IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 7.11.2008 CORAM: THE HONOURABLE MR.JUSTICE K.K.SASIDHARAN W.P.NOs.14428 to 14430 OF 2008 & M.P.No.1 of 2008 (3 Nos.) T.P.Vishnu Kumar ..Petitioner in all W.Ps. -Vs.- 1. Canara Bank P.N. Road Tiruppur. 2. The Debts Recovery Tribunal Coimbatore. 3. M/s. Ellwin Garments rep.by its Partner, R. Radhamani No.28, N.G.R. Nagar, Anakkdu Tiruppur-641 601. 4. R. Radhamani 5. P.Rathinam 6. K.M.Krishnasamy 7. O.P.Subbain ..Respondents in all W.Ps. Prayer:- Writ Petitions filed under Article 226 of the Constitution of India praying to issue a writ of Certiorarified Mandamus calling for the records from the file of the second respondent and to quash the order dated 18.2.2008 passed by the second respondent in I.A.Nos.873, 874 and 875/2007 in O.A.No.152/2002 and consequently direct the first respondent to produce the statement of accounts from the inception of the account till 30.6.1999. For Petitioner in all WPs : Mr.Vijay Narayan, Senior Counsel for Mr.Ananda Gomathy Sivakumar For Respondents in all Wps : Mr.M.V.Chandran for R1 -------- https://hcservices.ecourts.gov.in/hcservices/ O R D E R These writ petitions are directed against the order dated 18.2.2008 in I.A.Nos.873 to 875 of 2007 in O.A.No.152 of 2002 on the file of Debt Recovery Tribunal, Coimbatore whereby the applications preferred by the petitioner to direct the first respondent to produce the extract of accounts as well as documents relating to banking transactions were rejected by the Tribunal. Background Facts:- 2. The factual details necessary for the disposal of the writ petitions are as under:- The first respondent M/s.Canara Bank, Tiruppur preferred Original Application in O.A.No.152 of 2002 against the petitioner and ten others before the second respondent Tribunal praying for a decree directing the defendants in the O.A. to pay a sum of Rs.29,68,161.93 with interest at 17% per annum, being the amount on account of Open Cash Credit facilities; a sum of Rs.30,82,758/- being the amount due on account of packing credit facilities and a sum of Rs.99,00,558/- being the amount due for Foreign Bills of Exchange facilities and for a further direction to realise the amount by way of sale of the immovable property of the guarantor without prejudice to the right to claim a personal decree. Original Application by the Bank:- 3. In the original application in O.A.No.873 of 2007 it was the contention of the first respondent that the third respondent in the present application was constituted as a partnership firm with the petitioner and respondents 4 to 7 as partners and the petitioner being seventh defendant in the suit is the son of the third defendant and also the power of attorney of the first defendant firm. Initially at the request of the third respondent the Bank granted Cash Credit Facility with an outer limit of Rs.1,50,000/- on execution of relevant loan papers as well as on hypothecation of stocks and raw materials of hosiery garments. The said facility was subsequently enhanced at the request of the third respondent from time to time and from 27.2.1996, the facility was enhanced to Rs.10,00,000/-. Subsequently the third respondent requested for packing credit facilities for export of garments to foreign countries and those facilities were also granted for manufacture of garments exclusively for export and on export of garments, the foreign bills of exchange would be negotiated/discounted with the first respondent and the amount due under packing credit (PC) facilities will be adjusted from such Foreign Bills of Exchange on payment of the same. The said facility was initially granted on adhoc basis up to a https://hcservices.ecourts.gov.in/hcservices/ limit of Rs.5 lakhs on 30.12.1996 and later it was confirmed. The facilities were renewed by the third respondent on 15.12.1997 and the outer limit was enhanced periodically. Those facilities were granted on the guarantee of the sixth defendant in the suit and on mortgage of immovable property of some of the defendants. Necessary mortgages were also created in respect of the property by deposit of title deeds. There was also an acknowledgement of debt on 24.7.1999. Subsequently the account became irregular and the payment for export of goods were not received by the first respondent and as such notices were issued to the third respondent. However there was no response from the firm which resulted in filing the suit for realisation of the amount due. Defence:- 4. In the written statement filed by the petitioner along with other defendants, the liability was disputed and indicated their inability to file an effective written statement on account of non- production of accounts prior to 1.7.1999. The defendants also reserved their right to file additional written statement upon receipt of the entire accounts from the first respondent Bank. The