2018 (1) TMI 873 - HC - Companies Law

Non-accounting of the insurance amount - non-submission of the Statement of Accounts, from the date of Original Application within 15 days of the order of the Appellate Tribunal - Action of DRAT, Chennai in directing DRT, Bangalore, to dismiss original application, for non-submission of statement of accounts to the Tribunal - Procedure to be followed by the Tribunal, when application is filed - jurisdiction conferred on the Debts Recovery Tribunal to adjudicate the claim - Held that - When a specific procedure to adjudicate a claim/counter claim/set off, is envisaged in Rule 19 of the RDBI Act, 1993, the DRAT, Chennai, has committed a patent error in directing dismissal. Rules of natural justice are foundational and fundamental concepts of law. Principles of natural justice are part of the procedure, in the decision making process, involving the rights of parties. Statement of accounts, would reveal, the loan availed, amounts paid, and amount transferred by any other institution, in the case on insurance claim amount. Even taking it for granted that such statement is not filed, still it is always open to both parties, to adduce evidence, in Debts Recovery Tribunal, Bangalore, in support of their rival contentions. Public money to the tune of ₹ 21,76,42,758.42 is involved. Action of DRAT, Chennai in directing DRT, Bangalore, to dismiss original application, for non-submission of statement of accounts to the Tribunal, cannot be approved. When huge public money is involved, DRAT, Chennai, ought to have directed, DRT, Bangalore, to proceed with the matter, on merits. Going through the order impugned, it could be deduced that for the alleged non-accounting of the insurance amount, DRAT, Chennai, condemned the bank, ordered cost, in case of failure of submission of statement of accounts within three days and also gone to the extent of directing dismissal of O.A.. DRAT, Chennai and thus, committed a patent and grave error, which cannot be remedied and rectified, by review, as the order made in M.A. No.131/2013 dated 11.03.2015, has already been given effect to, by DRT, Bangalore. When violation of principles of natural justice is per se apparent on the face of record, High Court, while exercising jurisdiction under Article 227 of the Constitution of India, cannot be a mute spectator and refuse to entertain a revision petition. High Court, should step in and correct the manifest injustice. We cannot subscribe to the directions of the Appellate Tribunal to dismiss Original Application. Order requires to be set aside. Accordingly, set aside.

Summary

Issues Involved:
1. Challenge to the order made in M.A. No.131 of 2013 by the Debts Recovery Appellate Tribunal (DRAT), Chennai.
2. Non-filing of the statement of accounts by the petitioner.
3. Directions issued by DRAT, Chennai, including the dismissal of the Original Application (OA) No.326 of 2002.
4. Jurisdiction and powers of the Debts Recovery Tribunal (DRT) and DRAT.
5. Principles of natural justice and their violation.

Issue-wise Detailed Analysis:

1. Challenge to the Order in M.A. No.131 of 2013:
The petitioner challenged the order dated 11.03.2015 passed by DRAT, Chennai, in M.A. No.131 of 2013, which directed the dismissal of OA No.326 of 2002 for non-filing of the statement of accounts. The petitioner argued that the statement of accounts was only a piece of evidence and the failure to file it should not result in the dismissal of the OA.

2. Non-filing of the Statement of Accounts:
The petitioner admitted that the statement of accounts was not filed within the stipulated 15 days as directed by DRAT, Chennai. However, the petitioner contended that the statement of accounts was later emailed to the respondents' counsel and should have been allowed to be filed with the DRT, Bangalore.

3. Directions Issued by DRAT, Chennai:
DRAT, Chennai, observed that the bank had suppressed the receipt of insurance money for five years and condemned this action. It directed the petitioner to file the statement of accounts within three days and imposed a penalty of ?10,000 for failure to comply. Furthermore, DRAT ordered the dismissal of OA No.326 of 2002 if the statement of accounts was not filed within 15 days.

4. Jurisdiction and Powers of DRT and DRAT:
The High Court emphasized that DRAT, Chennai, exceeded its jurisdiction by directing the dismissal of OA No.326 of 2002 for non-filing of the statement of accounts. The court noted that the DRT should have been allowed to proceed with the available records and pass orders based on the merits of the case. The court cited Section 17 and Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which outline the jurisdiction and procedure to be followed by the Tribunal.

5. Principles of Natural Justice:
The High Court held that DRAT, Chennai, violated the principles of natural justice by directing the dismissal of the OA without allowing the petitioner to present evidence. The court cited several judgments to support the view that principles of natural justice are foundational and fundamental concepts of law. The court concluded that DRAT's order caused grave injustice to the petitioner and amounted to a violation of natural justice.

Conclusion:
The High Court set aside the order of DRAT, Chennai, dated 11.03.2015, and directed the petitioner to submit the statement of accounts to the Tribunal. The court emphasized that the DRAT's direction to dismiss the OA was a patent and grave error, and the High Court, exercising jurisdiction under Article 227 of the Constitution of India, must correct such manifest injustice. The civil revision petition was allowed, and the connected civil miscellaneous petition was closed.