w w w . L a w y e r S e r v i c e s . i n

Pleasant Securities And Finance Limited v/s Nri Financial Services Limited

    Interim Application Appeal No. 8764 of 1999

    Decided On, 16 February 2000

    At, High Court of Delhi


    For the Appearing Parties: Sandip Sharma, U.L. Vatvani, Advocates.

Judgment Text


(1) THIS is an application filed on behalf of the Plaintiff under Order XXXVII Rule 3 (3) and (7) read with Section 151 Civil Procedure Code and Section 5 of the Limitation Act. The applicant has prayed for the condonation of the delay in entering appearance and for being permitted to participate in the proceedings under Order XXXVII of the Civil Procedure Code.

(2) IT is necessary to mention some facts of the case. Attempts to serve the Defendants were made from after several attempts, an application was filed on behalf of the Plaintiff under Order V Rule 20 of the Code of Civil Procedure and on 24. 2. 1999 the Joint Registrar ordered that the Defendant be served with summons in the prescribed from under Order XXXVII of the Code of Civil Procedure by publication in the Statement as well as by effixation at their last known address and at the Notice Board of the Court returnable for 5. 7. 1999. On a report received from the Registry, that service has been affected, as contemplated by the orders of the Joint Registrar, the case was placed before the Court on July 15,1999. As there was no appearance on behalf of the Defendant, I had heard arguments on the suit and reserved orders on 15. 7. 1999. while the case was at this stage, an application, I. A. 7127/99 was Filed by the Defendant, which, at the threshold, appeared not to be maintainable in view of the decision of the Supreme Court in Arjun Singh Vs. Mohindra Kumar, AIR 1964 SC 993. On 6. 8. 1999, learned counsel for the Defendant withdrew the application. The case was, therefore, restored to the stage at which it was prior to the moving of this application viz. to await the passing of orders. On a perusal of the matter, however, I had some doubt on the maintainability of the suit. under the summary Procedure, and for this reason had listed it on 17. 8. 1999. It was at that stage that the present application was filed. Learned counsel for the applicant/defendant had submitted that since the case was now no reserved for orders/judgment, the application did not fall within the prescription contained in Arjun Singh's case (supra) and was therefore maintainable. This is how this application has come us for hearing.

(3) LEARNED counsel for the Defendant/applicant has reaffirmed and reiterated the contents thereof in the course of arguments. It has firstly been explained that Mr. M. S. Vinaik, Advocate had been contesting a winding up petition on behalf of the Defendant in the course of which he had come to learn of the pendency of the present proceedings. He had conveyed this information to the wife of Shri I. D. Kansal, Director of the Defendant's company who, on arrival in Delhi on 25. 7. 1999 filed the application which was subsequently withdrawn. It is then stated that in view of section 442 of the Companies Act, due to the prior pendency of the winding up petition, the present suit is liable to be stayed. In the course of the hearing on 1. 9. 1999, counsel for the Defendant learnt for the first time that the suit was under Order XXXVII of the Civil Procedure Code and thereupon the present application was filed, it has been averred that the Defendant has not been served in accordance with law; that the Plaintiffs did not attempt to serve the Defendants through registered A. D. post at all at the known addresses The averment of the illegality of the method service is that the Plaintiff was aware of the Defence Colour address of the Defendant but made no attempt to serve him there. Interesting, as is borne out from the service report, the only effort to serve the Defendants was at the address where they were either no found, or the premises were found locked. It is further submitted that in order to comply with the provisions of the law, if service by publication was to be effective, it was not sufficient to public only the summons but also the plaint and documents filed alongwith it.

(4) LEARNED counsel for the Plaintiff has submitted that the Defendants were fully aware of the pendency of the proceedings and were watching them. the applications have been filed only when the Defendant apprehended that adverse order would he passed against him. Learned counsel' also relied on the judgment rendered Memom Aba Isa Haji Adhreman Dharar Vs. Menon Mamad Hazi Suleman Chamadia and another AIR 1955 Saurashtra 28, However, this case is of no assistance since it deals with the provisions of Order 5 Rule 20 of the. Code of Civil Procedure and opines only on the legal efficacy of service on the Defendant under those provisions. The question of compliance with the provisions of Order XXXVII did not arise in that case and therefore did not engage the attention of the learned Judges. He also relied on Commissioner of Income Tax Vs. Daulat Ram Khanna AIR 1967 SC 1152 but this decision also has not been rendered in the context of summary proceedings under Order XXXVII. Thereafter the learned counsel relied on Smt. Ram Pyari Devi Vs. find Additional Distt. Judge Azamgarh and others, AIR 1989 Allahabad 93 which also death with an ordinary suit. Reliance was then placed on a decision of the Division Bench of this Court in Food Corporation of India. Vs. Balkrishan Garg21 (1982) DLT 167. However, fail to appreciate the relevance of this case in the context of the contentions raised in the present application. Paragraph 13 of this judgment is relevant, but the proposition advanced on behalf of the Plaintiff runs counter, to this observation and hence would have to be rejected. The relevant portion is as under:

