Anant Raj Agencies vs Delhi Development Authority
2000 Latest Caselaw 702 Del

ORDER

Vikramajit Sen, J.

1. By this Judgment I shall dispose of two sets of applications under Order IX Rule 13 and Section 5 of the Limitation Act. These applications had been filed by the Respondents pursuant to the Award passed in their respective cases having been made Rule of the Court.

2. In the first case, disputes had arisen between the parties in respect of the construction of houses under Self Financing Scheme (SFS) at Sheikh Sarai Pocket B, New Delhi. These disputes were referred to the Sole Arbitration of Shri K.D. Bali. He made and published his Award at New Delhi on 12.6.1991. Suit No. 1947/91 was initiated by the petitioner for filing of the Award and making it Rule of the Court. The consequence was that the Delhi Development Authority (DDA) filed Objections under Section 30 and 33 of the Arbitration Act, 1940, which were numbered as I.A. 11630/91. Issues were framed on 10.8.1994 and on 28.2.1995 the case was adjourned for hearing as 'Short Cause' to 14.8.1995. On this date the Court had observed that "it is not necessary to record any evidence, even by way of affidavit, in as much as the Objections raised are capable of being substantiated by reference to record of the arbitration proceedings, correctness whereof is not under challenge. "On 29.8.1995 the case was adjourned to 26.10.1995 and thereafter by orders dated 25.3.1996 the case was adjourned to 1.8.1996. On 19.8.1996 the case was heard. the Objections were found meritless, and the Award was confirmed. The exception was in respect of the interest awarded by the Arbitrator, which was modified from 17.5% per annum with quarterly rests to simple interest at 17.5% per annum. Since no payment was made against the Award, the Contractor/Petitioner initiated Execution Proceedings, which were numbered as Ex.143/96. Notice was issued and the DDA was served 3.12.1996. As no one had appeared on 18.12.1996 the proceedings were adjourned to 22.1.1997. Shri V.K. Sharma, learned counsel for the DDA in these proceedings also, entered appearance on that date. These facts are significant in the face of the stance of the DDA that it was 'shocked' to learn of the Award having been made Rule of the Court in February, 1997. On 19.2.1997 I. As. 1642/97 under Order IX Rule 13 and 1643/97 under Section 5 of the Limitation Act were filed by the Delhi Development Authority. Arguments on these applications have been heard by me and both these applications will be disposed of by the present Orders. It has been averred in I.A. 1642/97 "that the matter was listed in the category of 'short cause' and it reached for hearing all of sudden before this Hon'ble Court on 1.8.1996. The Hon'ble court heard arguments of the counsel for the petitioner and made the award Rule of the Court without hearing the arguments of counsel for the respondent/Delhi Development Authority on merits." It has also been pleaded that around 200 matters were listed in the short cause matters. The story put forward by the Applicant is that in the month of February 1997 it decided to file an application for bringing on record the additional objection that the Sole Arbitrator was related to the Claimant. This application was listed on 17.2.1997 and in the course of hearing the Respondent was shocked to learn that the matter had already been decided. An inspection was carried out and this information was found to be correct. It is further averred that the Order dated 1.8.1996 passed by the Court is an ex-parte order passed without hearing the counsel for the Respondent on merits. It will be relevant to clarify that the Order whereby the Award was made Rule of the Court, with the modification on the question of interest, is dated 19.8.1996. It is thereafter averred that the non-appearance of the counsel for the DDA on 1.8.1996 was neither intentional nor wilful and it was a result of over-sight. It is paradoxically stated that the setting aside of the ex-parte order will not prejudice the petitioner, but in the next breath it is stated that the DDA will suffer irreparable loss to the tune of Rs.42 lacs. The prayer is for setting aside of the decree dated 1.8.1996, which date is totally incorrect. I.A. 1643/97 under Section 5 of the Limitation Act is based on the same facts. In its Reply the Petitioner has submitted that the provisions of Order IX Rule 13 cannot be invoked since no ex parte decree has been passed. The Court heard the counsel for the Petitioner and had also considered the objections filed by the Respondent on merits. It is further submitted that Order IX Rule 13 has no application to Orders under Section 17 of the Arbitration Act, 1940. It is further averred by the Petitioner that on 1.8.1996 "the matter reached on its turn and the counsel for the Petitioner was heard at length." It has been denied that the counsel for the Respondent ever met the counsel for the Petitioner and told the former that the matter is listed in 'Short Cause'. It has been specifically denied that there was any relationship between Shri K.D. Bali, the Sole Arbitrator and late Anant Ram.

