2000 (8) TMI 1021 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the appeal before the Debt Recovery Appellate Tribunal.
2. Refusal to entertain the counterclaims by the petitioners.
3. Allegations of procedural delays and abuse of process by the petitioners.
4. Discretionary relief under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal:
The petitioners challenged an order dated 3-7-2000 by the Debt Recovery Tribunal (DRT) before the Debt Recovery Appellate Tribunal (DRAT), which was dismissed on 18-8-2000. The DRAT held that the appeal was not maintainable because the petitioners had previously filed CM (Main) 414 of 2000 under Article 227 of the Constitution challenging the same order, which was dismissed as withdrawn without permission to file an appeal. Despite this, the DRAT considered the case on merits and found no fault with the Tribunal's order.

2. Refusal to Entertain Counterclaims:
The main grievance of the petitioners was the refusal by the Tribunal and the Appellate Tribunal to entertain their counterclaims. The petitioners argued that the foundation for the counterclaims had been laid by an amendment to the written statement. However, the Tribunal rejected the counterclaims on the grounds that the amendment conferring the right to file counterclaims came into effect on 17-1-2000, and the proceedings had been instituted earlier. The court emphasized that counterclaims should be filed at the earliest stage to avoid delays, referencing sub-section (8) and (9) of section 19 of the Recovery of Debts Due to Bank and Financial Institutions (Amendment) Act, 2000. The court agreed with the Karnataka High Court's view that counterclaims should be set up before the issues are framed or before the commencement of evidence.

3. Allegations of Procedural Delays and Abuse of Process:
The court noted that the petitioners had repeatedly tried to delay the proceedings by filing multiple applications and counterclaims at advanced stages of the trial. The petitioners' conduct was seen as an attempt to delay the disposal of the Original Application (OA) and to involve the bank in a fresh trial on the basis of the counterclaims. The court concluded that the petitioners were abusing the process of the court.

4. Discretionary Relief under Article 226:
The court emphasized that the issuance of a writ under Article 226 is discretionary and not a matter of right. Given the petitioners' conduct and the circumstances of the case, the court found no merit in the petitioners' contention for relief under Article 226. The court held that the petitioners had failed to make a case for interference by the court and were not entitled to any discretionary relief.

Conclusion:
The court dismissed the petition with costs quantified at Rs. 10,000, finding no merit in the petitioners' contentions and emphasizing the petitioners' abuse of the judicial process to delay the main case.