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Lord Krishna Flour Mills (P) Ltd. v. State Bank Of Patiala .

Debts Recovery Appellate Tribunal

Jan 11, 2001

Judgment

Subsequent
References

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Judgment Summary — Misc. Appeal (A.K. Srivastava, Chairman)

Factual and Procedural Background

The State Bank of Patiala (respondent) filed an Original Application (O.A.) in the Debt Recovery Tribunal (DRT), Jaipur for recovery of dues arising out of a cash credit (C.C.) facility granted initially on 14.3.1995 to M/s. Lord Krishna Flour Mills (P) Ltd. (defendant No.1 / appellant) and enhanced on 30.6.1995. The C.C. facility was said to have continued until August 1999. Along with the O.A., the bank filed the statement of account for the C.C. account covering 14.3.1995 to 5.8.1999. The defendants, including the appellant, did not receive that account.

Before filing their written statements, defendant Nos.1–5 (including the appellant) filed three separate applications (dated 21.2.2000, 14.3.2000 and 3.7.2000) under Section 22(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, seeking supply of statements of account from multiple branches (Gohana, Wazir Pur Industrial Area Delhi, and Model Town Rohtak) for various periods (some dating back to October 1990). The DRT rejected these three applications by order dated 7.9.2000. Only defendant No.1 (M/s. Lord Krishna Flour Mills) filed the present Misc. Appeal in the Appellate Tribunal; other defendants did not challenge the impugned order.

Legal Issues Presented

Whether the three applications by the defendants requesting statements of account from multiple branches and across extended periods were relevant to the subject-matter of the O.A. (the C.C. account at the Gohana Branch) and therefore ought to have been allowed.
Whether filing multiple applications with substantially the same prayers in the same proceedings constitutes an abuse of process warranting dismissal.
Whether new factual grounds advanced for the first time in the appeal can be used to challenge the impugned interlocutory order of the Tribunal below.

Arguments of the Parties

Appellant's Arguments

The appellant contended that although the C.C. facility was granted at the Gohana Branch, most of its sales were in Delhi and across Haryana. Buyers in Delhi issued cheques drawn on Delhi banks and buyers in Haryana issued drafts drawn on various banks. For collection convenience and to avoid collection charges/delays, the bank had directed the appellant to open Current Accounts at Wazir Pur Industrial Area (Delhi) and Model Town (Rohtak).
Because payments (cheques/drafts) were deposited in those branch accounts and then credited to the C.C. account at Gohana, the appellant argued the statements of account from those branches were necessary for preparing a reply to the O.A. and for claiming set-off/adjustment of amounts.
The appellant claimed it had been forced by the bank to keep accounts at those branches; it also asserted limitations on withdrawals from those accounts without the bank’s permission (referring to a letter dated 3.6.1998, filed as Annexure-A).
In oral submissions, counsel reiterated that without statements from the two branches the appellant could not properly prepare its reply or prove credits/deposits that should offset the bank’s claim.

Respondent / Tribunal's Position (as recorded)

The bank's pleaded case was that the C.C. facility was given and maintained at the Gohana Branch. The relevance of account statements from the Wazir Pur (Delhi) and Model Town (Rohtak) branches to the dispute over the Gohana C.C. account was not explained in the applications.
The Tribunal recorded that the bank had already furnished the statement of account (covering 14.3.1995 to 5.8.1999) and that any challenge to it by the defendants should be made in their written replies to the bank's application under Section 19. If additional documents were needed thereafter, they could be sought from the bank.
The Tribunal considered the three applications to be repetitive (substantially the same prayers) and likely aimed at delaying the filing of a reply rather than genuinely seeking relevant documents.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal and the Appellate Bench proceeded by first addressing procedural propriety. The judgment observes that the appellant (defendant No.1) filed three separate applications with substantially identical prayers in the same proceedings, which the bench described as an unfair practice that burdens the court and amounts to an attempt to delay the proceedings. This procedural consideration weighed against the appellant.

On the substantive connection between the requested accounts and the O.A., the court noted that the bank's claim concerned a cash credit facility granted and maintained at the Gohana Branch. The three applications did not explain how the accounts at the Wazir Pur (Delhi) and Model Town (Rohtak) branches were relevant to the C.C. account at Gohana or to the bank's claim. The applications failed to link the requested historical account periods (some dating back to October 1990) to the subject-matter of the dispute.

