Fabcon Consultants & Engineers ... vs Ganesh Benzoplast Ltd
2021 Latest Caselaw 1526 Bom

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        IN THE HIGH COURT OF JUDICATURE AT BOMBAY
            ORDINARY ORIGINAL CIVIL JURISDICTION
             INTERIM APPLICATION NO. 38 OF 2020
                                 IN
                       SUIT NO. 4731 OF 1998
Ganesh Benzoplast Ltd.              .. Applicant/Original Defendant
In the matter between :
Fabcon Consultants & Engineers Pvt. Ltd.       .. Plaintiff
     Vs.
Ganesh Benzoplast Ltd.                         .. Defendant

Mr. Deepak Thakare a/w. Mr. Kuldip T. Pawar for applicant-original
defendant.
Ms. Sunanda Kumbhat a/w. Ms. Ankita Manjrekar for plaintiff.
                     CORAM : N.J. JAMADAR, J.

                     DATE    : 22nd JANUARY 2021
P.C.

1. The defendant has preferred this application to set aside the

order dated 26th October 2018, whereby the suit was directed to be

transferred to the list of undefended suits on account of the default on

the part of the defendant to file the written statement with a prayer

for condonation of delay in seeking setting aside of the said order.

2. The substance of the application is that though the suit was

instituted by the plaintiff in the year 1998, yet the plaintiff has not

prosecuted the suit till the month of November 2014. In the

meanwhile, the defendant, against whom the plaintiff had sought a

decree in the sum of Rs. 1,10,42,683.42, was declared a sick company

and proceedings were initiated before the Board for Industrial and

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Financial Reconstruction (BIFR). The proceedings before the BIFR

culminated in passing of an order by the Delhi High Court in Writ

Petition (C) No. 9320/2015, at the instance of the defendant, and

ultimately the Rehabilitation Scheme came to be approved by BIFR on

30th December 2015. In the intervening period, the defendant could

not file the written statement on account of certain circumstances

which were beyond the control of the defendant. The relevant

documents were lost in the floods in the month of July 2005. The

learned advocate of the defendant Mr.Jayendra D. Khairnar was

suffering from renal ailments and, therefore, the defendant could not

file the written statement.

3. The defendant has a strong defence on merit. In fact, the

defendant has made an excess payment to the tune of Rs.50,61,133/-.

The order transferring the suit to the list of undefended suit would,

thus, cause serious prejudice to the defendant. Hence, the said order

be set aside and the defendant be granted permission to file written

statement by condoning the delay.

4. The application is resisted by the plaintiff by filing an affidavit

in reply. The averments in the application are stated to be false and

misleading. The plaintiff asserts that there is inordinate delay of about

21 years in filing the written statement as the summons was served

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on the defendant on 8th December 1998. The claim of the defendant

that there is a delay of only 432 days is thus patently incorrect. The

reasons assigned in the application seeking condonation of delay and

permission to file the written statement are not genuine and bonafide.

There is no explanation much less justifiable one to permit the

defendant to file the written statement after lapse of 21 years of the

service of the writ of summons. On these, amongst the other grounds,

the plaintiff has prayed for rejection of the application.

5. I have heard Shri Thakare, the learned counsel for the

applicant-defendant and the Smt. Sundanda Kumbhat, the learned

counsel of the plaintiff at some length.

6. The learned counsel for the applicant submitted that the

defendant was prevented by a genuine cause from filing the written

statement as the defendant-company was declared a sick company and

proceedings for its rehabilitation were pending before the BIFR, for

has a considerable period. Inviting attention of the court to the order

passed by this Court on 17 th June 2014, whereby notice was issued to

the plaintiff, on the pain of dismissal of the suit for want of

prosecution, and the order dated 19 th November 2014, whereby after

noting the pendency of proceeding before BIFR, the suit was

adjourned sine-die, it was submitted that the plaintiff was not

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prosecuting the suit diligently and the defendant could not have filed

the written statement in the intervening period.

7. In opposition to this, the learned counsel for the plaintiff laid

emphasis on the fact that the writ of summons was duly served on

the defendant on 8th December 1998. However, the defendant has not

approached the court with clean hands acknowledging the fact of

service of writ of summons. Instead, disingenuous effort is made to

demonstrate that the plaintiff was not diligently prosecuting the suit.

In any event, the reasons ascribed in the application for condonation

of delay and permission to file the written statement are neither

genuine nor satisfactory. Therefore, the application be rejected.

