Shri Bhagwan Devji Rathod vs India SME Asset Reconstruction Co Ltd on 19 December 2020

J U D G M E N T

The applicants filed Securitisation Application No.69 of 2010 under sub-section (1) of Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the 2002 Act’). Feeling aggrieved by the measure initiated by the defendant bank of taking symbolic possession on 27th September 2010, the applicants have knocked the door of this Tribunal.

Few dates are relevant for the adjudication of the Securitisation Application. The material placed before me reveals that the account of the principal borrower was classified as Non Performing Asset on 29th March 2007. The defendant issued statutory demand notice on

20th May calling upon the principal borrower and the applicants to make the payment of the outstanding within 60 days. Since the principal borrower and the applicants failed to pay, the defendant initiated the measure under sub-section (4) of Section 13 of the 2002 Act read with the Security Interest (Enforcement) Rules, 2002 (for short ‘the said Rules’).

Pending the Securitisation Application, the defendant had put the mortgaged property for auction which is described in paragraph no.4.02 of the Securitisation Application. Securitisation Application No.69 of 2010 was dismissed for want of prosecution on 13th August 2015.

The applicants have moved this Tribunal by filing the Miscellaneous Application under sub- section (7) of Section 17 of the 2002 Act read with sub-section (25) of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short ‘the 1993 Act’). The Registry raised the objection with regard to the limitation in filing the Miscellaneous Application for setting aside various orders. According to Mrs Naik, this Tribunal failed to serve the order dated 13th August 2015 as per the Rule 16 of the Debts Recovery Tribunal

(Procedure) Rules,

(for short ‘the Procedural Rules’).

It is the case of the applicants that on 7th June 2006, the defendant sanctioned the credit facilities in the sum of Rs.1190 lakhs. The applicants approached the defendant with the restructured proposal on 30th January 2009. According to the applicants, the defendant issued the statutory notice on 11th February 2010 for the outstanding amount in the sum of Rs.14,51,10,445.33. On 5th March 2010, the applicants replied to the notice. On 15th March the defendant responded to the representation made by the applicants. On 5th April 2010, the applicants addressed letter to the defendant. The applicants approached the defendant to consider one time settlement proposal vide letters dated 26th June 2010, 27th July 2010 and 11th August 2010, respectively. On 20th September, 2010, the defendant bank replied to the letters of the applicants in which the outstanding amount of Rs.14,51,10,445.33 was shown as due and payable by the applicants to the defendant.

In the possession notice dated 27th September 2010 issued by the defendant, the amount in the sum of Rs.14,51,10,445.33 is claimed to be

outstanding, due and payable by the applicants. Again on 7th October 2010, the defendant addressed letter to the applicants showing the outstanding due and payable by the applicants in the sum of Rs.15,88,38,428/-.

As aforesaid, being aggrieved by the measures under sub-section (4) of Section 13 of the 2002 Act read with the said Rules, the applicants presented Securitisation Application No.69 of 2010 on 11th November 2010.

The applicants moved for urgent ad- interim/interim relief by filing the Interlocutory Application (exhibit no.7). On 27th December 2010, order came to be passed in Interlocutory Application (exhibit no.7) allowing the applicants to deposit the sum of Rs.4 crores. It is the case of the applicants that the sum of Rs.6,73,54,065/- was tendered by way of cheque dated 17th January 2011 to the defendant towards the settlement amount. It is the case of the applicants that the order granted on 27th December 2010 was extended by order dated 3rd February 2011. According to the applicants, the order was passed in Interlocutory Application (exhibit no.23).

It is the case of the applicants that the defendant had already initiated further

proceedings for taking the assistance of the learned Chief Metropolitan Magistrate of taking the physical possession of the secured asset described in paragraph no.4.02 of the Securitisation Application. The defendant filed case no.02/SA/2011 on 8th April 2011 being application under Section 14 of the 2002 Act.

According to the applicants, the defendant bank entered into deed of assignment on 28th March 2014 behind their back thereby assigning the debts along with the underlying securities to the assignee.

The applicants have challenged the measures initiated by the assignee by issuing the public notice on 30th August 2016. The applicants presented Securitisation Application No.115 of 2016 on 27th September 2016 which is pending before this Tribunal and will be listed on 15th January 2021. It is the case of the applicants that the assignee published the auction notice of the properties by suppressing the fact that they deposited the sum of Rs.4 crores and had made certain payments during the pendency of Securitisation Application No.69 of 2010.

According to Mrs Naik, the applicants are not duty bound to file separate application for condonation of delay. The reason which Mrs

Naik stated was that this Tribunal failed to serve the order dated 13th August 2015 as per the Rule 16 of the Procedural Rules.

