Dismissed

M/s. vaishnavi Trading India Pvt. Ltd. v. Union Bank of India (Corporation Bank)

DRAT23 Jun 2025MISC APPEAL/58/2024

Case brief

AI extract

What is this about?

In a miscellaneous appeal arising from an O.A. under the RDB Act, the Appellate Tribunal addressed the refusal by the DRT to extend the statutory time limit for filing a written statement beyond 45 days. The Tribunal held that the time limit mandated under Section 19(5)(i) is mandatory, not directory, and consequently dismissed the appeal.

What did the court decide?

The miscellaneous appeal was dismissed upholding the order of the DRT closing the right to file the written statement.

M/s. vaishnavi Trading India Pvt. Ltd. versus Union Bank of… — Company and Corporate | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL- KOLKATA (CAMP AT DRT, HYDERABAD)

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HON’BLE Mr.Justice Anil Kumar Srivastava, Chairperson

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Miscellaneous Appeal No.58 of 2024

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(Arising out of I.A.2165/2019 in O.A. 820/2018 in DRT-I, Hyderabad)

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23.06.2025

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M/s Vyshnavi Trading India Pvt.Ltd. Rep. by Sarath Chandra Babu, S/o. late Nageshwar Rao, aged 60 years, Office at: 8-3-319/5, 3^rd floor, Bharathi Nilayam, Sai Saradhi Nagar, Yellareddyguda, Hyderabad-73. Telangana

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Sarath Chandra Babu, S/o late Nageshwar Rao, aged 60 years, Office at: 8-3-319/5, 3^rd floor, Bharathi Nilayam, Sai Saradhi Nagar, Yellareddyguda, Hyderabad-73. Telangana. …. Appellants

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-Versus-

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Union Bank of India Having its branch office at Hyderguda branch, Rep. by is Power of Attorney, Sri Mohammed MahboobAlam, S/o. Mohammed Majibun Rahman, Aged about 44 years, Occ:Chief Manager, R/o. Hyderguda, Hyderabad-73.

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Mrs.Shanti Lakshmi, W/o. Sarath Chandra Babu, R/o. 8-3-319/5, 3^rd floor, Bharathi Nilayam, Sai Saradhi Nagar, Yellareddyguda, Hyderabad-73. Telangana

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Mr.Niha Gopal Banik, S/o late Rajendra Banik, R/o 35E, Mahanirban Roadn, Gariahat, Dist., South 24, Pargana, Kolkata-700029. … Respondents

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for the Appellants :Sri Nemani Srinivas, Ld. advocate. Sri Sharad Sanghi, Ld.Advocate

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for Respondents : Mr. Dipanjan Dutta , Ld. Advocate (through V.C)

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The Appellate Tribunal:

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Heard Ld. counsel for the parties and perused the record.

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This application is arising out of the judgement and order dt.28.08.2019 passed by learned DRT-I, Hyderabad in O.A.No.820/2018 wherein I.A.No.2165 of 2019 filed by the defendants for extension of time in filing written statement being forty-five days was dismissed by the learned DRT-I, Hyderabad.

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Feeling aggrieved by the said order, the Appellants preferred appeal.

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The Appellants preferred Writ Petition No.19435/19 against the impugned order dt.28.08.2019 before the Hon’ble High Court of Telangana at Hyderabad which was dismissed on 24.04.2024 giving liberty to the Appellants to file an appeal u/s 18 of RDB Act, 1993 and accordingly, the present appeal is filed by the Appellants. O.A.820/2018 was filed by the Respondent Bank u/s 19 of RDB Act, 1993, which was registered and notices were issued to the Appellants who are defendants in the O.A.

¶20

Notices were served upon the Appellants/defendants on 11.03.2019 but none appeared and the matter was listed on 14.03.2019. On 14.03.2019, Vakalatnama was filed by the defendants No.1 to 3 whereas Defendant No.4 who was also served but none represented and hence the proceedings were conducted exparte in respect of defendant no.4. 08.04.2019 was fixed for filing written statement by Defendants No.1 to 3. On 08.04.2019, written statement was not filed and sought time.

