Bombay High Court
National Commodity Clearing Ltd. ... vs Dita Comtrade Ltd on 23 April, 2025
Author: Abhay Ahuja
Bench: Abhay Ahuja
2025:BHC-OS:7033
23-COMSS-32-2020.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL SUMMARY SUIT NO. 32 OF 2020
NATIONAL COMMODITY CLEARING LTD.(NCCL) )...PLAINTIFF
V/s.
DITA COMTRADE LIMITED )...DEFENDANT
Mr.Kevic Setalvad, Senior Advocate a/w. Mr.Jehaan Lalkaka, Ms.Shirley
Mody i/by K. Ashar & Co., Advocate for the Plaintiff.
Mr.Pesi Modi a/w. Ms.Kalpana Desai i/by Mr.Prakash Shah, Advocate
for the Defendant.
CORAM : ABHAY AHUJA, J.
DATE : 23rd APRIL 2025
ORAL JUDGMENT :
1. Pursuant to order dated 2nd April 2025, today when the matter is
called out, Mr.Setalvad, learned Senior Counsel appearing for the
Plaintiff, has tendered across the bar Non-deposit Certificate dated 9 th
April 2025 submitting that as directed by this Court by order dated 2 nd
April 2025, application had been made to the Prothonotary & Senior
Master in view of the order dated 18 th February 2025 of the Hon'ble
Supreme Court observing that the Hon'ble Supreme Court was not
inclined to interfere with the order of this Court, however, extending
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the time to deposit till 31st March 2025 and that a fresh Non-deposit
Certificate has been obtained which clearly indicates that the
Defendant in the matter had not deposited the sum of
Rs.6,92,49,487.19 in this Court on or before 31 st March 2025.
Mr.Setalvad submits that this Court may, therefore, pass an ex-parte
decree in favour of the Plaintiff in view of Order XXXVII Rule 3(6)(b) of
the Code of Civil Procedure, 1908 (the "CPC").
2. On the other hand, Mr.Modi, learned Senior Counsel appearing
for the Defendant has submitted that since this Court had found triable
issues warranting filing of written statement, no order can be passed
simply on the ground of non deposit of amount. Mr.Modi has drawn
this Court's attention to paragraph 70 of the order dated 29 th January
2024 in the Summons for Judgment granting conditional leave and in
particular to the observations of this Court that prima facie it cannot be
said that the issue of counterclaim stands concluded and even if there is
an issue of limitation in raising the same, that can be an issue framed in
the Suit after filing of the written statement and that these are triable
issues.
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3. Mr.Modi, learned Senior Counsel for the Defendant, further
drawing this Court's attention to paragraph 71 of the said order,
submits that this Court had also recorded in the said paragraph that it
could not be ignored that the order dated 12 th February 2020 of the
MCSGF Committee had not been challenged by the Defendant by way
of an appeal and that the defences to the claim, therefore, also raise
reasonable doubt and that, therefore, this Court was inclined to grant
conditional leave to defend.
4. Referring to the Writ Petition No.8142 of 2021 filed by the
Defendant before the Delhi High Court, Mr.Modi has submitted that in
the order dated 29th January 2024, this Court has referred to the said
writ petition which has been filed challenging the order dated 12 th
February 2020 of the MCSGF Committee as well as the actioning
circulars and the notice of demand and that this Court has observed
that this Court cannot foreclose the outcome of the writ petition by
signing judgment in favour of the Plaintiff while refusing to make the
Summons for Judgment absolute and decree in the Suit as prayed for
while granting conditional leave to the Defendant. Mr.Modi would
submit that the said writ petition is still pending. That, the reply has
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already been filed by the Plaintiff herein and that the matter is now
listed on 14th July 2025.
5. Mr.Modi further submits that as per (iii) of paragraph 73 of the
order dated 29th January 2024, if the conditional order of deposit is not
complied with within the period stipulated above, the Plaintiff is
entitled to apply for an ex-parte decree against the Defendant after
obtaining non-deposit certificate from the Prothonotary & Senior
Master of this Court. That, no such application has been made by the
Plaintiff and that, if any such application is made, the Defendant be
permitted to file a reply to the same before passing any order or decree
in the matter.
