H.N. Singh v. Indian Overseas Bank And Others

The appellant is one of the defendants in the Original Application filed by respondent no.1 bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993(now called as Page 2 of 11 Misc. Appeal No. 341/2019 Recovery of Debts and Bankruptcy Act, 1993) for recovery of its outstanding dues of Rs.2,61,46,022/- from its corporate borrower, respondent no.3 herein and guarantors, appellant and respondents 2 and 4 herein. The appellant-defendant is aggrieved by the rejection of his application filed in the O.A. for impleadment in the banks O.A. of one Harinder Dhingra, respondent no.8 herein, who happens to be the father of respondent no.2 Prashant Dhingra and husband of respondent-defendant no.4 Mrs. Poonam Dhingra and for a direction to him for depositing a sum of Rs.two crores fiftythree lacs. That application was registered as I.A.No.777 of 2019 by the DRT and was rejected vide order dated 28.06.2019. Though vide order dated 28.06.2019 the DRT had disposed of as many as six applications, three of which three were filed by the present appellant-defendant and two by the said Mr. Harinder Dhingra one of which was for seeking his impleadment in the banks O.A. and whose impleadment in the O.A. had been sought by the appellant-defendant also and one by respondents-defendants 2 and 4 herein.

2. In the present appeal the challenge is only to the order of DRT rejecting appellants I.A. No. 777/2019 for impleadment of Mr. Harinder Dhingra, husband of respondent no.4 and father of respondent no.2 and a direction to him to deposit as an interim measure a sum of Rs.2,53,00,000/- with interest.

3. The respondent no.1 bank had extended some financial facilities to respondent no.3 herein(corporate borrower) in the year 2003 and the appellant herein and respondents 2 and 4 herein who had represented to the bank as its directors, had give their personal Page 3 of 11 Misc. Appeal No. 341/2019 guarantees also for the repayment of the dues of the bank. The facilities extended by the bank to respondent no.3 included packing credit facility and foreign bills discounting etc.(Foreign Documentary Demand Bill Purchased(FDDBP) & Foreign Documentary Usage Bill Discounted(FDUBD). The bill discounting/purchase facility was sanctioned and respondents 5 to 7 herein were represented by the appellant and respondents 2 and 4 herein as the buyers of the garments from respondent no.3 Company and the appellant and respondents 2 and 4 had represented to the bank that these foreign buyers were of their relatives. However, when the bills discounted/purchased by the bank and presented to respondents 5 to 7 herein for payment were not cleared and even the borrower Company and the appellant, respondents 2 and 4 failed to make the payment of those bills. The bank claimed in the O.A. that a sum of Rs.2,61,46,022/- was payable by all the defendants in the O.A. jointly and severally when the O.A. was filed.

4. In the written statement filed by appellant-defendant no.3 he had claimed that the bank was seeking to recover outstanding dues on account of foreign bills which respondents 2 and 4 herein had got discounted but the amount of those bills was received by the borrower Company in its account with Punjab National Bank. He also claimed that though he had signed blank loan documents on the request of Mr. Harinder Dhingra, husband of Respondent no.4 herein and father of respondent no.2 herein who had approached him to start a joint business as the appellant was already into the business of export of garments. Accordingly, reposing faith in Mr. Harinder Dhingra he signed loaning documents which were however blan at that time and later on misused by respondents 2, 4 and Mr. Harinder Dhingra in collusion with Page 4 of 11 Misc. Appeal No. 341/2019 bank officials. He also pleaded that though at the time of taking financial faciulities from respondent bank he had been shown as one of the directors of the borrower Company(respondent no.3 herein) but later on he found that these people had not shown him as a director of the borrower Company with the Registrar of Companies and further that these people in collusion with bank officials had been availing credit facilities from the bank by forging his signatures on various documents He had also claimed that the amount of money which the bank was claiming to be recoverable from the defendants under FDDBP and FDDUBD facility had in fact been received from foreign buyers by the respondent no.3 borrower Company. In I.A.No. 777/2019, which stands rejected by the DRT and which order of rejection of that application is now under challenge in the present appeal, it was claimed by the appellant-defendant no.3 that from the account of respondent no.3 Company with Punjab National Bank, in which account the appellant was not even a signatory nor he had been shown as a director of the borrower Company, a sum of Rs.2,53,00,000/-, which was received from buyers abroad, was siphoned off by respondents 2 and 4 herein, on 09.01.2005 in collusion with bank officials and Mr. Harinder Dhingra to the account of proprietorship Firm by the name of Golden Harvest of said Mr. Harinder Dhingra who was being sought to be impleaded as a defendant in the O.A. and against whom a direction was also being sought to deposit .Rs.2,53,00,000/- with interest.