It is the case of the applicants that they derived the knowledge of the order dated 13th August 2015 namely the dismissal of the Securitisation Application No.69 of for want of prosecution on 23rd December 2018. The applicants therefore, applied for the certified copy of the order dated 13th August 2015, on 20th December 2018. The certified copy was received on 1st January 2019.

It is the case of the applicants that Mr Harshad Rathod, the younger son of the applicant, was looking after their affairs. Mr Harshad Rathod appointed an advocate to look into the legal matters of Mr Bhagwan Rathod. Pursuant to the instructions, the appointee advocate filed vakalatnama (exhibit no.110) on 6th May 2015 in Securitisation Application No.69 of 2010. It is the case of the applicants that since the professional fees was not paid to the appointee advocate, no representation was made on behalf of the applicants. It is in this circumstance that the Securitisation Application No.69 of 2010 was dismissed for want of prosecution.

It is the case of the applicants that there was

differences and disagreement between the applicant no.1 and Mr Harshad Rathod. Consequently, Mr Harshad Rathod stopped taking interest into the matter. The health of applicant no.1 also deteriorated since then. Under the circumstances, the applicant no.1 could not keep the track of the matter.

It is the case of the applicants that the secured creditor again initiated action for recovery under the 2002 Act. The applicants reiterate that the secured creditor has ignored and suppressed the payment in the sum of Rs.4 crores made pursuant to the order of this Tribunal.

It is the case of the applicants that they approached advocate Ms Poonam Utekar who perpetrated fraud by intentionally substituting the name of M/s. India SME Asset Reconstruction Co. Ltd. instead of Canara Bank. The said Ms Poonam Utekar, advocate lodged fresh Securitisation Application bearing No.857 of 2017 which was admitted and registered as Securitisation Application No.115 of 2016. It was for this reason that the applicants could not file the

Application for restoration. The applicants therefore, seeks to condone the delay which is neither intentional nor deliberate. It is the case of the applicants

that the advocate was informed regarding the deposit of Rs.4 crores with Canara Bank and also instructed about the payment in the sum of Rs.4,73,62,168/- till March 2010.

The applicants has raised the query that if the delay is not condoned and the application is not restored what will be the status of the payment made by the applicants to the secured creditor.

It is the case of the applicants that several applications and written arguments were filed by the applicants. Instead of passing the order in the pending Interlocutory Applications, my predecessor dismissed the Securitisation Application for want of prosecution.

The applicants have stated that the non- representation was neither willful nor deliberate. According to the applicants, it was the negligence of the earlier advocate.

The applicants have blamed the earlier advocate for not writing even a single letter or intimated that she will not attend the case for non-payment of the profession fees.

According to the applicants, the defendant has also perpetrated the fraud with them. On 15th June 2019, the assignee got themselves substituted in place and instead of Canara Bank and obtained the order under Section 14.

Thereafter, the assignee took the physical possession of all the properties of the applicants and has now put it for auction sale.

Mrs Naik advanced her arguments based on the aforesaid fact and in support of the applicants’ case, relied upon the judgment in the case of Ganpatbhai Mahijibhai Solanki Versus State Of Gujarat & Ors passed by the Hon’ble Supreme Court of India on 4th March 2008. Mrs Naik relied upon the following observations: “It is now a well settled principle that fraud vitiates all solemn acts. If an order is obtained by reason of commission of fraud, even the principle of natural justice are not required to be complied with for setting aside the same.”

14. The object and purport of a statute must be given effect to. If there is a conflicting interest, the Court may adjust equities but under no circumstance it should refuse to consider the merit of the matter, when its attention is drawn that suppression of material facts has taken place or commission of fraud on Court has been committed.”

The applicants therefore, seeks to condone the delay of 1246 days. According to the applicants, my predecessor erred in not complying with the provisions of Rule 14(2) of the DRT Rules. The applicants claimed that they were not informed and therefore they were ignorant of the order dated 13th August 2015. Mrs Naik in her written submission have stated thus: “And kept the applicants in ignorance of passing of said order in violation of legal maxim “Expressio unin usest exclusive alternis” means if a statute provides for thing to be done in a particular, then it has to be done in that manner only. The said procedural infirmities and not pronouncing the order as per the provisions of the statute and delayed in lodging this Miscellaneous Application prima facie and also misguided by the Advocate as stated earlier and non-attending S.A. No.69/2010 by the Advocate.”

According to the applicants, they came to know about the order dated 13th August belatedly.