8. In order to bolster up this submission, the learned counsel for

the plaintiff placed a strong reliance on the judgment of the Supreme

Court in the case of Atcom Technologies Limited Vs. Y.A. Chunawala

and Company and Ors. 1, wherein, in the context of the amended

Rule 1 of Order VIII of the Code of Civil Procedure, 1908 ('the

Code'), it was enunciated that though the provisions of Rule 1 are

procedural in nature and, therefore, handmaid of justice; that would

not mean that the defendant has right to take as much time as he

wants in filing the written statement, without giving convincing and

1 2018 (6) SCC 639

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cogent reasons for delay and the High Court has to condone it

mechanically.

9. As indicated above, on 19th November 2014, on the strength of

the submission on behalf of the defendant, the suit was adjourned

sine-die. The order dated 4th December 2015 passed by Delhi High

Court in Writ Petition (C) No. 9320/2015 reveals that the Scheme

annexed to the report of BIFR was sanctioned. The letter dated 8 th

January 2016 conveying the approval to the Scheme reveals that

reference under section 15(1) of the Sick Industrial Companies (Special

Provisions) Act, 1985 (SICA) was made on the basis of an audited

balance-sheet for the year ending 31 st March 2008 and was registered

as Case No. 42 of 2009. The scheme came to be ultimately sanctioned

on 8th January 2016.

10. In view of the provisions contained in section 22 of SICA, no

suit for the recovery of money against the sick company shall lie or

be proceeded with further, except with the consent of the Board or

the Appellate Authority. Any decree passed in the face of embargo

created by section 22 of SICA for continuation of the proceedings is a

nullity. A useful reference in this context can be made to the

judgment of Supreme Court in the case of Managing Director,

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Bhoruka Textiles Limited Vs. Kashmiri Rice Industries 2.

11. Thus, from the date of the reference under section 15 of SICA

which appears to have been made in the year 2009, till the sanction

of the Scheme, in the least, the instant suit could not have been

proceeded with. It is true that the defendant has not placed an

accurate detail of the commencement and conclusion of the

proceedings before the BIFR. However, the fact remains that the

proceedings were pending before the BIFR from the year 2009 and the

Scheme came to be sanctioned in the year 2016 itself.

12. There is substance in the submission on behalf of the plaintiff

that the writ of summons was served on the defendant on 8 th

December 1998. However, the further submission that the written

statement ought to have been filed within the period stipulated by

amended Rule 1 of Order VIII of the Code, and upon failure, the

defendant has forfeited the right to file the written statement does not

merit acceptance. The stipulation of time contained in Rule 1 of Order

VIII for filing written statement does not apply with equal rigor to the

suits instituted on the Original Side of the Chartered High Court. This

position is made clear by the judgment of the Supreme Court in the

case of Iridium India Telecom Ltd. Vs. Motorola INC The suits 2 (2009) 7 SCC 521 3 (2005) 2 SCC 145

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before the Chartered High Court are governed by the rules framed

under section 129 of the Code.

13. The situation which thus obtains is that in view of the

declaration of the defendant as a sick company, there was, in a sense,

a moratorium against proceeding with the instant suit. The defendant

has ascribed certain reasons for not filing the written statement

including the loss of the documents in the floods in the year 2005 and

the illness of the learned counsel, who happened to represent the

defendant at the relevant time. The reasons cannot be said to be

wholly unjustifiable. Indeed, the reasons may not account for each

days delay. However, the courts lean in favour of adjudication on

merit, after providing an effective opportunity of hearing to the

parties, so as to advance the cause of substantive justice. In the

totality of the circumstances, in my view, it would be expedient in

the interest of justice to provide an opportunity to the defendant to

defend the suit by filing written statement. The aspect of delay and

inconvenience caused to the plaintiff can be taken care of by imposing

costs.

14. Hence, the following order :

O R D E R

(i) The interim application stands allowed.

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(ii) The delay in seeking setting aside the order dated

26th October 2018 stands condoned.

(iii) The order dated 26th October 2018 transferring the

suit to the list of undefended suits stands set aside.

(iv) Permission is granted to the defendant to file the

written statement in the registry, subject to payment of

costs of Rs.20,000/- to the plaintiff, within a period of

one week from today.

(v) The interim application stands disposed of. Digitally signed by Shraddha Shraddha K. Talekar The suit be listed on 5th February 2021.

K.

Date:

Talekar 2021.01.25 19:02:05 +0530

[ N.J. JAMADAR, J. ]

Shraddha Talekar PS