Case Note & Summary
The appeal arose from a decision of the High Court of Judicature at Allahabad, which dismissed a writ petition challenging the orders of the Debt Recovery Appellate Tribunal (DRAT) and the Debt Recovery Tribunal (DRT). The appellants, who were directors of Adhunik Detergent Ltd., had guaranteed a loan taken by the company from the respondent, Union Bank of India. After the company defaulted on the loan, the bank filed a civil suit for recovery, which was later transferred to the DRT. The appellants claimed they were unaware of the DRT proceedings and did not receive summons, leading to an ex parte decree against them. They filed an application to set aside the decree, which was dismissed by the DRT, a decision upheld by the DRAT and the High Court. The appellants argued that they were not given a fair opportunity to defend themselves. However, the court found that the appellants had previously engaged in the civil suit and were aware of the proceedings, thus their failure to appear before the DRT was a deliberate omission. The court emphasized that the summons had been published in a widely circulated newspaper, and the appellants had not disclosed their prior involvement in the civil suit when applying to set aside the ex parte order. The appeal was ultimately dismissed, with the court affirming that the appellants had not acted in good faith and had suppressed material facts.
Headnote
A) Debt Recovery Law - Ex Parte Decree - Setting Aside - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 22(2)(g) - The appellants contended that they were not served with summons and hence the ex parte decree should be set aside. The court held that the appellants were aware of the proceedings and had previously engaged in the civil suit, thus failing to appear before the DRT was their own omission. The application for setting aside the ex parte order was rightly dismissed (Paras 11-22).
Issue of Consideration
Whether the Debt Recovery Tribunal's ex parte order should be set aside due to alleged non-service of summons and lack of opportunity to be heard.
Final Decision
The Supreme Court dismissed the appeal, affirming the decisions of the DRT, DRAT, and High Court, holding that the appellants had not made out a case for setting aside the ex parte order.
Law Points
- Ex parte decree
- service of summons
- Debt Recovery Tribunal
- Code of Civil Procedure
- 1908
- suppression of facts