Therefore, this Tribunal should consider it as reasonable cause and not deny the justice. Therefore, the delay of 1246 days’ be condoned. In support of the applicants’ case, Mrs Naik has relied upon the observations made by Justice Vivian Bose in the case of Sangram Singh Versus Election Tribunal reported in AIR 1955 SC 425. The relevant observations are reproduced hereunder:

31. We have already seen that when a summons is issued to the defendant it must state whether the hearing is for the settlement of issues only or for the final disposal of the suit (Order 5 Rule 5). In either event, Order 8 Rule 1 comes into play and if the defendant does not present a written statement of his defence, the court can insist that he shall; and if, on being required to do so, he fails to comply— “the court may pronounce judgment against him, or make such order in relation to the suit as it thinks fit”. (Order 8 Rule 10). This invests the court with the widest possible discretion and enables it to see that justice is done to both sides; and also to witnesses if they are present: a matter on which we shall dwell later.

Based on the aforesaid fact, the applicants seeks to condone the delay in filing the Miscellaneous Application for restoration of Securitisation Application No.69 of 2010.

The assignee has opposed the application for restoration as well as to condone the delay. Mr Harshad Garude, authorised officer, has filed the affidavit-in-reply. The assignee states that

the application filed under sub-section (25) of Section 19 is not maintainable. Securitisation Application No.69 of 2010 was dismissed for want of prosecution. The applicants have the specific remedy available but they chose to file the application under sub-section (25) of Section 19 which is not maintainable. The assignee seeks the dismissal of the application with costs.

It is further stated that the application is time- barred and therefore, not maintainable and should be dismissed. It is further stated that the applicants filed the present application after 42 months from the date of passing of the order dated 13th August 2015. It is an afterthought, legally untenable as the applicants have failed to explain the delay. The assignee has specifically raised the issue that in the entire application filed by the applicants, no reason is set out for non-appearance on the part of the applicants in Securitisation Application No.69 of 2010 on the date of hearing that is 13th August 2015.

The assignee states that the application is frivolous and that the applicants have failed to point out any judicial error in the order dated 13th August 2015. The assignee has stated that it has no objection if the applicants want to

withdraw the Securitisation Application filed by them.

The assignee has raised the legal issue that the orders dated 27th December 2010; 8th January 2011 and 3rd February 2011 cannot be made operational as per the prayer clause (c) to the application.

The assignee has stated that this Tribunal is conferred with the powers and therefore, the Securitisation Application No.69 of 2010 was dismissed for want of prosecution as per the law. It is not mandatory for this Tribunal to first dispose of the Interlocutory Application while dismissing the Securitisation Application. Under no circumstances, the order dated 13th August 2015 can be construed as cryptic and non-speaking order. The assignee has supported the order passed by this Tribunal on 13th August 2015 and it cannot be so that it is in violation of any law laid down by the Apex Court. There is no judicial error in the order dated 13th August 2015. The assignee has denied that the applicants have no knowledge of English. The assignee has further denied that the applicants have made out any case for restoration and to condone the delay. The assignee has further stated that advocate cannot be blamed for the

delay in filing the application. The applicants are not diligent in pursing the legal remedies. They are blaming this Tribunal, the advocates appearing for them and everyone else other than themselves for not pursuing the legal remedies.

The defendant as assignee of Canara Bank is entitled to continue with the action and measures under the 2002 Act read with the said Rules. As regards the wrong legal advice, the advocate had called upon the applicants to the proof in respect thereof. It is stated that the applicants have failed to even make prima-facie case for grant of relief as prayed. The assignee has prayed for dismissal of the application.

I have heard the learned counsel for the applicants and defendant in the application to condone the delay and for restoration.

Mrs Naik submitted that the assignee has perpetrated fraud by substituting it in place of Canara Bank as can be seen by order dated 15th June 2019. Mrs Naik submitted that if at all the assignee intends to take the action and measures under the 2002 Act read with the said Rules and in that case the assignee ought to have issued the fresh demand notice. In the absence of fresh demand notice, the assignee cannot initiate the measures. Mrs Naik relied

upon the judgment in the case of T. Vijendra Das for the observations made in paragraph no.21 so also the judgment in the case of Ganpatbhai Solanki (supra). Both these judicial pronouncements were relied upon the propositions of ‘fraud’. Mrs Naik relied upon the decision that the fraud vitiates of solemn act if the order is obtained by fraud.

