J.M Malik, Chairperson:— This order shall dispose of two appeals which pertain to the same original proceedings.
2. Brief facts which are necessary for the disposal of these two appeals are these. The learned Presiding Officer, vide his order dated 28.11.1997, issued a recovery certificate in the sum of Rs. 1,07,37,312/- along with pendente lite and future interest from the date of institution of suit, i.e, 28.11.1994, initially before the Hon'ble Delhi High Court till its realization jointly and severally against defendants, namely, (1) Plaza Steel and Alloys Limited, (2) Shri Ashok Arora, (3) Shri Mohan Lal Arora, (4) Shri Hira Lal Arora, (5) Shri Bharat Bhushan Arora, (6) Shri Kishan Lal Malhotra, (7) Shri Kanwal Kishan Malhotra and (8) Shri Gulzari Lal Dhir, since deceased, who were arrayed as defendants 1 to 8 in the O.A Aggrieved by that order, three applications, one by defendant Nos. 2 to 5, one by defendant Nos. 6 and 7 and the third one by defendant No. 8, under Order 9 Rule 13, CPC read with Section 22 of the RDDBFI Act were moved before the DRT. Vide impugned orders dated 10.10.2001 and 24.1.2002 the DRT dismissed their applications. Hence, these two appeals.
3. The order dated 24.1.2002 is under challenge in the Miscellaneous Appeal No. 21/2002 filed by defendants 6 to 8 and the Miscellaneous Appeal No. 30/2002 filed by defendants 2 to 5 is against the order dated 24.1.2002
4. I have heard the Counsel for the parties and have perused the written submissions filed on behalf the appellants/defendants 6 to 8. First of all, I take up the Miscellaneous Appeal No. 121/2002. The Counsel for the appellants made the following submissions. M/s. Plaza Steel and Alloys Ltd., defendant No. 1 in the O.A was incorporated in or around 1984 by Mr. Ashok Arora, Mr. Mohan Lal Arora, Mr. Hira Lal Arora and Mr. Bharat Bhushan Arora along with other family members being its promoters. Mr. Ashok Arora was its Managing Director. They availed of certain credit facilities from Central Bank of India, respondent No. 1 herein, in or around December 1985. The accounts of the Company became irregular in or around August 1992.
5. Mr. Kishan Malhotra, Mr. Kanwal Krishan Malhotra and Mr. Gulzari Lal Dhir were inducted as directors on 15.12.1994 This fact was brought to the notice of the Central Bank of India. Central Bank of India imposed certain conditions for acceptance of new management. Paras 14 and 15 of the O.A are germane to the present controversy. The relevant portions of the said paragraphs are reproduced as follows:
“14. xxxxxxxxx
However as the defendant No. 1 failed and neglected to respond to various letters of the plaintiff and comply with the terms and conditions of the various security documents. The plaintiff through its Advocates served a notice dated 29th December, 1992 on defendant Nos. 1 to 5 pointing out the various discrepancies in the account and calling upon the defendant Nos. 1 to 5 to renew the documents within 7 days of the receipt of the notice falling which the Cash Credit Facilities would be deemed to be cancelled/revoked. Thereater the defendant Nos. 1 to 5 informed the plaintiff that the management of the company had change and that new Directors of the company were defendant Nos. 6 to 8. The defendants also requested the plaintiff to allow the operation of the account to the new management on the same terms and conditions as on which the loan was sanctioned. The plaintiff was compelled to agree to the proposal subject to the following conditions:
(a) Full review proposal along with financial report on the new promoter be submitted by 28.2.1993
(b) Personal guarantee of Mr. Ashok Arora to continue till the above process is over and limits are reviewed.
(c) Inspection of stocks is done by an independent agency or Branch Manager or a Chartered Accountant.
(d) Equitable Mortgage of Property being property No. 9, DLF Industrial Area, Najafgarh Road, New Delhi (hereinafter referred to as the property) is validly created in Bank's favour.
15. Thereafter on 7.1.1993 the defendant No. 1 executed and delivered to the plaintiff at New Delhi the following documents in respect of the cash credit facility.
(a) A fully stamped demand promissory note for Rs. 77.50 lakh together with interest at the rate of 22.25% per annum with quarterly rests dated 7.1.1993
(b) A letter dated 7th January, 1993 signed by the defendant Nos. 5 to 8 agreeing to abide by the rate of interest prevailing and changed from time-to-time as per the plaintiff's Rule and the Reserve Bank of India's directions.
(c) A declaration dated 7.1.1993 signed by the defendant Nos. 5 to 8 declaring to keep land, building, machinery, stocks outstanding and other assets of the defendant No. 1 free from encumbrances and undertaking not to create any charge or encumbrances or any of the aforesaid assets of the Company by way of pledge/mortgage, etc.
