Allowed

Canara Bank v. Coastal Andhra Agri Feed Technologies

DRAT20 Feb 2025MISC APPEAL/72/2024

Case brief

AI extract

What is this about?

The DRAT Kolkata allowed two miscellaneous appeals against orders permitting respondent's counter-claims. The tribunal held that the lower tribunal erred by admitting counter-claims lacking essential cause of action and limitation clauses as required by CPC. The matter was remanded to decide maintainability afresh.

What did the court decide?

Misc. Appeals allowed. Matter remanded to the Learned DRT to decide the issue of maintainability of the counter-claims afresh.

Canara Bank versus Coastal Andhra Agri Feed Technologies — Banking and Recovery | DRAT (2025)

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Reportable/Non-Reportable

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Misc. Appeal No. 71 of 2024

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(Arising out of O.A. 67 of 2013 in DRT, Visakhapatnam)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Canara Bank (Erstwhile Syndicate Bank) Plot No.52, Gangarajunagar, Kakinada – 533 005 (Authorized Officer: B Jeyaseelan)

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… Appellant

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-Versus-

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Coastal Andhra Agri Feed Technologies, Represented by its Proprietor K.V. Ramanaiah Naidu, son of K. Veera Raghavaiah Naidu, residing at 3-224, Ganga Raju Nagar, Road No. 2, Kakinada -533 005;

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K.V. Ramanaiah Naidu, son of Late Veera Raghavaiah Naidu, 3-224, Ganga Raju Nagar, Road No. 2, Kakinada 533 005, Kakinada District. ... Respondents

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Dr. K. V. Dhanwantry Naidu, son of Late Veera Raghavaiah Naidu, Resident of College Road, Amalapuram, East Godavari District.;

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K. Rajamani, son of Late VeeraRaghavaiah Naidu, Resident of College Road, Amalapuram, East Godavari District;

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Y. V. Parvathi, W/o Sri. Y. Vijaya Kumar, Resident of College Road, Amalapuram, East Godavari District.

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... Proforma Respondents

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Counsel for the Appellant

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Counsel for Respondent No. 2

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… Ms. Aparajita Rao Ms. Swastika Roy … Mr. K.V. Ramanaiah Naidu, in person

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With

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Misc. Appeal No. 72 of 2024

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(Arising out of O.A. 67 of 2013 in DRT, Visakhapatnam)

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Canara Bank (Erstwhile Syndicate Bank) Plot No.52, Gangarajunagar, Kakinada – 533 005 (Authorized Officer: B Jeyaseelan)

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… Appellant

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-Versus-

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Coastal Andhra Agri Feed Technologies, Represented by its Proprietor K.V. Ramanaiah Naidu, son of K. Veera Raghavaiah Naidu, residing at 3-224, Ganga Raju Nagar, Road No. 2, Kakinada -533 005;

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata

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K.V. Ramanaiah Naidu, son of Late Veera Raghavaiah Naidu, 3-224, Ganga Raju Nagar, Road No. 2, Kakinada 533 005, Kakinada District. ... Respondents

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Dr. K. V. Dhanwantry Naidu, son of Late Veera Raghavaiah Naidu, Resident of College Road, Amalapuram, East Godavari District.;

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K. Rajamani, son of Late VeeraRaghavaiah Naidu, Resident of College Road, Amalapuram, East Godavari District;

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Y. V. Parvathi, W/o Sri. Y. Vijaya Kumar, Household Duties, Malasia. ... Proforma Respondents

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Counsel for the Appellant

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Counsel for the Appellant … Ms. Aparajita Rao Ms. Swastika Roy Counsel for Respondent No. 2 … Mr. K.V. Ramanaiah Naidu, in person JUDGMENT : 20^th February, 2025

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THE APPELLATE TRIBUNAL :

