Sandeep Ahuja & Ors. vs National Small Industries ...
2012 Latest Caselaw 154 Del

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*   IN THE HIGH COURT OF DELHI AT NEW DELHI

                                DATE OF DECISION: JANUARY 09, 2012

+    RFA(OS) 98/2011

     SANDEEP AHUJA & ORS                 ..... Appellants
                  Through: Mr.Jayant Nath, Sr.Advocate
                  with Mr.L.M.Asthana, Advocate.

                 versus

     NATIONAL SMALL INDUSTRIES CORPORATION
     LTD & ORS.                       ..... Respondents
                  Through: Mr.A.K.Thakur, Mr.R.K.Mishra,
                  Mr.Aquib Ali and Mr.Chanchal Kumar,
                  Advocates for R-1.
                  None for R-2.

      CORAM:
      HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
      HON'BLE MS. JUSTICE PRATIBHA RANI

PRADEEP NANDRAJOG, J. (ORAL)

%

1. At the outset, Mr.Jayant Nath, Senior Advocate on instructions from Mr.L.M.Asthana, Advocate for the appellants states that without prejudice to their rights, the appellants are prepared to pay a sum of ` 10,00,000/- (Ten Lacs) each to the respondent No.1; which sum may be received by the respondent No.1 without prejudice to the rights of respondent No.1 as also without prejudice to the rights of the appellants and that the said sum could be taken

note of when the suit filed by the respondent No.1 is finally decided.

2. Relevant facts to be noted are that on 19.06.1999, a Memorandum of Agreement was executed between NSIC (respondent No.1) and M/s. Sristhi Auto Engineering Pvt. Ltd. (respondent No.2).

3. As per the said Memorandum of Agreement, it was agreed by the respondent No.1 that for the consideration mentioned in the Memorandum of Agreement, a machine would be let to the company under hire-purchase. It is mentioned in the Memorandum that Shalini Ahuja and her husband Sandeep Ahuja would stand surety.

4. Another Agreement in similar terms was executed on March 20, 1999.

5. It may be highlighted by us that as regards Rajiv Kapoor, there is no mention of his name or role in the two Memorandum of Agreements.

6. In terms of the two Memorandums, the two machines, required to be let on hire-purchase were given possession of to the company. To the misfortune of NSIC, its officers did not ensure that in compliance with the two Memorandum of Agreements, Shalini Ahuja and her husband executed surety bonds.

7. What was got executed from the two was declarations to the effect that both of them agreed to indemnify NSIC.

8. As regards Rajiv Kapoor, even he signed a declaration in the language pari materia with the declaration signed by Shalini Ahuja and Sandeep Ahuja.

9. NSIC filed a summary suit on the Original Side of this Court which was registered as CS(OS) No.267/2006, claiming decree in sum of ` 1,45,08,077. Qua Shalini Ahuja, impleaded as defendant No.2; Rajiv Kapoor, impleaded as defendant No.3 and Sandeep Ahuja, impleaded as defendant No.4, it was averred that defendants No.2 and 3 had executed a joint indemnity bond and qua defendant No.4, it was pleaded that he had furnished a declaration indemnifying the Corporation. Remainder averments were against the company.

10. Notice in the applicable form was served upon the defendants and only defendants No.1 and 2 entered appearance. Rajiv Kapoor and Sandeep Ahuja, defendants No.3 and 4 did not enter appearance.

11. An application seeking leave to defend was filed on behalf of defendants No.1 and 2. Affidavit in support was filed by Sandeep Ahuja, but with a clear disclaimer that he was representing defendant No.1 and acting on behalf of his wife Shalini Ahuja. To put it clear, application seeking leave

to defend was expressly filed on behalf of only defendants No.1 and 2.

12. Vide order dated 14.12.2009, declining leave to defend to defendant No.1 company, noting the law declared by the Supreme Court in the decision reported as 2002(4) SCC 736 State Bank of Saurashtra vs. M/s. Ashit Shipping Services Pvt. Ltd. & Anr. which held that on the basis of indemnity bonds, summary suits cannot be instituted, the learned Single Judge granted leave to defend to defendants No.2 and 3 i.e. Shalini Ahuja and Rajiv Kapoor.

13. Review of the order dated 14.12.2009 was prayed by NSIC pointing out to the learned Single Judge that defendants No.3 and 4 had not even entered appearance and thus it was prayed that two corrective actions were needed. Firstly, that the leave to defend granted to defendant No.3 vide order dated 14.12.2009 needs to be recalled, and secondly, there being no order qua defendant No.4, in view of the fact that the said defendant did not even enter appearance, the suit needed to be decreed against defendant No.4.

14. Vide impugned order dated 8th September, 2010, RP No.70/2010 filed by NSIC has been allowed; and reviewing the earlier order, suit has been decreed against defendant No.3 and defendant No.4 i.e. Sandeep Ahuja and Rajiv Kapoor.

15. A neat submission has been made by learned counsel for the appellant. The submission is that notwithstanding appearance not being entered by the appellants and leave to defend not being sought, it was the obligation of the learned Single Judge to have considered and decided whether or not a summary suit was maintainable against the appellants on the strength of declarations signed by them which are in the nature of indemnification. Learned counsel urges that qua Shalini Ahuja, defendant No.2, once the learned Single Judge recognized that summary suit, on the strength of an indemnity bond was not maintainable, the necessary consequential logical effect thereof required to be given qua the appellants as well.

16. Learned counsel for NSIC urges that if in a summary suit a party does not enter appearance, decree must automatically flow.

17. We do not agree with the submission of learned counsel for NSIC, inasmuch as it is the duty of every Court to consider whether it has jurisdiction over a particular subject matter.In fact, every Court is under an obligation to scrutinize every plaint which is presented before it and consider whether the action is cognizable by a Civil Court and is in respect of suits instituted under Order XXXVII of Code of Civil Procedure, it is the duty of the Court to apply its mind at the first hearing itself to decide whether the summary suit is maintainable. If the Court finds that the summary suit is not maintainable,

the suit has to be treated as an ordinary suit and summons issued accordingly.

18. Noting as aforesaid; binding the appellants to the statement made by their counsel, we dispose of the appeal setting aside the impugned order dated 08.09.2010. The appellants are bound to the statement made by their counsel and in compliance therewith would deposit (with respondent No.1) a sum of ` 10 lacs each within 12 weeks from today. The written statement filed by the appellants would be taken on record of the suit if filed within 6 weeks from today, but it is expressly made known that if ` 10 lacs each is not deposited by the appellants with respondent No.1 within 12 weeks from today, the defence under the written statement would be struck of.

19. We are conscious of the fact that as per law the suit filed by NSIC has to be treated as an ordinary suit with respect to the appellants, but we are directing as aforesaid on account of the fact that the appellants were negligent in pointing out to the learned Single Judge the relevant legal position qua them; and their counsel has in the appeal made a statement to the effect that each appellant would deposit, within 12 weeks from today, ` 10 lacs with NSIC.

20. We made it clear that the deposit made by the appellants with NSIC would be without prejudice to rights of either parties and would be factored by the learned Single Judge while deciding the suit on merits.

21. No costs.

22. Dasti.

                             PRADEEP NANDRAJOG
                                   (JUDGE)



                               PRATIBHA RANI
                                  (JUDGE)

JANUARY        09, 2012
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