2004(1) ALL MR 525
IN THE HIGH COURT OF JUDICATURE AT BOMBAY(NAGPUR BENCH)

R.J. KOCHAR AND S.T. KHARCHE, JJ.

Rajkumar S/O Sudarshan Agarwal Vs. The Debts Recovery Appellate Tribunal & Ors.

Letters Patent Appeal No.131 of 2003

17th June, 2003

Petitioner Counsel: Mr. S. S. JOSHI
Respondent Counsel: Mr. A. V. KHARE

(A) Recovery of Debts Due to Banks and Financial Institutions Act (1993), S.22 - Proceedings before Tribunal - Applicability of Civil Procedure Code - Technicalities of the Code of Civil Procedure are not made applicable to the proceedings before the Tribunal, but at the same time, underlying principles of Code of Civil Procedure cannot be wholly ignored by the Tribunal - Tribunal has to regulate its own procedure, but the Tribunal must remember that while regulating such procedure, it does not violate basic principles of natural justice of granting reasonable and adequate opportunity to the parties.

The technicalities of the Code of Civil Procedure are not made applicable to the proceedings before the Tribunal, but at the same time the underlying principles of the Code of Civil procedure cannot be ignored at all by the Tribunal as the underlying philosophy of the Code of Civil Procedure is nothing but elaborate codification of the principles of natural justice. What is contemplated under the Code of Civil Procedure and also by the principles of natural justice is a fair, reasonable and adequate opportunity to be afforded to the parties to put up their respective contentions before the Court/Tribunal. There is no doubt that the Tribunal has to regulate its own procedure, but the Tribunal must remember that while regulating such procedure, it does not violate the basic principles of natural justice of granting reasonable and adequate opportunity to the parties. Besides, even the Tribunal is vested with certain powers of a Civil Court under S.22 of the Act. [Para 6]

(B) Recovery of Debts Due to Banks and Financial Institutions Act (1993), S.22 - Proceedings before Tribunal - Presumption as to Bank documents - There is no presumption in law that the Bank documents and Bank officers are always truthful.

There is no presumption in law that the Bank documents and the Bank Officers are always truthful and the citizens or the borrowers are always false or liers. The Tribunals must change such presumptive approach in favour of the Banks and the Financial Institutions which are also manned by the frail human beings. There is nothing sacrosanct about them and their documents which are subject to the Law of Evidence. [Para 6]

JUDGMENT

R. J. KOCHAR, J.:- Appeal is admitted and by consent heard forthwith. Respondent No.3 waives service and the respondent no.3 is the only contesting party. Other respondents need not be heard here. They had not even appeared before the Tribunal.

2. The appellant is aggrieved by the order passed by the learned Single Judge on 16-4-2003. The learned Single Judge was pleased to dismiss the petition filed by the petitioner who was aggrieved by the order passed by the Debts Recovery Tribunal and also by the order passed by the Debts Recovery Appellate Tribunal at Mumbai.

3. The facts, in brief, can be narrated as under :

The respondent no.3/bank had instituted proceedings against respondents no.4, 5, 6, 7 and 8 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act ("the Act" for short) for recovery of Rs.12,65,642/-. The respondent no.4 was the principal borrower of the loan from the respondent no.3/bank. The appellant and the other respondents were impleaded as the respondents before the Tribunal in the capacity of the guarantors for the respondent no.4. It appears from the proceedings that except the appellant no other respondent contested the claim of the respondent no.3/bank. The appellant appeared before the Tribunal and filed his written statement on 26-3-2002 contesting the claim of the bank inter-alia on the ground that he had not signed the alleged guarantee papers and he was not a guarantor for the loan given by the bank to the respondent no.4. At the outset, in paragraph no.1 of his reply, he seriously contested the claim of the bank that he was a guarantor for the respondent no.4. He, therefore, filed two separate applications on 20-5-2002, one to delete his name from the O.A. and the other to request the Tribunal to send the alleged signature on the bank guarantee papers for the opinion of any hand writing expert who would compare the specimen signatures of the appellant which he had given with his written statement. The Bank filed its reply to the said applications to oppose the prayers of the appellant.

