M/S KUSUM ENTERPRISES, vs HDFC BANK on 1 May 2024

**ORDER**

1. 1. These are time bound matters by the Hon'ble High Court of Allahabad. Similar facts are involved in both the MAs, therefore, both the MAs are being disposed off by common order.

2. 2. These M.A.s have been filed by the M. Applicants requesting therein to set aside the Ex-parte order dated 31.07.2020 passed by this Tribunal in O. A. No. 1344 of 2019 and to decide the same after the M. Applicants otherwise, the M. applicant shall suffer irreparable loss and injury.

3. 3. The replies of the M. Applications have not been filed by the respondent Bank. However, the Ld. Counsel for the respondent Bank is ready to argue the matters on merits. Written arguments on behalf of both the parties have already been filed.

4. 4. Heart the learned counsels appearing for the parties on merits of the M. A.

5. 5. Ld. Counsel for the M. Applicants submitted that the restoration can be claimed as a right for n^th times, whereas starkly opposite of restoration – in recall absenting defendant/respondent cannot claim recall of order as a matter of right. It is further submitted that absenting defendant has to explain as to what stopped/prevented him from participating in court proceedings and ground for recall of ex-parte order is part of Order 9 Rule 13 of code of Civil Procedure, 1908.

6. Ld. Counsel for the M. Applicants further submitted that in any cases wherein a decree is passed ex parte against a defendant, such defendant may apply to the Court by which the decree was passed for an order to set it aside and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with provided that where the decree is of such a nature that it cannot be set aside as against such defendant only, it may be set aside as against all or any of the other defendants also provided further that no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim.

7. It is further submitted that at the relevant point of time i.e. between May 2020 to July 2020 as to what was such an urgency or compelling circumstances which hard pressed the Bank to get the Original Application disposed when entire country was at a standstill due to pandemic? It is submitted that during the aforesaid time, the entire world was almost at a halt due to COVID-19 pandemic. Though, some relaxations were given but on actual ground movements were very restricted. It is submitted that going out was like countering the looming death and coming back was like apprehension of with infection for self and for loved ones. It is submitted that no sane person dared to go out unnecessarily. It is submitted that it was not possible for the M. Applicants to visit Allahabad from Varanasi and meeting with the Counsel. No lodging facility was available in Hotels as night lockdown from 10 PM to 5 PM was still in vogue. It is further submitted that virtual hearing was an absolutely new concept and most of the persons including the M. Applicants were not well versed with the concept of Virtual hearing. The video quality, audibility and connectivity was not so perfect. It is further submitted that at that point of time the Registrar of this Tribunal has himself categorically admitted in his report dated 6^th July, 2020 that actual VC depends upon technical and other factors beyond control of the Debts Recovery Tribunal. Moreover, the lawyers were neither equipped nor well versed with this system.

8. Ld. Counsel for the M. Applicants further submitted that the defendant No. 2 was 42 years old and defendant No. 3 was 84 years at that point of time and the defendant No. 3 is also a neuro patient and he was also a victim of first wave of COVID-19 in April/May-2020. It is submitted that even if it is assumed that the M. Applicants were informed regarding notices/summons dated 15.07.2019 to appear before the Court physically or through VC on 28.07.2019 inspite of that it was obviously not feasible for the M. Applicants to appear as it was beyond their control. It is submitted that the defendants are semi-literate besides being technically illiterate unskilled, untrained and uninformed. It is submitted that hence on the aforesaid practical reasons, this Hon'ble Tribunal may be pleased to appreciate that this was impossible for Applicants to participate in court proceedings during the relevant point of time. It is further submitted that this Tribunal proceeded forthwith on misconceived report of Ld. Registrar of this Tribunal. It is submitted that the urgency application was already declined on 27^th May 2020, and, there was no further order for reconsidering the same Urgency Application. It is submitted that on the oral and misconceived submissions of the Ld. Counsel for the respondent Bank, the Registrar had placed the case before the Hon'ble Presiding Officer on 9^th July 2020 whereas, one week advance application was required as per DRT Notification dated 08.06.2020. It is submitted that the Ld. Counsel for the respondent Bank has made reference of two different Original Applications in one application therefore, the application is rather a generic application for more than one case in one single application, which is not permissible in the eye of law. It is submitted that the Bank's Counsel stated in is e-mail dated 4^th July, 2020 that lockdown has been lifted hence the case may now be heard ex-parte but through video conferencing. Whereas, the Ld. counsel ought to have filed two separate applications before the Registrar for getting the matter placed in supplementary cause list on 28^th July 2020 at Sl. No. 6.

