OM KANT AGGARWAL Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) Om Kant Aggarwal along with another through present petition filed by him under Articles 226/227 of the Constitution of India seeks issuance of a writ in the nature of certiorari so as to quash order dated 21-7-1995 passed by Senior Sub-Judge, Karnal, as also to quash the consequential order dated 22-1-1997 passed by Debt Recovery Tribunal, wherein the suit filed by first respondent namely Punjab National Bank had been decreed without affording any opportunity to the petitioners to lead evidence. Prayer of the petitioners is also to quash the order dated 3-11-1997 passed by respondent No. 8 wherein the application bearing No. 72 of 1997 for setting aside ex parte decree under Section 22(G) of the Recovery of Debt Due to Banks and Financial Institutions Act, 1973 has been dismissed as also to quash order dated 19-2-1998 to the extent the condition to deposit an amount of Rs. 5 lacs has been imposed upon the petitioners by the Appellate Authority i.e. 9th respondent.

(2.) The brief facts of the case leading to passing of various orders referred to above that are sought to be quashed reveal that the petitioner started business by taking franchise from M/s. Elgi Tyre and Treads Ltd. for which they were in need of funds. The funds were raised by way of term loan for the project i.e. Rs. 1,28,000.00 for the vehicle and Rs. 4 lacs for working capital. The case of the petitioners is that due to some unavoidable circumstances and the policies of the Government, it was not possible to earn profits. A memorandum of undertaking came to be prepared with the consent of the first respondent and after executing the Memorandum of Undertaking, shares were purchased by the 6th and 7th respondents which were subsequently transferred in their names and copy of the Memorandum of Undertaking was brought to the notice of the respondent-bank that the possession has been taken over by the 6th and 7th respondents. The respondent No. 1 gave an assurance to the petitioners that their security pledged or hypothecated with the bank will be released shortly. Despite execution of Memorandum of Undertaking first respondent instead of recovering the amount due from 6th and 7th respondents filed suit for recovery to the tune of Rs. 15,27,065.00 in the Court of Civil Judge, Karnal on 21-1-1993 against the petitioners. It is further the case of the petitioners that the suit aforesaid came up for consideration before the Civil Judge, Karnal on 21-1-1993 and while issuing notice to the petitioners, the Civil Judge was pleased to restrain the defendants in the suit from alienating the mortgaged property and other machinery of the industry in any manner till further orders. Respondents Nos. 6 and 7 were appointed as Directors of the Company in view of the Memorandum of Undertaking, sold the Generator set in July, 1994 by violating the orders passed by the Civil Court and this fact was brought to the notice of the learned Civil Judge by the petitioners by filing an application under Section 151 of the Code of Civil Procedure. The petitioners were represented by Shri V. K. Kapoor, Advocate before the Civil Court, Karnal and the case of the petitioners is that the said lawyer was already on the panel of Punjab National Bank and represented the petitioners against the said bank whereas he was not supposed to represent/defend the petitioners against the Punjab National Bank. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 came into force and as per provisions of the said Act the cases involving the amount of more than Rs. 10 lacs automatically stood transferred to the Tribunal. The vires of the said Act were challenged by certain associations in various High Courts and all the petitions were transferred to the Hon'ble Supreme Court. A stay was granted by the Hon'ble Supreme Court but the same was vacated vide order dated 18-3-1996. Meanwhile Shri V. K. Kapoor, Advocate filed written statement in the Civil Court at Karnal. However, inasmuch as the suit was for the recovery beyond Rs. 10 lacs after coming into force the Act of 1993, the same was transferred to the Tribunal at Jaipur. It is further the case of the petitioners that their counsel who was defending them before the Civil Court at Karnal did not inform them regarding transfer of the civil suit to Jaipur Bench of the Tribunal. On 21-7-1995, the Civil Court due to non-appearance of the counsel for the petitioners proceeded against ex parte and fixed the case for evidence of the bank and for consideration of the contempt petition. Counsel for the petitioners did not appear and colluded with the respondent-bank being their standing counsel. Meanwhile the constitutionality of the Act was upheld by the Hon'ble Supreme Court and all the matters pertaining to recovery of suit beyond Rs. 10 lacs were transferred to the concerned Bench of the Tribunal and the present suit was transferred to the Jaipur Bench in November, 1996 despite the fact that the stay was vacated on 18-3-1996. It is further the case of the petitioners that the Tribunal never gave notice of the transfer of the suit to them nor their counsel informed them. Instead of issuing notice as provided under Rule 13 as also Section 19(4) it proceeded ex parte against the petitioners. On 17-12-1996, the Tribunal received the suit and decreed the same against the petitioners on 22-1-1997. The petitioners filed an application bearing No. 72 of 1997 for setting aside ex parte decree. The application came up for hearing before the Tribunal but the same was dismissed on 3-11-1997. The petitioners then challenged the order passed by the 8th respondent by filing C.W.P. No. 1863 of 1997 which was later on withdrawn in order to avail remedy under the Act. On 19-2-1998 the petitioners filed statutory appeal as provided under the Act before the Appellate Tribunal, Mumbai and the 9th respondent entertaining the appeal imposed condition to deposit Rs. 5 lacs. Against this order of the Appellate Tribunal, the petitioners filed Civil Revision under Article 227 of the Constitution of India. It is further the case of the petitioners that after hearing their counsel, the Hon'ble single Judge was pleased to grant permission to file a writ petition under Article 226 of the Constitution of India. It is in these circumstances that the present petition has been filed for the reliefs as indicated in the earlier part of the judgment.

(3.) Mr. Mohanta, Senior Advocate appearing on behalf of the petitioners vehemently contends that the Civil Court had actually no jurisdiction to pass decree inasmuch as the decree came to be passed when the Act of 1993 had already come into existence. He further contends that the order passed by the Tribunal is without jurisdiction inasmuch as it was enjoined upon the said Tribunal to issue notice under Section 31 of the Act of 1993.