Allowed

Sri Nata Krishna Parua v. Uco Bank

DRAT28 Jun 2023REGULAR APPEAL/1/2023

Case brief

AI extract

What is this about?

In an I.A. for recall and condonation of delay by the responding bank, the tribunal recalled an order passed exparte due to failure to serve notice on the caveator. The delay of 47 days was condoned as sufficient grounds were explained regarding procedural internal approvals.

What did the court decide?

Order dated 23.12.2022 recalled; I.A. Nos. 101 of 2023 and 151 of 2023 allowed; matter listed for admission on 30.06.2023.

Sri Nata Krishna Parua versus Uco Bank — Banking and Recovery | DRAT (2023)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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I.A. No. 101 of 2023 I.A. No. 151 of 2023 (In Appl. Dy. No. 704 of 2022)

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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28.06.2023

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Sri Nata Krishna Parua

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… Appellant Vs. UCO Bank & Ors.

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….. Respondents

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For Appellant : Mr. A. K. Dhandhania, ld. Senior Counsel. Mr. Som Nath Roy Chowdhury, ld. Counsel. Ms. Arpita Chowdhury, ld. Counsel. Mr. Proshit Deb, ld. Counsel.

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For Respondent : Mr. Nimes Mishra, ld. Counsel. Ms. Ishani Ghosal, ld. Counsel.

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THE APPELLATE TRIBUNAL :

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An application being I.A. No.101 of 2023 praying for recall of

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the order dated 23.12.2022 passed by this Appellate Tribunal in Appeal Dy. No. 704 of 2022 and I.A. 151 of 2023 under Section 5 of the Limitation Act praying for condonation of delay in filing I.A. 101 of 2023 are filed by the respondent bank. Opposition filed by the appellant is on record.

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I.A. 101 of 2023 is moved to recall of the order dated 23.12.2022 on the ground that the order was passed exparte wherein Caveat was filed by the respondent bank and notice was given to them for hearing on 22.12.2022, but the matter was heard on 23.12.2022. It is further stated in the application that the amount of pre-deposit allegedly deposited by the appellant is

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not in compliance of the provisions of the second proviso of Section 18 of the SARFAESI Act, 2002 (hereinafter referred to as ‘Act of 2002’). It is also stated that Caveat was filed with a view

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that respondent bank would be given an opportunity of hearing at the time of hearing the appeal, but no opportunity was accorded and the order was passed exparte.

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In the I.A. 151 of 2023 filed under Section 5 of the Limitation Act, it is stated that the delay was not intentional. It is further stated in the application that no notice of hearing on 23.12.2022 was served upon the respondent bank. Advocate on record communicated the impugned order. Learned counsel for the respondent bank submits that on 24.12.2022 learned advocate was out of station to attend a meeting at the office of the bank at the Zonal Office at Hooghly. While attending a meeting on 04.01.2023 at Zonal Office Uttarpara entire issue was discussed with Zonal Manager and another meeting was rescheduled on 09.01.2023 for seeking opinion of the Law Department. On 09.01.2023 it was decided to assail the impugned order. On 14.01.2023 learned advocate on record discussed the matter with the arguing Advocate and was decided to move the application. On 19.01.2023 the Head Office had accorded consent to move the application. On 21.01.2023 learned advocate was instructed to prepare an appropriate application and on 24.01.2023 learned advocate on record prepared the draft. On 06.02.2023 draft was forwarded to the office of the competent authority and some changes were proposed and on 28.02.2023 final draft was prepared. On 10.03.2023 affidavit was sworn in.

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In the objection filed by the appellant it is stated that the present application is not an application for recall rather it is an application for review. Rule 6A of DRAT (Procedure) Rules, 1994 thirty days limitation for review. Section 5 of the Limitation Act is not applicable in review application. It is further submitted that the matter was taken up on 23.12.2022 before the Appellate Tribunal. Notice was given to the Caveator regarding filing of appeal and also hearing of the matter. Respondent bank should have been cautious enough to pursue the matter when they got notice, but they did not appear on the date of hearing i.e. 23.12.2022. Accordingly, the application for recall of the impugned order is not maintainable. The grounds taken in the application filed under Section 5 of the limitation Act are not borne out from the record. The application is liable to be dismissed.

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Heard learned counsel for the parties and perused records.

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Perusal of the record will show that appeal was filed on 20.12.2022. It is also admitted position that the appeal was taken up for hearing on 23.12.2022. Scrutiny of records reveals that Registry listed the matter on 23.12.2022. Caveat was filed by the respondent bank wherein a notice was given by the appellant communicating the date of hearing on 22.12.2022 which was in compliance of the Notification issued by this Appellate Tribunal on 08.06.2022 wherein it is provided that

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appeal or any petition/application filed in this Appellate Tribunal

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shall be taken up after one working day.

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Order dated 23.12.2022 reads as under :

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“For Admission

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Appeal is admitted. Regular appeal number be given. Caveat is filed on behalf of Respondent. Notice has been served upon the Respondent Bank and Affidavit-of-service to that effect has been filed. Despite service no one appears to represent the Bank. An amount of Rs.38,80,265.00 has been deposited by the Appellant as pre deposit.

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Learned Counsel for the Appellant submits that operation of the impugned order may be stayed. It is submitted that Appellant is in possession and has a prima facie case in his favour.

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I have heard the Learned Counsel and have gone through the record. I find that there is arguable point which needs consideration; hence, operation of the impugned order shall remain stayed till the next date of listing. Parties are further directed to maintain status quo. Respondents are directed to file opposition against I.A. 470 of 2022 within four weeks with advance copy to the Appellant. Rejoinder, if any, be filed within two weeks thereafter. List on 13^th March, 2023 for hearing of I.A. 470 of 2022.”

