Mr. Sahu, who appears for respondent no. 2 in the present
matter, candidly admitted that on the basis of the impugned order,
leave to cross-examine will have to be applied in practically all the
pending cases and such leave, will have to be granted as, the facts
and circumstances in each of these cases are the same. Therefore, if
the impugned order is allowed to stand, leave to cross-examine will
have to be granted, as a matter of course, in several matters
concerning the same transaction, thereby, rendering such proceedings
virtually interminable. All this, will only contribute to the very frustration
of the objective behind enactment of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 and the said Rules. The
said Act came to be enacted to facilitate expeditious resolution of
disputes concerning payment of dues to banks and financial
institutions. In order that the tribunals constituted under the said Act
are not fettered by technicalities, having regard to larger public
interest, the tribunals have been freed from shackles of procedural law
and are to be only guided by the principles of natural justice and fair
play. The tribunals constituted under the said Act are required to
bestow attention and give priority to the real controversy arising before
them out of the special legislations. Tribunals therefore, cannot permit
themselves to be derailed at the behest of parties resisting recovery,
particularly where such parties fail to take any prompt steps for the
assertion or enforcement of their alleged rights or privileges.
10] In the present case, there is no explanation whatsoever as to
why the respondents did not apply for leave to cross-examine, no
sooner, affidavit was filed for and on behalf of MSFC. The plea of
delay was rightly upheld by DRT and DRAT was obviously not right in
ignoring the same, merely on the ground that the proceedings, in any
case, had protracted for over 20 years. Besides, the DRAT has failed
to notice the impact of its order on several other cases arising out of
the very same transaction. This was certainly a very relevant
consideration, which has been totally ignored by DRAT in making the
impugned order.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2066 OF 2014
Maharashtra State Financial Corporation .. Petitioner
versus
Debts Recovery Appellate Tribunal,
Mumbai & Ors. .. Respondents
CORAM: D. H. WAGHELA, C. J. AND
M. S. SONAK, J.
Dated : 02 April 2016
Citation: 2016(4) MHLJ 458
1] By this petition under Articles 226 and 227 of the Constitution of
India, the petitioner - Maharashtra State Financial Corporation (MSFC)
challenges judgment and order dated 20 June 2014 made by the Debt
Recovery Appellate Tribunal, Mumbai (DRAT) in misc. appeal no. 241
of 2012.
2] By the impugned judgment and order, DRAT has set aside order
dated 7 August 2012 made by the Debt Recovery Tribunal (DRT)
refusing to grant leave to the respondents to cross-examine MFSC's
officer, who has filed affidavit in support of the original application
seeking to recover loan amounts and interest from the respondents,
who are the guarantors for the repayment of said loan amounts.
3] Dr. Barthakur, learned counsel for MSFC has submitted that the
impugned order made by DRAT is in violation of the Rule 12(6) of the
Debts Recovery Tribunal (Procedure) Rules, 1993 (said Rules) and if
the impugned order is allowed to stand, cross-examination shall have
to be permitted, not merely in the cases at hand, but also in several
other cases, arising out of the same transactions. Dr. Barthakur
pointed out that loans have been advanced to over 500 persons for
which, the respondents have offered themselves as guarantors. At no
stage have the respondents disputed the execution of the guaranteed
documents. On the premises that there is some scam in advance of
loans, the respondents cannot, belatedly insist upon crossexamination.
Dr. Barthakur submitted that the leave to cross-examine
was made at a highly belated stage, when in fact the final arguments
on behalf of MSFC were concluded and the matter was only posted
for final arguments on behalf of respondents. Dr. Barthakur submitted
that DRT by detailed reasoning had declined leave to respondents.
DRAT however, without assigning any cogent reasons and further,
without even adverting to the provisions contained in Rule 12(6) of the
said Rules has reversed DRT. Dr. Barthakur submitted that the
impugned order made by DRT suffers from perversity and therefore,
this Court should interfere with the same in exercise of its extra
ordinary jurisdiction.
