2007 Supreme(Bom) 1467

BOMBAY HIGH COURT
Before: Swatanter Kumar,C.J. and Dr.D.Y.Chandrachud,J
Sonu Textiles, Mumbai and others. ..Petitioners
Vs.
Punjab National Bank, Mumbai ………Respondent.
Writ Petition No.1758 of 2007,
decided on 11th October,2007

Headnote:Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Suit for recovery of debt due to bank-Application for cross-examination of officers of bank was made by respondent-Rejected-Petition against it-It was held that the petitioners are granted the liberty to cross-examine the Bank Manager.-In the present case, the defendants before the tribunal, while contesting the claim vehemently on fact and law, had filed an application for production of documents. It was stated that the documents, the production of which was sought, related to :-

       "1. Copy of RBI guidelines referred to by the applicant bank.

       2. Correspondence between the Foreign Bank and the drawee of collection bills including presentation memo delivered by Foreign Bank to the drawee and a proof of its delivery as also the written communication of the drawee to return the documents.

       3. The letter from custom authorities to the bank in the matter of valuation made by the custom authorities.

       4. Original GR for each of the collection bill.

       5. Correspondence between applicant bank and custom authorities.

       6. Correspondence between the Foreign Bank (acting as agent of the applicant bank) and the overseas shipping agency along with the original Bills of Lading-both for exports and for re-imports.

       7. Correspondence with BPT and auction agent and with any other party/person entrusted with the custody of re-imported goods.

       8. Documents evidencing the value realised under the auction of re-imported goods.

       9. Copies of letters addressed by the applicant bank to the defendants herein in the matter of re-import of goods.

       To this application, reply affidavit was filed on behalf of the bank in which it was stated that certain documents which were not earlier available could be noticed after intense search and were sought to be filed. It was also stated that the presentation memo of Foreign Bank to the drawer was not available with the bank and nothing else was stated in the reply. Thereafter, another application was filed for cross-examination of the Manager of the Bank. In that application it was stated that besides contesting the claim, even a counter claim had been raised by the defendant and the bank had not produced original copies of the correspondence with the Overseas Bank. A specific plea had been raised that the bank in violation of the terms and conditions and instructions, re-imported the goods to Mumbai which was not released and neither re-exported but the same was lying in the Port. This act on the part of the bank was unauthorised and illegal. The defendants were not informed of these developments in relation to the consignments and the documents like bill of lading, bill of entry and other material documents. No proof was submitted with regard to delivery of presentation memo or written communication by the drawee to return the documents. Besides these reasons, it was stated that the affidavit was contrary to records of the authorities as well as the bank as there was no shortage. The defendants had exported 121 cartons which was certified by the customs authorities. The quantity sold by Mumbai Port Trust shows 121 cartons. Blank documents had been filed by the bank without counter signatures of the defendants. The other ground stated was the necessity to cross-examine the witness to arrive at a just and fair conclusion on the basis of the pleadings of the parties. In the application of July, 2005, all these allegations were made which was subsequently withdrawn. Another application was filed in November, 2005, seeking to cross-examine the Manager of the Bank in relation to return of goods and suppression of material facts and non-production of documents. To this, reply was filed by the bank which in substance is vague. The Tribunal in the impugned order noticed that in terms of the affidavit of the bank dated 29th January, 2006, it had been stated that the bank did not have any other documents except the documents already produced before the DRT. Once an affidavit has been filed that the bank is not in possession of any other documents and the documents which were produced had been furnished to the defendants in those proceedings, hardly any contention could survive in this regard and the Tribunal would consider the effect of the same in accordance with law at the appropriate stage.

       As far as the cross-examination of the witness was concerned (Manager of the Bank), the request was declined on the ground that the necessity is not made out in the application filed by the appellant. Noticing the contentions of the borrower, the appellate Tribunal held that these contentions could be argued at the final stage. It also noticed that the application for production of documents had been file to support the counter claim filed by the appellants. The Tribunal in its order noticed the non-production of documents, record of the customs authorities, documents of the drawee and bills of lading in relation to the foreign purchasers. The Tribunal while noticing the contentions of the appellants stated that the necessity was not made out.