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As far as Caveat is concerned admittedly Caveat was filed by

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the respondent bank and notice of hearing on 22.12.2022 was given by the appellant. Service of notice dated 22.12.2022 is not denied. Section 18(c) of the Act of 2002 reads as under:

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18C – Right to ledge a caveat -

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(1) Where an application or an appeal is expected to be made or has been made under sub-section (1) of Section 17 or Section 17-A or sub-section ( l ) of Section 18 or Section 18-B, the secured creditor or any person claiming a right to appear before the Tribunal or the Court of District Judge or the Appellate Tribunal or the High Court, as the case may be, on the hearing of such application or appeal, may lodge a caveat in respect thereof.

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(2) Where a caveat has been lodged under sub-section (1),—

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( a ) the secured creditor by whom the caveat has been lodged (hereafter in this section referred to as the caveator) shall serve notice of the caveat by registered post, acknowledgement due, on the person by whom the application has been or is expected to be made under subsection (1);

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( b ) any person by whom the caveat has been lodged (hereafter in this section referred to as the caveator) shall serve notice of the caveat by registered post, acknowledgement due, on the person by whom the application has been or is expected to be made under sub-section (1).

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(3) Where after a caveat has been lodged under sub-section (1), any application or appeal is filed before the Tribunal or the court of

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District Judge or the Appellate Tribunal or the High Court, as the case may be, the Tribunal or the District Judge or the Appellate Tribunal or the High Court, as the case may be, shall serve a notice of application or appeal filed by the applicant or the appellant on the caveator.

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(4) Where a notice of any caveat has been served on the applicant or the Appellant, he shall periodically furnish the caveator with a copy of the application or the appeal made by him and also with copies of any paper or document which has been or may be filed by him in support of the application or the appeal.

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(5) Where a caveat has been lodged under sub-section (1), such caveat shall not remain in force after the expiry of the period of ninety days from the date on which it was lodged unless the application or appeal referred to in sub-section (1) has been made before the expiry of the said period.”

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Bare perusal of Section 18C(3) of the Act of 2002 will show that Appellate Tribunal shall have an obligation to serve a notice of the application or appeal filed by the applicant or appellant on the Caveator. This is a mandatory provision. Record shows that no notice was served by the Registry upon the Caveator. It also transpires from records that in view of the Notification dated 08.06.2022 appeal should have been listed before the Appellate Tribunal on 22.12.2022, as the same was filed on 20.12.2022, it should have been placed before the Appellate Tribunal after one working day. Registry of this Appellate Tribunal wrongly listed the matter on 23.12.2022. Further, compliance of Section 18C(3) of the Act of 2002 was also not made. This provision is akin to the provision of Section 148A of CPC wherein under subrule (3) provides that Court shall serve a notice of the application on the Caveator. In the case of Sukumar Roy Vs. Pratul Kumar Roy [1986(1) Civil L.J. 663] it was held by the Hon’ble High Court at Calcutta that :

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"rules of caveat are meant to give an opportunity to the party to contest any claim of injunction before it is made. If, caveat was

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actually lodged before the order was sought for, the Court could not proceed on the erroneous endorsement made by the Assistant Registrar. The only course open before the Court was to recall the order forthwith and re-hear the matter on contest when such defect was pointed out. This should be the procedure followed to fulfill the real object for the Rule of caveat".

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Hence, it is abundantly clear that no notice of hearing on 23.12.2022 was given to the respondent bank Caveator. A valuable right was created in their favour by the mandatory provision of law, however, they could not exercise the right to oppose the relief claimed by the appellant before the Appellate Tribunal and the order was passed without giving any opportunity of hearing to the respondent bank. Accordingly that order is an exparte order. Section 22(2)(g) of the Recovery of Debts & Bankruptcy Act, 1993 provides that any order passed by the Appellate Tribunal exparte can be set aside by it. Accordingly, I am of the view that impugned order was an exparte order wherein Caveator was not accorded opportunity of hearing prior to passing of the order.

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Application for recall is filed with the delay of 47 days. Learned counsel for the respondent bank submits that the delay was not intentional rather this delay, as explained in the application, was procedural in nature. 12. Learned counsel for the appellant submits that delay could not be property explained by the respondent bank which is not sufficient to condone the delay. Learned counsel further argued that respondent bank did not prefer to file the application in time rather when the Hon’ble Apex Court passed the decision in M/s

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Sidha Neelkanth Paper Industries Private Limited & Another Vs. Prudent ARC Limited & Ors [2022 LiveLaw (SC) 11] on 05.01.2022 on the issue of making pre-deposit the respondent bank moved this application for recall of the order.

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In the application filed under Section 5 of the Limitation Act details of the proceeding taken by the respondent bank have been duly explained wherein it is stated that delay was caused on the ground of taking legal opinion as well as necessary approval. It is stated that after communication of the impugned order advocate on record communicated the same to the bank thereafter meetings were fixed, legal opinion was sought and draft was finalized after taking approval and application was filed. It could not be accepted that after passing the judgement of Hon’ble Apex Court (supra) respondent bank preferred the application, as the judgement was passed on 05.01.2023, had it been so, application could have been filed immediately thereafter.

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In such circumstances, grounds as stated in the application are sufficient to condone the delay in moving the application. Accordingly, application filed under Section 5 of the Limitation Act is allowed. Delay in filing the application for recall of the impugned order is condoned.

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On the basis of the discussion made above, I am of the view that order dated 23.12.2022 is liable to be recalled. Accordingly, order dated 23.12.2022 is recalled. I.A. 101 of 2023 and I.A. 151

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of 2023 are liable to be allowed and accordingly both the I.A.s are

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allowed.

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