The learned Presiding Officer had formed the view that the bank had already furnished the pertinent statement of account and that defendants should first raise their contentions in the written reply to the bank’s application under Section 19. If additional documentary materials were necessary after the reply, those could be requested from the bank. The Presiding Officer considered the primary aim of the applications to be delaying the filing of replies rather than advancing relevant factual material. The Appellate Bench agreed with that approach.

The Appellate Bench also addressed attempts by the appellant to introduce new factual grounds in the appeal (specifically, the explanation about collections in Delhi and Rohtak and the direction from the bank to open local accounts). The court refused to entertain new facts at the appeal stage for the purpose of quashing the impugned interlocutory order, holding that if such factual grounds were the basis for the original applications they should have been pleaded at that time. The impugned order could not be re-examined on the basis of new factual assertions made for the first time in the appeal.

Finally, the court reiterated that the Presiding Officer had given liberty to the appellant to establish its case in the reply and, if further documents were then required, to demand them from the bank. This procedural pathway underpinned the decision to reject the three applications at the interlocutory stage.

Holding and Implications

Holding: The Misc. Appeal is DISMISSED IN LIMINE.

Immediate consequences:

The impugned DRT order dated 7.9.2000 rejecting the three applications by defendant Nos.1–5 is upheld insofar as it relates to the appellant (defendant No.1), and the appeal against that interlocutory order is dismissed without admission for want of merit and for being based on grounds not advanced before the Tribunal below.
The appellant retains the procedural liberty afforded by the Tribunal below to first set out its case in the written reply to the bank's application and thereafter, if required, to request additional documents from the bank.

Broader implications and precedent:

The judgment warns against the practice of filing multiple substantially identical applications in the same proceedings to delay or burden the Tribunal; such conduct is disfavoured. However, the opinion explicitly states that any observations made in the judgment shall have no effect on the merits of the underlying dispute, and it does not purport to lay down any new binding legal principle beyond the handling of the interlocutory applications in this case.

Appeal dismissed in limine.

Show all summary ...

A.K Srivastava, Chairman:— This Misc. Appeal has been filed against the impugned order dated 7.9.2000 passed by DRT, Jaipur in O.A No. 505/1999 whereby apparently three applications of the appellant dated 21.2.2000, 14.3.2000, and 3.7.2000 moved respectively by defendant Nos. 1-3, defendant Nos. 1-5 and defendant Nos. 1-5 in the said O.A under Section 22(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 have been rejected.

2. This appeal has been filed by M/s. Lord Krishna Flour Mills (P) Ltd. only which is defendant No. 1 in the said O.A Rest of the defendants i.e, defendant Nos. 2-5 have not challenged the impugned order.

3. The facts of the case are that the respondent-State Bank of Patiala filed the said O.A against the aforesaid defendants for recovery of dues on the basis of C.C facilities granted to the defendant No. 1 for Rs. 20 (twenty) lacs and thereafter the same being enhanced to Rs. 30 (thirty) lacs. The C.C facility was granted on 14.3.1995 and the enhancement was made on 30.6.1995 Agreements and promising notes etc. were executed from different dates. The C.C facility appears to have continued till August, 1999. Thereafter for the alleged due amount the State Bank of Patiala filed the aforesaid O.A in the concerned Tribunal. Along with the O.A, account of the C.C facility w.e.f 14.3.1995 to 5.8.1999 was also filed in the Tribunal. There is no dispute that the said account was not received by the defendants one of whom is the appellant here.

4. Before filing written statement in the said O.A the defendant Nos. 1-5 move the aforesaid applications making the following prayers.

Application dated 21.2.2000

“The applicant Bank be directed to supply complete statement of accounts of the following branches for the period shown against each:

(i) Wazir Pur Industrial Area, Delhi—From October, 1990 to August, 1993 and from 1995 till filing of the application.

(ii) Model Town, Rohtak—From October, 1990 to August, 1993 and from 1995 till the filing of the application.

Application dated 14.3.2000

The applicant Bank be directed to supply statement of accounts:

(i) Gohana Branch for the period October, 1990 to August, 1993.

