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M/s. Creative Decision Systems & Software Pvt. Ltd., Represented by its Managing Director, Suresh Kumar Mathur, Bangalore & Others v/s The Debt Recovery Tribunal-1, Represented by its Recovery Officer-1, Bengaluru & Others

    W.P. No. 48771 of 2018 (GM-DRT)

    Decided On, 29 November 2021

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE ALOK ARADHE & THE HONOURABLE MR. JUSTICE ANANT RAMANATH HEGDE

    For the Petitioners: K.S. Harish, Advocate. For the Respondents: R3, V.J. Achalananda, Advocate.



Judgment Text

(Prayer: This Writ Petition is filed Under Article 226 & 227 of the Constitution of India, praying to set aside the order dtd 14.11.2017 passed by the Learned Debt Recovery Appellate Tribunal at Chennai in M.A.64/2016 in OA No.907/1995 on the file of DRT Bangalore being Arbitrary, illegal and without any jurisdiction vide Annx-A. B) set aside the order dtd 26.12.2016 passed by the learned Debt Recovery appellate Tribunal at Chennai in M.A. 64/2016 in IA 576/2007 in OA No.907/1995 on the file of DRT Bangalore whereby the learned Debt Recovery Appellate Tribunal allowed the appeal and set aside the order passed by the Debt Recovery Tribunal at Bangalore Vide Annx-B & etc.)

Alok Aradhe, J.

1. In this writ petition the petitioner has inter alia assailed the validity of the order dated 14.11.2017 passed by the Debt Recovery Appellate Tribunal (hereinafter referred to as 'the tribunal' for short) as well as the order dated 26.12.2016. In order to appreciate the grievance of the petitioners, few facts need mention, which are stated infra.

2. At the request of the petitioner No.1 on 31.08.1988, respondent No.5 viz., the State Bank of India sanctioned term loan of Rs.9,55,000/- along with interest at the rate of 15% and cash credit loan of Rs.5,30,000/- Lakhs along with interest at the rate of 16.5%. Thereafter on 19.02.1985, the petitioner made an application seeking enhancement of the term loan and cash credit facility. The respondent No.5-Bank thereupon enhanced the term loan to Rs.16 Lakhs and cash credit facility to Rs.8.45,000/-. The partnership firm viz., Nav Vikas Builders and Developers created an equitable mortgage for the enhanced limit by depositing the title deeds in respect of its property situate at J.P.Nagar, Bangalore.

3. The respondent No.5 filed a suit before the City Civil Court against the petitioners, respondent No.2 and one Rukmini Mathur (deceased) before for recovery of an amount of RS.53,36,570/-. In 1995, the suit was transferred to Debt Recovery Tribunal. The Debt Recovery Tribunal by an order dated 24.07.2000 allowed the original application and directed respondent No.5 to file the memo of calculation with interest at the modified rate within two weeks. However, respondent No.5 did not file the memo of calculation and assigned the debt on 23.03.2006 to respondent No.4.

4. The respondent No.4 filed an application to substitute them as "certificate holder" in the recovery certificate in the place of SBI. The Debt Recovery Tribunal rejected the aforesaid application on 22.09.2007. The respondent No.5 thereupon filed an affidavit on 02.09.2008 requesting substitution of Kotak Mahindra Bank in its place along with memo of furnishing statement of interest. The Debt Recovery Tribunal by an order dated 28.11.2018 refused to accept notice as respondent No.5 failed to serve notice to respondents before the Debt Recovery Tribunal.

6. The respondent No.3 viz., Kotak Mahindra Bank filed an appeal before the tribunal along with an application seeking condonation of delay of 617 days in filing the appeal. The petitioner filed an objections to the aforesaid application. The proceeding in the appeal was adjourned from time to time for a period from 06.01.2014 to 24.12.2016. The tribunal heard the arguments on 21.12.2016 and thereafter, passed an order on 26.12.2016 condoning the delay. By another order passed on the same date, the appeal was also allowed. The petitioners thereupon filed a memo of facts on 26.12.2016, in which it was pointed out that no arguments were heard on merits. The petitioners thereafter filed an application seeking recall of the order on 11.01.2017. The petitioners thereafter filed an application seeking review of the order on 25.01.2017. The Debt Recovery Tribunal by an order dated 14.11.2017 dismissed the application for review as well as recall. In the aforesaid factual background, this petition has been filed.

7. Learned counsel for the petitioners submitted that the Debt Recovery Tribunal had heard the arguments on 21.12.2016 only on the application for condonation of delay and did not hear the arguments on the merits of the appeal. Therefore, the order dated 26.12.2016 has been passed without affording an opportunity of hearing to the petitioners and the tribunal by an order dated 14.11.2017 has wrongly rejected the application for review as well as recall filed by the petitioners.

8. On the other hand, learned counsel for the respondents has supported by order passed by the tribunal and submitted that the arguments were heard on the application for condonation of delay as well as on merits. Therefore, no interference is called for in this writ petition.

9. We have considered the submissions made by learned counsel for the parties and have perused the record. The order sheet dated 30.11.2016, 14.12.2016 as well as 21.12.2016 recorded by the tribunal reads as under:

PROCEEDINGS DATED 30.11.2016:

xxxxx List on 14.12.2016, for consideration of delay. PROCEEDINGS DATED 21.12.2016:

xxx Heard. Orders reserved on condonation and on merits as well.

Thus, from perusal of the aforesaid order sheets, it is evident that the tribunal has not recorded in the order sheet that the arguments were heard on the application for condonation of delay as well as on merits. On the same date, i.e., on 26.12.2016, the petitioners had filed a memo of fact for proceedings dated 21.12.2016 and 26.12.2016, in which paragraph 7 the following stand was taken:

This respondent by this memo clarify to this Hon'ble Tribunal that no arguments were submitted on the main appeal on 21.12.2016 either by this Respondents 1 to 3 or by the appellant. Further, there was no representation on the side of the 5th Respondent either in party or by counsel. The arguments was submitted by both the counsels in the IA No.1331/2009 i.e the condone delay petition not on the merits of the appeal or on the main appeal.

In the application for recall as well as review, the same contention was raised. Therefore, we find merit in the submission made on behalf of the petitioners that order dated 26.12.2016 was passed by the tribunal without affording an opportunity of hearing to the petitioners. The order dated 26.12.2016 has been passed without affording an opportunity of hearing to the petitioners to

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address arguments on merits, the aforesaid aspect of the matter has not been appreciated by the tribunal while passing the order dated 14.11.2017. The impugned orders dated 26.12.2016 and 14.11.2017 cannot be sustained in the eye of law. The same are hereby quashed. The matter is remitted to the tribunal to afford an opportunity to the petitioners to address arguments on the merits of the appeal. The parties are directed to appear before the tribunal along with a copy of this order on 20.12.2021. The tribunal thereafter shall hear the parties and shall decide the appeal. Needless to state that all contentions which are available to the parties are kept open. In the result, petition is disposed of.
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