6. Since the hearing of the matter had commenced before lunch
and heard partly, due to lunch break the Court had to rise, accordingly,
the matter was called out in the afternoon session, however, since none
appeared on behalf of the Defendant in the matter, the matter was kept
back. The matter has, thereafter, been mentioned jointly by the learned
Senior Counsel for the Plaintiff and the learned Counsel for the
Defendant and has been taken up.
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7. Ms.Kalpana Desai, learned Counsel for the Defendant submits
that the word "forthwith" in Order XXXVII Rule 3(6)(b) of the CPC be
considered keeping in mind the aforesaid findings and submissions.
8. I have heard the learned Senior Counsel and the Counsel for the
parties.
9. As has been noted in the order dated 29 th January 2024, the
Summary Suit has been filed by the Plaintiff under Order XXXVII of the
CPC praying for a decree against the Defendant for a sum of
Rs.9,81,24,358.59 along with interest at the rate of 18% p.a. from 30 th
November 2019 till realization. Pursuant to default arising out of the
Defendant's pay-in obligation as also mentioned in the show cause
notice dated 17th October 2019 which referred to sum of
Rs.9,81,24,358.59 which amount had not been paid to the Plaintiff
despite demands as recorded in order dated 29 th January 2024, the Suit
came to be filed as a summary Suit and the Summons for Judgment
was heard and the order on the Summons for Judgment was
pronounced on 29th January 2024, where after hearing the submissions
of the learned Counsel for the parties at length, this Court had granted
conditional leave to the Defendant. The operative paragraph 73 of the
said order is usefully quoted as under :
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"73. In the circumstances, in view of the principles laid
down by the Hon'ble Supreme Court in the case of IDBI
Trusteeship Services Ltd. vs. Hubtown Limited (supra), as
well as in the case of B L Kashyap and Sons Ltd Vs. M/s. JMS
Steels and Power Corporation and Anr.(supra), the following
order is passed :-
ORDER
(i) Leave to defend the present suit is granted to the
Defendant, subject to depositing a sum of Rs. 6,92, 49,
487.19, in this Court within a period of six weeks from the
date of uploading of this order.
(ii) If the aforesaid deposit is made within the stipulated
period, this suit shall be transferred to the list of Commercial
Causes and the Defendant shall file written statement within
a period of six weeks from the date of the deposit.
(iii) If the conditional order of deposit is not complied with
within the period stipulated above, the Plaintiff shall be
entitled to apply for an ex-parte decree against the Defendant
after obtaining non-deposit certificate from the Prothonotary
and Senior Master of this Court.
(iv) Summons for Judgment stands disposed of in the
aforesaid terms."
10. Thereafter, it has been submitted that the Defendant approached
the Hon'ble Supreme Court and as noted above, the Hon'ble Supreme
Court had declined to interfere with the order of this Court, however,
extending the time period to deposit till 31st March 2025.
23-COMSS-32-2020.doc
11. Also as noted above, when the matter came up before this Court
on 2nd April 2025, this Court had directed the Plaintiff to obtain fresh
Non-deposit Certificate in view of the extension of the time to deposit
by the Hon'ble Supreme Court, after which this Court would consider
the Plaintiff's entitlement for ex-parte decree.
12. Today, as noted above, Mr.Setalvad has tendered across the bar
Certificate of Non-deposit dated 9 th April 2024 issued by the
Prothonotary & Senior Master of this Court, which clearly records that
the deposit has not been made till 31 st March 2025. It is submitted by
Mr.Setalvad, learned Senior Counsel, that no deposit has been made till
date.
13. In paragraph 73(iii) of the order granting conditional leave, this
Court has observed that if the conditional order of deposit is not
complied with within the time period stipulated above, the Plaintiff
shall be entitled to apply for an ex-parte decree against the Defendant
after obtaining non-deposit certificate from the Prothonotary and
Senior Master of this Court.
