnaswamy Street, Ganapathypuram, Chromepet, Chennai 600 004. ... Defendants Whereas the above titled application having come up on 10.09.2004 for final disposal under provisions of S.19 of the Recovery of Debts due to Banks & Financial Institutions Act 1993 thereinafter referred to as the Act for the determination of debt against the respondents through lok adalat. Whereas the above defendants failed to honour the Lok Adalat verdict, it is hereby ordered and certified under Provisions of the Section 19 sub clauses 4 & 7 of the Act for recovery of Rs.62,96,582.68 with interest at 19.89% from the defendant from the date of application to the date of realisation, thereon with costs. It is further ordered that the defendant do pay the sum of Rs.1,37,24,962.68 comprising of Rs.62,96,582.68 as principal and Rs.73,13,647.00 as interest and Rs.1,14,733.00 as costs from the above named defendant as per the schedule of costs within https://hcservices.ecourts.gov.in/hcservices/ the time extended if any. It is further certified that in default of such payment as aforesaid the amount due shall be recoverable by sale of hypothecated movable or mortgaged immovable property as schedule hereunder to the defendants. It is further certified and ordered that if the money realised by such sale not be sufficient for payment in full of the amount payable to the Applicant Bank as aforesaid, the applicant Bank shall be at liberty to proceed against the defendant or defendants personally for the amount to the balance." 6. On 19.10.2005, a notice was issued by the Recovery Officer in terms of the Recovery Certificate for recovery of a sum of Rs.1,37,24,962.68 as per the Recovery Certificate. Thereafter on 25.10.2005, the respondents 1 and 2 filed M.A.Nos.295 to 297 of 2005 in O.A.No.450 of 2000. (i) M.A.No.295 of 2005 has been filed for condonation of delay of 320 days in filing the petition for extension of time in payment of the agreed amount covered under Lok Adalat order dated 10.9.2004 passed in O.A.No.450 of 2000. (ii) M.A.No.296 of 2005 has been filed praying to extend the time to comply with the order of Lok Adalat dated 10.9.2004 passed in O.A.No.450 of 2000. (iii) M.A.No.297 of 2005 has been filed praying to stay the Recovery Proceedings under DRC No.92/2005-RO-II in O.A.No.450 of 2000. On 14.11.2005, an order of attachment was passed by the Recovery Officer in respect of the lands which were the subject matter of equitable mortgage by deposit of title deeds. On 16.11.2005, respondents 1 and 2 filed M.A.No.311 of 2005 praying to recall the Recovery Certificate DRC No.92/2005 RO-II and withdraw the same. On 18.11.2005 respondent 1 and 2 filed a memo for advancing the date of hearing before the Debt Recovery Tribunal from 21.11.2005 to 18.11.2005, such memo was rejected and the matter was posted for hearing on 21.11.2005. 7. Aggrieved by the order rejecting the memo for advancing the hearing, appeal M.A.No.191 of 2005 was filed before the Debt Recovery Appellate Tribunal and interim orders were passed directing the present respondents 1 and 2 to deposit the entire https://hcservices.ecourts.gov.in/hcservices/ amount as determined by the Lok Adalat, less Rs.3 lakhs already deposited. A sum of Rs.31.5 lakhs was deposited on on 19.12.2005 recorded by memo dated 21.12.2005. Further on 3.8.2006, the Debt Recovery Appellate Tribunal passed the following order in M.A.No.191 of 2005:- "3. During the pendency of the appeal, the appellants have represented that the matter was settled in Lok Adalat held on 10.9.2004 for Rs.34.5 lakhs and they could not pay the amount in time, as agreed. But, however, they represented that they deposited Rs.3 lakhs on 8.2.2005. When the matter was taken up on 13.12.2005, interim stay was granted on condition that the appellants should deposit the entire amount agreed before the Lok Adalat i.e., Rs.34.5 lakhs together with interest at PLR rate from 10.9.2004 till that date less Rs.3 lakhs, and the appellants have filed a memo on 21.12.2005 stating that they have deposited the said amount. Both the parties were directed to settle the matter. But, now, it turns out that the matter is not settled. The appellants were directed to deposit the amount with the respondent bank, with a hope that the matter could be settled. But, now, the respondent bank states that the matter cannot be settled for the said amount, and therefore, the settlement could not be arrived at. 4. In the above said circumstances, the respondent bank is hereby directed to return the amount deposited by the appellants on 19.12.2005. 5. Interim stay granted, shall continue for two weeks from today. The appellants are at liberty to move the DRI-I, Chennai for settlement." 