Partly allowed

The South Indian Concerns Ltd. v. Canara Bank

DRAT24 Aug 2022MISC APPEAL/31/2018

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed an appeal seeking to cross-examine a bank officer whose affidavit contained disputed allegations of fraud and collusion, setting aside the lower order. The Tribunal dismissed the other appeals regarding document inspection and commissioner appointment, finding the appellant unaggrieved or the stage of procedure inappropriate.

What did the court decide?

Set aside the impugned order dated 19.03.2018 allowing the appellant to cross-examine the bank officer, and dismissing the other appeals.

The South Indian Concerns Ltd. versus Canara Bank — Banking and Recovery | DRAT (2022)

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MA 53/2018, MA 73/2018 & MA 31/2018

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 24^th of August, 2022

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PRESENT: Hon’ble Mr. Justice S. Ravi Kumar

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CHAIRPERSON

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MA 53/2018

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[IA 201/2013 in OA 500/2014 on the file of DRT-II, Chennai]

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MA 73/2018

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[IA 99/2014 in OA 500/2014 on the file of DRT-II, Chennai]

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and

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MA 31/2018

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[IA 794/2017 in OA 500/2014 on the file of DRT-II, Chennai]

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MA 53/2018 & MA 73/2018

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Between

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The South Indian Concerns Limited,

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Registered Office at

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Agra Building, 1^st Floor, 121, Mahatma Gandhi Road, Fort, Mumbai 400 001. Rep. by its Director and Authorised Signatory, Mr. Subodh Mody.

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Earlier Address No. 401 – Telang Road, Matunga CR, Mumbai – 400 019.

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MA 53/2018, MA 73/2018 & MA 31/2018

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……Appellant in MA 53/2018 & MA 73/2018

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And

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Canara Bank,

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Currently at ARM Branch, 5^th Floor, “ Venkatramana Centre” No.550, Anna Salai, Teynampet, Chennai – 600 018.

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Earlier Address No.171, R.K. Mutt Road, Mandavelipakkam, Chennai – 600 028.

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M/s. Sanraa Media Limited, 33/6, B. R. Complex, II Floor, C.P. Ramasamy Road, Alwarpet, Chennai – 600 018.

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Mrs. Uma Karthikeyan, 2E/G2, K.G. Green Meadows, Andal Nagar I Main Road, Adambakkam, Chennai -600 018

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Mr. Sukumar Subramanian, 1, Parthasarathy Street, M.C. Road, Old Washermenpet, Chennai.

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Mr. G. Sundaresan (Deceased)

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MA 53/2018, MA 73/2018 & MA 31/2018

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The Thane Janata Sahakari Bank Limited, Arihant Darshan, Junction of Tilak Road & Hingwala Lane, Ghatkopar (E)

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Mumbai – 400 077.

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Mrs. Usha Sundaresan, B-12, Plot Nos. 8 and 12, Road No.4, Peston Sagar, Chembur, Mumbai – 400 089.

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Mr. Siddharth Sundaresan, B-12, Plot Nos. 8 & 12, Road No.4, Peston Sagar, Chembur, Mumbai – 400 089.

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Mr. Bharat Sundaresan, B-12, Plot Nos. 8 & 12, Road No.4, Peston Sagar, Chembur, Mumbai – 400 089.

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….. Respondents in MA 53/2018 & MA 73/2018

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(R2 to R9 are given up)

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MA 31/2018

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Between

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The South Indian Concerns Limited,

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Registered Office at

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Agra Building, 1^st Floor, 121, Mahatma Gandhi Road, Fort, Mumbai 400 001. Rep. by its Director and Authorised Signatory, Mr. Subodh Mody.

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MA 53/2018, MA 73/2018 & MA 31/2018

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……Appellant

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And

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Canara Bank, ARM Branch, 5^th Floor, “ Venkatramana Centre” No.550, Anna Salai, Teynampet, Chennai – 600 018.

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M/s. Sanraa Media Limited, 33/6, B. R. Complex, II Floor, C.P. Ramasamy Road, Alwarapet, Chennai – 600 018.