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14. Order XXXVII Rule 3(6)(b) of the CPC is usefully quoted as
under:
"Order XXXVII Rule 3(6)(b) - if the defendant is permitted to
defend as to the whole or any part of the claim, the Court or
Judge may direct him to give such security and within such
time as may be fixed by the Court or Judge and that, on
failure to give such security within the time specified by the
Court or Judge or to carry out such other directions as may
have been given by the Court or judge, the plaintiff shall be
entitled to judgment forthwith."
15. It has been provided that at the hearing of the Summons for
Judgment, if the defendant is permitted to defend as to the whole or
any part of the claim, the Court or Judge may direct him to give such
security and within such time as may be fixed by the Court or Judge
and that, on failure to give such security within the time specified by
the Court or Judge or to carry out such other directions as may have
been given by the Court or judge, the plaintiff shall be entitled to
judgment forthwith.
16. This Court in the case of K. R. Patel (HUF), Mumbai vs. M. M.
Developers, Mumbai and Others1, has, in a case where the Defendant
had not complied with the conditional order in making deposit of the
1 2015(3) Mh.L.J. 260
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amount upon which leave to defend was granted, observed that a
reading of Order XXXVII Rule 3(6)(b) of the CPC makes it clear that on
failure of the Defendant to comply with the condition imposed by the
Court, the Plaintiff is entitled to judgment forthwith, citing the decision
of a Division Bench of this Court in the case of M/s. D. Shanalal and
Etc. vs. Bank of Maharashtra2 where the Division Bench observed that
when the Defendant fails to comply with the conditional order passed
under Order XXXVII of the CPC, the Defendant is precluded from
further contesting the Plaintiff's claim and that the facts stated in the
plaint must be considered to have been admitted by the Defendant and
the Plaintiff becomes entitled to judgment, further observing that Order
XXXVII not only provides for abridgment of the procedure of Suits
covered by the said provisions but also the said provisions restrict and /
or curtail the rights of the Defendant in these Suits to contest the
Plaintiff's claim. Paragraphs 3, 4, 5, 7 and 8 of the said decision are
usefully quoted as under :
"3. The said order has been challenged on the ground that the
course of action sought to be followed by the learned Judge of
the City Civil Court is not contemplated by Order XXXVII, Rule
3(6)(b) of the Civil Procedure Code. In the said context, it is
required to be noted that the Respondents herein were granted
conditional leave by the City Civil Court by order dated 4-8-2014
on the condition that the Respondents i.e. Defendants deposit an
2 AIR 1989 Bom 150
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amount of Rs. 64,63,096/- in the said Court within six weeks.
The said order came to be challenged in this Court by way of
Writ Petition No. 9973 of 2014. The said Writ Petition came to be
dismissed by this Court by order dated 13th November, 2014.
The said order was thereafter challenged by the Defendants
before the Apex Court by way of SLP No. 35412 of 2014. The
Apex Court whilst dismissing the said SLP granted time of six
weeks from the date of its order to deposit the said amount of Rs.
64,63,096/-. The Defendants thereafter filed an application Exh.
6 for seeking extension of time in the City Civil Court, Mumbai. A
Learned Judge of the City Civil Court extended the time by two
weeks from 4th February, 2015 by order dated 4th February,
2015: The said order came to be challenged in this Court by the
Plaintiff by way of Writ Petition No. 1244 of 2015. The said Writ
Petition came to be allowed by this Court, as the learned Counsel
appearing on behalf of the Defendants fairly conceded in the
light of the order passed by the Apex Court in SLP No. 35412 of
2014 that the City Civil Court did not have the jurisdiction to
extend the time. However, after the said Writ Petition came to be
disposed by this Court by order dated 6th February, 2015,
wherein the statement made by the learned Counsel for the
Defendants Shri. Javeed Hussein was recorded, the Defendants
did not approach the Apex Court for seeking extension of time,
though time had already expired long prior thereto. The upshot
of the aforesaid facts is that the Defendants have not complied
with the conditional order dated 4th August, 2014 in the matter
of making deposit of the amount of Rs. 64,63,096/- in the City
Civil Court which was a condition imposed on the Defendants so
as to entitle them for leave to defend the suit.
