Allowed

Union Bank of India v. M/S Union Krushak Seva Co-Op Society Ltd.

DRAT15 May 2024MISC APPEAL/123/2023

Case brief

AI extract

What is this about?

The Appellate Tribunal quashed an order imposing ₹20,000 cost on a bank officer for failing to appear at a Lok Adalat, noting the absence of notice. The court also addressed issues regarding service of summons and the requirement for an authorised officer under the RDB Act.

What did the court decide?

Quashed and set aside the impugned order dated 11.08.2023 directing payment of cost ₹20,000 by the law officer of the bank.

Union Bank of India versus M/S Union Krushak Seva Co-Op… — Banking and Recovery | DRAT (2024)

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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. 123/2023

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Between

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Union Bank of India … Appellant/s

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V/s.

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M/s Union Krushak Seva Co-op. Society Ltd. &

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Anr.

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Mr Anup Khaitan, i/b M/s Anup Khaitan & Co., Advocate for Appellant.

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This is an appeal filed by Union Bank of India under Sec. 20 of the Recovery of Debts and Bankruptcy Act, 1993 (“RDB Act”, for short) challenging the order dated 11.08.2023 in Original Application (O.A.) No. 143 of 2022 on the files of the Debts Recovery Tribunal, Aurangabad (D.R.T.).

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The facts in brief are thus:

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The O.A. came up for hearing before the D.R.T. on 21.07.2022 and on that day the D.R.T. directed the Registry to issue summons to the defendants by all prescribed modes including service by hand, by registered post acknowledgement due, as well as by email/pen drive etc. The Registry was directed to forward the summons to the bank by email for onward service on the defendants. The officer of the bank was directed to file an affidavit of service at least one week before the date of the hearing. There was also a direction to the defendants to file a written statement within 30 days from the date of service of

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summons with an advance copy to the applicant bank and thereafter, the bank was directed to file a rejoinder, if any, within a week. The bank was directed to file an affidavit of evidence and documents including a comprehensive affidavit of assets both movable and immovable before the next date of hearing. The defendants were directed to maintain the status quo in respect of the assets as per Sec. 19(4A) of the RDB Act.

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The appellant states that the summons was sent by registered post and the same was duly served and acknowledgement received. Order dated 06.08.2022 of the Ld. Registrar, D.R.T. indicates that the summons was prepared as directed by the Ld. Presiding Officer and issued to the defendants. On 12.12.2022, the matter came up before the Registrar for filing a service affidavit by the bank. It is noted that the counsel for the applicant did not file a service affidavit nor was the affidavit of evidence filed by the bank. An acknowledgement card of the service of notice on the first defendant was, however, produced. Re-issuance of summons by hand was requested by the Ld. Counsel for the applicant and accordingly, the summons was re-issued to the defendants and the applicant was granted the liberty to collect the summons from the Tribunal within 15 days failing which the summons was directed to be forwarded to the applicant and the counsel through email for onward service to the defendants. The appellant states that the summons was not received by mail at the address of the applicant or counsel Shri S.V. Natu. Later, it was realised that the summons was mailed to Advocate G.V Kulkarni who was not the Advocate on record.

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When the matter came up before the Registrar on 15.05.2023, it was noted that the service affidavit was not filed. However, the counsel submitted that the defendants had been served by hand and the soft copy was uploaded on the D.R.T. portal. It was requested that the matter be placed before the Ld. Presiding Officer. Accordingly, the matter was listed before the Ld. Presiding Officer on 27.06.2023 for appropriate steps. Service of summons was accordingly filed by the appellant. When the matter came up for hearing before the Ld. Presiding Officer on 27.06.2023, it is recorded that a service affidavit was filed regarding service of summons on the defendants by hand on 16.01.2023 for their appearance on 12.12.2022. The Ld. Presiding Officer observed that the service of summons on 16.01.2023 for appearance on 12.12.2022, has no value. An explanation by way of an affidavit was asked to be filed by the authorised officer of the bank by 14.07.2023. When the matter was taken up for filing the explanation by the officer of the bank on 14.07.2023, it was submitted by the counsel that the officer concerned was not available and therefore, an explanation affidavit could not be filed. The D.R.T. directed the explanation to be submitted within seven days and a cost of ₹5,000/was imposed to be paid to the Prime Relief Fund. The bank was also directed to file the itinerary of the officer from 27.06.2023 till the filing of the explanation. The in charge of the bank was also directed to file an affidavit regarding the presence of the officer in the bank. A copy of the order was directed to be sent to the General Manager at the Head Office in Mumbai.

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When the matter was again listed on 11.08.2023, the impugned

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order was passed stating that the counsel for the appellant bank had filed a pursis stating that the explanation could not be filed as there was confusion as to who could be an authorised officer in an original application. It was also submitted that a junior advocate was appearing for the bank before the D.R.T. and that the Tribunal was kind enough to direct the steno to remove the order earlier passed at the time of mentioning and simply adjourned the matter for filing an explanation affidavit. However, the earlier order without the correction was uploaded.

