Misc. Appeal No. 341/2019 The appellant is one of the defendants in the respondent banks Original Application filed way back in the year 2005 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993(now called the Recovery of Debts and Bankruptcy Act,1993) for recovery public money of over two crores fifty lacs of rupees given to respondent no.3 herein, in the years 2003-2004as financial aid to run its business of garment exports, on the personal guarantees of the appellant-defendant and respondents 2 and 4 herein who are mother and son.
2. The appellant-defendant had contested the claim of the bank by filing his written statement. In due course he had adduced his evidence also. His defence inter alia was that his co-defendants, respondents 2 and 4 herein in collusion with one Mr. Harinder Dhingra, husband of respondent no. and father of respondent no.2 herein and bank officials had duped and defrauded him by obtaining his signatures on blank loan documents. Another plea taken was that the bank officials in order to help respondents-defendants had lost the security of a property in Gurugram over which it had a charge and that intentional act of losing valuable security had the effect of his(appellants) discharge as a guarantor/surety. His co-defendants respondents 2 and 4 herein, had also contested the claim of the bank and in their written statement they had alsolevelled similar allegations of forgeries of documents against the appellant-defendant. They also adduced evidence in support of their defence pleas.
3. After final arguments the learned DRT had reserved the O.A. for final order. However, the appellant instead of allowing to DRT to Misc. Appeal No. 341/2019 pronounce its judgment moved an application, being I.A.No.618/2019, invoking Order VII Rule 11 of the Code of Civil Procedure for an order of rejection of the O.A. qua him for the reason as pleaded in his written statement that the bank had allowed its security in the form of a house in Gurgaon belonging to respondent no.4 herein vanish and consequently he stood discharged in view of the provision of Section
141 of Indian Contract Act. That application was opposed by the bank on the ground that there was no property in Gurgaon mortgaged with it by respondent no.4 as was being claimed by the appellant- defendant.
4. The learned DRT rejected the application of the appellant- defendant vide impugned order dated 28.06.2019. The relevant paras of the impugned order are re-produced below:-
I. A. Nos. 618 & 619 of 2019 (filed by defendant no. 3)
4. In application being I.A. No. 618 of 2019, the applicant/defendant no. 3 has sought dismissal of the OA No. 97 of 2005 qua him submitting that he has already filed his Written Statement and evidence in the instant case contending that the officials of the applicant bank have gone grave dereliction of duties and suppressed the material facts and information from this Tribunal just to favour of defendants no. 2 & 4 and one of the example is the letter dated 20th December, 2003 written by the applicant bank showing the charge over the property i.e. Apartment No. 01A056 in Oakwood Estate DLF City, Gurgaon owned by defendant no. 4 and applicant bank did not seek attachment/restraint order in respect thereof and defendant no. 3 stands discharged from such willful negligence in discharging the security by the applicant bank and, as such, the present OA is liable to be dismissed qua him. It is further pleaded that the property bearing No. D-4A7, DLF, Phase-I, Gurgaon is liable to be sold for recovery of the alleged dues and vide order dated 22nd April, 2009 this Tribunal directed defendants no. 1, 2 & 4 to furnish security for Rs. 40 crores failing which the prayer mentioned in the application bearing IA No. 898 of 2008 shall stand allowed. However, due to non-compliance of the order dated 22nd April, 2009, the following three properties were attached. Misc. Appeal No. 341/2019
(i) Apartment No. 01A056 in Oakwood Estate, DLF City Gurgaon
(ii) Property No. D-4A/7, DLF Phase I, Gurgaon, and
(iii) Premises i.e. Plot no. 24, Sector 6, IMT, Manesar, Gurgaon.
5. The applicant/ defendant no. 3 further submits that the applicant bank did not take any step for the protection of the property i.e factory at 371, UdyogVihar, Phase II, Gurgaon and further that there is gross negligence in delibertately releasing the security i.e. Apart No.-1A056 on Oakwood Estate, DLF City, Gurgaon belonging to defendant no. 4 as admitted by the applicant bank in its reply to IA No. 898 of 2018. It is further submitted by the applicant/defendant no. 3 that the applicant bank has deliberately and intentionally not laid its hands upon the factory premises i.e. Plot No.24, Sector 6, IMT, Manesar, Gurgaon owned by defendant no. 2 and allowed the said security to wither away from the clutches of sale for recovery of its alleged dues. The value of the properties mentioned in application being IA No. 898 of 2008 was approx. Rs. 400 lacs and that of the hypothecated goods was Rs. 18 lacs which have been deliberately left over by the applicant bank. In view of the above facts and position as well as the provisions of Section 141 of the Indian Contract Act, it is submitted that the applicant/defendant no. 3 is entitled to be discharged and his name is liable to deleted from the present proceedings and further that the present OA is liable to be rejected against him in view of the provisions of Order VII Rule 11 CPC read with Order I Rule 10 and Section 151 of the Code of Civil Procedure qua him.
14. Now coming to the application bearing I.A. No. 618 and 619 of 2019 filed by defendant no. 3, this Tribunal frames the following points for consideration.
(i) whether the applicant/defendant no. 3 is entitled for rejection/dismissal of the present OA qua him?