petitioner in fact disputed the entries in the extract of accounts submitted by the first respondent Bank and put the bank to strict proof various entries. Since the first respondent failed to produce the accounts prior to 1.7.1999 besides other relevant documents, the petitioner preferred interlocutory applications in I.A.Nos.873 to 875 of 2007 to cause production of statement of accounts besides certain documents as made mentioned in those applications. Interlocutory Applications:- 5. In I.A.No.873 of 2007, the request of the petitioner was to cause production of the entire accounts pertaining to the account of the third respondent firm maintained by the Bank with effect from the date of opening of the account and till 30.6.1999. In I.A.No.874 of 2007, the petitioner prayed for production of documents pertaining to the communication with the banker of the purchaser as well as communication pertaining to the promissory note received by them in respect of two bills. Similarly in I.A.No.875 of 2007 the request was to cause production of all the communication exchanged between the first respondent Bank and ECGC pertaining to the account of the third respondent firm. 6. In the affidavit filed in support of I.A.No.873 of 2007, it was the case of the petitioner that originally the matter was taken care of by the father of the petitioner, who subsequently met with an accident on 30.5.2006 and he was in coma on account of such accident and ultimately died on 3.11.2006. According to the petitioner, the https://hcservices.ecourts.gov.in/hcservices/ statement of accounts for the period prior to 30.6.1999 was absolutely necessary for the purpose of filing effective reply statement as the petitioner was incapacitated in filing such a statement without a copy of the accounts. Similarly, in I.A.No.874 of 2007 the petitioner has challenged the factual details as alleged in the plaint in O.A.No.152 of 2002. It was his contention that the bill amounting to more than Rs.65 lakhs was returned unpaid and the first respondent Bank failed to protest and deliver the original bills to the parties so as to enable the exporter to make a claim against the overseas purchaser. The bankers of the overseas purchaser from Germany had given promissory note amounting to Rs.41 lakhs as security for repayment of two bills out of the four bills mentioned and the first respondent did not deliver the original promissory note and on account of the negligence of the Bank, the petitioner and other respondents could not pursue their remedy to enforce the payment. In such circumstances, the petitioner called upon the Bank to produce the entire documents, being the communication between the first respondent and the overseas bank pertaining to the transaction involving the petitioner and more particularly with regard to the four bills. In I.A.No.875 of 2007 the petitioner sought for production of the communication exchanged between ECGC and the first respondent and it was his apprehension that proper particulars have not been disclosed in the plaint filed in I.A.No.875 of 2007. It was the further contention of the petitioner that the first respondent has been deducting premium amount for the coverage given by ECGC and ECGC having received the amount, cannot refuse to make payment and in case ECGC which had received the premium had paid the amount, the defendants would not have fastened with the liability and in such a case, there would have been no cause of action for the first respondent with respect to the transaction involving ECGC. In such circumstances the petitioner has prayed for production of the entire communication between ECGC and the Bank. 7. In all the three interlocutory applications, separate counter affidavits have been filed by the first respondent. In respect of I.A.No.874 of 2007, it was the case of the first respondent that in case there was any bonafide reason or claim for the petitioner against foreign buyer, they ought to have adjudicated the matter before Foreign Court and recovered the amount due to them under the alleged promissory notes executed by the Foreign buyer in their favour. The promissory notes executed by the petitioner had become time barred as per Indian Law and as such there was no requirement for production of those promissory notes executed in the year 1999. The Application in I.A.No.875 of 2007 was opposed by the first respondent on the ground that it was not open to the petitioner to sit in judgment as to whether ECGC has settled the claim and if there was any deficiency they should have adjudicated the same by filing separate suit against ECGC and through the present application the https://hcservices.ecourts.gov.in/hcservices/ petitioner is trying to re-open the issue and thereby to reopen the case initiated by the first respondent. It was the further contention of the first respondent that it was not obligatory and incumbent upon them to furnish details so as to enable the petitioner to file counter claim and in such factual situation, the first respondent prayed for dismissal of the application. 