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Time was granted till 29.04.2019 with a direction that if the same is not filed within the stipulated time, right to file written statement shall stand closed. On 29.04.2019 again written statement was not filed and adjournment was sought by the defendants and the matter was listed on 27.05.2019. Again on 27.05.2019, written statement was not filed, time was sought to file the same. Defendants filed a memo stating that material papers were not served upon them. The Bank was directed to file material papers within one week and the matter was posted to 24.06.2019. Again, written statement was not filed and adjournment was sought. Matter was fixed on 02.07.2019 and on 02.07.2019 again written statement was not filed and the conditional order dated 24.06.2019 passed by the DRT which was not complied. Accordingly, right to file written statement was closed by the learned DRT-I, Hyderabad. Thereafter, I.A.2165/2019 was filed praying for setting aside the said order dated 02.07.2019 closing the right to file written statement along with an application for condonation of delay. Written statement was also filed on 12.07.2019. I.A.2165/19 was dismissed by the DRT-I, Hyderabad. By passing the impugned order dt. 28.08.2019, learned DRT-I, Hyderabad has put reliance on Section 19(5)(i) of RDB Act, 1993. Further it was held by learned. DRT-I, Hyderabad that time for filing written statement cannot be extended beyond forty-five days. Accordingly, I.A.2165/19 was dismissed.

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Ld. Counsel for the Appellants would submit that the Appellants have bonafidely contesting the proceedings. Material papers were not served upon them. Accordingly, a memo was filed on 27.05.2019 wherein a direction was issued for serving material papers on them. Thereafter, written statement was filed along with the application for setting aside the order of closing the right to file written statement which was filed well within the time from the date of 27.05.2019. It was further submitted by the learned Counsel that defendants could not file written statement earlier as material papers were not served upon them. Reliance is placed upon Section 19(5)(i) of the RDB Act, 1993 along with Rule 12 of DRT (Procedure) Rules, 1993.

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Per contra, Ld. Counsel for the Respondent Bank would submit that time for filing written statement cannot be extended beyond forty-five days from the date of service of notices. Appellants/Defendants were duly served on 11.03.2019 and thereafter, they continuously seeking time to file their written statement but the same was not filed. Accordingly, right to file written statement was righty closed by the DRT-I, Hyderabad. No ground was made out for condoning the delay and for taking the written statement filed by the Appellants on record. Learned Counsel for the Respondent Bank also placed reliance on the judgement of Hon’ble High Court for the State of Telangana at Hyderabad in M/s Ravali Industries Pvt. Ltd., Karimnagar District & Another Vs. State Bank of India, Stressed Assets Recovery Branch-2, Hyderabad and others reported in 2022

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(1) ALD 456 (TS) (DB). Reliance is also placed upon Para No.17

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of the said judgment wherein it was held that -

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“ That being the position, we are of the view that the Tribunal erred in holding that it had no power to extend the time for filing written statement beyond 45 days. Of-course, whether to condone the delay or not, in the given fact and circumstances of a case, is a different question altogether.”

¶30

It is an admitted position that Appellants/defendants were served with notices in O.A. on 11.03.2019. Thereafter, they were continuously seeking time to file written statement till 27.05.2019. On 27.05.2019, a memo was filed stating that material papers were not served upon them. However, time for filing written statement starts from 11.03.2019 when the defendants were served with notices. But they did not choose to raise objection within forty-five days with regard to non-service of material papers. For the first time, after a lapse of about seventyfive days, they raised the issue of non-service of material papers. Even thereafter, written statement was not filed and the application along with written statement was filed on 12.07.2019 when the right to file the same was closed by the Ld. DRT-I, Hyderabad on 02.07.2019.

¶31

Hon’ble Supreme Court has dealt with the said issue in M/s Daddy’s Builders Pvt. Ltd. & Anr. Vs. Manisha Bhargava &

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Anr. [AIR 2021 SC 946] wherein it was held that the Tribunal has no power and/or jurisdiction to accept the written statement beyond the statutory period prescribed under the Act, i.e, forty-

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five days in all. The said judgment is directly applicable to the facts and circumstances of the case in hand.

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As far as service of documents is concerned, as has been held earlier, it was raised for the first time on 17.05.2019. If relevant papers were not served, then the Appellants/defendants should have raised the issue at the very first date when they put in appearance before DRT-I, Hyderabad. But they did not raise any such objection. The objections were raised after about 75 days of the service of notice. Hence, Appellants cannot take advantage of Rule 12 of DRT (Procedure) Rules, 1993.

