2007 Supreme(Bom) 448

IN THE HIGH COURT OF JDICATURE AT BOMBAY
F. I. REBELLO & R. M. SAVANT, JJ.
Ultramatix Systems Pvt. Ltd. Appellant
versus
State Bank of India & Ors. Respondent
Writ Petition No.7331 of 2006
Decided on 29th March, 2007.

Headnote:Recovery of Debt Due to Banks and Financial Institutions Act, 1993 - Section 19(20) - D.R.T. Rules, Rule 12(5) - CPC, Order XII, Rule 6 - Evidence Act, Section 17 - Admission of liability. - Since admission in balance sheet has been proved against petitioner hence such an admission can be proved against party in making admission.

       Having come to the conclusion that the amounts set out in the profit and loss account are an admission of amounts due by the petitioner to respondent No. 1 the question that has to be answered is whether the admission has to be in the course of the proceedings. Court may refer to the judgment of the Supreme Court in arose considering the provisions of Order XII, Rule 6 of the Civil Procedure Code. The contention urged was that resolution or minutes of the meeting of the Board of Directors and resolution thereof cannot amount to a pleading to come within the ambit of the rule. The Supreme Court noted that before the trial Court there was no pleading much less an explanation as to the circumstances in which the said admission was made so as to take it out of the category of admission. The Court noted that the matter could be decided even without referring to the expression "otherwise" in Rule 6 of Order XII of Civil Procedure Code and that an inference of liability could be drawn on the basis of the pleadings. In the instant case also, in the application, the respondent No. 1 had pleaded based on the profit and loss account of the petitioners that the amount set out therein was an admission that the amount was due and payable. There was no specific denial except for such vague pleadings. It is therefore clear that there was an admission by the petitioner in response to the application taken out by the respondent No. 1. No material was produced or explanation given of the circumstance under which the admission was made to take it out of the category of admission which created the liability. On this count itself, the petition in Court’s opinion is liable to be dismissed as the admission would be admission binding on the petitioner and it was open to the Tribunal to pass an order in terms of Section 19(20) of the Act read with Rule 12(5) of the Rules.

       Assuming it not to be so then whether the admission is required to be made only in the pleadings. The language of the rule does not lend itself to that construction, as the expression does not require that the admission must be made by the defendant in the pleadings before the Tribunal. The expression "defendant" has to be considered in the context of the opponent in the proceeding. The language used is to order such defendant to pay the amount to the extent of such admission. The language, therefore used is susceptible of a wider meaning to include any admission by the defendant. In other words, in proceeding either before the Tribunal or also in any other document. The object of the Act being to enable financial institutions to recover their debts expeditiously. Any other construction would defeat the very object of the Act. The language used in Order XII, Rule 5 of Civil Procedure Code is in the pleadings or otherwise unlike the language of Rule 12(5) of the Rules. As Court has noted the statement contained in the profit and loss account duly certified by the auditor is based on the records of the company. Once the balance-sheet/ profit and loss account shows the amount and that as a statutory requirement of the Companies Act, Court fails to understand as to how that cannot be an admission which can be proved against the company. It is for the company to establish by relevant facts that the admission would not be an admission in the eyes of law. In the instant case, the petitioner has been unable by any relevant fact to displace the admission made in the balance-sheet. In Court’s opinion therefore the admission in the balance-sheet has been proved against the petitioner and as Court has held earlier that such an admission even other than in the pleadings before the Tribunal can be proved against the party in making the admission. Court has therefore no hesitation in holding that the expression "admission" in Rule 12(5) of the Rules can be read to mean an admission both in the pleadings, in the proceedings as well as an admission of fact not in the proceedings and which is evidenced by any document or mode provided under Section 17 of the Indian Evidence Act. That contention must, therefore, be rejected.