Holding

The ex parte decree cannot be set aside; the ORT, DRAT and High Court were correct in dismissing the application under Section 22(2)(g) read with Order IX Rule 13 of the CPC.

Summary

The appellants, former directors and guarantors of Adhunik Detergent Ltd., were joined as defendants in a civil suit filed by Union Bank of India for recovery of a loan. They appeared in the civil court, filed a written statement and raised preliminary objections, but the suit was later transferred to a Debt Recovery Tribunal (ORT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The appellants did not appear before the ORT, which passed an ex parte decree holding them jointly and severally liable. They sought to set aside the decree under Section 22(2)(g) of the Act, claiming they had not been served notice and were unaware of the transfer. The ORT, the Debt Recovery Appellate Tribunal and the High Court dismissed the application, holding that the appellants had knowledge of the proceedings, that service by newspaper was valid, and that Section 22(2)(g) confers the same powers as a civil court under Order IX Rule 13 of the CPC. The Supreme Court affirmed these decisions, finding no ground to set aside the decree and dismissing the appeal.

Issues considered

Whether the ex parte decree passed by the ORT can be set aside under Section 22(2)(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 when the defendants had previously appeared in the civil suit.
Whether service of summons by publication in a widely circulated newspaper satisfies the requirement of ‘duly served’ for the purpose of setting aside an ex parte decree.
Whether the ORT and the Debt Recovery Appellate Tribunal have the same powers as a civil court under Order IX Rule 13 of the Code of Civil Procedure, 1908.

Legislation cited

Code of Civil Procedure, 1908s. Order IX Rule 13, s. Order V
Companies Act, 1956
Constitution of Indias. Article 136
Recovery of Debts Due to Banks and Financial Institutions Act, 1993s. 22(2)(g)

Subjects

ex parte decreeDebt Recovery Tribunalservice of summonsSection 22(2)(g)preliminary objectiondirector liabilityloan guaranteeCivil Proceduresetting aside decreesuppression of facts

Judgment

[2008] 1 S.C.R. 261

SUNIL PODDAR AND ORS. A
v.
UNION BANK OF INDIA
(C.A. No. 86 of 2008)

JANUARY 8, 2008
B
[C.K. THAKKER AND ALTAMAS KABIR, JJ.]

Recovery of Debts due to Banks and Financial Institutions
Act, 1993:
s.22(2)(g) - Recovery suit - Service of summons - C
Appearance of defendants through Advocate and also filing
. of written statement and application raising preliminary
objection as to maintainability of suit against them - Transfer
ofsuit to ORT - Non-appearance of defendants before ORT
- Ex parte decree - Application seeking setting aside of ex o
parte decree on ground that summonses were not issued -
Dismissal of, by ORT, ORA T, High Court - Correctness of -
Held: Correct, as defendants suppressed the fact of having
appeared in the civil suit - Defendants had knowledge of
proceedings and it was obligatory on them to have appeared E
before ORT and answered plaintiff's claim - Apart from
suppression of fact, even on legal ground, it was not obligatory
to serve notice on them once again - Code of Civil Procedure,
1~08 - 0. 9, r. 13 - Constitution of India, 1950 - Article· 136.
s.22(2)(g)- Powers of ORT and DRAT - Held: ORT and F
DRAT for the purpose of discharging their functions under the .
Act, have the same powers as are vested in Civil Court under
the Code of Civil Procedure, 1908.
Code of Civil Procedure, 1908 :
0.5 - Service of summons by publication - Summons G
published in a daily newspaper having wide circulation in the
locality- Plea of defendant that he was not aware of publication
in newspaper as he was not reading the said newspaper -
Tenability of - Held: Not tenable.
261 H
262 SUPREME COURT REPORTS [2008] 1 S.C.R.