¶36

The time fixed for filing written statement by the Registry is not extendable as has been held by the Hon’ble Apex Court in M/s Daddy’s Builders Pvt. Ltd. (supra) as well as the mandatory provision of Section 19(5)(i) of RDB Act and proviso thereto.

¶37

No doubt, when the right to file written statement was closed, still the defendants have a right to proceed further in the O.A. and to defend their own rights as has been held by the Hon’ble Apex Court in Kanchhu Vs. Prakash Chand & Ors. [2025 SCC OnLine SC 868] wherein it is held that

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“the limited right that the defendant, set exparte, would have is confined to cross–examining the plaintiff’s witnesses. The effort has to be directed towards demonstrating that they are not speaking the truth and, thereby, demolish the case of the plaintiff. Essentially, therefore, in such a case, the defendant has to convince the court that the case put up by the plaintiff is so false that the court ought not to accept it ”.

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Further, in the case of Nanda Dulal Pradhan & Anr. Vs. Dibakar Pradhan & Anr. [2022 SCC OnLine SC 822] Hon’ble Apex Court held that

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“ although the right to file written statement is closed but the defendants will be permitted to participate in the suit and cross examine the witnesses”

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Accordingly, even if the O.A. was proceeded exparte, but the Appellants herein still have a right to cross examine the bank witnesses which could not be denied to the Appellants herein.

¶43

Without entering into the merits of the matter, it would be appropriate to reproduce the provisions of Section 19(5)(i) of the Recovery of Debts and Bankruptcy Act, 1993 which is as under:

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19. (5)(i) The defendant shall within a period of thirty days from the date of service of summons, present a written statement of his defence including claim for set-off under sub-section (6) or a counterclaim under sub-section (8), if any, and such written statement shall be accompanied with original documents or true copies thereof with the leave of the Tribunal, relied on by the defendant in his defence:

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Provided that where the defendant fails to file the written statement within the said period of thirty days, the Presiding Officer may, in exceptional cases and in special circumstances to be recorded in writing, extend the said period by such further period not exceeding fifteen days to file the written statement of his defence;

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Now the question is as to whether the provisions are mandatory in nature or directory in nature?

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Provision of Order VIII Rule 1 C.P.C. and Order VIII Rule 10 C.P.C. are not applicable in DRT. It is settled legal proposition that when any provision of the Act does not state any exception to a particular point of law, then other provision akin to the relevant provision of law is important. This view is fortified by the

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view taken by Hon'ble Madhya Pradesh High Court in M/s. Crest Steel and Power Private Limited Vs Punjab National Bank [2019 (1) MPLJ 703] which was duly approved by the Hon'ble Apex Court by dismissing the SLP.

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18. In Para 7 of the judgment in M/s Crest Steel (supra) following observation made by the Hon'ble Madhya Pradesh High Court Court:

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“On the other hand, learned counsel for the Bank referred to Three Judge Bench judgment of the Supreme Court reported as New India Assurance Company Limited Vs. Hilli Multipurpose Cold Storage Private Limited, (2015) 16 SCC 22 (for short 'Hilli 1'), wherein the judgment in Kailash's case (supra) was found to be not correct view as the earlier Three Judges Bench Judgment in the case reported as Dr. J.J. Merchant and others -Vs- ShrinathChaturvedi, 2002 (6) SCC 635 was not noticed by the Bench."

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19. In view of the observation of the Hon'ble Division Bench of Madhya Pradesh High Court, it is to be seen as to whether the provisions of Section 19(5)(i) of the Act are mandatory or directory in nature?

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In Para 8 of Crest Steel (supra) Hon'ble Division Bench of Madhya Pradesh High Court has placed reliance on Central Bank of India Vs. State of Kerala [(2009) 4 SCC 94] wherein it was held that:

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"92. An analysis of the abovenoted provisions makes it clear that the primary object of the DRT Act was to facilitate creation of special machinery for speedy recovery of the dues of banks and financial institutions. This is the reason why the DRT Act not only provides for establishment of the Tribunals and the Appellate Tribunals with the Jurisdiction, powers and authority to make summary adjudication of applications made by banks or financial institutions and specifies the modes of recovery of the amount determined by the Tribunal or the Appellate Tribunal but also bars the jurisdiction of all courts except the Supreme Court and the High Courts in relation to the matters specified in Section 17. The Tribunals and the Appellate Tribunals have also been freed from the shackles of procedure contained in the Code of Civil Procedure. To put it differently, the DRT Act has not only brought into existence special procedural mechanism for speedy recovery of the dues of banks and financial institutions, but also made provision for ensuring that defaulting borrowers are not able to invoke the Jurisdiction of civil courts for frustrating the proceedings initiated by the banks and financial institutions.

