Veer Singh Kothari vs State Bank of India and Others

B.S. Chauhan, C.J.—This writ petition has been filed for quashing the impugned order dated 9.11.2006 by which the Tribunal has rejected the application for cross-examining the witness of the bank.

The facts and circumstances giving rise to the case are that M/s. Konark Paper and Industries Ltd. of which the Petitioner was the Managing Director approached the opposite party No. 1 the State Bank of India for financial assistance in the year 1981 and considering his application the said Bank granted medium term loan of Rs. 25 lakhs by sanction order dated 9.7.1981 and for that purpose several documents were executed. As the bank loan had not been paid in time and there was default on the part of the Petitioner the opposite party-bank filed O.A. No. 16 of 2006 before the Debts Recovery Tribunal (hereinafter called the Tribunal) for recovery of a sum of Rs. 1,05,61,676 under the provisions of Recovery of Debts Due to Banks and Financial Institutions Act 1993 (hereinafter called the ''Act 1993''). After receiving the notice the Petitioner entered appearance and filed a written statement stating inter alia that loan documents annexed to the original application had not been executed properly and the opposite party-bank had taken signature of the Petitioner on blank papers which he made in good faith. Execution of large number of documents was denied altogether by the Petitioner. The opposite party-bank filed the evidence on affidavit in support of the factual aspects of the case as pleaded in the original application. Petitioner also replied the same by filing affidavit supporting his submission made in the written statement. Petitioner submitted an application i.e. M.A. No. 606 of 2006 on 26.10.2006 before the Tribunal praying for permission of cross-examination of the deponent i.e. Manager of the opposite party-bank submitting that it was necessary for the applicant to verify the facts as most of the documents were not genuine. The opposite party-bank filed objection to the said application and ultimately the Tribunal dismissed the said application vide order dated 9.11.2006 (AnnEx. 4) with cost of Rs. 1000. Hence this appeal.

Mr. S.Udgata Learned Counsel appearing for the Petitioner submitted that dismissal of the application is in violation of the provisions of Rule 12(6) of the Debts Recovery Tribunal (Procedure) Rules 1993 (hereinafter called the Rules 19931 and the principles of natural justice. Therefore the petition deserved to be allowed.

On the contrary Mr. Himanshu Pattnaik Learned Counsel for the bank has vehemently opposed the petition contending that this Court should not interfere with the impugned order passed by the Tribunal. Interference at the interlocutory stage is not warranted at all. Provisions of the CPC (hereinafter called the ''Code of CPC do not apply in these proceedings. Procedure prescribed under the Act 1993 and Rules 1993 can be resorted to. The same do not provide for such a course thus application for calling a witness who has filed affidavit in evidence at the behest of a party cannot be accepted. In support of his contention he has placed reliance on the judgments of Hon''ble Supreme Court in Union of India and Another Vs. Delhi High Court Bar Association and Others, ; and State Bank of India v. Allied Chemical Laboratories and Anr. (2006) 9 SCC 252 wherein it has been held that writ court should not interfere against the order of rejection of the application for cross-examination of a witness. The petition deserve to be dismissed.

We have considered the rival submissions made by the parties and also perused the record.

Section 22 of the Act 1993 provides that the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down in the CPC but shall be guided by the principles of natural justice. The question does arise as to whether the cross examination of a witness is alien to the principle of natural justice.

A Constitution Bench of the Supreme Court in State of M.P. v. Chintaman Sadashiva Vaishampayan AIR 1961 SC 1623 held that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies that the evidence of the opponent should be taken in his presence and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not giving that opportunity to cross-examine the witness would violate the principles of natural justice.

