2011 (4) CTC 450
High Court of Judicature at Madras
ELIPE DHARMA RAO & M. VENUGOPAL
Dr. E. Prabakaran & Another
Versus
The Lakshmi Vilas Bank Limited, Hosur
C.R.P.No.506 of 2004 & C.M.P.No.4377 of 2004 & V.C.M.P.No.6278 of 2004
Decided On: 11-04-2011
RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 - SECTION 19 - SETTING ASIDE EXPARTE ORDER - SUFFICIENT CAUSE - SERVICE OF SUMMONS - SUBSTITUTED SERVICE - PUBLICATION IN NEWSPAPER - DEEMED SERVICE - INTEREST - CONTRACTUAL RATE - JUSTIFICATION - SURETIES/GUARANTORS - LIABILITY COEXTENSIVE WITH PRINCIPAL DEBTOR.
Fact of the Case:
The Petitioners, who are the guarantors to the loan taken by the 1st Defendant/Principal Debtor, filed a Civil Revision Petition challenging the orders of the Debts Recovery Appellate Tribunal, Chennai, and the Debts Recovery Tribunal, Coimbatore, which dismissed their application to set aside the ex parte order passed against them in an Original Application filed by the Respondent/Bank under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Petitioners contended that they were not served with the summons and that the publication of the notice in the newspaper was not a proper service. They also argued that the Tribunal erred in granting interest at the contractual rate of 22.5% per annum.
Finding of the Court:
The Court held that the Petitioners failed to show sufficient cause to set aside the ex parte order. It found that the registered notices sent to the Petitioners were returned with an endorsement 'Not claimed', which is deemed to be proper service. The Court also held that the publication of the notice in the newspaper was a valid form of substituted service and that the Petitioners were deemed to have received the notice. Regarding the interest rate, the Court held that the Petitioners had agreed to the charging of interest at 22.5% per annum and that the grant of contractual rate of interest was justified.
Issues: 1. Whether the Petitioners were properly served with the summons. 2. Whether the publication of the notice in the newspaper was a valid form of substituted service. 3. Whether the Tribunal erred in granting interest at the contractual rate of 22.5% per annum.
Ratio Decidendi: 1. The Court held that the registered notices sent to the Petitioners were returned with an endorsement 'Not claimed', which is deemed to be proper service. It also held that the publication of the notice in the newspaper was a valid form of substituted service and that the Petitioners were deemed to have received the notice. 2. The Court held that the Petitioners had agreed to the charging of interest at 22.5% per annum and that the grant of contractual rate of interest was justified.
Final Decision: The Court dismissed the Civil Revision Petition and left the parties to bear their own costs.
M.VENUGOPAL, J.
1. The Petitioners have filed the present Civil Revision Petition as against the order dated 05.03.2004 in M.A.No.34 of 2004 in I.A.No.30 2001 in T.A.No.2234 of 2002 (O.A.No.691 of 1999) passed by the Debts Recovery Appellate Tribunal, Chennai.
2. The Debts Recovery Appellate Tribunal, Chennai, while passing orders in M.A.No.34 of 2004 on 05.03.2004, has, among other things, observed, in paragraph 6, as follows:
"... He further pointed out that even on 7.1.2004 the guarantors wrote letter to the Chairman of the applicant Bank giving the address as Baroda Street only. So, all these correspondence clearly reveal that the appellant was residing in Baroda Street and only for the Baroda Street address all the correspondence were sent and the appellant was also sending letters only from that address. It has not been established that the appellant was not at all residing in 25-A, Baroda Street, West Mambalam, Chennai. Even with regard to the vacating of the premises and the occupation of the premises by another person, there is no intimation at all by the appellants to the Bank. In the absence of any intimation to the Bank, the Bank is not expected to know about the vacation of the premises by the appellant. All these correspondence clearly reveal that the appellant was residing in the Baroda Street address and he is also clearly aware. The fact that the Order copy was sent to the Baroda Street address clearly reveals that the appellant is residing in that premises and he came to know about the passing of the Order only from that address. All these things clearly go to establish that there was proper service of summons, the appellants were residing only in that address and notices were sent only to the address given by the appellants. In the absence of any proof that the appellant vacated premises and shifted his premises to other area intimating by letter, it is very difficult to sustain the case of the appellants." and further held in paragraph 7 that 'the Correspondences sent subsequently also reveal that the appellant was residing only in that address. So, it cannot be stated that there is no proper service of summons etc. and resultantly, held that there is no proper ground to set aside the exparte order and dismissed the Appeal.'
3. The Learned Senior Counsel for the Revision Petitioners submits that the order of the Debts Recovery Appellate Tribunal dated 05.03.2004 in M.A.No.34 of 2004 in I.A.No.30 of 2001 in T.A.No.2234 of 2002 (O.A.No.691 of 1999) is against law and further that the said Tribunal has failed to exercise its jurisdiction in a proper manner resulting in material irregularity and illegality.
4. According to the Learned Senior Counsel for the Petitioners, having found that the Respondent/Bank has sent the Lawyer's Notice only to the address of the Petitioners at Zackaria Colony, Chennai-94 before filing of O.A.No.691 of 1999, the Debts Recovery Appellate Tribunal has committed an error in observing that the Petitioners have resided at No.25-A, Baroda Street, West Mambalam, Chennai on the basis that the summons have been returned with an endorsement 'Not claimed'.
5. The Learned Senior Counsel for the Petitioners contends that the Debts Recovery Appellate Tribunal failed to see that the inmates of the premises might have unclaimed the said summons since it has not been addressed to them.
6. The Learned Senior Counsel for the Petitioners projects a plea that the Petitioners has specifically mentioned in Ground No.7 of the Memorandum of Appeal in M.A.No.34 of 2004 that they occupied the premises at No.25-A, Baroda Street, West Mambalam, Chennai-33 only in June 2001 for the first time and when that be the position, the Debts Recovery Appellate Tribunal has incorrectly held that the Counsel submitted that the Petitioners originally resided at the aforesaid address and then vacated.
7. The Petitioners have taken a ground in the Revision that the Debts Recovery Appellate Tribunal has failed to app
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