4] Mr. Sahu, learned counsel for respondent no. 2 submitted that
this is a scam, where MSFC has advanced loans to either non existing
persons or to the same persons under different names. He submitted
that DRAT, upon perusal of some loan applications has verified this
position and only thereafter, granted leave to cross-examine. He
submitted that in case scam is established, respondents will stand
discharged as guarantors and therefore, it is in the interests of justice
that the impugned order made by DRAT, be not interfered with. He
submitted that DRAT had also fixed the time limit for purposes of
cross-examination and therefore, there was no question of delay in
the proceedings. For all these reasons, Mr. Sahu submitted that this
petition may be dismissed.
5] Learned counsel for the petitioner has stated that the
respondents in this petition have been duly served and necessary
proof of service is available in the record. He pointed out that
respondents are only interested in delaying the matter and if the
impugned order is permitted to stand, several proceedings, involving
over 500 loanees, whose loans have been guaranteed by
respondents herein, will be virtually stalled or rendered interminable.
6] In this case, MSFC has instituted several original applications
against the respondents herein, as they are admittedly, the guarantors
to the loans granted by MSFC in favour of loanees. Affidavit of one
Pratap Gaikwad, Assistant Manager (Law) was filed some time in the
year 2005, in support of original applications and the claims made
therein. There is no merit in the submission made by Mr. Sahu that
proceedings filed only against the respondents – guarantors, without
institution of any proceedings against the loanees – principal
borrowers are not maintainable. It is settled position in law that the
liability of principal borrowers and the guarantors is joint and several.
7] At the stage when the final arguments on behalf of MSFC were
concluded and the matter was posted for final arguments on behalf of
respondents – guarantors, the respondents – guarantors filed an
application seeking leave to cross-examine Mr. Gaikwad, Assistant
Manager (Law) MSFC on the basis of his affidavit filed in the year
2005. We have perused the detailed order made by DRT on 7 August
2012 and we are satisfied that DRT, upon consideration of the
provisions contained in Rule 12(6) of the said Rules had rightly denied
leave to cross-examine. DRT has rightly taken into consideration the
inordinate and unexplained delay on the part of respondents in
seeking leave to cross-examine. DRT has also rightly rejected the
respondents contention in the context of institution of proceedings only
against the guarantors and not against the principal borrowers. DRT
has also rightly appreciated the position that the entire case of MSFC
is based upon the documents of guarantee, the execution of which,
has never been disputed by respondents. DRT, by adverting to
relevant and cogent parameters had rightly dismissed the respondents
application seeking leave to cross-examine at such a belated stage.
8] We are satisfied that DRAT has exceeded its jurisdiction or in
any case, exercised discretion in a perverse manner, in reversing the
well reasoned order made by DRT in this matter. DRAT has virtually
brushed aside the issue of unexplained and inordinate delay, by
observing that since the matter has protracted for 20 long years, there
is no necessity of even directing DRT to go into the allegations. After
these observations, DRT has itself, proceeded to grant leave to crossexamine,
without assigning any cogent reasons and without even
adverting to the provisions contained in Rule 12(6) of the said Rules,
which provide that proceedings before DRT, in the normal course,
must proceed only on the basis of affidavits and documents. No
doubt, discretion is vested in DRT to permit cross-examination, if, the
conditions specified in the Rule are duly fulfilled. However, this is by
way of an exception and not as a matter of rule or routine. DRAT,
while failing to even advert to the provisions contained in Rule 12(6) of
the said Rules as also some judicial pronouncements interpreting the
same, has exercised discretion perversely. Relevant considerations
have been ignored and irrelevant considerations appear to have been
taken into account. MSFC, has accordingly, made out a case
warranting interference with the impugned order.
9] Mr. Sahu, who appears for respondent no. 2 in the present
matter, candidly admitted that on the basis of the impugned order,
leave to cross-examine will have to be applied in practically all the
pending cases and such leave, will have to be granted as, the facts
and circumstances in each of these cases are the same. Therefore, if
the impugned order is allowed to stand, leave to cross-examine will
have to be granted, as a matter of course, in several matters
concerning the same transaction, thereby, rendering such proceedings
virtually interminable. All this, will only contribute to the very frustration
of the objective behind enactment of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 and the said Rules. The
said Act came to be enacted to facilitate expeditious resolution of
disputes concerning payment of dues to banks and financial
institutions. In order that the tribunals constituted under the said Act
are not fettered by technicalities, having regard to larger public
interest, the tribunals have been freed from shackles of procedural law
and are to be only guided by the principles of natural justice and fair
play. The tribunals constituted under the said Act are required to
bestow attention and give priority to the real controversy arising before
them out of the special legislations. Tribunals therefore, cannot permit
themselves to be derailed at the behest of parties resisting recovery,
particularly where such parties fail to take any prompt steps for the
assertion or enforcement of their alleged rights or privileges.
