Procedure for issuance of Summons by DRT

Procedure for issuance of Summons by DRT (HC Bombay (12.09.2022) in Sunil Gupta Vs. Asset Reconstruction Company (India) Ltd. [Writ Petition No.4885 of 2022 ]

Facts of the case

In the instant case, respondent no.1/IOB has not produced any evidence/document to establish that summons was in fact created and served on petitioners in accordance with the aforesaid Act, DRT Rules and the aforesaid DRT Regulations or that any of the steps set out hereinabove were complied with. 

 

Even if we proceed on the assumption that a writ of summons, as required by the DRT Rules and Regulations was issued, the same was never served on petitioners as is clear from the reply filed by IOB before the DRT in M.A. No.145/2010.

 

Even if the case of IOB that the Demand Notices (details of which have not been supplied) or summons had returned as unclaimed, even then it was incumbent on IOB to follow the procedure contemplated in Rule 12 read with Regulation 19 as set out herein above before the matter could be proceeded ex-parte. 

 

This is particularly the case where the address on the record of the judicial proceedings is incorrect as is evident from a mere perusal of the cause title in the O.A. and the subsequent affidavit filed by IOB accepting that on due diligence IOB could ascertain the correct address of petitioners in Kanpur. As submitted by Mr. Dwarkadas there is no material whatsoever available or on the record of the DRT to establish that this was in fact done. This was not controverted or denied by Mr. Nimbkar.

 

Decision of High Court

Hon’ble High Court held that:

 

Service of summons upon petitioners:

Petitioners, it is clear, were never served with any writ of summons/documents of the proceedings before the DRT. The burden of proof to establish that petitioners had been served with summons is on IOB/respondent no.1 and petitioners should not be asked to prove a negative averment.(p24)

 

The DRT was duty bound to consider the provisions of the Code of Civil Procedure, 1908 (“the Code”) whilst considering petitioners application to set aside the order dated 11th

December 2009.(p26)

 

Further and in any event, the service of summons is a mandatory requirement as per the Act, the Debt Recovery Tribunal (Procedure) Rules, 1993, (DRT Rules) and the Debts Recovery Tribunals, Maharashtra & Goa Regulations of Practice, 2003 (DRT Regulations). Issuance of a notice informing the other party of the date, place and time of hearing and giving him/her a chance to make representation, is also an essential tenet of the principles of natural justice. The procedure for issuance of Summons by the DRT, as provided in the DRT Regulations of 2003.(p27)

 

From DRT Rules and DRT Regulations, it is clear that the following steps are required to be adopted for the writ of summons to be issued under the Seal of the Registrar and served on the Defendants to the O.A. (including petitioners herein):(p33)

 

Steps	Provision	Particulars
Step 1	Section 19(4) of the Act	Direction   of issuance of summons : On   receipt of the Application, the Tribunal is required to issue summons   requiring the Defendants to show cause within thirty days of the service of   summons as to why the relief prayed for should not be granted. Mr. Dwarkadas, on instructions stated   that (and not denied by Mr. Nimbkar for respondent no.1) not even a copy of   the Writ of Summons is available on the record of the DRT nor has IOB   produced any proof of the Writ of Summons being created or served. Admittedly no documents were filed by   IOB in response to the MA filed by petitioners to set aside the ex parte   order. IOB has not produced any Writ of Summons that they claim was returned,   or a copy thereof, or even an Affidavit of Service that may have been   contemporaneously filed in the Ld. DRT.
Step 2	Regulation 19(1), 19(2) of the DRT Regulations r/w Rule 13, 22 of the DRT Rules	Creation  of summons: The Tribunal shall issue summons/Notice   and the Registrar or the Assistant Registrar or official authorized by  Registrar shall sign the summons/notice adding thereto the date of signing. Each summons of O.A. shall be in Form   No. 14. The seal of the Tribunal is required to    be affixed on every Summons/Notice.  Date and place of hearing should also be   notified. There is a need for creation of   summons/notice even in case of pending proceedings and service of the same on   the Advocate.
Step 3	Regulation 19(3) of the DRT Regulations   r/w Rule 11 of the DRT Rules	Service   of summons: Summons/Notice are ordinarily required   to be served by Registered Post Acknowledgment Due. The Registrar shall also serve a copy of   the application and paper book, as soon as they are filed, on defendants by   registered post.
Step   4	Regulations 19(7), 19(8), 19(10) of the   DRT Regulations	Enquiry   regarding service: Where   the summons/notice was properly addressed (pre-paid and duly issued) by   Registered Post Acknowledgment due is not received within 30 days from the   date of the issue of summons/notice, the Registrar is required to declare, on   submission of the Affidavit by the applicant regarding correctness of the   address and evidence of posting that the summons/notice is duly served and   the matter would proceed further. Where the summons/notice is returned   un-served except in the above circumstances, the Applicant shall take steps   for service within 15 days from the date of return of summons/notice failing which the matter is required to be kept before Presiding Officer for further   orders. Where summons are returned with postal   endorsement ‘refused’ or ‘not claimed’, the Registrar is required to declare   that the summons/notice has been duly served and the matter shall proceed   ex parte.
Step 5	Section 19 (5) of the Act r/w Rule 12(1)   of the DRT Rules	Filing   of Written Statement : If Step 3 has been duly completed, then defendant   is required, within a period of thirty days/one month from the date of   service of summons, to present a written statement of his defence.
Step 6	Proviso to Section 19(5) of the Act r/w   Rules 12(3) and 12(4) of the DRT Rules	Enquiry   on non-filing of Written Statement: However, where defendant fails to file   the written statement within the said period of thirty days, the Presiding   Officer may, in exceptional cases and in special circumstances to be recorded   in writing, allow not more than two extensions to defendant to file the   written statement. If defendant fails to file the reply   within 30 days/ 1 month of service of summons or on the date fixed for hearing of the application, the Tribunal may proceed forthwith to pass an   order on the application as it thinks fit.
Step 7	Rule 13 of the DRT Rules	Requirement   of issuance of notice for date and place of hearing: The Tribunal is also required to notify   the parties the date and place of hearing of the application in such a manner   as the Presiding Officer may by general or special order direct.

