Ge Capital Services India vs Prayag Scanning Pvt Ltd & Ors
2015 Latest Caselaw 6916 Del

       $~9
*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+      CS(OS) 3339/2011
       GE CAPITAL SERVICES INDIA                        ..... Plaintiff
                      Through : Ms. Deepika V. Marwaha with
                      Ms. Worthina Kasar, Advocates with
                      Mr. Atul Bansal, AR in person.

                          versus

       PRAYAG SCANNING PVT LTD & ORS            ..... Defendants
                     Through : Mr. Himanshu Pathak, Advocate

       CORAM:
       HON'BLE MS. JUSTICE HIMA KOHLI

                          ORDER

% 14.09.2015

IA No.17878/2012 (by the u/O XXXVII R-4 r/w Sec.151 CPC) and IA No.17879/2012 (for condonation of delay), R.A. NO. 388/2015 and I.A. No. 16543/2015

1. IA No.17878/2012 has been filed by the defendants praying

inter alia for setting aside the judgment and decree dated 16.7.2012,

passed in the suit and I.A. 17879/2012 is for seeking condonation of

delay of 33 days in filing the leave to defend application.

2. Review Application No. 388/2015 has been filed by the

defendants No. 1 and 3 to 7 for seeking review of the order dated

28.4.2015, whereunder it was observed that the decree dated

16.7.2012 is final against all the defendants, except for the defendants

No.1 and 4. Accompanying the said application is I.A. No.

16543/2015, for seeking condonation of delay of 65 days in filing the

review application.

3. Before dealing with the present applications, it is considered

necessary to recapitulate the brief facts of the case.

4. The plaintiff/GE Capital Services India had instituted the present

summary suit in December, 2011, praying inter alia that a decree for a

sum of Rs.49,87,082.56 paise be passed against the defendant

No.1/company and the defendants No.2 to 7, as guarantors of the

defendant No.1/company.

5. Summons in the prescribed form were issued in the suit, vide

order dated 3.5.2012. On the said date, Mr. R.S. Kundra, Advocate

had entered appearance for the defendant No.4 and he was granted

time to take appropriate steps. Despite service, none of the

defendants filed their memo of appearance. Since the suit remained

uncontested, it was decreed vide order dated 16.7.2012 in favour of

the plaintiff against all the defendants jointly and severally.

Pertinently, counsel for the defendant No.4 was present in Court when

the decree was passed. Thereafter, the defendant No.4 filed I.A.‟s

17878-79/2012 on 11.9.2012. A perusal of said applications reveals

that the same has been signed by defendant No.4 for self and as the

Managing Director of the defendant No.1/company, praying inter alia

for setting aside the ex parte decree dated 16.7.2012 and for being

granted leave to defend the suit.

6. Notice was issued on the captioned applications on 25.9.2012,

returnable on 1.2.2013. On 22.5.2013, counsel for the defendants

No.1 and 4 had stated before the Court that his clients would deposit

the title documents of some immovable property equivalent to the

decretal amount. Seven weeks‟ time was for the said purpose and the

defendants were directed to produce the original title deeds of the

immovable property in question on 05.8.2013, for the satisfaction of

the Registrar General. On 5.8.2013, counsel for the defendants No.1 &

4 had stated that they had filed original title deeds of some other

property bearing No.84/82, Vake Mohalla, Leader Road, District &

Tehsil Sadar, Allahabad City, UP. However, the title deeds revealed

that the Government valuation of the said property is for a sum of

Rs.6,70,809/-, whereas the decretal amount was to the tune of

Rs.49,87,082.56 paise. At the request of counsel for the defendants

No.1 & 4, the case was adjourned by the Registrar General to

10.9.2013.

7. On 10.9.2013, counsel for the defendants No.1 & 4 had

submitted a valuation certificate of the captioned property obtained

from a private valuer, which showed the valuation as Rs.33.95 lacs.

