Jindal Aromatics vs South Coast Spices Exports Pvt. ...
2003 Latest Caselaw 589 Del

JUDGMENT

Manmohan Sarin, J.

1. This is a suit, filed under Order xxxvII CPC, for recovery of Rs. 27,55,567/- (Rs. twenty seven lacs fifty five thousand five hundred sixty seven only) against the defendant. Before coming to the factual aspects of the averments made in the plaint, it would be appropriate to notice the course of proceedings in the present suit.

2. Summons in the suit were issued in the prescribed pro-forma for a suit under Order xxxvII CPC, requiring the appearance to be entered within 10 days, returnable on 30.7.1996. Defendant did not enter appearance, instead an application (IA. 6727/96), under Section 34 of the Arbitration Act, 1940, seeking a stay of the suit on the ground that there was an arbitration agreement, was filed. Defendant was served on the summons issued in the prescribed form on 8.6.1996 and 11.6.1996. Defendant did not enter appearance, as required, instead, as noted, filed the above application on 22.7.1996.

3. IA. No. 6727/1996, filed under Section 34 of the Arbitration Act, 1940, was allowed by the learned Single Judge vide order dated 30.7.2001. Plaintiff went in appeal in FAO (OS). 417/2001. The Division Bench vide order dated 4.3.2003 set aside the order passed by the learned Single Judge and dismissed IA. No. 6727/96.

4. The Division Bench held that though there was an arbitration agreement and the application under Section 34 of Arbitration Act, 1940, could be filed even after the period of 10 days under Order xxxvII CPC, in the facts of the present case there had been accord, inasmuch as the defendant upon settlement had issued cheques, which upon presentation were dishonoured. The Division Bench held that as a result of the accord, pursuant to which cheques were issued by the defendant, the arbitration agreement ceased to exist. The cause of action for the suit was not based on the original contract, which continued the arbitration agreement. It was based on dishonoured cheques. Accordingly, the application under Section 34 of the Arbitration Act, 1940 would not be maintainable.

5. The question, which arises for consideration in this case is, can the application moved under Section 34 of the Arbitration Act, 1940, wherein the defendant gives the details of the address of the defendant as also the address of the counsel, who is representing the defendant, be taken as entering appearance for purposes of Order xxxvII CPC. This in my view would not be permissible. Order xxxvII CPC, requires appearance to be entered within 10 days of the service. In the instant case, application under Section 34 was filed in July, 1996 while the defendant was served in June, 1996. In any case, even for the sake of argument, if it was assumed that necessary particulars, as are required for entering appearance, had been brought on record, the same had been brought on record belatedly and would be of no avail. Moreover, there is a specific procedure, prescribed under Order xxxvII CPC, which is intended to ensure an expeditious adjudication under the summary procedure, if the particulars furnished in Section 34 application are treated as entering appearance, it would defeat the very purpose of the provision.

6. Another factor, which to my mind, does not entitle the defendant to any beneficial interpretation is the fact that the Division Bench, while allowing the appeal of the plaintiff directed both the parties to appear before the Court on 28.3.2003. None appeared on behalf of the defendant on 28.3.2003. However, with a view to give another opportunity and in the interest of justice, the case was directed to be re-notified on 2.5.2003, when again none had appeared on behalf of the defendant. The matter was re-notified for 19.5.2003. None appeared on behalf of the defendant also on 19.5.2003 and the matter was re-notified for today. Today also, none is present on behalf of the defendant.

7. It may be noted that the suit is based on dishonoured cheques, amounting to Rs. 18,69,000/- and the interest thereon. In the instant case, defendant has failed to appear or take any steps for entering appearance, as required and moving the Court for condensation of delay in entering appearance, even after the dismissal of the application under Section 34 of the Arbitration Act, 1940. In these circumstances, there is no alternative, but to proceed in accordance with the provision of Order xxxvII CPC Rule 2 Sub-rule (3), which provides, "the defendant shall not defend the suit referred to in sub-rule (1) unless he enters appearance and in default of his entering 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". The suit being based on dishonoured cheques, plaintiff has claimed interest at the rate of 24% per annum being a commercial transaction.

8. Defendant having failed to enter appearance, the allegations in the plaint, shall be deemed to be admitted. Plaintiff is, accordingly, entitled to a decree in the sum of Rs. 27,55,567/- (Rs. twenty seven lacs fifty five thousand five hundred sixty seven only) in favor of plaintiff and against the defendant, together with pendente lite and future interest at 18% per annum on the principal amount with costs. Ordered accordingly.