9. It is further submitted that notwithstanding Ld. Registrar's reported on 6^th July 2020 that, "The notice Dt.: 08.06.2020 categorically mentions that actual video conferencing depends upon technical and oehr factors of this office; yet in same breathe Ld. Registrar reported let the file be placed before Hon'ble Presiding Officer. This reporting clearly strengthens Applicants' aforesaid submission regarding technical glitches, shortcomings and handicap in the office. Order sheets clearly reveal that opportunity was never closed for defendants till 25^th July 2020, hence, it is submitted that reference of Section 19 (5) (i) of RDB Act was not necessitated that too under those prevailing facts & circumstances of global pandemic. It is submitted that on 6^th July 2020 Applicant Bank's Counsel made a false and deceptive statement which is recorded by the Ld. Registrar in his report Dt.: 6^th July 2019 with regard to his Application dated 27.05.2020 which was declined already and there was no fresh/ separate Application on record. This Hon'ble Tribunal's indulgence is also craved on Applicant (Defendants) statement that he had engaged a lawyer after receipt of summons and notice. This is a fact that all a parties can file a case this is why it is said that, "party should not be made to bear the loss for his Counsel's conduct." It is further submitted that in addition to aforesaid in the interest of justice, this Hon'ble Tribunal may also be pleased to consider taking in a rational and pragmatic manner is much warranted pedantic approach while dealing with Appellant's explanation of the absence during unprecedented global pandemic period. Furthermore, this Hon'ble Tribunal may be also be pleased to consider that between substantial justice and technical considerations, the substantial justice should get precedence first since the other side cannot contend to have a superior right in injustice being done under a bona fide mistake. This Hon'ble Tribunal's kind indulgence is craved on Hon'ble Supreme Court's Order dated 23^rd Sep. 2021 passed in Misc. Application No.- 665 of 2021 In SMW (C) No.- 03 of 2020. By means of this order Hon'ble

