Full Judgment Text
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 5487 of 2013
(Arising out of SLP(C) No.13099 of 2008)
M/s. TVC Skyshop Ltd. ... Appellant
Versus
M/s. Reliance Communication and Infrastructure Ltd. ...Respondent
J U D G M E N T
G.S. SINGHVI, J.
JUDGMENT
1. Having failed to persuade the learned Single Judge and the Division
Bench of the Bombay High Court to entertain its prayer for setting aside the
decree passed in favour of the respondent under Order XXXVII Rule 3 of
the Code of Civil Procedure, the appellant has filed this petition.
2. The appellant and respondent entered into an agreement whereby the
respondent provided 54 mobile phone connections to the former in 2003.
Due to non-payment of the amount due, the respondent sent legal notice
dated 22.9.2004 and demanded Rs.13,31,800.59. After some time, the
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respondent filed a petition under Sections 433 and 434 of the Companies
Act, 1956, which came to be registered as Company Petition No.910/2005
for winding up of the appellant by alleging that it has failed to pay
Rs.19,69,417.11 despite demand. The learned Company Judge passed
order dated 13.4.2006 and directed the appellant to deposit a sum of
Rs.11,00,000/- to avoid advertisement of the petition filed by the
respondent.
3. The respondent also filed a Summary Suit No.1989/2006 under Order
XXXVII for passing a decree of Rs.25,83,078.35 with interest at the rate of
30% per annum from the date of suit. The summon issued by the Court was
duly served upon the appellant, but neither an application was filed for leave
to defend nor any one appeared on the date specified in the summons.
Therefore, the learned Single Judge passed order dated 7.11.2006 and
decreed the suit in terms of clauses (a) and (b) of the plaint. 4. Soon
thereafter, the appellant filed application dated 18.12.2006 in the form of an
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affidavit of its Company Secretary Shri Mahesh Katudia and prayed for
setting aside decree dated 7.11.2006. In paragraphs 5 and 6 of his affidavit,
Shri Katudia referred to order dated 13.4.2006 passed by the learned
Company Judge in Company Petition No.910/2005 and averred that a sum
of Rs.11,00,000/- was deposited by the appellant on 8.6.2006. In paragraph
7, he averred that Shri Pradeep Bhandekar, who was working as Executive
Assistant to the Chairman had resigned in September, 2006 and on that
count, proper instructions could not be given to Shri R.A.Shaikh, Advocate.
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It was also averred that summons for judgment was served on Shri R.A.
Shaikh, Advocate in September, 2006 but no application for leave to defend
was filed and that resulted in passing of ex parte decree dated 7.11.2006.
5. When the appellant’s prayer for setting aside decree dated 7.11.2006
was taken up for consideration, counsel appearing on its behalf relied upon
Order IX Rule 13 CPC. The learned Single Judge referred to the relevant
provision and held that the two grounds contemplated by Rule 13 are not
available for setting aside decree dated 7.11.2006. The learned Judge
observed that it is not a case in which the summons had not been served
upon the judgment debtor or that there was sufficient cause for its non-
appearance on 7.11.2006.
6. The appellant appealed against the order of the learned Single Judge
but could not convince the Division Bench of the High Court to entertain its
prayer for setting aside decree dated 7.11.2006. Paragraphs 4 and 5 of the
judgment of the Division Bench, which contain the reasons for dismissal of
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the appeal read as under:
“ 4. The question of going into the
illegality
infirmity or legality or
pertaining to the rate of interest or to what extent the
amount has already been paid by the appellant would have
arisen in case there was any material placed by the
appellant in that regard before the learned Single Judge
after obtaining necessary leave to defend the suit in
accordance with the law. The appellate Court's going
into the documentary evidence, if such evidence have
been found on record before the trial Court and that too
without following the procedure prescribed under Order
41 Rule 27 of the Code of Civil Procedure, does not arise
at all. In any case, the appellant having failed to seek
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leave to defend before the learned Single Judge in
accordance with the law, the question of going into
various contentions sought to be raised which essentially
relate to the evidence does not arise, at this stage.
5. As regards the contention that the appellant has
already paid a substantial amount, nothing would prevent
the appellant from bringing such fact to the notice of the
Executing Court in case the respondent files an execution
application in accordance with the decree passed in its
favour.”
7. We have heard learned counsel for the parties. Order XXXVII Rules
1 to 4 CPC, which have bearing on the decision of this appeal read as
under:
“ 1. Courts and classes of suits to which the Order is to apply.
— (1) This Order shall apply to the following Courts, namely:—
(a) High Courts, City Civil Courts and Courts of Small Causes;
and
(b) other Courts:
Provided that in respect of the Courts referred to in clause
(b), the High Court may, by notification in the Official Gazette,
restrict the operation of this Order only to such categories of
suits as it deems proper, and may also, from time to time, as the
circumstances of the case may require, by subsequent
notification in the Official Gazette, further restrict, enlarge or
vary, the categories of suits to be brought under the operation of
this Order as it deems proper.
