Sunil Poddar & Ors vs Union Bank Of India

3. To appreciate the controversy raised in the present appeal, few relevant facts may be stated. It is the case of the appellant that Adhunik Detergent Ltd. (Defendant No. 1 in Suit No. 44A of 1993 instituted by respondent-Union Bank of India) was incorporated as Company under the Indian Companies Act, 1956. There was another Company also known as Adhunik Synthetics Ltd. which was floated by the Directors of Adhunik Detergent Ltd. According to the appellants, initially, Adhunik Detergent Ltd. had seven Directors, namely, (1) Satyanarayan Jalan, (2) Krishna Jalan, (3) Chakrapani Jalan, (4) K.K. Jalan, (5)Sunil Poddar, (6) Sushil Kumar Kanodia and (7) Radhey Shyam Poddar. Adhunik Detergent Ltd. had taken loan from the respondent-Bank. The appellants herein as Directors of Adhunik Detergent Ltd. at the relevant time became guarantors for repayment of loan and executed certain documents in favour of the respondent-Bank. It is the say of the appellants that there was division of business among the Directors of Adhunik Detergent Ltd. and Adhunik Synthetics Ltd. Consequent upon the division, the appellants herein, who were Directors 5, 6 and 7 had resigned as Directors from Adhunik Detergent Ltd. on August 18, 1989 and they got exclusive control over Adhunik Synthetics Ltd. From that date onwards, the appellants no more remained as Directors of Adhunik Detergent Ltd.

4. It was alleged by the respondent-Bank that since Adhunik Detergent Ltd. did not repay the loan amount, a civil suit came to be filed by the Bank in the Court of District Judge, Raipur, Madhya Pradesh for recovery of Rs. 1,07,17,177.60 p. In the said suit, over and above the Company, all the Directors were also joined as defendants. A prayer was made in the plaint to hold all the defendants jointly and severely liable to pay the amount claimed by the plaintiff-Bank along with interest, costs and other expenses. Summonses were issued by the Court and the defendants appeared. So far as the present appellants are concerned, they were not served with the summonses but when they came to know about the filing of the suit, they appeared and filed written statement on March 9, 1995 contending inter alia that they had resigned from the Directorship of the Company (Adhunik Detergent Ltd.) with effect from August 18, 1989 and the Bank was intimated about such resignation. It was, therefore, contended that they were not responsible for repayment of loan amount and suit against them was not maintainable. The appellants, therefore, prayed that they may be deleted from the array of parties. On March 14, 1995, the appellants also filed an application by raising preliminary objection as to maintainability of civil suit against them. It was stated in the said application that preliminary objections were raised in the written statement by the appellants (defendant Nos. 7, 8 and 9) that no suit against them would lie. It was stated that the preliminary objection raised by them was fundamental in nature and went to very root of the jurisdiction of the Court. It was, therefore, prayed that an issue as to maintainability of suit against defendant Nos. 7 to 9 be framed and decided as preliminary issue before trying the suit on merits. Another application was also made in November, 1995 raising a similar objection contending that the suit was not instituted in accordance with law. The plaint which was filed was not signed by a person authorized to do so and on that count also, the suit was not tenable. It was further stated that suit against defendant Nos. 7 to 9 was not maintainable. A prayer was made to frame two issues under Order XIV, Rule 1 of the Code of Civil Procedure, 1908 (Code for short) as preliminary issues and to decide them as such.

5. It may, however, be stated that during the pendency of the suit before the Civil Court, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the Act) came into force and in 1998 the suit filed by the respondent-Bank came to be transferred to the Debt Recovery Tribunal, Jabalpur (DRT for short). The appellants had no knowledge about the transfer of the suit to DRT nor summonses were issued by DRT to the appellants at the new address. In the circumstances, nobody appeared before the DRT and the DRT vide its ex parte judgment and order dated December 15, 2000 decreed the suit filed by the plaintiff-Bank holding that the Bank was entitled to recover 1,07,17,177/- with interest and cost from the defendant Nos. 1-9 jointly and severely. The defendants were also restrained from transferring, alienating or otherwise dealing with or disposing off the hypothecated/mortgaged properties without the prior permission of DRT.

7. Notice was issued by this Court on March 6, 2006. After hearing the parties, execution proceedings were stayed and the matter was ordered to be posted for final hearing. That is how the matter has been placed before us.

In the present case, the appellants very artistically have suppressed the fact of their filing of written statement in the case while it was proceeding in the Civil Court and were being represented by their lawyer till the date of its transfer to the Tribunal at Jabalpur.

21. The High Court, in our judgment, was equally right in dismissing the petition confirming the finding of the DRAT that the appellant had artistically suppressed material fact and no interference was called for.

22. Finally, we are exercising discretionary and equitable jurisdiction under Article 136 of the Constitution. From the facts and circumstances of the case in their entirety, we do not feel that there is miscarriage of justice. On the contrary, we are convinced that the appellants had not come forward with clean hands. They wanted to delay the proceedings. Though they were aware of the proceedings pending against them, had appeared before the Civil Court, but then did not care to inquire into the matter. Even after ex-parte order was passed, in an application for setting aside the order, they had not candidly disclosed all the facts that they were aware of such proceedings and were represented by a counsel. In the light of all these facts and keeping in view the provisions of Section 22 (2)(g) of the Act read with Rule 13 of Order IX of the Code, if the Debt Recovery Tribunal dismissed the application and the said order was confirmed by the Debt Recovery Appellate Tribunal and by the High Court, it cannot be held that those orders were wrong and ex parte order should be quashed. The prayer of the appellants, therefore, has no substance and cannot be accepted.

23. For the foregoing reasons, the appeal deserves to be dismissed and is accordingly dismissed with costs.