Supreme Court was pleased to exclude limitation for the period between 15.03.2020 to 02.10.2021. Meaning thereby Hon'ble Supreme Court itself observed this period as grey period since Hon'ble Supreme Court had also observed that it was very hard for litigants to approach Courts. Hon'ble Supreme Court's Order dated 23^rd Sep. 2021 passed in Misc. Application No.- 665 of 2021 in SMW (C) No.- 03 of 2020. Taking light and guidance from Hon'ble Supreme Court aforesaid dictation, this Hon'ble Tribunal may be pleased to examine most unwarranted aggression to get the Original Application disposed off. Hence, in view of aforestated facts & circumstances this Hon'ble Tribunal may be pleased to reason with the fact that Applicants absentia was neither deliberate nor intentional but purely incidental in participating in the court proceedings, and, for the reasons stated in aforegoing paragraphs. Request is made that this Hon'ble Tribunal may most graciously be pleased to recall its ex-parte order Dt.: 31.07.2020 passed in Original Application No.- 1344 of 2019 In-Re HDFC Bank Ltd. V/s. Kusum Enterprises. The Ld. Counsel for the M. Applicants has cited following CASE LAWS / PRECEDENTS: *Murugesan V. Jamuna Rani*, (2019) 20 SCC 803 Hon'ble Supreme Court reiterated the observations made in the case of G.P. Srivastava v. R.K. Raizada (2000) 3 SCC 54 (2), and said that "Under Order IX rule 13 CPC an ex parte decree passed against a defendant can be set aside upon satisfaction of the court that either the summons was not duly served upon the defendant or he was prevented by any "sufficient cause" from appearing when the suit was called on for hearing. Unless "sufficient cause" is shown for non-appearance of the defendant in the case on the date of hearing, the court has no power to set aside an ex parte decree. The words "was prevented by any sufficient cause from appearing" must be liberally construed to enable the court to do complete justice between the parties particularly when no negligence or inaction is imputable to the erring party. Sufficient cause for the purpose of order 9 Rule 13 has to be construed as an elastic expression for which no hard-and-fast guidelines can be prescribed. The courts have a wide discretion in deciding the sufficient cause keeping in view the peculiar facts and circumstances of each case. The "sufficient cause" for non-appearance refers to the date on which the absence was made a ground for proceeding ex parte and cannot be stretched to rely upon other circumstances anterior in time. If "sufficient cause" is made out for non-appearance of the defendant on the date fixed for hearing when ex parte proceedings were initiated against him, he cannot be penalized for his previous negligence which had been overlooked and thereby condoned earlier. In a case where the defendant approaches the court immediately and within the statutory time specified, the discretion is normally exercised in his favour, provided the absence was not mala fide or intentional. For the absence of a party in a case the other side can be compensated by adequate costs and the lis decided on merits". 2. *Subodh Kumar V. Shamim Ahmed and others* 2021 SCC Online SC 164. Hon'ble apex court held that Application under Order IX Rule 13 CPC can be allowed only when sufficient cause is made out to set aside ex parte decree. It is submitted that the crux of Order IX Rule 13 is not only "whether the summons was duly served or not" but also "whether the defendant has knowledge of the date of hearing or not AND whether he has sufficient time to present his case or not". Also, the defendant has to show the 'sufficient cause' for his non-appearance to set aside an ex parte decree. Once the "sufficient cause" is made out, which impliedly includes 'non-service of summons or ignorance of the date of hearing or insufficiency of time to present the case', the court shall set aside the ex parte decree against the defendant under Order IX Rule 13 of the Code of Civil Procedure. (3) Bhanu Kumar Jain V/s. Archana Kumar (S.L.P. (C) No. 6392 of 2003). The Hon'ble Supreme Court stated that it is permissible for the defendant to argue that he had sufficient and reasonable grounds for not being able to attend the hearing of the suit on a relevant day, except to challenge the authenticity or otherwise of an order posting the matter for ex-parte hearing. Request is made that the M. Applications may be allowed and the order dated 31.07.2019 may be recalled.

10. On the other hand, Ld. Counsel for the respondent Bank submitted that the Applicant Bank sanctioned a limit of Rs. 170 Lakh to the defendant no. 1 through its proprietor defendant no. 2 on 08.11.2016. It is further submitted that under the Bank's sanction letter dated 09.11.2016 the defendant no. 1 through its authorised proprietor executed certain documents in favour of Applicant Bank in order to secure the repayment of the Sanction Credit Facilities of Rs. 170 Lakh by taking over the banking facilities from Bank of Baroda by paying Rs. 98 Lakh. The defendant no. 3 created equitable mortgage over the property described in sanction letter on 31.12.2016. The defendant no. 1 to 3 failed to maintained the financial discipline in terms of sanction Letter as well as document executed by Defendants despite repeated requests and reminders from the Applicant Bank, then the Applicant bank recalled the credit facilities & invoked the Guarantees vide Recall notice dated 21.10.2019. It is further submitted that after recalling the credit facilities granted to the Defendant No. 1 to 3, the appellant bank filed an Original Application bearing no. 1344 of 2019 under section 19 of the RDB, Act 1993 on 01.11.2019 against Defendant No. 1 to 3 before Debts Recovery Tribunal, Allahabad for recovery of Rs. 18094717.88. Further, on 08.11.2019, Ld. DRT, Allahabad issued the summons to the Defendant no. 1 to 3 by fixing the next date 31.12.2019. On 20.11.2019, the appellant bank served summons upon Defendant no. 1 to 3 through registered post but Defendant no. 1 to 3 neither appeared before Ld. Debts Recovery Tribunal, Allahabad on the next date 31.12.2019 nor filed any objection to the Original Application but due to COVID-19 pandemic, Ld. Debts Recovery Tribunal, Allahabad vide its order dated 09.07.2020 again provided an opportunity to the Defendant no. 1 to 3 to appear by fixing the date 31.07.2020. In pursuance to order dated 09.07.2020, notices were sent to Defendant no. 1 to 3 on 10.07.2020 through registered post which served upon Defendant no. 1 to 3 on 15.07.2020 but on 31.07.2020 Defendant no. 1 to 3 did not appeared before the Ld. Debts Recovery Tribunal, Allahabad. On 31.07.2020 Original Application bearing no. 1344 of 2019 of the appellant banks decreed against Defendant no. 1 to 3 for Rs. 18094717.88 along with pendentilite and future interest @ 12.5% per annum compound interest monthly till the date of realization with cost whereupon, on 06.08.2020. Ld. Debts Recovery Tribunal, Allahabad issued Recovery Certificate bearing no. 123 of 2020. In pursuance to Recovery Certificate bearing no. 123 of 2020 dated 06.08.2020, office of