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Mrs. Uma Karthikeyan, 2E/G2, K.G. Green Meadows, Andal Nagar I Main Road, Alwarapet, Chennai -600 018

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Mr. Sukumar Subramanian, 2E/G2, K.G. Green Meadows, Andal Nagar I Main Road, Alwarapet, Chennai -600 018

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The Thane Janata Sahakari Bank Limited, Arihant Darshan, Junction of Tilak Road & Hingwala Lane, Ghatkopar (East) Mumbai – 400 077.

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Mrs. Usha Sundaresan, B-12, Plot Nos. 8 and 12, Road No.4, Peston Sagar, Chembur, Mumbai – 400 089.

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MA 53/2018, MA 73/2018 & MA 31/2018

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Mr. Siddharth Sundaresan, B-12, Plot Nos. 8 & 12, Road No.4, Peston Sagar, Chembur, Mumbai – 400 089.

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Mr. Bharat Sundaresan, B-12, Plot Nos. 8 & 12, Road No.4, Peston Sagar, Chembur, Mumbai – 400 089.

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….. Respondents

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(R2 to R8 are given up)

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Counsel for Appellant : M/s. Shona G. Malvi Counsel for R1 Bank : Mr. R. Umasuthan

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COMMON ORDER

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These three Appeals are preferred by South Indian Concerns Limited, who is Defendant No.5 in OA 500/2014 (OA106/2013 of DRT-I Chennai) on the file of DRT-II, Chennai.

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Appeal MA 31/2018 is preferred against Order dated

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19.03.2018 in IA 794/2017 in OA 500/2014; Appeal MA 53/2018 is filed against Order dated 20.04.2018 in IA

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201/2013 in OA 500/2014 and Appeal MA 73/2018 is filed

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against Order dated 20.04.2018 in IA 99/2014 in OA

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MA 53/2018, MA 73/2018 & MA 31/2018

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500/2014. All three Appeals arise out of same proceedings in OA 500/2014 and argued commonly, therefore, they are disposed of through a Common Order.

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Both Appellant and first Respondent Bank filed Written Arguments and they reiterated the same at the time of oral submissions.

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Brief and relevant facts necessary for these three Appeals are as follows:-

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i) First Respondent Bank filed OA 500/2014 (OA106/2013 of DRT-I Chennai) for recovery of Rs.23,26,51,142/from Appellant and others, contending that Respondent No.2 herein is principal borrower for which Appellant herein and Respondent Nos. 3 and 4 stood as guarantors for said loan. Appellant herein filed Written Statement disputing the claim contending that it availed loan from Thane Janata Sahakari Bank Limited (Respondent No.6 herein) mortgaging immovable property belonging to it as collateral security. Appellant also

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MA 53/2018, MA 73/2018 & MA 31/2018

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contended that Defendant No.4 (G. Sundaresan) in OA, in collusion with erstwhile management of Appellant namely R. M. Vaidyanathan, Subbaramani Iyer and Bharat Sundaresan along with principal borrower and officials of 1^st Respondent Bank, committed fraud in a calculated and a systematic manner to the adverse interest of Appellant and created certain documents. Proof Affidavit is filed on behalf of 1^st Respondent Bank and documents are also marked as relied on by 1^st Respondent Bank. Counter Proof Affidavit of Appellant is also filed and thereafter Appellant filed IA 794/2017 in OA 500/2014 seeking permission to cross examine officers of 1^st Respondent Bank to substantiate its plea of fraud and collusion. First Respondent Bank opposed said Application on various grounds, and Tribunal below on a consideration of contentions and rival contentions, dismissed Application through impugned Order dated 19.03.2018, aggrieved by said Order, Appeal MA 31/2018 is filed.

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ii) Appellant filed IA 201/2013 in OA 500/2014 to direct

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1^st Respondent Bank to permit Appellant to inspect original

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MA 53/2018, MA 73/2018 & MA 31/2018

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documents referred to in OA and to furnish certified true copy of Statement of Accounts as provided under the Bankers’ Books Evidence Act, 1891. Tribunal below closed said Application on 20.04.2018 as main OA has reached the stage of arguments, aggrieved by the same, Appeal MA 53/2018 is filed.

