Allowed

Shri B L Joshi v. Standerd Chartered Bank & Ors.

DRAT11 Jul 2022MISC APPEAL/57/2010

Case brief

AI extract

What is this about?

The Tribunal allowed the appeal and dismissed the lower order which had impleaded additional defendants on a Letter of Guarantee. The court held that due to the long delay (over 15 years) without action against the proposed defendants, the creditor deemed to have waived the right to sue them.

What did the court decide?

Impugned order allowing impleadment of additional defendants dismissed; OA disposed expeditiously.

Shri B L Joshi versus Standerd Chartered Bank… — Contract and Commercial Disputes | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson

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Misc. Appeal No. 57/2010

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Between Shri. Bhanushankar Lliladhar Joshi … Appellant/s V/s. Standard Chartered Bank & 7 Ors. …Respondent/s

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Mr. Vishal Thaker a/w Ms. Anjali Trivedi, Advocate for Appellant. Ms. Pallavi Chari, i/b Mr. O.A. Das, Advocate for Respondent No.5 (Bank of India).

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-:Order dated: 11/07/2022:-

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This is an appeal filed u/s 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the RDDB&FI Act for short) challenging the impugned order dated 05.03.2020 below Exh. 59 in Original Application (O.A) No.3386/2000 on the files of Debts Recovery Tribunal No. I, Mumbai (D.R.T. for short).

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The above-stated application at Exh. 59 was filed by the 3^rd Applicant in the O.A to implead additional Defendant Nos.5 and 6 in the O.A. and for consequential amendment of the pleadings including the prayer clause.

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The facts as may be essential for the disposal of this appeal are thus:

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The Original Applicants had filed a Summary Suit No. 5042 of 1994 before the Hon’ble High Court of Judicature of Bombay for recovery of Rs.4,81,46,281/- in respect of Rupee Term Loan and also claiming Rs.18,78,7769/- in respect of Bridge Loan

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against the first Defendant company represented by its Directors. Defendant Nos.2 and 4 in the O.A. are the other Banks and Financial Institution that are also interested in the assets of the company by lending money to them.

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The Suit mentioned above was transferred to the D.R.T.- I Mumbai consequent to the establishment of the D.R.Ts. under the RDDB&FI Act and the case was re-numbered as O.A. No. 3386/2000.

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The first Defendant company was wound up by the Hon’ble High Court of Gujarat and an Official Liquidator ( O.L. for short) was appointed. At present, it is the O.L. who is representing the company.

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In the application, it is alleged that a Letter of Guarantee was executed by the proposed Defendants on 16.06.1987. As a continuing guarantee, it remains in full force till the first Defendant company repays debts in its entirety.

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The loan account was declared Non-Performing Asset (N.P.A. for short) and a notice was sent to the first Defendant to repay the amount. Consequently, the above-mentioned Suit was filed for the realization of the amount.

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In the application, it is contended that the first Defendant company as also the guarantors who are the proposed Defendants are jointly and severally liable to pay the amount and hence they are to be impleaded as additional Defendants.

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The Ld. P.O. after considering the application and the objections raised by the proposed Defendants who contended that

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the claim against them is already time-barred by limitation as they were not impleaded as the Defendants in the original Suit and, therefore, they cannot be impleaded at this point. The Appellant has also raised an objection stating that he has not signed any Deed of Guarantee. However, the Ld. P.O. relying on a decision of the Hon’ble Apex Court in Amit Kumar Shaw & Anr. Vs. Farida Khatoon & Anr. AIR 2005 SC 2209 allowed the application holding that the contention raised by the proposed Defendants can be agitated in the O.A. and the decision will be taken after hearing them.

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Heard the learned counsel appearing for the Appellant and the learned counsel appearing for Respondent No.5. The Applicant Bank, which applied amendment, however, did not appear to submit arguments.

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Even though the provisions of C.P.C. does not apply to the proceedings before the D.R.T., the principles nevertheless apply. Order 1, Rule 3 (a) and (b) of the C.P.C. deals with who may be joined as defendants in a suit. It reads thus:

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“3. Who may be joined as defendants:- All persons may be joined in one suit as defendants where-

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(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or, transactions is alleged to exist against such persons, whether jointly, severally or in the alternative; and

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(b) if separate suits were brought against such persons, any common question of law or fact would arise.”

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Reading of the aforesaid provision of C.P.C. would indicate that any right in respect of a relief arising out of the same

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transaction and the defendants are jointly and severally liable for such transactions, they may be joined as defendants and, therefore, the proposed defendants in this case allegedly being guarantors ought to have been impleaded, though they are not necessary parties, because plaintiff is the dominus litiis and has the liberty to implead to whomsoever as defendants and the Suit would not be bad for the reason that the proposed defendants are not joined as defendants. The plaintiff can limit the relief to the first defendant alone, which is the primary borrower. Order 2 Rule 1 of C.P.C. deals with the frame of a suit, which reads thus:

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“1. Frame of suit:- Every suit shall as far as practicable be framed so as to afford ground for final decision upon the subjects in dispute and to prevent further litigation concerning them.”

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Order 2 Rule 2 of C.P.C. reads thus:

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“2. Suit to include the whole claim .-(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.”

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In the instant case, the 3^rd applicant in the O.A. alone had sought impleadment of the additional defendants. In the original suit, they were neither impleaded nor any claim raised against them.

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In a case where an amendment is sought, it has to be within the time of limitation. Time barred plea cannot be added to a plaint because such a plea would then relate to the date of filing of the Suit. In the instant case, no action whatsoever was taken against the proposed defendants till 2009 while the original suit was filed as early as 1994, therefore, after the time of limitation the

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plaintiff cannot claim that some defendants were left out of the Suit and, therefore, needs to be added. The question of limitation can indeed be considered even while the objection raised by the defendants is concerned at the time of disposing of the Original Application but when an application on the face of it does appear to be maintainable under limitation and also under Order 2 Rule 1 of C.P.C., the applicant could not have maintained an application after such long period. It is to be assumed that the applicant had waived their rights against these defendants.

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The Ld. P.O. had relied on the decision of the Hon’ble Supreme Court in Amit Kumar Shaw (Supra) case to allow this application. But, the facts case, are different. In that case, an additional party was sought to be impleaded or substituted because there was a transfer pendente lite and, therefore, for determining the real question in dispute, the transferee was a necessary party and, therefore, the Hon’ble Supreme Court held that the application for impleading and consequential amendments needs to be allowed. In the instant case, the facts are different. The proposed defendants had allegedly executed a Deed of Guarantee as early as 1987 despite that, they were not impleaded as defendants in the suit which was filed in 1994. Under Order 1 Rule 3 (a) (b) of C.P.C., they are proper parties and liable to pay the alleged debt jointly and severally. However, if the plaintiff does not implead them in the first instance and lets the claim against them lapse, it has to be assumed that the plaintiff has waived the right to sue the proposed defendants. The Ld. P.O. was, therefore, not justified in allowing the application and consequently, the application needs to be

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dismissed.

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