No material has been placed on record in support of various steps alleged to have been taken after 1.4.1998 or at least from 11.4.1998 onwards. Postal receipts/Postal covers about posting of correspondence to and fro have not been filed. Keeping in view the time constraint if the applications were to be drafted by two counsel, one at Delhi and the other at Bombay, their meeting(s) could have been arranged either at Delhi or at Bombay or the consultations could have been made either on telephone or through the modern time savings modes like e-mail and telex or even by availing courier services which are commonly available and usefully availed especially by persons engaged in trade and commerce. This was all the more necessary as the application for leave had to be made within 10 days, i.e., by 11.4.1998 and almost four weeks time has been taken in to and fro correspondence between defendants and their counsel in Delhi. It cannot be said that this inordinate and unreasonable delay, as it is in the present case, could not have been avoided by exercise of due care, attention and diligence. There is clearly lack of diligence and it is suggestive of lack of bona fides on the part of the defendants. The delay caused by a party on account of its own ipsi dixit and without due care and attention could not be excused on the ground of sufficient cause.
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Delhi High Court
M/S. Escorts Finance Ltd. vs Nielcon Ltd. & Anr. on 19 January, 2000
Equivalent citations: 2000 VAD Delhi 611, 85 (2000) DLT 773
Bench: J Goel
1. Applications (I. As. 4411/98 & 4413/98) under Order 37, Rule 3(7) of the Code of Civil Procedure (for short "the Code") have been filed by the two defendants separately for condensation of delay in filing applications for leave to defend.
2. Plaintiff, a non-banking financial corporation, has filed a suit for recovery of Rs. 25,50,645/- under summary procedure of Order 37 of the Code against the defendants, defendant No. 1 as the principal debtor and defendant No. 2 as its surety. The plaintiff had granted a loan of Rs. 30.00 lakhs to finance certain plant and machinery to defendant No. 1. An agreement was executed between the parties on 29.12.1994 agreeing to repay the loan in 36 monthly instalments of Rs. 1,10,834/- each. Some instalments were paid but balance remained unpaid. Some cheques given towards the repayment were dishonoured. After serving notice of demand, the suit was filed for recovery of the balance amount. The defendants put in appearance. Summons for judgment was served and the defendants have filed applications for leave to defend after the prescribed period of 10 days. They seek condensation of delay of 34 days. The two applications contain identical pleas.
3. It is admitted by the defendants that their counsel had accepted the summons for judgment in Court on 31.3.1998, however, copy of the application for judgment was supplied to him on 1.4.1998; he sent the same to the defendants in Bombay on 3.4.1998, received by the latter on 8.4.1998. Defendants sent replies on 10.4.1998 which were received by their counsel in Delhi on 14.4.1998. The said counsel prepared the replies on 17.4.1998 and sent to the defendants in Bombay who received the same on 22.4.1998. The defendants sent again with suggestions for change/modifications to their counsel on 27.4.1998 who received in Delhi on 30.4.1998. The counsel after making requisite changes sent the applications on 4.5.1998 which were received by the defendants in Bombay on 8.5.1998. These applications were filed in this Court on 14.5.1998. Delay is sought to be condoned on the ground that defendants are placed in Bombay, and delay is due to finalisation of replies in consultation with their counsel in Bombay and Delhi. The plaintiff in replies have alleged that sufficient cause for condensation of delay is not shown.
4. I have heard learned counsel for the parties. Learned counsel for the defendants has contended that the defendants are located in Bombay and delay was caused in finalising the replies by their counsel in Delhi and Bombay as some amendments had to be made in the draft replies prepared by their counsel in Delhi and Bombay, the delay is unintentional and bona fide and in the circumstances sufficient cause exists for condensation of delay. Whereas learned counsel for the plaintiff has contended that there is gross negligence, inaction and lack of diligence and bona fides on the part of the defendants and sufficient cause for condensation of delay is not made out. He has relied on Ram Lal & Ors. Vs. Rewa Coalfields Ltd. , DCM Financial Services Limited Vs. Khaitan Hostombe Spinels Ltd. and Nirayu Pvt. Ltd. Vs. Mohan Lal ,.
5. Rule 3(7) of Order 37 which provides for condensation of delay reads as under:-
3. Procedure for the appearance of defendant.-
x x x x x x x x x x x (7) The Court or Judge may, for sufficient cause shown by the defendant, excuse the delay of the defendant in entering an appearance or in applying for leave to defend the suit.