15. Now the abovementioned points are taken for discussion. Point No. (i)
16. The ground urged for rejection/dismissal of the present OA qua the applicant/defendant no. 2 is that defendants no. 2 & 4 and one Mr. HarinderDhingra, who is husband and father of defendants no. 2 & 4 respectively, diluted the securities and failed to protect the dues of the applicant bank intentional, willfully and deliberately and, as such, the applicant/defendant no. 3 is entitled to be released from the alleged liability as a guarantor as the applicant bank failed to protect the securities to safeguard and recover its alleged dues. It is further the contention of applicant/defendant no. 3 that the original applicant bank is negligent in obtaining the appropriate orders against defendant no. 2 & 4 in respect of their properties and thereby lost securities and the property bearing No. D-4A/7, DLF, Phase I, Gurgaon is liable for sale of the alleged dues and by order dated 22nd April, 2009 defendant no. 1,2 & 4 were directed to furnish security of Rs. 4 Crores and in default the attachment of the properties mentioned Misc. Appeal No. 341/2019 in the application shall stand allowed and due to non-compliance of the said order, the applicant bank did not take any step in respect of the order dated 22nd April, 2009 and as such the efforts to recover frustrated and the bank did not deliberately lay its hands on the factory premises owned by defendant no. 2 and the alleged securities Rs. 400 lacs and that of the hypothecated goods is Rs. 18 lacs and in view of the provisions of Section 141 of the Indian Contract Act, the bank failed to take measures for recovery and as such defendant no. 3 is discharged from the liability.
17. The main OA is still pending adjudication. The order dated 22nd April, 2009 provides attachment of the properties and the attached properties can be sold only during the execution proceedings by the Recovery Officer after issuance of the final order by this Tribunal. If there is any grievance, it is for the original applicant bank to take action for expeditious disposal of the present OA and execute the final order. The proceedings have been delayed due to filing of Interlocutory Applications by one Batch of the defendants against the other and vice-versa. Since the properties are attached, therefore, the execution part will come only after the final order is passed. 3rd defendant/applicant has already put forth his defence and the same is to be adjudicated in the main OA and not by discharging him in the middle of the present OA as per wishes of the applicant/defendant no. 3. I see no bonafide in the present application bearing
I.A. No. 618 of 2019 as the same has been pressed into service to delay the disposal of the main OA. Accordingly, the same is dismissed.
5. I have considered the arguments of the counsel for the appellant, respondent no.1 bank and respondents 2 and 4.
6. Learned counsel for the appellant referred to one letter written by the bank to DLF Ltd. In the year 2003 to the effect that it was intending to take as security property in question in Gurgaon and, No Objection. May be given and its lien over that residential be also noted. Referring to that letter which the bank admitted having written learned counsel for the appellant had argued forcefully that the bank had concealed that letter in which it had admitted that the property in question in Gurgaon owned by respondent no.4 herein was charged with it for the repayment of the loan given to respondent no.3 but then Misc. Appeal No. 341/2019 having allowed that property to vanish the appellant stood discharged of his liability towards the bank as a surety.
7. I however do not find any substance in this submission of the learned counsel for the appellant and in my view the application under Order VII Rule 11 CPC moved by the appellant-was rightly rejected by the DRT.
8. In a judgment in CIVIL APPEAL NOS.2795-2796 OF 2011, K.K. Velusamy vs N. Palaanisamyrendered on 30 March, 2011 by the Honble Supreme Court it was held that no miscellaneous application can be filed once a case is reserved for judgment. In the present case, the appellant had moved the application under Order VII Rule 11 CPC after the O.A. had been reserved for pronouncement of final order and, therefore should have been rejected straightaway by the DRT as being not maintainable and should have proceeded ahead to pronounce the final judgment. The argument of learned counsel for the appellant that an application under Order VII Rule 11 CPC can be moved at any stage would have been of some substance if the application had been moved before the O.A. was reserved for final order but not thereafter.
9. I am also of the view that even otherwise the application under Order VII Rule 11 CPC was misconceived and it was rightly observed by the to have been moved only with the motive of delaying the disposal of the O.A. It is now well settled legal position that an application under Order VII Rule CPC has to proceed on the basis of averments made in the plaint only and the same are to be accepted as correct and not disputed by the defendant concerned wanting rejection of the plaint under Order VII Rule 11 CPC and defence pleas cannot be pressed into Misc. Appeal No. 341/2019 service in support of the prayer for the rejection of the plaint before considering anything else on merits of the case. Here the appellant- defendant wants to have a finding in his favour under Order VII Rule 11 CPC by accepting his plea in written statement that he stood discharged because of the bank having lost a valuable security provided by his co-surety , respondent no.4 herein. In support of this plea the defence claims to have already adduced evidence. This kind of an attempt on the part of a defendant to have the plaint rejected under Order VII Rule 11 CPC has to be thwarted being contrary to the legal position. In the present case the O.A. applicant bank did not claim that its loan repayment was secured by way of a mortgage of one residential house in Gurgaon owned by respondent no.4 herein. If the bank has concealed this fact and there was any charge of the bank over the property of respondent no.4 in Gurgaon which bank has allowed to vanish the appellant-defendant can very well establish the concealment and its legal effect upon his liability towards the respondent bank by relying upon the evidence which he claims to already adduced before the DRT in this regard. The DRT could not enter into the veracity of this defence plea under Order VII Rule 11 CPC and learned DRT has rightly observed in the impugned orderthat the appellant-defendant cannot have any verdict in the midway and he has to await the final decision to be given in the O.A. after considering the evidence adduced from both sides.
10. This appeal is accordingly dismissed but clarifying for the DRT that whenever the O.A. will be disposed of finally it will examine the worth of the pleas of the appellant-defendant as raised in the written statement including the plea of appellant-defendants discharge under Section 141 of the Contract Act and at that time various judgments Misc. Appeal No. 341/2019 cited before this Tribunal on the scope and applicability of Section 141(which are not necessary to be examined by me in this appeal for the reasons for which this appeal is liable to be rejected) will also be considered by DRT and final decision shall be taken in accordance with law totally uninfluenced by the dismissal of this appeal as the merits of the defence plea based on which the appellant-defendant has claimed his discharge by invoking Order VII Rule 11 CPC have not been gone into by this Tribunal. May 10 , 2021 (CHAIRPERSON)