 

Where packet is unclaimed more than one attempt must be made to serve particularly where the address to which the summons was posted in incorrect:

It is settled law that the serving of the summons is a mandatory procedural requirement and the time for filing the written statement commences only from the date of service of summons. It is evident that no enquiry was ever conducted by both DRT and DRAT into whether a notice/summons was ever served on petitioners herein. The said enquiry ought to

have been made more so when the said advocate had stopped appearing on behalf of petitioners before the DRT, w.e.f., 24th August 2005. The enquiry would have required the IOB/respondent no.1 to discharge its burden qua service of summons (which it has not been able to discharge till date) and would have established that petitioners had never been served with the summons. The alleged knowledge about the pendency of the case by IOB/respondent no.1 cannot dispense with the requirement of service of summons, which should have been issued to petitioners to notify to them the day, date, time and place of hearing of the Original Application.(p38&43)

 

Mere filing of the Vakalatnama or appearance through an Advocate does not amount to waiver of the mandatory requirement of service of summons:

Service of summons is a mandatory procedural requirement and is not dispensed with merely on account of the party entering appearance by filing a Vakalatnama. Given the almost identical language in Rule 12(1) of the DRT Rules when compared with the amendments brought about to the Original Side Rules and Order 8 Rule 1 of the Code by the Commercial Courts Act, 2015, it is clear that the time to file written statement contemplated in the DRT Rules, could only commence on due and proper service of the writ of summons. The appearance of an Advocate and filing of a Vakalatnama by him cannot and does not dispense with the requirement to serve the writ of summons. Accordingly, petitioners, in the absence of service of summons, could not have made any representation and/or file their written statement before the DRT. In light of the above, it is immaterial that the said advocate appeared on behalf of petitioners in the proceedings before the DRT. 

 

Mere filing of a Vakalatnama and appearance of the said advocate could not have dispensed/waived the requirement of service of summons. 

The said Vakalatnama cannot be considered to be a proof of service of summons, particularly when the purpose for which it has been obtained is disputed and when it has been virtually admitted by IOB/respondent no.1 that petitioners were never served with the summons. Thus, the proceedings in O.A. No.927/2001, without the issuance of summons, were in complete derogation and ignorance of the principles of natural justice.(p45-48)

 

Individual service of summons on each partner:

As petitioners are sought to be proceeded against individually, as Partners of respondent no.2 firm, it was incumbent on the DRT to ensure that summons were served individually on each of the Partners. In this regard, it is first pertinent to note that the DRAT has incorrectly purported to hold that the individual partners of the firm, including petitioners herein are not being proceeded against personally. On account of this error alone, the impugned order deserves to be set aside. If that is assumed to be true, no recovery can be initiated in law against petitioners in their individual capacity and the recovery can only be made against respondent no.2 firm. 

