Matthew Michael and Others v. Dhanlaxmi Bank

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI WEDNESDAY, THE 18TH DAY OF DECEMBER 2019 / 27TH AGRAHAYANA, 1941 ## OP (DRT).No.143 OF 2019 AGAINST THE ORDER/JUDGMENT IN SA 271/2018 OF DEBT RECOVERY TRIBUNAL, ERNAKULAM ## PETITIONER/S: 1 MATTHEW MICHAEL, AGED 67 YEARS S/O. MICHAEL, VELLIYEPPALLIL HOUSE, ANTHINADU. P.O., PRAVITHANAM, PALA - 686 651. 2 M/S. EMJAY TRADING COMPANY PROPRIETARY CONCERN, VELLIYEPPALLIL BUILDINGS, NADAYAR ROAD, MUNNAR 685612 REPRESENTED BY MATTHEW MICHAEL 3 TOJO MATHEW, S/O. MATHEW MICHAEL, VELLIYEPPALLIL HOUSE, ANTHINADU P O, PRAVITHANAM, PALA 686 651. ADDNL. PETITIONERS 2 & 3 ARE IMPLEADED AS PER THE ORDER DATED 05.12.2019 IN I.A. NO.1/2019 BY ADVS. SRI.P.SHRIHARI SRI.C.M.SUNILKUMAR ## RESPONDENT/S: - 1 DHANALAXMI BANK, REPRESENTED BY ITS BRANCH MANAGER, MUNNAR BRANCH, IDUKKI DISTRICT. - 2 THE AUTHORIZED OFFICER DHANALAXMI BANK, KOCHI ZONE, MARINE DRIVE, ERNAKULAM - 682 131. ## **O.P.(DRT) No.143/2019** **-2-** ## OTHER PRESENT: ## SC C.K. KARUNAKARAN THIS OP (DEBT RECOVERY TRIBUNAL) HAVING BEEN FINALLY HEARD AND RESERVED ON 05.12.2019, THE COURT ON 18.12.2019 DELIVERED THE FOLLOWING: **O.P.(DRT) No.143/2019** **-3-** ## **J U D G M E N T** Dated this the 18th day of December 2019 Heard learned Advocates P.Shrihari and C.K. Karunakaran for parties. 2. The applicant in S.A. No.271 of 2018 before the Debts Recovery Tribunal-I Ernakulam (‘DRT’ for short) is the petitioner. The instant petition is filed under Article 227 of the Constitution of India. The petitioner challenges the legality, propriety and validity of order dated 29.06.2018 in I.A. No.2288 of 2018 (Ext.P3) whereunder DRT rejected the prayer of petitioners/applicants for amendment of S.A.. Ext.P1 petition contains the proposed amendments to body of the application and the additional relief to set aside Annexures X and XI proceedings in S.A. No. 271 of 2018. Annexure X is the sale **-4-** ## **O.P.(DRT) No.143/2019** notice dated 06.9.2018 published in Madhrubhoomi daily dated 14.09.2018 and Annexure XI is the application submitted by the Bank before the Chief Judicail Magistrate Court, Kottayam in M.C. No.163 of 2018 for taking possession of secured asset. 3. The circumstances relevant for disposing of the Original Petition are stated thus: Petitioners on 16.05.2018 filed S.A. No.271 of 2018 to set aside Annexure VII demand notice dated 10.03.2018 and possession notice dated 10.5.2018 issued by respondent Bank. During the pendency of S.A., the respondent Bank issued Annexure X sale notice dated 06.09.2018 and obtained order in Annexure XI from the Chief Judicial Magistrate (CJM) Court, Kottayam in M.C. No.163 of 2018. These prayers are opposed by respondent Bank and finally through Ext.P3 order dated 29.06.2018 in I.A. No.2288 of 2018, the DRT rejected the prayer of petitioners for amendment. **O.P.(DRT) No.143/2019** **-5-** 4. The learned counsel appearing for the parties have admitted that a learned Single Judge of this Court in _Veena Prabhakumar v. Dhanlaxmi Bank, Kollam Branch_[1] (Justice Devan Ramachandran), after taking note of a different view taken by another learned Single Judge (Justice A.K.J. Nambiar) in _Sidheek A.V. v. Authorized Officer, Federal Bank, M.G. Road Branch_[2] , has distinguished _Sidheek A.V._ 's case and held as follows: “20. In the case at hand, what has been attempted by the petitioners is to bring on record a subsequent event and to impel a consequential prayer against further measures taken by the Bank, which were taken by them solely because the sale proposed through the first sale notice did not fructify for want of bidders. The second sale notice was resultantly issued by the Bank as a consequential action and it is therefore, incontestable that the challenge to this measure is merely an extension of the original cause of action of the petitioners. Pertinently, all the steps and action taken by the Bank under the SARFAESI Act, which included the first sale notice, had been challenged by the petitioners in SA > 1 2019 (3) KHC 268 2 2017 (5) KHC 373 **O.P.