Monday, 6 February 2017

Whether decree in summary suit can be set aside on ground that through oversight vakalatnama was not filed?

To accept the contention of the respondents in that regard would virtually amount to legislating upon Rule 4 that it is nothing but the repetition of the provision of law comprised under Sub-rule (7) of Rule 3 of Order 37.
8. The Order 9, Rule 13 of the C.P.C. specifically provides that when the defendant approaches the Court to set aside an ex parte decree in a regular suit, he has to satisfy the Court that either the summons was not duly served upon him or that he was prevented by sufficient cause from appearing when the suit was called out for hearing. It is pertinent to note that this provision has been made in addition to the provision of law comprised under Rule 7 of Order 9 whereby the defendant appearing on the adjourned date of hearing is permitted to assign good cause for previous non-appearance in the suit and to seek setting aside of the order to proceed ex parte. Similar is the provision in Order 37, Rule 3(7) which speaks about opportunity being made available to the defendant to satisfy the Court with sufficient cause for failure on the part of the defendant in entering the appearance or for applying for leave to defend. In other words, while in a regular suit the defendant seeking to set aside the ex parte decree is bound to disclose sufficient cause for non-appearance of the defendant when the suit was called out for hearing and decreed ex parte, in the case of summary suit it is not only the requirement of law that the defendant has to disclose sufficient cause for his failure to enter an appearance and apply for leave to defend the suit, but it is also necessary to make out availability of a good defence to the defendant in answer to the claim put forth by the plaintiff and that is the import of the expression "special circumstances" in Rule 4 of Order 37.
9. Bearing in mind the above provisions of law as is found in the C.P.C. in relation to the procedure to be followed when the defendant approaches the Court for setting aside the ex parte decree in a summary suit, mere failure to file Vakalatnama or failure to enter an appearance, that itself cannot be said to be a special circumstance for setting aside the decree. It is not that every failure, including for the reason of being not vigilant, that would be sufficient to categorise the same as a special circumstance for setting aside the decree under Rule 4 of Order 37. Undoubtedly, bona fide lapse on the part of the party to be established from the facts as they have happened in a particular matter, could perhaps be a special circumstance in a given case to exercise power under Rule 4 of Order 37. Mere claim on the part of the defendant that due to oversight and being under tension of other litigation that there was failure to enter an appearance, can by no stretch of imagination be said to be a special circumstance to exercise power under Order 37, Rule 4 of the C.P.C. Bare perusal of the impugned order discloses that the learned Single Judge in a most casual manner had held that failure on the part of the respondents to file Vakalatnama in the case in hand was sufficient to set aside the ex parte decree. With respect, we are unable to agree with the said view taken by the learned Single Judge and, therefore, the impugned order cannot be sustained.
IN THE HIGH COURT OF BOMBAY
Appeal No. 663 of 2004 in Notice of Motion No. 2322 of 2004 in Summary Suit No. 3835 of 2003
Decided On: 02.06.2008
 Madhusudan Shrikrishna
Vs.
Emkay Exports and Anr.
Coram:
R.M.S. Khandeparkar and P.B. Majmudar, JJ.




1. Heard. The present appeal arises from the order dated 13-9-2004 passed in Notice of Motion No. 2322 of 2004 in Summary Suit No. 3835 of 2003. By the impugned order, the motion taken out by the respondents, the original defendants in the suit, has been allowed and an ex parte decree in the said suit has been set aside.
2. The undisputed facts in the matter are that, by Advocate's notice dated 22-7-2002, issued on behalf of the appellant, the respondents herein were called upon to pay an amount of Rs. 3,00,000/- which was the subject-matter of the cheque dated 7-6-2002. As there was failure to pay the said amount, proceedings under Section 138 of the Negotiable Instruments Act, 1881 were initiated. Thereafter, on 1-12-2003 Summary Suit No. 3835 of 2003 came to be filed against the respondents claiming an amount of Rs. 9,03,732/- along with interest thereon on account of failure to pay the said dues payable by the defendants pursuant to supply of goods by the plaintiff. The summons was duly served and as there was failure on the part of the respondents to record their appearance in the suit, the matter proceeded in accordance with the provisions of law and an ex parte decree came to be passed on 20-2-2004. In the execution proceedings taken out pursuant to the said ex parte decree, attachment was levied on the immovable properties of the respondent Nos. 2 and 3 on 23-7-2004. Thereafter, on 12-8-2004 the respondents herein took out Notice of Motion No. 2322 of 2004 for setting aside the said ex parte decree. The notice of motion was opposed on behalf of the appellant, however, by the impugned order the same was allowed and the ex parte decree was set aside. Hence the present appeal.