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(2) Subject to the provisions of sub-rule (1), the Order applies to
the following classes of suits, namely:—
(a)suits upon bills of exchange, hundies and promissory notes;
(b) suits in which the plaintiff seeks only to recover a debt or
liquidated demand in money payable by the defendant, with or
without interest, arising,—
(i) on a written contract; or
(ii) on an enactment, where the sum sought to be recovered is a
fixed sum of money or in the nature of a debt other than a
penalty; or
(iii) on a guarantee, where the claim against the principal is in
respect of a debt or liquidated demand only.
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(iv) suit for recovery of receivables instituted by any assignee of
a receivable.
2. Institution of summary suits. —(1) A suit, to which this
Order applies, may if the plaintiff desires to proceed hereunder,
be instituted by presenting a plaint which shall contain,—
(a) a specific averment to the effect that the suit is filed under
this Order;
(b) that no relief, which does not fall within the ambit of this
rule, has been claimed in the plaint; and
(c) the following inscription, immediately below the number of
the suit in the title of the suit, namely:—
“(Under Order XXXVII of the Code of Civil Procedure, 1908)”
(2) The summons of the suit shall be in Form No.4 in Appendix
B or in such other Form as may, from time to time, be
prescribed.
(3) The defendant shall not defend the suit referred to in sub-rule
(1) unless he enters an appearance and in default of his entering
an appearance the allegations in the plaint shall be deemed to be
admitted and the plaintiff shall be entitled to a decree for any
sum, not exceeding the sum mentioned in the summons, together
with interest at the rate specified, if any, up to the date of the
decree and such sum for costs as may be determined by the High
Court from time to time by rules made in that behalf, and such
decree may be executed forthwith.
3. Procedure for the appearance of defendant .—(1) In a suit
to which this Order applies, the plaintiff shall, together with the
summons under rule 2, serve on the defendant a copy of the
plaint and annexures thereto and the defendant may, at any time
within ten days of such service, enter an appearance either in
person or by pleader and, in either case, he shall file in Court an
address for service of notices on him.
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(2) Unless otherwise ordered, all summonses, notices and
other judicial processes, required to be served on the defendant,
shall be deemed to have been duly served on him if they are left
at the address given by him for such service.
(3) On the day of entering the appearance, notice of such
appearance shall be given by the defendant to the plaintiff's
pleader, or, if the plaintiff sues in person, to the plaintiff himself,
either by notice delivered at or sent by a pre-paid letter directed
to the address of the plaintiff's pleader or of the plaintiff, as the
case may be.
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(4) If the defendant enters an appearance, the plaintiff shall
thereafter serve on the defendant a summons for judgment in
Form No. 4A in Appendix B or such other Form as may be
prescribed from time to time, returnable not less than ten days
from the date of service supported by an affidavit verifying the
cause of action and the amount claimed and stating that in his
belief there is no defence to the suit.
(5) The defendant may, at any time within ten days from the
service of such summons for judgment, by affidavit or otherwise
disclosing such facts as may be deemed sufficient to entitle him
to defend, apply on such summons for leave to defend such suit,
and leave to defend may be granted to him unconditionally or
upon such terms as may appear to the Court or Judge to be just:
Provided that leave to defend shall not be refused unless
the Court is satisfied that the facts disclosed by the defendant do
not indicate that he has a substantial defence to raise or that the
defence intended to be put up by the defendant is frivolous or
vexatious:
Provided further that, where a part of the amount claimed
by the plaintiff is admitted by the defendant to be due from him,
leave to defend the suit shall not be granted unless the amount so
admitted to be due is deposited by the defendant in Court.
(6) At the hearing of such summons for judgment,—
(a) if the defendant has not applied for leave to defend, or if such
application has been made and is refused, the plaintiff shall be
entitled to judgment forthwith; or
(b) if the defendant is permitted to defend as to the whole or any
part of the claim, the Court or Judge may direct him to give such
security and within such time as may be fixed by the Court or
Judge and that, on failure to give such security within the time
specified by the Court or Judge or to carry out such other
directions as may have been given by the Court or Judge, the
plaintiff shall be entitled to judgment forthwith.
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(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.
4. Power to set aside decree .—After decree the Court may,
under special circumstances set aside the decree, and if
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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 thinks fit.”
8. An analysis of Order XXXVII shows that the provisions contained
therein are applicable to the suits specified in Rule 1(2). Rule 2(1)
prescribes the particulars to be incorporated in the suit. Sub-rule (3) of
Rule 2 lays down that the defendant shall not defend the suit unless he
enters appearance and in default of his appearance, the allegations
contained in the plaint shall be deemed to be admitted and the plaintiff shall
be entitled to a decree for a sum not exceeding the sum specified in the
summons together with interest at the specified rate, if any. Rule 3 contains
the procedure for the appearance of the defendant. Sub-rule (5) prescribes
time limit of ten days from the service of summons for judgment within
which the defendant can apply for leave to defend. The concerned Court
can grant leave to defend unconditionally or conditionally. First proviso to
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this sub-rule lays down that leave to defend cannot be refused unless the
Court is satisfied that the facts disclosed by the defendant do not indicate
that he has substantial defence or that the defence is frivolous or vexatious.