8. The learned Debt Recovery Tribunal, Coimbatore considered the interlocutory applications and dismissed the applications mainly on the ground that the intention of the petitioner was only to drag on the proceedings. Nature of disposal of the applications and reasoning:- I.A.No.873 of 2007:- The interlocutory application in I.A.No.873 of 2007 was dismissed by the Tribunal on the ground that Original Application was filed in the year 2002 and the reply statement was also filed much earlier. The Tribunal also observed that it was only when the case was posted for hearing that the petitioner has come forward with a prayer to direct the respondent Bank to furnish the statement of accounts as well as other details. According to the Tribunal, the statement of accounts prior to the claim period was unnecessary and it would not in any way help the petitioner to prepare their defence. Accordingly, the application was dismissed. I.A.No.874 of 2007:- The Application in I.A.No.874 of 2007 was also dismissed mainly on the ground of delay. Incidentally, it was also the finding of the Tribunal that the correspondence exchanged between the Bank and ECGC were in no way helpful to the petitioner in his defence. I.A.No.875 of 2007:- The application in I.A.No.875 of 2007 was rejected on the ground that those documents are unnecessary and two promissory notes were untraceable and also on the ground that the petitioner ought to have taken necessary steps independently before or after the filing of Original Application with respect to the two promissory notes. The learned Tribunal also found that the promissory notes were time barred and un-enforceable and as such there was no necessity to produce those promissory notes in the present suit. Contention:- 9. Thiru Vijay Narayan, learned Senior Counsel appearing for the petitioner contended that even in the plaint filed in O.A.No.152 of 2002, the first respondent bank undertook to furnish the copy of accounts for the period prior to 1.7.1999 and since they failed to produce the statement of accounts for the said period, the petitioner was fully justified in requesting the court to cause production of https://hcservices.ecourts.gov.in/hcservices/ the entire accounts in respect of the third respondent firm as maintained by the bank. With respect to the prayer as sought for in I.A.Nos.874 and 875 of 2007, the learned counsel contended that the entire correspondence exchanged between the Bank and the ECGC as well as the promissory notes are absolutely necessary to justify the stand taken by the petitioner. Those documents are also necessary for the purpose of filing additional written statement, liberty having already been taken in the written statement originally filed. According to the learned Senior Counsel, Section 22(2)(b) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 gives jurisdiction to the Tribunal for requiring the discovery and production of documents and the Tribunal being a creature of the Statute, should have acted in accordance with the principles of natural justice and by dismissing the application, foreclosed the defence that could have been raised by the petitioner after perusing the statement of accounts as well as the correspondence exchanged between the bank and ECGC. The learned Senior Counsel also relied on the judgement of the Apex court in M.L.SETHI v. R.P.KAPUR (AIR 1972 SC 2379) in support of his contention that the documents sought to be discovered need not be admissible in evidence in the enquiry and proceedings and it would be sufficient if the documents would be relevant for the purpose of throwing light on the matter in controversy. 10. Per contra, Mr.M.V.Chandran, learned counsel appearing on behalf of the first respondent contended that none of the documents sought for by the petitioner were germane to the issue to be decided in the matter and it was only an attempt to protract the proceedings. Learned counsel also submitted that there was a clear alternative remedy available to the petitioner by filing a statutory appeal before the appellate Tribunal as per Section 20 of Act 51 of 1993 and as such all the three writ petitions are clearly not maintainable. Learned counsel also justified the decision of the Tribunal on the ground that even if the documents sought for by the petitioner were produced, the decision would not have been different and as such the Tribunal was perfectly justified in rejecting the applications. Analysis:- 11. The interlocutory applications have been preferred by the petitioner as per Section 19(25) read with Section 22(2)(b) of Recovery of Debts due to Banks and Financial Institutions Act, 1993. In the affidavit