4. It appears from the pleadings that the appellant who was impleaded as defendant no.2 before the Tribunal appeared on receipt of the summons on 11-2-2002. On that date the bank was directed to furnish the copy of the original application filed by the respondent no.4 before the Tribunal. On 14-3-2002 the appellant received the copy of the original application along with the documents from the bank and on 26-4-2002 he filed his written statement specifically denying the allegation of the bank that he had executed the alleged guarantee-deed at any point of time. The appellant, therefore, raised a preliminary issue in respect of maintainability of the O.A. against him and prayed that the issue regarding the signing of the guarantee-deed be tried as a preliminary issue. It appears that since no such preliminary issue was framed by the Tribunal, he filed on 20-5-2002 two separate applications, one to delete him from the O.A. and another for appointment of hand writing expert with a direction to examine the signature appearing on the bank guarantee and the other signatures of the appellant as specified in the said application as appended with the written statement filed by him. The Tribunal dismissed the said application by its order dated 15-7-2002. The appellant was aggrieved by the said order and, therefore, he filed an Appeal under Section 20 of the Act. The Appellate Tribunal vide its order dated 28-1-2003 dismissed the Appeal and confirmed the order of the Tribunal. The appellant thereafter has approached this Court under Articles 226 and 227 of the Constitution of India against the order passed by the Appellate Tribunal. The learned Single Judge of this Court was pleased to reject the petition in liminae after hearing the parties. The appellant has approached this Court by filing the present Letters Patent Appeal. The order passed by the learned Single Judge is reproduced hereinbelow for the sake of convenience -

"I have considered the contentions canvassed by the respective learned counsel for the parties and perused the impugned order. The observations in the impugned order reveal that petitioner was served with summons of the original application in the year 2000. However, he had filed the application in question only in the year 2002 when the matter was kept for final arguments. Considering this aspect and also other aspects, the Debts Recovery Appellate Tribunal rejected the appeal. At this stage, it is brought to the notice of this Court by the learned counsel for the respondent no.3 Bank that the notice was served on the petitioner prior to filing of the Original application before the Tribunal. Be that as it may, no case is made out for interference. The petition is dismissed."

From the order which we have reproduced hereinabove, it is clear that the learned Single Judge was given to understand that though the appellant was served with the summons of the original application in the year 2000, he filed an application for appointment of hand writing expert in the year 2002 when the matter was kept for final arguments. The learned counsel appearing for the appellant submitted that the said observation in the order of the learned Single Judge is factually incorrect and contrary to the record, as the appellant was served with the summons sometimes between 25-1-2002 and 11-2-2002 and he filed his appearance in the Tribunal on 11-2-2002 when the bank was directed to furnish the copy of the original application and the documents. The learned counsel further pointed out that on 14-3-2002 he was furnished with the copy of the Original Application and the documents by the bank and thereafter he filed his written statement on 26-4-2003 denying specifically the execution of the guarantee and asserting that he had never signed the alleged guarantee and denying any liability to pay the debt of the principal borrower. It would be useful to produce the exact plea of the Appellant in his written statement :

"1. At the very outset, it is submitted that defendant no.2 has no concern whatsoever, with the instant matter, he has been arrayed as defendant alleging that he has signed the guarantee deed and stood as guarantor for the defendant no.1 for the loan advanced for the defendant no.1 only. It is most humbly submitted that this defendant never appeared before the Bank, nor did he sign the guarantee deed at any point of time, the guarantee deed which is document no.3 attached with the plaint does not bear signature of this defendant. In view of this fact, when this defendant never signed the guarantee deed nor he showed his willingness to stand as a guarantor and defendant no.1, this defendant cannot be made liable under the said guarantee deed or any other deed moreover, his name be deleted from the array of defendant. [The specimen signature of the defendant no.2 is attached herewith at Anxs.I, II & III]."