(DRT) No.143/2019** **-6-** 498/2018 and therefore, should said SA finally succeed, then the subsequent action taken by the Bank may also fail. 21. Obviously, therefore, the filing of a fresh Securitisation Application, challenging the second sale notice or the further action taken by the Bank under Section 14 of the SARFAESI Act, would serve only to OP (DRT).No. 48 of 2019 15 proliferate litigation and unnecessarily add to docket numbers because the alleged infirmities in the recovery action, being pursued by the Bank, had already been brought to the notice of the Tribunal in the pending Securitisation Application, which cannot be construed to have become infructuous merely because additional / fresh steps have been taken by the Bank, pending it. 22. From the above angle, when one examines the provisions of Order 6 Rule 17 of the CPC, it becomes without doubt that the power to allow an amendment is vested in a Court to ensure that the real questions in controversy between the parties are appositely determined. The Hon'ble Supreme Court has, in various judgments, cemented this principle beyond any requirement for restatement, two among them being Sampath Kumar v. Ayyakannu and another (2002 [7] SCC 559) and Abdul Rehman and another v. Mohd. Ruldu and others (2012 [11] SCC 341). In both these judgments, the Hon'ble Supreme Court has strongly driven ## **O.P.(DRT) No.143/2019** **-7-** home the edict that all OP (DRT).No. 48 of 2019 16 amendments made and allowed to the pleadings are intended to determine the real point of controversy between the parties and to avoid multiplicity of litigations. 23. Resultantly, the imperatively fundamental prescript that must inexorably guide Courts, while deciding whether an application for amendment is to be allowed or otherwise, is to find out whether the cause of action is altered by such amendment or whether it is supplemental. In the former case, certainly the Courts will be much more circumspect in allowing the proposed amendments; while in the latter scenario, Courts will generally be relaxed and liberal in its consideration because any pleadings or circumstances, that are intended to supplement the original pleadings or cause of action, should be welcomed, since that will surely help in determining the real issue between the parties. 24. Viewed from the afore perspective and testing these principles against the conceded facts of the case at hand, it becomes irrefragable that what was sought by the OP (DRT).No. 48 of 2019 17 petitioners, through Exhibit P4 application, was to bring on record the subsequent action, taken by the Bank pending the SA, which is merely the corollary progression of the earlier steps taken by them, which had already been projected and challenged by the **O.P.(DRT) No.143/2019** **-8-** petitioner in the pending Securitisation Application and to the same I challenge through supplemental prayers. therefore, fail to comprehend why the DRT should have thought such an amendment to be not permissible, particularly when they have been admittedly made well within the period of limitation, within which time the subsequent steps/action could have been independently challenged through a fresh Securitisation Application. 25. That said, however, I am certainly cognizant that the particular reason, cited by the DRT in Exhibit P6 order, in not allowing the amendments sought for by the petitioners, is that the declarations in Sidheek A.V(supra) inhibits it. I am afraid that the DRT has completely misread the conclusions in Sidheek A.V(supra), since even a OP (DRT).No. 48 of 2019 18 cursory reading of the facts and circumstances noticed by this Court in the said case would clearly indicate that the forensic exposition therein was made in the context of a person attempting to challenge a subsequent action taken by the Bank merely by filing an interlocutory application assailing it but without seeking amendment of the pleadings or prayers in the pending Securitisation Application; and this Court rightly held that such a challenge could not have been carried through an interlocutory application in the pending lis, but only through a fresh Securitisation **O.P.(DRT) No.143/2019** **-9-** Application, because every action taken by the Bank under the SARFAESI Act gives rise to a fresh cause of action. Pertinently, however, nowhere in Sidheek A.V(supra) has the law been enounced that amendments to an SA cannot be made, so as to bring on record the subsequent measures / steps taken by the Bank, pending it and to seek supplemental reliefs. 26. I, therefore, am compelled to hold that the interpretation of the DRT and the manner in which it has OP (DRT).No. 48 of 2019 19 understood Sidheek A.V(supra) is completely untenable and cannot obtain the imprimatur of this Court. 27. Interestingly, I am told by the learned counsel for the petitioners that another bench of the DRT, Ernakulam has, in fact, allowed applications for amendments similar to Exhibit P4, in various cases before it, including in Hope Constructions, Kolenchery & others v. Federal Bank Ltd (SA No.252/2015) and that such amendments were thus carried and the Securitisation Applications thereafter, finally considered on such basis. I, therefore, find no justifiable explication from the impugned order, as to why the DRT has now issued Exhibit P6 order, particularly when there is no express or implied proscription in Sidheek A.V (supra) against it in allowing eligible amendments to pending **-10-** ## **O.P.