(d) An Agreement of Hypothecation dated 7.11.1993 to secure demand cash credit against goods duly stamped hypothecating/pleading thereby tangible movable property such as product, stock-in-trade and goods of the borrower situated at or stored in the premises of the defendant No. 1 at 9 DLF, Industrial Area, Najafgarh Road, New Delhi or anywhere else.”
6. The learned Counsel for the appellants vehemently argued that they never fulfilled the said conditions and consequently they were never accepted as directors of the company. He contended that the other directors continued to manage the affairs of the company Counsel argued that under these circumstances no liability can be fastened upon them. He argued that the above said appellants never honoured even a single transaction concerning the respondent Bank. The alleged credit facilities were never allowed to be used by the new management. Subsequently, the appellants were compelled to resign from the said company on 1.9.1994
7. It was also argued that the appellants were never served. They gained knowledge of the above said ex parte decree on 14.12.2001 It was contended that necessary process of service was not exhausted before resorting to the substituted service as was held in the authorities reported in AIR 1957 Andh 1 (2) (FB) : AIR 2004 All 391 : 2004 (561) All LR 583 (DB) : AIR 2003 NOC 571 : (2003) 3 Punj LR 315, Metro Polymers v. Indian Renewable Energy Development Agency Limited, IV (2004) BC 48 (DRAT/DRT) : AIR 1985 NOC 214 : (1985) 1 Kant LJ 136 (DB) : (1981) 1 Andh WR 186 : AIR 1980 Punj 315 : 1978 Pun LJ 103 and Poddars Electronics Ltd. v. Allahabad Bank, II (2002) BC 14 : 2001 (2) Bank CLR 369 (DRAT Cal.).
8. It was argued that although record Shows that Mr. Vinay Bhasin and Mr. H.L Raina appeared for all the defendants, yet those Advocates were never engaged by the appellants. Again, no Vakalatnama was also filed on the record. The appellant were never served with the notice of transfer of case from Hon'ble High Court to DRT. It was argued that service of notice of transfer was must as was held in Almania Foods v. Catholic Syrian Bank, I (2004) BC 130. The learned Counsel pointed out that the record further reveals that the process server went to the appellants' house but it was reported that he had met a servant there but the appellants did not meet him. In this context the attention of the Court was invited towards the authorities reported in AIR 1924 Calcutta 1004 (DB) : AIR 1925 Calcutta 627 to the effect that the mode of service should be adopted by delivering notice to the defendants personally or only to his duly empowered agent. Again, when the service cannot be effected, the summons should be affixed to the outer door or any other conspicuous part of the defendant's residence. It has further been argued that as per the judgments reported in AIR 1916 Cal 181 : 86 Pun LR 283 : 1980 Pat. LJR 470 : AIR 1977 Mad 358 : 90 Mad LW 484, the Service Officer will not be deemed to have exercised due and reasonable diligence unless he has made a real and substantial effort to find the defendant.
9. It was also argued that the Local Commissioners visited the premises on 12.12.1994, but these appellants had resigned from the Board of Directors of the Company on 1.9.1994 and these appellants were not aware of the fact that the Local Commissioner had visited the company premises.
10. Now, I turn to the submissions made on behalf of the appellants/defendants 2 to 5 in the suit/O.A, in Miscellaneous Appeal No. 30/2002. The learned Counsel for the appellants in this appeal argued that the appellants were never served in this case. He argued that service was addressed to Sh. Ashok Arora, S/o Sh. Harbans Lal Arora, 9-A, Punjabi Bagh, New Delhi, whereas his correct address was ‘9-A, North West Avenue, Punjabi Bagh, New Delhi’. Likewise, Mr. Hira Lai Arora was served at 9-A, Punjabi Bagh, New Delhi whereas his correct address was ‘9-A, North West Avenue, Punjabi Bagh, New Delhi’. Further more, the correct address of Mr. Bharat Bhushan Arora is ‘9-A, North West Avenue, Punjabi Bagh, New Delhi’, Pointing out that in the “Form of Guarantee for Advances and Credits Generally”, Ex. P-17, the address of these appellants has been clearly, specifically and unequivocally mentioned as ‘9-A, N.W.A Punjabi Bagh, N-. Delhi-26’, he contended that the registered A.D notices sent to them do not mention their correct addresses. The attention of the Court was also invited towards the summons issued to Mr. Ashok Arora and contended that the report made by the process-server goes to show that he went to the house but people told him that there are three or four house bearing No. 9-A, these are East Avenue, West Avenue, North Avenue and North West Avenue and since the address did not contain full particulars, therefore, could not be served. The same is the position with all other defendants who are residing in Punjabi Bagh. However, Mr. Mohan Lal Arora has given a different address in the Form as H-2, Model Town, Delhi-9. The process server went to his house where he met a servant a lady and they informed the processor-server that he is out of station.