The defendant issued demand notice calling upon the applicants to pay the sum of Rs.14.41 crores. The learned counsel for the applicants submitted that they deposited Rs.4.73 crores after the issuance of the demand notice. On 27th December 2010, order was passed in Interlocutory Application (exhibit no.7). This Tribunal directed the applicants to deposit Rs.4 crores. The applicants complied with the order dated 6th January 2011 by depositing Rs.4 crores with the defendant bank during the pendency of the Securitisation Application No.69 of 2010. On 6th January 2011 and on 3rd February 2011, this Tribunal extended the interim order. The applicants have made the aggregate payment in the sum of Rs.8.73 crores. On 20th September 2010, the defendant has shown the sum of Rs.15.13 crores as the amount due and payable by the applicants. On 7th

October 2013, the defendant claimed the sum of Rs.15.88 crores as the outstanding amount due and payable by the applicants. During the pendency of Securitisation Application No.69 of 2010, the applicants handed over the cheque in the sum of Rs.6.73 crores towards settlement.

Mrs Naik conceded to the fact that the assignee took the physical possession of

(i) office premises no.202 and 203 at Ready Money premises, 2nd Floor, 167, Dr. Annie Besant Road, Worli, Mumbai 400 018; and (ii) residential flat no.C/505-506, Poonam Apartment, Shiv Sagar Estate Worli, Mumbai 400 018.

The arguments advanced by Mr Sawant fascinates me. Mr Sawant submitted that the applicants have made the allegations against this Tribunal for non-service of the order dated 13th August 2015. The Applicants have made allegations against the assignor and assignee. Lastly, the applicants have made allegations against their advocate for non-appearance in Securitisation Application No.69 of 2010 and perpetrating fraud by filing

Application No.115 of 2016. Mr Sawant submitted that the allegations made against this Tribunal are baseless. The order dated 13th August 2015 was passed in accordance with the

provisions of the 1993 Act. The applicants failed to demonstrate by giving the details about the source of information.

The allegations against the assignor and assignee are an afterthought. Mr Sawant submitted that it has given due credit in the sum of Rs.4 crores for which the applicants are seeking the restoration of Securitisation Application No.69 of 2010. Mr Sawant further submitted that in the pending Securitisation Application No.115 of 2016 the assignee will clear the misconception of the applicants.

Mr Sawant submitted that Mrs Naik was incorrect in supporting the applicants’ stand by making the allegations against Ms Poonam Utekar, advocate. Mr Sawant submitted that if the litigant makes allegations against the advocate then in that case the advocate should be made as a party and cannot be taken by surprise behind her back.

The application filed by the applicants is nothing but an abuse of the process of law. I was astonished when I perused the record and proceedings sent to me in 4 parts. After examining the fact and circumstances of the case and evidence produced by the parties, the following points throws the light in the case: (i)

the applicants have produced power of attorney at page 354 of the paper-book; (ii) the applicants granted power of attorney to Mr Ismail Halwadwala. The reading of the recital of the power of attorney demonstrates the diabolical plan of the applicants to stall recovery of the loan amount. It is a well orchestrated plan by the applicants in collusion and connivance with Mr Ismail Halwadwala. The applicants called themselves as M/s. B.R. Petrochem Pvt. Ltd. to mean that they are the directors and are in management. The applicants then went on to say that the said M/s. B.R. Petrochem Pvt. Ltd. availed financial facilities from Canara Bank, Worli Branch, Mumbai. The applicants attempted to deny that they have stood as guarantors to the credit facilities granted by the defendant to M/s/ B.R. Petrochem Pvt. Ltd.

Nevertheless, the act of omission and commission of the applicants and Mr Ismail Halwadwala, the constituted attorney inside and outside the court is different. The disgruntled applicant admitted the credit facility granted to M/s. B.R. Petrochem Pvt. Ltd.

On 30th January 2009, the applicants addressed a letter to the defendant for restructuring the term loan. By this letter, the applicants

admitted the liability in the sum of Rs.11.90 crores.

On 1st November 2010, the applicants through their chartered accountant issued notice to the defendant. By the said notice, the applicants unconditionally and unequivocal admitted the signing and execution of the loan and security documents in the bank. Paragraph no.5 of the letter dated 1st November 2010 reveals the applicants having perpetrated the fraud by suppressing the facts. The applicants admitted that they signed and executed the loan and security documents under bonafide belief as directors of the company. The form annexed at page no.208 is the cost of project and source of finance. By this document, the applicants admitted the liability in the sum of Rs.1321 lakhs (term loan). The applicants did not attempt to explain the admission as per the law laid down in the case of Uttam Singh Dugal and Co. Ltd. Versus United Bank of India and Ors reported in 2000 (7) SCC 120. At page no.210 of the paper book is the calculation of interest from March 2010 to March 2018. In the earlier documents on page no.208, the applicants admitted the liability. It is therefore not open for the applicants to deny making the payment

and dispute high rate of interest. The judicial pronouncement in the case of Syndicate Bank Versus R. Veeranna and Ors. reported in AIR

SCC

applies to the facts and circumstances of the present case. At page no.220 is the admission of creation of mortgage concerning valuation done by the panel valuer.