(DRT) No.143/2019** ## Securitisation Applications. 28. In summation, I am of the certain opinion that since neither the SARFAESI Act or the RDB Act prohibits amendments to pleadings, the DRT is well within its powers to consider applications for such purpose, on the basis of OP (DRT).No. 48 of 2019 20 the procedural guidelines available from Order 6, Rule 17 of the CPC, and to consider if such amendments be allowed or otherwise. However, while doing so, the DRT must exercise requisite circumspection and be careful not to allow amendments carrying challenge to the subsequent measures/steps taken by a Bank/Financial Institution, if they have been made beyond the period of limitation for making such challenge through a fresh Securitisation Application; though amendments to the pleadings, without a prayer against it, to bring on record subsequent events/steps, may be possible.” 5. The petitioner in the petition filed in the instant Original Petition raises the following grounds against nonconsideration of judgment of this Court in _Veena Prabhakumar_ . The objection taken in memo of grounds is excerpted for immediate reference: ## **O.P.(DRT) No.143/2019** **-11-** “5. The Debts Recovery Tribunal-2, Ernakulam, which is vested with the jurisdiction of Debts Recovery Tribunal-1, Ernakulam also had heard Exhibit-P1 amendment application on 30.05.2019 and dismissed the same on 29.06.2019. The true copy of the Order dated 29.06.2019 is produce herewith and marked as Exhibit P3. Exhibit P3 is passed without applying judicial mind to the factual metrics and law. The Debts Recovery Tribunal-2, Ernakulam which had heard Exhibit P1 had pervert approach in the matter of considering Exhibit-P1 and even failed to follow the judgment of this Hon'ble Court rendered in the case of Veena Prabhakumar and Another Vs. Dhanlaxmi Bank, Ernakulam Branch and Another reported in 2019 (3) KHC 268 : 2019 (2) KLJ 968, which clearly provides that an amendment petition to incorporate subsequent measure under SARFAESI Act is maintainable. Further to that, while disposing Exhibit P1, Debts Recovery Tribunal-2 Ernakulam ought to have invoked/observed juridial discipline by following the judgment of this Hon'ble Court. It is further submitted that the failure of the Tribunal to follow the aforesaid judgment of this Hon'ble Court amounts to contempt. It is further submitted that in the case of Jai Jai Ram Manohar Lal reported in (1969) 1 SCC 869, Hon'ble Apex Court had held that “The power to grant amendment of the pleadings is **-12-** ## **O.P.(DRT) No.143/2019** intended to serve the ends of justice and is not governed by any such narrow or technical limitaitons”. The DRT-2 which heard Exhibit P1 had failed to evaluate and apply its judicial mind to the fact of the case that the amendment sought for by the Petitioner is relatable and continuing cause of action as held in the case of Authorised Officer, Indian Overseas Bank Vs. Ashok Saw Mill reported in (2009) 8 SCC 366 and the power to grant amendment of the pleadings is intended to serve the ends of justice and is not governed by any such narrow or technical limitations.” 6. Advocate C.K. Karunakaran objects to maintainability of OP(DRT), for the petitioner has effective remedy of appeal under Section 18 of SARFAESI Act, 2002. In other words, the remedy for questioning the order impugned is before the Debts Recovery Appellate Tribunal (DRAT) Chennai and not before the Kerala High Court at Ernakulam. 7. Advocate P.Sreehari submits that the DRT is within the territorial and supervisory jurisdiction of this Court. The remedy of appeal is worked out against an order of DRT, merits on all issues **-13-** ## **O.P.(DRT) No.143/2019** are re-heard and decided by the Appellate Tribunal. But in a case where the Presiding Officer omits to look at a binding precedent of this Court in _Veena Prabhakumar_ 's case and decides the Interlocutory Application, the present remedy is invoked within the scope of jurisdictional review of this Court under Artilce 227. The narration of circumstances preceeding to filing etc can be completed by noticing that, Advocate C.K. Karunakaran except raising the objection of maintainability of instant Original Petition under Article 227 of Constitution of India, did not make submissions to sustain the order in Ext.P3. 8. Section 13 provides for measures taken by a Bank for enforcement of security and realisation of secured debt together with unsatisfied debt in spite of successful completion of process under subsection (4) of Section 13. The proposed amendments have arisen during the pendency of S.A. No.271 of 2018. Annexure X is dated 06.09.2018 and Annexure XI is the application filed by respondent Bank before the Court of CJM ## **O.P.