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iii) IA 99/2014 in OA 500/2014 is filed by 1^st

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Respondent Bank with prayer to appoint a Commissioner to take inventory of equipments related to Studio set up at Perungudi, Chennai, and sell the same and deposit sale proceeds with Tribunal, in which Appellant is not at all a party. Tribunal below by Order dated 20.04.2018 closed this Application also, on the same ground that main OA is at the stage of arguments, aggrieved by the same, Appeal MA 73/2018 is filed.

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Advocate for Appellant vehemently contended that in September, 2017, Proof Affidavit on behalf of 1^st Respondent Bank is filed, and on seeing that, Appellant noticed serious discrepancies in pleadings and documents filed along with OA,

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MA 53/2018, MA 73/2018 & MA 31/2018

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on one hand and Proof Affidavit and documents filed along with Proof Affidavit on the other hand. It is submitted that pleadings and evidence put forth by 1^st Respondent Bank have exposed several discrepancies and a calculated fraud on the part of principal borrower and its Directors on one hand and officials of 1^st Respondent Bank on the other hand, in taking properties of Appellant as a collateral security for loan obtained by principal borrower. He submitted that process of documentation can only be elicited during cross examination, and as Appellant even disputed execution of some documents, only by way of cross examination that aspect can be brought on record for better appreciation of Affidavit filed on behalf of both parties at the time of final adjudication. It is further submitted Tribunal below, instead of giving an opportunity to cross examine Official of 1^st Respondent Bank in the interest of justice and equity, dismissed Application, therefore, prayed to allow Appeal MA 31/2018 by setting aside the impugned Order dated 19.03.2018 and consequently permit Appellant to cross examine PW1 .

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MA 53/2018, MA 73/2018 & MA 31/2018

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On the other hand, Advocate for 1^st Respondent Bank vehemently opposed the request of Appellant, and submitted that grounds urged for the purpose of cross examination of deponent, who is PW1, are not valid and tenable, and Application is filed when OA is at the stage of arguments, only with a view to protract the case and drag on the proceedings. It is submitted at the time of sanction of loan to principal borrower, immovable property belonging to Appellant was taken as collateral security through document dated 29.05.2010, and said facility was renewed on 11.10.2011, and immovable property of Appellant was treated as prime security. It is submitted request for cross examination put forth by Appellant is devoid of merits on all aspects, and Learned Presiding Officer rightly dismissed IA 294/2017 and there are no grounds to interfere with.

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Advocate for Appellant further submitted that other two Appeals; one is for inspection of original documents and other is

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MA 53/2018, MA 73/2018 & MA 31/2018

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to appoint a Commissioner to take an inventory of equipments and sell them, may be considered in the interest of justice.

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Advocate for 1^st Respondent Bank submitted that the purpose of inspection of documents is for preparing Written Statement as indicated in the Affidavit filed in support of Application, and it is not in dispute that Appellant has already filed its Written Statement and additional Written Statement, and therefore, when matter has come up for arguments, there is no point in permitting Appellant to inspect documents for the purpose of preparing Written Statement, for that reason, Tribunal below closed the said Application and that there are no grounds to interfere with that Order.

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With regard to appointment of Advocate Commissioner, Written Arguments filed on behalf of 1^st Respondent Bank indicates as if that IA 99/2014 is filed by Appellant herein, but from verification of record, it is evident that 1^st Respondent Bank itself filed said Application, and Appellant not being a party to said Application, cannot be treated as an aggrieved

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MA 53/2018, MA 73/2018 & MA 31/2018

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party, particularly, when 1^st Respondent Bank is not aggrieved by closure of that Application.