3. The contention of Mr. V.K. Sharma, learned counsel for the DDA is that, as envisaged under Chapter XVII, Rule 2 of the Original Side Rules of this Court, actual date has to be fixed. Chapter XVII, Rule 2 reads as under:

"2. Day for short causes _ Short causes shall be set down for hearing on such date as may be appointed for the purpose."

4. Since the case was listed in 'Short Causes' and there were 200 matters being shown in this category, it was his contention that it would be too onerous to expect that counsels in all the 200 cases listed in this category should be available in Court. It was further contended that if an order is passed in the absence of a party, it would plainly be nothing but an exparte order/judgment. Even if some points raised in the pleadings of the absent party were considered by the Court, this would not change the character of the hearings from being any thing but ex-parte. Reliance was placed by him on the following cases:

1. M/s. Bhagwan Dass Bros., Vs. Ghulam Ahmed Dar and others,

2. Shri B.P. Sharma Vs. Union of India, 1995 II AD (Delhi) 439.

3. DDA Vs. M/s. Star Builders & Decorators, FAO(OS) No. 276/96, unreported judgment dated July 23, 1996 by a Division Bench comprising R.C. Lahoti, J. (as he then was) and S.N. Kapoor, J.

4. Shri Satish Kumar Agarwal Vs. Delhi Development Authority and another, Suit No. 1320/91, unreported judgment dated August 4, 1998 rendered by M.S.A. Siddiqui, J.

5. Shri Vijay Kishan, Learned Counsel for the plaintiff, has contended that even though the case was listed in the category of "Short Causes", it was fixed on an actual date, having been adjourned to that date on the previous hearing i.e. 25.3.1996. Learned Counsel contended that execution of the Judgment now sought to be set aside under Order IX, Rule 13, had been initiated several months before the filing of the present application. In the hearing dated 3.12.1996 it was specifically noted that notice had been served on the DDA, even if the present applications were maintainable, unexplained and inexcusable delay has occurred. He has relied on Order XVII, Rule 2 to contend that the Judgment dated 3.12.1996 was not an ex parte. In support of his arguments, reliance is placed on Lakhbir Chand Vs. Land Acquisition Collector, AIR 1979 Delhi, Rangammal Vs. Srinivasan and another, 1986 (II) MLJ 9, Judgment delivered by Shanmukhan J. dated 13th March, 1986 reported in M/s. B. Champalal Jain Vs. M/s. Chewarchand Ashok Kumar and Co., 1999 MLW 735, I.N.C.A. Builders Vs. I.A.A.I., 1998 V AD (Delhi) 602 and the decision by N.G. Nandi, J. in I.A. 7310/1994 and 7311/1994 in S. No. 455/1987 (Unreported).

6. In the erudite judgment of M.L. Varma J, rendered in the case of Bhagwan Dass Brothers Vs. Ghulam Ahmed Dar, , the Learned Judge drew a distinction between cases where no Objections against an award had been fulfillled and those where this exercise had been made but not pursued any further. In his opinion, in the second category of cases, the phrase "after refusing it" in Section 17 of the Arbitration Act 1940 was of such significance that on the refusal of the application, and the subsequent passing of an Award, this Award/decree would always have the characteristic of an ex parte decree. Hence the provisions of Order IX Rule 13 would be attracted. However, let us consider the conceivable consequences that may ensue on the non-appearance of the Objector or his Advocate, when the case is called on for hearing. The Court may dismiss the Objections in default and in the absence of any Objections it may pronounce judgment in terms of the Award without any further thought. In Lachhman Das Vs. Ram Lal, , the Supreme Court and in Rajender Prasad Sharma Vs. Ashok Kumar Sharma, 1996 (2) Arb. L.R. 362, a Division Bench of this Court have been at pains to observe that a duty is cast on the Court to positively and proactively peruse the Award so as to be assured of its correctness before pronouncing judgment on its terms. Nonetheless, whether the Award receives the Courts imprimatur automatically or after due considerations, in both the eventualities, it seems to me that the Order/Judgment would have an ex parte character. This would not justify obscuring the distinction between an ex-parte decree, and a decree passed ex parte the defendant/respondent. The Court must, even in default of any appearance for the Objector, consider the Objections on the record and either accept them wholly or in part, or reject them. In this event, it can scarcely be argued that the Court had proceeded to pronounce judgment without "refusing the application for setting aside the Award". Such an order/judgment would not assume an ex parte character. The principle of audi alteram mandates that an opportunity should be afforded to all parties to be heard. In my view, this principle would be unduly stretched and strained to require that justice may be delayed for the sake of hearing the oral submissions of a non diligent litigant.