A 0. 9 r. 13 - Expression 'duly served' - Connotation of.
Appellants-defendants no.7 to 9 were directors of
defendant-Company, which took a loan from the
respondent bank; and all the directors became guarantors
for repayment of the loan. There was division of business,
8 whereby defendants 7 to 9 resigned as directors from .the
defendant=company. The loan amount was not repaid by •
the defendant-Company. Respondent-bank filed a civil
suit for recovery of the loan amount. All the directors
including the appellants were arrayed as defen~ants.
C Summonses were issued. The appellants appeared and·
filed a written statement contending that as they had
resigned from the directorship of the defendant-Company
· which fact was intimated to the respondent-bank, they
were not liable for repayment of the loan. They also filed
D an application raising preliminary objections as to
maintainability of the civil suit against them.
During f:he pendency of the civil. suit, Recovery of 1
Debts Due to Banks and Financial Institutions Act, 1993
came into force and the suit was transferred to ORT. No
E one appeared for the appellants before the ORT which
passed an ex parte decree holding all the defendants
jointly and severally liable to repay the loan amount. When
the appellants came to know about the ex parte decree,
they filed an application under s.22(2)(g) for setting aside
F the ex parte decree stating that they had no knowledge
about the transfer of the suit to ORT nor were summonses
issued by ORT to them at the new address. The application
was dismissed .. Having remained unsuccessful before the
DRAT and the High Court, defendants 7-9 filed the instant
G appeal.
Dismissing the appeal, the Court
HELD: 1.1. The appellants have not made out any
ground on the basis of which the order passed by the
H ORT, confirmed by the. DRAT and by the High Court can
SUNIL PODDAR AND ORS. v. 263
UNION BANK OF INDIA

be set aside. [Para 11] [271-E, F] A
•1
1.2. From the record, it is clearly established that the
suit was instituted by the plaintiff-Bank as early as in
August, 19~3. The appellants who were defendant Nos. 7
to 9 were aware of the proceedings before the Civil Court.
They appeared before the Court, engaged an advocate B
and filed a written statement. They raised preliminary
objections as also objections on merits. They filed
"* applications requesting the Court to raise certain issues
and try them as preliminary issues. It was, therefore,
obligatory on their part to appear before the ORT when c
the matter was transferred under the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993. [Para 11]
[271-F, G; 272-A]
1.3. It cannot be said that appellants were not aware
D
of the proceedings before the ORT and summonses were
not duly served. As is clear, summonses were issued
).- earlier and on the same address, summonses were
sought to be served ag;iin after the case was transferred
to ORT. It seems that the appellants avoided service of
summons as they wanted to delay the proceedings. In E
view of the fact that the appellants were appearing before
the Civil Court, it was not necessary fo~ the Bank to get
summonses published in a newspaper after the matter
was transferred in accordance with law to the ORT. But
even that step was taken by the respondent-Bank by F
getting the summonses published in a Hindi newspaper
having wide circulation in Bombay and Raipur. It is
immaterial whether appellants were subscribers of the
said newspaper and whether they were reading it. Once
a summons is published in a newspaper having wide G
circulation in the locality, it does not lie iil the mouth of
--i the person sought to be served that he was not aware of
such publication as he was not reading the said
newspaper. [Para 11] [272-A, B, C, D, E, F]
H
264 SUPREME COURT REPORTS [2008] 1 S.C.R.

A 2.1. In the application filed by the appellants before
the ORT under s.22(2)(g) of the Act, there is nd murmur
.,. . '

that the applicants were defendants in the suit instituted
·in Civil Court; that they were served and that they
appeared through an advocate and filed a written
B statement and other applications requesting the Court to
try certain Issues as preliminary issues. It was expected
of the appellants to disclose all those facts. The ORT was
right in commenting on. the conduct of the appellants/
defendants. As has been correctly stated by DRAT, even
c if it is taken to be true that the appellants did not receive
notice from the ORT, it was their duty to make necessary
inquiry in the proceedings when the case was transferred
to the ORT. Apart from suppression of fact as to service
of summons and appearance of defendants before the
Court, even on legal Qround, it was not obligatory that
0
the appellants should have been served once again.
[Paras 13, 20] [273-C,_ D; 279-B; 273-D]
2.2. A bare reading of s.22 makes it c•ear that the ORT
and the DRAT have, for the purpose of discharging their
E functions under the Act, the same. powers as are vested
in Civil Court under .the Code of Civil Procedure, 1908.
Clause (g) of sub-section (2) of s. 22, therefore, has to be
read with Rule 13 of Order IX of the Code which provides
for setting aside ex parte decree passed against a
F defendant. [Para 15] [2r4-D, E]
2.3. After the Code of Civil Procedure (Amendment)
Act, 1976, legal position with regard to the expression
'duly served' as occurring in r.13 of 0.9 has undergone a
change. The legal position now under the amended Code
G is not whether the defendant was actually served with the
summons. in accordance with the procedure laid down
and in the manner prescribed in Order V of the Code, but 1o--
whether (i) he had notice of the date of hearing of the suit;
and (ii) whether he ha_d sufficient time to appear and
H answer the claim of the plaintiff. Once these two conditions
SUNIL PODD_AR AND ORS. v. 265
UNION BANK OF INDIA

