M/S.Polyblends (India) Pvt Ltd vs M/S.Videocon International ...
2009 Latest Caselaw 2244 Del

*                  IN THE HIGH COURT OF DELHI AT NEW DELHI
+                                    CS(OS) No.1228/2005
%                               Date of Decision: 25.05.2009
M/s.Polyblends (India) Pvt Ltd                                     .... Plaintiff
                Through Mr.S.S.Jain, Advocate.

                                         Versus

M/s.Videocon International Limited & Anr                        .... Defendants
               Through Mr.R.D.Soni with               Mr.   Vidhu Upadhyay,
                         Advocates.

CORAM:
HON'BLE MR. JUSTICE ANIL KUMAR

1.       Whether reporters of Local papers may be                  YES
         allowed to see the judgment?
2.       To be referred to the reporter or not?                    NO
3.       Whether the judgment should be reported in                NO
         the Digest?

ANIL KUMAR, J.

*

IA No.348/2009

1. This is an application by the defendants under Order 37 Rule 4

read with Section 151 of the Code of Civil Procedure for setting aside

the judgment and decree dated 21st November, 2008.

2. The plaintiff has filed the abovenoted suit under Order 37 of the

Code of Civil Procedure for recovery of Rs.62,13,190/- on the basis of a

running account maintained by the plaintiff.

3. After the summons under Order 37 of the Code of Civil Procedure

were served on the defendants, appearance was filed on behalf of them

and after summons for judgment were served application for leave to

defend and contest the suit under Order 37 Rule 3(5) read with Section

151 of CPC dated 10th February, 2007 was filed by the defendants.

4. The application was listed on 21st November, 2008 on which date

no one appeared on behalf of defendants and the application was,

therefore, dismissed in default of appearance of the defendants and

their counsel and the suit was decreed.

5. Thereafter present application was filled seeking setting aside the

decree dated 21st November, 2008 and order of dismissal of the

application in default of appearance of the defendants and their counsel

and for restoration of the application for leave to defend and contest the

suit. The applicants have contended that the non appearance of the

defendants counsel was neither deliberate nor intentional but on

account of the sufficient reasons and special circumstances.

6. It is contended that the counsel for the applicants had to shift his

residence from M-200, Vikaspuri, New Delhi to 8, Ashoka Enclave-I,

Faridabad, Haryana in the first week of July, 2008. The applicants

further contended that the accommodation of the counsel at Delhi was

a permanent since 1986 whereas the accommodation taken by the

counsel for the applicants where he shifted was rented. It is stated that

since at the new residence the counsel had to make adjustment of his

home and office and had to search for all the amenities detailed in the

application because of which he was under lot of stress and suffered

from vertigo and high blood pressure which was caused due to toxic

imbalance in his ears and he also developed hearing problem.

7. The applicants contended that his counsel could develop vertigo

at any time, while driving or hearing loud sound or speaking loudly

which problem continued in August and part of September. The counsel

is alleged to be under medication and treatment at Shivalik Hospital,

HUDA Market, Sector 31, Faridabad. The applicants have produced the

medical certificates of the counsel for the applicants.

8. According to the applicants/defendants the matter was listed on

8th August, 2008 and it had been adjourned before the counsel for the

defendants could appear on that date. It is stated that the counsel was

delayed on that date on account of his medical problems. Since the

matter had already been adjourned on 8th August, 2008, the enquiries

were made about what had happened in the matter by the counsel for

the applicants and it transpired that the application for leave to defend

was not dismissed but was adjourned to next date. The counsel,

however, noted the next date as 24th November, 2008. The defendant

was therefore, also informed the next date of hearing as 24th November,

2008.

9. The applicants have also contended that in October, 2008 his

counsel had to again shift his residence from 8, Ashoka Enclave-I,

Faridabad, Haryana to House No.281, Sector 28, Faridabad, Haryana

which was purchased by the father of the counsel.

10. The plea of the applicants/defendants is that on 24th November,

2008 the matter was not listed and on enquiry by the counsel for the

defendants, it transpired that the matter was listed on 21st November,

2008 on which date the application of the defendant was dismissed in

default and the suit was decreed.