(5) THE rule to obtain leave within 20 days laid down in Chapter XV relating to summary suits of the original side Rules does prescribe some sort of a period of Limitation, as Article 118 of the Limitation Act does in respect of applications for leave to appear and defend a suit under summary procedure which Article appears redundant insofar as it may relate to Order 37 Civil Procedure Code or the said Chapter XV. They lay down their own time schedule of procedure and do not depend upon the Limitation Act. But the necessary consequence is not that such an application must be rejected under Section 3 of the Limitation Act because Order 37 Civil Procedure Code. , or for that matter Chapter XV itself indicates the consequences of failure to apply within the time specified therein. Such consequence are that the Plaintiff shall be entitled to a decree upon the allegations made in the plaint. But until such a decree is passed, there is nothing to prevent the defendant to appear and explain the circumstances why he failed to apply for. leave to appear and defend within 20 days from the service of the notice and why should, he be allowed to do so now. Sub-rule (7) of Rule 3 of Order 37 Civil Procedure Code has placed this position beyond any controversy. Indeed, it appears incongruous and extreme a position to adopt to hold that after the aforesaid failure to obtain leave within 20 days, a decree must be deemed to have been passed. and then the defendant be required to move an application under Rule 8 of the said Rules to have it set aside. We are of the view that as long as a decree is not passed in accordance with Chapter XV of the Original Side Rules, the defendant may be permitted for sufficient cause to make an application for leave to defend, specially when, as in this case, the court had fixed 30. 1. 1980 for hearing in the summons. This was so held S. Srinivasan and another Vs. C. Bhakthavatsalu, -Naida, AIR 1953 Mad. 909. the Calcutta High Court in Pench Velly (supra) was of the view that if the defendant is allowed to make an application under Section 34 of the Act even after 20 days/then it will defeat the provisions of Order 37. We are and maybe permitted to say so with respect, not in agreement with that approach. The proper way of looking at the matter is that the special law of arbitration should be allowed to prevail over the general law. If the procedure under Order 37 Chapter XV of the Original Side Rules is allowed toprevail and the Period of 20 days is held to operate as the period of limitation for making a stay application under Section 34 of the Act then, the defendant will not at all be able to make such an application unless he has obtained leave to appear and defend, because it is only upon such leave being given that a defendadant is entitled to be heard in the matter. And if he makes an application to obtain leave to appear and defend, then it will amount to taking a step in the proceedings and he will be precluded from making an application under Section 34 of the Act. Authority for such as view is available Jadavji Jarsidas Shah and Co. Vs. Hirachand Chaturbhai, AIR 1954 Bombay 174. We , therefore, hold that it is not necessary that an application for stay under Section 34 of the Act can be made only within the time prescribed in Chapter XV of the Original Side Rules or Order 37 Civil Procedure Code and shall be rejected if not made in time. Such an application can be made as long as a decree has not been passed and before nay application has been made indicated that the defendant wants his rights to be determined by the civil and not by the domestic forum of choice.

(6) LEARNED counsel for the Plaintiff also relied on Vijaya Home Loans Ltd. Vs. M/s Crown Traders Ltd. and another AIR 1998 Delhi 183 in which a learned single Judge had observed that on the failure of the Defendants to enter appearance within the prescribed period the allegation in the plaint shall be deemed to be admitted and the Plaintiff would be entitled to a decree for the suit amount with interest. This decision was rendered ex parte. I am in respectful agreement with the proposal contained therein. It was in consonance with these observations that I had earlier proceeded to hear arguments and reserved orders because of the failure of the Defendant to enter appearance. This case, as also the other cases mentioned above do not support the proposition of the Defendant/applicant that the publication, as carried out in" the present case, was not sufficient compliance with Order XXXVII.

(7) IN (Lala) Gopal DOS v. (Lala) Chander Prakash-AIR 1966 Jandk 138, a Division Bench had observed that in suits under Order XXXVII of the Civil Procedure Code the defendant cannot appear or defend the suit as a matter of right but has to obtain the permission of the Court within a specified period of time. Therefore, the provisions have to be construed strictly, giving every benefit of doubt to the defendant. Since it was a common ground in that case that no summons were ever served on the defendant it was held that the starting point of limitation did not reach at all. Learned counsel for the Applicant/defendant has cited the case of Narinder Kumar v. Smt. Veena Dhinra, 1989 (2) Delhi Lawyer 246, which is a decision rendered in the context under Order XXXVII itself. In that case the Defendant was ordered to be served by affixation and the Court was satisfied that this was effected on the Defendant by pasting. The suit was subsequently decreed, ex-parte. The decree was set aside by the learned Judge on the grounds that the service was not effected strictly in accordance with the provisions of Order XXXVII Rule 3 Civil Procedure Code. This was substantially on the ground that the service was not effected strictly in accordance with the provisions of Order XXXVII Rule 3 Civil Procedure Code. This was substantially on the ground that there was nothing to suggest in the various summons issued that a copy of the plaint and accompanying documents which were the basis of the suit were ever provided to the Defendant while serving it with the summons by means of affixation. This decision was rendered on a plain reading of Order XXXVII Rule 3 (1) which is reproduced below:

"procedure for the appearance of defendant' (l) 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 times 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 on notices on him. I am in respectful agreement with the above decision.

