M/s Frost International Ltd. Vs. Canara Bank – DRAT Allahabad Bench

I. Case Reference Case Citation : (2020) ibclaw.in 160 DRAT Case Name : M/s Frost International Ltd. Vs. Canara Bank […]

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I. Case Reference

Case Citation : (2020) ibclaw.in 160 DRAT
Case Name : M/s Frost International Ltd. Vs. Canara Bank
Appeal No. : Appeal No. R-25/2019
Judgment Date : 27-Jan-20
Court/Bench : DRAT Allahabad Bench
Act : Recovery of Debts & Bankruptcy Act 1993
Present for Appellant(s) : Shri V. D. Chauhan alongwith Ms. Gunjan Jadwani, Advocate
Present for Respondent(s) : Shri Maneesh Mehrotra, Advocate
Chairperson : Mr. Justice R. S. Kulhari

II. Full text of the judgment

JUDGMENT
Date of Decision: 27.01.2020

R. S. KULHARI, CHAIRPERSON

1. This appeal has been preferred by the appellants under section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short “the RDDBFI Act”) challenging the order dated 21.02.2019 passed by the Presiding Officer, DRT, Allahabad, whereby the application filed by the defendants for condonation of delay in filing the written statement and counter claim was dismissed and the written statement and counter claim filed by the appellants were not taken on record.

2. The relevant facts of the matter are, that the respondent-Bank granted certain credit facilities to the appellant-firm through its directors appellant Nos. 1 to 5, to which the appellant Nos. 2 to 16 stood as guarantor and created mortgage over their properties with the respondent Bank. The borrowers did not adhere to the terms of the loan agreement, hence the respondent-Bank filed an original application for recovery of Rs. 140,29,11,710.77 against the appellants/defendants before the Tribunal below.

3. It appears that for the first time, the case was listed before the Hon’ble Presiding Officer on 12.11.2018 and the notices were directed to be issued to the defendants/appellants fixing the next date as 02.01.2019 before the Registrar and thereafter on 10.01.2019 before the bench for further proceedings. On 02.01.2019, Miss Gunjan Jadwani, Advocate appeared and filed vakalatnama on behalf of the defendant Nos. 1 & 17 before the Registrar and no one appeared for the defendant No. 18. The case was listed on 10.01.2019 as earlier fixed before the bench. On 10.01.2019, no one appeared on behalf of the defendants, hence, the case was listed for 14.02.2019 for further consideration.

4. In the meantime, the appellants/defendants filed I.A. for condonation of delay along with written statement as well as counter claim on 24.01.2019, which was ordered to be put up on 14.02.2019.

5. On 13.02.2019, the appellants/defendants filed an interim application seeking stay of further proceedings in view of the order of status quo passed by the Hon’ble Supreme Court on 13.11.2018 in writ petition (Civil) No. 1316/2018.

6. On 14.02.2019, at the request of the counsel for the defendant Nos. 1 to 17, the case was adjourned to 21.02.2019 for further consideration.

7. The Tribunal below vide impugned order has dismissed the I.A. filed by the appellants/defendants and consequently, the written statement and counter claim were rejected observing that they have already lost their right to file written statement or counter claim having failed to do so within 30 days and also in the additional 15 days from the date of receipt of original summons. Being aggrieved by the said order, the present appeal has been filed by the appellants.

8. Learned counsel for the appellants submitted that one SLP was pending before the Hon’ble Supreme Court, in which the status quo order was passed, so the appellants did not file the written statement and the counter claim before the DRT. Thus the DRT ought to have considered this aspect in the application for condonation of delay. Further, the discretion for extension of time for the period of 15 days lies with the Presiding Officer, DRT, which starts from the date, when the application is filed before the Presiding Officer. Thus, the learned Presiding Officer has incorrectly exercised its discretion in not taking on record the written statement as well as the counter claim.