5. It appears that the delay in filing the application for appointment of hand writing expert had weighed with the learned Single Judge to reject the petition in liminae. It appears that he was given to understand that the matter was kept for final hearing and that to delay the proceedings the appellant had on the last date at the last moment filed such application for appointment of hand writing expert. We find merit in the submission of the learned counsel for the appellant. It appears that the facts disclosed to the learned Single Judge were not correct as a result of which a grave error of miscarriage of justice has taken place. It appears from the record that the appellant was served with the summons from the Tribunal on 11-2-2002 and not in the year 2000, as urged before the learned Single Judge. It also appears from the record and particularly from the Roznama maintained by the Tribunal that as late as on 8-1-2002 the appellant was not served and summons of service on defendants 3, 4 and 6 were returned unserved. They were therefore called out on 8-1-2002 and were proceeded ex parte. It further appears that the defendant no.5 in the application had filed his Vakalatnama and prayed for permission to file his written statement. The Roznama further indicates that on 15-1-2002 the learned Advocate for the bank filed pursis stating that summons was served on defendant no.2 but acknowledgement was not received. It further appears that the matter was posted for awaiting acknowledgement of the receipt of summons on the appellant and for written statement of defendant no.5. The matter was further adjourned on the same ground on 25-1-2002 and thereafter it was adjourned to 11-2-2002. On 11-2-2002 Ms. Manjarkhede, the learned advocate, filed Vakalatnama on behalf of the appellant. On that date she was furnished with the copies of the proceedings. On that date itself, the matter proceeded ex parte against defendant no.5 who did not file his written statement. On 01-03-2002 the learned advocate for defendant no.5 filed an application praying for setting aside the order to proceed ex parte against her client. The hearing of the application was adjourned to 14-3-2002. On 26-4-2002 the appellant filed his written statement. On 7-5-2002 the learned Tribunal curiously enough rejected the application seeking permission by the defendant no.5 to file a written statement, though the entire application was pending final hearing. No prejudice of any nature would have been caused to any one if the learned Tribunal had taken the written statement on file on behalf of the defendant no.5. The original application is still pending before the Tribunal. It appears that the Tribunal has acted in an unwarranted haste in refusing permission to defendant no.5 to file his written statement. Since the defendant no.5 is not before us, we say nothing more. It would be open to him to again apply to the Tribunal seeking permission to file his written statement and we hope that the Tribunal shall take on record the written statement of the defendant no.5 when the matter is still pending final disposal.

6. Thereafter a number of adjournments were given on one or the other ground. The Tribunal finally dismissed the applications filed by the appellant for sending the alleged signature on the guarantee to a hand writing expert and to delete his name from the original application as he was not a guarantor for the principal borrower, as alleged by the bank. The Tribunal has rejected the application by observing in paragraphs 6, 7 and 8 of the order, which read as under :

"6. The Debts Recovery Tribunal is a Tribunal and not a Court, the proceedings before it are initiated on an application and not upon suit. The Tribunal does not pass a decree. It only issues a certificate which is liable to be executed through the Recovery Officer. Procedure contemplated under the Act is a summary procedure. The provisions of C.P.C can not be made applicable to the procedure prescribed under Recovery of Debts Due to Banks and Financial Institutions Act. The Tribunals are guided u/s.22 of the Recovery of Debts Due to Banks and Financial Institutions Act by the principles of natural justice. The Tribunal has the power to regulate its own procedure.

7. It is pertinent to note that when the notice was issued to the defendants including defendant no.2 by the applicant bank on 21/2/2000 to demanding payment of the outstanding dues due to the applicant bank. The defendant no.2 did not care to give reply alleging that he never stood as guarantor and that he did not sign in the deed of guarantee etc. If a party by his conduct relinguishes the objections which he should have raised and it is in the manner as if no irregularity, he shall be bound by the rule of waiver.

8. Apart from that, there is no necessity for the bank officers to forge signatures of 2nd defendant on the guarantee deed in order to fasten the liability on defendant no.2. By fabricating such documents, the bank officers are not getting any personal gain. This is only a frivolous application filed by defendant no.2 to protract the proceedings. If this sort of applications are entertained, it is not possible to dispose of the original applications within six months as per the provisions of Debts Recovery Tribunal Act."

