M s Mangal Royal Jewels Partner Meghraj Jain vs CANARA BANK on 25 November 2024

:- COMMON ORDER -:

1. The backdrop of facts and the prayers in both the petitions filed under Section 5 of the Limitation Act being common, the present common order disposes both the petitions in deference to the orders of the Hon'ble High Court dated 31.07.2024 in CRP No.3051/24, which directed that MA No.163/2023 be disposed as expeditiously as possible within a period of two months from the date of receipt of the order, directing DRT-III for which the present PO, DRT-I is in-charge of DRT-II and also DRT-III.

2. In MA No.163/2023, the petitioner is the 7th defendant in OA No.424/2014, prays for condonation of delay in filing the separate petition for setting aside the ex-parte order. He filed a separate petition which is un-numbered to set aside the ex-parte final orders passed by the Ld. Predecessor on 11.07.2019.

3. Likewise, in MA No.165/2023, the petitioner is the 6th defendant in OA No.424/2014. He filed a separate petition which is un-numbered to set aside the ex- parte final orders passed by the Ld. Predecessor on 11.07.2019.

4. Since both the petitions are filed after the period of limitation, the prayers in MA 163/23 and 165/23 is to condone the delay of 1451 days in moving the petitions for setting aside the ex-parte final orders.

5. The parties are referred to their rank as in the OA. As already mentioned, the 7th defendant and the 6th defendant have filed their affidavits in the capacity of the authorised representatives being the Directors of the 6th and 7th defendant companies (though the defendant No.6 is described as M/s Mangal Royal Jewels, represented by its Partner – in the OA and the affidavit is sworn to on behalf of M/s Mangal Royal Jewels Pvt. Ltd.).

6. The Ld. Predecessor, DRT-III had passed the final order in OA No.424/2014 dated 11.07.2019, directing recovery of a sum of Rs.21,09,87,806.97p against defendants 1, 2 and 4 to 26, along with interest and also directs individual sums of recovery against certain defendants.

7. Both the deponents in their respective affidavits contend that the applicant bank “seems to have served the summons upon the address which is not the Registered office of the company. There was no lawful service.

8. Though many facets of the case are discussed in the affidavits till the knowledge about the decree operating against these defendants, the same are unnecessary for the limited purposes of deciding the aspect of condoning the delay.

9. The relevant gist of pleadings explaining the circumstances seeking condoning the delay in MA No.165/23 by defendant No.6 is that: a. On 13.07.2023 the Recovery Officer directed the transfer of amounts of the 7th defendant account to an extent of Rs.3,63,00,825/- to itself. These amounts have come to defendant No.6 upon the direction of the Hon'ble Supreme Court, upon furnishing guarantee with the Joint Director of Enforcement Directorate, Chennai. They came to the knowledge of the decree only when the summons were sent by the Recovery Officer on 17.11.2022. Thereafter, he applied for the certificate copies and filed objections before the Recovery Officer on 16.12.2022 in DRC

No.392/2019. He was under the bonafide belief that Recovery Officer would consider the objections. When the Recovery Officer did not take steps, they moved the Hon'ble High Court in W.P. No.4212/2023 and the applicants enjoyed interim protection. However, the same was disposed of by an order dated 06.07.2023 and thus they are filing the present petitions for condoning the delay and un-numbered petition to set aside the ex- parte order. b. 6th Defendant submits that Recovery Certificate was served on 13.01.2020. Further steps were taken by the Recovery Officer by issuing summons on 17.11.2022, after the orders of the Hon'ble Supreme Court dated 17.10.2022. Thereafter, the applicants moved the Hon'ble High Court in WP No.4212/2023. Hence the delay of 1451 days till filing of the present petition. c. The period during the Covid situation is also pressed into service.

10. As regards the 7th defendant affidavit concerning the relevant portion seeking condonation of delay, it is submitted that the recovery officer issued the summons dated 17.11.2022, which was received on 22.11.2022 at Mumbai and they were unable to appear on the said date and later they came to know about the proceedings concluded. The applicant is a body corporate and moved the Hon'ble High Court in WP No.4212/2023. After filing of the WP, recovery officer passed an order on 04.02.2023 which was received on 10.02.2023 and further issued attachment orders dated 09.12.2022 on 14.12.2022. Further order is passed on 20.02.2023. These proceedings before the Recovery Officer is done while the Writ petition was pending before the High Court. The applicant acted in a bonafide manner by approaching the Hon'ble High court and under the provisions of Section 22(2)(g) of the RDDBFI Act, 1993, the 7th defendant files the present petition and the delay is due to the pendency of the writ petition and the Covid period is also agitated seeking the condonation of delay.