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1. Both these appeals relates to the same matter pending before Learned DRT arising out of O.A. 67 of 2023 (Coastal Andhra Agri Feed Technologies -vs- Syndicate Bank & Others) hence are being decided simultaneously. 2. In Misc. Appeal No. 71 of 2024 judgment and order dated 19.8.2023 passed in I.A. 1483 of 2023 arising out of O.A. 67 of 2013 (Canara Bank -vs- Coastal Andhra Agri Feed & Others) and in Misc. Appeal No. 72 of 2024 judgment and order dated 30.6.2023 passed by Learned DRT, Visakhapatnam in O.A. 67 of 2013 (Canara Bank -vsCoastal Andhra Agri Feed & Others) have been challenged. 3. As per the pleading of the parties, O.A. 67 of 2013 was filed by the Appellant Bank before the Learned DRT, Visakhapatnam for recovery of Rs.35,00,595.72 with

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata consequential reliefs on 18.2.2013. Respondent entered appearance on 19.7.2013 and filed written statement along with counter-claim for Rs.20.00 lac. On 12.5.2016 another counter-claim was filed by the Respondent for an amount of Rs.3,64,45,212.00.

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3. On 17.11.2017 a third counter-claim was filed for an amount of Rs.9,64,10,353.00 with an application, I.A. 1820 of 2022, for leave to file the third counter-claim. 4. In the meantime, on 22.6.2022, Appellant was directed to file its Evidence. Appellant tendered the Evidence on 22.6.2022. Learned DRT allowed the I.A. 1820 of 2022 on 30^th June, 2023 thereby allowing the Respondents for filing the second and third counter claim. 5. On 3^rd July, 2013, DRT directed the Respondents to file an amendment application in place of numbering the second and third counter-claims. Thereafter I.A. 1483 of 2023 was filed for amendment of the counter-claim which was allowed by the impugned order dated 19.8.2023. In Misc. Appeal No. 72 of 2024, the impugned order under challenge is dated 30^th June, 2023 whereby the Learned DRT allowed the second and third counter-claims of the Respondents for admission. Registrar was directed to register the counter-claims.

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6. Feeling aggrieved by the impugned orders, Appellant preferred the instant Misc. Appeals. 7. I have heard the Learned Counsel for Appellant as well as Respondent No. 2, namely, Mr. K.V. Ramanaiah Naidu, in person and perused the records.

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata 8. Facts of the matter are not in dispute. Admittedly, O.A. was filed by the Appellant Bank for recovery of Rs.35,00,595.72 It is also not in dispute that the written statement was filed by the Respondents on 19.7.2013 along with the counter-claim of Rs.20.00 lac. Thereafter two counter-claims raising the amount from Rs.20.00 lac to Rs.3,64,45,212.00 and thereafter to Rs.9,64,10,353.00 were filed on 12.5.2016 and 17.11.2017 respectively which were taken on record by the Learned DRT on 30^th June, 2023. Thereafter, amendment in the written statement was allowed by the impugned order dated 19.8.2023.

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9. Learned Counsel for Appellant would submit that the whole exercise done by the Learned DRT is against law. Basic ingredients of the counter-claim have not been looked into. Successive counter claims have been admitted on record by order dated 30^th June, 2023 even thereafter amendment was allowed to be incorporated in the written statement on 19.8.2023. Learned DRT failed to analyse the basic principles of law regarding counter-claim, as contained in Order 8 Rule 6A C.P.C. and Section 19 sub-section (8) of the Recovery of Debts And Bankruptcy Act, 1993. It is further submitted that the counter-claim has to be treated as a plaint. But neither any clause of cause of action was mentioned in the counter-claim nor any clause for limitation is there. Furthermore, when the cause of action arose in favour of the Respondents for filing the counter claim or whether the counter claim was filed within the period of limitation or not was also not mentioned in the

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata counter-claim. Learned Counsel has placed reliance upon Hon’ble Apex Court (3 Hon’ble Judges Bench) in Ashok Kumar Kalra -vs- Wing Commandar Surendra Agnihotri & Others [(2020) 2 SCC 394] and Vidyabai & Others -vsPadmalatha & Another [(2009) 2 SCC 409].