10] In the present case, there is no explanation whatsoever as to
why the respondents did not apply for leave to cross-examine, no
sooner, affidavit was filed for and on behalf of MSFC. The plea of
delay was rightly upheld by DRT and DRAT was obviously not right in
ignoring the same, merely on the ground that the proceedings, in any
case, had protracted for over 20 years. Besides, the DRAT has failed
to notice the impact of its order on several other cases arising out of
the very same transaction. This was certainly a very relevant
consideration, which has been totally ignored by DRAT in making the
impugned order.
11] Mr. Sahu, learned counsel for respondent no. 2 made it clear
that the respondents were not disputing the execution of guarantee
documents. If this be so, there is no question of entertaining any
vague pleas of scam or otherwise at the behest of such respondents.
In any case, respondents had their own opportunity for producing their
own documents, which they have failed to do. The loan applications,
which DRAT has referred to, are really, not documents produced by
MSFC and therefore, there is no question of grant of any leave to
cross-examine, on the basis of such documents. The respondents
contention that original applications should fail because MSFC has not
proceeded against the principal borrowers, is quite misconceived and
was rightly rejected by DRT. In the matters of this nature, documents,
particularly the execution of which, is admitted, are of crucial
importance. Respondents, having not denied the execution of the
guaranteed documents, could not, at a belated stage, have insisted
upon leave to cross-examine.
12] Rule 12(6) of the said Rules, reads thus :
“(6) The Tribunal may at any time for sufficient reason order
that any particular fact or facts shall be proved by affidavit, or
that the affidavit of any witness shall be read at the hearing, on
such conditions as the Tribunal thinks reasonable:
Provided that after filing of the affidavits by the respective
parties where it appears to the Tribunal that either the applicant
or the defendant desires the production of a witness for crossexamination
and that such witness can be produced and it is
necessary to do so, the Tribunal shall for sufficient reasons to be
recorded, order the witness to be present for cross-examination,
and in the event of the witness not appearing for crossexamination,
then, the affidavit shall not be taken into evidence
and further that no oral evidence other than that given in this
proviso will be permitted.”
13] In Union of India and Anr. vs. Delhi High Court Bar
Association and Ors. (2002) 4 SCC 275, the Hon'ble Supreme Court
at paragraphs 22 and 23 has observed thus :
“22. At the outset, we find that the Rule 12 is not happily
worded. The reason for establishing banking tribunals being to
expedite the disposal of the claims by the banks, the
Parliament thought it proper only to require the principles of
natural justice to be the guiding factor for the Tribunals in
deciding the applications, as is evident from Section 22 of the
Act. While the Tribunal has, no doubt, been given the power of
summoning and enforcing the attendance of any witness and
examining him on oath, but the Act does not contain any
provision which makes it mandatory for the witness to be
examined, if such a witness could be produced. Rule 12(6) has
to be read harmoniously with the other provisions of the Act
and the Rules. As we have already noticed, Rule 12 (7) gives
the Tribunal the power to act upon the affidavit of the applicant
where the defendant denies his liability to pay the claims. Rule
12(6), if paraphrased, would read as follows:
1. The Tribunal may at any time for sufficient reason order that
any particular fact or facts may be proved by affidavit.. on such
conditions as the Tribunal thinks reasonable;
2. The Tribunal may, at any time for sufficient reason order...that
the affidavit of any witness may be read at the hearing, on such
conditions as the Tribunal thinks reasonable.
