Back
2025 Supreme(Online)(AP) 17516
HIGH COURT OF ANDHRA PRADESH
CHEEKATI MANAVENDRANATH ROY,Tuhin Kumar Gedela
INDIA LINERS PRIVATE LIMITED – Appellant
Versus
CANARA BANK – Respondent
WP 14122/2025
A decree cannot be based on a vague admission in a written statement when the plaintiff has failed to adduce any oral or documentary evidence to prove its claim.
Headnote:(A) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 31 - Transfer of pending suits to Debts Recovery Tribunal - Code of Civil Procedure, 1908 - Order XII Rule 6 - Judgment on admission - Order VIII Rule 5 - Specific denial - Specific Relief Act, 1963 - Indian Evidence Act, 1872 - Section 102 - Burden of proof.
(B) Judgment on admission - Requirements - An admission, to form the basis of a decree under Order XII Rule 6 CPC, must be clear, categorical, specific, unambiguous, and unconditional - It must be a conscious and deliberate act showing an intention to be bound by it - Vague or equivocal statements do not constitute a clear admission - Mere pleading that a party availed a facility or hypothecated goods, without admitting the specific loan transactions, documents, or the exact amount claimed, is insufficient to pass a decree. (Paras 10, 11, 12)
(C) Judgment on admission - Discretionary power - Order XII Rule 6 CPC is an enabling provision conferring a wide discretionary power on the court - It is neither mandatory nor peremptory - The court must exercise its discretion judicially, keeping in mind that a judgment on admission permanently denies the defendant a remedy by way of an appeal on merits. (Para 11)
(D) Principle of natural justice - Violation - An order passed without any evidence and based on a misreading of the pleadings amounts to a patent illegality and a violation of principles of natural justice - A finding of fact arrived at without any evidence or based on a manifest misreading of the evidence is perverse and can be interfered with under Article 227 of the Constitution of India. (Paras 6, 7)
Facts of the case:
A bank filed an original application before the Debts Recovery Tribunal for recovery of a sum from a company and its directors (defendants). The bank’s suit documents, allegedly lost during transfer from a civil court, were not produced before the Tribunal. An enquiry revealed the bank had never filed the original documents. The bank failed to adduce any oral or documentary evidence; its witnesses did not enter the witness box for cross-examination. The Tribunal allowed the application solely based on an alleged admission in the written statement of the defendants. The first defendant challenged this order by way of a writ petition.
Findings of Court:
The High Court found that the defendants’ written statement specifically denied the plaint averments. The admission was not clear, categorical, or unambiguous. There was no oral or documentary evidence on record to substantiate the bank's claim. The Tribunal’s order, based on no evidence and on a purported admission that was vague, was held to be perverse, illegal, and contrary to law. It also suffered from a patent illegality and a manifest error of law.
Issues: The main issues were whether the Debts Recovery Tribunal could pass a decree based on a vague and unclear admission in the written statement in the absence of any evidence, and whether the High Court could exercise its writ jurisdiction despite the availability of an alternative remedy.
Ratio Decidendi: A decree cannot be based solely on plaint averments and vague admissions in a written statement. An admission must be clear, categorical, and unambiguous to act upon. A court cannot decree a claim when the plaintiff has utterly failed to adduce any proof of the debt. An order passed without any evidence is perverse and liable to be set aside in writ jurisdiction. Result : Writ petition allowed. The impugned order of the Debts Recovery Tribunal is set aside. No order as to costs.
ORDER: (Per Hon’ble Sri Justice Cheekati Manavendranath Roy
Aggrieved by the order dated 13.03.2025 passed in O.A.No.68 of 2004 on the file of the Debts Recovery Tribunal, Visakhapatnam, whereby the claim of the applicant therein, which is Canara Bank represented by its Manager, Buckinghampet Branch, Vijayawada, for recovery of a sum of Rs.26,99,821.70 ps., was allowed against defendant Nos.1 to 3 therein and Recovery Certificate was issued for the said sum of Rs.26,99,821.70 ps., with interest at the rate of 9% per annum, while dismissing the claim against defendant No.4, the present writ petition has been filed by defendant No.1 in the said O.A.
2. Heard Mr. S.S. Prasad, learned Senior Counsel assisted by Mr. S.N. Chidambara Sastry, learned counsel for the petitioner, Mr. M. Prudvi Raju, learned counsel for respondent No.1 and Mr. Naresh Byrapaneni, learned counsel for respondent No.2.
3. The parties will be referred as they are arrayed in O.A.No.68 of 2004 before the Debts Recovery Tribunal for the sake of convenience.
4. Brief overview of the facts leading to the lis in this writ petition may be stated as follows:
(i) The applicant before the Tribunal is Canara Bank represented by its Manager, Buckinghampet Branch, Vijayawada. Defendant No.1 is a private limited company dealing in manufacture of auto liners, having its showroom at Governorpet, Vijayawada. Defendant Nos.2 and 3 are the Directors of defendant No.1- company. According to the applicant-bank, defendant No.1 availed certain financial facilities from it for the purpose of running the business. The applicant-bank has sanctioned OD loan facility of Rs.4,25,000/-. Defendant Nos.1 to 3 have executed all necessary documents in favour of the bank and defendant No.1 has hypothecated the stock in trade, which consist of raw materials and finished goods and consumables, towards security for repayment of the overdraft amount and executed hypothecation agreement in favour of the bank on 13.04.1985. Defendant Nos.2 and 3 have also executed personal guarantee for the loan facility availed by defendant No.1- company. The stocks hypothecated were covered by insurance policy with the 4th defendant- M/s. New India Assurance Company Limited. So, it is stated that the applicant-bank has got first charge in respect of the hypothecated goods and defendant Nos.2 and 3 are jointly and severally liable to pay the said amount due to the applicant-bank under the above overdraft. While so, it is stated that defendant Nos.2 and 3 informed the bank during January, 1989 that the stocks hypothecated with the applicant-bank were burnt/looted in the riots that took place on 26.12.1988 and requested the bank to forward the claim forms to the 4th defendant-insurance company. The forms were accordingly forwarded to the insurance company by the bank, but the said claim was not settled by the insurance company. It appears that the insurance company has repudiated the claim.
(ii) It is the further case of the applicant-bank that defendant No.1 has also availed financial facility by way of overdraft to a tune of Rs.4,00,000/- under the ODB loan account on 17.09.1985. The said facility was availed by defendant No.1 by drawing bills on local customers and that defendant No.1 has received the bill amounts from the drawees directly without the knowledge of the applicant-bank and that the same was informed to the bank by the concerned customers when demanded for bill amounts.
(iii) It is pleaded that despite repeated demands made by the applicant-bank, both orally and in writing, defendant Nos.1 to 3 did not pay the loan amounts due to the applicant-bank. Therefore, the applicant-bank has filed a suit against defendant Nos.1 to 4 before the civil court for recovery of a sum of Rs.26,99,821.70 ps. along with interest.
(iv) Initially, the said suit in O.S.No.242 of 1994 was filed in the Court of Principal Sub Judge, Vijayawada. Defendant Nos.1 to 3 filed written statement in the said suit denying all the material ave
