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Cross Country Hotels Ltd V/S Tourism Finance Corporation of India Ltd. and Others.

    Misc. Appln. Nos. 308 and 309 of 2001 and Misc. Appeal No. 209 of 2001 in O.A. No. 26 of 2000 (Delhi)

    Decided On, 18 February 2002

    At, Debt Recovery Appellate Tribunal At Delhi

    By, THE HONORABLE JUSTICE: A.K. SRIVASTAVA. (CHAIRMAN)

    For Petitioner: Shellka Arora, Advocate And For Respondents: Sumant Batra, Advocate.



Judgment Text


Misc. Appln. No. 308 of 2001

1. This is an application for condonation of delay in filing Appeal No. 209/2001 in which Orders dated 25.5.2001 and 12.10.2001 passed by the Debts Recovery Tribunal-I, Delhi in O.A. No. 26/2000 have been challenged. Since this appeal was filed on 7.11.2001, this application for condonation of delay in filing appeal against order dated 25.5.2001 has been moved. The ground, inter alia, taken in this application is that after order dated 25.5.2001 was passed, an application for review of that order was made and the same was disposed of only on 12.10.2001. Hence the prayer is that the delay in filing appeal against order dated 25.5.2001 may be condoned.

2. Reply to this application has been filed. Heard learned Counsels for the parties.

3. Though appeal against order dated 25.5.2001 ought to have been filed in lime but in view of the fact that, under advice, the appellant had moved an application for review of order dated 25.5.2001 and that application was disposed of only on 12.10.2001. I consider it a fit case where condonation of delay in filing appeal against order dated 25.5.2001 may be allowed. Accordingly, the application is allowed and delay in filing appeal against order dated 25.5.2001 is here by condoned.

4. The application stands disposed of.

Misc. Appeal No. 209/2001

1. This appeal is against orders dated 25.5.2001 and 12.10.2001 passed by the Debts Recovery Tribunal-I, Delhi in O.A. No. 26/2000 -- Tourism Finance Corporation of India Ltd. v. M/A. Cross Country Hotels Ltd. & Ors .

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2. Reply by respondent Corporation has been filed, Heard learned Counsels for the parties.

3. The facts of the case appear to be that the respondent Corporation filed the aforesaid O.A. against the appellant and others for recovery of dues. After filing of such recovery application, the appellant along with other defendants in the O.A. moved an application before the Tribunal below on 26.8.2000 wherein it was stated that after the aforesaid O.A. came up for hearing before the Tribunal on 1.8.2000 the appellant and other defendants were given 30 days' time to file reply and the matter was listed for 13.10.2000; that the appellant and other defendants wanted to file counter-claim as the respondent Corporation was responsible for the losses and downfall of the appellant; that the Department of Finance of the appellant was being looked after by one Mr. B.K. Malhotra, the then Director (Finance) and that he along with the Company Secretary Ms. Suman Gambhir had played fraud on the appellant and had sold its valuable property for their personal gain without proper sanction of the Board of the appellant; that the appellant had to get an FIR registered against them; that they were facing trial before Judicial Magistrate, Nawalgarh, Jhunjhunu; that said Mr. B.K. Malhotra and the said Company Secretary Ms. Suman Gambhir were sacked from the appellant company but before they had been removed they had already removed all the records and the correspondence of the appellant Company which had not been returned despite the filing of the FIR and filing of the Civil suit against them in the Delhi High Court; and that in view of the non-availability of the records the appellant was not in a position to file a proper reply as well as counter-claim. Accordingly, in that application it was prayed that the respondent Corporation be directed to file in the Tribunal the correspondence exchanged between the parties and also to supply the copies of the same to the appellant Company. It was further prayed that the appellant be granted time to file the counter-claim after the receipt of the documents from the respondent Corporation. That application came up for hearing before the Tribunal and the same was rejected under the impugned order dated 25.5.2001. The said order reads as follows:

"By this application, defendants have prayed that applicant be directed to supply the letters written by the defendants to the applicant Bank. It has been alleged that one of the Directors of defendant No. 1 has misappropriated the funds and has taken away the documents. This application has been opposed by the applicant Bank by saying that whatever documents on which it is relying have already been filed and copy of the same has already been supplied to defendants. In my view, no such directions can be given to the applicant Bank to supply the documents on which applicant is not relying. This application is dismissed.

OA 26/2000

Last and final opportunity is given to file WS within 4 weeks. Replication, evidence by way of affidavit along with original documents be filed within 4 weeks. Evidence by way of affidavit by defendant be also filed on or before the next date.

Fix before Registrar for completing the formalities and exhibiting the documents on 6.8.2001."