7. The orders passed by the Hon'ble Division Bench in Delhi Development Authority Vs. Star Builders (supra) are brief. As recorded therein, "the Learned Single Judge dismissed the Objection petition in default of appearance and made the award a rule of the Court followed by a decree drawn up in terms of the Order". Although reference was made to the decision in Bhagwan Dass Brothers case (supra) the order does not indicate whether the Learned Single Judge had duly considered the Objections, as has been done in the present case. This Order/Judgment does not state that in all cases, only an application under Order IX Rule 13 is maintainable and not an appeal. It cannot be of avail to the Respondent. The decision in B.P. Sharma Vs. Union of India, 1995 II AD (Delhi) 439, is of no assistance in the determination of the issues before me. In this case the learned Judge held that summons/notice have to be served in a meaningful manner and not as a mere formality. Since it was found that this had not been so done, the Court suo moto set aside the ex parte judgement and independent of, without recourse to and exercise of the powers and discretion available to it under Order IX Rule 13 of the Code of Civil Procedure. The ratio set down is of no assistance to the applicants. In Satish Kumar Agarwal Vs. Delhi Development Authority (supra) the contentions raised in these proceedings were not in contemplation. The learned Single Judge was of the opinion that since the Court Master had no authority to fix a case for hearing, it was not proper to proceed ex parte on the following date. This proposition is well settled and perhaps for this reason the applications appear not to have been seriously opposed.

8. In Prakash Chander Manchanda and another Vs. Smt. Janaki Manchanda, , after noticing that two views existed prior to the amendment of the CPC in 1976 the Court made the following observations.

"6. In some decisions, the High Courts have gone to the extent of saying that even if the trial Court disposes of the matter as if it was disposing it on merits under O.17, R.3 still if the party against whom the decision was pronounced was absent it could not be treated to be a disposal in accordance with O.17, R.3 and provisions of O.9 will be available to such a party either for restoration or for setting aside an ex parte decree. Learned counsel placed before us a number of decisions of various High Court on this aspect of the matter. But in our opinion in view of the amendment to these two rules which have been made by 1976 amendment of the civil P.C. it is not disputed that to the facts of this case, Civil P.C. as amended will be applicable and therefore it is not necessary for us to (go) into that question. O.17, R.2 and R.3 as they now stand read:

"Order 17, Rule 2: Procedure if parties fail to appear on day fixed:

Where, on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by O.IX or make such other order as it thinks fit.

Explanation - Where the evidence or a substantial portion of the evidence of any party has already been recorded and such party fails to appear on any day to which the hearing of the suit is adjourned, the Court may, in its discretion, proceed with the case as if such party were present.

Order 17 Rule 3: Court may proceed notwithstanding either party fails to produce evidence, etc.

Where any party to a suit to whom time has been granted fails to produce his evidence, or to cause the attendance of his witnesses, or to perform any other act necessary to the further progress of the suit, for which time has been allowed, the court may, notwithstanding, such default, _

(a) if the parties are present, proceed to decide the suit forth-with, or

(b) if the parties are, or any of them is absent, proceed under Rule 2."

