SC grants opportunity to borrowers to defend recovery suit as they paid entire decretal amount

Case Details: Jersey Developers (P.) Ltd. v. Canara Bank - [2022] 141 taxmann.com 547 (SC)

Judiciary and Counsel Details

• • M.R. Shah & B. V. Nagarathna, JJ.

Facts of the Case

In the instant case, an appeal was filed against the order passed by the High Court whereby the revision application preferred by the appellants challenging the order passed by the learned Trial Court dismissing the petition to set aside the ex-parte decree was dismissed.

Appellant no. 1 was the company that availed the loan facility from the respondent – Bank and appellant nos. 2 and 3 were the directors who were staying along with their families in the United States of America (USA) for the last 40 years. On the borrower company’s failure to repay, the lender bank instituted a suit before the Trial Court for recovery of the amount.

The summons of the suit and the notices were issued by the Trial Court to the appellant directors. However, the summons and the notices were returned ‘unclaimed’ as the same was sent to the appellant’s address in Chennai, which remained closed as the appellants were staying in the USA.

Thereafter the suit proceeded ex-parte and an ex-parte decree came to be passed vide judgment and decree dated 12.02.2004. The Bank subsequently approached the Debts Recovery Tribunal for issuance of the recovery certificate. The Debt Recovery Tribunal (DRT) issued a notice in name of appellants calling upon them to pay the due amount, which also returned unclaimed.

According to the appellants, when appellants visited India, they became aware of the recovery certificate and ex parte decree and, therefore, filed an application before the Trial Court to set aside the ex parte judgment, which came to be dismissed by the Trial Court and subsequently, by the High Court also by the impugned judgement and order.

It was noted that pursuant to the order passed by the High Court, the petitioners have already deposited 50% of the decretal amount. This Court passed an order that on deposit of the balance 50% of the decretal amount with the Registry of this Court, notice shall be issued. It was reported that the petitioners have deposited the entire decretal amount (50% with the High Court and 50% with the Registry of this Court).

Supreme Court Held

The Supreme Court held that since the entire decretal amount was deposited by the appellants to show their bona fides, the amount alleged to have been due and payable to Bank was secured and, therefore, in the fitness of things and to meet the end of justice, one additional opportunity was to be granted to appellants to defend the original suit. In view of the above, the instant appeal against the order passed by High Court as well as by the Trial Court was to be allowed.

List of Cases Reviewed

• • Jersey Developers (P.) Ltd. v. Canara Bank [CRP. NPD No. 4427 of 2015, dated 23-4-2021] (para 5) reversed.