23. In other words, the Tribunal has the power to require any
particular fact to be proved by affidavit, or it may order that the
affidavit of any witness may be read at the hearing. While
passing such an order, it must record sufficient reasons for the
same. The proviso to Rule 12(6) would certainly apply only
where the Tribunal chooses to issue a direction, on its own, for
any particular fact to be proved by affidavit or the affidavit of a
witness being read at the hearing. The said proviso refers to the
desire of an applicant or defendant for the production of a
witness for cross-examination. In the setting in which the said
proviso occurs, it would appear to us that once the parties have
filed affidavits in support of their respective cases, it is only
thereafter that the desire for a witness to be cross-examined
can legitimately arise. It is at that time, if it appears to the
Tribunal, that such a witness can be produced and it is
necessary to do so and there is no desire to prolong the case
that it shall require the witness to be present for crossexamination
and in the event of his not appearing, then the
affidavit shall not be taken into evidence. When the High Courts
and the Supreme Court in exercise of their jurisdiction under
Article 226 and Article 32 can decide questions of fact as well
as law merely on the basis of documents and affidavits filed
before it ordinarily, there should be no reason as to why a
Tribunal, likewise, should not be able to decide the case merely
on the basis of documents and affidavits before it. It is common
knowledge that hardly any transaction with the Bank would be
oral and without proper documentation, whether in the form of
letters or formal agreements. In such an event the bona fide
need for the oral examination of a witness should rarely arise.
There has to be a very good reason to hold that affidavits, in
such a case, would not be sufficient.”
14] The Hon'ble Supreme Court has clearly held that it is
common knowledge that hardly any transaction with the bank
would be oral and without proper documentation, whether in the
form of letters or formal agreements. In such an event the bona
fide need for the oral examination of a witness should rarely
arise. There has to be a very good reason to hold that
affidavits, in such a case, would not be sufficient.
15] In Sonu Textiles, Mumbai and Ors. vs. Punjab National Bank
2008(3) Bom. C.R. 889, upon which, reliance was placed by Mr. Sahu
for respondent no. 2 also lays down that there is no indefeasible right
vested in the defendant to ask for cross-examination of the witneses
whose affidavits may have been filed in the proceedings. Further, it is
held that it will be difficult to provide for any strait jacket formula
universally applicable in the matter of grant or refusal of leave to crossexamine
and it would primarily depend upon the facts and
circumstances of each case. Further, even the said case lays down
that leave to cross-examine can be granted only if conditions
precedent provided in Rule 12(6) of the said Rules are complied with.
In the present case, DRAT has not even adverted to the provisions
contained in Rule 12(6) of the said Rules, much less, satisfied itself as
to whether the conditions precedent therein had indeed been fulfilled.
16] In Standard Chartered Bank vs. Dharminder Bhohi and Ors.
2013(12) Scale 124, the Hon'ble Supreme Court has held that
intendment of the said Act is for speedy recovery of dues to the banks.
In this backdrop the Tribunals are expected to act in quite promptitude
regard being had to the nature of the lis and to see to it that an
ingenious litigant does not take recourse to dilatory tactics. The
principal purpose is to see that the recovery of dues which is essential
function of any banking institution does not get halted because of
procrastinated delineation by the tribunal. It is worthy to note that the
legislature by its wisdom under section 22 of the said Act has provided
that DRT and DRAT shall not be bound by the procedure laid down by
the CPC, but shall be guided by the principles of natural justice,
subject to the rules framed. The tribunals have been conferred powers
to regulate their own procedure, so as to expedite disposal of the
applications and appeals before them. They have the character of
specialized institutions with expertise and conferred jurisdiction to
decide the lis in speedy manner so that the larger public interest, that
is, the economy of the country does not suffer.
17] For all the aforesaid reasons, we set aside the impugned order
dated 20 June 2014 and restore DRT's order dated 7 August 2012.
18] This petition is allowed in the aforesaid terms. There shall
however be no order as to costs.
19] The parties to appear before DRT on 18 April 2016 and produce
authenticated copy of this judgment and order. We request the DRT to
dispose of the proceedings before it as expeditiously as possible
considering that the proceedings have already protracted for over two
decades.
20] All concerned to act on basis of authenticated copy of this
judgment and order.
(M. S. SONAK, J.) CHIEF JUSTICE
21] Upon pronouncement of the judgment today, learned counsel for
respondent no. 2 requested for stay of the above order for a period of
eight weeks. There is no justification for granting the request and the
same is rejected.
