The Supreme Court in a bench comprising Justice K.M. Joseph and Justice Hrishikesh Roy clarified that it was possible to submit both an application for security and a request to set aside a decree concurrently, under Section 17 of the Provincial Small Cause Courts Act, 1887. Alternatively, litigants have the option to secure the execution of the Decree by filing a distinct application for providing security.
Brief Facts of the Case:
The appellants were subjected to an ex-parte decree by Respondents No. 1 to 4, which entailed eviction and recovery of outstanding rent, taxes, damages, and other dues. The appellants submitted an application invoking Order IX Rule 13 and Section 151 of the Code of Civil Procedure (hereinafter referred to as 'CPC') asserting their awareness of the decree's execution proceedings on April 5, 2014. The application was labelled as 4C. On the same day, an additional application was filed under Section 17 of the Provincial Small Cause Courts Act, 1887 (hereinafter referred to as the'Act, 1887').
Brief Background of the Case:
The appellants faced an ex-parte decree obtained by Respondents No. 1 to 4, which encompassed eviction and the recovery of rent arrears, taxes, damages, and other dues. This decree was issued on October 18, 2012. On May 6, 2014, the appellants filed an application under Order IX Rule 13 and Section 151 of the Code of Civil Procedure (hereinafter referred to as 'CPC'), claiming their knowledge of the decree's execution proceedings on April 5, 2014. On the same day, another application was submitted under Section 17 of the Provincial Small Cause Courts Act of 1887 (hereinafter referred to as the 'Act, 1887'). Later, on May 12, 2014, an application was filed requesting the inclusion of security in the form of a rental shop owned by Nagar Nigam. This application, numbered 14C, was allowed or admitted on May 24, 2014, which became a point of contention. The surety provided was by Abhishek Dixit, the 7th proforma respondent in this appeal. However, on September 23, 2015, the Trial Court dismissed Application 8C filed under Section 17 of the Act. The appellants challenged this order by filing a revision before the High Court, and the order was passed on December 3, 2015.
Procedural History:
The Trial Court recognised that the appellants had submitted the application under Section 17 of the Act, 1887 at the time of presenting the application under Order IX Rule 13 of the CPC. Although Application 8C had been dismissed in light of Application No. 14C. Therefore, the application under Order IX Rule 13 (4C) was allowed, with the appellants being directed to pay costs. This order was subsequently challenged before the Additional District Judge (hereinafter referred to as “ADJ”). Based on the order, passed by the ADJ, the Trial Court, rejected the application under Section 17. The appellants then filed a Writ Petition before the High Court, challenging the order passed by the Trial Court, and the order passed by the ADJ. Additionally, they challenged the order passed by the ADJ in the Execution Case, which ordered their eviction. The High Court dismissed the appeal.
Contentions of the Appellants:
The appellants had submitted two applications, one under Order IX Rule 13 of the CPC and another under Section 17 of the Act, in the past. The Application for accepting the security had been approved, and the prayer in Application 14C had been recorded as 'taken on records'.
According to the appellant's contentions, the Trial Court had declared the security as 'inappropriate' after a delay of two years. They argued that the Trial Court was supposed to provide directions regarding the sufficiency of the security within the specified timeframe. If the Trial Court had issued such an order and questioned the sufficiency of the security, the appellants would not have been able to provide alternative security or cash without the Court's approval.
The appellants further contended that the ADJ had made an error by disregarding the High Court's order in the hierarchical system. They emphasized the importance of considering the merits of the case, including the challenge made before the High Court regarding the ADJ's order in the writ petition.
Contentions of the Respondents:
The respondents contended that the requirements under Section 17 were mandatory. They argued that the security had not been filed claimed by the appellants. As a result, the mandatory condition in the proviso to Section 17(1) had not been fulfilled. The Court should have issued an Order regarding the Application under Section 17 (8C) specifying the nature of the security required for the fulfilment of the Decree. The respondents questioned why the appellants did not pursue the Application under Section 17 and instead filed another application for security.
The respondents argued that the Court's failure to pass an order on the Application under Section 17 did not entitle the appellants to claim prejudice, as the appellants were presumed to be aware, based on Section 17(2) of the Act, that the security must be enforceable in law. The security provided, which was a shop room belonging to the Municipal Corporation and not the surety, was deemed unenforceable. Additionally, the period of limitation for providing security had expired.
Furthermore, the respondents asserted that while an Application under Section 17 could be filed along with an application under Order IX Rule 13, the security should be filed simultaneously. Failing to do so would hinder the Court's ability to determine whether the security provided complied with Section 17(2) of the Act. Even if it were assumed that security could be furnished subsequently, the subsequently provided security was still not enforceable in law. The respondents pointed out that the rejection of the Application under Order IX Rule 13 was not due to the non-furnishing of security but because the security provided (Application 14C), was deemed invalid.
Observations of the Court:
The Supreme Court reiterated that when a Court of Small Causes passed an ex-parte Decree, the applicant who wanted to set aside the Decree had certain obligations. Firstly, they were required to deposit the amount due under the Decree with the Court. Alternatively, they could provide security for the performance of the Decree by making a separate application. The interpretation of the law stated that the application for security could be made along with the application to set aside the Decree. The key question was whether the appellants complied with the requirements of Section 17 of the Act, 1887. The High Court's observation that the appellants did not apply for dispensing with surety was incorrect. The proviso to Section 17 allows the applicant to seek a dispensation of the deposit and request to furnish security as directed by the Court.
In this case, the appellants filed both applications on the same day, seeking permission to furnish security. Although no orders were passed on the Section 17 application, the appellants furnished security on their own. However, the security provided in the form of a rented shop was deemed unacceptable by the courts as it could not be sold for enforcing the surety.
While no order was passed on Section 17 of the Act, 1887 application on the filing date, the appellants provided security on their own. The High Court held that the security was not acceptable because it was not furnished along with the application under Order IX Rule 13 and because it did not comply with the law.
The decision of the Court:
Therefore, the Supreme Court dismissed the appeal.
Case Title: Arti Dixit & Anr Vs. Sushil Kumar Mishra & Ors
Case No.: Civil Appeal No. 3858 of 2023
Citation: 2023 Latest Caselaw 502 SC
Coram: Hon'ble Mr. Justice K.M. Joseph and Hon'ble Mr. Justice Hrishikesh Roy
Advocates for Petitioner: Mr. Haraprasad Sahu, Adv., Mr. Pramod Kr. Yadav, Adv. and Mr. Pranaya Kumar Mohapatra, AOR
Advocates for Respondent: Mr. Pradeep Kumar Yadav, Adv., Mr. Vishal Thakre, Adv., Mr. Gopal Singh, Adv. and Mr. Sanjeev Malhotra, AOR
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