I.A.12009/2019 (under Order XXXVII Rule 4 of the CPC for recalling the orders dated 16.04.2019 and 07.08.2019) in CS(COMM) 205/2016
1. This is an application filed by the defendant in the present suit under Order XXXVII Rule 4 of the Code of Civil Procedure, 1908 [“CPC”]. The following reliefs are sought by way of this application:-
“A. That in view of the above facts and circumstances at this stage it is only humbly prayed that Rs.20,00,000/- paid may be taken as payment made by the time as may deem to have been extended by the Hon’ble Court and allow suit to proceed in special facts and circumstances;
B. The leave to defend ought to have been given unconditionally as is obvious from relevant paras 6 and 12 of the agreement of 22/05/2011, and other infirmities, on the basis of which this suit was filed as also arbitration issue was raised but under O7R11 CPC, instead of u/Section 8 of the Arbitration Act, and other infirmities and as such recall orders dated 16/04/2019 and 07/08/2019.”
2. The suit was filed by the plaintiff on 13.01.2015 under Order XXXVII of the CPC for a money decree against the defendant in the sum of Rs.1,10,00,000/- alongwith interest thereupon. Summons were issued by an order dated 29.01.2015, although inadvertently treating the suit as an ordinary suit. The defendant filed a written statement on 28.04.2015. When the aforesaid error came to light, an order dated 01.05.2015 was passed, modifying the order dated 29.01.2015 and recording that the defendant had already entered appearance. The defendant was treated as having appeared under Order XXXVII of the CPC, and the plaintiff was given liberty to take further steps.
3. The defendant thereafter filed an application under Order VII Rule 11 of the CPC in which it was inter alia contended that the transaction between the parties was covered by an arbitration clause contained in an agreement dated 22.05.2011. The defendant’s plea to this effect was rejected by an order dated 04.03.2016, leaving it open to the defendant to make an appropriate application under Section 8 of the Arbitration and Conciliation Act, 1996, if so advised. The application under Order VII Rule 11 of the CPC was dismissed by the said order with costs.
4. Upon the plaintiff filing an application for issuance of summons for judgment, the defendant made an application for leave to defend the suit. That application was allowed by an order dated 16.04.2019, subject to payment of the sum of Rs.20,00,000/- to the plaintiff within eight weeks. The operative portion of the order is reproduced below: -
“Consequently, defendant-society is granted leave to defend, subject to payment of Rs. 20,00,000/- (Rupees 1,10,00,000/- minus Rs.90,00,000/-) to the plaintiff within eight weeks. Needless to say, if the aforesaid payment is not made within the stipulated period the suit shall stand decreed without any further orders of this Court. Accordingly, present application stands disposed of.”
5. The defendant’s petition for review of this order was dismissed by an order dated 31.05.2019. The order dated 16.04.2019 was also challenged by the plaintiff before the Division Bench in FA(OS)(COMM) 167/2019. The Division Bench came to the conclusion that there was no error in the order dated 16.04.2019 and dismissed the appeal in limine.
6. The defendant, at this stage of the proceedings, filed I.A. 10670/2019 seeking an extension of time by six weeks for making payment to the plaintiff in terms of the order dated 16.04.2019. That application was rejected by an order dated 07.08.2019. The Court noticed that the consequence of non-payment of the amount of Rs.20,00,000/- by the defendant to the plaintiff, within the time granted by the order dated 16.04.2019, was incorporated in the said order itself. It is recorded in the order dated 07.08.2019 that the defendant had admittedly not sought any extension of time for making the payment before the Division Bench, and that the Division Bench had also not recorded any such request having been made on behalf of the defendant. The Court noted that the application for review of the order dated 16.04.2019 was filed almost six weeks thereafter, and the appeal before the Division Bench was filed in July 2019, and was dismissed on the first day itself. In view of the peremptory order of the Court imposing a time limit for making the payment and stipulating the consequences of failure to do so, the defendant’s application was rejected and it was directed that decree be drawn in terms of the orders dated 16.04.2019 and 07.08.2019.
7. With matters standing thus, the defendant has filed the present application seeking to invoke Order XXXVII Rule 4 of the CPC and contending that special circumstances exist in the present case, by reason of which the orders dated 16.04.2019 and 07.08.2019 are liable to be recalled.
Order XXXVII Rule 4 of the Code of Civil Procedure, 1908
8. The text of Order XXXVII Rule 4 of the CPC is as follows:-
“4. Power to set aside decree – After decree the Court may, under special circumstances set aside the 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 thinks fit.”
