Case: Tamilnadu Mercantile Bank Limited Vs. G. Vijayalakshmi &amp; Others

The respondent No.1 was impleaded as defendant No.6 in Original Application (O.A.) No.124 of 2000 filed on behalf of the appellant Bank before the Debt Recovery Tribunal, Chennai (hereinafter referred to as Tribunal). The said proceedings (O.A. No.124 of 2000) was instituted by the appellantBank against one M/s Pioneer Metals & Alloys Ltd. and its Directors (defendant Nos. 2 to 4) for recovery of different amounts of financial accommodation provided by the appellantBank. According to the Bank, the respondent No.1defendant No.6 stood as a guarantor against the said loan provided to said M/s Pioneer Metals & Alloys Ltd. and secured some of her properties by way of mortgage. It is also necessary to notice at this stage that the Bank had also provided a personal loan of Rs.4,00,000/(Rupees four lakh) to the respondent No.1defendant No.6 against the security of the same properties. According to the appellant Bank, the respondent No.1 was served with the summons issued by the Tribunal but she chose not to enter appearance and contest the case as she perceived the O.A. filed by the Bank to be in respect of the personal loan availed of by her. The Tribunal, therefore, proceeded ex parte against the respondentdefendant No.6. The said O.A. was decreed on 30th April, 2003 and Recovery Certificate was issued on 14th May, 2003 by the Tribunal. A public notice of the said Recovery Certificate was published on 24th May, 2005. It is thereafter that the respondentdefendant No.1 filed an application before the Tribunal for setting aside the ex parte decree which application was accompanied by a supplementary application for condonation of delay which was claimed to be 62 days. The Tribunal dismissed the application for condonation of delay and hence the application for setting aside ex parte decree. In appeal, the Debt Recovery Appellate Tribunal (hereinafter referred to as Appellate Tribunal) reversed the said decision and directed an adjudication on merits of the application for setting aside the ex parte decree. On an approach to the High Court by the appellant Bank, the High Court maintained the said order of the learned Appellate Tribunal though on different grounds. Shortly put the High Court took the view that the provisions of the Limitation Act, 1963 will not apply to applications to set aside ex parte decrees passed by the Tribunal(s). Aggrieved, this appeal has been filed.      3. The contest to the ex parte decree by the respondentdefendant No.6 was on the ground that though she received notice/summons of the proceedings in connection with O.A. No.124 of 2000 she understood the same to be a proceeding for recovery of the amount of personal loan [Rs. 4,00,000/(Rupees four lakh)] made available to her by the appellant Bank. She, therefore, did not bother to contest the proceedings. However, on coming to know of the public notice of the Recovery Certificate issued by the learned Tribunal as against the loan made available to M/s Pioneer Metals & Alloys Ltd., wherein she was joined as a guarantor, she carried out necessary verification and thereafter filed the application for setting aside the ex parte decree along with the condonation application for condonation of delay of 62 days in filing the application computed from the date of knowledge of the ex parte decree. The respondentdefendant No.6 had also specifically urged before the learned Tribunal and the learned Appellate Tribunal that she had not executed any guarantee document securing the loan advanced by the appellant Bank to M/s Pioneer Metals & Alloys Ltd. and the documents in this regard are forged and fabricated. Though the learned Tribunal took the view that the above contentions advanced should not have its acceptance, the learned appellate Tribunal took a contrary view, particularly, having regard to the fact that though the alleged loan to M/s Pioneer Metals & Alloys Ltd. was made in the year 1996 the guarantee documents were executed in the year 1997. On this basis, the learned appellate Tribunal thought it proper to hold that the matter should receive consideration on merits and, therefore, condoned the delay and issued further directions accordingly.

Court's reasoning:
5. Having considered the matter at length we are of the view that it will not be necessary in the present case to enter into any discussion with regard to the correctness of the reasons advanced by the High court for the view taken. Even assuming the Limitation Act to be applicable, as contended on behalf of the appellantBank, all that would be relevant and, therefore, would require consideration of the Court is whether the respondentdefendant No.6 was prevented by sufficient cause from filing the application for setting aside the ex parte decree in time. In this regard, we have taken note of the reasons which had prevailed with the learned appellate Tribunal in holding in favour of thet No.6. On due consideration, we agree with the reasoning of the learned appellate Tribunal, particularly, in a situation where the pleadings in support of the plea advanced i.e. for setting aside the ex parte decree are clear and cogent, namely, that though she was served with the notice/summons of the O.A. before the learned Tribunal she had misconstrued the same as being in connection with the personal loan advanced to her by the Bank. In this regard the contention advanced that she had not furnished any guarantee for the loan by the Bank to M/s Pioneer Metals & Alloys Ltd. would be relevant. Only after notice of the Recovery Certificate was published that the respondentdefendant No.6 made enquiries and came to know of the detailed facts in this regard with regard to O.A. No.124 of 2000 and moved the Tribunal for setting aside the ex parte decree with a prayer for condonation of delay of 62 days computed from the date of knowledge of the decree. In a situation where the respondent guarantor has specifically urged that she had not executed any guarantee document in favour of the Bank, regardless of the period of the delay that had occurred, the said respondentdefendant, in our considered view, was entitled to an adjudication on merits of her contentions by an appropriate order on the condonation application6. The learned appellate Tribunal being the last court of facts having found the same in favour of the respondent No.1defendant No.6 and the said conclusion having been maintained by the High Court though for different reasons we are of the view that the conclusion recorded by the learned appellate Tribunal should also have our approval.