Back
2010 Supreme(Mad) 4388
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE D. MURUGESAN & THE HONOURABLE MR. JUSTICE B. RAJENDRAN
G. Thulasi
Versus
Debt Recovery Appellate Tribunal, Chennai & Others
W.P.No.30811 of 2008
Decided On : 04-10-2010
For the Petitioner:Gowri, for M. Balasubramanian, Advocates.
For the Respondents:R3, Om Prakash for M/s. Ramalingam Asso, R5, C. Ravichandran, Advocates. No appearance.
The extent of a guarantor's liability and the compliance with procedural rules, particularly Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993, were central to the judgment.
Headnote:
Guarantor - Debt Recovery - Debts Recovery Tribunal (Procedure) Rules, 1993 - Rule 16 - Summary of Acts and Sections: The court discussed the application of the Debts Recovery Tribunal (Procedure) Rules, 1993, particularly Rule 16, and its compliance in the context of the petitioner's claims. The court also referred to the letter of guarantee executed by the petitioner and others, emphasizing the extent of the guarantee provided.
Fact of the Case:
The petitioner acted as a guarantor for a packing credit advance availed by the principal borrower from the respondent bank. The bank obtained an exparte decree for the failure of repayment, leading to the attachment and sale of properties, including one belonging to the petitioner. The petitioner filed an application to set aside the sale, citing various grounds, which were rejected by the Debt Recovery Tribunal and the Appellate Tribunal.
Finding of the Court:
The court analyzed the grounds presented by the petitioner and found no merit in them, ultimately dismissing the writ petition.
Issues: The issues revolved around the service of notice to the petitioner, the bank's action in bringing the property for sale during the pendency of the application to set aside the ex parte decree, compliance with the Debts Recovery Tribunal (Procedure) Rules, 1993 in the publication of sale notice, the extent of the property's mortgage, and the communication of the order of the Tribunal to the petitioner.
Ratio Decidendi: The court held that the petitioner's failure to appear before the Debts Recovery Tribunal after being served notice led to the rejection of the contention regarding the notice. The court also found that the bank's actions in bringing the property for sale during the pendency of the application were justified, and that the petitioner's knowledge of the sale proceedings precluded the complaint about noncompliance with the publication rule. Additionally, the court emphasized the contents of the letter of guarantee in determining the extent of the petitioner's liability. The court also clarified the interpretation of Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993, and found that the bank had complied with the rule.
Final Decision: The court found no merit in the writ petition and dismissed it without costs.
(D.MURUGESAN, J.)
1. The petitioner is the guarantor for the packing credit advance availed by the principal borrower from the respondent bank on 16.8.1994 to a tune of Rs.15 lakhs carrying interest at 13% p.a. Apart from four properties belonging to the borrower having been mortgaged for the said advance, one property of the petitioner being a guarantor was also given in mortgage. For the failure of repayment of advance amount by the principal borrower, the bank approached the Debt Recovery Tribunal and obtained an exparte decree dated 3.5.1999 for a sum of Rs.21,12,714/- together with interest. Thereafter, the properties were attached on 06.08.2002 including the fifth item belonging to the petitioner and publication of sale notice was issued on 13.07.2003. The sale was effected on 14.8.2003 and thereafter, it was confirmed and the sale certificate was also issued on 18.9.2003.
2. The petitioner has filed an application on 1.9.2003 before the Debt Recovery Tribunal to set aside the sale, on the following grounds:
i) That the property, viz., Item No.5, belonging to the petitioner was given in mortgage only to an extent of Rs.1,20,000/-and the bank cannot claim lien over the property for the entire loan amount;
ii) That there was no proper publication of sale;
iii) That the order of the Debt Recovery Tribunal has not been communicated and there was violation of Rule 16 of the Debt Recovery Tribunal (Procedure) Rules, 1993;
iv) That the sale price was very low as against the actual price of Rs.20 lakhs; and
v) That in any case, when proceedings are pending before the Debt Recovery Tribunal, the bank should not have brought the properties for sale.
Both the Debt Recovery Tribunal as well as the Appellate Tribunal did not agree with any of the above grounds made by the petitioner and accordingly, the relief sought for by the petitioner to set aside the ex parte decree was negatived. Hence, the present writ petition.
3. We have heard Ms.Gowri, learned counsel appearing for the petitioner, Mr.Om Prakash, learned counsel for the third respondent/bank and Mr.C.Ravichandran, learned counsel appearing for the fifth respondent.
4. From the submissions made by the learned counsel for the petitioner, the following questions emerge for our consideration:
I. Whether, in the given case, notice was served to the petitioner before ex parte order was passed ?
II. Whether the respondent could bring the property for sale when an application for setting aside the ex parte decree was pending before the Debt Recovery Tribunal ?
III. Whether there was proper compliance of the Debts Recovery Tribunal (Procedure) Rules, 1993, in publication of sale notice in Dailies ?
IV. Whether the property in Item No.5 was given in mortgage only for a liability to an extent of Rs.1,20,000/- or for the entire loan of the principal borrower ? and
V. Whether the copy of the order of the Tribunal was not communicated to the petitioner and thus, there was violation of Rule 16 of the Debts Recovery Tribunal (Procedural) Rules, 1993 ?
Question No.I:
"Whether, in the given case, notice was served to the petitioner before ex parte order was passed "
5. It is seen from the order of the Debts Recovery Appellate Tribunal that the notice indicating the date of hearing as 17.02.1998 was served on the writ petitioner on 19.01.1998. The petitioner failed to appear on that date before the Debts Recovery Tribunal. The petitioner was, in fact, set ex parte only on 13.03.1998 and subsequently, an ex parte final order was passed on 03.05.1999. The Debts Recovery Appellate Tribunal, considering the above factual aspect, held that in spite of service of notice on 19.01.1998, the petitioner had allowed the Debts Recovery Tribunal to pass an ex parte order and thereafter, ex parte decree, almost after one year and four months and the petitioner had not taken any steps to represent before the Debts Recovery Tribunal. This finding of the Debts Recovery Appellate Tribuna
