M/S. Skylark Motors (India) And ... vs Lakshim Commercial Bank Ltd.
1996 Latest Caselaw 554 Del

ORDER

1. In this revision petition directed against a composite order rejecting application for leave to defend and decreeing the suit under O. 37, Code of Civil Procedure, two following questions arise for decision:

(a) Whether the defendant (i) who claimed set off/adjustment before filing the suit by making a request-to sell goods pledged with the plaintiff-respondent; and (ii) who claimed adjustment of the amount of the value of the goods pledged, insured and kept under lock and key of the plaintiff-bank, which were subsequently burnt, is entitled to get leave to defend the suit?

(b) Whether revision petition itself is not maintainable in view of the composite order of rejection of application for leave to defend, followed by passing of decree, as an appeal could be filed ?

2. Relevant facts are as under:

Laxmi Commercial Bank Ltd., plaintiff/ respondent filed a suit for recovery of Rs. 17,0001- under Order 37, C.P.C. According to the Bank's case, on the request of defendant/revision petitioner, cash credit facility to the limit of Rs. 12.000/- (bearing interest @ 9% above the RBI's rate of interest with a minimum of 17% per annum) was given, on execution of various documents, by the defendant/revision petitioner on 27th February, 1980. A sum of Rs. 17,000/- was found due against the petitioner on 30th November, 1991. As the defendant/petitioner failed to pay the same despite notice, a suit under Order 37, C.P.C. was filed by the plaintiff-respondent Bank.

3. The defendant filed an application for leave to defend the suit. It was contended that in February, 1980 only a sum of Rs. 12,000/-was due. Five cases containing goods worth Rs. 18.515/- were pledged in February, 1980. The defendant requested that these pledged goods should be sold by the Bank to clear the account. But the Bank failed to sell the goods. As such, the defendant/petitioner was not liable to pay any interest after February, 1980. At the time of filing of the application for leave to defend the value of the pledged goods would have been about Rs. 30,880/-. These pledged goods were allegedly destroyed by fire in April 1993. Accordingly, the defendant/petitioner claimed that he was entitled to get Rs. 30,880 / - as the price of the aforesaid goods. The defendant/petitioner expressed his willingness to pay a sum of Rs. 12,000 /- in case he got back their pledged goods or price thereof amounting to Rs. 30,880/-.

4. The respondent-Bank in their reply to the application for leave, to defend admitted burning of the pledged goods. But they claimed that the Bank could not be blamed for it as they had taken all due care and fire was on account of acts beyond their power and control. Claim had been lodged with the Insurance Company. The Bank further claimed that a notice of demand demanding Rs. 15,860/- was sent in August, 1981' through Baxi Vikram Singh Sahni, Advocate. In reply to the said notice, petitioner/defendant admitted the claim of the Bank regarding a sum of Rs. 15,860/ - and promised to pay the same in monthly instalments. The respondent-Bank also contended that the defendant was at liberty to have the pledged goods redeemed after paying the amount claimed by the plaintiff/respondent.

5. The learned trial Court in view of the admitted part of the plaintiff's case rejected the application for leave to defend and took the view that the defendants had failed to raise any triable issue which needed investigation and decreed the suit for recovery of Rupees 17,000/- with cost and pendente lite and future interest @ Rs. 17% per annum till realisation.

6. The present revision petition has been filed on the ground that admittedly the pledged goods were destroyed in fire in the godown of the plaintiff and the plaintiff-Bank had not only lodged a claim with the Insurance Company but had also realised a claim of Rs. 9,720/ -. According to the petitioner, in April, 1993 the value of pledged goods was Rs. 30,880/-. The insurance claim was settled without any notice to the petitioner. Thus, instead of making good the loss, the Bank filed a suit under Order 37, C.P.C. against the petitioner.

7. I have gone through the record of the learned trial Court. From reply to para 5 of the application, for leave to defend, it is apparent that in February 1980, the defendant/petitioner desired that the pledged goods should be sold to clear the account. But they failed to do so. The Bank did not dispute this position. As such, it is apparent that they did not take any action. Further, from the "reply to para 10 of the application, it is apparent that in April, 1983 godown did catch fire and the pledged goods were burnt.

8. In view of these admitted facts, the plea put forward by the defendant/petitioner appeared to be just and plausible and it cannot be said to be sham or bogus or practically a moon-shine to justify even imposition of any condition, leave aside the question of rejecting the application for leave to defend. It may be added that High Court of Madhya Pradesh took the view that where the valuable property belonging to the defendant was already in possession of the plaintiff-Bank, it was not proper for the Court to ask for security (see 1986 Bank J 726 (Madh Pra)).

9. So far as the question of maintainability of revision is concerned, for invoking the provisions of Section 115, C.P.C., one has to see firstly whether it is a "case which has been decided" which includes "any order made, or any order deciding an issue, in the course of a suit or other proceedings"; secondly whether it is such a decided case "in which no appeal lies" "either to the High Court Court or any court subordinate thereto" for the High Court shall not "vary or reverse any such decree or order"; thirdly whether impugned order was either passed in exercise of "a jurisdiction not vested in it by law" or a consequence of failure . "to exercise its jurisdiction illegally or with material irregularity"; and fourthly (a) if the impugned order had been made in favour of the petitioner "would have finally disposed of the suit or other proceeding" or (b) if allowed to stand "would occasion a failure of justice or cause irreparable injury to the party against whom it was made".