filed in support of the interlocutory applications the petitioner has detailed the reasons which necessitated in filing the petition for issue of direction to cause production of documents, as according to him, the statement of accounts for the entire period as well as some of the correspondence exchanged between the Bank and ECGC were absolutely necessary for the purpose of filing effective https://hcservices.ecourts.gov.in/hcservices/ reply in the matter and in the absence of which, serious prejudice would be caused to him as well as to the firm. 12. It is found from the application in O.A.No152 of 2002 that the first respondent Bank had agreed to produce the copies of accounts prior to the period 1.7.1999 and the relevant paragraph is extracted below:- "(11) The applicant submits that though accounts are available with the applicant since 1993, copies of accounts are filed from 1.7.1999 since the first defendant has confirmed the balance of amounts due by it to the applicant in the Acknowledgements of Debt and Security dated 24.7.1999. The applicant undertakes to produce earlier accounts as and when required." 13. It was not the case of the first respondent that they were not in possession of the documents sought for by the petitioner except the promissory notes. In fact the case of the first respondent was that the entire accounts relating to the third respondent firm was available with the Bank since 1993 but however they have produced only the accounts from 1.7.1999 as the firm had confirmed the balance amount due as on the said date. However the first respondent undertook to produce the earlier accounts as and when required. The original application was preferred in the year 2002 and the petitioner has filed his written statement also in the year 2002 and in the said statement the petitioner reserved his right to file additional written statement upon receipt of the entire accounts from the first respondent Bank. Even though the application was preferred by the petitioner only in the year 2007, the fact remains that the suit was only in the stage of adducing evidence on the side of the applicant Bank. The Tribunal proceeded on the basis that the applications were highly belated as it was filed only during the time of hearing. The said factual finding was disputed by the petitioner and in the course of hearing even the learned counsel appearing on behalf of the Bank submitted that the matter is in the evidence stage and the first respondent Bank has submitted their proof affidavit and the matter is adjourned for the purpose of cross examination, in case the petitioner and other defendants requires the witness of the first respondent to be cross examined. Therefore it cannot be said that there was undue delay in coming up with the applications. Application of provisions of the Code of Civil Procedure:- 14. The Recovery of Debts due to Banks and Financial Institutions Act, 1993 is a self contained code. Though the https://hcservices.ecourts.gov.in/hcservices/ provisions of Civil Procedure Code is not made applicable to a proceeding under the said Act in its entirety, certain powers of the Civil Courts are conferred on the Tribunal. As per Section 19(25), the Tribunal is permitted to make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. Section 22(2) provides that the Tribunal shall have, for the purpose of discharging their functions under the Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, while trying the suit, in respect of matters enumerated in the said provision and as per sub-clause (b) of Section 22(2) the Tribunal is having the power to require the discovery and production of documents. It is true that the Tribunal under the Debt Recovery Tribunal Act is constituted as an authority to resolve the dispute between the bank and the defaulting customer so as to enable the Bank to recover the amount due from the defaulting customers without approaching the Civil Court. 15. Merely because it was provided that the Tribunal is not bound by the procedure laid down by the Code of Civil Procedure, it cannot be said that while exercising its functions, the Tribunal is not bound to observe the principles of natural justice. Since the Tribunal is constituted to adjudicate the dispute between the bank and the defaulters, it is nothing but an adversarial litigation and as such both sides should be given reasonable opportunity to submit their version. Nobody should have a feeling that his/her case has not been considered by the Tribunal and they were put in an embarrassing position on account of the undue advantage taken by one of the contesting parties and that the Tribunal failed to give sufficient opportunity to put forward their case. Since the original application has been preferred by the Bank it was obligatory on the part of the Bank to produce the entire statement of accounts with respect