Similar view has been reiterated by the Apex Court in Union of India (UOI) Vs. T.R. Varma, ; Khem Chand Vs. The Union of India (UOI )and Others, ; Jagannath Prasad Sharma Vs. State of Uttar Pradesh and Others, ; State of Mysore Vs. S.S. Makapur, ; Meenglas Tea Estate Vs. Its Workmen, ; Kesoram Cotton Mills Ltd. Vs. Gangadhar and Others, ; State of Uttar Pradesh Vs. Om Prakash Gupta, ; The State of Punjab Vs. Dewan Chuni Lal, ; State Bank of India Vs. R.K. Jain and Others, ; Bareilly Electricity Supply Co. Ltd. Vs. The Workmen and Others, ; Delhi Cloth and General MillsCo., Ltd. Vs. Thejvir Singh, ; State of Kerala Vs. K.T. Shaduli Yusuff etc., ; Town Area Committee, Jalalabad Vs. Jagdish Prasad and Others, ; Managing Director, Uttar Pradesh Warehousing Corporation and Another Vs. Vijay Narayan Vajpayee, ; Kishinchand Chellaram Vs. Commissioner of Income Tax, Bombay City II, Bombay, ; K.L. Tripathi Vs. State Bank of India and Others, ; Sawai Singh Vs. State of Rajasthan, ; and Shalimar Rubber Industries and Others Vs. Collector of Central Excise, Cochin, .

In Lakshman Exports Limited Vs. Collector of Central Excise, the Apex Court while dealing with a case under the Central Excise Act 1944 considered a similar issue i.e. permission for cross-examination of a witness. In the said case the Assessee had specifically asked to be allowed to cross-examine the representatives of the firms concern to establish that goods in question had been accounted for in their books of account and excise duty had been paid. The Court held that such a request cannot be turn down as denial of right to cross examine amounts denial of right of hearing i.e. audi alteram partem.

In New India Assurance Company Ltd. Vs. Nusli Neville Wadia and Another, ; the Supreme Court considered a case under the Public Premises ( Eviction of Unauthorised Occupants) Act 1971 and held as follows:

If some facts are to be proved by the landlord indisputably the occupant should get an opportunity to cross-examine. The witness who intends to prove the said fact has the right to cross-examine the witness. This may not be provided by under the statute but it being a part of the principle of natural justice should be held to be indefeasible right." (Emphasis added) 11. In view of the above we are of the considered opinion that right of cross-examination is an integral part of the principles of natural justice.

It gives rise to further question as to what extent this right of cross examination being part of the natural justice can be enforced in view of the provision of the Act 1993 and Rules 1993.

Section 22 of the Act provides that the Tribunal and the appellate Tribunal shall not be bound by the procedure laid down in CPC but shall be guided by the principles of natural justice and subject to other provisions of the Act and the Rules the Tribunal and the appellate forum shall regulate their own procedure. Sub-Section 2 there of provides that the Tribunal and the appellate forum shall have the powers provided under the CPC in respect of certain matters mentioned thereunder. Rule 12 (6) of the Rules 1993 provides that it is the Tribunal which may for sufficient reasons order that a particular fact be proved by affidavit or that the affidavit of any witness shall be read at the hearing and in that situation the party may be permitted to cross-examine a witness/deponent of the affidavit and in case the deponent refuses to come to the Court the affidavit shall not be taken into consideration. Rule 18 of the Rules 1993 provides that the Tribunal may make such orders to give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.

The Supreme Court in State Bank of India v. M/ s. Allied Chemical Laboratories and Anr.(supra) considered this Issue and deprecated the practice of entertaining the writ petition by the High Court against the order of refusal to cross examine the witness who has filed the affidavit in evidence. In the said case after rejection of such an application the applicant did not challenge the said order and the Tribunal concluded the proceedings and passed the final order. Subsequent thereto at much belated stage some other party challenged the order of rejection of application for permitting the cross-examination by filing the writ petition which has been disapproved by the Court. The Apex Court has not held that such an application was not maintainable or the application could not have been decided. The said judgment is an authority laying down the law that High Court should not interfere at such a belated stage and that the party first should exhaust the statutory remedy of appeal. Thus the said judgment is of No. help to the Respondents.

In Union of India v. Delhi High Court Bar Association (supra) the issue was examined by the Supreme Court wherein the Court noticed that the Rule 12 was not happily worded. The purpose of establishment of the Bank''s Tribunal was to expedite the disposal of claims by the banks. The Tribunal was given the power to summon and enforce the attendance of the witness and examine him on oath. But the Act does not contain any provision which makes it mandatory for the witness to be examined if such witness could be produced. Thus the Court held that the Tribunal may ask a party to prove a fact on affidavit if it considers it necessary but it must record sufficient reasons for the same. The Court further held as under:

It is only thereafter that the desire for a witness to be cross-examined can legitimately arise. It is at that time if it appears to the Tribunal that such a witness can be produced and it is necessary to do so ad there is No. desire to prolong the case that it shall require the witness to be present for cross examination and in the event of his not appearing then the affidavit shall not be taken into evidence...... It is common knowledge that hardly any transaction with the Bank would be oral and without proper documentation whether in the form of letters or formal agreements. In such an event the bona fide need for the oral examination of a witness should rarely arise. There has to be a very good reason to hold that affidavits in such a case would not be sufficient.