At the request of counsels for the parties, the case was placed before

the Court on 9.10.2013. On 9.10.2013, counsel for the defendants had

sought an adjournment to enable his clients negotiate a settlement

with the plaintiff through mediation and the case was adjourned to

13.12.2013.

8. On 13.12.2013, counsel for the defendants had claimed that

they had secured the outstanding loan by depositing the title deeds in

respect of a residential property situated in Allahabad. As the said

submission was disputed by the counsel for the plaintiff, vide order

dated 13.12.2013 the defendants no.1 and 4 were directed to file an

affidavit and place on record the relevant documents to establish

creation of a mortgage in respect of the residential property in favour

of the plaintiff and file a valuation report obtained from a Government

valuer in respect of the captioned property. The case was then

adjourned to 25.3.2014.

9. On 25.3.2014, none had appeared on behalf of the defendants

No.1 & 4 and resultantly, I.A. 17878-79/2012 were dismissed. After

one month, the defendants filed IA No.7949/2014, praying inter alia

for setting aside the order dated 25.3.2014. Notice was issued on the

said application on 29.4.2014, returnable on 19.8.2014. Finally, vide

order dated 26.11.2014, IA No.7949/2014 was allowed and the

dismissal order dated 25.3.2014, was set aside and the defendant

No.4 was permitted to argue IAs No.17878-79/2012 on merits.

10. Aggrieved by the aforesaid order, the plaintiff had filed an intra

court appeal, registered as FAO(OS)No.3/2015, which was allowed by

the Division Bench vide order dated 22.4.2015, and the order dated

26.11.2014 was set aside. However, the case was remitted back to

the Single Judge for a fresh consideration.

11. It is in the light of the said order that I.A. 17878-79/2012 were

taken up for arguments by the predecessor Bench on 28.4.2015. On

the said date, counsel for the defendants No.1 & 4 had stated that he

had filed a valuation report got prepared from a private valuer wherein

the immovable property had been valued at Rs.33.00 lacs. He had

also sought time to file a report from a Government approved valuer

for the valuation of the suit property. While granting three weeks‟ time

to the defendants to do so, the case was adjourned for today. It was

also clarified on the said date that as the present applications had only

been filed by the defendants No.1 & 4, the decree had attained finality

qua the other defendants.

12. On 12.8.2015, the review application filed by the defendants,

(RA No.388/2015), was taken up for consideration along with the

application for condonation of delay, and notice was issued to the non-

applicant/plaintiff directly as also through counsel, returnable on

9.10.2015.

13. Ms. Marwaha, learned counsel for the plaintiff states though the

review application states that it has been filed by all the defendants,

except for the defendant No.2, a perusal of the affidavit filed in

support of the said application reveals that the same has been signed

and sworn only by Mr. Manoj Kumar Yadav, defendant No.4 as the

Managing Director of the defendant No.1/company.

14. An examination of the review application bears out the

submissions of counsel for the plaintiff that it is not supported by the

affidavit of any of the other defendants except for defendant no.4.

Further, a perusal of the authorization letter dated 1.5.2012, which

learned counsel for the defendants No.1 & 4 relies on to claim that it

authorizes the said defendant to appear on behalf of all the

defendants, reveals that the Board of Directors of the defendant No.1

have authorized the defendant No.4 as its Managing Director to take

steps in the suit. The said letter does not authorize the defendant No.4

to appear for or on behalf of the remaining defendants. Even the

power of attorney filed by the counsel for the applicants with the

review application reveals that it has been signed by the defendant

No.4 in his personal capacity and not as a Director of the defendant

No.1.

15. In these circumstances, the review application cannot be treated

as one that has been filed by all the defendants, excluding the

defendant No.2, as stated by learned counsel for the defendant no. 4.

The said application and the condonation of delay application shall

have to be treated as having been filed by the defendants No.1 & 4

alone. Ordered accordingly.

16. In view of the fact that I.A‟s 17878-79/2012, filed by defendant

no.1 and 4 are still pending consideration and no adverse orders were

passed against the said defendants on the relevant date, i.e., on

28.4.2015, the review application filed by them for seeking review of

the order dated 28.4.2015 is found to be misconceived and is

accordingly disposed of along with the condonation of delay

application.