9. It was also contended that since the counter claim is a type of cross suit, therefore, the period for filing written statement cannot be applied for filing the counter claim. Hence, the appeal be allowed and the written statement and counter claim filed by the appellants be ordered to be taken on record.

10. On the other hand, the learned counsel for the respondent-Bank submitted that the summons/notices alongwith all the documents were duly served on the appellants on 28.11.2018, therefore, they were required to file the written statement/counter claim within 30 days from the date of service, but they have neither filed the same within the said period nor even on the first date of appearing before the Presiding Officer. Thus, the stipulated period had already been lapsed and the Presiding Officer has no discretion to extend the same, as decided by this Tribunal in Appeal Sr. No. 296/2017-M/s Crest Steel and Power Private Limited & Ors. Vs. Punjab National Bank & Ors. decided on 19.03.2018, which was affirmed by the Hon’ble Madhya Pradesh High Court in M.P. No. 2271/2018 – M/s Crest Steel and Power Private Limited Vs. Punjab National Bank, decided on 10.05.2018 and the SLP filed against the said order has also been dismissed by the Hon’ble Supreme Court on 20.07.2018, therefore, the appeal deserves dismissal.

11. I have considered the rival contentions of the learned counsels for the parties and perused the record.

12. There is no dispute on the point that the summons were issued on 17.11.2018 and the same were served on the appellants on 28.11.2018. Section 19(5)(i) of the RDDBFI Act mandates that the defendant shall file written statement or counter claim, if any, within 30 days from the date of service, which may be extended for further period not exceeding 15 days in exceptional cases and in special circumstances to be recorded in writing. The Hon’ble Madhya Pradesh High Court in M/s Crest Steel and Power Private Limited Vs. Punjab National Bank (Supra) has held that the Presiding Officer is not empowered to extend the period beyond 15 days and the SLP filed against the said judgment has also been dismissed by the Hon’ble Supreme Court, therefore, I am of the view that the discretion to extend the period for further 15 days, in continuity of 30 days, lies with the Presiding Officer in exceptional circumstances, but not beyond that in any case. I am not convinced with the argument that such period can be considered when the application for extension of time is filed by the defendant before the Presiding Officer.

13. The argument that there was stay of the Hon’ble Supreme Court is also not of any assistance to the appellants, because it has not been placed on record that the Hon’ble Supreme Court has stayed the further proceedings of the present case pending before the DRT.

14. So far as the argument that the counter claim may be filed at any point of time is also devoid of force. Section 19(5)(i) of the RDDBFI Act provides that the defendant shall present a written statement including claim for set-off or a counter claim within 30 days from service of summons. Thus, the counter claim is required to be filed within 30 days. Although, the proviso, which empowers the Presiding Officer to extend the period for further 15 days, states that “if the defendant fails to file the written statement”, then the period may be extended and here the term “counter claim” is not included. However, in Rule 12(3) of the DRT (Procedure) Rules 1993, it has been stated that “if the defendant fails to file the written statement including set-off or counter claim”, then in exceptional cases, the period of 15 days may be extended. Thus, even if, the term “counter claim” is not included in proviso to section 19(5)(i) of the RDDBFI Act, it does not make any difference and the stipulated period is applicable in both the cases for filing the written statement as well as the counter claim. Conversely, the strict interpretation of the proviso to section 19(5) of the RDDBFI Act leads to infer that here the term “counter claim” is not included, so the Presiding Officer has no discretion to extend the time for filing the counter claim even for a period of 15 days as provided for filing the written statement.

15. In view of the aforesaid, the Tribunal below has rightly dismissed the application for condonation of delay, as also rejected the written statement/counter claim filed beyond the stipulated period. As such no interference is called for in the impugned order.

16. Accordingly, the appeal is dismissed with no order as to costs.

17. A copy of this judgment be sent to the parties as well as the DRT concerned.

CHAIRPERSON

Date: 27.01.2020


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