are satisfied, an ex parte decree cannot be set aside even A
if it is established that there was irregularity in service of
summons. If the Court is convinced that the defendant
had otherwise knowledge of the proceedings and he
could have appeared· and answered the plaintiff's claim;
he cannot put forward a ground of non-service of B
summons for setting aside ex parte decree passed against
him by invoking r.13 of 0.9 of the Code. Since the said
provision applies to Debt Recovery Tribunals and
Appellate Tribunals under the Act in view of s.22(2)(g) of
the Act, both the Tribunals were right in observing that C
the ground raised by the appellants could not be upheld.
[Paras 16,18,19] [277-A; 278-A, B, C, D]
3. From .the facts and circumstances of the case in
their entirety, there is no miscarriage of justice. On the
contrary, the appellants did not come forward with clean 0
hands. In the light of all the facts and keeping in view the
provisions of s.22 (2)(g) of the Act read with r.13 of 0.9 of
the Code, the ORT has rightly dismissed the application
and the said order has been confirmed by the DRAT and
by the High Court, it cannot in the exercise of discretionary E
and equitable jurisdiction under Article 136 of the
Constitution be held that the orders are wrong and the ex
parte order should be quashed. [Para 22] [279-E, F, G;
280-A]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 86 F
,. J of 2008.
From the Judgment and final Order dated 23.11.2005 of
the High Court of Judicature at Allahabad in C.M.W.P. No. 67297/
. 2005.
Subrat Birla and Subhash Chandra Birla for the Appellants. G
Jyoti Saxena, Vipin Saxena, M.P. Shorawala, Hemant
Choudhary, S.W. Haider, Ram Niwas, Neeraj Kumar and
Sanjeev Malhotra for the Respondent.
The Judgment of the Court was delivered by H
266 SUPREME COURT REPORTS [2008] 1 S.C.R.

A C.K. Thakker, J. 1. Leave granted.
2. The present appeal is directed against the order dated
November 23, 2005 passed by the High Court of Judicature at
Allahabad in Civil Miscellaneous Writ Petition No. 67297 of
2005. By the said order, the High Court dismissed the writ
B petition filed by the appellant-writ petitioners and confirmed the
order of Debt Recovery Appellate Tribunal, Allahabad dated
September 13, 2005 which in turn affirmed the order passed
by the Debt Recovery Tribunal, Jabalpur on December 20, 2001. ~

c 3. To appreciate the controversy raised in the present
appeal, few relevant facts may be stated. It is the case of the
appellant that Adhunik Detergent Ltd. (Defendant No. 1 in Suit.
No. 44A of 1993 instituted by respondent-Union Bank of India)
was incorporated as Company under the Indian Companies Act,
D 1956. There was another Company also known as Adhunik
Synthetics Ltd. which was floated by the Directors of Adhunik
Detergent Ltd. According to the appellants, initially, Adhunik
Detergent Ltd. had seven Directors, namely, (1) Satyanarayan
Jalan, (2) Krishna Jalan, (3) Chakrapani Jalan, (4) K.K. Jalan,
E {5)Sunil Poddar, (6) Sushil Kumar Kanodia and (7) Radhey
Shyam Poddar. Adhunik Detergent Ltd. had taken loan from
the respondent-Bank. The appellants herein as Directors of
Adhunil< Detergent Ltd. at the relevant time became guarantors
for repayment of loan and ex.ecuted certain documents in favour
of the respondent-Bank. It is the say of the appellants that there
F was division of business among the Directors of Adhunik
Detergent Ltd. and Adhunik Synthetics Ltd. Consequent upo~
the division, the appellants herein, who were Directors 5, 6 and ·
7 had resigned as Directors from Adhunik Detergent Ltd. on
August 18, 1989 and they got exclusive control over Adhunik
G Synthetics Ltd. From that date onwards, the appellants no more
remained as Directors of Adhunik Detergent Ltd.
·4. It was alleged by the respondent-Bank that since
Adhunik Detergent Ltd. did not repay the loan amount, a civil
H suit came to be filed by the Bank in the Court of District Judge,
SUNIL PODDAR AND ORS. v. 267
UNION BANK OF INDIA [C.K. THAKKER, J.]