4. Respondents-defendants 2 and 4 in their written statement pleaded, inter alia, that the appellant-defendant herein was not a director of respondent no.3 company and by resorting to forgeries etc. had shown himself as a director and availed foreign bills purchase and packing credit facilities and that they had never sought any such Page 5 of 11 Misc. Appeal No. 341/2019 facilities from the bank. They further pleaded thet had only got opened a current account with the respondent bank and at that time appellant- herein was not even present nor was he ever a director. They claimed that by relying upon a forged boar resolution of the borrower Company the appellant had showed himself as a director and of respondent no.3 borrower Company and obtained packing credit and bill discounting/purchase facilities unauthorisedly and, therefore, these three respondents were not liable to pay to the bank any money in these three accounts and as far as the current account opened by them is concerned the same never was overdrawn

5. During the pendency of the proceedings before the DRT the appellant moved I.A.No.777/2019 seeking relief of impleadment of Mr. Harinder Dhingra and for a direction to him to deposit Rs.2,53,00,000/- as an interim measure which he had in collusion with his wife and son got transferred from the account of borrower Company to his personal account in the name of his Firm Golden Harvest.

6. The respondent bank does not appear to have filed any replication to the written statement of any of the contesting defendants or reply to I.A.No.777/2019.

7. Respondents 2 and 4 herein also do not appear to have filed any reply to that application no. 777/2019 filed by the appellant-defendant no.3. My Attention was not even drawn by the counsel representing the bank and respondents 1,2 and 4 herein to any replies, if at all filed by them. Page 6 of 11 Misc. Appeal No. 341/2019

8. Mr. Harinder Dhingra, however, filed his reply and in fact he had also filed an application seeking his impleadment in the O.A.

9. In his reply Mr. Harinder Dhingra claimed that appellant- defendant no.3 was seeking his impleadment in the O.A. relying upon some entry in a stolen statement of account of Punjab National Bank showing receipt of Rs.2,53,00,000/- in the account of borrower Company with Punjab National Bank and transfer of that amount to the account of M/s Golden Harvest and that way appellant was alleging illegal siphoning off of that much amount by respondents 2 and 4 in collusion with him(Harinder Dhingra) who in fact as per the case of the appellant was the person actually managing and controlling the affairs of respondent no.3 borrower Company. Therefore, in these circumstances, prima facie, it can be said to have been accepted by the bank as well as respondents-defendants 1, 2 and 4 herein, that payment of Rs. 2,53,00,000/- was in fact received by the borrower Company from its foreign buyers, respondents 5 to 7 herein, but were received not in its account with respondent no.1 bank herein and instead the amount so received was received in another account of borrower Company with another bank and then the same was transferred to the account of Mr. Harinder Dhingra in the name of his proprietorship Firm by the name of Golden Harvest. Therefore, this Firm and its sole proprietor should have been impleaded in the O.A. as the amount of Rs.2,53,00,000/- allegedly received by it from the account of borrower Company, respondent no.1, if at all finally is established to have been received by it can be recovered by the bank from this Firm and its proprietor Mr. Harinder Dhingra also as a debt. Page 7 of 11 Misc. Appeal No. 341/2019 All these facts should have been considered by the DRT, prima facie, sufficient to implead Mr. Harinder Dhingra and his Firm as defendants in the O.A. Learned DRT, however, has not examined the I.A.No. 777/2019 keeping in mind all the aforesaid facts and circumstances highlighted by me. In fact, Mr. Harinder Dhingra himself had also moved an application for his impleadment in the O.A. but his application was also dismissed. The fact that Mr. Harinder Dhingra himself also wanted to be impleaded in the O.A. should also have been considered to be prima facie sufficient to implead him and then left it to him to explain his defence in his written statement regarding transfer of Rs.2,53,00,000/- from the account of respondent no.3 to his Firms account.

10. The learned DRT has rejected the appellants application for the impleadment of Mr. Harinder Dhingra with the following observations made in paras 2.2 and 2.5 of the impugned order:- 2.2. Dealing with the application bearing I.A. No. 777 of 2019, the point for consideration therein is that whether the applicant/defendant no. 3 is entitled for direction to Mr. HarinderDhingra, husband of defendant no. 2 and father of defendant no. 4, to deposit a sum of Rs. 2.53 crores, as prayed for? 2.3. The present application has been pressed into service on the ground that as per the Statement of Account, foreign bills claimed by the bank were received by defendants no.1,2 & 4 in their account with the Punjab National Bank and defendant no.2 & 4 in diverted the amount to the account of Golden Harvest and this clearly shows that the defenses taken by defendants no. 2 & 4 are false and concocted and since the foreign bill amount was transferred from the account of defendant no. 1 to Golden Harvest in the name of Mr. Harinder Dhingra as is evident from the Statement of Account and it would be in the interest of justice if said Mr. Harinder Dhingra is directed to deposit the said amount with this Tribunal. 2.4. The present OA has been filed in the year 2005. There is no clarity from the averments made in the present application when the amount from the account of Page 8 of 11 Misc. Appeal No. 341/2019 defendant no. 1 Company was diverted to the account of Golden Harvest of Mr. Harinder Dhingra. Suppose if there is any illegal diversion of the fund, the applicant/defendant no. 3 ought to have taken the steps within reasonable time. It is not known whether the alleged claim is in time or not. At this stage, Mr. Harinder Dhingra is not a party to the present OA and since there is no application from the original applicant bank itself regarding the alleged diversion of the funds, the applicant/defendant no. 3 cannot seek direction for said Mr. Harinder Dhingra to deposit the alleged amount especially when it is not known whether the claim is within time or not. I see no bonafide in this application as well.