(M. S. SONAK, J.) CHIEF JUSTICE
Print Page
matter, candidly admitted that on the basis of the impugned order,
leave to cross-examine will have to be applied in practically all the
pending cases and such leave, will have to be granted as, the facts
and circumstances in each of these cases are the same. Therefore, if
the impugned order is allowed to stand, leave to cross-examine will
have to be granted, as a matter of course, in several matters
concerning the same transaction, thereby, rendering such proceedings
virtually interminable. All this, will only contribute to the very frustration
of the objective behind enactment of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 and the said Rules. The
said Act came to be enacted to facilitate expeditious resolution of
disputes concerning payment of dues to banks and financial
institutions. In order that the tribunals constituted under the said Act
are not fettered by technicalities, having regard to larger public
interest, the tribunals have been freed from shackles of procedural law
and are to be only guided by the principles of natural justice and fair
play. The tribunals constituted under the said Act are required to
bestow attention and give priority to the real controversy arising before
them out of the special legislations. Tribunals therefore, cannot permit
themselves to be derailed at the behest of parties resisting recovery,
particularly where such parties fail to take any prompt steps for the
assertion or enforcement of their alleged rights or privileges.
10] In the present case, there is no explanation whatsoever as to
why the respondents did not apply for leave to cross-examine, no
sooner, affidavit was filed for and on behalf of MSFC. The plea of
delay was rightly upheld by DRT and DRAT was obviously not right in
ignoring the same, merely on the ground that the proceedings, in any
case, had protracted for over 20 years. Besides, the DRAT has failed
to notice the impact of its order on several other cases arising out of
the very same transaction. This was certainly a very relevant
consideration, which has been totally ignored by DRAT in making the
impugned order.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2066 OF 2014
Maharashtra State Financial Corporation .. Petitioner
versus
Debts Recovery Appellate Tribunal,
Mumbai & Ors. .. Respondents
CORAM: D. H. WAGHELA, C. J. AND
M. S. SONAK, J.
Dated : 02 April 2016
Citation: 2016(4) MHLJ 458
1] By this petition under Articles 226 and 227 of the Constitution of
India, the petitioner - Maharashtra State Financial Corporation (MSFC)
challenges judgment and order dated 20 June 2014 made by the Debt
Recovery Appellate Tribunal, Mumbai (DRAT) in misc. appeal no. 241
of 2012.
2] By the impugned judgment and order, DRAT has set aside order
dated 7 August 2012 made by the Debt Recovery Tribunal (DRT)
refusing to grant leave to the respondents to cross-examine MFSC's
officer, who has filed affidavit in support of the original application
seeking to recover loan amounts and interest from the respondents,
who are the guarantors for the repayment of said loan amounts.
3] Dr. Barthakur, learned counsel for MSFC has submitted that the
impugned order made by DRAT is in violation of the Rule 12(6) of the
Debts Recovery Tribunal (Procedure) Rules, 1993 (said Rules) and if
the impugned order is allowed to stand, cross-examination shall have
to be permitted, not merely in the cases at hand, but also in several
other cases, arising out of the same transactions. Dr. Barthakur
pointed out that loans have been advanced to over 500 persons for
which, the respondents have offered themselves as guarantors. At no
stage have the respondents disputed the execution of the guaranteed
documents. On the premises that there is some scam in advance of
loans, the respondents cannot, belatedly insist upon crossexamination.
Dr. Barthakur submitted that the leave to cross-examine
was made at a highly belated stage, when in fact the final arguments
on behalf of MSFC were concluded and the matter was only posted
for final arguments on behalf of respondents. Dr. Barthakur submitted
that DRT by detailed reasoning had declined leave to respondents.
DRAT however, without assigning any cogent reasons and further,
without even adverting to the provisions contained in Rule 12(6) of the
said Rules has reversed DRT. Dr. Barthakur submitted that the
impugned order made by DRT suffers from perversity and therefore,
this Court should interfere with the same in exercise of its extra
ordinary jurisdiction.