4. The suit was thereafter listed before the City Civil Court on 18-
2-2015, where the Plaintiffs have filed the documents in original.
However, the trial Court has recorded that the suit to proceed
without the written statement of the Defendants meaning
thereby that the trial Court seems to be labouring under an
impression that the suit is to be proceeded on the basis that the
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written statement has not been filed by the Defendant and
therefore, the provisions which are applicable when the
Defendant does not file the written statement would have to be
followed.
5. Heard the learned Counsel for the parties. The learned
Counsel appearing on behalf of the Petitioner/original Plaintiff
Shri. Sharan Jagtiani would contend that the procedure adopted
by the trial Court is contrary to the procedure prescribed by
Order XXXVII, Rule 3(6)(b) of the Civil Procedure Code. The
learned Counsel would contend that once the condition by which
leave was granted has not been complied by the Defendants, the
Plaintiffs are entitled to a judgment. The learned Counsel seeks
to rely upon a judgment of the Division Bench of this Court
reported in 1988 Mh. LJ. 956 : AIR 1989 Bombay 150 in the
matter of D. Shanalal and etc. v. Bank of Maharashtra and also
the judgment of a learned Single Judge of the Delhi High Court
reported in AIR 1995 Delhi 252 in the matter of Standard
Chartered Bank v. M.S. Handa.
7. Having heard the learned Counsel for the parties, in my view
the course of action that is proposed to be followed by the trial
Court can be said to be in contravention of the mandate of Order
XXXVII, Rule 3(6)(b) of the Civil Procedure Code. A reading of
the said provision makes it clear that on failure of the Defendant
to comply with the condition imposed by the Court, the Plaintiff
is entitled to judgment forthwith. The said provision was the
subject matter of the judgment of a Division Bench of this Court
in D. Shanalal's case (supra), where the Division Bench has
observed that when the Defendant fails to comply with a
conditional order passed under Order XXXVII, the Defendant is
precluded from further contesting the plaintiffs claim and that
the facts stated in the plaint must be considered to have been
admitted by the Defendant and the Plaintiff becomes entitled to
judgment. The Division Bench has further observed that Order
XXXVII not only provides for abridgment of the procedure of suits
covered by the said provisions but also the said provisions restrict
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and/or curtail the rights of the Defendants in these suits to
contest the Plaintiff's claims.
8. Insofar as the judgment in Standard Chartered Bank's case
(supra) is concerned, a learned Single Judge of the Delhi High
Court in the said case has relied upon the judgment of the
Division Bench of this Court in D. Shanalal's case (supra), the
learned Single Judge has reiterated the proposition of law that
the condition having not been fulfilled by the Defendant, leave to
defend would be deemed to have been refused to the said
Defendant and the Plaintiff becomes entitled to a judgment. In
the light of the aforesaid judgments, it is not possible to
countenance the submissions urged on behalf of the Defendants
by Shri. Javeed Hussein. There is no scope for any further
enquiry and the Plaintiff would be entitled to judgment
forthwith. The trial Court would therefore have to proceed on the
basis that the claim in the plaint is accepted and has to proceed
to pass judgment in terms of the law which has been enunciated
by the Division Bench of this Court in D. Shanalal's case (supra).
With the aforesaid observations, the Writ Petition is disposed of.
The learned Counsel to inform the developments in the above
Writ Petition to the trial Court when the suit comes up for
hearing. The above Writ Petition is allowed to the aforesaid
extent. Rule is accordingly made absolute in the aforesaid terms,
with parties to bear their respective costs."
17. Mr.Modi, learned Senior Counsel for the Defendant has sought to
raise objections to the grant of ex-parte decree quoting paragraphs 70,
71 and 72 of the order granting conditional leave and also submitted
that no application has been made on behalf of the Plaintiff under
paragraph 73(iii) of the said order.