11. In the opinion of this tribunal the learned DRT has refused to implead Mr. Harinder Dhingra on very weak grounds. The observation that the appellant herein had not given full details as to when the money was received by the borrower Company from its foreign buyers and which reasoning was adopted by Ms. Neha Kapur, learned counsel for the contesting respondents also. She submitted that the appellant- defendant no.3 had not placed on record anything to show that the money received by the borrower Company, as was being claimed by him, was actually the money which the respondent bank was claiming to be recoverable from its borrower. This submission, however, would have been worth consideration if respondents-defendants whom she was representing had denied having received the money in question for some transaction(s) unconnected with the transactions with the respondent bank for which it had filed the O.A. Even Mr. Harinder Dhingra had simply claimed that the appellant-defendant no.3 was seeking his impleadment on the basis of some stolen statement of account. He was not claiming that no such amount had been received in the account of borrower Company and no such amount of Rs. 2,53,00,000/- was transferred to the account of his Firm by the name of Golden Harvest, as was being claimed by the appellant- defendant no.3. Page 9 of 11 Misc. Appeal No. 341/2019

12. Learned counsel for the bank had submitted that bank officials did not have any knowledge nor could they be expected to have any knowledge of the alleged fraudulent transactions. firstly of receipt of money from the foreign buyers and secondly about the borrower Company having a separate account with other bank in which it received the amount of foreign bills whose payment the bank had already made and which all the defendants had failed to pay to the bank. Counsel also submitted that such like fraudulent transactions can rarely come to light and in the present case it has come to light when one of the guarantors, appellant herein, has spilled the beans because of some friction between him and respondents 2 and 4 herein and Mr. Harinder Singh who himself was also at one time praying to the DRT to implead him the O.A. Learned counsel submitted that though in his written statement the appellant-defendant had pleaded that the amount of foreign bills discounted by the bank had been received by the borrower Company but at that time had deliberately not given full details/particulars of the payment received from foreign buyers. It was only after many years he had spilled the beans by giving necessary particulars in I.A.No.777/2019 perhaps realising that their game plan may no longer succeed and the appellant and respondents 2.4 and 8 appear to have developed some friction amongst themselves and to save his skin the appellant came out with the particulars of receipt of money from foreign buyers and just by claiming impleadment of Mr. Harinder Dhingra as his co-defendant in the O.A. he may not be in a position to gain anything because he would be equally liable for payment of the dues of the bank in the event of bank succeeding in the O.A. It was also submitted that even though the bank had not sought impleadment of Mr. Harinder Dhingra as a defendant in its O.A. for the aforesaid reasons but now in view of the aforesaid facts and Page 10 of 11 Misc. Appeal No. 341/2019 circumstances and the fact that Mr. Harinder Dhingra himself was also wanting to be impleaded by filing an application before the DRT this Tribunal may pass any appropriate orders in the matter of impleadment of Mr. Harinder Dhingra.

13. In my view, the justification for non impleadment of Mr. Harinder Singh in the O.A. given by the banks counsel appears to be plausible but it is neverr too late for impleadment of a necessary party particularly when the litigation is going on for recovery of huge amount of public money as is the case here where bank is fighting to recover crores of rupees.

14. This appeal accordingly succeeds but partly and disposed of with a direction for the impleadment of Mr. Harinder Dhingra as a defendant in the banks O.A. and his impleadment will relate back to the date of filing of the O.A. The O.A. applicant bank shall file amended memo parties before the DRT within two weeks and it will also be open to the bank to make amendments in its O.A. if it so decides, as a consequence of this Tribunal ordering impleadment of an additional defendant and thereafter Mr. Harinder Dhingra will get one months period to file his written statement, if so desired, as also to adduce evidence by way of affidavit(s) alongwith the written statement as is the requirement of law.

15. Since Mr. Harinder Dhingra has now been ordered to be impleaded formally as a defendant in the O.A. it will be open to the appellant-defendant to make prayers for other reliefs which he was Page 11 of 11 Misc. Appeal No. 341/2019 claiming in I.A.NO. 777/2029 including a direction for Mr. Harinder Dhingra to deposit Rs.2,53,00,000/- and if made the learned DRT shall deal with the same in accordance with law uninfluenced by the non- grant of those prayers by this Tribunal in the present appeal.

16. It is, however, clarified that whatever has been observed hereinabove is only on a prima facie view of the matter for the purpose of deciding the impleadment application of the appellant-defendant no.3. It will be open to Mr. Harinder Dhingra to urge before the DRT whatever his defences might be in opposition to the claim of the bank and all those pleas will be considered by the DRT uninfluenced by the observations made in this order by this Tribunal. It is also clarified that the present order will not be construed as an opinion of this Tribunal that the appellant gets absolved of all liability towards the bank if O.A. is finally allowed, just because at his request Mr. Harinder Dhingra has been impleaded as his co-defendant in the banks O.A. His defence pleas will be examined at the appropriate stage by the learned DRT in accordance with the law. May 07, 2021 (CHAIRPERSON)