On 26th June 2010, the borrower addressed letter to the bank, thereby proposing the one time settlement. Mr Bhagwan Rathod, Chairman to M/s. B. R. Petrochem Pvt. Ltd. signed the letter. By this one time settlement letter, the application no.1 admitted the liability in the sum of Rs.11.81 crores. The applicant no.1 reveal that the borrower company paid interest only till 31st March 2008. While, acknowledging the dues and promising to pay the sum of Rs.11.81 crores, the applicant no.1 requested to the defendant bank to waive of all the entire interest outstanding.

M/s. B.R. Petrochem Pvt. Ltd. addressed a letter to the defendant on 27th July 2010. By this letter, it offered to pay the defendant a sum of Rs.13 crores. The borrower recorded that M/s. Sai Financial Services (I) Pvt. Ltd. will disburse the said amount of Rs.13 crores and enclose the letter dated 26th July 2010 for the reference of the bank. The contents of the letter dated 26th July 2010 addressed by M/s. Sai Financial Services (I) Pvt. Ltd. to the borrower, is an eye opener. The letter of M/s. Sai Financial Services (I) Pvt. Ltd. reveals the execution of the MOU with the borrower on 14th June 2010. It further shows the conditions imposed upon the borrower to get the mortgaged property released from the defendant bank within 15 days and also to procure no due certificate.

On 11th August 2010, the applicant no.1 as the director addressed a letter to the bank to accept the maximum sum of Rs.13 crores as and by way of one time settlement.

In the case of Deepika Paresh Thakkar Versus Gruh Finance Ltd. and others, in Writ Petition No.873 of 2015, the Hon’ble Bombay High Court has held that ‘it is settled law that once the statement is made and a party gives consent to make the payment of a such amount, the question of them going into the merits of the case does not arise’. The Hon’ble Supreme Court in SLP No.31812 of 2015 did not interfere with the order passed by the Hon’ble Bombay High Court.

The order dated 26th July 2002 records the relevant terms and conditions of the MOU

between M/s. Sai Financial Services (I) Pvt. Ltd. and the borrower for the disbursement of Rs.13 crores. The borrower agreed to obtain (i) the title documents and (ii) no due certificate from the defendant bank within 15 days.

The game of the applicants starts now. On 11th November 2010, the applicants filed Securitization Application No.69 of 2010. The applicants moved Interlocutory Application (exhibit no.7) seeking prohibitory order against the bank from conducting the sale on 29th December 2010, of the mortgaged properties. On 27th December 2010, Mrs Naik represented the applicants. Mr Ismail Halwadwala was present in the Court. The statement made by advocate Mrs Naik upon instructions of Mr Ismail Halwadwala is important. Paragraph No.4 of the order records the statement as:

Paragraph no.4: “During the course of arguments, Learned Counsel for the Applicant states that her clients had already given cheque of Rs.6,73,54,065/- Dt.17.01.2011 being the settlement amount. The Learned Counsel for the Applicant on instructions from Mr. Ismail Halmadwala [constituted attorney of the Applicant], states that the Applicant would deposit Rs.4 Crore with the Respondent Bank

without prejudice to their contentions as condition for not confirming the sale. The Learned Counsel for the Respondent has no objection for passing the order;”

The applicants received the copy of the order on 29th December 2010 through the hands of Mr Pratik Shah. On 6th January 2011, this Tribunal directed the bank not to confirm the sale for one month.

In February 2011, the applicants moved an Interlocutory Application (exhibit no.23) for extension of the order. In the application, the applicants made reckless allegations that when the prayer made by the bank, my predecessor passed an order dated 6th January 2011. Now, the question is who benefited from the order? It is the applicant who got help by an interim order of 6th January 2011, and the bank was the looser. On 3rd February 2011, the bank did not object for the extension of the order till next date.

On 13th August 2015, my predecessor dismissed the Securitization Application for want of prosecution. The applicants woke-up from the slumber and filed the present application for setting aside, the order dated 13th August 2015 and the order passed in the Interlocutory

Applications.

Admittedly, the applicants received the copy of the order dated 27th December 2010 on 29th December 2010. It is not a case of the applicants that they did not receive the order through the hands of Mr Pratik Shah. The endorsement made on the order-sheet speaks volume. Therefore, the narratives of the applicants are false and incorrect. The order dated 27th December 2010 was passed based on the statement made by Mrs Naik upon instructions of Mr Ismail Halwadwala present in the Court Hall. Therefore, the question of set-aside the order dated 27th December 2010 does not arise.