10. In the light of conditions and requirements of Sections 115 and the aforementioned facts in earlier part of this judgment, the impugned order is "a case decided" against the petitioner as refusal to grant leave has already led to the passing of a decree. The impugned order has been passed in exercise of its jurisdiction illegally as well as with material irregularity for the petitioner could not get the pledged goods burnt in fire released even after payment. As such, claim of the plaintiff could only be adjusted against the amount of insurance of the burnt goods. If it is allowed to stand, it would occasion a failure of justice by providing double advantage to the plaintiff-Bank by giving money under the decree and simultaneously to leave the insurance money for the burnt pledged goods in their hands. Besides, it amounts to causing irreparable toss to the petitioner by settling the amount of insurance, in his absence.

11. Now the only important question about filing an appeal instead of present revision petition remains to be seen. Madhya Pradesh High Court and our own High Court in Pran Nath v. Sudarshan, 1980 Rajdhani LR (Notes) 67 have taken the view that the revision would not be maintainable as the decree would stand. But it appears that a revision petition is maintainable in view of the judgment delivered by a Division Bench of our own High Court in Shri Krishan Bhardwaj v. Manohar Lal Gupta, . Doubts expressed in Pran Nath's case (supra) related to that particular case especially on Recount of possibility of inconsistent decrees. Otherwise Shri Krishan Bhardwaj (supra) is a complete answer about the maintainability of revision petition against a composite order refusing to grant leave to defend and simultaneously passing a decree for the recovery of the amount claimed. As such he had earned the leave to defend. The petitioner was not required to make out a case as should warrant a sure success in the end. As it is apparent from what has been said above that the petitioner had a good defense to the claim on its merit the plaintiff/respondent was not entitled to the judgment sought and given in this case. As such, in my considered view, the defendant was and is entitled to get unconditional leave to defend the suit.

12. In para 11 of the judgment, following observations were made:

".....there is an independent right with a litigant to file an appeal but there is no right as such to file a revision petition. There is, however, a right to bring an illegality or material irregularity to the notice of the High Court which in its turn would exercise the power conferred upon it, as warranted by the circumstances of the case."

13. Further relevant observations for the present purpose are being reproduced from para 15 as under:

"In the present case the order refusing to grant leave to appear and defend did not finally dispose of the suit and an appeal is competent from the decree that has been passed, but it must be kept in view that the effect of the impugned order is as given in Cl. (2) of Order 37, Rule 2, C.P.C., namely that in case leave to defend and appear is not granted, the allegations in the plaint shall be deemed to be admitted. Therefore, an order like the present one has far-reaching consequences and would clearly fall within the ambit of the phrase "any case which has been decided" for as far as the defendant is concerned, the controversy has really come to an end. If that is the correct proposition and if the expression "case" includes a part of a case, then, as was observed in S. S. Khanna's "case" includes a part of a case, then, as was observed in S. S. Khanna's case, by the Supreme Court, "there is no escape from the conclusion that the revisional jurisdiction of the High Court may be exercised irrespective of the question whether an appeal lies from the ultimate decree or order passed in a suit". In my view the only interpretation that one can give is that in the present case irrespective of the decree that has been passed, a revision is competent.

When leave is refused to the defendant to appear and defend a 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 follows 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 must also fall and directions to that effect have to be given.

In Rangiah v. Peddireddi, AIR 1957 Andh Pra 330, Subba Rao, C. J. (as his Lordship then was) following the dicta of the Privy Council in Shama purshad Ray Chowdry v. Hurrp Purshad Ray Chowdhry (1863-66) 10 Moo Ind App 203 (PC) observed : "It is a well-settled principle of law that certain orders and degrees which are subordinate and independent it upon earlier orders and decrees could only remain in force so long as the orders or decrees on which they were independent or not reversed or superseded."

14. On the basis of these authorities, the Division Bench took the view :

"I, therefore, hold that if the impugned order is Reversed or modified, the consequential order or decree will also have to be modified or directions will have to be given that the same is of no effect".

15. In para 17 and 18, the following further observations were made :

". . . The amendment to S. 115. C.P.C.. therefore does not detract from the principles. enunciated above. Indeed, it will be worth noticing that the explanation to the newly added sub-section (2) of S. 115. C. P.C: makes it clear that the expression any case which has been decided" is to be given the meanin, which their Lordships of the supreme Court had given to the phrase S. S; Khanna case. .

16. As, the judgment of a Division Bench of this Court in S. K. Bhardwaj case is very clear, I am of the considered opinion that the revision petition is maintainable.

17. Accordingly, I allow the revision petition and the impugned order is set aside. A copy of this order be sent to the learned-trial Court along with the trial Court record with the direction to proceed further in accordance with law after giving due notice to the counsel for parties.

18. Petition allowed.