Introduction

The case of Ajay Pal Singh Kandari v. Central Bank of India was adjudicated by the Debts Recovery Tribunal (DRT) in Dehradun on August 10, 2022. The primary issue centered around the legitimacy and procedural correctness of securitization applications filed by the appellant Ajay Pal Singh Kandari and his associates via a Special Power of Attorney (SPA). The application aimed to challenge the Central Bank of India's recovery proceedings and the subsequent securitization actions. However, the Tribunal dismissed the applications based on several procedural lapses and the improper use of SPA.

Summary of the Judgment

The Debts Recovery Tribunal thoroughly examined multiple securitization applications filed by Ajay Pal Singh Kandari and other applicants through Special Power of Attorney Sh. Sanjeev Lal. The Tribunal found that the applicants failed to appear personally before the Tribunal, did not seek proper authorization for their SPA, and attempted to misuse the SPA to represent themselves unlawfully. Additionally, allegations of fraud and procedural irregularities were evident in the applications. Consequently, the Tribunal dismissed all securitization applications as not maintainable and ordered that any pending interim applications also be dismissed.

Analysis

Precedents Cited

The Tribunal referenced several critical judgments to substantiate its decision:

• Hirachand Amichand Gujar Vs. NemChand (AIR 1923 Bombay 403): The Bombay High Court held that the right to claim damages cannot be transferred under Section 6(e) of the Transfer of Property Act, as it constitutes a mere right to sue.
• Gangaraju Vs. Gopala (1957 AP 215): The Andhra Pradesh High Court reaffirmed that a bare right of action is non-assignable.
• Surender Raj Jaiswal & Ors Vs. Vijaya Jaiswal (AIR 2003 AP 317): Emphasized that an SPA cannot be used to grant unauthorized representatives the right to litigate.
• K. Umeshwar Vs Electronics Corporation of India: The court refused permission to a general SPA holder to represent a party, highlighting the necessity for a lawful representative.
• Hari Shankar Rastogi Vs. Girdhari Sharma & Anr. (1978 SC 1019): The Supreme Court held that a private individual cannot represent another in court without being an advocate or having explicit court permission.
• Agri Marketing Company Sarl Vs. Imperial Export Ltd. (2002): The Madras High Court reinforced that mere assignments of rights do not grant the assignee the authority to participate in legal proceedings.
• Dalip Singh Vs. State of UP & Ors. (Civil Appeal No.52/2002): Highlighted the ethical obligations of litigants to uphold truth and integrity in court proceedings.

Legal Reasoning

The Tribunal’s decision was anchored on the principle that a mere right to sue cannot be transferred or assigned, as stipulated under Section 6(e) of the Transfer of Property Act, 1882. This provision is in place to prevent the commercialization of litigation and ensure that only those with a legitimate interest in the matter can represent parties in court.

In this case, the applicants attempted to use an SPA without obtaining proper authorization to represent themselves. The SPA was misused to present multiple securitization applications without the principal applicant’s personal involvement, thereby undermining the procedural sanctity of the Tribunal. Furthermore, the Tribunal noted the absence of any legitimate relationship or trust between the principal applicants and the SPA holder, Sh. Sanjeev Lal.

Additionally, the presence of fraud allegations and discrepancies in documentation further weakened the applicants’ positions, leading the Tribunal to conclude that their applications were not maintainable.

Impact

This judgment reinforces the necessity for strict adherence to procedural requirements in debt recovery and securitization proceedings. It serves as a precedent ensuring that:

• Power of Attorney must be legitimately executed and properly authorized.
• Mere SPAs cannot substitute the personal appearance or legitimate advocacy in court proceedings.
• Procedural lapses, fraudulent intentions, or misuse of legal instruments like SPA can lead to the dismissal of cases.
• Tribunals and courts will not entertain applications that lack authenticity, proper representation, or have ulterior motives like obstruction of legal proceedings.

Future litigants and their representatives must ensure complete compliance with legal formalities to avoid similar dismissals.

Complex Concepts Simplified

• Special Power of Attorney (SPA): A legal document granting one person (the attorney) the authority to act on behalf of another (the principal) in specific matters.
• Securitization Application: A legal process where creditors convert their loans into marketable securities to manage or recover debts.
• Debts Recovery Tribunal (DRT): A specialized court in India that handles cases related to the recovery of debts from individuals or businesses.
• Section 6(e) of the Transfer of Property Act, 1882: Prohibits the transfer of a mere right to sue, aiming to prevent the commodification of litigation.
• Right in Personam vs. Right in Rem: Right in personam is a personal right enforceable against a specific individual, while right in rem is enforceable against the world at large.
• Vakalatnama: A document allowing an advocate to represent a litigant in court.

Conclusion

The judgment in Ajay Pal Singh Kandari v. Central Bank of India underscores the critical importance of procedural integrity in debt recovery proceedings. By dismissing the securitization applications due to improper use of SPA and lack of legitimate representation, the Tribunal has set a clear precedent that upholds the sanctity of legal processes. This decision acts as a deterrent against attempts to misuse legal instruments for obfuscation or to impede rightful recovery actions. Moving forward, both creditors and debtors must ensure that all legal representations are transparent, authorized, and compliant with established legal norms to facilitate fair and just outcomes.