8. On 9.10.2006 auction sale notice was issued by the Recovery Officer, DRT-I, Chennai. On 11.10.2006, M.A.No.295 of 2005 filed for condonation of delay was dismissed by DRT-I, Chennai. The main reason for rejecting the M.A.No.295 of 2005 is on the ground of delay, laches and lack of bona fides holding that respondents 1 and 2 did not pay the agreed amount in time and there is no valid reason for condonation of delay. https://hcservices.ecourts.gov.in/hcservices/ 9. Aggrieved by the order of the Debts Recovery Tribunal, Chennai, dismissing the M.A.No.295 of 2005 in O.A.No.450 of 2000 for condonation of delay, the appeal M.A.No.203 of 2006 was filed on 16.10.2006 before the Debts Recovery Appellate Tribunal. Interim stay was granted on 17.10.2006, on condition, respondents 1 and 2 herein depositing a sum of Rs.38 lakhs. On 29.10.2006, a sum of Rs.3 lakhs was deposited by the respondents 1 and 2 herein to the petitioner bank. The appeal was disposed off holding that the Debt Recovery Tribunal should have considered the application seeking extension of time instead of dismissing the Miscellaneous Application No.295 of 2005 filed for condonation of delay. The Appellate Tribunal also observed that the other applications were kept pending and the condone delay application alone was taken up and was dismissed. To meet the ends of justice, holding that Tribunal had the power to extend time, the appeal was allowed. The application seeking extension of time, which was pending, was also allowed. 10. On consideration of all the above stated factual position, the Debts Recovery Appellate Tribunal passed the order on 30.11.2006 allowing the appeal, as follows:- "(1) The respondent bank is hereby directed to furnish the statement of account to the appellants within 15 days from the date of receipt of copy of this order, calculating the interest at its PLR rate on Rs.34.5 lakhs, the amount awarded by the Lok Adalat from 10.12.2004 upto 30.11.2006, after giving credit to a sum of Rs.38 lakhs already deposited by the appellants with the respondent bank. (2) The appellants are directed to pay the balance amount within a month's time from the date of receipt of the statement of account from the respondent bank. (3) Failing which, the respondent bank is entitled to recover the balance amount together with interest at 12% p.a. simple from 1.12.2006 till the date of realisation." Aggrieved against the above said order of the Debt Recovery Appellate Tribunal, the present writ petition has been filed by the petitioner bank. The main contentions raised in the writ petition and by the learned counsel for petitioner is as follows:- https://hcservices.ecourts.gov.in/hcservices/ (i) that the Debt Recovery Tribunal dismissed the petition for cononation of delay on the ground of delay and laches and that the plea of respondents 1 and 2 lacked bona fides. Such finding is not rejected by the Debt Recovery Appellate Tribunal and therefore, the Appellate Tribunal ought to have dismissed the appeal, (ii) that the third respondent Debts Recovery Appellate Tribunal has no authority or power to modify the terms of the contract between the parties, (iii) that the Debts Recovery Appellate Tribunal ought to have dismissed the appeal filed by the respondents 1 and 2 on the ground that they had participated in the Lok Adalat and failed to show sufficient cause to condone the delay, (iv) that as per Section 21(2) of the Legal Services Authority Act every Award made by Lok Adalat shall be final and binding on all the parties to the dispute and no appeal shall lie to any Court against the Award, (v) that the Court cannot interpose its authority under Section 148 CPC to extend the time agreed upon between the parties to the settlement and (vi) that the Debts Recovery Tribunal has no locus standi to extend the time or period of payment under Section 22 of the DRT Act read with Rule 18 of the DRT Rules or any other law that too without the consent of the parties. Petitioner bank, therefore, contended that the impugned order dated 30.11.2006 passed by the Debts Recovery Appellate Tribunal should be set aside as without jurisdiction and contrary to law. 11. According to the respondents 1 and 2, the Recovery Certificate dated 18.10.2005 is an illegal order and passed without any adjudication and without notice to the respondents 1 and 2. Learned counsel for the respondents 1 and 2 referred to the affidavit dated 25.10.2005 filed in support of M.A.Nos.295 to 297 of 2005. The contention as stated by the respondents 1 and 2 is extracted hereunder:- "No further adjudication are found in the Case File and I am put to confusion that without an Order by the Presiding Officer, how a Recovery Certificate be issued not upon the Order of compromise but upon the actual claim made in the Main O.A. It is also https://hcservices.ecourts.gov.in/hcservices/ respectfully submitted before this Hon'ble Tribunal that in the verdict of the Lok Adalat it is also mutually agreed between the parties that if the petitioner herein fails to pay the amount, then the respondent Bank can claim the entire claim amount as per the Main O.A. and not that the respondent bank can recover the O.A. covered amount whileso if at all the respondent Bank has to recover the O.A. covered amount, this Hon'ble Tribunal ought to have provided sufficient opportunity to be heard to this Applicants before issuing any Recovery Certificate since the matter was referred to Lok Adalat at the time of marking of documents by the Applicant Bank and no opportunity on