3. The impugned order setting aside the ex parte decree reads thus:
This Motion is taken out by the Defendants for setting aside ex parte decree. Advocate for the Defendants states that there were five suits, in four suits filed Vakalatnama and in the present suit Vakalatnama could not be filed. The suit is for the money claim.
The motion is strongly opposed by the Counsel for the plaintiff, however, on the explanation given by the learned Advocate for defendants, this Motion is allowed. Ex parte Decree is set aside subject to payment of cost of Rs. 5,000/-. Payment of cost is condition precedent, to be paid within three months. Hence, this Motion is disposed of.
4. The only ground on which the ex parte decree passed in the summary suit has been set aside is that the respondents herein had failed to file the Vakalatnama in the suit in question though such Vakalatnamas were filed in the other four suits which were filed against the said respondents. Undoubtedly, the affidavit in support of the notice of motion refers to other grounds, namely, that the respondents have good defence to the claim put forth by the appellant and secondly, that the respondents by oversight did not deal with the suit in question and hence the ex parte decree came to be passed on 20-2-2004. In the course of the arguments, the learned Advocate appearing for the respondents has also contended that the suit itself was not maintainable as it was based on invoices, without any supporting challans and secondly that the cheques referred to in the complaint were of the total amount of Rs. 3,00,000/- whereas the claim made in the suit exceeds the said amount.
5. As already observed above, it is not in dispute that the proceedings for setting aside the ex parte decree were instituted in relation to the ex parte decree which came to be passed in a summary suit. Such an application is to be dealt with in terms of the provisions of law comprised under Order 37, Rule of the Code of Civil Procedure. There is no dispute about this aspect of the matter. In fact, upon hearing the learned Advocates for the parties and on perusal of the records, only two points arise for consideration. Firstly, whether the ground on which the ex parte decree has been set aside by the impugned order can be said to be the one which is available under Order 39, Rule 4 of the C.P.C.? And if not, whether the respondents had otherwise made out a case for exercise of powers under the said Rule 4 of Order 37 for setting aside the ex parte decree dated 20-2-2004.
6. The Order 37, Rule 4 of the C.P.C. clearly provides that after passing of the decree thereunder, the Court may, under special circumstances, set aside such decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court may deem fit. The Rule 7 of the said Order 37 provides that save as provided by the said Order, the procedure in suits under the said Order shall be same as the procedure in suits instituted in the ordinary manner. It is also to be noted that in case the defendant fails to enter an appearance or fails to apply for leave to defend the suit within the time frame, in terms of Rule 3 of Order 37, the Sub-rule (7) of the said Rule provides that the Court or the 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.
7. The above provisions of law clearly disclose that the Legislature has taken sufficient care to provide ample opportunities to a defendant in a summary suit to defend the claim against him and even in case of failure to take appropriate steps within the time stipulated thereunder, the defendant is afforded with an opportunity to satisfy the Court by disclosing sufficient cause for failure to do so within the time stipulated and seek leave of the Court to defend the suit. Even failure to enter an appearance can be condoned under the said provision of law, albeit for sufficient cause being shown. In the background of this provision made in Order 37 to enable the defendant to avail ample opportunity to defend the claim against him, while understanding the scope of the expression "under special circumstance" in Rule 4 of Order 37, which relates to the power of the Court to set aside the decree passed under the said order, can it be said that the provisions of Order 9, Rule 13 of the C.P.C. are totally excluded from their application to such proceedings? Plain reading of Rule 7 of Order 37 may create an impression to that effect. However, proper reading thereof would disclose that though the said Rule 4 specifically requires special circumstances to be disclosed for setting aside the decree, it does not thereby totally exclude the application of the principle behind Rule 13 of Order 9 of the C.P.C. to such proceedings. On the contrary, the very expression "special circumstances" read with the provision of Rule 7 of the said Order would disclose that the defendant approaching the Court to get the ex parte decree issued under Order 37 of the C.P.C. set aside has to make out a clear case regarding sufficient cause for his non-appearance at the time such decree was passed including regarding his failure to enter an appearance as well as failure to apply for leave to defend the suit before passing of the ex parte decree. In addition to that, the defendant has also to disclose that he has a good case to defend on merits. It is only when all these facts are present and disclosed with necessary supporting materials, that the Court would be justified in exercising its discretion for setting aside the ex parte decree passed against the defendant under Order 37. Otherwise, the Legislature has no reason to use the expression "special circumstances" in Rule 4 of Order 37. The expression "special circumstances" cannot be construed to mean merely a good case to defend on merits. The Order 37, Rule 3 makes detail provisions in order to afford opportunity to the defendant not only to enter his appearance but also to disclose good defence for contesting the claim of the plaintiff. Once such opportunity is made specifically available under Rule 3 of Order 37, it cannot be said that the same facility is made available by use of the expression "special circumstances" under Rule 4 of Order 37. To accept the contention of the respondents in that regard would virtually amount to legislating upon Rule 4 that it is nothing but the repetition of the provision of law comprised under Sub-rule (7) of Rule 3 of Order 37.
