JUDGMENT :

K.R. SHRIRAM, J.

WRIT PETITION NO. 4885 OF 2022

1. By consent, this petition was taken as a lead matter. Counsel agreed that the findings in this petition would also equally apply to Writ Petition No. 4880 2002. Counsel also stated that the order in Writ Petition (ST.) No. 11009 of 2021 and Writ Petition (ST.) No. 11010 of 2021 would depend on our conclusions in this petition. Counsel also stated that if the Court is inclined to allow this petition, Writ Petition No. 4880 2002 will also have to be allowed and consequently, Writ Petition (ST.) No. 11009 of 2021 and Writ Petition (ST.) No. 11010 of 2021 will have to be dismissed.

2. In this petition, petitioners are impugning a judgment dated 12th May 2021 passed by the Debt Recovery Appellate Tribunal (the DRAT) by which the DRAT dismissed the appeal that petitioners had filed. In the appeal, petitioners were impugning an order dated 27th April 2011 passed by the Debt Recovery Tribunal (the DRT).

3. The DRT, in O.A. No. 927 of 2001, had passed an ex-parte decree dated 11th December 2009 qua petitioners. When petitioners applied for recall of the ex-parte decree, the DRT did not entertain the said Miscellaneous Application and dismissed the same by its order dated 27th April 2011. It was that order that petitioners had challenged before the DRAT, which dismissed the appeal by the impugned order and judgment dated 12th May 2021.

4. It is petitioners’ case that the DRT, without enquiring into whether the summons was ever issued in O.A. No. 927 of 2001 at all or whether the summons was issued to the correct address of petitioners, passed the ex-parte decree. It is petitioners’ case that petitioners were never served with any summons.

5. The Miscellaneous Application of petitioners to recall the ex-parte decree was dismissed by the DRT solely on the ground that petitioners had at some stage appeared in the O.A. through an advocate in whose favour a Vakalatnama had been filed. It is petitioners’ case that mere filing of a Vakalatnama by an advocate cannot amount to waiver or dispense with the requirement for service of the writ of summons on defendants which is essential for the time to file the written statement to commence.

6. It is also petitioners’ case that the DRT did not appreciate that the advocate who had entered appearance for petitioners sometime in 2003 had stopped appearing sometime in 2005 and despite non appearance of any advocate for a period of almost four years, i.e. till the decree came to be passed by the DRT, petitioners had no notice of any of the hearing dates.

Facts in brief:

7. Respondent no. 2 firm was constituted on 13th June 1989 with only 3 partners, i.e. respondent no. 3, respondent no. 4 and respondent no. 5. The firm had availed three facilities. First one was on or about 27th July 1992 when IOB sanctioned certain facilities to the tune of Rs. 1.41 Crores to respondent no. 2. The sanction letter specified only respondent nos. 3 and 5 as partners.

8. Some time in 1995, IOB sanctioned a further facility of approximately Rs. 2.49 Crores to respondent no. 2 in relation to which personal guarantees were also issued. On or about 6th January 1997, IOB sanctioned a further facility of approximately Rs. 2.49 Crores to respondent no. 2. Respondent nos. 3 to 5 also created equitable mortgage of their properties to secure the amounts borrowed.

9. None of the documents relating to the facilities sanctioned were signed by petitioners. Petitioners were neither shown as partners or guarantors or borrowers or mortgagors or otherwise. It does not appear that even IOB had made out a case that petitioners were signatories to any of the bank agreements or that any property was mortgaged as security by petitioners. Respondent no. 3 has alleged in the reply filed before the DRAT that petitioners became partners of respondent no. 2 on 18th January 1997. Mr. Dwarkadas submi