Gujarat HC in the case of Punjab National Bank

Case Covered:

Punjab National Bank

Versus

M/s Mithilanchal Industries Pvt. Ltd.

Facts of the Case:

The present litigation initiated by the appellant Bank, right from the inception has resulted only in the loss of the time of the various judicial forums that have been approached by the appellant Bank and is also a drain on the public exchequer. What perplexes us most, is that in such financial matters, the objective is quick recovery and lowering the possibility of losses. However, by engaging in the present litigation, the attitude adopted by the appellant Bank and its officers has borne results that are against the interests of the Bank and a matter that could have been laid to rest by rational thinking has been unnecessarily dragged for 3 years. When such litigation reaches our doorsteps, we feel exasperated by the inaction or rather the wrongful action and by the policy of blindly engaging in litigation before various judicial forums as entities such as the appellant Bank before us are expected to exercise finer sense and sensibility in their litigation policy, as compared to an individual litigant.

Observations of the Court:

The above discussion further strengthens the answers to both the questions. Firstly that whether the bank was required to spell out the details or not, the answer would be, `YES’, and the Bank is required to furnish the details on its own and all the more when the borrower demands it. Secondly, whether under Section 17, the Tribunal could examine the validity of the notice under Section 13(2), the answer would again be `YES’. The Tribunal has to examine the validity and only based upon the validity of notice and validity of discharge of obligation of the secured creditor under sub-section (2), (3) and (3A) that the Tribunal would hold that the action under sub-section (4) to be valid. In the present case, such action having been held to be invalid and as the same is apparent from the record, no error could be found in the order of the Tribunal. The appellate Tribunal as also the learned Single Judge rightly dismissed the appeal and the writ petition filed by the Secured Creditor – the appellant Bank. Accordingly, the present appeals fail and are liable to be dismissed. It is ordered accordingly.

The present case, as highlighted by us in the paragraphs hereinabove, is a classic example of how the judicial system is getting clogged with frivolous litigation. The facts and the circumstances that have led to the filing of the present appeal before us, leave us with no choice but to impose exemplary costs on the appellant Secured Creditor. The Hon’ble Supreme Court has stressed in a catena of matters that costs should be in real and compensatory terms and not merely symbolic. We are of the firm opinion that costs act as a deterrent to vexatious, frivolous, impractical, and unnecessary litigation. The whole objective behind the imposition of costs is that every litigant, especially big public sector entities, like the appellant bank, would have to think twice before engaging in such litigation, as the one before us. 

The decision of the Court:

We accordingly are of the view that this matter requires costs to be imposed upon the appellant Bank which we quantify at Rs.5.00 lakhs per appeal. The amount of costs to be deposited within one month from today with the Registrar General of this Court whereupon the same shall be transmitted to the Gujarat State Legal Service Authority. This amount is to be recovered from the Officers found responsible for carrying on this frivolous litigation.

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