8. The Order 9, Rule 13 of the C.P.C. specifically provides that when the defendant approaches the Court to set aside an ex parte decree in a regular suit, he has to satisfy the Court that either the summons was not duly served upon him or that he was prevented by sufficient cause from appearing when the suit was called out for hearing. It is pertinent to note that this provision has been made in addition to the provision of law comprised under Rule 7 of Order 9 whereby the defendant appearing on the adjourned date of hearing is permitted to assign good cause for previous non-appearance in the suit and to seek setting aside of the order to proceed ex parte. Similar is the provision in Order 37, Rule 3(7) which speaks about opportunity being made available to the defendant to satisfy the Court with sufficient cause for failure on the part of the defendant in entering the appearance or for applying for leave to defend. In other words, while in a regular suit the defendant seeking to set aside the ex parte decree is bound to disclose sufficient cause for non-appearance of the defendant when the suit was called out for hearing and decreed ex parte, in the case of summary suit it is not only the requirement of law that the defendant has to disclose sufficient cause for his failure to enter an appearance and apply for leave to defend the suit, but it is also necessary to make out availability of a good defence to the defendant in answer to the claim put forth by the plaintiff and that is the import of the expression "special circumstances" in Rule 4 of Order 37.
9. Bearing in mind the above provisions of law as is found in the C.P.C. in relation to the procedure to be followed when the defendant approaches the Court for setting aside the ex parte decree in a summary suit, mere failure to file Vakalatnama or failure to enter an appearance, that itself cannot be said to be a special circumstance for setting aside the decree. It is not that every failure, including for the reason of being not vigilant, that would be sufficient to categorise the same as a special circumstance for setting aside the decree under Rule 4 of Order 37. Undoubtedly, bona fide lapse on the part of the party to be established from the facts as they have happened in a particular matter, could perhaps be a special circumstance in a given case to exercise power under Rule 4 of Order 37. Mere claim on the part of the defendant that due to oversight and being under tension of other litigation that there was failure to enter an appearance, can by no stretch of imagination be said to be a special circumstance to exercise power under Order 37, Rule 4 of the C.P.C. Bare perusal of the impugned order discloses that the learned Single Judge in a most casual manner had held that failure on the part of the respondents to file Vakalatnama in the case in hand was sufficient to set aside the ex parte decree. With respect, we are unable to agree with the said view taken by the learned Single Judge and, therefore, the impugned order cannot be sustained.
10. In the normal circumstances, when the order passed by the learned Single Judge does not disclose consideration of various grounds which are sought to be raised in the application for setting aside an ex parte decree and in those circumstances when the order is set aside, the matter is to be remanded to the learned Single Judge to consider the matter afresh. However, it is also to be noted that in order to exercise the power of remand, there must be material available on record which could justify the exercise of power under Order 37, Rule 4 of the C.P.C. The power of remand is not be exercised as a matter of course.
11. Perusal of the motion taken out by the respondents for setting aside the ex parte decree and the affidavit in support thereof and upon hearing the learned Advocates for the parties, it is the contention on behalf of the respondents that the latter had specifically raised two points in the said notice of motion in relation to the ex parte decree, (i) that the suit being based on invoice without any supporting challans was not maintainable under Order 37 of the C.P.C. and, secondly, the respondents have a good case on merits and both these issues were not considered in detail by the learned Single Judge. The fact that both these aspects have not been considered by the learned Single Judge is apparent on the face of the impugned order itself. The point, however, remains as to whether both these points were really raised in the notice of motion which was taken out by the respondents. Normally, when there is no reference to any argument in relation to such points in the impugned order, it is to be presumed that no such arguments were advanced. However, since the matter relates to an ex parte decree, we decided to peruse the notice of motion and the affidavit in support thereof and to find out as to whether the respondents had raised such points and had prima facie disclosed a good defence to the claim put forth by the appellant.