Even in the said case the Apex Court has not held that a party cannot file an application for cross-examination of a witness. Rather the Court observed that there will be hardly any occasion where oral examination may be required. Thus possibility of oral examination is not excluded altogether.

Be that as it may the issue involved herein has not been agitated before the Apex Court in the said case. In fact constitutional validity of the Act 1993 was under challenge on the ground that the Act was not reasonable and was violative of Article 14 of the Constitution and it was beyond the competence of the Parliament to enact it. The main contention in the said case had been that when the subject matter can be adjudicated upon by the Civil Court why such a Tribunal be constituted.

The submissions made by Sri Himanshu Pattnaik Learned Counsel for the Bank that the judgment is binding upon this Court and the Court cannot interfere with the order of the Tribunal and create a right to cross-examine in such a case is not tenable for the reason that the issue involved herein had not been agitated before the Apex Court in the aforesaid case.

There can be No. dispute that the law laid down by the Apex Court is binding on all Courts of the country in view of the provisions of Article 141 of the Constitution of India but the decision of the Hon''ble Apex Court is to be read with reference to and in the contest of the peculiar statutory provisions interpreted by the Court and taking into consideration the facts of the case where the law had been laid down.

It is settled proposition of law that an issue which has not been considered by the Court while delivering a judgment cannot be said to be binding as a decision of the Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case the Court must carefully try to ascertain the true principle laid down by the decision of the Court. The Court should not place reliance upon a discussion without discussing as to how the factual situation fits in with a fact situation of the decision on which reliance is placed as it has to be ascertained by analyzing all the material facts and the issues involved in the case and argued on both sides. The judgment has to be read with reference to and in context with a particular statutory provisions interpreted by the Court as the Court has to examine as what principle of law has been decided and the decision cannot be relied upon in support of a proposition that it did not decide (Vide H.H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur of Gwalior and Others Vs. Union of India and Another, ; Amar Nath Om Prakash and Others Vs. State of Punjab and Others, ; Rajput Ruda Meha and Others Vs. State of Gujarat, ; Commissioner of Income Tax Vs. M/s. Sun Engineering Works (P.) Ltd., ; Sarva Shramik Sangh, Bombay Vs. Indian Hume Pipe Co. Ltd. and Another, ; Haryana Financial Corporation and Another Vs. Jagdamba Oil Mills and Another, ; Mehboob Dawood Shaikh Vs. State of Maharashtra, ; ICICI Bank Ltd. and Another Vs. Municipal Corporation of Greater Bombay and Others, ; Makhija Construction and Enggr. Pvt. Ltd. Vs. Indore Development Authority and Others, ; and Shin-Etsu Chemical Co. Ltd. Vs. Aksh Optifibre Ltd. and Another, ).

In Jawahar Lal Sazawal and Others Vs. State of Jammu and Kashmir and Others, Hon''ble Supreme Court held that a judgment may not be followed in a given case if it has some distinguishing features.

In Bhavnagar University Vs. Palitana Sugar Mill Pvt. Ltd. and Others, ; and Union of India (UOI) Vs. Chajju Ram (Dead) by Lrs. and Others, the Hon''ble Supreme Court held that a decision is an authority for which it is decided and not what can logically be deduced therefrom. A little difference in facts or additional facts may make a lot of difference in the presidential value of a decision. While deciding the said case the Court placed reliance upon its earlier judgment in Delhi Administration (Now N.C.T. of Delhi) Vs. Manohar Lal, .

In Ashwani Kumar Singh Vs. U.P. Public Service Commission and Others, the Apex court held that a judgment of the Court is not to be read as a statute as it is to be remembered that judicial utterances have been made in setting of the facts of a particular case. Substantial flexibility; one additional or different fact may make a world of difference between the conclusions in two cases. Disposal of cases by blindly placing reliance upon a decision is not proper.