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93. The enactment of the Securitization Act can be treated as one of the most radical legislative measures taken by the Government for ensuring that dues of secured creditors including banks, financial Institutions are recovered from the defaulting borrowers without any obstruction. For the first time, the secured creditors have been empowered to take measures for recovery of their dues without the intervention of the courts or tribunals."

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21. Further, reliance is placed upon the judgment of Hon'ble Apex Court in Pegasus Assets Reconstruction Private Limited -Vs- Haryana Concast Limited [(2016) 4 SCC 47] wherein it is held that:

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"21. The RDB Act is of 1993 le. later to the Companies Act. Its avowed object is to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. This Act creates a special machinery for speedy recovery of dues of banks and financial institutions which, by an amendment of 2004 now includes a registered securitisation company or reconstruction company envisaged under the SARFAESI Act. Section 18 bars the jurisdiction of ordinary courts or authority in respect of matters falling within the jurisdiction of the Tribunal as specified in Section 17. An Appellate Tribunal is provided under Section 20. The power of the Tribunal extends to determining the debt due as well as Its realisation. Section 34 confers overriding effect upon this Act over any other law in force."

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It was also held in Para 13 of the judgment in M/sCrest Steel

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(supra) that

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"13- A reading of the Act would show that it is a complete Code providing for a Forum for adjudication of claim of the secured creditors and also to the procedure to be followed by the Adjudicating Authorities under the Act. It also mandates to ensure that there is expeditious disposal of the claim of the secured creditors, as huge public money is locked up on account of defaults of borrowers. Sub-section (4) of Section 19 of the Act provides for a show cause within thirty days of service of summons as to why relief prayed for should not be granted. In terms of sub-section (5), the defendant has to file written statement of his defence within a period of thirty days, including claim for set-off under sub-section (6) or a counter-claim under sub-section (8). The first proviso contemplates that the Presiding Officer in exceptional cases and in special circumstances can extend the period for filing of written statement, but not exceeding 15 days. In other words, the time prescribed for filing of written statement is normally thirty days, but can be extended in certain circumstances by another fifteen days. The argument of petitioners is that such provisions are directory relying upon Kailash's case."

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In Crest Steel (supra) it was held that provisions of Order VIII Rule 1 CPC are not mandatory but directory in nature.

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24. In New India Assurance Co. Ltd. Vs. Hilli Multipurpose Cold Storage Pvt. Ltd. [(2015) 16 SCC 20] it was held that in

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no case period beyond 45 days can be granted to the opposite party for filing its version of the case. In J.J. Merchant & Others -Vs- Shrinath Chaturvedi [2002 (6) SCC 635] issue relates to the applicability of the provision in Section 13 of the Consumer Protection Act, 1986 regarding failing to file reply to the complaint were in issue wherein it was held in Para 15 and 17 are as under:

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"15. Under this Rule also, there is a legislative mandate that written statement of defence is to be filed within 30 days. However, if there is a failure to file such written statement within stipulated time, the court can at the most extend further period of 60 days and no more. Under the Act, the legislative intent is not to give 90 days of time but only maximum 45 days for filing the version by the opposite party. Therefore, the aforesaid mandate is required to be strictly adhered to."

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"17. In view of the aforesaid provisions, the Commission can certainly refer to Order VII Rule 14 which provides that where a plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in the Court when the plaint is presented by him and shall, at the same time deliver the document and a copy thereof, to be filed with the plaint. It appears that this mandatory requirement is not followed and thereafter, there is complaint of delay in disposal. Similarly, in case of written statement under Order VIII Rule I-A, defendant is required to produce the documents relied upon by him when written submission is presented. The Commission can always insist on production of all documents relied upon by the parties along with the complaint and the defence version."