12. The notice of motion along with the affidavit in support thereof which was filed by the respondents nowhere discloses the point regarding the non-maintainability of the suit on the ground that the same was filed on the basis of invoices without any supporting challans having been raised any where therein or in the affidavit in support thereof.
13. The para 6 of the plaint states that the defendants are bound and liable to pay to the plaintiff a sum of Rs. 4,61,624.25 being the amount of the goods sold and delivered by him to the defendant Nos. 1, 2 and 3 under the said bills at Exhibits 'A' and B' annexed to the plaint and along with the interest thereon at the rate of 30% per annum as stipulated in the said bills and, therefore, the plaintiff is entitled to recover the said amount of Rs. 9,03,732/- as detailed in the particulars of claim annexed to the plaint and marked as Exhibit-F. Undoubtedly, the para 6 refers to the bills coupled with the fact that the amount was due on account of goods which were sold and delivered to the defendant. At the same time, in the para 3 of the plaint it is stated that the defendant Nos. 1, 2 and 3 were bound and liable to pay to the plaintiff the amount of Rs. 4,61,624.25 being the amount of the said two bills. It is further stated that the defendant No. 1 under the signature of the defendant No. 3 issued cheque dated 7-6-2002 bearing No. 776528 for Rs. 3,00,000/-, drawn on the Development Credit Bank Limited, Andheri (West) Branch towards the payment of the said amount of Rs. 4,61,624.25. It is further stated that the plaintiff had deposited the said cheque with the bankers Union Bank of India, Kalbadevi branch, however, the cheque was returned unpaid by the bankers with the remarks "Funds Insufficient". Undisputedly, at the time the ex parts decree was passed, there was neither any reply nor any application on behalf of the respondents disputing the facts alleged in the plaint. In the affidavit in support of the notice of motion, apart from claiming that the cheque in question relates to some "separate dealing", there has been no disclosure about any other dealings between the parties. In these circumstances, can it be said that even prima facie there was any material disclosed by the respondents which could reveal non-maintainability of the suit or that the said suit was filed solely on the basis of bills unsupported by delivery challans? Once the pleadings disclose that the defendant had made part payment in respect of the bills issued pertaining to the goods supplied to the defendant, considering the provisions of Order 8, Rules 3 and 4 of the C.P.C., it is not sufficient for the defendant merely to generally deny the statements of facts made by the plaintiff in the plaint nor evasive denial of those facts would be sufficient. The affidavit in support of the notice of motion, therefore, nowhere discloses any case about non-maintainability of the suit on the alleged ground that the plaint was filed solely on the basis of the invoices unsupported by delivery challans nor that there was a good case on merits to defendant was ever revealed from the said affidavit.
14. The affidavit in support of the notice of motion neither discloses what prevented the respondents from entering the appearance in the said suit nor it discloses what prevented the respondents from seeking leave to defend nor it discloses what prevented the respondents from taking steps in accordance with Order 37, Rule 3(7) of the C.P.C. nor it discloses special circumstances to warrant exercise of powers under Rule 4 of Order 37 by the Court in relation to the ex parte decree passed on 20-2-2004. As already held above, mere lapse or failure to enter an appearance by itself can be no cause for exercise of powers under Sub-rule (4). It is more so in view of the fact that even Rule 3(7) clearly requires the defendant to show sufficient cause when there is any delay on the part of the defendant in taking steps for entering his appearance or seeking leave to defend the suit. In the absence of any material in this regard, we find no case for remand of the matter to the learned Single Judge for re-consideration of the notice of motion in the case in hand.
15. The learned Advocate for the respondents has sought to draw our attention to the decision of the learned Single Judge of this Court in (J.K. Enterprise v. Prithuiraj Ratanchand Mehta) and Anr. reported in MANU/MH/0030/1991 : AIR1991Bom162 . Therein, the learned Single Judge refused to interfere with the discretion which was exercised by the learned trial Judge in granting conditional leave to the defendant. Apparently, that was not a case under Order 37, Rule 4 of the C.P.C. and on that ground itself there is absolutely no point in considering the said decision to decide the matter in hand. It is well-settled law that the ratio of a decision is to be carved out on the basis of the facts of the case, the points which arise for determination in the case and the findings arrived at in such decision on consideration of the rival contentions on behalf of the parties in relation to the points for determination.