Thus in view of the above it can be inferred the judgments of the Supreme Court relied upon by Mr. Himanshu Pattnaik do not render any assistance to the Respondents on the issue involved herein as the same issue has not been agitated/ involved in either of the said cases before the Apex Court.

In The Industrial Credit and Investment Corporation of India Ltd. Vs. Grapco Industries Ltd. and Others, the Apex Court considering the provisions of the Act 1993 which is involved in the instant case examined the issue as to whether the Tribunal had a power to grant ad-interim ex parte order though not provided under the Act and Rules 1993 and came to the conclusion that while considering the provisions of Section 22 of the Act 1993 it must be held that the powers of the Tribunal are wider than the powers of the Civil Court and the only limitation was that it should observe principle of natural justice. The Court in crystal clear word said that not only the Tribunal can apply the provision of CPC but can travel beyond it and observed as under:

We however do not agree with the reasoning adopted by the High Court. When Section 22 of the Act says that the Tribunal shall not be bound by the procedure laid by the CPC it does not mean that it will not have jurisdiction to exercise powers of a Code of Civil Procedure. Rather the Tribunal can travel beyond the CPC and the only fetter that is put on its powers is to observe the principles of natural justice.

Similarly in Allahabad Bank, Calcutta Vs. Radha Krishna Maity and Others, the Hon''ble Supreme Court considered a similar issue as the ex parte interim order restraining the Bank to make any recovery of money had been passed by the Tribunal and it was contended that the Tribunal had No. power to pass such an order. The Apex Court took into consideration the provision of Section 22 of the Act 1993 and Rule 18 of the Rules 1993 and came to the conclusion that the width and amplitude of the powers are to be gathered from Section 22 and Rule 18 which enables the Tribunal to pass orders to secure the ends of justice. Therefore the order has been passed in conformity with the principles of natural justice.

It is settled legal proposition that affidavit is not an evidence within the meaning of Section 3 of the Evidence Act as held by the Courts in Prakash Rai v. J.N. Dhar AIR 1977 Del 73; Radha Kishan Vs. Navratan Mal Jain and Another, ; S. Sukumar Vs. Spl. Commissioner of Commercial Taxes, Madras, ; and M/s. Glorious Plastics Ltd. Vs. Laghate Enterprises and others, .

In Sudha Devi Vs. M.P. Narayanan and Others, the Supreme Court held that affidavits are not included in the definition of "evidence" in Section 3 of the Evidence Act and the same can be used as "evidence" only if for sufficient reasons the Court passes an order under Order 19 Rules 1 and 2 of the Code. Similar view has been reiterated in The Range Forest Officer Vs. S.T. Hadimani, wherein the Apex Court held that filing of an affidavit only of his own statement in his favour cannot be regarded as sufficient evidence for any Court or Tribunal to come to the conclusion of a particular fact-situation.

In Abdul Hameed Khan Vs. Mujeed-Ul-Hasan and Others, it was held that if contents of affidavits are contradicted the Court may summon the deponents of the affidavits for cross examination.

While examining a case under the provisions of the Industrial Disputes Act 1947 the Supreme Court in Bareilly Electricity Supply Co. Ltd. Vs. The Workmen and Others, considered the application of Order 19 Rules 1 and 2 of CPC and observed as under:

But the application of principles of natural justice does not imply that what is not evidence can be acted upon. On the other hand what it means is that No. material can be relied upon to establish a contested fact which are not spoken to by the persons who are competent to speak about them and are subject to cross-examination by the party against whom they are sought to be used. When a document is produced in a Court or a Tribunal the question that naturally arises is: is it a genuine document what are its contents and are the statements contained therein true If a letter or other document is produced to establish some fact which is relevant to the inquiry the writer must be produced or his affidavit in respect thereof be filed and opportunity afforded to the opposite party who challenges this fact. This is both in accordance with the principles of natural justice as also according to the procedure under Order 19 of the Code and the Evidence Act both of which incorporate the general principles.