Raipur, Madhya Pradesh for recovery of Rs. 1,07,17,177.60 p. A
~ "' In the said suit, over and above the Company, all the Directors
were also joined as defendants. A prayer was made in the plaint
to hold all the defendants jointly and severally liable to pay the
amount claimed by the plaintiff-Bank along with interest, costs
and other expenses. Summonses were issued by the Court and B
the defendants appeared. So far as the present appellants are
concerned, they were not served with the summonses but when
..., they came to know about the filing of the suit, they appeared
and filed written statement on March 9, 1995 contending inter
alia that they had resigned from the Directorship of the Company c
(Adhunik Detergent Ltd.) with effect fromAugust 18, 1989 and
the Bank was intimated about such resignation. It was, therefore,
contended that they were not responsible for repayment of loan
amount and suit against them was. not maintainable. The
appellants, therefore, prayed that they may be deleted from the 0
array of parties. On March 14, 1995, the appellants also filed
an application by raising preliminary objection as to
'!- maintainability of civil suit against them. It was stated in the said
application that preliminary objections were raised in the written
statement by the appellants (defendant Nos. 7, 8 and 9) that no E
suit against them would lie. It was stated that the preliminary
objection raised by them was fundamental in nature and went
to very root of the jurisdiction of the Court. It was, therefore,
prayed that an issue as to maintainability of suit against
defendant Nos. 7 to 9 be framed and decided as preliminary
.., issue before trying the suit on merits. Another application was F
also made in November, 1995 raising a similar objection
contending tha.t t~e suit was not instituted in accordance with
law. ·The plaint which was filed was not signed by a person
authorized to do so and on that count also, the suit was not
tenable. It was further stated that suit against defendant Nos. 7 G
to 9 was not maintainable. A prayer was made to frame two
· ~ issues under Order XIV; Rule 1 of the Code of Civil Procedure,
.1908 ("Code" for short) as preliminary issues and to decide.
them as such.
H
268 SUPREME COURT REPORTS [2008] 1 S.C.R.

A 5. It may, however, be stated that during the pendency of ~ •
the suit before the Civil Court, the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 (hereinafter referred
to as "th~ Act") came into force and in 1998 the suit filed by the
respondent-Bank came to be transferred to the Debt Recovery
B Tribunal, Jabalpur ('ORT' for short). The appellants had no
knowledge about the transfer of the suit to ORT nor summonses
were issued by ORT to the appellants at the new address. In the
circumstances, nobody appeared before the ORT and the ORT . ,.
vide its ex parte judgment and order dated December 15, 2000
c decreed the suit filed by the plaintiff-Bank holding that the Bank
was entitled to recover 1,07, 17, 177/-with interest and cost from
the defendant Nos. 1-9 jointly and severally. The defendants were
also restrained from transferring, alienating or otherwise dealing
with or disposing off the hypothecated/mortgaged properties
without the prior permission of ORT.
0
6. It is asserted by the appellants that they were not aware
of the proceedings before the ORT and no summonses were
1
served upon them. In the circumstances, they could not remain
present before the ORT. It was on December 16, 2000 when
E Mr. G. Karmakar, who was working for the appellants, happened
to visit the office of M.P. Audyogik Vikas Nigam Ltd. at Bhopal
for some official work that the officials of the Nigam informed
him that a suit pending in the Civil Court, Raipur was transferred
to ORT, Jabalpur and an ex-parte decree had been passed
F against the appellants. Immediately on December 18, 2000, t
Mr. Karmakar went to ORT, Jabalpur for getting requisite
information and came to know that notice was sent to the
appellants at the old address though new address was available.
An advertisement was also published in a Hindi daily. He also
G came to know that since nobody appeared on behalf of the
appellants, ex-parte decree had been passed. In the
circumstances, the appellants herein made an application under ..,...-
Section 22(2)(g) of the Act on January 10, 2001 for setting aside
an ex-parte order passed by the ORT. The ORT,' however, on
December 20, 2001 dismissed the application. The appellants
H
SUNIL PODDAR AND ORS. v. 269.
UNION BANK OF INDIA [C.K. THAKKER, J.]

-. -r· appealed against the order passed by the DRT, but the Debt A
Recovery AppellatE;! Tribunal, Allahabad ('DRAT' for short) also
dismissed the appeal. A writ petition filed against the order of
DRAT also met with the same fate. The High Court dismissed
the writ petition. All these orders have been challenged by the
appellants in the present appeal. B

7. Notice was issued by this Court on March 6, 2006. After
,~ hearing the parties, execution proceedings were stayed and
the matter was ordered to be posted for final hearing. That is
how the matter has been placed before us.
c
8. We have heard the learned counsel for the parties.

