The main legal point established in the judgment is the need for a fair evaluation of all material on record and the background of the case, especially in cases involving fraudulent transactions, service of summons, equitable mortgage, and Power of Attorney.

(DR. D.Y.CHANDRACHUD, J.)

The challenge in these proceedings under Article 226 of the Constitution is to an order of the Debts Recovery Appellate Tribunal dated 1 April 2010 and to an order passed by the Tribunal in Original Application 3158 of 2000. By an order dated 29 April 2010, the Division Bench directed that since arguable questions are raised, instead of admitting the petition, the proceedings will be placed for final disposal at the stage of admission. Accordingly, the petition has been heard for final disposal at the stage of admission. The First Respondent, which is the contesting party, being the Applicant before the Debts Recovery Tribunal, has appeared through Counsel.

2. On 31 March 1995, the Tahsildar, Andheri, passed an order recording the name of the Petitioner in the ‘other rights’ column of the record of rights in respect of the property in question, admeasuring 9467 sq.mtrs. at Kole Kalyan.

3. In 1999-2000, inspection had revealed that one M.B. Tawadia, who was then a DGM of the First Respondent at the M.S.Marg Branch of the Bank, had discounted certain bills for a proprietary concern by the name of M/s.R.D.Swamy with discrepant documents. The inspection noted that though the buyers had refused payment of earlier bills, Tawadia had opened Letters of Credit for non-existing transactions resulting in an overdue of Rs.25 crores in the account of the firm.

4. On 15 February 2000, Vilas Thale and Mohd Shaikh purported to execute a substitute Power of Attorney in favour of Rajesh Baheti (the Seventh Respondent), who was one of the guarantors of the amount due by the firm, R.D.Swamy to the Bank, purporting to appoint him as a Constituted Attorney for the Petitioner. The Power of Attorney recited that on 22 January 1992, the Petitioner had executed an irrevocable Power of Attorney in favour of Thale and Shaikh. The Power of Attorney was executed on 15 February 2000 and was notarised on 16 February 2000. The endorsement of the Notary does not bear a notarial registration number. The substitute Power of Attorney was executed by Thale and Shaikh on the basis of a Power of Attorney alleged to have been executed by the Petitioner on 22 January 1992 in respect of the property at Kole Kalyan, admeasuring 9467 sq.mtrs. Under clause 19, a power was conferred upon Thale and Shaikh to substitute any other party. The Power of Attorney was notarized on 31 March 1992 over two months after its execution. The Power of Attorney does not bear a notarial registration number. Evidently, it was eight years after the alleged execution of the Power of Attorney by the Petitioner, on 22 January 1992 that the substitute Power of Attorney was executed on 15 February 2000.

5. On the basis of the substitute Power of Attorney, which is executed on 15 February 2000 and notarised on 16 February 2000, a memorandum was recorded with the First Respondent on 17 February 2000 stating that Rajesh Baheti (the Seventh Respondent) as Constituted Attorney for the Petitioner had delivered the title deeds of the property over which the Petitioner claimed rights (i.e. a certified copy of an order of the Tahsildar, Andheri, dated 31 January 1995, a certified copy of Village Extract Form No.6 and a valuation report dated 1 February 2000) with an intent to create an equitable mortgage of the property in favour of the Bank to secure facilities granted and to be granted by the Bank to the firm M/s.R.D.Swamy.

6. The case of the Petitioner is that on 29 June 2000 a note was addressed by the Bank Manager to the Chief Vigilance Officer recording that in May and October 1999 inspections revealed that Shri Tawadia, DGM of the M.S.Marg Branch had discounted bills for the firm with discrepant documents. Despite the buyers having refused the payment of earlier bills, he had opened L.Cs. for non-existing transactions resulting in an overdue of Rs.25 crores in the account. The note inter alia records that additional collaterals in the form of property belonging