17. Coming back to IA No.17878/2012 filed by the defendants No.1

& 4 for setting aside the judgment and decree dated 16.7.2012,

learned counsel for the plaintiff opposes the said application and states

that the defendants No.1 & 4 have used every tactic under the sun to

delay the execution of the judgment and decree, which had to be

placed on the back burner for the past three years, thus leaving the

plaintiff high and dry.

18. As for the merits of the present applications, the explanation

offered by the defendant no.1 and 4 for their failure to enter in

appearance within the stipulated period of ten days prescribed under

Order XXXVII Rule 3(1) CPC, is that the defendant no. 4, Managing

Director of the defendant No.1/company was unwell and suffering

from hepatitis and diabetes and the other Directors were unaware of

the service of summons on them and therefore, no effective steps

could be taken to file the memos of appearance within the prescribed

timeline.

19. It has been further averred in the application that on 11.5.2012,

the defendants had filed an application for condonation under Order

XXXVII Rule 3 CPC, but the same had remained under objections and

no steps were taken by the clerk of the counsel to cure the defects

pointed out by the Registry and re-file the same. The defendant No.4

came to know about the passing of the decree in the present suit on

16.7.2012 whereafter he took steps to file the present application

along with an application for condonation of delay of 33 days.

20. Counsel for the plaintiff stresses the fact that no explanation has

been offered by the defendants 1 to 3 for non-filing of the memo of

appearance, when they were admittedly served with the summons in

the suit along with the defendant No.4. She submits that though the

remaining defendants have been impleaded by the plaintiff as

guarantors of the defendant No.1/company, they also happen to be

the Directors in the defendant No.1/company and in that capacity,

they were all along aware of the institution of the present suit and the

consequences of non-filing of the memo of appearance within the

prescribed timeline. She contends that there is no explanation offered

by the defendants No.1 & 4, signatories to the present applications for

moving the same so belatedly more so when their counsel was present

on 16.7.2012, the date when the judgment and decree came to be

passed.

21. Counsel for the plaintiff seeks to clarify that contrary to the

submission made by the counsel for the defendants on 13.12.2013, to

the effect that the plaintiff had secured the outstanding loan on the

basis of an equitable mortgaged created by the defendant No.2 in

respect of a residential premises, the same is an incorrect position

and this fact was duly clarified before the Division Bench in the appeal.

22. The Court has considered the rival contentions of the parties

and perused the material placed on record. Before dealing with the

submissions of the parties, it would be useful to refer to Rule 4 of

Order XXXVII CPC, which is reproduced hereinbelow:

"Order XXXVII-Summary Procedure

1 to 3- xxx

(4) Power to set aside decree-After decree the Court may, under special circumstances, set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court to do so, and on such terms as the Court thinks fit."

23. A glance at Rule 4 reveals that the court may under special

circumstances set aside an ex-parte decree under Order XXXVII CPC

or set aside the execution or grant leave to defend to the defendant.

In the case of Rajni Kumar Vs. Suresh Kumar Malhotra & Anr.

Reported as (2003) 5 SCC 315, the Supreme Court had held as

below:

"Para 9: The expression „special circumstances‟ is not defined in the C.P.C. nor is it capable of any precise definition by the court because problems of human beings are so varied and complex. In its ordinary dictionary meaning it connotes something exceptional in character, extra-ordinary, significant, uncommon. It is an antonym of common, ordinary and general. It is neither practicable nor advisable to enumerate such circumstances. Non-service of summons will undoubtedly by a special circumstances. In an application under Order 37, Rule 4, the court has to determine the question, on the facts of each case, as to whether circumstances pleaded are so unusual or extraordinary as to justify putting the clock back by setting aside the decree; to grant further relief in regard to post- decree matters namely, staying or setting aside the execution and also in regard to pre decree matters viz., to

give leave to the defendant to appear to the summons and to defend the suit."