In Needle Industries (India) Ltd. and Others Vs. Needle Industries Newey (India) Holding Ltd. and Others, the Apex Court considered the case under the Indian Companies Act and observed that" it is generally dissatisfactory to record a finding involving grave consequences to a person on the basis of affidavits and documents without asking that person to submit to cross-examination unless the parties have agreed to proceed with the matter on the basis of affidavits only.

In Ramesh Kumar Vs. Kesho Ram, the Supreme Court considered the scope of application of provisions of Order 19 Rules 1 and 2 in a Rent Control matter observing as under:

The Court may also treat any affidavit filed in support of the pleadings itself as one under the said provisions and call upon the opposite side to traverse it. The Court if it finds that having regard to the nature of the allegations it is necessary to record oral evidence tested by oral cross-examination may have recourse to that procedure.

In Standard Chartered Bank Vs. Andhra Bank Financial Services Ltd. and Others, the Apex Court while dealing with a case under the provisions of Companies Act 1956 and considering the complex issues of Markets and Exchanges and Securities and the procedure to be followed by special Tribunals held as under:

While it may be true that the Special Court has been given a certain amount of latitude in the matter of procedure it surely cannot flyaway from established legal principles while deciding the cases before it. As to what inference arises from a document is always a matter of evidence unless the document is self-explanatory......In the absence of any such explanation it was not open to the Special Court to come up with its own explanations and decide the fate of the suit on the basis of its inference based on such assumed explanations.

The right of hearing can be regulated/curtailed to certain extent. The right of hearing does not necessarily mean the right of personal/oral hearing (vide Hira Nath Mishra and Others Vs. The Principal, Rajendra Medical College, Ranchi and Another, ; and State of Haryana and Another Vs. Rattan Singh, ).

In view of the above it is beyond imagination that the document can be relied upon without giving the opportunity to the party to explain its nature and contents and other party to controvert the same particularly while considering the same provisions of the Act and Rules involved herein the Apex Court has held that the principles of natural justice are to be followed in addition to the provisions of Code of Civil Procedure.

The issue requires to be considered in the light of the context and the purpose for which the Act has been enacted. At the same time it should not deprive a person from putting its case fully. In a case like the instant if a party denies the execution of documents altogether which have been mentioned in the affidavit or claims that documents had never been signed by him it may be necessary to cross-examine the deponent of the affidavit wherein such documents have been referred to. The Tribunal has been created to expedite the recovery of the bank''s dues. Therefore the party cannot ask for cross-examination in each and every case as it would mean delaying tactics. Thus in such a situation a balance is required to be struck-off. In such a situation a party seeking cross examination must show reasons for cross-examination and what would be the prejudice if such a relief is not granted. Necessity of cross-examination will depend upon the facts and circumstances of each case. Therefore it cannot be in every case that application for cross-examination can be filed and it has to be allowed as a general rule. The veracity of averments made in the affidavit can be tested by cross-examination but unless it is established that the veracity of facts stated in the affidavit is necessary to be tested by cross examination it is not necessary for the Tribunal to allow such an application. Therefore in spite of the fact that cross-examination is a part of principle of natural justice it cannot be accepted that it would be available in all cases and in all circumstances. As oral examination in all cases is not contemplated and while deciding such a case the authority has to record the reasons. In case the authority comes to the conclusion that application has been filed only to delay the proceedings. definitely it has a right to reject the same. More so in a appropriate case such an application requires to be considered when the affidavit is relied upon and pressed into service. It should also be examined as to whether it is necessary to grant the right of cross-examination as it would depend upon the facts and circumstances of each case. Therefore this is discretionary power of the authority but it has to be exercised sparingly while considering the application taking note of facts and circumstances of each case. As application require to be decided in the factual ground of the case and in the context of the nature of the proceedings under the Act.

The Tribunal has not considered any of the issue and rejected the application placing reliance of the judgment of the Hon''ble Supreme Court in Union of India v. Delhi High Court Bar Association (supra). The petition succeeds and allowed. The impugned order dated 9.11.2006 is set aside.

The Tribunal is requested to reconsider the application at the stage when the affidavit filed by the Bank is to be considered taking note as to the facts and circumstances involved therein and render the finding as to whether it is necessary to grant such a relief in order to ascertain the veracity of the context thereof. The Tribunal is requested to conclude the trial expeditiously.

B.N. Mahapatra, J.

I agree.