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The Ld. Presiding Officer observed that there was no such direction given to the P.S. to remove or recall the earlier order and therefore, the pursis filed by the Counsel for the Appellant is only to safeguard the officer of the bank. It is also observed that a copy of the order was sent to the General Manager of the Head Office. The Ld. Presiding Officer observes that the affidavit filed by the authorised officer was neither convincing nor correct. The explanation regarding the service of summons was also not found to be satisfactory. Hence, the Ld. Presiding Officer imposed a cost of ₹20,000/- to be paid to the Prime Minister Relief Fund over and above the cost of ₹5,000/imposed earlier on the bank. It was also directed that the said amount be recovered from the salary of Mr Kapil Vijaysingh Bilwal, the law officer of the bank. Copies of the order were directed to be sent to the CEO/ Managing Director and the Secretary, NALSA for taking up the matter with the bank.

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The Appellant is aggrieved and hence, in appeal.

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It is submitted that there was no communication regarding the

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Lok Adalat to be held. A WhatsApp group was created by D.R.T. to communicate the facts regarding a Lok Adalat to be held on 09.09.2023. Hence, the Appellant states that the impugned order may be set aside and the costs imposed be quashed.

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Respondents did not appear despite being served with notice. The Ld. Counsel for the Appellant was heard. Documents perused. 10. It is pertinent to note that the summons was ordered to be served on the defendants by registered post with acknowledgement due and the acknowledgement card of service of summons on the first defendant was produced as noticed in the order of the Registrar dated 12.12.2022. However, service by hand was not affected and therefore, the summons was directed to be re-issued for compliance under the order of the Ld. Presiding Officer dated 11.08.2022. The appellant has also produced the details of the track consignment of the delivery effect on the defendants which indicates that the notice was served on 19.08.2022 to the Chairman (addressee). When summons is ordered to be served by multiple modes, delivery of the summons by any of the modes would be considered sufficient. The RDB Act does not prescribe any particular mode of service for the defendant. Neither does the Debts Recovery Tribunal (Procedure) Rules state anything about the mode of service of summons. sub-rule (2-A) of Rule 5 of the aforesaid rules states that after registration of the application under sub-rule (2), the Tribunal shall issue summons to the defendant in Form IV.

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It is true that the D.R.T. may direct the service of summons by multiple modes as done in the instant case. But it is not necessary that

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summons have to be served by all the modes directed.

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Order V Rule 9 of the Code of Civil Procedure states regarding service of summons. Rule 9(1) states that where the defendant resides within the jurisdiction of the court in which the suit is instituted or has an agent resident within that jurisdiction who is empowered to accept the service of summons, the summons shall, unless the Court otherwise directs, be delivered or sent either to the proper officer to be served by him or one of his subordinates or to such courier services as are approved by the Court. Order V Rule 9(3) CPC states that the service of summons may be made by delivering or transmitting a copy thereof by registered post acknowledgement due addressed to the defendant or his agent empowered to accept the service or by speed post or by such courier services as are approved by the High Court or by the Court referred to in sub-rule (1) or by any other means of transmission of documents (including fax message or electronic mail service) provided by the rules made by the High Court.

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When the acknowledgement card evidencing service of summons on the defendant is produced, that would be sufficient service. In the instant case, when the matter was taken up before the D.R.T. on 27.06.2023 the Ld. Presiding Officer was peeved by the applicant not producing a service affidavit regarding the service of summons on the defendants by hand before the date of the hearing. It is noted that the service by hand was effected only on 16.01.2023 for the appearance of defendants on 12.12.2022 and therefore, an explanation was sought from the “authorised officer”. There is no authorised officer in the proceedings under the RDB Act. An

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authorised officer is deputed only in Sarfaesi proceedings where without interference of the Court or the Tribunal, recovery proceedings can be initiated. The filing of the original application under the RDB Act is just like a plaint in a civil suit. Any person who is authorised to sign the plaint can sign and present it. He need not be an officer of the rank of an authorised officer as contemplated under the Sarfaesi proceedings.

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On 14.07.2023, when no explanation was forthcoming from the authorised officer for the reason that he was out of town, it was directed that the explanation be submitted within seven days and a cost of ₹5,000/- was imposed on the bank. That apart, the itinerary of the officer was directed to be produced by the superior officer of the bank.

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It has to be observed that the D.R.T. has absolutely no power to monitor the movement or actions of a bank officer. The purpose of serving summons on the defendant was already accomplished in this matter. It was the D.R.T. which was protracting the matter despite service of summons on the defendants. Hence, there was no need to impose any costs on the bank. Nevertheless, I am not inclined to interfere with the order imposing ₹5000/- as cost on the bank.

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The impugned order dated 11.08.2023 has transgressed a little too far. It directs imposition of cost ₹20,000/- on the law officer concerned of the bank for not appearing before the Lok Adalat meeting convened by the court master of the Tribunal. There was no notice of Lok Adalat served on the bank. Despite that, the cost was imposed.

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Cost cannot be imposed on a party on whimsical grounds. The Court or the Tribunal indeed has the power to impose a cost on a party deploying dilatory tactics to protract the litigation. In the instant case, it was the D.R.T. which was protracting the matter by not recording service of summons on the defendants and setting them ex-parte. A Presiding Officer exercising judicial powers is not expected to be peevish and vengeful in the discharge of his judicial functions.

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Hence, the appeal is allowed and the order dated 11.08.2023 directing payment of cost ₹20,000/ by the law officer of the bank is quashed and set aside.

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Sd/Chairperson

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mks-01

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Union Bank of India v. M/S Union Krushak Seva Co-Op Society Ltd.

Case brief

What is this about?

What did the court decide?

Union Bank of India v. M/S Union Krushak Seva Co-Op Society Ltd.

Case brief

What is this about?

What did the court decide?

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