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10. Per contra, Respondent No. 2, appearing in person, opposed the prayer and submitted that great irregularities have been committed by the Bank in initiating SARFAESI proceedings against the Respondent thus the Respondent is entitled for damages. Accordingly, counter-claim was filed by the Respondent. Initially, a counter-claim for Rs.20.00 lac was submitted. Subsequently, on examining the records, Respondent found the quantum of damages should be enhanced and second counter-claim for Rs.3,64,45,212.00 was filed. Thereafter third counter-claim for Rs.9,64,10,353.00 was filed. Leave of the Tribunal could not be obtained initially but was subsequently leave was sought for and the counter-claims were directed to be registered. It is further submitted that Appellant Bank has filed the evidence after a delay of more than about four and a half years. Counter claim was filed well within time.

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11. Respondent No. 2, in person, has also placed reliance upon Ashok Kumar Kalra -vs- Wing Commandar Surendra Agnihotri and Others [(2020) 2 SCC 394] and Vidyabai and Others -vs- Padmalatha & Another [(2009) 2 SCC 409]. Some other judgments have also been relied upon which are not relevant in the matter.

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata

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12. At the very outset, it is to be seen as what is the law and concept of counter claim?

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13. Hon’ble Apex Court in the case of Ashok Kumar Kalra (supra) has placed reliance upon Order 8 Rule 6A C.P.C. which reads as under :

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“Order 8 Rule 6-A:

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"6-A. Counterclaim by defendant. (1) A defendant in a suit may, in addition to his right of pleading a set-off under Rule 6, set up, by way of counterclaim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counterclaim is in the nature of a claim for damages or not:

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Provided that such counterclaim shall not exceed the pecuniary limits of the jurisdiction of the court.

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(2) Such counterclaim shall have the same effect as a cross-suit so as to enable the court to pronounce a final judgment in the same suit, both on the original claim and on the counterclaim.

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(3) The plaintiff shall be at liberty to file a written statement in answer to the counterclaim of the defendant within such period as may be fixed by the court.

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(4) The counterclaim shall be treated as a plaint and governed by the rules applicable to plaints."

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14. It is held by the Hon’ble Apex Court in Ashok Kumar Kalra (supra) that the counter claim shall be treated as a plaint and governed by the rules applicable to plaints. Hon’ble Apex Court held in paragraph 17 that :

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At the cost of repetition, we may note the conditions for filing a counterclaim under Order 8 Rule 6-A:

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(i) Counterclaim can be for claim of damages or otherwise.

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(ii) Counterclaim should relate to the cause of action, which may accrue before or even after filing the suit.

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(iii) If the cause of action in the counterclaim relates to one accrued after filing of suit, it should be one accruing before filing of the written statement or the time given for the same.

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When we look at the whole scheme of Order 8 CPC, it unequivocally points out at the legislative intent to advance the cause of justice by placing embargo on the belated filing of written statement, set-off and counterclaim.”

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15. Further it was held by the Hon’ble Apex Court in paragraph 21 that :

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata “21. We sum up our findings, that Order 8 Rule 6-A C.P.C. does not put an embargo on filing the counterclaim after filing the written statement, rather the restriction is only with respect to the accrual of the cause of action. Having said so, this does not give absolute right to the defendant to file the counterclaim with substantive delay, even if the limitation period prescribed has not elapsed. The court has to take into consideration the outer limit for filing the counterclaim, which is pegged till the issues are framed. The court in such cases have the discretion to entertain filing of the counterclaim, after taking into consideration and evaluating inclusive factors provided below which are only illustrative, though not exhaustive:

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(i) Period of delay. (ii) Prescribed limitation period for the cause of action pleaded. (iii) Reason for the delay. (iv) Defendant's assertion of his right. (v) Similarity of cause of action between the main suit and the counterclaim.

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(vi) Cost of fresh litigation. (vii) Injustice and abuse of process. (viii) Prejudice to the opposite party. (ix) And facts and circumstances of each case. (x) In any case, not after framing of the issues.”

