1. Mr. J.P. Sen for the appellants and Mr. Colabawala for the respondent Bank are present.
2. The short question that arises for consideration in this appeal is about the right to cross-examine a witness in original application before the D.R.T.3. This appeal has been filed by the original defendant Nos. 2 and 3 against the order dated 8th February, 2006 passed by the D.R.T.-II, Mumbai rejecting the application made by the appellants/original defendant Nos. 2 and 3 in February, 2006 seeking permission to cross-examine one Mr. Anil Kumar Agrawal, Senior Branch Manager of the respondent Bank, who had filed the affidavit of evidence dated 27th December, 2004 on behalf of the respondent Bank.
4. On behalf of the appellants, it is argued that when a discretion has been given to the D.R.T. to allow cross-examination of witnesses on an application made in that behalf, the Tribunal should be liberal in its approach in granting such permission. In my view, provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDBFI Act) and the Debts Recovery Tribunal (Procedure) Rules, 1993 (hereinafter referred to as the Rules) made thereunder do not allow the D.R.T. to grant permission to cross-examine witnesses just for the asking. In this connection, it would be relevant to see the provisions of Sub-rule (5) of Rule 12 of the Rules, which read as follows: Sub-rule (6). "The Tribunal may at any time for sufficient reason order that any particular fact or facts shall be proved by affidavit, or that the affidavit of any witness shall be read at the hearing, on such conditions as the Tribunal thinks reasonable: Provided that after filing of the affidavits by the respective parties where it appears to the Tribunal that either the applicant or the defendant desires the production of the witness for cross-examination and that such witness can be produced and it is necessary to do so, the Tribunal shall for sufficient reasons to be recorded, order the witness to be present for cross-examination and in the event of the witness not appearing for cross-examination, then, the affidavit shall not be taken into evidence and further that no oral evidence other than that given in this proviso will be permitted.
5. As per the scheme of the Rules, the discretion given to the Tribunal is that the Tribunal may at any time for sufficient reason; order that any particular fact or facts shall be proved by affidavit, or that the affidavit of any witness shall be read at the hearing, on such conditions as the Tribunal thinks reasonable. It is only by way of an exception that witnesses can be allowed to be examined if the conditions laid down under proviso to the above sub-rule are fulfilled on an application made either on behalf of the applicant Bank or defendants before the D.R.T. If the Tribunal finds that it is necessary to do so, it has to record reasons for giving such permission.
Therefore, such permission has to be granted not as a matter of course or rule but it can be granted by way of an exception. In this respect, it would be relevant to refer to the observations of the Supreme Court made in paras 22 and 23, in the case of Union of India v. Delhi High Court Bar Association 22. At the outset, we find that the Rule 12 is not happily worded.
The reason for establishing Banking Tribunals being to expedite the disposal of the claims by the Banks, the Parliament thought it proper only to require the principles of natural justice to be the guiding factor for the Tribunals in deciding the applications, as is evident from Section 22 of the Act. While the Tribunal has, no doubt, been given the power of summoning and enforcing the attendance of any witness and examining him on oath, but the Act does not contain any provision which makes it mandatory for the witness to be examined. If such a witness could be produced, Rule 12(6) has to be read harmoniously with the other provisions of the Act and the Rules. As we have already noticed, Rule 12(7) given the Tribunal the power to act upon the affidavit of the applicant where the defendant denies his liability to pay the claims. Rule 12(6), if paraphrased, would read as follows: 1. The Tribunal may at any time for sufficient reason order that any particular fact or facts may be proved by affidavit...on such conditions as the Tribunal thinks reasonable.
2. The Tribunal may at any time for sufficient reason order...that the affidavit of any witness may be read at the hearing, on such conditions as the Tribunal thinks reasonable.
23. In other words, the Tribunal has the power to require any particular fact to be proved by affidavit, or it may order the affidavit of any witness may be read at the hearing. While passing such an order, it must record sufficient reasons for the same. The proviso to Rule 12(6) would certainly apply only where the Tribunal chooses to issue a direction, of its own, for any particular fact to be proved by affidavit or the affidavit of a witness being read at the hearing. The said proviso refers to the desire of an applicant or defendant for the production of a witness for cross-examination.
In the setting in which the said proviso occurs, it would appear to us that once the parties have filed affidavits in support of their respective cases, 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 and 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.
Thus, permission for cross-examination of a witness can be given on an application made in that behalf after parties have filed their affidavits of claim in support of their respective cases. In view of the use of the words "if it is necessary to do so" in Sub-rule (6) and if "there is no desire to prolong the case" as observed by the Supreme Court in the aforesaid para, it is quite clear that permission cannot be given as a matter of course. It would be further relevant to quote last portion of the observations of the Supreme Court made in para 23 of the above case, which are as follows: When the High Courts and the Supreme Court in exercise of their jurisdiction under Article 226 and Article 32 can decide questions of facts as well as law merely on the basis of documents and affidavits filed before it ordinarily, there should be no reason as to why Tribunal likewise, should not be able to decide the case merely on the basis of documents and affidavits before it. It is common knowledge that hardly any transaction with the Bank would be oral and without proper documentation whether in the forms 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.