9. The learned counsel for the appellants contended that
DRT committed grave error of law and jurisdiction in proceeding
with the application and deciding it on merits ex-parte in absence
of the appellants. It was submitted that no summonses were D
served upon the appellants and thus no opportunity of hearing
>· was afforded to them before passing the impugned order which
is liable to be set aside:. The DRT in the circumstances, ought
to have allowed the application for setting aside ex-parte order.
By not doing so, the ORT had committed grave error and the E
said order deserves to be quashed. It was also submitted that
appellants were not informed about the transfer of case from
Civil Court to DRT and no summonses were served upon them.
According to the appellants, they had changed their address
and new address was available with the Bank. In spite of that, F
-~
with mala fide intention and oblique motive, summonses were
sought to be served upon appellants at an old address but the
appellants were not ·served because of change of address.
Summonses were then published in a Hindi newspaper which
had no 'wide circulation'. That action was also taken with a view G
to deprive the appellants from knowing about the proceedings
~ . before the ORT so that they may not be able to appear and
defend themselves and the Bank would be able to obtain ex
parte order. The appellants had led the evidence in support of
their say that they were not in Mumbai at the relevant time and
H
270 SUPREME COURT REPORTS · [2008] 1 S.C.R.

A they were not subscribers of Hindi newspaper "Navbharat >r ,.
Times''. They had produced necessary particulars and yet the
ORT failed to consider the said evidence in its proper
perspective and dismissed the application·observing that the
appellants must be deemed to be aware of the proceedings.
B According to the ORT, the appellants appeared in Civil Court,
filed written statement but all those facts were suppressed by
them while filing the application before the ORT for setting aside
ex parte order. The same mistake has been repeated by the "
Appellate Tribunal as also by the High Court. H was submitted
C that all those facts were not relevant in the present'J:>roceedings.
On all these grounds,· the orders are liable to set aside by
directing the Debt Recovery Tribunal, Jabalpur to consider the
matter afresh and to decide it in accordance with law.

10. The learned counsel for the respondent-Bank, on the
D other hand, supported the order passed by the ORT, confirmed
by the DRAT as well as by the High Court. An affidavit-in-reply
is filed by Senior Manager (Law) of the respondent-Bank,
wherein it was submitted that the appellants were aware of the
proceedings initiated by the Bank against them. In civil suit, the
E · appellants were joined as defendant Nos. 7-9. They appeared
before the Court through an advocate and filed written statement
in March, 1995. They also raised preliminary objections by filing
applications, requesting the Court to treat the issues as to
maintainability of suit and liability of the appellants as preliminary
F issues. It was, therefore, clear that they were served with the
summonses and were in know of the proceedings. It was
thereafter their duty to take care of their interest, when the suit
was transferred to ORT, Jabalpur. It was further stated that
summonses were issued to the appellants at the addresses at
G which they were earlier served. In fact, according to the
respondent-Bank, it was the same address which was given by
the appellants themselves before both the Tribunals and before
the High Court. But with a view to deprive the Bank of the
legitimate dues and to delay the proceedings initiated against
them, they did not appear before the ORT. Though it was not
H
· SUNIL PODDAR AND ORS. v. 271
...f UNION BANK OF INDIA [C.K. THAKKER, J.]
~. 'I necessary for the Bank to serve the appellants once again, they A
made a prayer to the Court to get the summonses published in
a newspaper which was done and in "Navbharat Times",
Bombay as well as "NavbharatTimes", Raipur summonses were
published. "Navbharat Times" is having very wide circulation at
both the places, i.e. Bombay as well as at Raipur. It was, B
therefore, not open-to the appellants to contend that they were
not subscribing and/or reading a Hindi newspaper by producing
"' a bill from a newspaper agent. Such a bill can be obtained from
any vendor. No reliance can be placed on such evidence.
Moreover, an extremely important fact which weighed with both c
the Tribunals as well as with the High Court was that in an
application under Section 22(2)(g) of the Act for setting aside
ex parte order passed by ORT, the appellants have suppressed