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16. Hon’ble Apex Court has specifically held that the rules

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of plaint would be applicable to the counter-claim as counter-claim is treated to be a plaint. Generally all the rules of the plaint must be complied with. Limitation is provided under the Limitation Act of 1963 as the time barred suits cannot be entertained under the guise of counter-claim just because of the fact that cause of action arose as per the parameters of Order 8 Rule 6A C.P.C.

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17. Order VII of the C.P.C. deals with the plaint. Order VII Rule 1 C.P.C. provides that the necessary requirement of a plaint should contain a clause regarding cause of action as well as jurisdiction of the Court coupled with the limitation. Order 7 Rule 11 C.P.C. provides that the plaint shall be rejected where it does not disclose a cause of action or barred by any law. The words “barred by any law” covers the period of limitation.

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata

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18. Hon’ble Apex Court in Ashoke Kumar Kalra (supra) has also enumerated the factors which should be considered by the Courts for entertaining the counter-claim wherein a necessary requirement is about the clause regarding accrual of cause of action as well as the period of limitation. These are mandatory provisions which should be complied with and looked into by the Courts before entertaining a counter claim.

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19. Now, in the light of the law laid down by the Hon’ble Apex Court, if we examine the counter-claim as filed by the Respondent, prima facie it is to be seen as to whether the requirements of law have been complied with by the Respondent or not? Whether the limitation clause, cause of action clause and the requirement of Order VII C.P.C. have been complied with or not?

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20. A bare perusal of all the three counter-claims prima facie reveals that these clauses did not find place in the counter-claims. A counter-claim can only be entertained subject to the provisions of law as enumerated above. Learned DRT entertained three counter claims one after the other, and also allowed the Respondent to make amendment in the first counter-claim without recording any finding about the maintainability of the counter-claim.

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21. As far as issue of entertaining the counter-claim at the stage of beginning of the Evidence is concerned, I am leaving it open as recording a finding in the appeal may affect the finding of the Learned DRT. But at this stage it suffices to say that the Learned DRT ignored the provisions

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata of law at the time of entertaining the first counter-claim and thereafter the subsequent counter-claims. Learned DRT is required to look into the issue of maintainability of the counter-claims in view of the law laid down by the Hon’ble Apex Court in the case of Ashok Kumar Kalra (supra). Thereafter, if the Learned DRT finds that the first counter-claim is legally maintainable, then he should pass appropriate orders on subsequent counter-claims or on the amendment applications. But at this stage, without entering into the merits of the matter, I find it appropriate to remand the matter to the Learned DRT to decide the issue of maintainability of the counter-claims afresh in the light of the observation made in the body of the judgment.

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22. Respondent, in person, has placed reliance upon a number of judgments, including Ashok Kumar Kalra (supra). Since the judgment of the Hon’ble Apex Court in Ashok Kumar Kalra (supra) covers the field, no separate finding is being recorded on the other judgments relied upon by the Respondent.

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23. On the basis of the discussion made above, I am of the considered view that both the appeals deserve to be allowed and the matter is liable to be remanded to Learned DRT to decide the issue of maintainability of the counter claims afresh.

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O R D E R

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Both the appeals, Misc. Appeal No. 71 of 2024 and Misc. Appeal No. 72 of 2024, are allowed. Matter is

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Misc. Appeal No. 71 of 2024 & Misc. Appeal No. 72 of 2024-DRAT-Kolkata remanded to Learned DRT to decide afresh about the maintainability of the first counter-claim. If the first counter-claim is maintainable, Learned DRT should pass appropriate orders on the amendment application moved by the Respondent herein after giving opportunity of hearing to the parties.

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Since this is an old matter, it is expected that the Learned DRT would decide the same expeditiously.

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Parties are directed to appear before the Learned DRT on 20^th March, 2025.

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No order as to costs.

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File be consigned to Record room.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Copy of the order be retained in the records of Misc. Appeal No. 72 of 2024.