6. In view of the above position in law, I asked the learned advocate for the appellants to point out to me the points on which the appellants want to cross-examine the Bank's witness and necessity thereof. According to him, the appellants want to cross-examine the Bank officer on three points: Firstly, the Bank officer who has filed affidavit on behalf of the Bank has no personal knowledge about the transaction with the Bank even though he has chosen to file affidavit on behalf of the Bank, which is going to be treated as an evidence.
Secondly, it is stated that the appellants want to cross-examine the Bank's officer with respect to the blanks left in the documents, which were executed initially while granting the loan.
Thirdly, the Bank officer is required to be cross-examined regarding the recovery of rents in respect of the machineries, which were hypothecated to the Bank with a view to avail the benefit of provisions of Section 141 of the Indian Contract Act to the appellants who are the guarantors.
7. As regards the first contention, my attention was drawn by the learned Advocate appearing for the appellants to the affidavit dated 27th December, 2004 of Mr. Anil Kumar Agrawal filed by the Bank. He also drew my attention to para 1 of the said affidavit, in which it is stated that Mr. Anil Kumar Agrawal is conversant with the facts of the case and is able to depose as per the records available with the Bank.
The learned Advocate for the appellants also read out to me para 2 of the said affidavit which speaks about the applicant Bank being an undertaking of the Government of India and has several branches all over the country including one at Kalbadevi Road, Mumbai with which the appellants had dealings. It is also mentioned that by a notification dated 19th June, 2002 the former Banares State Bank Ltd. was amalgamated with the Bank of Baroda and therefore, the applicant Bank i.e. Bank of Baroda has become entitled to recover the amount due to the original applicant, the Banares State Bank Ltd. In my opinion, since the contents of para 2 of the affidavit are based on notification dated 19th June, 2002, whereby former Banares State Bank Ltd. from whom the appellants had taken loan was amalgamated with the Bank of Baroda, which is a matter of record, there is no necessity of cross-examination of Bank's witness on that point.
8. As far as what is stated in para 1 of the claim affidavit, is concerned, the deponent, himself has clearly stated that he is able to depose, to the facts of the case from the record available with the Bank and obviously when he says that he is conversant with the facts of the case, that must be on the basis of the record available with the applicant Bank, with which he must have made himself conversant by going through the same. Simply because the Bank, which had originally given loan was different Bank which has merged with the present applicant Bank it cannot be said that cross-examination of the witness is necessary. In this regard the respondent Bank has rightly placed reliance on Sub-rule (7) of Rule 12, which follows immediately after Sub-rule (6), which was adverted to hereinabove. It would be convenient at this stage to quote Sub-rule (7) of Rule 12, which states as follows: Sub-rule (7) If the defendant denies his liability to pay the claim made by the applicant, the Tribunal may act upon the affidavit of the applicant who is acquainted with the facts of the case or who has on verification of the record sworn the affidavit in respect of the contents of application and the documents as evidence.
The said sub-rule expressly empowers the Tribunal to act upon affidavit of a person who is acquainted with the facts of the case or who has on verification of the record sworn on affidavit in respect of the contents of the application and the documents as an evidence. As stated earlier, in the first para of the claim affidavit, the officer has stated that he is able to depose to the facts of the case from the record available with the applicant Bank with which he is conversant.
Thus, there is absolutely no substance in the first point urged on behalf of the appellants.
9. As regards the second point about the blanks having been filled up not by the borrowers but by the respondent Bank subsequently, it is contended on behalf of the appellants that in the written statement and reply affidavit filed on behalf of the appellants several controversies have been raised and the appellants want to cross-examine the officer regarding the blanks filled up in the documents by the Bank, which were not filled up by the borrowers or the appellants. Considering the scheme of the RDDBFI Act and the Rules thereunder, I do not think that a party can be allowed to cross-examine a witness just to grope in the dark. When I asked the learned Advocate appearing for the appellants to show me how it can be said that the blanks have been filled up by or on behalf of the Bank falsely or to the disadvantage of the appellants, which would necessitate cross-examination of the Bank's witness, the learned Advocate, however, could not point out even one instance. On the contrary, the respondent Bank's Advocate took me through the documents like promissory note, letter of guarantee executed and duly signed by the appellants or the borrowers, which show that not a single blank has been filled up falsely, wrongly or to the disadvantage of the appellants so as to attribute it to the Bank. It is not in dispute that the loan was sanctioned originally for a sum of Rs. 3 crores by the erstwhile Bank to the borrower company of which the appellants are the directors. A copy of the demand promissory note signed by the appellants, produced at page No. 171 of the compilation, shows that the promissory note dated 27th April, 1995 was duly signed for a sum of Rs. 3 crores. In other words, the appellants had executed demand promissory note for a sum of Rs. 3 crores which is undisputedly the amount of loan sanctioned to the appellants and their company. So far as the rate of interest is concerned, that must be prevailing Bank's rate of interest at the relevant time which can be proved by the Bank.
