2021 (3) TMI 79 - HC - Indian Laws

Seeking condonation of delay in filing claim affidavit - Order of Debt Recovery Appellate Tribunal (DRAT) - HELD THAT - The order dated January 16, 2018 cannot be said to be an order passed in adjudication on merits. Order impugned in the present petition passed by the DRAT has considered the same and records the background of the lis between the parties. It records that on June 29, 2020 learned counsel appearing on behalf of the petitioner (applicant No. 2 therein) had itself submitted that since the record in the case was bulky and it required detail arguments, instead of virtual hearing, physical hearing may be taken in the case and had in fact, consented for a short adjournment. Further on July 20, 2020 matter before the DRAT came to be adjourned on the request of both the parties. According to the petitioner delay was required to be calculated from January 16, 2018 and would therefore amount to a delay of two years as against the delay of 269 days argued by respondent No. 1, the DRAT has taken an overall view while observing that though there were some lapses on the part of respondent No. 1 in not filing the claim affidavit, but since the claim affidavit was ready, no prejudice whatsoever would be caused to the petitioner (financial institution). It is to be noted that ultimately the case was required to be decided on the basis of the material evidence placed before the DRAT. The appellants shall file their claim affidavit in the DRT within one week from the date on which the present order is uploaded on the website after duly serving a copy of the same on the opposite party - The application for cross-examination of the witnesses of respondent-financial institution filed by the appellants in main O. A. shall be decided within a period of four weeks including witness action, if any, from today.

Summary

Issues Involved:
1. Condonation of delay in filing claim affidavit by respondent No. 1.
2. Validity of the order dated January 16, 2018, by the DRT.
3. Whether the DRAT's decision to set aside the DRT's rejection order was justified.
4. The impact of interlocutory orders on the rights of parties.
5. The application of the principle of res judicata to interlocutory orders.

Detailed Analysis:

Issue 1: Condonation of Delay in Filing Claim Affidavit by Respondent No. 1
The petitioner, an asset reconstruction company, challenged the DRAT's order allowing respondent No. 1 to file a delayed claim affidavit. The DRT had initially rejected respondent No. 1's request for condonation of delay, but the DRAT reversed this decision, noting that the claim affidavit was ready and no prejudice would be caused to the petitioner. The DRAT allowed respondent No. 1 to file the claim affidavit within a week and permitted the petitioner to file an additional affidavit in response.

Issue 2: Validity of the Order Dated January 16, 2018, by the DRT
The petitioner argued that the DRT's order dated January 16, 2018, which forfeited respondent No. 1's right to file a claim affidavit, should be upheld. The petitioner contended that respondent No. 1's subsequent application for condonation of delay was an indirect attempt to recall the January 16, 2018 order. However, the respondent countered that the January 16, 2018 order was not a final adjudication on the merits but an interlocutory order, which did not preclude the possibility of seeking its recall or modification.

Issue 3: Whether the DRAT's Decision to Set Aside the DRT's Rejection Order Was Justified
The DRAT's decision to set aside the DRT's rejection order was based on the observation that the delay in filing the claim affidavit was due to the DRT's non-functioning following a fire incident. The DRAT noted that the petitioner's counsel had previously requested adjournments and that the claim affidavit was ready. The DRAT concluded that no prejudice would be caused to the petitioner by allowing the delayed filing, as the case would ultimately be decided based on the material evidence presented.

Issue 4: The Impact of Interlocutory Orders on the Rights of Parties
The respondent cited the Supreme Court's judgment in Arjun Singh v. Mohindra Kumar to argue that interlocutory orders, such as the one dated January 16, 2018, do not attain finality and can be reconsidered. The Supreme Court's judgment highlighted that interlocutory orders are of various kinds and do not necessarily decide the merits of the case. The DRAT's order reflected this understanding, emphasizing that the interlocutory nature of the January 16, 2018 order did not preclude its reconsideration.

Issue 5: The Application of the Principle of Res Judicata to Interlocutory Orders
The principle of res judicata, which prevents the same issue from being litigated multiple times, was discussed in the context of interlocutory orders. The Supreme Court's judgment in Arjun Singh v. Mohindra Kumar clarified that while some interlocutory orders may attain finality, others, particularly those that do not decide the merits of the case, can be reconsidered. The DRAT's decision to allow the delayed filing of the claim affidavit was consistent with this principle, as the January 16, 2018 order was not a final adjudication on the merits.

Conclusion:
The High Court agreed with the DRAT's findings and upheld its order, allowing respondent No. 1 to file the claim affidavit and directing the DRT to expedite the disposal of the main application. The Court emphasized the need for a fair hearing and the importance of considering the material evidence before making a final decision. The principle that interlocutory orders do not necessarily preclude reconsideration was reaffirmed, ensuring that the parties' rights were preserved while facilitating the expeditious resolution of the case.