to the transaction and the bank cannot pick and choose and produce only part of the accounts, though decree was sought for on the basis of the entire accounts. The bank was not justified in their contention to the effect that as the accounts were settled prior to 30.6.1999, there was no requirement to produce the accounts from the inception. While rejecting the application submitted by the petitioner, the learned Tribunal failed to consider the undertaking given by the bank to produce the entire accounts at a later point of time. Even without the application from the petitioner, the bank should have produced the entire accounts as they are expected to claim a decree only after placing the entire materials before the Tribunal. The Tribunal constituted to provide speedy remedy for recovery of debts due to Banks and Financial Institutions is required to give due opportunity to the defaulters also to submit their case. When the Bank themselves filed only part of the accounts, it was incumbent upon the Tribunal to direct the Bank to produce the entire accounts. https://hcservices.ecourts.gov.in/hcservices/ 16. The merits or otherwise of the case of the petitioner is a matter to be decided during trial and it is too early on the part of the Tribunal to comment about the case of the petitioner at the stage of interlocutory application. Though the Tribunal is entitled to come to a prima facie opinion about the relevancy of the documents sought to be summoned by the petitioner, it was not the proper stage to consider the entire documents on merits and to come to a conclusion that the documents are not relevant for deciding the issue in question. In the present matter, even the trial has only just commenced and only the proof affidavit of the Bank was before the Tribunal. There was no opportunity for the Tribunal to assess the merits or otherwise of the contentions of the parties and as such it was too pre-mature to make observation about the relative merits of the case of the petitioner in the interlocutory application stage. 17. In case the trial courts take practical approach in matters regarding production of documents as well as deciding the admissibility of documents, it would save the valuable time of the court. In the event of the courts considering each and every application like a suit and adjudicating the same on merits by conducing a mini trial or roving enquiry, substantial proceeding would remain on file without attaining finality. Very often one interlocutory proceeding gives rise to many other proceedings further proceedings resulting in stay of further proceedings of the suit/original application and as such it must be the endeavour of the trial courts to avoid multiplicity of proceedings, as otherwise, arrears would remain "arrears". Law laid down by the Supreme Court:- 18. The Apex Court in Bipin Shantilal Panchal v. State of Gujarat, [(2001) 3 SCC 1] indicated the procedure to be followed by the trial-court at the stage of taking evidence when objection is raised regarding admissibility of any material or any item of oral evidence in the following lines:- "13. It is an archaic practice that during the evidence-collecting stage, whenever any objection is raised regarding admissibility of any material in evidence the court does not proceed further without passing order on such objection. But the fallout of the above practice is this: Suppose the trial court, in a case, upholds a particular objection and excludes the material from being admitted in evidence and then proceeds with the https://hcservices.ecourts.gov.in/hcservices/ trial and disposes of the case finally. If the appellate or the revisional court, when the same question is recanvassed, could take a different view on the admissibility of that material in such cases the appellate court would be deprived of the benefit of that evidence, because that was not put on record by the trial court. In such a situation the higher court may have to send the case back to the trial court for recording that evidence and then to dispose of the case afresh. Why should the trial prolong like that unnecessarily on account of practices created by ourselves. Such practices, when realised through the course of long period to be hindrances which impede steady and swift progress of trial proceedings, must be recast or remoulded to give way for better substitutes which would help acceleration of trial proceedings. 14. When so recast, the practice which can be a better substitute is this: Whenever an objection is raised during evidence-taking stage regarding the admissibility of any material or item of oral evidence the trial court can make a note of such objection and mark the objected document tentatively as an exhibit in the case (or record the objected part of the oral evidence) subject to such objections to be decided at the last stage in the final