Ld. Recovery Officer issued a demand notice to the Defendant JDs and despite of service of demand notice, the Defendant JDs not appeared before Ld. Recovery Officer. On 05.04.2021 Appellant bank filed an application under section 25(aa) of the RDB Act, 1993 for physical possession of the mortgaged property whereupon the defendant no. 1 to 3 filed a Recall Application No. 35 & 36 of the 2021 before this Hon'ble Tribunal on 15.07.2021 and vide order dated 06.08.2021, this Hon'ble Tribunal issue to notices to the bank and counsel for the defendant took steps but notice not sent to bank and takes time for filing of serve report upto one year which is recorded by this tribunal in its order dated 14.11.2022. It is further submitted that after coming the knowledge about the Misc Application no. 36 of 2021 from the cause list, counsel for the bank appeared on 03.11.2021 in Misc Application no. 36 of 2021 but due to not having any knowledge, counsel for the bank could not appeared in Misc Application no. 35 of 2021 while on several dated counsel for the bank appeared in both cases and requested for providing the copy of both application but same did not provided by the counsel despite of several order of this Hon'ble Tribunal, however copy of the Misc Application no. 36 of 2021 provide on 16.04.2024 under the order dated 12.04.2024 passed by Hon'ble Allahabad High Court but not provided the copy of the Misc Application no. 36 of 2021 till date. Despite of observation recorded by the Ld. Registrar dated 14.11.2022, counsel for the M. Applicant mislead to this Hon'ble Court and requested to send the Notice to DGM of the bank and on request of the M. Applicant this Hon'ble tribunal send the notice to DGM of the bank without considering the observation of the Ld. Registrar. It is further submitted that on 20.07.2022. Ld. Recovery Officer DRT, Allahabad issued attachment order by fixing the date 30.08.2022. Despite of service of attachment order Defendant no. 1 to 3 not appeared before R.O. hence mortgaged property attached by the Ld. Recovery Officer DRT, Allahabad on 30.08.2022. After attachment of mortgaged property, Defendant no. 3 filed an objection against attachment on 04.11.2022. Objection dated 04.11.2022 filed by the Defendant no. 3 rejected by the Ld. Recovery Officer DRT, Allahabad on 19.08.2023. Against order dated 19.08.2023 passed by Recovery Officer DRT, Allahabad respondent no. 3 filed an appeal no. 09/2023 before Ld. DRT, Allahabad under section 30 of the RDB, Act 1993 on 29.09.2023. Ld. DRT, Allahabad dismissed the appeal 09/2023 on 18.10.2023 as non-maintainable against which defendant no. 3 failed to file any appeal under section 20 of the RDB, Act 1993. It is further submitted that on 09.02.2024, Ld. Recovery Officer DRT, Allahabad passed an order for physical possession of the mortgaged property by fixing the date 11.03.2024 for possession and appointed Sandeep Kumar Mishra as advocate commissioner as well as Sri Suyash Narayan as receiver. Against order dated 09.02.2024 instead of filing an appeal under section 30 of the RDB Act, 1993 against order dated 09.02.2024 defendant no. 1 to 3 filed a Writ Petition before Hon'ble Allahabad High Court.

