2021 (4) TMI 1307 - HC - Indian Laws

Suit for recovery of money - jurisdiction to set aside the exparte decree or not - HELD THAT - The petitioners are the defendants in the suit filed by the respondent for recovery of money. The first petitioner is a private limited company and the second and third defendants are its Directors. They availed term loan to the tune of ₹ 10 lakhs from the respondent on 25.10.1995 to purchase machineries. Accordingly, the deed of hypothecation in respect of machineries and vehicles were executed on 25.10.1995. They also executed letter of undertaking on the same day and thereafter they defaulted payment of loan. Therefore, the respondent filed suit for recovery of money to the tune of ₹ 9,93,812/- - the respondent filed suit and suit summons were sent to the address given by the petitioners. Those summons were returned unclaimed and as such substituted service was ordered. Accordingly, the respondent effected paper publication and the petitioners were set exparte and exparte decree was passed on 12.02.2004. Now it cannot be said that the fixed deposit made by the petitioners not returned to the petitioners by the respondent. That apart, the petitioners filed petition to set aside the exparte order without any condone delay petition. Though it was numbered and ordered on merits, the petitioners failed to mention sufficient cause for the delay in petition to set aside the exparte decree. Exparte decree was passed on 12.02.2004 - It is unbelievable statement and as rightly pointed by the learned counsel for the respondent, it is nothing but cock and bull story and only to maintain the petition to set aside the exparte decree without condone delay of petition. Therefore, the petitioners failed to state any sufficient cause to consider the petition to set aside the exparte decree. Admittedly, the machineries are also sold out and no amount was paid towards loan in favour of the respondent herein. While admitting the present civil revision petition, this Court imposed condition and the said condition was only complied with by the petitioners by depositing 50% of the decree amount. Though the learned counsel for the petitioners submitted in respect of jurisdiction of the Debts Recovery Tribunal, on perusal of the order passed by the court below, it does not refer any jurisdiction point. The petition to set aside the exparte decree was dismissed only on merits. Therefore, there is nothing to go into the ground of jurisdiction of Debts Recovery Tribunal. Hence, this Court finds no irregularity of infirmity in the order passed by the court below. This civil revision petition is dismissed.

Summary

Issues:
1. Dismissal of petition to set aside the exparte decree by the II Additional City Civil Judge, Chennai.
2. Jurisdiction of the Debts Recovery Tribunal to entertain the petition to set aside the exparte decree.
3. Allegations of fraud by the respondent in obtaining the exparte order.
4. Failure of the petitioners to provide sufficient cause for the delay in filing the petition to set aside the exparte decree.

Issue 1: Dismissal of Petition to Set Aside the Exparte Decree
The petitioners, defendants in a money recovery suit, sought to set aside an exparte decree issued by the civil court. The second petitioner, a doctor in the USA, claimed ignorance of legal proceedings due to residing abroad for 40 years. The petitioners argued that the civil court, not the Debts Recovery Tribunal, had jurisdiction to set aside the exparte decree, citing a relevant court judgment. The petitioners contended that they promptly filed the petition upon learning of the decree, denying any delay.

Issue 2: Jurisdiction of the Debts Recovery Tribunal
The respondent, after obtaining an exparte decree exceeding ?10 lakhs, approached the Debts Recovery Tribunal for a recovery certificate. The respondent justified the Tribunal's jurisdiction under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The respondent argued that the petitioners' failure to repay a loan led to legal action, including substituted service and an exparte decree. The respondent emphasized the Tribunal's authority to issue recovery certificates for such cases, citing relevant judgments to support their position.

Issue 3: Allegations of Fraud
The petitioners alleged that the respondent committed fraud by not considering a deposited amount towards the loan account. They claimed the respondent obtained the exparte order unfairly. However, the respondent refuted these claims, asserting that the loan default led to legal action, and the petitioners failed to respond to notices. The respondent maintained that the petitioners' personal disputes were irrelevant to the loan repayment obligation.

Issue 4: Failure to Provide Sufficient Cause for Delay
The court noted the petitioners' failure to justify the delay in filing the petition to set aside the exparte decree. Despite the petitioners' attempt to explain the delay, the court found their reasons insufficient. The court dismissed the petition on its merits, emphasizing the lack of a valid cause for the delay. The court also highlighted the petitioners' compliance with a condition to deposit a portion of the decree amount.

In conclusion, the Madras High Court upheld the dismissal of the civil revision petition, finding no irregularities in the lower court's decision. The court emphasized the petitioners' failure to establish sufficient cause for the delay in filing the petition to set aside the exparte decree. The judgment clarified the jurisdiction of the Debts Recovery Tribunal in issuing recovery certificates for amounts exceeding ?10 lakhs and rejected the petitioners' allegations of fraud by the respondent.