• •t
material and extremely important fact that they had appeared
before the Civil Court and had filed written statement. The
application proceeded on the footing as if the appellants were
D
never aware of any proceedings initiated against them by the
>-
plaintiff-Bank. The ORT was, therefore, wholly right in dismissing
the application and the said order was correctly confirmed by
the DRAT and by the High Court. No case can be said to have
E
been made out by the appellants to interfere with those orders
and the appeal deserves to be dismissed.
11. Having heard the learned counsel for the parties, in
our opinion, the appellants have not made out any ground on
~ . the basis of which the order passed by the ORT, confirmed by F
the DRAT and by. the High Court can be set aside. From the
record, it is clearly established that the suit was instituted by the
plaintiff-Bank as early as in August, 1993. The appellants who
were defendant Nos. 7 to 9 were aware of the proceedings
before the Civil Court. They appeared before the Court, engaged G
an advocate and filed a written statement. They raised
' ---...i preliminary objections as also objections on merits. They filed
applications requesting the Court to raise certain issues and
try them-as preliminary issues. It was, therefore, obligatory on
their part to appear before the ORT, Jabalpur when the matter
H
272 SUPREME COURT REPORTS [2008] 1 S.C.R. ~

A was transferred under the Act. The appellants, however, failed '!' A

to do so. We are not impressed by the argument of the learned
counsel for the appellants that they were not aware of the
proceedings before the ORT and summonses could not be said
to have been duly served. As is clear, summonses were issued
B earlier and on the same address, summonses were sought to
be served again after the case was transferred to ORT. There
is substance in the submission of the learned counsel for the
respondent-Bank that the appellants had avoided service of
summons as they wanted to delay the proceedings. We are
c also inclined to uphold the argument of learned counsel for the
Bank that in view of the fact that the appellants were appearing
before the Civil Court, it was not necessary for the Bank to get
summonses published in a newspaper after the matter was
tfansferred in accordance with law to the ORT, Jabalpur. But

0
even that step was taken by the respondent-Bank. In "Navbharat
Times", a Hindi newspaper having wide circulation in Bombay
and Raipur, summonses were published. It cannot be argued
';
~
successfully that the appellants were not the subscribers of the
said newspaper and were not reading 'Navbharat Times' Hindi
Edition. But even otherwise,.such contention is wholly irrelevant.
E As to bills said to have bf!len produced from the newspaper
agent, to us, both the Tribunals were right in observing that such
a bill can be obtained at any time and no implicit reliance can
be placed on that evidence. It is immaterial whether appellants
were subscribers of the said newspaper and whether they were
F reading it. Once a summons is published in a newspaper having ;..
'
wide circulation in the locality, if does not lie in the mouth of the
person sought to be served that he was not aware of such
publication as he was not reading the said newspaper. That
ground also, therefore, does not impress us and was ~ightly
G rejected by the Tribunals.
12. While dealing with the contention raised by the ~-
•
appellants, the ORT observed;
"When summo!1s are published in newspaper, the Court
H has to be cautious that it is published in a newspaper,
SUNIL PODDAR AND ORS. v. 273
UNION BANK OF INDIA [C.K. THAKKER, J.]
"'- ... circulated and Widely read in an area where the defendant A
I' stays. Navbharat Times is a national newspaper read not
- only in Mumbai but also elsewhere in this country. The
summons were published also in a newspaper circulated
in Raipur from where the loan was disbursed. As stated in
the main order, the Court is satisfied that summons were B
properly published and summons has been properly
served".
"' 13. But the fundamental objection which had been raised
by the respondent-Bank and upheld by the Tribunals is legally
well-founded. In the application filed by the appellants before c
the DRT, Jabalpur under Section 22(2)(g) of the Act, there is no
murmur that the applicants were defendants in the suit instituted
in Civil Court; they were served and they appeared through an
advocate and also filed a written statement and other
applications requesting the Court to try certain issues as D
preliminary issues. It was expected of the appellants to disclose
>- all those facts. Apart from suppression of fact as to service of
summons and appearance of defendants before the Court, even
on legal ground, it was not obligatory that the appellants should
have been served once again. E
14. In this connection, we may refer to the provisions of
Section 22 of the Act which lays down procedure to be followed
by the Tribunals. The relevant part of the said section reads thus;

-t 22. Procedure and powers of the Tribunal and the F
Appellate Tribunal.-(1) The Tribunal and the Appellate
Tribunal shall not be bound by the procedure laid down by
the Code of Civil Procedure, 1908 (5 of 1908), but shall
be guided by the principles of natural justice and, subject
to the other provisions of this Act and of any rules, the
G
Tribunal and the Appellate Tribunal shall have powers to
regulate their own procedure including the places at which
'-..... they shall have their sittings.
(2) The Tribunal and the Appellate Tribunal shall have, for
the purposes of discharging their functions under this Act, H

..
274 SUPREME COURT REPORTS [2008) 1 S,C R.