The other prayers of the applicants are to set aside the order dated 6th January 2011. It was only an order extending the ad-interim order granted on 27th December 2010. The applicants have neither pleaded nor established the case of fraud. I would say, it is the applicants who have perpetuated fraud in getting the order dated 27th December 2010 extended on 6th January 2011. The applicants are benefited by the extension of the order and none else.

The applicants applied for an extension of the order dated 27th December 2010 till disposal of the Securitization Application. The applicants

succeeded in obtaining the extension of the order, as the bank’s counsel did not object. Again, the applicants benefited by the extension, this time, till disposal of the Securitisation Application.

In Cotton Corporation of India Versus United Industrial Bank reported in 1983 (4) SCC 625, the Hon’ble Supreme Court has laid down the law that the Court’s power to grant interim injunction was conferred in aid or as auxiliary to the main relief. The applicants enjoyed the temporary protection from 27th December 2010 till 13th August 2015. The applicants had no grievance during the period as rightly argued by Mr Sawant.

The recent judgment of the Hon’ble Supreme Court in the case of Asian Resurfacing of Road Agency Pvt. Ltd. and another Versus Central Bureau of Investigation, it is stated thus: “35. … … In cases where stay is granted in future, the same will end on expiry of six months from the date of such order unless similar extension is granted by a speaking order. The speaking order must show that the case was of such exceptional nature that continuing the stay was more important than having the trial finalized. The trial Court where order of stay of civil or criminal proceedings is produced, may fix a date not beyond six months of the order of stay so that on expiry of period of stay, proceedings can commence unless order of extension of stay is produced.” “Whatever stay has been granted by any court including the High Court automatically expires within a period of six months, and unless extension is granted for good reason, as per our judgment, within the next six months, the trial Court is, on the expiry of the first period of six months, to set a date for the trial and go ahead with the same.”

In view of the law laid down in the case of Asian Resurfacing of Road Agency Pvt. Ltd. (supra), the stay order granted stands vacated automatically, upon expiry of six months. The prayer of the applicants is, therefore, beyond the judicial precedent.

There is another angle to deny the relief to the applicants. The applicants have united in the same application several causes of action vide orders passed on different applications on different dates. This is s mis-joinder of the causes of action, which is impermissible in one single application. The applicants are also not

entitled to the relief in view of law laid down by the Hon’ble Bombay High Court in the case of Deepika Paresh Thakkar (supra).

Mrs Naik has filed the written submission, which reveals that they knew about the following facts (a) Canara Bank, applied under Section 14 of the 2002 Act before the Learned Chief Metropolitan Magistrate; (b) on 8th April 2011, the Learned Chief Metropolitan Magistrate passed an order under Section 14; (c) on 28th March 2014, deed of assignment was made and entered into between assignor and the assignee; (d) in 2016, the assignee announced the public auction of the mortgaged property by publishing the notice; (e) on 27th September 2016, the applicants presented the

Application No.115 of 2016 challenging the auction notice dated 30th August 2016; and (f) the said Securitization Application No.115 of 2016 is pending.

In the course of arguments Mrs Naik conceded that the assignee took physical possession of the secured assets on 4th November 2019.

Understood thus, the applicants have challenged the auction notice dated 30th August 2016 in Securitization Application No.115 of 2016 which is pending. Instead of moving the Miscellaneous

Application for setting aside the order as prayed, advocate Ms Poonam Utekar advised the applicants to file Securitization Application No.115 of 2016. Mr Sawant was right in his submission that the applicants have made baseless allegations against Ms Poonam Utekar without joining here as party to the present proceeding.

Mr Sawant is right that the applicants have made baseless allegations that this Tribunal has not followed the procedure. The applicants are incorrect in saying so. Section 22 (2) (f) confers power upon this Tribunal to dismiss an application for want of prosecution. Therefore, ignoring the provisions of the Act, the arguments advanced by Mrs Naik is not only absurd but is not tenable.

Mr Sawant is also right in his submission that instead of making the payment of admitted liability, the applicants have made reckless allegations against the assignor and the assignee. Despite unambiguous arguments on the issue of giving due credit in the sum of Rs.4 crores, the applicants are not satisfied.