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Further, the same judgment was relied upon by the Hon'ble

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Apex Court in the case of Hilli Multipurpose Cold Storage Pvt. Ltd. (supra) wherein in Para 16 Hon'ble Apex Court has held :

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"16. In the aforestated circumstances, we have now to consider whether in a case under the provisions of the Act, where a complaint has been filed and the opposite party has not filed its version to the case within 30 days or within extended period of 45 days, which at the most could have been granted by the District Forum, the version given by the opposite party can be accepted."

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In Para 24 of the judgment of Hon'ble Apex Court, the Three Judges Bench decision in J.J. Merchant case (supra) was followed, wherein it was held in Para 13 that:

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"13 The question arose in the case of Dr. J.J. Merchant (supra) whether the Forum can grant time beyond 45 days to the opposite party for filing its version. After considering the aforestated section in the light of the object with which the Act has been enacted, a three-Judge Bench of this Court came to the conclusion that in no case period beyond 45 days can be granted to the opposite party for filing its version of the case."

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27. Further, it was held that judgment delivered in J.J. Merchant case (supra) followed the field and therefore, we are agreed with the view that the District Forum can grant a further period of 15 days to the opposite party for filing of version or reply and not beyond that. Ultimately, in Para 29 of the judgment it was held that law laid down by the Three Judges Bench of Hon'ble Apex Court J.J.Merchant case (supra) should prevail.

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28. In Crest Steel (supra) at Para 11 Hon'ble Madhya Pradesh High Court has held as under:

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"11- The experience of more than 20 years to speed up recovery of public dues, the Act was amended while enacting The Insolvency and Bankruptcy Code, 2016 published on 28^th of May, 2016. The Act was also amended by another Central Act No.44 of 2016 "The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016." The later Act has inter-alia amended Section 19 of the Act. The amended Act (Section 31B) gives priority to the dues of the secured creditors over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority.

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12- With this back ground, the relevant provisions of Act need to be extracted before the arguments raised by learned counsel for the parties are dealt with. The provisions read as under: -

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(5) (i) The defendant shall within a period of thirty days from the date of service of summons, present a written statement of his defence including claim for set-off under sub-section (6) or a counter-claim under sub-section (8), if any, and such written statement shall be accompanied with original documents or true copies thereof with the leave of the Tribunal, relied on by the defendant in his defence:

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(24) The application made to the Tribunal under sub-section (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and every effort shall be made by it to complete the proceedings in two hearings, and to dispose of the application finally within one hundred and eighty days from the date of receipt of the application."

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On the basis of the discussion made above, I am of the considered view that the written statement was required to be filed within 30 days and in exceptional cases or in special circumstances be extended by the DRT by another 15 days. In the present case written statement was not filed either in 30 days or in extended 15 days. Provisions of the Act have to assign meaning thereby keeping in view the objective of the Act rather to frustrate the object. Accordingly, I am of the considered opinion that defendant/respondent have no right to file written statement.

¶83

The law laid down as above is squarely applicable upon the facts of the present case. Written statement was not filed within 30 days of service and thereafter not even extended period of 15 days. Accordingly, it was in violation of mandatory provisions of Section 19 (5)(1) of the Recovery of Debts and Bankruptcy Act, 1993.

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Accordingly, I am of the considered opinion that learned DRT-I, Hyderabad has righty arrived at its conclusion. I do not find any merit in the Appeal. Accordingly, the appeal is liable to be dismissed.

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O R D E R

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Appeal is dismissed. Interlocutory Applications pending, if any, shall stand disposed of. No costs.

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File be consigned to Record Room.

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Copy of the order be supplied to the Appellants and Respondents and a copy shall also be forwarded to the concerned DRT and uploaded in the official website.

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Order signed and pronounced in the open Court on this the 23^rd day of June, 2025.

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(Anil Kumar Srivastava, J) Chairperson

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Dated 23^rd June 2025

M/s. vaishnavi Trading India Pvt. Ltd. v. Union Bank of India (Corporation Bank)

Case brief

What is this about?

What did the court decide?

M/s. vaishnavi Trading India Pvt. Ltd. v. Union Bank of India (Corporation Bank)

Case brief

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What did the court decide?

What the court decided

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