A the same powers as are vested in a civil court under the " " •'
Code of Civil Procedure, 1908 (5 of 1908), while trying a
suit, in respect of the following matters, namely:-
(a) summoning and enforcing the attendance of any
person and examining him on oath;
B
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits; "'
(d) issuing commissions for the examination of
c witnesses or documents;
(e) reviewing its decisions;
(f) dismissing an application for default or deciding it.
ex parte;
D (g) setting aside any order of dismissal of any application
for default or any order passed by it ex parte;
(h)
15. Bare reading of the above provision makes it clear
E that the ORT and the DRAT have, for the purpose of discharging
their functions under the Act, the same powers as are vested in
Civil Court und~r the Code of Civil Procedure, 1908. Clause
(g) of sub-section (2) of Section 22, therefore, has to be read
with Rule 13 of Order IX of the Code which provides for setting
F aside ex parte decree passed against a defendant. Rule 13 of +-
Order IX as originally enacted in the Code of 1908 read thus;
13. Setting aside decree ex parte against
defendant-In any case in which a decree is passed ex
parte against a defendant, he may apply to the Court by
G which the decree was passed for an order to set it aside;
and if he satisfies the Court that the summons was not
duly served, or that he was prevented by any sufficient
cause from appearing when the suit was called on for
hearing, the Court sh2'll make an order setting aside the
decree as against him upon such terms as to costs,
SUNIL PODDAR AND ORS. v. 275
UNION BANK OF INDIA [C.K. THAKKER, J.]

... y payment into Court or otherwise as it thinks fit, and shall A
appoint a day for proceeding with the suit:
Provided that where the decree is of such a nature that it
cannot be set aside as against such defendant only it may
be set aside as against all or any of the other defendants
also". B

16. Original Rule 13 of Order IX of the Code thus
provided that when a decree had been passed ex parte
against the defendant who satisfied the Court that summons
was not duly served upon him, the Court was bound to set c
aside the decree. It was immaterial whether the defendant
had knowledge about the pendency of suit or whether he was
aware as to the date of hearing and yet did not appear before
the Court. The Law Commission considered that aspect and
the expression "duly served". In its Twenty-seventh Report,
D
.the Commission stated;

.~·
1. Under Order IX, rule 13, if the court is satisfied either
that the summons has not been served, or that the
defendant wa·s prevented by sufficient cause from
appearing, etc., the ex parte decree should be set aside. E
The two branches of the rule are distinctive and the
defendant, whatever his position may be in respect.of one
branch, is the court that he has made good his contention
in respect of the other branch.
2. Now, cases may arise where there has been a technical F
breach of the requirements of "due service", though the
defendant was aware of the institution of the suit. It may
well be, that the defendant had knowledge of the suit in
due time before the date fixed for hearing, and yet,
apparently he Would succeed if there is a technical flaw. G
This situation can arise e.g., where the acknowledgement
on the duplicate of the summons has not been signed.
There may be small defects in relation to affixation, etc.,
under Order V, rule 15. At present, the requirements of the
rules regarding service must be strictly complied with, H
276 SUPREME COURT REPORTS [2008) 1 S.C.R.

A and actual knowledge (of the defendant) is immaterial.
(There are not many decisions which hold that even where
there has not been due service, yet the decree can be
maintained, if the defendant knew the date of hearing.)
3. Where a literal conformity with the C.P.C. is wanting,
B the second part of column third of article 164, Indian
Limitation Act, 1908 (now article 123, Limitation Act, 1963)
applies. As to substituted service, see discussion in under-
mentioned decision.

c 4. The matter was considered exhaustively by the Civil
Justice Committee, which recommended.a provision that
a decree should not be set aside for mere irregularity.
Local Amendments made by several High Courts
(including Allahabad, Kerala, Madhya Pradesh, Madras
D and Orissa) have made a provision on the subject, though
there are slight variations in the language adopted by each.
Such a provision appears to be useful one, and has been
adopted on the lines of the Madras Amendment.
17. The Commission again considered the question and
E in its Fifty-fourth Report, reiterated;
9.12. Under Order 9, rule 13, if the court is satisfied either
that the summons has not been served, or that the
defendant was prevented by sufficient cause from
appearing, etc., the ex parte decree should be set aside.
F The two branches of the rule are distinctive, and the
defendant, whatever his position may be in respect of one
branch, is entitled to benefit of the other branch, if he
satisfies the court that he has made good his contention
in respect of the other branch:
G
9.13. In the earlier Report, several points were considered
with reference to this rule, and amendments suggested
on one point,-the broad object being to ensure that a
decree shall not be ser aside merely on the ground of
H
irregularity in service, if the defendant had knowledge of
.'
278 SUPREME COURT REPORTS [2008] 1 S.C.R.