merits were given to us. It is also pertinent to note that the Order copy passed by this Hon'ble Tribunal on 10.09.2004 and the issual of Recovery Certificate Order if any passed on 18.10.2005 were not communicated as contemplated in Section 19(21) of Debt Recovery Act." 12. Therefore, counsel for respondents 1 and 2 contended that there was no adjudication of the claim on merits. If at all the petitioner bank is entitled to recover, it is only the amount specified in the Lok Adalat award which is confirmed by the Debt Recovery Tribunal on the same day (i.e.) 9.10.2004. The learned counsel for the respondents 1 and 2 referred to the terms of the award stated that in the event of the amount as specified in the Lok Adalat is not satisfied, the bank is entitled to claim as per Original Application. Therefore, in default, adjudication on merits should have been done. It is also contended that the Tribunal has got the power to extend the time granted by the Lok Adalat and in the present case, the Bank has agreed to extend the time on more than one occasion in the month of January, 2005. The Debt Recovery Tribunal has dismissed the petition filed for condonation of delay by misreading the terms of the award of the Lok Adalat and without considering the prima facie case and bona fide plea for extension of time. 13. The Appellate Tribunal, however, by applying the ratio of the Supreme Court in the case of P.T.Thomas – vs. - Thomas Job (2005(4) CTC 30) held that the respondents 1 and 2 have come forward to pay the amount as per the award together with interest at the PLR rate and also deposited Rs.38 lakhs with the petitioner bank proving their bona fides, granted extension of time and allowed the appeal. Counsel for respondents 1 and 2 submitted that the order of the Debts Recovery Appellate https://hcservices.ecourts.gov.in/hcservices/ Tribunal is in the facts and circumstances of the case is valid in law and the writ petition should be dismissed. 14. The appellate Tribunal relying upon the Apex Court's decision in P.T.Thomas – vs. - Thomas Job reported in 2005(4) CTC 30, held that the Tribunal in this case is empowered to extend the time granted as agreed to by the parties before the Lok Adalat. The conclusion of the appellate Tribunal is based on the factual events that happened in this case, which is found in paragraph 10 of the order impugned, and is set out herender:- "10. On a careful consideration of the rival submissions, it is made out that the award was passed by the Lok Adalat on 10.9.2004 granting time to the appellants till 10.12.2004 to pay the amount. The appellants did not pay the amount within the time stipulated in the award. But, however, it appears that at the request of the appellants, the respondent bank had extended the time to pay the amount upto 20.1.2005. Even by that time, the appellants were not able to pay the entire amount. But part payment of Rs.3 lakhs was paid on 8.2.2005. Thereafter, the appellants have filed the application before the DRT for extension of time to pay the amount. The appellants were under the mistaken impression that they have to file an application to condone the delay in filing the application for extension of time. But, no such application need be filed. It is suffice if an application is filed for the enlargement of time. The prayer for extension of time is akin to Section 148 in Code of Civil Procedure, which reads, "Where any period is fixed or granted by the Court for the doing of any act prescribed or allowed by this Code, the Court may, in its discretion, from time to time, enlarge such period, even though the period originally fixed or granted may have expired." As such, it is evident that the court has got an inherent power to enlarge the time, which was fixed or granted by the Court. In this connection, it will be useful to refer the decision in the case of Smt.Periyakkal & Others (Appellants) Vs. Smt.Dakshayani (Respondent) – AIR 1983 SC 428, wherein it was held, "4. In the case https://hcservices.ecourts.gov.in/hcservices/ before us, the situation is totally different. Unlike the case of Hukumchand Vs. Bansilal (AIR 1968 SC 86) where there was a statutory compulsion to confirm the sale on the dismissal of the application under O.XXI Rule 90 and, therefore, postponement and further postponement of the confirmation of the sale could only be by the consent of the parties, in the case before us, there was no statutory compulsion to dismiss the application under O.XXI Rule 90 in the absence of an agreement between the parties...... The time for deposit stipulated by the parties became the time allowed by the Court and this gave the Court the jurisdiction to extend time in appropriate cases. Of course, time would not be extended ordinarily, nor for the mere asking. It would be granted in rare cases to prevent manifest injustice." The time agreed and granted by the Lok Adalat is not under any statute. The time prescribed under any statute alone could not be extended even by consent of parties. But, when no time is prescribed under the statute, the Court has got discretion and jurisdiction to enlarge