10. Then a copy of letter of guarantee signed by the appellant No. 1 is produced at page No. 201 of the said compilation, in which, what is filled in is the names of the borrower company and of the appellant No.1 which is not disputed as incorrect. On the second page of the said letter of guarantee figure, mentioned is Rs. 3 crores which, is not more than the amount of loan sanctioned by the Bank, which also corresponds with the amount mentioned in the demand promissory note.
The said letter of guarantee is said to be dated 27th April, 1995 and its execution by the appellant No. 1 is not disputed. More significantly there is copy of a letter dated 5th May, 1995 at page No.215 of the said compilation, which is produced and filed by the appellants, which is also undisputedly and duly signed by the appellant No. 1 Mr. Rajiv Kochhar, who is the director of the Credential Finance Ltd. Clause 7 of this letter gives a list of documents which were already submitted by the appellants to the Bank. In Clause 7, there is also mention of execution of demand promissory note for a sum of Rs. 3 crores. That means figure mentioned in the demand promissory note cannot be said to be wrongly or falsely filled up by or on behalf of the Bank as it is expressly acknowledged by the appellants to have been executed for the said amount. This letter was addressed to the Bank within a period of about two weeks after execution of the documents of loan, like demand promissory note and letter of guarantee. After bringing this to the notice of the learned Advocate for the appellants, he did not attempt to create doubt about genuineness of these documents before me.
11. Lastly it is argued that the appellants want to cross-examine the officer of the Bank regarding collection of rent in respect of machineries belonging to the borrower company, which were hypothecated to the Bank. It is not disputed that the Receiver was appointed in respect of the hypothecated goods by the High Court in the suit originally filed there, which later on came to be transferred to the D.R.T. The hypothecated goods are not in possession of the Bank. This contention is raised with a view to take benefit from the provisions of Section 141 of the Indian Contract Act. As regards this contention, the appellants will have to first establish that the appellants are entitled to the benefit of the said provision. However, they failed to establish the same in an another application made in the month of February 2006, which was rejected by the D.R.T. and the appeal therefrom, is also rejected by me by a separate order passed today. In this respect, reference can be made to the letter of guarantee dated 27th April, 1995 executed by the appellant No. 1 to which reference is already made while discussing the second point raised on behalf of the appellants regarding the blanks allegedly filled up in the documents by the Bank. Clause 1 the said letter expressly states that the appellants' liability to the Bank shall be that of a principal debtor and at the Bank's option, the Bank may treat them as primarily liable for the debt of the principal or the balance from time to time due in respect thereof, provided that the amount for which they shall be liable under this guarantee shall not exceed Rs. 3 crores plus interest. Similarly, Clause 6 of the said letter of guarantee states.
"I/we waive all suretyship or other rights at any time inconsistent with any of the terms hereof'. The learned Advocate for the appellants tried to place emphasis on the wording "inconsistent with any of the terms hereof but could not point out to me any inconsistent term which would not make the appellants primarily liable for the debt of the main borrower. Consequently the provisions of Section 141 of the Indian Contract Act are not attracted.
It is also relevant to point out that though the D.R.T. has rejected the application, it is observed in the impugned order regarding hypothecated goods that if the Bank has not chosen to give explanation regarding hypothecated security, it could be highlighted during the course of final argument in the original application.
Considering the hollowness of this application, I am of the opinion that the learned Advocate for the Bank was right when he submitted that this application was made with a view to prolong the litigation. It is relevant to mention here that the claim was filed on 27th December, 2004, reply affidavit was filed in September 2005 and this application was made in January, 2006, which according to the learned Advocate, for the respondent Bank was made after taking several adjournments when the original application had come up for hearing and this appeal was urgently moved two days before when the original application was listed for final hearing before the D.R.T.-II, Mumbai. As observed by the Supreme Court in para 23 of the judgment in the case of Union of India v. Delhi High Court Bar Association (supra), if cross-examination of a witness is sought with a desire to prolong the case, the same cannot be permitted.
For the reasons which I have given above, this appeal deserves to be summarily dismissed with costs.
At the request of the Advocate for the respondent Bank, amount of costs shall be paid by the appellants to the D.R.T. Library within a period of two weeks from today.