A 19. It is, therefore, clear that the ·legal position under the
amended Code is not whether the defendant was actually served
"' .
with the summons in accordance with the procedure laid down
. and in the manner prescribed in Order V of the Code, but
whether (i) he had notice of the date of hearing of the suit; and
B (ii) whether he had sufficient time to appear and answer the
claim of the plaintiff. Once these two conditions are satisfied,
an ex parte decree cannot be set aside even if it is established
that there was irregularity in service of summons. If the Co'urt is ~
convinced that the defendant had otherwise knowledge of the l
c proceedings and he could have .appeared and answered the
plaintiff's claim, he cannot put forward a ground of non service
of summons for setting aside ex parte decree passed against
him by invoking Rule 13 of Order IX of the Code. Since t~e said
provision applies to Debt Recovery Tribunals and Appellate
Tribunals under the Act in view of Section 22(2)(g) of the Act,
D
both the Tribunals were right in observing that the ground raised
by the appellants could not be upheld. It is not even contended
4
by the appellants that though they had knowledge of the '
proceedings before the ORT, they had no sufficient time to
appear and answer the claim of the plaintiff-bank and on that
E
ground, ex parte order deserves to be set aside.

20. In our opinion, the Tribunals were also right in
commenting on the conduct of the appellants/defendants that
they were appearing before Civil Court through an advocate,
F had filed written statement as also applications requesting the /.-
Court to treat and try certain issues as preliminary issues. All
those facts were material facts. It was, therefore, incumbent upon
the appellants to disclose such facts in an application under
'
Section 22(2)(g) of the Act when they requested the ORT to set
G aside ex parte order passed against them. The appellants
deliberately and intentionally concealed those facts. There was
no whisper in the said application indicating that before the Civil
Court they were present and were also represented by an
,.
advocate. An impression was sought to be created by the
defendants/appellants as if for the first time they came to know
H
SUNIL PODDAR AND ORS. v. 279
UNION BANK OF INDIA [C.K. THAKKER, J.]

in December, 2000 that an ex pa rte order had been passed. A
against them and immediately thereafter they had approached
the ORT. The Debt Recovery Tribunal, Jabalpur, therefore, in
our opinion was right in dismissing the said application. In an
appeal against the said order, the DRAT ob.served that the
appellants had 'willfully suppressed the fact that they were not B
in the know of the proceedings when the same was proceeding
in the Civil Court'. The DRAT correctly stated that even if it is
taken to be true that the appellants did not receive notice from
the ORT, it was their duty to make necessary inquiry in the
proceedings when the case had been transferred to the ORT. c
The Appellate Tribunal rightly concluded;
"In the present case, the appellants very artistically have
suppressed the fact of their filing of written statement in
the case while it was proceeding in the Civil Court and ,
were being represented by their lawyer till the date of its D
transfer to the Tribunal at Jabalpur".
21. The High Court, in our judgment, was equally right in
dismissing the petition confirming the finding of the DRAT that
the appellant had 'artistically' suppressed material fact and no E
interference was called for.
22. Finally, we are exercising discretionary and equitable
jurisdiction under Article 136 of the Constitution. From the facts
and circumstances of the case in their entirety, we do not feel
that there is miscarriage of justice. On the contrary, we are F
convinced that the appellants had not come forward with clean
hands. They wanted to delay the proceedings. Though they were
aware of the proceedings pending against them, had appeared
before the Civil Court, but then did not care to inquire into the
matter. Even after ex-parte order was passed, in an application G
for setting aside the order, they had not candidly disclosed all
the facts that they were aware of such proceedings and were
represented by a counsel. In the light of all these facts and
keeping in view the provisions of Section 22 (2)(g) of the Act
read with Rule 13 of Order IX of the Code, if the Debt Recovery
H
280 SUPREME COURT REPORTS [2008) 1 S.C.R.

A Tribunal dismissed the application and the said order was
confirmed by the Debt Recovery Appellate Tribunal and by the
High Court, it cannot be held that those orders were wrong and

B
ex parte order should be quashed. The prayer of the appellants,
therefore, has no substance and cannot be accepted.
23. For the foregoing reasons, the appeal deserves to be
-
dismissed and is accordingly dismissed with costs.
D.G. Appeal dismissed.