11. Ld. Counsel for the respondent Bank further submitted that despite of knowledge of execution proceeding is going on, respondents M. Applicants failed to press their both Misc Application under bad intension and filed a writ petition before Hon'ble Allahabad High Court with averment that Ld. DRT is not deciding the Misc. Application as Bank is

appeared before Ld. DRT, Allahabad but not filed its reply till date by concealing material facts with regard to non-supplied the copy of Misc. Application to the counsel for the bank till filing of writ petition before Hon'ble Allahabad High Court. It is further submitted that on 11.03.2024, Ld. Recovery Officer DRT, Allahabad took physical possession of the mortgaged property through Sandeep Kumar Mishra and handed over to Court Receiver. In paragraph 5 of the Misc Application no. 36 of 2021 respondent no. 1 to 3 stated that after receiving the notice issued by the Ld. Tribunal on 08.11.2019, they engaged a counsel namely Mr. Vivek Kumar Singh by handing over the Vakalatnama & relevant documents which clearly shows that proceeding of Original Application was well within knowledge of the respondents M. Applicants and notices was sent on correct address. It is submitted that the respondents M. Applicants failed to disclose their due diligence against proceeding of Original Application as due to COVID-19 pandemic, Ld. Debts Recovery Tribunal, Allahabad vide its order dated 09.07.2020 again provide an opportunity to the defendant no. 1 to 3 to appear by fixing the date 31.07.2020 but despite of receiving the notices Defendant no. 1 to 3 intentionally did not appear before the Ld. Debts Recovery Tribunal, Allahabad and even not made any averment in its application about non-appearance despite of receiving the notices issued by the Ld. Tribunal vide its order dated 09.07.2020. It is further submitted that the respondents M. Applicants also failed to make an averment about their activities with their alleged appointed counsel Mr. Vivek Kumar Singh after receiving the notices issued by Ld. Debts Recovery Tribunal, Allahabad vide its order dated 09.07.2020 as an opportunity Due to COVID-19 pandemic. The respondents M. Applicants failed to disclose any cogent reason which could show their inability to participate in proceeding of Original Application despite of admitted fact that they have knowledge, about the proceedings Original Application from Nov., 2019. It is further submitted that as per averment made in paragraph 13 of the Misc Application no. 36 of 2021, it is admitted facts that order dated 31.07.2020 was received to respondents M. Applicants in first week of August, 2020 which clearly shows that respondents M. Applicants have knowledge about paragraph (iii) of the order dated 31.07.2020 wherein Ld. DRT restrained to respondents M. Applicants from creating third party interest over the mortgaged property without first paying the dues of the bank but despite of knowledge of order, respondents M. Applicants created third party interest over the mortgaged property by executing a registered lease deed dated 15.03.2022 in favour of one M/s Om Shri Enterprises through its proprietor Bhaiya Lal Patel without having any authority. It is submitted that in view of the aforesaid facts mentioned in above paragraph both Misc Application no. 35 & 36 of 2021 filed by the respondents M. Applicants for recalling the Ex-parte order dated 31.07.2020 in Original Application No. 1344 of 2019 is liable to be dismissed with heavy cost.

12. Considered the rival contentions of the parties and perused the records.

13. On perusal of record, it appears that the Applicant Bank vide sanctioned letter dated 09.11.2016 sanctioned a limit of Rs. 170 Lakh to the defendant no. 1 through its proprietor defendant no. 2. Whereupon, the proprietor of the firm executed security documents in favour of Applicant Bank to secure the repayment of the said Credit Facilities. The defendant no. 3 created equitable mortgage over the property described in sanction letter on 31.12.2016. The defendant no. 1 to 3 failed to maintain the financial discipline in terms of sanction Letter as well as document executed by M. Applicants despite repeated requests and reminders. Therefore, the Applicant bank recalled the credit facilities & invoked the Guarantees vide Recall notice dated 21.10.2019. Thereafter, the appellant bank filed Original Application No. 1344 of 2019 under section 19 of the RDB, Act 1993 on 01.11.2019 before this Tribunal for recovery of Rs. 18094717.88.