Second proviso to sub-rule (5) lays down that if the defendant admits part
of the amount claimed by the plaintiff then he shall not be granted leave to
defend unless the admitted amount is deposited in the Court. Sub-rule (6)
provides for the consequences of the defendant’s failure to apply for leave
to defend or refusal of prayer for leave to defend. In such an eventuality,
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the plaintiff is entitled to judgment forthwith. Sub-rule (7) lays down that if
the defendant is able to show sufficient cause, the Court can excuse the
delay in entering of appearance or in making an application for leave to
defend. Rule 4 gives power to the Court to set aside the decree provided
special circumstances exist for doing so. The Court can also stay or set
aside execution and grant leave to the defendant to defend the suit.
9. The expression “special circumstances” appearing in Order
XXXVII Rule 4 was considered by this Court in Rajni Kumar v. Suresh
Kumar Malhotra (2003) 5 SCC 315 and it was observed:
“The expression “special circumstances” is not defined in
the Civil Procedure Code nor is it capable of any precise
definition by the court because problems of human beings
are so varied and complex. In its ordinary dictionary
meaning it connotes something exceptional in character,
extraordinary, significant, uncommon. It is an antonym of
common, ordinary and general. It is neither practicable
nor advisable to enumerate such circumstances. Non-
service of summons will undoubtedly be a special
circumstance. In an application under Order 37 Rule 4,
the court has to determine the question, on the facts of
each case, as to whether circumstances pleaded are so
unusual or extraordinary as to justify putting the clock
back by setting aside the decree; to grant further relief in
regard to post-decree matters, namely, staying or setting
aside the execution and also in regard to pre-decree
matters viz. to give leave to the defendant to appear to the
summons and to defend the suit.”
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In the same judgment, the Court considered the scope of order XXXVII
Rule 4 and observed:
“It is important to note here that the power under Rule 4
of Order 37 is not confined to setting aside the ex parte
decree, it extends to staying or setting aside the execution
and giving leave to appear to the summons and to defend
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the suit. We may point out that as the very purpose of
Order 37 is to ensure an expeditious hearing and disposal
of the suit filed thereunder, Rule 4 empowers the court to
grant leave to the defendant to appear to summons and
defend the suit if the court considers it reasonable so to
do, on such terms as the court thinks fit in addition to
setting aside the decree. Where on an application, more
than one among the specified reliefs may be granted by
the court, all such reliefs must be claimed in one
application. It is not permissible to claim such reliefs in
successive petitions as it would be contrary to the letter
and spirit of the provision. That is why where an
application under Rule 4 of Order 37 is filed to set aside a
decree either because the defendant did not appear in
response to summons and limitation expired, or having
appeared, did not apply for leave to defend the suit in the
prescribed period, the court is empowered to grant leave
to the defendant to appear to the summons and to defend
the suit in the same application. It is, therefore, not
enough for the defendant to show special circumstances
which prevented him from appearing or applying for leave
to defend, he has also to show by affidavit or otherwise,
facts which would entitle him leave to defend the suit. In
this respect, Rule 4 of Order 37 is different from Rule 13
of Order 9.”
10. In the present case, we find that the application filed by the appellant
for setting aside decree dated 7.11.2006 did not disclose any special
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circumstance which could justify an order under Order XXXVII Rule 4. In
his affidavit, Shri Mahesh Katudia had merely stated that sum of
Rs.11,00,000/- had been paid in terms of order dated 13.4.2006 passed by
the learned Company Judge and proper instructions could not be given to
the Advocate engaged for defending the suit. Therefore, it is not possible
to find any fault with the view taken by the Division Bench of the High
Court on the tenability of the appellant’s prayer for setting aside decree
dated 7.11.2006.
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11. The argument of Shri Rohan Thawani, learned counsel for the
appellant that even though the appellant had not applied for leave to defend,
the learned Single Judge was duty bound to scrutinise the claim of the
respondent and the suit could have been decreed only if the Court felt
satisfied that the claim was bonafide and not vexatious which finds some
support from the judgment in Neebha Kapoor v. Jayantilal Khandwala
(2008) 3 SCC 770 sounds attractive in the first flash but we do not find any
valid ground to overturn the impugned judgment because, as mentioned
above, the affidavit filed by Shri Mahesh Katudia did not disclose any
special circumstances which could warrant exercise of power under Order
XXXVII Rule 4. He did not even contest the liability of the appellant to
pay the amount claimed in the plaint. The mere fact that one of the officials
of the appellant had resigned would not constitute a valid ground for
negating the policy underlying Order XXXVII in general and Rule 3(5) in
particular.
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12. Equally meritless is the argument of Shri Thawani that the rate at
which the respondent claimed interest is highly excessive. According to
Shri Jaideep Gupta with whom we agree, the interest was charged as per
the terms of the agreement and the appellant had always paid the bills in
which interest was claimed at the rate of 30% per annum.
13. In the result, the appeal is dismissed.
…………………………..J.
(G.S. SINGHVI)
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………………………….J.
(V. GOPALA GOWDA)
New Delhi;
July 15, 2013.
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