4] Mr. Sahu, learned counsel for respondent no. 2 submitted that
this is a scam, where MSFC has advanced loans to either non existing
persons or to the same persons under different names. He submitted
that DRAT, upon perusal of some loan applications has verified this
position and only thereafter, granted leave to cross-examine. He
submitted that in case scam is established, respondents will stand
discharged as guarantors and therefore, it is in the interests of justice
that the impugned order made by DRAT, be not interfered with. He
submitted that DRAT had also fixed the time limit for purposes of
cross-examination and therefore, there was no question of delay in
the proceedings. For all these reasons, Mr. Sahu submitted that this
petition may be dismissed.
5] Learned counsel for the petitioner has stated that the
respondents in this petition have been duly served and necessary
proof of service is available in the record. He pointed out that
respondents are only interested in delaying the matter and if the
impugned order is permitted to stand, several proceedings, involving
over 500 loanees, whose loans have been guaranteed by
respondents herein, will be virtually stalled or rendered interminable.
6] In this case, MSFC has instituted several original applications
against the respondents herein, as they are admittedly, the guarantors
to the loans granted by MSFC in favour of loanees. Affidavit of one
Pratap Gaikwad, Assistant Manager (Law) was filed some time in the
year 2005, in support of original applications and the claims made
therein. There is no merit in the submission made by Mr. Sahu that
proceedings filed only against the respondents – guarantors, without
institution of any proceedings against the loanees – principal
borrowers are not maintainable. It is settled position in law that the
liability of principal borrowers and the guarantors is joint and several.
7] At the stage when the final arguments on behalf of MSFC were
concluded and the matter was posted for final arguments on behalf of
respondents – guarantors, the respondents – guarantors filed an
application seeking leave to cross-examine Mr. Gaikwad, Assistant
Manager (Law) MSFC on the basis of his affidavit filed in the year
2005. We have perused the detailed order made by DRT on 7 August
2012 and we are satisfied that DRT, upon consideration of the
provisions contained in Rule 12(6) of the said Rules had rightly denied
leave to cross-examine. DRT has rightly taken into consideration the
inordinate and unexplained delay on the part of respondents in
seeking leave to cross-examine. DRT has also rightly rejected the
respondents contention in the context of institution of proceedings only
against the guarantors and not against the principal borrowers. DRT
has also rightly appreciated the position that the entire case of MSFC
is based upon the documents of guarantee, the execution of which,
has never been disputed by respondents. DRT, by adverting to
relevant and cogent parameters had rightly dismissed the respondents
application seeking leave to cross-examine at such a belated stage.
8] We are satisfied that DRAT has exceeded its jurisdiction or in
any case, exercised discretion in a perverse manner, in reversing the
well reasoned order made by DRT in this matter. DRAT has virtually
brushed aside the issue of unexplained and inordinate delay, by
observing that since the matter has protracted for 20 long years, there
is no necessity of even directing DRT to go into the allegations. After
these observations, DRT has itself, proceeded to grant leave to crossexamine,
without assigning any cogent reasons and without even
adverting to the provisions contained in Rule 12(6) of the said Rules,
which provide that proceedings before DRT, in the normal course,
must proceed only on the basis of affidavits and documents. No
doubt, discretion is vested in DRT to permit cross-examination, if, the
conditions specified in the Rule are duly fulfilled. However, this is by
way of an exception and not as a matter of rule or routine. DRAT,
while failing to even advert to the provisions contained in Rule 12(6) of
the said Rules as also some judicial pronouncements interpreting the
same, has exercised discretion perversely. Relevant considerations
have been ignored and irrelevant considerations appear to have been
taken into account. MSFC, has accordingly, made out a case
warranting interference with the impugned order.
9] Mr. Sahu, who appears for respondent no. 2 in the present
matter, candidly admitted that on the basis of the impugned order,
leave to cross-examine will have to be applied in practically all the
pending cases and such leave, will have to be granted as, the facts
and circumstances in each of these cases are the same. Therefore, if
the impugned order is allowed to stand, leave to cross-examine will
have to be granted, as a matter of course, in several matters
concerning the same transaction, thereby, rendering such proceedings
virtually interminable. All this, will only contribute to the very frustration
of the objective behind enactment of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 and the said Rules. The
said Act came to be enacted to facilitate expeditious resolution of
disputes concerning payment of dues to banks and financial
institutions. In order that the tribunals constituted under the said Act
are not fettered by technicalities, having regard to larger public
interest, the tribunals have been freed from shackles of procedural law
and are to be only guided by the principles of natural justice and fair
play. The tribunals constituted under the said Act are required to
bestow attention and give priority to the real controversy arising before
them out of the special legislations. Tribunals therefore, cannot permit
themselves to be derailed at the behest of parties resisting recovery,
particularly where such parties fail to take any prompt steps for the
assertion or enforcement of their alleged rights or privileges.