(ii) Wazir Pur Industrial Area, Delhi—From October, 1990 to August, 1993 and from 1995 till filing of the O.A

(iii) Model Town Rohtak—From October, 1990 to August, 1993 and from 1995 till filing of the O.A

Application dated 3.7.2000 (copy of which has just been given in this Appellate Tribunal today)

The applicant Bank be directed to supply the statement of accounts as under:

(a) From Oct., 1990 to 1993 of the Cash Credit Limit of the Gohana Branch.

(b) From Oct., 1990 to 15th September, 1999 of Branch Office at Wazirpur Delhi.

(d) From Oct., 1990 to 15th September, 1999 of the Current Account of the Gohana Branch Office.”

5. From the above prayers it is very clear that the appellant who is defendant No. 1 in the O.A, made three applications with almost the same prayers. This kind of practice of the litigants for making three applications for almost the same prayers before same Tribunal in same proceeding is not fair to the system. If in substance for one relief one application has been moved by a party it is atrotious on his part to flood two applications before the same Court in the same proceedings and for the same prayer and thus burden the Presiding Officer to deal with such applications with substantially for the same prayers.

6. I have heard Mr. R.P Vats, learned Counsel for the appellant at length. But I am sorry to say that the appellant has no case and the appeal should be dismissed in limine. The reasons are as under.

7. Admittedly, the cash credit facility in relation to which the said O.A was filed by the respondent Bank was granted to the appellant for the first time on 14.3.1995 and the same was enhanced on 30.6.1995 The case of the Bank is that the cash credit facility was given to the appellant at the respondents Bank's Gohana Branch. Therefore, it is not understandable as to how the accounts of the appellant with the respondent Bank at its other two branches Wazir Pur Industrial Area, Delhi and Model Town, Rohtak were relevant for filing written statement by the defendants. In the aforesaid three applications no where there is any mention as to how the Wazir Pur Industrial Area Branch at Delhi and Model Town Branch at Rohtak were related to the Cash Credit facility granted to the appellant. The averments made in the applications dated 21.2.2000 were that the appellant was forced to keep the accounts at the branches Wazir Pur Industrial Area, Delhi and Model Town, Rohtak of the respondent Bank previous to the present statement of account from 1995 till the filing of the application. It is further stated that the act of the respondent forcing the appellant to keep the separate accounts at its branch at Wazirpur Industrial Area, Delhi and Model Town, Rohtak was illegal, unlawful, un-constitutional, arbitrary, unvires, unilateral and vice of Article 14 of the Constitution. The averment made in the application dated 14.3.2000 is to the effect that in the application under Section 19 of the Act none of the paras disclosed that the appellant was having accounts from 18.10.1990 to August, 1993 and the appellant was forced to keep the accounts at its Branch Offices at State Bank of Patiala, Wazir Pur Industrial Area, Delhi and State Bank of India, Model Town, Rohtak apart from keeping the account at Gohana Branch. It was further stated that the Bank forced the appellant to maintain a separate account in its branches at Model Town, Rohtak and Wazir Fur Industrial Area, Delhi from 1995 till the filing of the O.A Apart from keeping the account at its Gohana Branch the averment made in the application dated 3.7.2000 were just the same as were made in the application dated-14.3.2000.

8. Thus from the contents of the aforesaid three applications nowhere it is to be found as to how the appellant's accounts with the respondent Bank with its branches at Wazir Pur Industrial Area, Delhi and Model Town, Rohtak were relevant for the subject-matter in dispute, i.e the Cash Credit Account at Gohana Branch, in the said O.A Learned Presiding Officer, after hearing the parties, formed a view that since the statement of account had already been furnished by the Bank the same could be challenged by the defendants only by filing their replies to the application under Section 19 moved by the Bank. He questions the relevance of the accounts at Wazir Pur Branch and Model Town Branch with the case in hand and that also for the period from October, 1990. The learned Presiding Officer was of the view that the defendants should first contend their case in the reply and then if, thereafter, any documents would be needed they would be demanded from the Bank. According to him the aim of the application was only to delay the filing of the reply. With this view the learned Presiding Officer rejected the applications.