11. The second contention raised by the Counsel for the appellants was that they never appointed Mr. Vinay Bhasin or Mr. H.L Raina as their Advocates. They did not file Vakalatnama on their behalf.
12. The Counsel for the appellants argued that non-substitution of legal representative of diseased Mr. Gulzari Lal Dhir has got no affect upon the remaining appellants. He opined that the suit/O.A does not abate.
Findings
13. Instead of touching the heart of the problem, the learned Counsel for the appellants have just skirted it. As a matter of fact, truth is known to Mr. Vinay Bhasin and Mr. H.L Raina, Advocates. At the appropriate time they were the most material witnesses in this case. Their presence in the dock would have gone a long way to bring the Court face-to-face with reality. I have perused the copies of the order-sheets recorded by the Hon'ble High Court. The order dated 16.3.1995 is reproduced here as under:
“Present:
Ms. Kumkum Sain for the Plaintiff Mr. Vinay Bhasin for sddefendant Nos. 1 and 6 to 8
S. 2635/94 and I.A 10109/94
Fresh summons in the suit and notice of the application be issued to defendant Nos. 2 to 5 for 22nd August, 1995. Till then, the interim order to continue.
Written statement and reply may be filed by defendant Nos. 1 and 6 to 8 within six weeks. Advance copies be furnished. Rejoinder and replication may be filed before the date fixed.”
14. Again, the order dated 22.8.1995 is reproduced as follows:
“Present:
Ms. Prema Gupta for Counsel for the plaintiff.
Mr. H.L Raina for defendants
S. 2635/94 and LA. 10109/94
The suit is filed by the Central Bank of India and is for the recovery of more than Rs. one crore. In view of Sections 17, 18 and 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the suit stands transferred to the Tribunal. The parties are directed to appear before the Tribunal on 28th August, 1995.”
15. The order-sheets of the learned Trial Court goes to show that the notices were sent to Mr. Vinay Bhasin and the same were received by him. It is surprising to note that Mr. Vijay Bhasin and Mr. H.L Raina were not examined as witnesses in this case. The appellants did not file their affidavits in support of their case. The filing of affidavits at that appropriate time would have gone a long way in proving the case of the appellants. At that time every fact must have been fresh in the minds of both the Advocates. They could have stated the truth at that very time. During the course of arguments I had thought of summoning them as witnesses in this Court, but I had to crop that idea because the human memory is vicissitudinary.
16. The Court cannot doubt the bona fides of above said two Advocates. In case the appellants are telling the truth, they should have taken action against Mr. Vinay Bhasin or Mr. H.L Raina, Advocates. The appellants should have made inquiries from them. The appellants should have brought this fact to the notice of the Bar Council of India. They should have sent legal notice or should have claimed compensation from the above said two Advocates. The real facts were kept under the hat. In absence of any explanation from the side of those Advocates, the truth will always remain elusive. Their explanation should have removed every scintilla of doubt about this case. In absence of their explanation to the contrary the service of the notices on the appellants stands proved beyond reasonable doubt.
17. Secondly, the Hon'ble High Court, vide its order dated 30.11.1994, appointed Mr. D.D Singh as Local Commissioner in this case. He visited the premises of M/s. Plaza Steel Alloys Ltd. situated at 9, DLF Industrial Area, Najafgarh Road, New Delhi on 6.12.1994 at 1525 hrs. along with Mr. Avtar Singh, Bank Officer, and Mr. Rahul Ray, Advocate for the plaintiff Bank. He met Mr. Sudhir, telephone operator of the company and informed Mr. Sudhir that as per the Court's order he was to prepare inventories. After taking instructions on the telephone, he allowed the preparation of inventories. Consequently, the entire Company came to know about the pendency of the case on 6.12.1994 Specially, the appellants/defendants 1 to 5 knew about the pendency of the case on 6.12.1994 Nobody can stop them from burying their heads in the sand.
18. The defendants 6 to 8 could not be found at their house when the notices were taken to them. However, through the servant and the woman whom the process-server met, these defendants must have gained knowledge about the pendency of the case.
19. By no strech of imagination it can be held that respondents 6 to 8 are not liable for the above said debt. Till their retirement they were well aware that the company had to pay the Bank's dues. The later part of the plaint clearly goes to show that the requirement of the Bank stood fulfilled by the Company and its directors. The Bank never objected afterwards, i.e., after its requirements were met.