(8) LEARNED counsel for the Defendant has also relied on Punjab and Sind Bank v. Ramji Das Khanna and Anr, AIR 1984 Delhi 175 in which it was held. that where a process server without making any efforts to find the defendants out, has affixed only a copy of summons without affixing the copy of plaint and annexures thereto on the. outer door of houses of defendants, and has not made any effort to find out if any adult male member of the family is residing with the Defendant, the service of summons under Order XXXVII was insufficient. The decree was set aside. Learned counsel has also sought support of his contention from a decision in M/s Durant Refrigeration Pvt. Ltd. v. Northern Radio and Refrigeration Co. (P) Ltd. and Anr. 48 (1992) Delhi Law Times 680 which was also a case under Order XXXVII. It was observed by the learned single Judge that compliance with Rule 8 of Chapter 7-B, Volume IV of the High Court. Rules was essential. In that case a copy of the newspaper in which publication was carried out had not been sent to the party concerned under Certificate of posting. This was treated as fatal. Rule 8 of Chapter 7-B, Volume IV reads as under:

"in sending a judicial notice for publication in a newspaper, the Court should, in the covering letter, require the manager of the newspaper to send under postal certificate, the copy of the paper containing the notice to the party for whose perusal it is intended at the address given in the notice, marking the notice in question with red ink, he should also be required, as proof of compliance with this order, to attach the postal certificate to his bill when submitting the latter to the Court for payment. "

(9) APPLYING the ratio of these decisions to the facts that have unfolded in the prevent case, it appears to me that the inescapable conclusion is to hold that service was not correctly and legally effected. However, if the plaint as well as the documents relied upon are to be published in the newspaper, it would lead to forcing the Plaintiff to bear astronomical costs in the context of a situation where the Defendant is keeping away and avoiding 'service. It is disturbing to the judicial conscience to allow a premium and advantage to be given to such a party and to impose a overwhelming burden on the Plaintiff. The answer lies in the assuaging effect of imposition of costs at the appropriate and first available occasion in the suit. This monetary retribution may not be inopportune in a number of cases where the Plaintiff would be unable to bear such expenses. These competing interests need to be balanced. Rigours of Rule 3 of Order XXXVII, inasmuch as it requires the service of a copy of the plaint as well as documents relied on requires reconsideration by the Legislature, or by the Court if the vires of this Section are challenged.

(10) RETURNING to the facts of the present case it appears that efforts to serve the Defendant were initially made at addresses where the Defendant was not available. There is substance in the contention of the learned counsel for the Defendant that the address of Ishwar Dass Kansal was available with the Plaintiff since an affidavit of this person had been filed in the company court. A copy of this affidavit has been furnished in these proceedin

Please Login To View The Full Judgment!

gs. No attempt to serve the Defendant or this person at A10, Defence Colony, New Delhi was taken. Every so often a party attempts to effect service on the opposite side, Dasti, without resorting to the ordinary process as well as service through registered A. D. post. In all such cases, where only Dasti service is sought to be relied on, the situation is pregnant with uncertainty. In the present case service at the Scindia House address as well as the Skipper Bhawan address was unsuccessful. I am not satisfied that sufficient efforts were made by the Plaintiff to serve the Defendants through the ordinary process and procedure. Since the provisions of Order XXXVII Rule 3 (1) were not strictly complied with, service by publication cannot be treated as legally binding. (11) LEARNED counsel for the Plaintiff has cited as number of judgments which I find are of no relevance to the point at issue. I would have been loath and reluctant to condone the delay in taking necessary steps in all cases where the Plaintiff has been constrained to effect service on the Defendant through publication. The delay and the expense is undoubtedly a needless and avoidable harassment wherever the provisions of Order V Rule 20 are resorter to since the Court, even at that stage, is convinced that the Defendant is avoiding service. I would, therefore, have imposed exemplary costs on the Defendants but since the Plaintiff has not diligently and properly attempted to serve the Defendants at the stage prior to the passing of the publication orders I am desisting from doing so. The application is, therefore, allowed and the delay in entering appearance is condoned. The Plaintiff will now take further steps as envisaged under Order XXXVII.