I agree with the arguments of Mr Sawant, that the applicants have overstepped their limit of making the allegations against Ms Poonam

Utekar, advocate in her absence. The similar situation arose in the case of the Bengal Mills Stores Supply Company Versus V/s. Central Bureau of Investigation in Notice of Motion no.125 of 2009 in Summary Suit no.2872 of 2005 before the Hon’ble Bombay High Court. The Hon’ble Bombay High Court held that “it is alleged that the previous advocate was negligent, and that the plaintiff should not suffer for his negligence. There are clear averments against the previous advocate who has not been jointed as party to the Motion, plaintiff-applicant is therefore directed to join the previous advocate as party to the Motion and serve a copy of the Motion on him. The advocate shall file a reply on the allegations made against him because they are true, he may be explained to the action/damages against mis-conduct.”

Similar order is passed by Hon’ble Delhi High Court in the case of Sukhdev Raj Arora (deceased) through legal heirs Versus M.K. Bhargava in CM(M) No.1155 of 2008 passed by Hon’ble Delhi High Court.

Paragraph 12:

12. There has been a shift in law in this regard also. A party/litigant is not always entitled to explain away his default by making allegations against the advocate. It is significant that when such allegations are made, the advocate against whom the allegations are made is not before the court. It is for this reason only that the courts have now taken a view that where a litigant claims to be the victim of professional misconduct / negligence of advocate engaged by him, he is also required to show as to what steps have been taken against the advocate and what is the response of the advocate thereto. This is necessary to prevent the litigant from, in concert with his advocate, causing prejudice to his opponent. Advocate is an agent of the party and the party is bound by the actions of his agent and if aggrieved by any such action of the agent, cannot be permitted to wrest the advantage which has so occasioned to the other party, without establishing its bonafidies by taking appropriate action against the advocate. It is not the case here that the petitioner/tenant has taken any action against the advocate. However, this aspect need not detain me any further since in this case the petitioner/tenant though blaming the advocate has also obtained an affidavit from the advocate that he himself was not aware of the order. Thus the petitioner/tenant and his advocate are acting in concert with each other

and what has to be seen is whether the said explanation of the advocate is plausible or not. The two courts below have not found it plausible.

The arguments of Mrs Naik failed to convince me for restoration of the Securitization Application and other Interlocutory Applications.

The limitation is a question of jurisdiction. It puts an embargo on the Tribunal to entertain the application for setting aside the order as prayed. Under Section 3 of the Limitation Act 1963, it is imperative and a duty-cast upon this Tribunal to consider proper explanation given. The rights which accrued in favour of the secured creditor cannot be defeated. Even if there is no plea of limitation set up as a defence, an application made after the prescribed period can be dismissed as barred by limitation. It is not a bonafide application. The application is a part of dilatory tactics, deliberate inaction or negligence on the part of the applicants. The applicants have failed to disclose the sufficient case to condone the gross inordinate delay of 1246 days. The length of the delay is not important but the sufficient cause and the explanation is.

On 13th August 2015, it appears that Ms Poonam Utekar, advocate did not choose to enter appearance as the applicants failed to pay the professional fees. I failed to understand how not addressing a letter about the non-appearance by Ms Poonam Utekar will help the applicants. It is only the person who appointed to Ms Poonam Utekar can throw light in the case. No such affidavit is filed by the person appointing Ms Poonam Utekar, advocate, placing on record the understanding with regard to the payment of fees and services to be rendered. In the absence of the applicants making Ms Poonam Utekar as a party to the present proceedings, such allegations cannot be entertained. Be it as it may, there is no averment in the entire application that the applicants have adopted or taken any action against Ms Poonam Utekar before the concerned Bar Council. Therefore, the applicants cannot get the benefit of being supremely confident by relying on the services of Ms Poonam Utekar. In the absence of the testimony, the statement made by the applicants as gospel truth is unacceptable.

The applicants have attempted to state that Mr Harshad Rathod appointed Ms Poonam Utekar, advocate. From the statement made in the application, it is apparent that the applicants were aware of the date of the dismissal of the

Securitization Application. The application also reveals that though the applicant no.1 is aged, he kept track of Securitization Application No.69 of 2010. Admittedly, Mr Harshad Rathod and the applicant no.1 were actively involved in the matter until the dispute arose in 2017. If there was an active involvement of the applicant no.1 and Mr Harshad Rathod so also Mr Ismail Halwadwala, their narratives about they were unaware of the dismissal of the Securitization Application No.69 of is not tenable. Assuming that the applicants did not know about the disposal of the Securitization Application No.69 of 2010, the applicants have neither pleaded nor demonstrated the source of information from whom they derived the knowledge and when.