       Court is of the considered view that the expression "necessary" should be given reasonably liberal interpretation as it is a part of procedural law and cannot be construed in abstract without reference to the facts and law of the case. It is always beneficial to construe such provisions with the aid of necessitas est lex temporis et loci. The word "necessary" should be understood and construed to suitably conclude the proceedings effectively and to meet the ends of justice in contradistinction to impossible to be otherwise. Some element of relaxation is essential as the Tribunal has been vested with the discretion to deal with such applications by recording appropriate reasons. The discretion vested in the Tribunal in furtherance to the provisions relating to procedural law is to be guided by settled judicial norms and is a controlled exercise of power unlike "do as you like." The rule certainly contemplates restricted exercise of power and consequent power and discretion but it cannot be treated as an absolute proposition of law that in no circumstances the Tribunal would permit cross-examination of witnesses. Such an approach would frustrate the cause of the rule rather than further its cause. The procedure is something designed to facilitate justice and further its ends, not a penal enactment leading to absolute denial. Too technical a construction of a provision that leaves no room for elasticity of interpretation and, therefore, be guarded against, as procedural laws are founded on principle of natural justice. Reference can be made in this regard to the judgments of the Supreme Court in the case of (i) Chinnammal v. P. Arumugham, 1990 BCJ 129 : 1990 DGLS 21 (soft) : AIR 1990 SC 1828 : 1990 (1) SCC 513, and (ii) Ghanshyam Dass v. Dominion of India, 1984 DGLS 80 (soft) : AIR 1984 SC 1004 : 1984 (3) SCC 46. The object of Rule 12(6) is to permit cross-examination of a witness, if the condition precedent thereto is satisfied. To give the meaning of an absolute physical necessity would sub-serve the purpose of procedural law. The appellants have made out a clear case that the documents were not produced by the bank and it is stated that they are not in possession of the bank. However, averments in that regard have been made in the affidavit filed on behalf of the bank. Furthermore, the appellants had made out grounds which would certainly fall within the ambit of valid causes for justifying the prayer for cross-examination of the Manager. A very material controversy arises between the parties as to on whose instructions the goods were brought back to Mumbai and under whose authority the goods were kept for such a long period, the liability of which is ultimately fastened upon the appellants. The admission of the bank that they did not have GRs in their possession but still facts have been averred in the affidavits would certainly bring the case of the appellants within the four corners of the provisions of Rule 12(6). In the original application filed by the bank, it is stated in para 5 that the goods were delivered to the consignee but later on the stand was that they were re-imported to Mumbai. If such an averment is not supported by proper documents, which even partially is conceded before the Court, then the appellants would be entitled to cross-examine the witness in regard to such averments made in the affidavit tendered in evidence. There cannot be fixed parameters for consideration of such applications and each case would have to be examined on its own merits.

       Based on non-production of documents, contradictory stand of the bank, the documents being not supportive of each other and the controversy raised in the pleadings between the parties, it was a fit case where the request should have been allowed to completely and fully determine and decide the claim of the bank and the counter claim of the borrower. Thus, in the interest of justice and to fully and finally adjudicate the disputes between the parties, in Court’s opinion, the application should have been allowed by the Tribunal. In the present case, we have no hesitation in coming to the conclusion that the Tribunal has erred in law in declining the request of the applicants for cross-examination of the Bank Manager.

       In the result, the impugned orders dated 25th August, 2006 and 5th December, 2006 are quashed and set aside and the petitioners are granted liberty to cross-examine the Bank Manager in accordance with law. Rule is made absolute, while leaving the parties to bear their own costs.

       Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Suit for recovery of debt due to bank - Application for cross-examination of officers of bank was made by respondent - Rejected - Petition against it - It was held that the petitioners are granted the liberty to cross-examine the Bank Manager. - In the present case, the defendants before the tribunal, while contesting the claim vehemently on fact and law, had filed an application for production of documents. It was stated that the documents, the production of which was sought, related to : -

       "1. Copy of RBI guidelines referred to by the applicant bank.

       2. Correspondence between the Foreign Bank and the drawee of collection bills including presentation memo delivered by Foreign Bank to the drawee and a proof of its delivery as also the written communication of the drawee to return the documents.

       3. The letter from custom authorities to the bank in the matter of valuation made by the custom authorities.

       4. Original G R for each of the collection bill.

       5. Correspondence between applicant bank and custom authorities.

       6. Correspondence between the Foreign Bank (acting as agent of the applicant bank) and the overseas shipping agency along with the original Bills of Lading-both for exports and for re-imports.

       7. Correspondence with BPT and auction agent and with any other party/person entrusted with the custody of re-imported goods.