6. Provision for condensation of delay on "sufficient cause" is also provided under Section 5 of the Limitation Act. The Supreme Court in the case of Ram Lal (supra) has laid down that two important considerations have to be borne in mind for construing Section 5 of the Limitation Act. First consideration is that the expiration of the period of limitation prescribed gives rise to a right in favour of the other party and the right so accrued should not be light heartedly disturbed. The other consideration is that if sufficient cause for excusing delay is shown discretion is given to the Court to condone the delay, of course, this discretion should be exercised to advance substantial justice. The Supreme Court has referred with approval to the following observations made by Madras High Court in Krishna Vs. Chathappan, ILR 13 Mad 269:-
"Section 5 gives the Court a discretion which in respect of jurisdiction is to be exercised in the way in which judicial power and discretion ought to be exercised upon principles which are well understood; the words 'sufficient cause' receiving a liberal construction so as to advance substantial justice when no negligence nor inaction nor want of bona fide is imputable to the appellant."
7. In this case, if the delay is not condoned, plaintiff will be entitled to straight away decree as provided under Order 37 Rule 3(6) of the Code.
8. In DCM Financial Services Limited (supra), it has been laid down that the test whether or not a cause is sufficient is to see whether delay could have been avoided by the party by the exercise of due care and attention as nothing shall be deemed to be done bona fide or in good faith which is not done with due care and attention. The same test has also been laid down in the case of Nirayu Pvt. Ltd. Vs. Mohan Lal (supra).
9. The principles thus to be taken into consideration for condensation of delay would be : (1) while liberal construction is to be given to the words "sufficient cause" to advance substantial justice, liberal construction, however, is available only when no negligence or inaction or want of bona fide is imputable to the party invoking Section 5(2) want of due care and attention or want of due diligence negatives the existence of sufficient cause; (3) burden is on the party seeking extension of limitation to show that he acted with care and attention and was not negligent or careless; (4) each case is to be seen on its facts and circumstances and the circumstances to be "sufficient cause" must appear to the Court to be reasonable having regard to the facts and circumstances of the case.
10. For determining whether "sufficient cause" in the circumstances exists or not, the object of the enactment wherein this discretion is sought to be exercised would also be a relevant consideration.
11. The provision of Order 37 of the Code are a special enactment which applies to certain categories of cases. The object for this enactment is that the defendant does not unnecessarily prolong litigation and prevent the plaintiff from obtaining an early decree in a class of cases where speedy decisions are desirable in the interest of trade and commerce.
12. Under summary procedure of Order 37, the plaintiff is required to serve the defendant with the summons of the suit. Such summons has to accompany copy of the plaint and other relevant documents relied by the plaintiff. On receipt on the same, defendant has to make appearance within 10 days of such service and then the plaintiff has to take out summons for judgment to the defendant and then the defendant has to make an application seeking leave to defend within 10 days of such receipt. There will obviously be sufficient time gap between the two steps to be taken by the defendant. The first step puts the defendant to notice to be ready for taking steps for leave to defend in case he wants to contest the suit of the defendant in time and for that purpose he is equipped with copy of the plaint and other documents relied in support by the plaintiff. The question thus is whether the defendants have acted with due care and diligence or have been negligent and careless in approaching the Court.
13. It is admitted by the defendants that summons for judgment were accepted by their counsel on 31.3.1998 but copy of the application of summons for judgment was given to him on 1.4.1998. The service of summons for judgment thus admittedly was effected on 1.4.1998. The various steps alleged to have been taken by the defendant in filing the application as pleaded are :-
31.3.2001 Counsel for defendant accepted summons
for judgment in Court.
1.4.1998 (Wed) Copy of application for summons
for judgment provided to counsel
for defendants.
3.4.1998 (Fri) Application despatched by counsel
for defendants to defendants at Bombay.
8.4.1998 (Wed) Application received by defendants
at Bombay.
10.4.1998 (Fri) Replies and comments prepared by the
defendants and despatched to counsel
at Delhi.
14.4.1998 (Tue) Received by counsel in Delhi.
17.4.1998(Fri) Application for leave to defend
despatched by counsel at Delhi
to defendants at Bombay.
22.4.1998(Wed) Application received by defendants
at Bombay.
27.4.1998 (Mon) Defendants, desiring some changes
despatched further comments to their
counsel in Delhi.
30.4.1998 (Thurs) Further comments received by counsel
in Delhi.
4.5.1998 (Mon) Further comments incorporated in
application and despatched to
defendants at Bombay.
8.5.1998 (Fri) Application for leave to defend,
incorporating further comments
received by defendants
at Bombay.