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I have perused the material papers and impugned Orders challenging three Appeals. Tribunal below refused the request of Appellant for cross examination of PW 1, i.e. officer, who filed Proof Affidavit on behalf of 1^st Respondent Bank, on the ground that no oral evidence can be taken against written documents. Rule 12, Sub-rule 9 of Debts Recovery Tribunal (Procedure) Rules, 1993 [hereinafter referred to as Rules, 1993], provide remedy for cross examination of witnesses, who filed Proof Affidavit. As seen from proviso to Sub-rule 9 of Rule 12 of Rules, 1993, where it appears to the Tribunal that either Applicant or Defendant desires the production of a witness for cross examination, Tribunal shall record reasons and then order witness to be present for cross examination. Here in this case, one of the Defendants i.e. Appellant, expressed its desire to cross examine deponent of Proof Affidavit mainly on the ground that there are discrepancies which are narrated in Affidavit filed in support of Application. In fact, all those

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MA 53/2018, MA 73/2018 & MA 31/2018

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discrepancies are reiterated at the time of arguments, which are also reflected in Written Submissions, but it may not be proper to deal with those discrepancies, since it may reflect on main adjudication process while appreciating evidence of both parties in the OA, therefore, I am not recording those aspects in this Order. Main objection of 1^st Respondent Bank is that Application is filed to protract the case and drag on the proceedings. In fact, if 1^st Respondent Bank has consented for production of witness, by this time, main OA ought to have been disposed of, and because of this Appeal, OA is pending since last four years. When a specific pleading is to the effect that certain documents are not at all executed and there is collusion between principal borrower and officials of 1^st Respondent Bank, Tribunal below ought to have given an opportunity to Appellant to cross examine PW1, deponent of Proof Affidavit, by which no prejudice will be caused to 1^st Respondent Bank. The grounds recorded by Tribunal below is that oral evidence cannot be allowed against written documents, cannot be applied to all cases, and it can be applied only in certain specified circumstances as indicated in Section 91 of Indian Evidence

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MA 53/2018, MA 73/2018 & MA 31/2018

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Act, 1872, where oral evidence is excluded. When execution of documents itself is disputed, fraud and collusion is pleaded, denying right of cross examination, in my view, amounts to denial of justice, therefore, without going into any other aspects, I deem it appropriate that, an opportunity be given to Appellant to cross examine deponent of Proof Affidavit i.e. PW1 and for this purpose, Tribunal below shall fix a specific date, and on that date, 1^st Respondent Bank should ensure production of witness and Counsel for Appellant shall ensure completion of cross examination by restricting it only to the extent of disputed documents to which Appellant is a party.

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With regard to other two Appeals, request of inspection of original documents is for the purpose of filing Written Statement, which is clear from the Affidavit filed in support of Application. As that stage is over and even Counter Proof Affidavit on behalf of Appellant is also filed, I do not find any wrong in closing that Application, therefore, no interference is warranted in Order dated 20.04.2018 in IA 201/2013.

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MA 53/2018, MA 73/2018 & MA 31/2018

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With regard to request of 1^st Respondent Bank for appointment of Advocate Commissioner, when Appellant is not a party to that Application, it cannot complain closure of that Application. Even for the argument sake, it is treated that Appellant is also a party to that Application, who will be at best a Respondent, it can only report no objection for appointment, and ultimately, it is for the person who filed Application to prosecute it and get the relief and if person who filed that Application is not interested, Appellant cannot have right to challenge that Order as an aggrieved party. Tribunal below rightly closed said Application, and Appellant cannot challenge that Order as it cannot be treated as aggrieved party, and for that reasons, Appeal challenging Order in IA 99/2014 is not maintainable.

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In view of foregoing discussions and observations, Appeal No.31/2018 is allowed and impugned Order dated 19.03.2018 in IA 794/2017 is set aside permitting Appellant to cross

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examine PW1, deponent of Proof Affidavit, as indicated above.

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MA 53/2018, MA 73/2018 & MA 31/2018

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Appeal MA 53/2018 is dismissed confirming Order of Tribunal below dated 20.04.2018 in IA 201/2013. MA 73/2018 is also dismissed confirming order dated 20.04.2018 in IA 99/2014. Both parties shall bear their own costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 24^th of August, 2022]

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[ Justice S. Ravi Kumar]

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CHAIRPERSON

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The South Indian Concerns Ltd. v. Canara Bank

Case brief

What is this about?

What did the court decide?

The South Indian Concerns Ltd. v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

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