It is clear that in cases where a party is absent only course is as mentioned in O.17(3)(b) to proceed under R.2. It is therefore clear that in absence of the defendant, the Court had no option but to proceed under R.2. Similarly the language of R.2 as now stands also clearly lays down that if any one of the parties fails to appear, the Court has to proceed to dispose of the suit in one of the modes directed under O.9. The Explanation to R.2 gives a discretion to the Court to proceed under R.3 even if a party is absent but that discretion is limited only in cases where a party which is absent has led some evidence or has examined substantial part of their evidence. It is therefore clear that if on a date fixed, one of the parties remain absent and for that party no evidence has been examined up to that date the Court has no option but to proceed to dispose of the matter in accordance with O.17 R.2 in any one of the modes prescribed under O.9, Civil P.C. It is therefore clear that after this amendment in O.17 Rr. 2 and 3, Civil P.C. there remains no doubt and therefore there is no possibility of any controversy. In this view of the matter it is clear that when in the present case on 30.10.1985 when the case was called nobody was present for the defendant. It is also clear that till that date the plaintiff's evidence has been recorded but no evidence for defendant was recorded. The defendant was only to begin on this date or an earlier date when the case was adjourned. It is therefore clear that up to the date i.e. 30.10.1985 when the trial Court closed the case of defendant there was no evidence on record on behalf of the defendant. In this view of the matter therefore the explanation to O.17 R.2 was not applicable at all. Apparently when the defendant was absent O.17 R.2 only permitted the Court to proceed to dispose of the matter in any one of the modes provided under O.9."

"7. It is also clear that O.17 R.3 as it stands was not applicable to the facts of this case as admittedly on the date when the evidence of defendant was closed nobody appeared for the defendant. In this view of the matter it could not be disputed that the Court when proceeded to dispose of the suit on merits had committed an error. Unfortunately even on the review application, the learned trial Court went on in the controversy about O.17 Rr. 2 and 3, which existed before the amendment and rejected the review application and on appeal the High Court also unfortunately dismissed the appeal in limine by one word."

"8. The learned counsel for the respondent attempted to contend that in this view of law as it now stands an application under O.9 R.13 will be maintainable. However it was suggested that there was also an objection of limitation about the acceptance of that application. It is apparent that the learned trial Court has not considered the application on merits but has only rejected it as not maintainable and that order has been maintained. This objection of the learned counsel for the respondent is not necessary for us to go into at this stage as in view of the law discussed above, the order rejecting the application as not maintainable, has to be set aside and it will be open to the learned trial Court to consider the application under O.9 R.13 and dispose it of in accordance with that law and while so doing, it may even examine the objections that may be raised by the respondent."

This case did not relate to the Arbitration Act, it appears to have been a civil suit.

9. The decision of the Full Bench of the Allahabad High Court in the case of Duryodhan Vs. Sitaram, , is also of no assistance to the applicants. It was a case dealing with the Representation of the People Act, 1951 and the powers of the Court under Section 116-A thereof. It was only incidently that the question arose of whether the petition could have been disposed off on merits. Since the Apex Court has already laid down the law pertaining to Order XVII in Manchandas' case (supra), and since the decision in Hoshiar Singh Vs. Ram Dev, was delivered prior to the amendment of the CPC, and further because the case does not pertain to disputes under the Arbitration Act, the relevance of citing it cannot be appreciated. Since valuable public time, in dear dearth, is exhausted, such reference needs to be deprecated.

10. On behalf of the Plaintiffs, reliance has been heaving placed on the decision in Navab Usmanali Khan Vs. Sagar Mal, AIR 1965 Supreme Court 1978. The adversaries had agreed to refer their disputes to arbitration but when the Award was rendered against the Nawab he pleaded the immunity from being sued, under the sundry provision of the Code of Civil Procedure. The Court relied on the opinion of Lord Russel in Hansraj Gupta Vs. Official Liquidator to the effect that " the word 'suit' ordinarily means, and apart from some context must be taken to mean, a civil proceeding instituted by presentation of a plaint". It recorded that similar views were also voiced in Bhawan Singh Vs. State of Rajasthan, . The Apex Court then held that proceedings under Section 14 read with Section 17 of the Arbitration Act 1940 for passing a judgment on an award does not commence with a plaint and therefore cannot be regarded as a suit. Similar views were earlier recorded in Ganeshmal Bhawarlal Vs. Kesoram Cotton Mills, , where it was specifically held that Order IX, Rule 13 would not be attracted to Arbitration proceedings. A Division Bench of the Andhra Pradesh High Court returned the same legal view, in the case entitled Government of Andhra Pradesh Vs. Boctchala Balaiah, , in the following words:

"When an award is passed in the Court, what the aggrieved party has to do is enunciated by S.30 gives an opportunity to the aggrieved party to file an application under S.30 for setting aside the award within 30 days from the date of service of the notice of filing of the award in the Court on the grounds mentioned therein and no appeal against such an order lies under S.30 of the Act. If such a petition is not filed under S.30, the Court has to pass a decree under S.17 of the Act making the award the rule of the Court, irrespective of the fact whether the defendants do appear or do not appear and contest. S.17 makes it mandatory on the part of the Court to pass judgment and decree in terms of the award as such a decree can be pronounced even if the parties, cannot be treated as ex parte, especially when a petition under S.30 of the Act for setting aside the award was not filed within 30 days from the date of service of the notice of filing of the award in the Court. It is not an ex parte decree, the question of setting aside such a decree under O.9 R.13 does not arise. Hence the petition filed under O.9 R.13 C.P.C., for setting aside the ex parte decree which was passed under S.17, Arbitration Act, is not maintainable. This legal position is made clear by the several High Courts and the Supreme Court.

In Ganeshmal Vs. S.Kesoram Cotton Mills this question was examined by Bachawat J, thoroughly with reference to the case law on this aspect. In that case there is no service of notice of filing of the award in the Court on the defendants in the manner prescribed by law. The limitation for applying to set aside the award, therefore, never started to run and the decree was passed before the expiry of the time for applying to set aside the award and without complying with the mandatory Provisions of S.17, Arbitration Act. Under those circumstances the learned Judge observed:

In my judgment in spite of S.43 of the Arbitration Act and S.141 of the Code strictly the provision of O.9 R.13 does not apply to proceedings for setting aside of an ex parte decree passed under S.17. In a suit there is plaintiff and defendant and O.9, R.13 deals with them differently; strictly neither party to an award is a plaintiff or defendant and both parties are entitled to ask the Court to pronounce judgment according to the award. In a suit if the plaintiff does not appear no decree can be passed and if the defendant does not appear the plaintiff must prove his case. Under S.17 a judgment must be pronounced and a decree must follow, if the conditions of Ss. 14 and 17 are complied with. Such a decree even if pronounced in the absence of the parties cannot be said to be passed as ex parte so as to attract O.9,R.13...0.9,R.13 enables the Court to set aside an ex parte decree in case where the summons was not duly served but it does not provide for a case where the decree under S.17. Arbitration Act, is passed without complying with its mandatory provisions and before the expiry of the time for applying to set aside the award. The provision of O.9 R.13 of the Code cannot be made applicable to the proceedings for setting aside a judgment pronounced under S.17 of the Arbitration Act. In spite of S.43, Arbitration Act, such provisions of the Code as are not consistent with the provisions of the Arbitration Act will not apply to the proceedings under the latter Act."

11. A Division Bench of the Madras High Court in Alvel Sales Vs. Dujadwala Industries, , was of the opinion that even if a decree under Section 17 had been passed when the Respondents were not present, it was not an ex parte decree, since the presence of the parties was not necessary. It affirmed and followed the previous decisions of Division Benches in Roshan Lal Marwari and others Vs. Firm of Bridhi Chan Sri Lal, AIR 1924 Patna 603 and Rajashwar Prasad Singh Vs. Ambika Prasad Singh and others, . In Ram Chander Vs. Jamna Shankar, it was observed that when a decree was passed under Section 17 of the Arbitration Act 1940, it could not be regarded as an ex parte decree even though it was passed in the absence of the Defendants. The Learned Judge held that if service had not been properly effected, the decree could be set aside "on a summary application". This was also the view favoured in Soorajmull Nagarmal Vs. Golden Fibre and Products, .

In circumstances remarkably similar to those obtaining in these proceedings, S.K. Mahajan J. has also held that the award having been made rule of the Court and a decree passed in terms thereof, even though the Defendant was absent, could not be set aside under Order IX Rule 13. In this case titled I.N.C.A. Builders Vs. I.A.A.I., 1998 V AD (Delhi) 602, the Learned Judge came to this conclusion after perusing Order XVII, Rule 2 of the Code of Civil Procedure. I am in respectful agreement with his view. B. Champalal Jain's case (supra) and Rengammal's case (supra) were also decided on the same analogy.