With respect to the learned Presiding Officer of the Tribunal, we must observe that the above quoted opinion of the learned Tribunal suffers from basic misgivings and misunderstanding of law. It is no doubt true that the Tribunal does not pass a Decree but issues a Certificate which has to be executed through the Recovery Officer as a decree. Such a certificate issued by the Tribunal at the end of the hearing of the application by the creditor-bank partakes a character of a decree, though it is called a Certificate under this Act. We must also observe that the technicalities of the Code of Civil Procedure are not made applicable to the proceedings before the Tribunal, but at the same time the underlying principles of the Code of Civil procedure cannot be ignored at all by the Tribunal as the underlying philosophy of the Code of Civil Procedure is nothing but elaborate codification of the principles of natural justice. What is contemplated under the Code of Civil Procedure and also by the principles of natural justice is a fair, reasonable and adequate opportunity to be afforded to the parties to put up their respective contentions before the Court/Tribunal. There is no doubt that the Tribunal has to regulate its own procedure, but the Tribunal must remember that while regulating such procedure, it does not violate the basic principles of natural justice of granting reasonable and adequate opportunity to the parties. Besides, even the Tribunal is vested with certain powers of a Civil Court under S.22 of the Act. In the present case, the Tribunal has violated the basic principles of natural justice by denying a fair opportunity of hearing to the appellant. It does not appear from the record or the Roznama that the appellant was trying to prolong the matter. At the earliest opportunity available to him after service of summons, he filed his written statement and in the very first paragraph of his written statement, which we have reproduced hereinabove, denied his liability in the matter and denied the fact that he was a guarantor and had signed the bank guarantee in favour of the principal borrower. In our opinion, the learned Member of the Tribunal committed a grave error of dismissing the application filed by the appellant for appointing a hand writing expert to compare the signatures of the appellant as specified by him and the alleged signature relied on by the bank on the alleged guarantee. The appellant has been denied fair opportunity of hearing by the Tribunal. It appears that the Tribunal has held against the appellant only because he did not send a reply to the notice sent by the advocate of the bank. Assuming that he received the notice and failed to reply the same, can we rush to a conclusion that failure on the part of the party to reply a notice would automatically result into a decree? We answer certainly no. Failure to reply the notice certainly does not amount to admission of the claim or waiver of any objection, as erroneously held by the Tribunal. It would also depend on the fact of receipt of such notice by the addressee. Reply or no reply to a notice would be only one of the factors to be considered at the time of decision of the matter. Merely because the appellant did not send reply to the notice served by the bank, we cannot rush to a conclusion that the appellant was liable to pay to the bank on behalf of the principal borrower such a huge amount of the debt. The Tribunal has not at all considered the pleadings of the appellant in the written statement. He has categorically denied the allegation that he had signed any guarantee on behalf of the principal borrower. The only factor which has gone against the appellant is the allegation made by the bank that the appellant did not give reply to the notice sent through its advocate. Unfortunately, the Appellate Tribunal has not applied its mind to the pleadings of the appellant and has factually committed a mistake to assume that the appellant was served in the year 2000 with the summons from the Tribunal. There has been a confusion in respect of the service of a notice by the bank in the year 2000 and service of summons from the Tribunal in February, 2002. The learned Member of the Tribunal as well as the learned Chairperson of the Appellate Tribunal were given a wrong and baseless impression that the appellant was trying to prolong or protract the proceedings, while from the record we are satisfied that that was not the case. The Appellate Tribunal has also committed a clear error of fact by observing that even in the written statement filed by the appellant there was no clear and categoric averment to the effect that he had not signed the bank guarantee. It appears that the attention of the learned Appellate Tribunal was not drawn to the clear averments made by the appellant in the very first paragraph of his written statement which we have specifically quoted hereinabove. The learned Chairperson of the Appellate Tribunal has formed a mistaken impression that the appellant had applied for appointment of hand writing expert when the matter was at the crucial stage of final hearing. From the Roznama, which we have set out, it is clear that it was not the crucial stage of final hearing. The appellant had filed his written statement and had denied that he had ever signed the guarantee, as alleged by the bank. The question is not whether the Presiding Officer can compare the signatures and come to his own conclusion and that he will not be bound by the hand writing expert's opinion. The question which we are required to answer is whether the appellant had at the earliest opportunity denied the liability which was tried to be foisted on him through the guarantee alleging that he had signed as the guarantor for the principal borrower. The appellant has very categorically denied this fact and was entitled to prove that he had not signed the said guarantee. He has come out with a very specific case that the signature which appears on the guarantee as relied on by the bank was not his signature. He has on his own produced three specimen signatures