9. Dr.Harish Uppal, learned counsel for the defendant, has argued the following special circumstances in support of this application:-
a. That the suit could not properly be regarded as a suit under Order XXXVII of the CPC, as evidenced by the order dated 01.05.2015, to which the plaintiff did not raise any objection. As noted above, the order dated 01.05.2015 directed issuance of summons in the suit, as if it were an ordinary suit and without adverting to the fact that it had been filed under Order XXXVII of the CPC.
b. The agreement between the parties dated 22.05.2011 contained an arbitration agreement in Clause 16 thereof, by reason of which the suit ought not to have been entertained.
c. In the written statement filed on 28.04.2015, the defendant had adverted to various payments made to the plaintiff, which would show that it had a strong defence to the suit.
d. Dr.Uppal submitted that the plaintiff had been subjected to an order of costs of Rs.25,000/-, in the event its written submissions were not filed within four weeks, and that the plaintiff did not pay the costs imposed. He therefore urged that, by virtue of Section 35B of the CPC, the plaintiff was not entitled to prosecute its suit without paying the costs imposed upon it.
e. The last circumstance urged is that Order XXXVII of the CPC does not permit a direction upon the defendant to pay any amount to the plaintiff as a condition for grant of leave to defend, and the defendant can only be directed to deposit the amount into Court. It is submitted that the orders mandating payment were outside the scope of the statutory provision.
10. Before dealing with the submissions aforesaid, it is necessary to bear in mind that the purpose of Order XXXVII of the CPC is to provide for expeditious disposal of suits by summary proceedings. The Supreme Court has so held inter alia in Neebha Kapoor vs. Jayantilal Khandwala & Ors., (2008) 3 SCC 770 (paragraph 12).
11. The proceedings in a suit under Order XXXVII of the CPC therefore follow a different procedure from an ordinary suit, and strict timelines are laid down. The consequences of the failure of the defendant to appear can however be reversed by the Court if "special circumstances" exist within the meaning of Order XXXVII Rule 4 of the CPC.
12. Order XXXVII Rule 4 of the CPC has been interpreted in the judgment of the Supreme Court in Rajni Kumar vs. Suresh Kumar Malhotra & Anr. (2003) 5 SCC 315. For the determination of whether special circumstances exist in the facts of a particular case, the Court has laid down as follows: -
“9. 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.”
13. In the said judgment, the Court has also elaborated upon the difference between Order XXXVII Rule 4 and Order IX Rule 13 of the CPC, which is applicable in an ordinary suit. For the purposes of the present application, it is sufficient to note that, in the case of Order XXXVII Rule 4, a defendant must not only show circumstances which prevented it from appearing or applying for leave to defend, but must also establish facts which would entitle it to defend the suit.
14. A judgment of the Bombay High Court, Indian Express Newspapers (Bombay) Ltd. vs. Shiv Kapooria & Ors. AIR 2003 Bom 496, emphasises that Order XXXVII Rule 4 of the CPC is intended principally to address factual circumstances which might have disabled the defendant from entering appearance or defending the suit. However, it cannot permit agitation of the same issues which could have been or were brought to the attention of the Court at the time the decree was passed. The Bombay High Court held as follows: -
“5. On a plain reading of Rule 4, it appears that the power is conferred on the Court to set aside the decree under special circumstances i.e. to say circumstances which are not ordinary and usual. The circumstance pleaded by the defendants is that this Court had no legal authority under Section 9A to decree the suit while the question of jurisdiction was pending consideration in the application for revocation of leave under clause 12. Firstly, this is a circumstance that existed before this Court passed a decree and though this circumstance is not considered by the Court in its judgment and decree, both the learned counsel admit that this issue was argued before the Court. The other circumstances that is referred to is the circumstance of the plaintiff having applied for an adjournment before the learned Chamber Judge on 7-1-2001 and then praying for a decree oil 14-1-2001. To my mind, it appear that both these circumstances are common and ordinary in the sense that they are usual grounds of law that are taken by parties in an appellate Court. It appears that when Parliament provides that the Court may set aside a decree under special circumstances, it had in mind, circumstances mainly factual in nature like the defendants being prevented from appearing in Court or in some way disabling from appearing in Court or presenting his case. In any case, it appears that Parliament intended that the circumstances should be circumstances not in existence when the Court passed the decree or if in existence, not brought to the notice of the Court when it passed the decree. Otherwise, any other interpretation, to my mind, would enable the defendants to turn the application for setting aside the decree into a review petition or even into a full-fledged appeal. Therefore, even if the term “special circumstances” is not to be construed restrictively, it cannot be construed so widely as to allow all sorts of pleas which could have been and have been, in fact, taken before the court which passed the decree, to be taken again in the same Court. I think that in such a situation, the defendants must file an appeal.”