4. The appellant moved an application for review before the Tribunal but the same was rejected by order dated 12.10.2001. In that order it has been observed that if order dated 25.5.2001 was erroneous, appropriate remedy was to file an appeal against that order. The review application was dismissed with costs of Rs. 5,000. On that very date, in the main application for recovery (O.A. No. 26/2000), the appellant was granted one final opportunity to file their Written Statement within four weeks subject to payment of Rs. 20,000 as costs. It was further made clear in that order that in case Written Statement was not filed and costs not paid within four weeks, opportunity to the appellant to file Written Statement would stand automatically closed.

5. This appeal has been vehemently opposed. Reply has also been filed.

6. I have gone through the reply in which nowhere it has been disputed that the appellant's Director (Finance) and the Company Secretary had been sacked by the appellant and that an FIR and Civil Suit had also been launched against them. Since these facts are not disputed, the assertions made in the appellant's application dated 26.8.2000 may be taken to be true. In that application it had also been asserted that Mr. B.K. Malhotra along with the Company Secretary, Ms. Suman Gamhhir had removed all the records and the correspondence of the appellant company and had not returned the same to the appellant company. This alleged fact has also not been disputed by the respondent Corporation in their reply. Therefore, it may also be taken to be true.

7. The main thrust of the aforesaid application was that the appellant be not directed to file Written Statement unless it had an opportunity to go through the entire correspondence between the appellant company and the respondent Corporation in respect to the claimed matter in the recovery application. The respondent Corporation vehemently opposed that application on the grounds that as per law and the rules the respondent Corporation was not bound to produce those documents, which had not been filed in the Tribunal below or upon which it had not relied for the claim before the Tribunal. The learned Presiding Officer of the Tribunal below appears to have accepted the aforesaid contentions of the respondent Corporation and, therefore, dismissed the appellant's aforesaid application for directions.

8. I have given my careful consideration to the point at issue. I may agree with the respondent's Counsel that the duty of the respondent Corporation is only to supply copies of those documents, which are either mentioned in the recovery application or upon which the respondent Corporation relies to prove its claim. But the facts of this case are very peculiar where a company appears to have been defrauded and deceived by its Director (Finance) and the Company Secretary. The appellant Company does not appear to be in possession of the correspondence, which took place between the company and the respondent Corporation in respect to the dues claimed in the aforesaid O.A. Unless the company goes through the correspondence, which was exchanged between the appellant company and the respondent Corporation, the appellant Company contends that it will not be in a position to file a proper defence. On this point I agree with the appellant Company because the appellant Company is an artificial person and not a person in flesh and blood and its affairs are managed by its Directors and the Company Secretary. Therefore, if the Finance Director of the appellant Company has allegedly duped the Company and has taken all the records with him, it will be in the interests of principles of natural justice that the Company should be given an opportunity to become aware of all the facts relating to the dues in question. Since the entire correspondence is not with the Company, I am inclined to agree with learned Counsel for the appellant that the appellant Company may not be in a position to give its defence. Therefore, appropriate orders may be passed accordingly.

9. On the other hand, the respondent Corporation is not going to be prejudiced in any manner if it is asked to file entire correspondence, which took place between the appellant Company and the respondent Corporation relating to the dues in question before the Tribunal below.

10. Learned Counsel for the respondent Corporation contended before me that the appellant ought to have filed Written Statement before asking for the copies of the correspondence. I do not agree with this contention. How defence can be filed without having all the documents. He further contended that if the appellant was granted that indulgence it would create a bad precedent that no borrower would file written statement and would go on asking for copies of all the documents of the lender Banks. This fear is without basis. This order will not be a precedent because the circumstances in other cases may not be the same. As discussed above, the circumstances of this case, as stated by the appellant, are quite peculiar.

11. In view of above discussion, the appeal is allowed. Orders dated 25.5.2001 and 12.10.2001 are hereby set aside. Application of the appellant dated 26.8.2000 is hereby allowed to the extent that the respondent Corporation is directed to file copies of all such documents, which are the correspondence between the appellant and the respondent Corporation relating to the dues in question before the Tribunal below in O.A. No. 26/2000. Such copies shall be filed before the Tribunal below and the appellant may apply for obtaining certified copies thereof from the Tribunal below.

12. The respondent Corporation is directed to file copies of the aforesaid correspondence in the Tribunal below by 18th of March, 2002. The Tribunal below is directed to give certified copies of those documents, if applied for, to the appellant after taking appropriate fee for the same, by 30th March, 2002. The appellant shall file its Written Statement before the Tribunal below within four weeks from 30th March, 2002. Parties shall appear before the Tribunal on 3rd May, 2002 for further proceedings in the O.A. as may be directed by the Tribunal below.

Copy of this order be given dasti to the parties and be sent to the concerned Tribunal.