Judgment:
1. This appeal is directed against the order dated 24.3.2005, passed by the DRT, Bangalore, in IR-378/2001 in OA-687/1999.
2. The learned Advocate for the appellant Bank submitted that the respondents remained ex parte in the OA filed by the appellants and, therefore, they have filed an application to set aside the ex parte order and the same is pending in IR-378/2001, and pending disposal of that application, there was a compromise between the appellant Bank and the respondents and they have also arrived at One Time Settlement (OTS). But in the meanwhile, on the strength of the ex parte order passed in the OA, the recovery certificate was issued and the recovery officer proceeded with the matter. That in order avoid to avoid the sale proceedings by the recovery officer, the respondents herein have filed two Interim Applications in IA No. 253/2005 and IA No. 254/2005.
All these applications were taken together along with IR-378/2001, and the DRT passed a common order accepting the compromise reached between the parties. During the passing of the order, the appellant Bank raised objection on the ground that they have to get necessary instructions from the Higher Officer, as the settlement was reached after ex parte decree, but the said objection was overruled by the Tribunal and order were passed. The learned Advocate for the appellant Bank submits that as per the guidelines issued by the Reserve Bank of India, including the clarification dated 7.10.2003, whereby the guidelines were not applicable to cases where already decree/necessary orders have been passed by the Tribunal and this clarification was also upheld by the Hon'ble Supreme Court of India in Civil Appeal No. 4929/2004 (Arising out of SLP(C) No. 17147/2003)--MA. X-Calibre Knives Pvt. Ltd.and Anr.
v. State Bank of India. It is, therefore, submitted that in the present case also, the respondents have already been set ex parte and order was passed against them and, therefore, clarification issued by the Reserve Bank of India in the communication dated 7.10.2003 is applicable and the respondents cannot have the benefit of the OTS. This fact was not properly considered by the DRT which resulted in passing an order which is erroneous. It is, therefore, submittied that the order passed by the DRT is liable to be set aside.
3. On the contrary, the learned Advocate for the respondents would contend that no doubt the DRT has passed an ex parte order on 31.5.2000, and the respondents have filed an application in IR-378/2001, to set aside the ex parte order and the same is pending.
When once an application filed to set aside the ex parte order is pending, then the entire matter is set at large and the respondents are entitled to the benefit of the OTS and the clarification issued by the Reserve Bank of India is not applicable to the case on hand, and thus argued in support of the order passed by the DRT.4. The fact that the respondents have remained ex parte and they have also filed at application to set aside the ex parte order in IR-378/2001, which is pending and not in dispute. It is also not in dispute that on the strength of the ex parte order passed by the DRT, the appellant Bank have proceeded with the matter and the recovery certificate; was also issued. No doubt, it is true that the application filed by the respondents to set aside the ex parte order is pending.
The contention of the learned Advocate for the respondents that the very fact that an application filed to set aside the ex parte order is pending, the entire matter is set at large, does not appear to me as a correct proposition of law. Pendency of an application to set aside the ex parte order will not automatically operate as stay, so also, the pendency of an application to set aside the ex parte decree will not set at naught the proceedings. The mere fact than an application has been filed to set aside the ex pane order, without that order being set aside, would not cloth with any right to the party concerned. Though the DRT had dealt with the application IR-378/2001, which is meant to set aside the ex pane order, unless an order has been passed to that effect, it may not be possible for the DRT to direct either the appellant Bank or any of the parties to the lis, to abide by the compromise. As long as the ex parte order is not set aside, any manner of compromise entered into by the parties cannot at all be implemented through Court. What the DRT should have done is that it should have passed order in IR-378/2001, either allowing or dismissing the said application and only, thereafter, the consideration of the compromise would arise. But unfortunately, the DRT without setting aside the ex parte order, in its anxiety and in haste, has directed the appellant Bank to accept the compromise and orders have been passed. Of course, the DRT after allowing the application of the respondents in IR-378/2001, it would have passed the very same order. But that is not the case. The question is whether the compromise entered into between the parties can be accepted or recorded when the ex parte order was not set aside. In my view, the DRT is not correct, for the reason that when the ex parte order was not set aside, any manner of compromise between the parties cannot at all be recorded. As the DRT has not done so, I come to the conclusion that the DRT has committed an error and the impugned order is liable to be set aside and accordingly it is set aside.
5. In the above said circumstances, it is a fit case for remand and the matter is remanded back to the DRT, Bangalore, for passing appropriate orders in IR-378/2001 and then to consider the OTS arrived at between the parties. It is needless to say that if IR-378/2001 is allowed in favour of the respondents, and the entire matter stands restored to its original position, then it would amount that the matter is pending adjudication and, therefore, the clarification issued by the Reserve Bank of India in its communication dated 7.10.2003 will not come in the way in recording the OTS filed on 16.4.2004.
6. The appeal is ordered accordingly. The entire recovery proceedings are stayed till the disposal of IR-378/2001.