LexSUNIL PODDAR AND ORS. versus UNION BANK OF INDIA
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[2008] 1 S.C.R. 261 SUNIL PODDAR AND ORS. v. UNION BANK OF INDIA (C.A. No. 86 of 2008) JANUARY 8, 2008 [C.K. THAKKER AND ALTAMAS KABIR, JJ.] Recovery of Debts due to Banks and Financial Institutions Act, 1993: A B s.22(2)(g) - Recovery suit - Service of summons - C Appearance of defendants through Advocate and also filing . of written statement and application raising preliminary objection as to maintainability of suit against them - Transfer ofsuit to ORT - Non-appearance of defendants before ORT - Ex parte decree - Application seeking setting aside of ex o parte decree on ground that summonses were not issued - Dismissal of, by ORT, ORA T, High Court - Correctness of - Held: Correct, as defendants suppressed the fact of having appeared in the civil suit - Defendants had knowledge of proceedings and it was obligatory on them to have appeared E before ORT and answered plaintiff's claim - Apart from suppression of fact, even on legal ground, it was not obligatory to serve notice on them once again - Code of Civil Procedure, 1 ~08 - 0. 9, r. 13 - Constitution of India, 1950 - Article· 136. s.22(2)(g)- Powers of ORT and DRAT - Held: ORT and F DRAT for the purpose of discharging their functions under the . Act, have the same powers as are vested in Civil Court under the Code of Civil Procedure, 1908. Code of Civil Procedure, 1908 : 0.5 - Service of summons by publication - Summons G published in a daily newspaper having wide circulation in the locality- Plea of defendant that he was not aware of publication in newspaper as he was not reading the said newspaper - Tenability of - Held: Not tenable. 261 H 262 SUPREME COURT REPORTS [2008] 1 S.C.R. A 0. 9 r. 13 - Expression 'duly served' - Connotation of. Appellants-defendants no.7 to 9 were directors of defendant-Company, which took a loan from the respondent bank; and all the directors became guarantors for repayment of the loan. There was division of business, 8 whereby defendants 7 to 9 resigned as directors from .the defendant=company. The loan amount was not repaid by the defendant-Company. Respondent-bank filed a civil suit for recovery of the loan amount. All the directors including the appellants were arrayed as defen~ants. C Summonses were issued. The appellants appeared and· filed a written statement contending that as they had resigned from the directorship of the defendant-Company · which fact was intimated to the respondent-bank, they were not liable for repayment of the loan. They also filed D an application raising preliminary objections as to maintainability of the civil suit against them. During f:he pendency of the civil. suit, Recovery of Debts Due to Banks and Financial Institutions Act, 1993 came into force and the suit was transferred to ORT. No E one appeared for the appellants before the ORT which passed an ex parte decree holding all the defendants jointly and severally liable to repay the loan amount. When the appellants came to know about the ex parte decree, they filed an application under s.22(2)(g) for setting aside F the ex parte decree stating that they had no knowledge about the transfer of the suit to ORT nor were summonses issued by ORT to them at the new address. The application was dismissed .. Having remained unsuccessful before the DRAT and the High Court, defendants 7-9 filed the instant G appeal. Dismissing the appeal, the Court HELD: 1.1. The appellants have not made out any ground on the basis of which the order passed by the H ORT, confirmed by the. DRAT and by the High Court can • 1 SUNIL PODDAR AND ORS. v. 263 UNION BANK OF INDIA be set aside. [Para 11] [271-E, F] A • 1 1.2. From the record, it is clearly established that the suit was instituted by the plaintiff-Bank as early as in August, 19~3. The appellants who were defendant Nos. 7 to 9 were aware of the proceedings before the Civil Court. B They appeared before the Court, engaged an advocate and filed a written statement. They raised preliminary objections as also objections on merits. They filed "* applications requesting the Court to raise certain issues and try them as preliminary issues. It was, therefore, obligatory on their part to appear before the ORT when c the matter was transferred under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. [Para 11] [271-F, G; 272-A] 1.3. It cannot be said that appellants were not aware D of the proceedings before
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