10] In the present case, there is no explanation whatsoever as to
why the respondents did not apply for leave to cross-examine, no
sooner, affidavit was filed for and on behalf of MSFC. The plea of
delay was rightly upheld by DRT and DRAT was obviously not right in
ignoring the same, merely on the ground that the proceedings, in any
case, had protracted for over 20 years. Besides, the DRAT has failed
to notice the impact of its order on several other cases arising out of
the very same transaction. This was certainly a very relevant
consideration, which has been totally ignored by DRAT in making the
impugned order.
11] Mr. Sahu, learned counsel for respondent no. 2 made it clear
that the respondents were not disputing the execution of guarantee
documents. If this be so, there is no question of entertaining any
vague pleas of scam or otherwise at the behest of such respondents.
In any case, respondents had their own opportunity for producing their
own documents, which they have failed to do. The loan applications,
which DRAT has referred to, are really, not documents produced by
MSFC and therefore, there is no question of grant of any leave to
cross-examine, on the basis of such documents. The respondents
contention that original applications should fail because MSFC has not
proceeded against the principal borrowers, is quite misconceived and
was rightly rejected by DRT. In the matters of this nature, documents,
particularly the execution of which, is admitted, are of crucial
importance. Respondents, having not denied the execution of the
guaranteed documents, could not, at a belated stage, have insisted
upon leave to cross-examine.
12] Rule 12(6) of the said Rules, reads thus :
“(6) The Tribunal may at any time for sufficient reason order
that any particular fact or facts shall be proved by affidavit, or
that the affidavit of any witness shall be read at the hearing, on
such conditions as the Tribunal thinks reasonable:
Provided that after filing of the affidavits by the respective
parties where it appears to the Tribunal that either the applicant
or the defendant desires the production of a witness for crossexamination
and that such witness can be produced and it is
necessary to do so, the Tribunal shall for sufficient reasons to be
recorded, order the witness to be present for cross-examination,
and in the event of the witness not appearing for crossexamination,
then, the affidavit shall not be taken into evidence
and further that no oral evidence other than that given in this
proviso will be permitted.”
13] In Union of India and Anr. vs. Delhi High Court Bar
Association and Ors. (2002) 4 SCC 275, the Hon'ble Supreme Court
at paragraphs 22 and 23 has observed thus :
“22. At the outset, we find that the Rule 12 is not happily
worded. The reason for establishing banking tribunals being to
expedite the disposal of the claims by the banks, the
Parliament thought it proper only to require the principles of
natural justice to be the guiding factor for the Tribunals in
deciding the applications, as is evident from Section 22 of the
Act. While the Tribunal has, no doubt, been given the power of
summoning and enforcing the attendance of any witness and
examining him on oath, but the Act does not contain any
provision which makes it mandatory for the witness to be
examined, if such a witness could be produced. Rule 12(6) has
to be read harmoniously with the other provisions of the Act
and the Rules. As we have already noticed, Rule 12 (7) gives
the Tribunal the power to act upon the affidavit of the applicant
where the defendant denies his liability to pay the claims. Rule
12(6), if paraphrased, would read as follows:
1. The Tribunal may at any time for sufficient reason order that
any particular fact or facts may be proved by affidavit.. on such
conditions as the Tribunal thinks reasonable;
2. The Tribunal may, at any time for sufficient reason order...that
the affidavit of any witness may be read at the hearing, on such
conditions as the Tribunal thinks reasonable.