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18. I am afraid, I am unable to appreciate the submissions made by
Mr.Modi, learned Senior Counsel appearing for the Defendant. As has
been noted above and in the order dated 2nd April 2025, Mr.Setalvad on
behalf of the Plaintiff had already made an application for ex-parte
decree pursuant to paragraph 73(iii) of the order granting conditional
leave along with certificate of non-deposit. There is no requirement
that the said application be made in writing. Therefore, this objection
is untenable. Secondly, the reliance by Mr.Modi on paragraphs 70, 71
and 72 to submit that no judgment can be given forthwith is also not
tenable in view of the two decisions cited above where it has been held
that:
(i) in a case where the Defendant had not complied with the
conditional order in making deposit of the amount upon which leave to
defend was granted, reading of Order XXXVII Rule 3(6)(b) of the CPC
makes it clear that on failure of the Defendant to comply with the
condition imposed by the Court, the Plaintiff is entitled to judgment
forthwith;
(ii) when the Defendant fails to comply with the conditional order
passed under Order XXXVII of the CPC, the Defendant is precluded
from further contesting the Plaintiff's claim and that the facts stated in
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the plaint must be considered to have been admitted by the Defendant
and the Plaintiff becomes entitled to judgment;
(iii) Order XXXVII not only provides for abridgment of the procedure
of Suits covered by the said provisions but also the said provisions
restrict and / or curtail the rights of the Defendant in these Suits to
contest the Plaintiff's claim.
19. Moreover, as noted above, paragraph 73(iii) of the very same
order granting conditional leave, itself provides that if the conditional
order of deposit is not complied with within the period stipulated, the
Plaintiff shall be entitled to apply for an ex-parte decree against the
Defendant after obtaining non-deposit certificate from the Prothonotary
and Senior Master of this Court which application as noted above had
been made and certificate of non-deposit also has been obtained.
20. Ergo, in view of the clear provisions of Order XXXVII Rule 3(6)
(b) of the CPC and the decisions of this Court in the cases of K. R. Patel
(HUF), Mumbai vs. M. M. Developers, Mumbai and Others (supra) and
M/s. D. Shanalal and Etc. vs. Bank of Maharashtra (supra) , I am of the
view that the Suit deserves to be decreed in favour of the Plaintiff
forthwith.
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21. Further, Ms.Kalpana, learned Counsel for the Defendant has
submitted that the word 'forthwith' may be considered in the
circumstances of the case keeping in mind the findings based on which
the conditional leave was granted. I am unable to accept any other
interpretation of the word 'forthwith' except as interpreted by this
Court in the two decisions cited above. In my view, once the condition
for deposit has not been complied with, the provisions of Order XXXVII
Rule 3(6)(b) become applicable and the word 'forthwith' has to be
interpreted as it is understood in general parlance, which means
without delay; at the very same time, no other meaning can be
attributed to it.
22. The Defendant having failed to comply with the condition
granting leave to defend within the stipulated period as also extended
by the Hon'ble Supreme Court and the Non-deposit Certificate dated 9 th
April 2025 having already been furnished by the Plaintiff, and having
held that the Plaintiff has become entitled to a judgment forthwith in
view of Order XXXVII Rule 3(6)(b) of the CPC, the suit deserves to be
decreed in favour of the Plaintiff.
23. I, therefore, pass the following order:-
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ORDER
(i) Suit is decreed in terms of prayer clause (a), which reads thus:-
"(a) that this Hon'ble Court be pleased to pass a decree and
order directing the Defendant to pay to the Plaintiff a
principal amount of Rs.9,81,24,358.59 being the outstanding
liability of the said Defendant to the Plaintiff together with
interest at the rate of 18% p.a. from 30 th November, 2019 till
payment and/or realization thereof, as per the particulars of
claim set out in Exhibit 'M' hereto."
(ii) Refund of Court fees as per rules.
(iii) The drawn up decree is dispensed with.
(ABHAY AHUJA, J.)
ARTI
VILAS
KHATATE
