ANDHRA BANK Vs. BHANU ENGINEERING CORPORATION

JUDGEMENT

(1.) Respondent 1 is the borrower firm of which Respondent 2 is the Managing Director. The loan was taken from the appellant Bank. The claim of the appellant was allowed by the Debts Recovery Tribunal (for short "DRT") by ex parte order dated 31.10.2000. The application for its setting aside was dismissed by the Tribunal on 3.01.2003 and the appeal was dismissed by the Debts Recovery Appellate Tribunal (for short "the Appellate Tribunal") on 10.04.2003.

(2.) The High Court, by the impugned Judgement and order dated 1.05.2003, in a petition filed under Art. 226 of the Constitution of India by the borrower firm and its Managing Director, has set aside the orders dated 3.01.2003 and 10.04.2003. The Bank is in appeal on grant of leave.

(3.) In brief, the facts are that the appellant Bank filed a suit against the borrower firm, its Managing Director and other partners in the year 1993 for recovery of more than rupees fifty-six lakhs. The written statement was filed in November 1995. The suit was transferred to DRT at Bangalore and thereafter to DRT at Hyderabad. In the written statement, only vague pleas were taken. Before DRT, on 12.10.2000, one witness was examined and certain documents were exhibited and the case was adjourned to 19.10.2000. On this date, Mr. D.K. Murthy, Advocate, appeared and filed fresh vakalatnama on behalf of the borrowers. Mr. G.V. Shivaji, Advocate, had earlier filed the vakalatnama. On request of the counsel, the case was adjourned to 27.10.2000 giving last opportunity to the borrowers. On 27.10.2000, neither the counsel nor any of the defendants appeared. The evidence was closed and the matter was posted for 31.10.2000 on which date the application of the Bank was allowed on the basis of the material on record. The order dated 31.10.2000 is said to have been received by the Managing Director of the borrower on 28.11.2000. On 3.01.2001, application for setting aside the ex parte order dated 31.10.2000 was made with a delay of thirty-two days. The said application was returned by the Registry with objections. It was resubmitted on 9.05.2002 with a delay of 472 days after removing the objections. On resubmission, the Registry pointed out that the application for setting aside the ex parte order was not accompanied by an application for condonation of delay. That application was filed on 16.07. 2002. In the intervening period between 3.01.2001 and 16.07.2002, demand notices had been served on the respondents on 28.08.2001 and 1.10.2001 and attachment order was served on 19.04.2002. The sale proclamation was issued on 5.08.2002 and publication for sale appeared in the newspaper on 8.08.2002. The application filed for condonation of delay was dismissed by DRT on 9.09. 2002 and, consequently, application for setting aside the ex parte order was also dismissed. On 18.09.2002, the property was auctioned for Rs. 2.86 crores. The respondents filed a writ petition in the High Court challenging the auction-sale. The High Court directed them to deposit rupees fifty lakhs in two instalments but the order was not complied with. Be that as it may, the Appellate Tribunal dismissed the appeal filed against the order dated 9.09. 2002. The sale was confirmed by the Recovery Officer of DRT on 20.11.2002. Respondents 1 and 2 challenged the orders of DRT and the Appellate Tribunal, whereby the application seeking condonation of delay had been dismissed, in a writ petition filed before the High Court. The High Court, by order dated 27.11.2002 passed in the said writ petition, taking a liberal view, condoned the delay and directed DRT to take up the application for setting aside the ex parte order on merit.