(DRT) No.143/2019** **-14-** Kottayam under Section 14 of SARFAESI Act. Annexure XI order is dated 04.09.2018. 9. Section 17 of SARFAESI Act enables challenge to measures taken by Bank by filing an application before DRT. The subsequesnt events for the purpose of amendment are understood as happenings next to a thing already complained of or follows another thing in point of time. A Court or Tribunal takes note of subsequent events which have bearing on the prayers already made in this behalf, firstly to avoid multiplicity of proceedings and secondly to enable the parties to get a comprehensive decison on primary events complained and subsequent events introduced through amendments in the same case. The prayer for an amendment to include subsequent events is considered liberally. I have already given the dates and these dates clearly demonstrate that for the additional relief now prayed for by the petitioners, an application **-15-** ## **O.P.(DRT) No.143/2019** independently if has been filed on 03.10.2018, i.e., the date on which present application for amendment is filed, prayers are within period of limitation and the DRT would have had jurisdiction to entertain the prayers. Section 17(4) enables DRT to declare the measures taken by Bank as illegal. If that be the position of law, there ought not to be a restricted view on the prayer for amendment. Amendments are normally considered liberally, unless prejudice occasions to opposite parties, or that the proposed amendment is beyond the period of limitation. Neither of these circumstances are present in the case on hand. In the case on hand, the whole approach to an application filed for amendment of S.A. is patently erroneous. 10. 'Subsequent event' - Each one of the stages under Section 13 of SARFAESI Act constitutes cause of action. This Court has held that an aggrieved party can move DRT at each one of these stages. Subsequent stages/measures may be an ## **O.P.(DRT) No.143/2019** **-16-** independent cause of action, but can certainly be challenged along with the cause of action on which a _lis_ is pending in that behalf. Illustratively stated S.A. is filed challenging taking possession on available grounds, then steps to sell the property are taken or completed by Bank. These are substantially in the same loan account the _lis_ is presented. The filing of separate independent application will lead to similar number of appeals before DRAT. Therefore, the Tribunal ought to appreciate the approach of borrower/applicant while considering these consequential or independent prayer. Further, in the findings recorded in paragraph 22, which reads as follows: ' _The present amendment sought for by the petitioners by incorporating additonal pleadings, grounds and reliefs is not to complete the cause of action that had already culminated in the institution of this SA within the statutory period of 45 days from the date of taking symbolic possession, but only to introduce a fresh/new cause of action which is_ ## **O.P.(DRT) No.143/2019** **-17-** _not required for the proper and effective adjudication of the case put forth by them in the original SA_ ', the failure of DRT to appreciate the purpose of amendment in the right perspective is evidenced. 11. I am not proposing to comment on each one of the observations made by DRT-I in the order under challenge, but being a Court having supervisory jurisdiction over DRT, this Court is of the view that a very laconic and unsustainable order is made in Ext.P3. The order impugned is unsustainable and DRT has committed an error by ignoring the judgment of this Court in _Veena Prabhakumar_ 's case and further erroneously decided that separate application needs to be filed. It is not even the case of respondent Bank that the proposed amendment is otherwise beyond the period of limitation. The Tribunal upon accepting the prayer for amendment considers each one of the measures, along with objections raised by Bank **-18-** ## **O.P.(DRT) No.143/2019** in this behalf, suitable issues are framed and considered together, while disposing of the S.A. For the above reasons I am satisfied a case for interference under Article 227 is made out. The order impugned in the Original Petition is set aside. I.A. No. 2288 of 2018 is allowed. The petitioner is directed to carryout other amendments in accordance with law on or before 31.01.2020. Sd/S.V.BHATTI JUDGE jjj **-19-** ## **O.P.(DRT) No.143/2019** ## APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF I.A. NO.2288/2018 IN THE ABOVE S.A.NO.271/2018. EXHIBIT P2 TRUE COPY OF JUDGEMENT DATED 14.2.2019 IN O.P. (DRT)NO.22/2019. EXHIBIT P3 TRUE COPY OF ORDER DATED 29.6.2019 IN I.A.NO.2288/2018 IN THE ABOVE S.A.NO.271/2018.