Marson Biocare Private Ltd. ... vs M/S. Ace Laboratories Ltd. & Ors.
1999 Latest Caselaw 1142 Del

ORDER

Vikramajit Sen, J.

I.A. 11555/99

1. This is an application filed by the Defendant in a suit for the recovery of Rs. 59,04,110/- governed by the provisions of Order xxxvII of the Code of Civil Procedure. When the suit and the accompanying application had come up for hearing on 8.10.1999, I had directed the Defendants to deposit a sum of Rs. 50 lakhs in this Court. It is in response to these orders that the present application has been filed.

2. It was contended by the learned counsel for the Defendants that the Provisions of Order XXXIX, Rule 10 would not apply to suits filed under the summary procedure established under Order xxxvII of the Code of Civil Procedure. The submission was that these provisions conceive of a situation where during the pendency of the suit, the Defendants admit a claim; that it would not apply to admission contained in other documents. It will be relevant to under score that in this application containing 12 paragraphs, the Defendants have not denied its liability for the payment of the amount claimed in the plaint and has only assailed challanged the availability of Order XXXIX Rule 10. Even more, significantly, it has been averred that the Defendants are facing a financial crunch which is likely to ease within three months when the Defendants will be able to comply with the orders passed by this Court.

3. Since I have come to the conclusion that the suit deserves to be decreed these contentions are rendered otiose and, I do not propose to decide the question whether Order XXXIX, Rule 10 is available in proceedings under Order xxxvII. The interest of justice would be met by substantially granting the prayers made in this application and ordering that the execution of the decree will be stayed till 31.12.1999.

Suit No. 2204/99

4. This suit for the recovery of Rs. 59,04,110/- has been filed under Order xxxvII of the Code of Civil Procedure, 1908. Summons/Notices were ordered to issue on 8.10.1999. By orders of the same date, the Defendants were also directed to deposit a sum of Rs. 50 lakhs in court by Demand Draft payable in favour of the Registrar of this Court, within four weeks from the receipt of the copy of the order. The application dated 15.11.1999 under Section 151 of the Code of Civil Procedure was thereafter filed on 16.11.1999. This application, in Para 9, contains a statement that the order was served on the Defendant on 18.10.1999. It has been prayed in the application that the order be set aside or be modified by extending the time for compliance by three months.

5. Order xxxvII is a complete code and contains the following provisions which are germane to the points which have arisen for decision :

2(3) The defendant shall not defend the suit referred to in subrule (1) unless he enters an appearance and in default of his entering an appearance the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree for any sum, not exceeding the sum mentioned in the summons, together with interest at the rate specified, if any, up to the date of the decree and such sum for costs as may be determined by the High Court from time to time by rules made in that behalf and such decree may be executed forthwith.

3. Procedure for the appearance of defendant - (1) In a suit to which this Order applies, the plaintiff shall, together with the summons under Rule 2, serve on the defendant a copy of the plaint and annexures thereto and the defendant may, at any time within ten days of such service, enter an appearance wither in person or by pleader and, in either case, he shall file in Court an address for service of notices on him.

(2) Unless otherwise ordered, all summonses, notices and other judicial processes, required to be served on the defendants, shall be deemed to have been duly served on his if they are left at the address given by him for such service.

(3) On the day of entering the appearance, notice of such appearance shall be given by the defendant to the Plaintiff's pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice delivered at or sent by a pre-paid letter directed to the address of the plaintiff's pleader or of the plaintiff, as the case may be.

6. I have already observed that the Defendants have mentioned that they were served with a copy of the order dated 8.10.1999 on 18.10.1999. Since no objection has been taken in the application, or at any other time or place, it would be fair to assume that alongwith the summons these persons also received a copy of the plaint and annexure thereof. In compliance with Rule 3 (1) of Order xxxvII, it was mandatory for the defendants to have entered appearance within ten (10) days, which period expired on 28.10.1999. This compliance has not been made and instead I.A. 11555/99 was filed alongwith three Vakalatnamas also dated 15.11.1999. As envisaged by Rule 3(3) of the Order, no notice of such appearance has been given by the Defendant to the Plaintiff's pleader, as stated by Mr. A.S. Chandiok in Court today. Having failed to enter appearance the legal consequences are that the allegation in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree for any sum not exceeding the sum mentioned in the summons together with interest at the specified rate. The suit could therefore have been immediately decreed witout further investigation.

7. However, I have still perused the plaint and the documents filed alongwith it. The plaintiff had on 29.8.1997 agreed to invest a sum of Rs. 50 lakhs in Redeemable Cumulative Preference Shares of Defendant No. 1 for a period of 36 months, which was to yield and annual dividend of 15 per cent. This investment was secured by the personal guarantees of Defendants 2 and 3. Due to default and irregularity of payment, the plaintiff decided to redeem these shares vide its letter dated 20.8.1998. By its letter dated 3.9.1998, Defendant No.1 promised to redeem these shares in one consolidated instalments by 15th October, 1998. However, the following cheques were issued in this regard but were dishonoured on presentation:

S.No. Cheque No. Dated Amount Dishonoured

1. 264010 31.10.98 10,00,000 16.2.1999

2. 264011 7.11.98 10,00,000 16.2.1999

3. 264012 14.11.98 10,00,000 16.2.1999

4. 264013 21.11.98 10,00,000 16.2.1999

5. 264014 28.11.98 10,00,000 16.2.1999

8. After issuing various notices, on 1st April, 1999, the plaintiff filed a Crl. Complaint under Section 138 of the Negotiable Instrument, Act 1881 before the Metropolitan Magistrate, Mazagoan, Mumbai, but no payments have been made even thereafter. After calculating interest at the agreed rate of 15 per cent per annum,a total sum of Rs. 59,04,110/- has been claimed in this suit.

The documents filed alongwith the plaint amply prove and sustain the correctness of the statement contained in the plaint.

9. For these reasons, I am satisfied that the suit for the recovery of Rs. 59,04,110/- deserves to be decreed. The suit is accordingly decreed with costs.

10. Decree sheet be drawn up. In the interest of justice, execution of this decree shall stand stayed till 31.12.1999.