Bombay High Court
Sudarshan Vishwanath Malpani And ... vs Vinod Kumar Saboo on 23 August, 2023
Bench: Amit Borkar
2023:BHC-AS:24022
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AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.12812 OF 2017
Sudarshan Vishwanath Malpani & Anr. ... Petitioners
V/s.
Vinod Kumar Saboo ... Respondent
Mr. Kishore D. Shah for the petitioners.
Mr. Yashpal Jain with Ms. Jessica Dharmadhikari for
the respondent.
CORAM : AMIT BORKAR, J.
DATED : AUGUST 23, 2023
P.C.:
1. The challenge in this writ petition in exercise of powers
under Article 227 of the Constitution of India is to the order dated
9 October 2017 dismissing Notice of Motion No.1756 of 2017 to
refer parties to arbitration under Section 8 of the Arbitration and
Conciliation Act, 1996 and for dismissal of the suit.
2. Facts giving rise to the filing of the present writ petition are
as under.
The petitioners filed Summary Suit No.6977 of 2003 seeking
enforcement of settlement allegedly arrived at between the parties,
wherein the respondent promised to pay Rs.42,50,000/- to the
petitioners, and on such payment the petitioners would retire from
the suit firm. On 4 August 2003 the petitioners filed Summons for
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Judgment. On 16 August 2005 this Court granted conditional
leave to the respondent on deposit of Rs.40 lakh. The respondent
challenged the order of grant of conditional leave by way of
Appeal No.972 of 2005. Due to enhancement of pecuniary
jurisdiction, suit was transferred to the City Civil Court. During
pendency of appeal, City Civil Court on 28 October 2014 passed ex
parte decree against the respondent. On 3 April 2017, the
Appellate Court allowed the appeal granting unconditional leave
to the respondent. The operative part of the Appellate Court reads
thus:
"a) Appeal is allowed.
b) Impugned order dated 16 August 2005, is quashed and
set aside to the extent of direction to deposit an amount of
Rs.40 lakhs within a period of four weeks.
c) Appellant is entitled for unconditional leave to defend
the Suit.
d) The Appellant-Original Defendant, if required, to file
written statement within thirty days from the receipt of copy
of this order. Affidavit, list of documents to be filed within
four weeks, thereafter. Inspection be made within four
weeks, thereafter.
e) The Suit, if pending, be placed on the board of learned
Judge, who is taking the commercial causes suits, as the
same is transferred to the list of commercial causes.
f) In view of disposal of the Appeal itself nothing survives
in the Notice of Motion and the same is also disposed of."
3. The respondent, therefore, filed Notice of Motion under
Section 8 of the Arbitration and Conciliation Act, 1996. The City
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Civil Court, while refusing to accept request to refer the parties to
arbitration under Section 8, passed an order of setting aside ex
parte decree dated 28 October 2014 and restored the suit. The
Trial Court directed the defendant to file written statement before
next date. Said order of the Trial Court has been challenged by the
petitioners in this writ petition.
4. According to the learned advocate for the petitioners, in the
absence of specific application either under Order 37 Rule 4 or
under Order 9 Rule 13 of the Code of Civil Procedure, 1908, ex
parte decree dated 28 October 2014 could not have been set aside.
5. Per contra, learned advocate for the respondent invited my
attention to the operative part of the order passed by the Appellate
Court to submit that the final relief as contemplated under Order
37 Rule 4 of the Code of Civil Procedure, 1908 granting leave to
defendant to appear to summons and to defend the suit has
already been granted by the Appellate Court. Therefore, applying
under Order 37 Rule 4 was not necessary. He submitted that the
foundation of passing of decree having been extinguished,
consequential order of passing of decree has no force. In support of
his submissions, he relied on the following judgments:
a) Siri Krishan Bharadwaj v. Manohar Lal Gupta &
Anr. reported in ILR (1977) II Delhi 438;
b) Vareed Jacob v. Sosamma Geevarghese & Ors.
Reported in (2004) 6 SCC 378;
c) Emkay Exports, Mumbai & Anr. v. Madhusudan
Shrikrishna reported in 2008 (4) Mh.L.J. 843; and
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d) Lucky Electrical Stores v. Ramesh Steel House
reported in 1988-I-L-W-574.
6. Having heard learned advocates for the parties and after
perusing the material on record, to decide the controversy between
the parties, it is necessary to refer to Order 37 Rule 4 of the Code
of Civil Procedure, 1908 as under:
"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."
7. On consideration of documents on record, it appears that the
Appellate Court has granted unconditional leave to defend to the
defendant. The Appellate Court further granted permission to the
defendant to file written statement, affidavit and list of documents.
On reading of Order 37 Rule 4, the Court while exercising power
under Order 37 Rule 4 CPC after setting aside decree is conferred
with the power to grant leave to the defendant to appear to
summons and to defend the suit. Such exercise which the Court
while exercising power under Order 37 Rule 4 was required to
exercise has already been done by the Appellate Court in an appeal
arising out order granting conditional leave to the defendant.
Therefore, in my opinion, the fact of granting unconditional leave
to defend and permission to file written statement is deemed to be
an exercise of power under Order 37 Rule 4 of the Code of Civil
Procedure, 1908.
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8. Moreover, as rightly pointed out by the learned advocate for
the defendant relying on the judgment of the High Court of
Madras in Lucky Electrical Stores (supra) as under:
"8. In Sri Krishna Bharadwaj's case (AIR 1977 Delhi 226),
a Division Bench of the Delhi High Court has held that the
effect of refusal of leave to appear and defend is that
statutorily, the allegation in the plaint have to be treated as
admitted and a decree has to follow. In such a case, the
decree is consequential on the earlier order refusing to grant
leave and if the earlier order is set aside the latter order must
also fail. In paragraph 15 of the judgment, Prakash Narain, J.
(as he then was) with whom Pritam Singh Safeer, J. agreed,
has observed as follows--
"When leave is refused to the defendant to appear and
defend the suit under O.37, C.P.C. the effect of the
refusal of leave to appear and defend is that the
allegations in the plaint by a deeming provision stand
admitted. The allegations in the plaint being admitted,
a decree has to follow. This means that the decree
followed as a consequence of the earlier order of
refusal to grant leave to appear and defend. In my
opinion, when a subsequent order, even if it be a
decree, is a consequential order to an earlier order and
the earlier order is set aside the latter order also falls
and directions to that effect have to be given."
9. It is well settled that when the foundation of an order is
taken away, consequential order would have no legal force.
10. Moreover, the order passed by the Trial Court sub-serves
interest of justice. By passing the impugned order, the Trial Court
has done substantial justice. Therefore, no interference under
Article 227 of the Constitution of India is called for.
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11. The writ petition accordingly stands dismissed. No costs.
(AMIT BORKAR, J.)
