2016 (1) TMI 815 - HC - Indian Laws

Recovery proceedings - why writ petitioner was a necessary or a proper party - validity of orders of Debts Recovery Tribunal - The borrower and the co-borrower are in default and the bank has proceeded to recover the same. Proceedings are pending before the Debts Recovery Tribunal. Subsequently an application was filed to implead the writ petitioner as a respondent and by a cryptic non-reasoned order without bringing out as to why writ petitioner was a necessary or a proper party, vide order dated September 15, 2014 the Debts Recovery Tribunal impleaded writ petitioner as a respondent which order has been upheld by the Debts Recovery Appellate Tribunal on March 20, 2015. Needless to state the said two orders are under challenge. Held that - The principle relating to impleadment in decisions involving rights to physical properties are equally capable of being applied to contractual rights. - Regretfully, neither the order dated September 15, 2014 passed by the Debts Recovery Tribunal nor the order dated March 20, 2015 passed by the Debts Recovery Appellate Tribunal has dealt with the issue arising concerning writ petitioner s impleadment as prayed by the respondent No.1 bank in its application seeking impleadment. The two orders do not bring out the reasons why presence of the writ petitioner is necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the proceedings before the Debts Recovery Tribunal. Application filed by the first respondent seeking impleadment of the writ petition is revived for adjudication afresh before the Debts Recovery Tribunal which shall decide the application guided by the law concerning impleadment as discussed above.

Issues Involved:
1. Inchoate pleadings by the respondent bank.
2. Impleadment of the writ petitioner under Order 1 Rule 10 of the Code of Civil Procedure.
3. Default in loan repayment and subsequent legal proceedings.
4. Evaluation of necessary and proper party for adjudication.
5. Analysis of relevant case laws and legal principles regarding impleadment.

Issue-wise Detailed Analysis:

1. Inchoate Pleadings by the Respondent Bank:
The court noted that the respondent bank's application under Order 1 Rule 10 of the Code of Civil Procedure contained inchoate pleadings. The bank sought to implead the writ petitioner without providing a clear rationale for why the petitioner was a necessary or proper party in the proceedings.

2. Impleadment of the Writ Petitioner under Order 1 Rule 10 of the Code of Civil Procedure:
Order 1 Rule 10(2) of the Code of Civil Procedure allows the court to add parties whose presence is necessary for the complete adjudication of the questions involved in the suit. The court emphasized that a person must have a direct interest in the subject matter of the litigation to be considered a proper party.

3. Default in Loan Repayment and Subsequent Legal Proceedings:
The case involved a transaction between ICICI Bank and Link Engineers Private Ltd., with a co-borrower. The loan was sanctioned to purchase a motor vehicle. There was a default in repayment, and the vehicle changed hands. The bank initiated recovery proceedings before the Debts Recovery Tribunal (DRT). The DRT's order to implead the writ petitioner as a respondent was challenged, as it lacked reasoning for the necessity of the writ petitioner's presence.

4. Evaluation of Necessary and Proper Party for Adjudication:
The court referred to multiple case laws to elucidate the criteria for determining necessary and proper parties. In Razia Begum v. Anwar Begum, the Supreme Court held that a person should have a direct interest in the subject matter of the litigation to be added as a party. Similarly, in Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay, the Supreme Court stated that a necessary party is one without whom no effective order can be made, while a proper party is one whose presence is necessary for a complete and final decision.

5. Analysis of Relevant Case Laws and Legal Principles Regarding Impleadment:
The court cited several decisions to highlight the principles governing the impleadment of parties:
- In Dollfus Mieg et Compagnie S.A. v. Bank of England, the court held that the true test lies in the result on the subject matter of the action if the applicant's rights could be established.
- In Amon v. Raphael Tuck & Sons Ltd., the court emphasized that the intervener must have a direct interest in the subject matter of the action, which would be affected by the order sought by the plaintiff.

Conclusion:
The court found that the orders passed by the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal did not provide adequate reasons for the writ petitioner's impleadment. The orders were set aside, and the application for impleadment was revived for fresh adjudication by the Debts Recovery Tribunal, guided by the legal principles discussed. The writ petition was disposed of, and no costs were awarded. The connected application was dismissed as infructuous.

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