The applicants have also not pleaded the facts about the power of attorney of Mr Ismail Halwadwala. The order placed on record reveals that Mr Ismail Halwadwala was present in the court-hall on 27th December 2010. It is pertinent to note that Mr Ismail Halwadwala does not choose to say that he is unaware of the dismissal of the Securitization Application No.69 of 2010.

To compute the period of limitation, the date of making the application for certified copy, the date when the certified copy was ready is necessary. It is upon proving and establishing the case; the applicants can claim the exclusion of the time spent in this regard. Admittedly, the applicants have neither pleaded nor, any arguments was advanced may be because there is no pleading to this effect. In the written submission, Mrs Naik has stated that the applicants applied for the certified copy of the order dated 13th August 2015 on 20th December 2018. In her written submissions, Mrs Naik stated that the applicants came to know about the order on 23rd December 2018. Which applicant? There are two applicants. What is the source, the name of the applicant is not pleaded. Mrs Naik has travelled beyond the scope of the pleading in her written submission which is impermissible under the settled law. The applicants did not choose to place the relevant facts before this Tribunal. However, Mrs Naik wants me to believe the narratives of the applicants which are full of falsehood. Why Mr Ismail Halwadwala did not choose to record the facts stated in the written submissions, in the

Application and the application to condone the delay, filed by him?

The applicants have approbated and reprobated at the same time. On the one hand, the applicants have advanced their case that only applicant no.1, his younger son and Mr Ismail Halwadwala were actively involved in the case. Admittedly, after the dispute in August 2017, Mr Harshad Rathod stopped taking interest in the matter. The applicant no.1 could not keep track of the matter because of deterioration in his health. Who is left to acquire the knowledge? There is no reference that the applicant no.2 has ever taken an active interest. Therefore, the only person can acquire the knowledge is Mr Ismail Halwadwala. He was the director of the borrower company. He claimed to have personal knowledge of the case. Mr Ismail Halwadwala was present on the Court on 27th December 2010. Since then, he is signing all the pleadings and affidavit necessary in the present case or in Securitization Application No.115 of 2019. The circumstances of the case suggest, Mr Ismail Halwadwala has suppressed the material facts from this Tribunal. The applicants have failed to explain the gross inordinate delay which is deliberate and intentional. It is settled proposition of the law that the applicant must explain the delay. The applicants are guilty for

inaction in ascertaining their rights.

Most importantly the secured creditor once again initiated the action and measures under the

Act.

The applicants filed the Securitization Application (Lodging) No.857 of 2016 which was admitted as Securitization Application No.115 of 2016. The applicants choose to file Securitization Application No.115 of 2016 and not the application to set-aside the order dated 11th August 2015. The applicants have adopted the available remedy under sub- section (1) of Section 17 by filing Securitization Application No.115 of 2016 which is pending.

Mrs Naik has placed emphasis on fraud perpetrated in the present case. What is the fraud is neither pleaded nor established. It was obligatory upon the applicants to make the averments as required under Order 6 Rule 4 of the Code of Civil Procedure. However, the applicants have not demonstrated any suppression of facts by the assignor or assignee. This Tribunal has invoked the provisions of Section 22 (2) (f) of the 1993 Act for dismissing the application for default. I respectfully agree with the proposition of law laid down in the case of Ganpatbhai Solanki (supra) but it will not apply to the facts and circumstances of the

present case.

I agree with the arguments of Mr Sawant that the assignee is entitled to continue the action and measures based on the statutory demand notice issued by the assignor. The submissions made by Mr Sawant are as per sub-section (4) of Section 5 of the 2002 Act. Mr Sawant’s submission is as per judicial pronouncement in the case of Sharadamma Versus Mohammed Pyrejan (deceased) through legal representatives & others reported in (2016) 1 Supreme Court case 1730. Given the proposition laid down in the case of Sharadamma (supra), the narratives of Mrs Naik is not tenable.

The Securitization Application dismissed on 13th August 2015 cannot be restored or taken on the file by this Tribunal.

Admittedly, the applicants have consented to pay the sum of Rs.13 crores to the secured creditor. The assignee having initiated the measures for recovery from the applicants by the sale of the mortgaged property has filed the Miscellaneous Application to pressurize it to settle the matter for the amount suggested by them. Filing of the Miscellaneous Application during the pendency of the Securitization Application No.115 of 2019 is a gross abuse of

the process of law.

In view of the above, I pass the following order:

ORDER

Miscellaneous Application No.28 of 2020 and Miscellaneous Application (L) No.73 of 2019 are hereby dismissed with cost quantified in the sum of Rs.10,000/- (as suggested by Mrs Naik).

Sd/- (Deepak M. Thakkar) Presiding Officer,

Dhawale, Srishti, Sagar