9. Appeal against the impugned order was filed and Mr. R.P Vats who is now appearing for the appellants found it necessary to file an amended appeal, perhaps realising that the grounds taken in the appeal were not sufficient for its admission. He accordingly, filed a modified appeal with liberty. The ground “C” taken in the modified appeal is reproduced as follows:

“Because the credit facility was allegedly granted (though not admitted) at the Branch Office, Gohana (Haryana) of the respondent Bank. The present appellant had most of its sales in Delhi and throughout Haryana and the buyers of the present appellant in Delhi used to issue the cheques drawn on their Delhi Banks, as such it is convenient for the present appellant to collect these cheques in its account in Delhi only, because collecting these cheques in Gohana would involve the collection charges and minimum of 15 to 30 days for collecting the said cheques, as the Clearing House for both the places are different. Likewise, for its sales in Haryana, the present appellant used to get the drafts from its buyers and these drafts were drawn on various Banks, but unfortunately, in Gohana, only three Banks have their branches, i.e present respondent Bank, Oriental Bank of Commerce and the Punjab National Bank.

In these circumstances, as per the directions of the present respondent, the present appellant had to open the Current Accounts in Delhi with the Wazirpur Branch of the present respondent and in Rohtak Branch of the present respondent. These Current Accounts were opened as per the instructions and directions of the present respondent by the present appellant only for the collection of the proceeds of the cheques and drafts. The present appellant could not withdraw any amount from the said accounts in Wazirpur Branch and Rohtak Branch of the present respondent, without the prior permission from the present respondent. A copy of the letter dated 3.6.1998 to this effect, i.e granting the permission is enclosed herewith as Annexure-A.”

10. From the aforesaid ground it would appear that for the first time the appellant has, on facts, taken a case and that also in appeal that in view of the fact that the appellant had most of it sales in Delhi and throughout Haryana, the buyers in Delhi and Haryana used to respectively issue cheques and drafts payable either on Delhi or Rohtak and, therefore, as per directions of the respondent Bank the appellant had to open Current Account in Delhi with the Wazir Pur Industrial Area Branch of the respondent Bank and in the Model Town, Rohtak Branch of the respondent Bank to avoid collection charges on cheques and drafts. If the ground now being taken was the ground for moving the aforesaid three applications under Section 22 of the Act the appellant should have stated the same in those applications when he made a very strong averment in those applications that the appellant was forced by the respondent Bank to keep the accounts at Wazir Pur Industrial Area, Delhi and Model Town, Rohtak open. If in the said applications nothing was stated to connect the appellant's accounts in the respondent's Branches at Delhi and Rohtak with the Banks claim against the appellant in respect of the cash credit facility admittedly granted to the appellant then I do not find any error having been committed by the learned Presiding Officer of the Tribunal below in the impugned order. The impugned order cannot be judged on the basis of the new factual grounds in the appeal.

11. Learned Counsel for the appellant by his oral submission tried to persuade this Appellate Tribunal to admit the appeal saying that the appellant was depositing cheques and drafts at the respondent's Bank's branches at Wazir Pur Industrial Area, Delhi and Model Town, Rohtak and the same were being credited to the aforesaid cash credit account at respondent Bank's branch at Gohana and the respondent Bank should give credit to those cheques and drafts. He contended that unless the appellant had the accounts of the aforesaid two branches it would not be in position to file their reply to the O.A I am sorry that in the facts and circumstances of the case in hand it would not be possible, to agree with him.

12. First of all in this appeal I am not inclined to entertain new facts to quash the impugned order. Secondly the appellant should know it well as to how many cheques or drafts had been deposited in the aforesaid two branches and it can after checking the account submitted by the respondent Bank take a case in its reply for adjusting those amounts by way of set off I am not inclined to accept the arguments of Mr. R.P Vats, that the appellant could not file its response till the respondent Bank furnished statement of accounts of the appellant with the respondent Bank's branches at Wazir Pur Industrial Area, Delhi and Model Town, Rohtak. The accounts for the period of October, 1990 to August, 1993, however, appear to be absolutely irrelevant.

13. Further it may also be taken note of that in the impugned order the learned Presiding Officer of the Tribunal, has given liberty to the appellant to first establish its case in the reply and then if it required any documents, the same could be demanded from the Bank.

14. For the reasons given above the appeal is dismissed in limine. However, it is made clear that any observation made in this judgment and order shall have no effect on the merits of the case.