24. The very object of Order XXXVII CPC is to ensure expeditious

hearing and disposal of the suit filed under a special provision. Rule 4

empowers the court to grant leave to the defendant to appear to the

summons and defend the suit if the court considers it reasonable to do

so, on such terms as it may think fit in addition to setting aside the

decree. Where an application is filed under Order XXXVII Rule 4 CPC

praying inter alia for setting aside a decree either because the

defendant did not appear in response to the summons and the

limitation had expired, or after entering appearance did not apply for

leave to defend in the suit within the prescribed period, not only is the

defendant required to demonstrate special circumstances that

prevented him from appearing or applying for leave to defend, he has

also to show by affidavit or otherwise, facts that would entitle him to

leave to defend the suit.

25. A glance at the sequence of events after filing the present

applications make it abundantly clear that several opportunities were

granted to the defendants No.1 & 4 to offer an immovable property as

security for the decretal amount only with the idea that conditional

leave could then be granted to them, but to no avail. After the

passage of three years, the position remains the same even today. It

is apparent from their conduct that the defendants No.1 & 4 have been

deliberately stalling the proceedings by offering title deeds of

properties that are far below the mark or of those that they do not

own. The explanation offered by the counsel for the defendants No.1

& 4 for setting aside the order dated 16.7.2012 can by no stretch of

imagination be termed as an extraordinary or special ground as

envisaged under Order XXXVII Rule 4 CPC. Not only were the

defendants No.1 and 4 served with the summons in the suit, records

reveal that all the remaining defendants were contemporaneously

served with the summons in the suit, but they have elected to stay

away from the suit proceedings with no explanation worth the while

offered for the same. Furthermore, the defendants No.1 & 4 were

duly represented through counsel on the date of passing of the

judgment and decree, i.e., on 16.7.2012 and no justification has been

offered by the said defendants for having waited for about three years

to file the present applications when they were apprised of the orders

passed in the suit through their counsel long before.

26. Even today, the defendants No.1 & 4 have not complied with the

order dated 22.5.2013, whereunder they were directed to file the title

documents of the immovable property equivalent to the decretal

amount. The submission made by the counsel for the defendants No.1

& 4 to the effect that the sale deed dated 11.8.2011 produced by him

is in respect of the second and third floors of premises bearing

No.84/82, Vake Mohalla, Leader Road, District & Tehsil Sadar,

Allahabad City, UP, is not borne out from a perusal thereof. Quite

clearly, the sale deed is with respect to the second floor of the

property in question and therefore any valuation report filed by the

defendants No.1 & 4, giving the value of the second and the third

floors at Rs.49.92 lacs, cannot be accepted. Incidentally, even the

valuation report dated 1.7.2015, stated to have been filed by the

defendants No.1 & 4 is not on record. However, a copy thereof has

been furnished to the Court for scrutiny and it reveals that only the

second floor is in the name of the defendant No.4 whereas the third

floor is in the name of his son, Shri Utkarsh Yadav, who is not even a

party to the present proceedings.

27. This Court is of the opinion that sufficient time has been given to

the defendant no.1 and 4 to comply with the order dated 22.5.2013

and demonstrate their bonafides, but they have miserably failed and

have been dragging their feet. There is no justification for granting

further time to them to make compliances and at the same time keep

in abeyance the judgment and decree dated 16.7.2012.

28. In view of the aforesaid facts and circumstances, this Court is of

the opinion that the defendants no. 1 and 4 do not deserve any further

indulgence. This Court is not inclined to exercise its discretion in their

favour under Order XXXVII Rule 4 CPC as no exceptional

circumstances have been pointed out by them. Resultantly, the

present applications are dismissed as being devoid of merits.

R.A.No.388/2015 & IA No.16543/2015 (for condonation of delay)

1. In view of the order passed above, the date fixed in the

applications, i.e., 9.10.2015 is cancelled.

HIMA KOHLI, J SEPTEMBER 14, 2015 sk/ap/mk