       8. Documents evidencing the value realised under the auction of re-imported goods.

       9. Copies of letters addressed by the applicant bank to the defendants herein in the matter of re-import of goods.

       To this application, reply affidavit was filed on behalf of the bank in which it was stated that certain documents which were not earlier available could be noticed after intense search and were sought to be filed. It was also stated that the presentation memo of Foreign Bank to the drawer was not available with the bank and nothing else was stated in the reply. Thereafter, another application was filed for cross-examination of the Manager of the Bank. In that application it was stated that besides contesting the claim, even a counter claim had been raised by the defendant and the bank had not produced original copies of the correspondence with the Overseas Bank. A specific plea had been raised that the bank in violation of the terms and conditions and instructions, re-imported the goods to Mumbai which was not released and neither re-exported but the same was lying in the Port. This act on the part of the bank was unauthorised and illegal. The defendants were not informed of these developments in relation to the consignments and the documents like bill of lading, bill of entry and other material documents. No proof was submitted with regard to delivery of presentation memo or written communication by the drawee to return the documents. Besides these reasons, it was stated that the affidavit was contrary to records of the authorities as well as the bank as there was no shortage. The defendants had exported 121 cartons which was certified by the customs authorities. The quantity sold by Mumbai Port Trust shows 121 cartons. Blank documents had been filed by the bank without counter signatures of the defendants. The other ground stated was the necessity to cross-examine the witness to arrive at a just and fair conclusion on the basis of the pleadings of the parties. In the application of July, 2005, all these allegations were made which was subsequently withdrawn. Another application was filed in November, 2005, seeking to cross-examine the Manager of the Bank in relation to return of goods and suppression of material facts and non-production of documents. To this, reply was filed by the bank which in substance is vague. The Tribunal in the impugned order noticed that in terms of the affidavit of the bank dated 29th January, 2006, it had been stated that the bank did not have any other documents except the documents already produced before the DRT. Once an affidavit has been filed that the bank is not in possession of any other documents and the documents which were produced had been furnished to the defendants in those proceedings, hardly any contention could survive in this regard and the Tribunal would consider the effect of the same in accordance with law at the appropriate stage.

       As far as the cross-examination of the witness was concerned (Manager of the Bank), the request was declined on the ground that the necessity is not made out in the application filed by the appellant. Noticing the contentions of the borrower, the appellate Tribunal held that these contentions could be argued at the final stage. It also noticed that the application for production of documents had been file to support the counter claim filed by the appellants. The Tribunal in its order noticed the non-production of documents, record of the customs authorities, documents of the drawee and bills of lading in relation to the foreign purchasers. The Tribunal while noticing the contentions of the appellants stated that the necessity was not made out.

       Court is of the considered view that the expression "necessary" should be given reasonably liberal interpretation as it is a part of procedural law and cannot be construed in abstract without reference to the facts and law of the case. It is always beneficial to construe such provisions with the aid of necessitas est lex temporis et loci. The word "necessary" should be understood and construed to suitably conclude the proceedings effectively and to meet the ends of justice in contradistinction to impossible to be otherwise. Some element of relaxation is essential as the Tribunal has been vested with the discretion to deal with such applications by recording appropriate reasons. The discretion vested in the Tribunal in furtherance to the provisions relating to procedural law is to be guided by settled judicial norms and is a controlled exercise of power unlike "do as you like." The rule certainly contemplates restricted exercise of power and consequent power and discretion but it cannot be treated as an absolute proposition of law that in no circumstances the Tribunal would permit cross-examination of witnesses. Such an approach would frustrate the cause of the rule rather than further its cause. The procedure is something designed to facilitate justice and further its ends, not a penal enactment leading to absolute denial. Too technical a construction of a provision that leaves no room for elasticity of interpretation and, therefore, be guarded against, as procedural laws are founded on principle of natural justice. Reference can be made in this regard to the judgments of the Supreme Court in the case of (i) Chinnammal v. P. Arumugham, 1990 BCJ 129 : 1990 DGLS 21 (soft) : AIR 1990 SC 1828 : 1990 (1) SCC 513, and (ii) Ghanshyam Dass v. Dominion of India, 1984 DGLS 80 (soft) : AIR 1984 SC 1004 : 1984 (3) SCC 46. The object of Rule 12(6) is to permit cross-examination of a witness, if the condition precedent thereto is satisfied. To give the meaning of an absolute physical necessity would sub-serve the purpose of procedural law. The appellants have made out a clear case that the documents were not produced by the bank and it is stated that they are not in possession of the bank. However, averments in that regard have been made in the affidavit filed on behalf of the bank. Furthermore, the appellants had made out grounds which would certainly fall within the ambit of valid causes for justifying the prayer for cross-examination of the Manager. A very material controversy arises between the parties as to on whose instructions the goods were brought back to Mumbai and under whose authority the goods were kept for such a long period, the liability of which is ultimately fastened upon the appellants. The admission of the bank that they did not have GRs in their possession but still facts have been averred in the affidavits would certainly bring the case of the appellants within the four corners of the provisions of Rule 12(6). In the original application filed by the bank, it is stated in para 5 that the goods were delivered to the consignee but later on the stand was that they were re-imported to Mumbai. If such an averment is not sup ported by proper documents, which even partially is conceded before the Court, then the appellants would be entitled to cross-examine the witness in regard to such averments made in the affidavit tendered in evidence. There cannot be fixed parameters for consideration of such applications and each case would have to be examined on its own merits.

       Based on non-production of documents, contradictory stand of the bank, the documents being not supportive of each other and the controversy raised in the pleadings between the parties, it was a fit case where the request should have been allowed to completely and fully determine and decide the claim of the bank and the counter claim of the borrower. Thus, in the interest of justice and to fully and finally adjudicate the disputes between the parties, in Court’s opinion, the application should have been allowed by the Tribunal. In the present case, we have no hesitation in coming to the conclusion that the Tribunal has erred in law in declining the request of the applicants for cross-examination of the Bank Manager.