for comparison by the hand writing expert. With respect to the learned Chairperson, we do not think that the entire exercise was unnecessary in view of the conduct of the appellant. We do not find anything wrong in the conduct of the appellant. The castigation of the appellant in such manner is unfair to him and at the same time is not supported by any material on record. We find that the appellant had at the first opportunity filed his written statement denying his liability which has been totally ignored by the learned Presiding Officer of the Tribunal as also by the learned Chairperson of the Appellate Tribunal. According to us, both have committed grave error of facts and also law and have caused through their order grave injustice and miscarriage of justice to the appellant. Finally, it would perhaps be proved beyond any reasonable doubt that the signature on the bank guarantee was not that of the appellant and that he would perhaps be discharged honourably from the debt as a guarantor, as alleged by the bank. The appellant has every right to plead and prove that he was not a party to the transaction in which he was being implicated. We must also bear in mind that the principal borrower and others are deliberately remaining away from the Tribunal for the reasons best known to them and the whole liability is being foisted on the Appellant. Unfortunately, even the learned Single Judge of our Court has also lost sight of the crucial facts on record and erroneously concluded that the Appellant was served with summons of the Tribunal in the year 2000 and that he filed the applications under questions in the year 2002 when the matter was kept for final arguments. He also mistook the notice of the Bank's Advocate sent in the year 2000 as the summons of the Tribunal which undisputedly were received by the Appellant on or about 11-2-2002 and he was given the copies of the O. A. and the documents in the Tribunal on 14-3-2002. There is nothing on record to show that the Bank had adduced any evidence to prove the facts of signature of the Appellant on the guarantee by examining the Officer before whom the Appellant had allegedly signed. As the Appellant had unequivocally and categorically denied the alleged signature on the guarantee, the guarantee could not be said to have been proved to be accepted as valid and conclusive evidence against the appellant. The Bank has to examine the witness and offer him for cross-examination to the Appellant. We, therefore, fail to understand how in the absence of crucial and material evidence the Tribunals could decide the liability fastened on the Appellant. In the face of denial of the signature of the Appellant on the guarantee and in the absence of any evidence adduced by the Bank, the O. A. will have to be dismissed against the Appellant. There is nothing on record to conclude that the Bank did not want to adduce any evidence and that the matter was therefore for final arguments as observed by the Tribunals below and the learned Single Judge. The matter was only at the interlocutory stage and, therefore, there was no question of it being at the stage of final arguments. Summary proceedings do not overthrow the board the principles of natural justice and hearing in accordance with law. It does not mean that the defence of the party should be shut out and that he should be totally gagged. From the facts which have come on surface of the record, we are more than satisfied that the Appellant did not get fair deal in his matter on account of clear error of facts and loss of sight of the plea of the Appellant. We have also failed to appreciate the logic of the learned Presiding Officer that there was no necessity for the Bank Officers to forge signature of the Appellant on the guarantee and that they are not getting any personal gain. There are a host of reasons which get clear from evidence to unearth the motive and truth. The Tribunal was not justified in rejecting the Application of the Appellant as frivolous when that was the lifeline of his defence. There is no presumption in law that the Bank documents and the Bank Officers are always truthful and the citizens or the borrowers are always false or liers. The Tribunals must change such presumptive approach in favour of the Banks and the Financial Institutions which are also manned by the frail human beings. There is nothing sacrosanct about them and their documents which are subject to the Law of Evidence.

7. Today when the Appeal was called out, the learned counsel for the respondent no.3/bank has fairly made a statement that the bank will not object to the reference being made to a hand writing expert by the Tribunal and that they will give consent to the alleged signature of the appellant on the guarantee to be referred to the hand writing expert. In view of this fair stand taken by the respondent/bank, nothing survives in the present matter, though however, we have decided the Appeal on its merits and not on the concessions made by the learned counsel for the Bank under instructions.

8. The Tribunal shall refer the alleged signature on the guarantee on which the respondent/bank is relying to be the signature of the appellant to any hand writing expert. The appellant shall also produce his original signatures on his passport, driving licence and his bank opening form, which he has produced before the Tribunal with his written statement. These specimen signatures would be for the period prior to the date of the guarantee-deed. It is needless to mention that it will be for the respondent/bank to prove the signature of the appellant and in rebuttal the appellant would be entitled to rely on the opinion of the hand writing expert in addition to other evidence available to substantiate his defence. The impugned orders passed by the Presiding Officer of the Tribunal and also by the learned Chairperson of the Appellate Tribunal and the order passed by the learned Single Judge are quashed and set aside and the Letters Patent Appeal stands allowed. In the circumstances, no order as to costs.

Letters Patent Appeal allowed.