12. Since the uniform and universal opinion of the various High Courts is that Order IX Rule 13 is inapplicable in cases where an award has been made rule of the Court, even de hors the provisions of Order XVII of the Code of Civil Procedure 1908, the Present applications are clearly not maintainable.

13. Although these applications under Order IX Rule 13 and Section 5 of the Limitation Act are not maintainable, since arguments were addressed on their respective merits, I shall dispose them off on these terms also.

I.As. 1642/97 & 1643/97 & S.No. 1947-A/1991

14. In Anant Raj Agencies case, the first case before me, it is stated that the DDA was 'shocked' to learn, in February 1997, of the Award having been made Rule of the Court and accordingly filed I.A. 1642/97 under Order IX Rule 13 and I.A. 1643/97 under Section 5 of the Limitation Act on 19.2.1997. The records disclose that the DDA was served on 20.11.1996 for appearance before Court on 3.12.1996. No person appeared for DDA on this date even though it must have been realized by then that a decree had been passed. On the next adjourned date, i.e. 22.1.1997, Counsel appeared for the Judgment Debtor DDA. Atleast on this date the Applicant had knowledge of the passing of the Decree in terms of the Award. It is false and totally incorrect that it was 'shocked' to learn of these facts only in February 1997". Even if the DDA's failure to make enquiries after August 1996 are glossed over, it had knowledge of the decree when it was served in November 1996. No cause has therefore been disclosed to warrant the condensation of delay in filing the application under Order IX Rule 13, even if it is assumed that such an application is maintainable in law. The conduct of the DDA is replete with repeated negligence. I.As. 1642/97 & 1643/97 are dismissed even on factual matrix. The DDA shall pay costs of Rs.5000/- to the petitioner.

E.As. No. 161/1996 and 221/1996 in Ex. 154/1995.

15. In the second case, the relevant facts in EA 161/96 are that a Decree was passed on 17.4.1995 in the absence of any representation on behalf of the Respondents. Warrants of Attachment were issued on 4.1.1996. A perusal of the Court file shows that the Attachment Orders were served on the Bankers of the Judgment Debtors on 23.2.1996. The contention raised is that the Applicants were informed of the Attachment Orders dated 4.1.1996 only on 3.5.1996 and hence filed present applications on 16.5.1996. What is glossed over is the fact that Objections were filed in 1991 but despite a service of notices of default issued by the Court on 24.2.1994, 22.7.1994 and 7.10.1994 the Defendants were absent. The argument that these Notices of Default had not been served because of change in the counsel for the Respondent's address and consequently they should not have been proceeded ex parte cannot be countenanced since on any of these dates the Court could have considered the Objections under Section 17 and passed a decree, if satisfied on the legality of the Award. Merely because indulgence is extended by the Court towards a party, it does not thereby attain a vested right for being served afresh. In order to receive discretionary relief a party must disclose and satisfy the Court that it was not present at the time of hearing because of circumstances beyond the applicant's control. Sleeping over your Objections is not such a circumstance. In paragraph 7 of the application under Section 5 of the Limitation Act it has been cryptically stated that the Judgment Debtor learnt of the "ex parte decree dated 17.4.1995 and the orders dated 4.1.1996 of this Hon'ble Court on 3.5.1995 when the Bankers of the applicant informed the Judgment Debtor of the attachment of a sum of Rs.6,73,844,67." It has already been seen that these orders were served on the Bank on 23.2.1996. It would have been expected that the Judgment Debtor should have given a detailed explanation of the circumstances in which it gained the knowledge as late as 3.5.1995. No such explanation is forthcoming. It would surely have necessitated the filing of an affidavit of the concerned Bank Official and specific averments in this regard. Litigants have become accustomed to a cavalier approach to court cases, leading to an overload in the judicial system. A change in perspective is essential for countering a possible breakdown. No reasons are disclosed why it took over a fortnight, i.e. 20.5.1995, to file the applications which were already prepared on 16.5.1995. Negligence pervades throughout. Since no such circumstances have been shown E.A. 161/96 filed under Order IX Rule 13 as well as E.A. 221/96 filed under Section 5 of the Limitation Act are dismissed with costs of Rs.5000/-.