11. The applicants/defendants have produced the photocopy of the

diary of the counsel dated 8th August, 2008 in which the next date of

hearing in the matter is recorded as 24th November, 2008. In the

circumstances, it is contended that non appearance of the defendants

and their counsel on 21st November, 2008 was neither intentional nor

willful and there is sufficient cause for setting aside the order of

dismissal dated 21st November, 2008 dismissing the application under

Order 37 Rule 3(5) of the Code of Civil Procedure for leave to defend and

contest the suit and restoring the same to its number and for setting

aside the judgment and decree dated 21st November, 2008 passed

consequent upon the dismissal of the application for leave to defend

and contest the suit in default of appearance.

12. The application is contested by the plaintiff. The plaintiff/non

applicant has contended that the application is not maintainable as it

not in accordance with law. According to the plaintiff, defendants have

failed to show special circumstances and good, substantial and

meritorious defence on merit of the suit in the application, and in the

circumstances the application is liable to be dismissed. The application

is also alleged to be neither signed nor supported by the affidavits of the

defendants and the power of attorney given in favor of Sh.Shailender

Mishra does not authorize him and gives requisite power to file the

application on behalf of the defendants. It is also contended that no

resolution of the board of directors authorizing execution of power of

attorney in favor of Sh. Shailendra Mishra has been filed with the

application.

13. It is also contended that the Form `C' were issued by the

defendant no.1 company after issuance of legal notice raising demands

and consequently the liability is admitted by the defendant company for

the goods supplied. It is also contended that since the execution

petition has also been filed there are no grounds to set aside the order

of dismissal dated 21st November, 2008 dismissing the application of

the defendants under Order 37 Rule 3(5) of the Code of Civil Procedure

and passing judgment and decree dated 21st November, 2008.

14. I have heard the learned counsel for the parties at length and

perused the applications and replies. The application filed on behalf of

defendants/applicants showing cause for non appearance of defendants

and their counsel on 21st November, 2008 is supported by the affidavit

of the counsel. The reply filed by the plaintiff is supported by the

affidavit of Sh.Dalip Kumar Parekh, Manager, Commercial of the

plaintiff company. Beside the bald denial in the reply about the facts

regarding the illness of the counsel for the applicants and also his

shifting of residence and noting the wrong date, nothing has been

pleaded or averred on behalf of the plaintiff so as to disbelieve the pleas

and contentions of the defendants/applicants and affidavit of their

counsel.

15. Perusal of the application seeking unconditional leave to defend

and contest the suit is rather reveals that a ground has been taken by

the defendants that this Court does not have jurisdiction to try the

present suit as the Clause 21 of the purchase order which is not denied

by the plaintiff categorically stipulates that the contract shall be

deemed to have been entered in Aurangabad only and Courts will have

jurisdiction in all matters whatsoever out of this work at Aurangabad

only.

16. In the plaint the plaintiff has alleged that the defendants had

been making purchases of the polyblends of different brands on

deferred payment and the defendants had been maintaining an open,

mutual and current account with the plaintiff. It is also averred that the

mode of payment adopted between the parties was that the defendants

used to issue irrevocable letter of credit from their bankers and the

goods used to be retired by the defendants against the acceptance of

commercial hundies which used to be paid by the defendants or their

bankers on or about due dates. This is also averred by the plaintiffs

that defendants had also been giving demand drafts in favor of plaintiff

for amounts towards payment of outstanding dues against them and

the credit of these used to be given to the defendants in the books of

account of plaintiff.

17. In the circumstances it cannot be held that part of cause of action

had not arisen at Aurangabad. If part of the cause of action had arisen

at Aurangabad and part of cause of action had arisen at New Delhi, by

exclusion clause in the purchase orders which have been admitted by

the plaintiffs, the jurisdiction of the Courts at Delhi will be excluded.

The Supreme Court in A.B.C.Laminart Pvt Ltd and Anr v. A.P.Agencies,

Salem, AIR 1989 SC 1239 had held that the exclusion clause in a

contract is not against the public policy and if the cause of action has

arisen at more than one place giving jurisdiction to different Courts, by

agreement the jurisdiction can be vested in one Court excluding the

jurisdiction of other Courts. It was held that if under law, civil Courts at

various places have jurisdiction and the parties have agreed to submit

to one of these jurisdiction and not to others, then it cannot be said

that there will not be total ouster of jurisdiction of other Courts. It was

held that the jurisdiction to which the parties have agreed not to submit

to, will not be a proper jurisdiction to decide the dispute arising out of a

contract.