14. The records available in the present matter further reveal that on 08.11.2019, the summons were issued to the M. Applicants (Defendant nos. 1 to 3) by fixing the next date 31.12.2019 but the defendants did not appear and due to COVID-19 pandemic, vide order dated 09.07.2020, this Tribunal again provided an opportunity to the M. Applicants (defendants) by fixing the date 31.07.2020. In pursuance to order dated 09.07.2020, notices were sent to M. Applicants (Defendants) on 10.07.2020 through registered post which served upon M. Applicants (Defendants) on 15.07.2020 but on 31.07.2020 the defendants again did not appeared before this Tribunal. On 31.07.2020 Original Application No. 1344 of 2019 was decreed against M. Applicants (Defendants) for a sum of Rs. 18094717.88 along with pendentilite and future interest @ 12.5% per annum compound interest monthly till the date of realization with cost.

15. On perusal of record, it appears that this Tribunal issued Recovery Certificate No. 123 of 2020 dated 06.08.2020 pursuant to which the office of Ld. Recovery Officer issued a demand notice to the M. Applicants (Defendants JDs) and despite of service of demand notice, the M. Applicants (Defendant JDs) did not appear before Ld. Recovery Officer. On 05.04.2021, the respondent bank filed an application under section 25(aa) of the RDB Act, 1993 for taking physical possession of the mortgaged property whereupon, the M. Applicants (defendants) have filed this recall Application on 15.07.2021.

16. On perusal of record, it appears that despite having knowledge about execution proceeding, the M. Applicants failed to press their Misc. Application and filed a writ petition before Hon'ble Allahabad High Court. In paragraph 5 of the Misc. Application, the M. Applicants (defendants) have stated that after receiving the notice issued by this Tribunal on 08.11.2019, they had engaged a counsel namely Mr. Vivek Kumar Singh by handing over the Vakalatnama & relevant documents which clearly shows that proceeding of Original Application, was well within their knowledge and notices were sent on correct address. The M. Applicants failed to show their due diligence against proceeding of Original Application as due to COVID-19 pandemic, vide its order dated 09.07.2020, this Tribunal again provided an opportunity to the M. Applicants (defendants) to appear by fixing the date 31.07.2020 but despite of receiving the notices, the M. Applicants (Defendants) did not appear before this Tribunal and even not made any averment in its application about non-appearance despite of receiving the notices vide order dated 09.07.2020.

DRT, ALLAHABAD9MA 35 & 36 of 2021 [J]

17. The record further reveals that the M. Applicants also failed to make an averment about their activities with their alleged appointed counsel Mr. Vivek Kumar Singh after receiving the notices issued by this Tribunal vide its order dated 09.07.2020 as an opportunity due to COVID-19 pandemic. The respondents M. Applicants are failed to disclosed any cogent reason which could show their inability to participate in proceedings of Original Application despite of admitted fact that they have knowledge about the proceedings Original Application from Nov., 2019.

18. The records available further demonstrate that in paragraph 13 of the Misc. Application, it is admitted facts that order dated 31.07.2020 was received to the M. Applicants in first week of August, 2020 which clearly shows that respondents M. Applicants had knowledge about paragraph (iii) of the order dated 31.07.2020 wherein Ld. DRT restrained the M. Applicants from creating third party interest over the mortgaged property without first paying the dues of the bank but despite of knowledge of order, the M. Applicants created third party interest over the mortgaged property by executing a registered lease deed dated 15.03.2022 in favour of one M/s Om Shri Enterprises through its proprietor Bhaiya Lal Patel without having any authority.

19. In view of above, since inspite of having knowledge as also admitted by the M. Applicants, the M. Applicants did not appear before this Tribunal to contest the case, therefore, the request of the M. Applicants to recall/set aside the order dated 31.07.2020 is liable to dismissed.

Both the M. Applications, filed by the M. Applicants are, hereby, dismissed.

This order shall not prejudice any order, passed by higher Courts.

I.A./Interim order passed earlier stands vacated.

A copy of this order be furnished to the parties as per Rules.

Order signed, sealed, dated and pronounced in the open court on this 1^st Day of May, 2024.

Dictated & Corrected by me.

[R. M. Kushawaha] Presiding Officer Debts Recovery Tribunal, Allahabad

[R. M. Kushawaha] Presiding Officer Debts Recovery Tribunal, Allahabad

VK