15. Having considered the special circumstances urged on behalf of the defendant, in the context of the aforesaid judgments, I am of the view that it has failed to make out any ground for exercising the power conferred by Order XXXVII Rule 4 of the CPC. As set out below, each of the circumstances relied upon at this stage were known to the defendant at earlier stages of the suit. They were, or in any event, ought to have been, urged by the defendant then, and cannot be agitated afresh now. The “special circumstances” argued by Dr.Uppal, set out in paragraph 9 above, are dealt with serially below: -
a. Dr. Uppal is right in submitting that the summons issued in the suit by the order of this Court dated 29.01.2015 were in the nature of an ordinary suit. However, that order was modified by the order dated 01.05.2015, recording that the earlier order was inadvertently passed. The defendant was represented on 01.05.2015 and has accepted that order. The subsequent proceedings have been under Order XXXVII of the CPC, and the defendant has also participated at every stage in accordance with Order XXXVII of the CPC.
b. The defendant raised the issue of existence of an arbitration clause in its application under Order VII Rule 11 of the CPC. By an order dated 04.03.2016, while rejecting the contention in the context of that application, the Court specifically left it open to the defendant to invoke the arbitration agreement by making an application under Section 8 of the Arbitration & Conciliation Act, 1996. No such application was filed by the defendant at any stage of the suit and the order dated 04.03.2016 also remained unchallenged.
c. The defendant’s reliance upon its substantive defences, as laid out in the written statement and the documents filed therewith, is misconceived. An application under Order XXXVII Rule 4 of the CPC is necessarily predicated upon the defendant having been denied leave to defend the suit. The inadvertent error in the order dated 29.01.2015 as mentioned above, and the consequent filing of the written statement by the defendant, does not entitle it to rely upon the written statement. However, the defendant was given an opportunity to state its defences within the framework of Order XXXVII of the CPC itself, by means of an application for leave to defend. As stated above, that application was contested and was in fact allowed, albeit conditionally. The defendant’s attempts to seek review of the order and to challenge the order in appeal have both failed.
d. Dr. Uppal has relied upon the order dated 18.09.2017, which permitted the petitioner to file written submissions within a period of four weeks. It was also recorded that, in the event the written submissions were not filed within the stipulated time, the same would be taken on record, subject to payment of costs of Rs.25,000/-. Relying upon the subsequent order dated 13.12.2017, which recorded that the counsel for the plaintiff handed over the written submissions in Court on that date, Dr. Uppal submitted that the belated written submissions could not have been taken on record without payment of costs and the plaintiff could not have prosecuted the suit further, by virtue of Section 35B of the CPC. At the very outset, it may be noted that the order dated 13.12.2017 was passed in the presence of counsel for both parties, and the issue cannot be raised for the first time by invoking Section 35B of the CPC after the decree has been passed. Factually also, the submission is incorrect. The plaintiff, in fact, filed the written submissions on 13.10.2017 (within the stipulated time of four weeks), which was apparently returned under objection on 13.12.2017. In this context, the Court accepted the written submissions handed over in Court on 13.12.2017, and took them on record.
e. Dr. Uppal relied upon paragraph 17.6 of the judgment of the Supreme Court in IDBI Trusteeship Services Limited vs. Hubtown Limited, (2017) 1 SCC 568 to contend that even an admitted amount cannot be made over to the plaintiff as a condition for grant of leave to defend in an Order XXXVII suit. Without entering into the merits of the said contention, it is sufficient to note that t
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he order of the Court dated 16.04.2019 has been reiterated in review, and affirmed in appeal. The contention of the defendant on the merits of that order cannot be entertained by this Court at this stage. 16. After the dismissal of the defendant’s appeal against the order dated 16.04.2019, the defendant first moved an application under Section 151 of the CPC. It was stated that the order dated 16.04.2019 had not been complied with, in view of the filing of the appeal against the said order, after dismissal of the review petition on 31.05.2019. Consequently, an extension of time was sought. In the said application also, the defendant sought to urge substantive defences to the plaintiff’s claim. However, the application was rejected by the Court on 07.08.2019. 17. The present application, in the context of the facts noted above, is another attempt by the defendant to reagitate issues which it could have raised at earlier stages of proceedings, including when the application for leave to defend was heard. Significantly, the defendant was, in fact, granted leave to defend, but chose not to comply with the condition imposed by this Court. Its application for review, its appeal, and its application for condonation of delay have all been rejected. The defendant has not put forward any exceptional or extraordinary circumstances in the present case which would entitle it, under Order XXXVII Rule 4 of the CPC, to deprive the plaintiff of the fruits of the decree passed in its favour. In these circumstances, the Court must unequivocally reject the defendant’s invitation to revisit several orders passed in the course of proceedings, and to recall the orders dated 16.04.2019 and 07.08.2019. Conclusion 18. For the reasons aforesaid, the application is entirely without merit, and is dismissed.