16. Another decision to which attention is drawn is of the learned Single Judge of the Andhra Pradesh High Court in the matter of Pragathi Bearings v. Laxmi Durga Granites Ltd.) reported in MANU/AP/0637/2000 : A.I.R. 2001 A.P. 56. Therein, it was held that the pleadings in the plaint did not disclose specific averment that the conditions stipulated at the footnote of the invoices would by themselves amount to a written contract. The Court was dealing with the point of jurisdiction which was sought to be raised based on the footnote in the invoice. The decision has absolutely no application to the matter in hand.
17. Yet another decision which is sought to be relied upon is of the learned Single Judge of the Delhi High Court in the matter of (S.V. Electricals Ltd. v. Sylvania and Lakshman Ltd.) reported in A.I.R. 2000 Del 156. Therein the cause of action for initiating the proceedings in summary suit was stated to be the dishonoured cheques and hundi. However, not a Single dishonoured cheque or hundi was produced nor it was disclosed that any hundi was accepted by the defendant. In those circumstances, it was held that the summary suit was not maintainable. Obviously, the finding was based on the peculiar facts of the case before the Court.
18. Attention was also sought to be drawn to the decision of the learned Single Judge of this Court in (Unilab Chemicals & Pharmaceuticals v. Smith Stanistreet Pharmaceuticals Ltd.) reported in MANU/MH/0154/1999 : (1999)1BOMLR878 and particularly to para 7 thereof. In fact, the para 7 merely refers to the contention which was sought to be raised on behalf of the Advocate for the plaintiff in the said suit. However, the learned Single Judge therein has referred to a decision of another learned Single Judge of this Court in the matter of (Harshad Shah v. Bhor Industries Ltd.) reported in 1998 (IV) LLJ 334wherein it was held that:
Specific provision is made under Order XXXVII, Rule 4 C.P.C. where under the defendant has to show the special circumstances for set-ting aside ex parte decree passed in Summary Suit under Order XXXVII, C.P.C. To spell out special circumstances the defendant has to first satisfy the Court that there was not due service of Writ of Summons or Summons for Judgment or that he was prevented by sufficient cause from getting leave to defend and then secondly to show that he has good, substantial and/or meritorious defence in the suit. In the absence of satisfaction of first condition it may not be necessary to go into second condition at all.
19. We are in respectful agreement with the said finding of the learned Single Judge. The power to set aside an ex parte decree cannot be exercised in a casual manner, more particularly when the statutory provision specifically requires the party to make out special circumstances for exercise of such powers.
20. It is then sought to be contended on behalf of the respondents that mere setting aside of the ex parte decree will not amount to dismissal of the suit and the plaintiff can still succeed in the suit if he is able to prove his claim. By setting aside an ex parte decree, only consequence that will follow is that execution of the decree would be postponed for some time but it will give opportunity to the defendant to defend the case. The contention is devoid of substance. Once the plaintiff is armed with the decree, his right to execute the decree cannot be denied but for special circumstances to be made out by the defendant for that purpose. The provision of law in that regard under Rule 4, Order 37 of the C.P.C. is very clear. Besides, as far as the opportunity to defend the claim is concerned, there are enough safeguards provided under the statutory provision, as already observed above. The first such opportunity is available when the summons is served. The second opportunity is available under Rule 3(7) of Order 37 whereby the defendant inspite of delay or failure on his part to take appropriate steps within the time frame can satisfy the Court and avail the opportunity to defend the suit. It is nobody's case that the respondents were denied such opportunity. If the respondents had failed to avail this opportunity, then they themselves to be blamed for their failure.
21. For the reasons stated above, therefore, the impugned order cannot be sustained and is liable to be set aside and the appeal to be allowed and the notice of motion taken out by the respondents to be dismissed.
22. The appeal accordingly, therefore, succeeds; the impugned order is hereby set aside and the Notice of Motion No. 2322 of 2004 which was taken out by the respondents before the learned Single Judge in Summary Suit No. 3835 of 2003 is hereby dismissed with costs.
23. At this stage, the learned Advocate for the respondents prayed for stay of the order passed today in this appeal. Upon hearing the learned Advocates for the parties, the order is stayed for a period of eight weeks.

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