18. When the ouster clause is clear, unambiguous and is specific,

this will bind the parties unless the absence of ad idem can be shown

and the other Courts except the Court where the parties have agreed to

have jurisdiction should avoid exercising jurisdiction. The ouster clause

between the plaintiff and defendants also stipulates the word 'only' for

the Jurisdiction at Aurangabad. In the circumstances, apparently the

Court at Delhi will not have jurisdiction, prima facie and it will be a

special circumstance to set aside the decree passed by this Court on

21st November, 2008 on dismissal of the application of the defendants

for unconditional leave to defend and contest the suit. In U.Can Migrate

Consultants Groups Ltd v. Canadian Connections Groups Ltd,

144(2007) DLT 863 a suit filed under Order 37 was returned as the

Court at Delhi did not have jurisdiction and, therefore, the plaint was

returned for filing at the appropriate Court relying on the ratio of

A.B.C.Laminart Pvt Ltd (Supra).

19. The plaintiff have also alleged the liability against defendant No.2

on the ground that he is the managing director and the person

responsible and, therefore, he is liable to meet the liabilities of

defendant No.1. The managing director of a private limited company

cannot be held to be personally liable unless such a managing director

had stood guarantee or assured the payment of the amounts due from

the private limited company to the creditor.

20. A Division Bench of this Court in 136 (2007) DLT 573, Manjari v.

Ranjit Singh had rather held that for invoking the power under Order

37 of the Code of Civil Procedure for setting aside the ex-parte decree

the Court should not demand existence of triable issues. Approach of

the Court to consider the triable issues before setting aside the ex-parte

decree shall be illegal, incorrect and will result in miscarriage of justice.

In Manjari (Supra) the defendant was served by publication though a

copy of the suit was not published along with the summons. On this

ground though a finding had been recorded that the service of summon

upon the defendant was not in accordance with law, however, for

setting aside an ex-parte decree passed in such circumstances, the

Court had insisted for consideration of triable issues and such an

approach of the trial Court was set aside.

21. In the present facts and circumstances, the defendants

applicants have been able to make out special circumstances and

sufficient cause for non appearance of applicants and his counsel on

21st November, 2008 when on account of non appearance of

defendants/applicants, their application for leave to defend and contest

the suit being IA No.11606/2007 was dismissed and consequent

thereto, the suit was dismissed.

22. The applicants have been able to establish that on 8th August,

2008 their counsel could not reach on time on account of his medical

problems and by the time, the Counsel for the defendants had reached

the matter had already been adjourned. The counsel made enquiries

when it had transpired that the application for leave to defend and

contest the suit had been adjourned. However, the next date of hearing

was noted by the counsel as 24th November, 2008 in place of 21st

November, 2008 leading to non appearance on 21st November, 2008

and dismissal of the application of the defendants for leave to defend

and contest the suit and an ex-parte decree passed against the

defendants. From the copy of the power of attorney executed in favor of

the Shailendra Mishra dated 19th December, 2005 it cannot be inferred

that he is not authorized on behalf of the defendant company to file the

application for setting aside the ex-parte decree passed against the

defendants. It has also been contended that Sh. Shailendra Mishra is

the Principal officer as well as duly constituted attorney of the

defendant company. In the circumstances, prima facie, it cannot be

held that the application has not been filed by a duly authorized person

on behalf of the defendant company.

23. Non appearance by the counsel for the defendants is for bona fide

reasons and there are no grounds to disbelieve the counsel for the

defendants who had also filed his affidavit in support of the allegations

made in the application for setting aside the ex-parte decree. In the

circumstances, the applicants have been able to make out sufficient

cause for non appearance of the defendants leading to dismissal of the

application for leave to defend and contest the suit and there are also

special circumstances, prima facie, for the setting aside the judgment

and decree passed against the defendants in the suit filed under order

37 of the Code of Civil Procedure.

24. Consequently, the judgment and decree dated 21st November,

2008 are set aside and order dated 21st November, 2008 dismissing the

application of the defendants applicants for non appearance of

defendants and their counsel is set aside and IA No.11606/2007 is

restored to its original number.

IA No.11606/2007

Adjourned at the request of the counsel for the plaintiff.

Adjournment is not opposed.

List on 31st July, 2009 for hearing of application for leave to

defend and contest the suit.

IA No.414/2009

Since the judgment and decree dated 21st November, 2008 has

been set aside, the application has become infructuous.

Dismissed as infructuous.

MAY 25, 2009                                    ANIL KUMAR, J.
"k"