 

Order 30 of the Code of Civil Procedure (Code) deals with the procedure in respect of suits against Partnership Firms. The Courts have, on an interpretation of Order 30 of the Code, held that if a person wants to bind the partners of a firm individually, he must serve the partners personally. 

 

In the present case, the O.A. filed by respondent no.1 (IOB) has sought to bind each of petitioners personally. The order dated 11th December 2009 is accordingly passed against respondent no. 2 firm as well as against each of petitioners individually. In our view, petitioners ought to have been personally served with the summons as mandated by law. Non-service of summons on petitioners vitiates the order dated 11th December 2009 qua them.(p49-52)

 

Requirement of issuance of fresh notice at the time of the hearing when the party is not represented on the date of the hearing:

A party must not be made to suffer on account of the mistake committed by the Advocate engaged. This was a without prejudice submission made on behalf of petitioners.  It is a matter of record that the said advocate had stopped appearing on behalf of petitioners, with effect from 24th August 2005 and had not filed any written statement or contested any evidence. In view of the above, and basis the settled principles of law, it was incumbent upon the DRT to make an enquiry regarding service of summons to petitioners herein and call upon IOB/respondent no. 1 to prove the same. 

 

In terms of Rule 13 of the DRT Rules, the DRT should have issued at least one notice to petitioners between August 2005 and December 2009, when the matter came to be finally disposed. The finding of the DRAT to the contrary is clearly erroneous and contrary to the said Rule.(p55)

 

Despite appearance of the said Advocate, order dated 11.12.2009 is nevertheless an e x-parte order:

In case we proceed on the basis that the service of summons was not mandatory on account of the appearance of advocate Bhushan Sakpal for petitioners, the order dated 11th December 2009 is nevertheless an ex-parte order and ought to be set aside under Order 9 Rule 13 of the Code. The DRAT has wrongly held in the impugned order that the order dated 11th December 2009 was not in the nature of an ex-parte order. As noted above, the said advocate Bhushan Sakpal stopped appearing on behalf of petitioners, w.e.f. 24th August 2005. This being the case, the DRT should have proceeded to decide the O.A. in accordance with the provisions of Order 17 Rules 2 and 3 read with Order 9 Rule 6 of the Code. Thus, on such non-appearance of the said advocate on behalf of petitioners, the DRT should have inquired if the summons had been duly served. If it was considered to be duly served, the DRT essentially proceeded ex-parte against petitioners under Order 9 Rule 6(1)(a) of the Code. If the summons were considered not to be duly served, the DRT should have effected a fresh service of summons under Order 9 Rule (6)(1)(b) of the Code.

The impugned order, in fact, being in the nature of an ex-parte order, petitioners are entitled to seek to set aside the same in accordance with Order 9 Rule 13 of the Code on making out

sufficient grounds. In the present case, the following grounds are clearly sufficient grounds to set aside the order dated 11th December 2009 : 

• (i) The signing of the Vakalatnama and consequent appearance of advocate Bhushan Sakpal was on the alleged misrepresentation made to petitioners that the matter was being settled;

• (ii) That petitioners had clearly averred that they were neither issued a notice of the filing of the O.A. nor served with any copies of the papers, an assertion which respondent no.1 (IOB) has not been able to disprove;

• (iii)The DRT did not observe Rule 13 of the said Rules and did not issue any notice to petitioners between August 2005 and 2009 intimating petitioners of the hearing fixed in the matter;

• (iv) The DRT failed to consider the admitted position that petitioners were not aware of the date, day and time of hearing of the matter.

 

The DRT and DRAT having failed to consider the order dated 11th December 2009 as an ex-parte order did not apply the test laid down in Order 9 Rules 6 and 13 of the Code, thereby failing to afford petitioners an opportunity to seek to set aside the order dated 11th December 2009 despite having sufficient grounds. In view thereof, it is evident that there has been a serious lapse of procedure in the present case. There has been no service of the writ of summons on petitioners and respondent no.1 (IOB) has been unable to establish otherwise. The advocate appearing for petitioners was engaged only for a very limited purpose and has not appeared on behalf of petitioners in the matter since August 2005. The

passing of the order in 2009 and the recovery certificates issued pursuant thereto, therefore, suffer from a serious procedural infirmity and the order dated 11th December 2009 ought to be set aside.(p56-59)

 

The Court concluded that the ex-parte decree dated 11th December 2009 passed by the DRT and order dated 27th April 2011 passed by the DRAT and Recovery Certificate dated 21st January 2010 issued by the Recovery Officer are hereby quashed and set aside.(p67)

 

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