11. The applicant bank filed the replies to both the petitions separately. As regards the 6th defendant, it is submitted that the addresses of the defendants is as available in the provisional attachment order of the ED dated 13.09.2013. The summons were issued as per the addresses and upon the satisfaction of proof of service, they were set ex-parte by the Tribunal. The defendants do not deny the service of summons, which can be gathered from the comprehensive reading of the affidavit. The allegation that 6th defendant is not a legal entity is belied by the provisional attachment order and the affidavit is filed before the Hon'ble High Court showing the petitioner as Mangal Royal Jewels as depicted in the OA.

12. The bank further contends that they came to know about the proceedings only on 17.11.2022 is untrue. They knew about the proceedings earlier but stood away to contest. The delay is not properly explained and there is no justifiable, valid or tenable reason to condone the delay. So far the recoveries are made only to the extent of Rs.8,60,66,471/-. It is submitted that prejudice will be caused to the bank, if the delay is condoned. Therefore, it is prayed that MA may be dismissed.

13. While refuting the allegations made in the petition by the 6th defendant in MA No.163/2023 seeking condonation of delay, the contentions are alike as in the counter filed in the other petition.

14. Heard the Ld. Counsels on either side. The Ld. Senior counsel appearing for the petitioners in MA 163/23 and 165/23 submitted that the provisions of Section 14 of the Limitation Act comes to the aid of the petitioners. They have approached the Hon'ble High Court in CRP No.3051/2024 and the other Writ Petitions which is discussed.

15. The Ld. Counsel for the contesting bank submits that there is no merit in the contentions and the applicants were very much aware of the orders passed by the ED as far back as 2013 and the present OA being of the year 2014, cannot plead ignorance of the proceedings. This Tribunal had issued the summons and that on 22.07.2014 itself the Ld. Registrar noted that these defendants 6 and 7 were served. Having been served with the summons, the inordinate delay is not explained.

16. After going through the order sheet from 22.07.2014 till 28.10.2015, which proceedings were before the Registrar, the matter was listed for the first time before the Presiding Officer on 20.11.2015. The order sheet shows that on 20.11.2015, it was noted that “the Ld. Counsel for the applicant bank is present and sought further time for filing the Proof Affidavit. No representation for the defendants. At request, call on 10.12.2015 finally as a last chance for filing PA and documents, failing which next step follows”. Thus, there is no formal order passed by the Tribunal placing the defendants ex-parte.

17. The only point that arises for determination in both the petitions is “Whether the applicants have put forth a sufficient cause for condoning the delay?”

18. Though it can be inferred at the fore, as regards the service of summons as contended by the opponent bank, it is not disputed that the matter related to certain attachments made by the ED and these defendants having approached the competent Courts including the Hon'ble High Court of Madras and further upon conclusion of the proceedings, they have filed the present petitions for setting aside the ex-parte orders – which are filed beyond the period of limitation. It is not disputed by the bank that there were other proceedings relating to the same matter before the ED, the challenge made to such orders of the ED before the competent forum of law. This aspect cannot be ignored for answering the point for determination.

19. In view of the above pending proceedings, the role of the defendants in the transaction having not come to a definite stage to contest the OA, it cannot be said that the defendants 6 and 7 had deliberately kept themselves away from the process of law pending before this Tribunal.

20. The anticipation of these defendants regarding the findings of the higher Courts touching the issue in the OA cannot be termed as unreasonable or malafide. Therefore, the reasons put forth by the petitioners seeking condoning the delay cannot be termed as cynical, intentional and deliberate. In view of the above, the following order:

O R D E R

MA No.163/2023 and 165/2023 are allowed subject to the petitioners paying cost of Rs. 50,000/- in each petition payable to the applicant bank. Cost be paid by way of DD in the name of the applicant, Canara Bank by the next date. If the cost is paid, the accompanying applications seeking to setting aside the ex-parte order be numbered and the same may be taken up before the Ld. Registrar for proper counter to be filed by the bank. Put up this matter before Registrar for compliance on 13.01.2025.

21. Order be communicated to the parties as per Rules.

Sd/- (A.S. JAYACHANDRA)

PRESIDING OFFICER (In-charge) (Dictated to PS, who typed in the system, corrected, signed and pronounced in Open Court, on this 25th day of November, 2024)