23. In other words, the Tribunal has the power to require any
particular fact to be proved by affidavit, or it may order that the
affidavit of any witness may be read at the hearing. While
passing such an order, it must record sufficient reasons for the
same. The proviso to Rule 12(6) would certainly apply only
where the Tribunal chooses to issue a direction, on its own, for
any particular fact to be proved by affidavit or the affidavit of a
witness being read at the hearing. The said proviso refers to the
desire of an applicant or defendant for the production of a
witness for cross-examination. In the setting in which the said
proviso occurs, it would appear to us that once the parties have
filed affidavits in support of their respective cases, it is only
thereafter that the desire for a witness to be cross-examined
can legitimately arise. It is at that time, if it appears to the
Tribunal, that such a witness can be produced and it is
necessary to do so and there is no desire to prolong the case
that it shall require the witness to be present for crossexamination
and in the event of his not appearing, then the
affidavit shall not be taken into evidence. When the High Courts
and the Supreme Court in exercise of their jurisdiction under
Article 226 and Article 32 can decide questions of fact as well
as law merely on the basis of documents and affidavits filed
before it ordinarily, there should be no reason as to why a
Tribunal, likewise, should not be able to decide the case merely
on the basis of documents and affidavits before it. It is common
knowledge that hardly any transaction with the Bank would be
oral and without proper documentation, whether in the form of
letters or formal agreements. In such an event the bona fide
need for the oral examination of a witness should rarely arise.
There has to be a very good reason to hold that affidavits, in
such a case, would not be sufficient.”
14] The Hon'ble Supreme Court has clearly held that it is
common knowledge that hardly any transaction with the bank
would be oral and without proper documentation, whether in the
form of letters or formal agreements. In such an event the bona
fide need for the oral examination of a witness should rarely
arise. There has to be a very good reason to hold that
affidavits, in such a case, would not be sufficient.
15] In Sonu Textiles, Mumbai and Ors. vs. Punjab National Bank
2008(3) Bom. C.R. 889, upon which, reliance was placed by Mr. Sahu
for respondent no. 2 also lays down that there is no indefeasible right
vested in the defendant to ask for cross-examination of the witneses
whose affidavits may have been filed in the proceedings. Further, it is
held that it will be difficult to provide for any strait jacket formula
universally applicable in the matter of grant or refusal of leave to crossexamine
and it would primarily depend upon the facts and
circumstances of each case. Further, even the said case lays down
that leave to cross-examine can be granted only if conditions
precedent provided in Rule 12(6) of the said Rules are complied with.
In the present case, DRAT has not even adverted to the provisions
contained in Rule 12(6) of the said Rules, much less, satisfied itself as
to whether the conditions precedent therein had indeed been fulfilled.
16] In Standard Chartered Bank vs. Dharminder Bhohi and Ors.
2013(12) Scale 124, the Hon'ble Supreme Court has held that
intendment of the said Act is for speedy recovery of dues to the banks.
In this backdrop the Tribunals are expected to act in quite promptitude
regard being had to the nature of the lis and to see to it that an
ingenious litigant does not take recourse to dilatory tactics. The
principal purpose is to see that the recovery of dues which is essential
function of any banking institution does not get halted because of
procrastinated delineation by the tribunal. It is worthy to note that the
legislature by its wisdom under section 22 of the said Act has provided
that DRT and DRAT shall not be bound by the procedure laid down by
the CPC, but shall be guided by the principles of natural justice,
subject to the rules framed. The tribunals have been conferred powers
to regulate their own procedure, so as to expedite disposal of the
applications and appeals before them. They have the character of
specialized institutions with expertise and conferred jurisdiction to
decide the lis in speedy manner so that the larger public interest, that
is, the economy of the country does not suffer.
17] For all the aforesaid reasons, we set aside the impugned order
dated 20 June 2014 and restore DRT's order dated 7 August 2012.
18] This petition is allowed in the aforesaid terms. There shall
however be no order as to costs.
19] The parties to appear before DRT on 18 April 2016 and produce
authenticated copy of this judgment and order. We request the DRT to
dispose of the proceedings before it as expeditiously as possible
considering that the proceedings have already protracted for over two
decades.
20] All concerned to act on basis of authenticated copy of this
judgment and order.
(M. S. SONAK, J.) CHIEF JUSTICE
21] Upon pronouncement of the judgment today, learned counsel for
respondent no. 2 requested for stay of the above order for a period of
eight weeks. There is no justification for granting the request and the
same is rejected.
(M. S. SONAK, J.) CHIEF JUSTICE
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