20. The Counsel for the appellants have cited a number of authorities, but it must be borne in mind that Order 9 Rule 13, CPC has been amended subsequently. The said amendment has been discussed and explained in the latest celebrated authority reported in Sunil Poddar v. Union Bank of India, I (2008) SLT 521 : I (2008) CLT 135 (SC) : AIR 2008 S.C 1006. It must be pointed out that this case also pertains to DRT and the Hon'ble Apex Court was pleased to hold:
“Accepting the recommendations of the Law Commission, the rule was amended by the Code of Civil Procedure (Amendment) Act, 1976. Rule 13 of Order 9 with effect from February 1; 1977 now reads thus—
13. Setting aside decree ex parte against defendant. In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit:
Provided that where the decree is of such a nature it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also:
Provided further that no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of is, summons, it is satisfied that the defendant has notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim.
Explanation—Where there has been an appeal against a decree passed ex parte under this rule, and the appeal has been disposed of on any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under this rule for setting aside that ex parte decree.
“19. It is, therefore, clear that the legal position under the amended Code is not whether the defendant was actually served with the summons in accordance with the procedure laid down and in the manner prescribed in Order 5 of the Code, but whether (i) he had notice of the date of hearing of suit; and (ii) whether he had sufficient time to appear and answer the claim of the plaintiff. Once these two conditions are satisfied, an ex parte decree cannot be set aside even if it is established that there was irregularity in service of summons. If the Court is convinced that the defendant had otherwise knowledge of the proceedings and he could have appeared and answered the plaintiffs claim, he cannot put forward a ground of non service of summons for setting aside ex parte decree passed against him by invoking Rule 13 Order 9 of the Code. Since the said provision applies to Debts Recovery Tribunals and Appellate Tribunals under the Act in view of Section 22(2)(g) of the Act, both the Tribunals were right in observing that the ground raised by the appellants could not be upheld. It is not even contended by the appellants that through they had knowledge of the proceedings before the DRT, they had no sufficient time to appear and answer the claim of the plaintiff-Bank and on the ground, ex parte order deserves to be set aside.”
21. Hon'ble Punjab and Haryana High Court in case of Ajita Sharma v. Rakesh Kumar Sharma, 1999 (1) Civil Court Cases 363 (Pandh), held as under—
“If a person knows about a pending case and still ignores the said litigation, it would be wholly unfair for the person to urge that he had not been formally served.”
22. Same view was taken by the Chairperson, DRAT, Delhi in case reported in Inrays v. State Bank of India, I (2008) BC 67.
23. It is thus clear that the appellants have no approached the Court with clean hands. They had no qualms in felling untruth before this Court, for example, they could it muster courage to examine Mr. Vinay Bhasin and Mr. H.L Raina. They could not tell as to what was the reaction to me visit of the Local Commissioner. In S.P Chengalvaraya Naidu (dead) by LRs. v. Jagannath (dead) by LRs., II (1993) BC 546 : AIR 1994 S.C 853, the Hon'ble Supreme Court was pleased to hold:
“The principle of finality of litigation cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The Courts of law amendment for imparting justice between the parties. One who comes to the Court, must come with clean hands. We are constrained to say that more often than not, process of the Court is being abused. Property-grabbers, tax-evaders, Bank-loan-dodgers and other unscrupulous persons from all walks of life find the Court process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person whose case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of the litigation.”
24. Similar view was taken by Apex Court in a recent authority reported as Prestige Lights Ltd. v. State Bank Of India., VII (2007) SLT 440 : III (2007) CLT 296 (SC) : IV (2007) BC 240 (SC) : (2007) 8 SCC 449.
25. Last but not the least, the legal representatives of deceased Mr. Gulzari Lai Dhir were not brought on the record despite several opportunities given to the appellants. The defendants were held liable jointly and severally. Consequently, both the appeals abate wholly in view of the authorities reported in Natha Naik v. Padmalochan Naik, AIR 1978 Ori 193, Badni (Dead) by LRs. v. Siri Chand (Dead) by LRs., II (1999) CLT 46 (SC) : (1999) 2 SCC 448 and Sita Ram v. Fatingan, AIR 1981 Allahabad 37.
26. The whole gamut of the facts and circumstances detailed about leans on the side of the respondent Bank. The appeals are without merits and are dismissed as such with costs. Counsel's fees as per Bank's norms.
27. Copies of this order be furnished to the parties as per law and another copy, along with lower Court records, be sent to the DRT concerned.
28. Appeals dismissed.