The main legal point established in the judgment is the importance of adhering to the provisions of Rule 12(6) of the Debts Recovery Tribunal (Procedure) Rules, 1993 and the need for expeditious resolution of disputes under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

1] By this petition under Articles 226 and 227 of the Constitution of India, the petitioner - Maharashtra State Financial Corporation (MSFC) challenges judgment and order dated 20 June 2014 made by the Debt Recovery Appellate Tribunal, Mumbai (DRAT) in misc. appeal no. 241 of 2012.

2] By the impugned judgment and order, DRAT has set aside order dated 7 August 2012 made by the Debt Recovery Tribunal (DRT) refusing to grant leave to the respondents to cross-examine MFSC's officer, who has filed affidavit in support of the original application seeking to recover loan amounts and interest from the respondents, who are the guarantors for the repayment of said loan amounts.

3] Dr. Barthakur, learned counsel for MSFC has submitted that the impugned order made by DRAT is in violation of the Rule 12(6) of the Debts Recovery Tribunal (Procedure) Rules, 1993 (said Rules) and if the impugned order is allowed to stand, cross-examination shall have to be permitted, not merely in the cases at hand, but also in several other cases, arising out of the same transactions. Dr. Barthakur pointed out that loans have been advanced to over 500 persons for which, the respondents have offered themselves as guarantors. At no stage have the respondents disputed the execution of the guaranteed documents. On the premises that there is some scam in advance of loans, the respondents cannot, belatedly insist upon crossexamination. Dr. Barthakur submitted that the leave to cross-examine was made at a highly belated stage, when in fact the final arguments on behalf of MSFC were concluded and the matter was only posted for final arguments on behalf of respondents. Dr. Barthakur submitted that DRT by detailed reasoning had declined leave to respondents. DRAT however, without assigning any cogent reasons and further, without even adverting to the provisions contained in Rule 12(6) of the said Rules has reversed DRT. Dr. Barthakur submitted that the impugned order made by DRT suffers from perversity and therefore, this Court should interfere with the same in exercise of its extra ordinary jurisdiction.

4] Mr. Sahu, learned counsel for respondent no. 2 submitted that this is a scam, where MSFC has advanced loans to either non existing persons or to the same persons under different names. He submitted that DRAT, upon perusal of some loan applications has verified this position and only thereafter, granted leave to cross-examine. He submitted that in case scam is established, respondents will stand discharged as guarantors and therefore, it is in the interests of justice that the impugned order made by DRAT, be not interfered with. He submitted that DRAT had also fixed the time limit for purposes of cross-examination and therefore, there was no question of delay in the proceedings. For all these reasons, Mr. Sahu submitted that this petition may be dismissed.

5] Learned counsel for the petitioner has stated that the respondents in this petition have been duly served and necessary proof of service is available in the record. He pointed out that respondents are only interested in delaying the matter and if the impugned order is permitted to stand, several proceedings, involving over 500 loanees, whose loans have been guaranteed by respondents herein, will be virtually stalled or rendered interminable.

6] In this case, MSFC has instituted several original applications against the respondents herein, as they are admittedly, the guarantors to the loans granted by MSFC in favour of loanees. Affidavit of one Pratap Gaikwad, Assistant Manager (Law) was filed some time in the year 2005, in support of original applications and the claims made therein. There is no merit in the submission made by Mr. Sahu that proceedings filed only against the respondents – guarantors, without institution of any proceedings against the loanees – principal borrowers are not maintainable. It is settled position in law that the liability of principal borrowers and the guarantors is joint and s