12.5.1998(Tue) Application for leave to defend
signed, attested and notarised
in Bombay, and dispatched to
counsel at Delhi.
14.5.1998 (Thurs) Application seeking leave
to defend filed by the defendants.
14. Taking the service of summons for
judgment on the defendants to be on
1.4.1998, these application have been
filed on the 43rd day, i.e., there is
delay of 33 days.
15. No material has been placed on record in support of various steps alleged to have been taken after 1.4.1998 or at least from 11.4.1998 onwards. Postal receipts/Postal covers about posting of correspondence to and fro have not been filed. Keeping in view the time constraint if the applications were to be drafted by two counsel, one at Delhi and the other at Bombay, their meeting(s) could have been arranged either at Delhi or at Bombay or the consultations could have been made either on telephone or through the modern time savings modes like e-mail and telex or even by availing courier services which are commonly available and usefully availed especially by persons engaged in trade and commerce. This was all the more necessary as the application for leave had to be made within 10 days, i.e., by 11.4.1998 and almost four weeks time has been taken in to and fro correspondence between defendants and their counsel in Delhi. It cannot be said that this inordinate and unreasonable delay, as it is in the present case, could not have been avoided by exercise of due care, attention and diligence. There is clearly lack of diligence and it is suggestive of lack of bona fides on the part of the defendants. The delay caused by a party on account of its own ipsi dixit and without due care and attention could not be excused on the ground of sufficient cause.
16. Incidentally, it may also be mentioned that the defense sought to be raised by the defendants is prima facie not bona fide. The defendants in one breath deny having executed the agreement in question and also of passing of any consideration, and at the same time, plead discharge of the liability to the extent of over Rs. 39.00 lakhs. In ground "H" of the application seeking leave to defend, it is pleaded as under :-
"H. Even assuming for the sake of arguments and in the absence of any averment in the suit that any consideration was received by the defendant company, it is specifically stated and submitted that the said purported consideration would be discharged by a payment of Rs. 19,39,305/- (Rupees Nineteen lakhs thirty nine thousand three hundred five only) and further depreciation on the machinery which would be additionally approximately Rs.20.00 lakhs as per the calculation of the defendant company totalling approximately Rs. 39.00 lakhs."
17. The payment to the extent of Rs.19,39,205/- admitted to have been made obviously was towards the liability in dispute as there is nothing to show that there was any other liability due from the defendants to the plaintiff. Against which machinery, the defendants claim adjustment of Rs. 20.00 lakhs on account of depreciation? This adjustment obviously is in respect of the machinery given on lease/hire purchase to defendants out of which the present dispute has arisen. If the plaintiff had financed the machinery given to the defendants on lease/hire purchase basis, the defendants as hirer/lessee would be the owner thereof after the agreed instalments were paid by them. How the plaintiff would be entitled to a depreciation on account of user of the leased machinery by the defendants is beyond comprehension. This clearly is a bogus plea showing mala fide on the part of the defendants. There is clearly admission of liability on the part of the defendants.
18. In the circumstances, sufficient cause has not been shown for condensation of delay. The application lack bona fides and the same are accordingly dismissed.
I. As. 4410/98 & 4412/98
19. These are applications for leave to defend. These are dismissed as time barred.
Suit No. 2080/97
20. Plaintiff is thus entitled to a decree of Rs. 25,50,645/-.
21. Plaintiff claims pendente lite and future interest @ 24% per annum. As appears from the agreement between the parties, rate of interest agreed was 11% per annum. There is no basis for claiming interest @ 24% per annum. Plaintiff would be entitled to pendente lite and future interest under Section 34 of the Code on the principal amount adjudged. Statement of account filed by the plaintiff shows that Rs. 30.00 lakhs as principal and Rs.9,90,000/- as hire/lease charges were to be paid by the defendants in 36 monthly instalments. Defendants have paid Rs. 17,85,913/-. The instalments were not paid as agreed. The defendants are liable to pay the balance amount of Rs. 22,04,111/- Another sum of Rs. 3,46,534/- as overdue interest as agreed in the agreement is also payable. Thus the plaintiff is entitled to Rs. 25,50,645/-.
22. The suit of the plaintiff is accordingly decreed and a decree of Rs. 25,50,645/- with pendente lite and future interest @ 11% per annum on the amount of Rs. 22,04,111/- and costs of the suit is passed in favour of the plaintiff and against the defendants, defendant No.1 as principal debtor and defendant No.2 as surety.
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