Icon Build Con. Pvt. Ltd. vs Aggarwal Developers Pvt. Ltd.
2016 Latest Caselaw 6829 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                     Date of decision: 7th November, 2016

+            CS(OS) No.2656/2008 & IA No.8760/2016 (for stay).

       ICON BUILD CON. PVT.LTD                     ..... Plaintiff
                    Through: Mr. Gopal Jain, Sr. Adv. with Mr.
                             Ankit Jain, Adv.
                                    Versus
       AGGARWAL DEVELOPERS PVT.LTD               ..... Defendant
                    Through: Mr. Sanjay Manchanda, Adv.
       CORAM:-
       HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

IA No.8761/2016 (of the defendant under Order XXXVII Rule 4 CPC).
1.

The defendant, by this application seeks setting aside of a money

decree passed in this summary suit.

2. The counsel for the defendant/applicant and the senior counsel for the

plaintiff/non-applicant have been heard.

3. The plaintiff instituted this suit under Order XXXVII of the Code of

Civil Procedure, 1908 (CPC) for recovery of Rs.4,05,67,347/- with interest

inter alia pleading that (i) the plaintiff had entered into agreements with

others for purchase of some land in Tehsil Najafgarh, New Delhi and in

pursuance to the said agreements had paid a sum of Rs.1,92,92,500/- out of

the total sale consideration of approximately Rs.3.6 crores to the sellers: (ii)

the plaintiff, vide Agreement dated 24th February, 2007 with the defendant,

agreed to assign its right under the said Agreements to Sell in favour of the

defendant and the defendant in pursuance to the said Agreement dated 24th

February, 2007 handed over cheques for a total sum of Rs.3,60,59,864/- in

favour of the plaintiff to the plaintiff; and, (iii) the said cheques were

dishonoured on presentment.

Accordingly, the suit for amount of the cheques together with interest

at 15% per annum thereon up to the date of institution of the suit, on the

basis of the contract dated 24th February, 2007 with the defendant and the

dishonoured cheques was filed.

4. The defendant applied for leave to defend inter alia contending that

since the cheques were in pursuance to an agreement of assignment of rights

to purchase land and which land had not been assigned in favour of the

defendant, the said cheques were without consideration.

5. Vide order dated 20th April, 2012 conditional leave to defend, subject

to the defendant depositing 50% of the principal amount in this court, was

granted.

6. The defendant preferred FAO(OS) No.278/2012 against the order

aforesaid and of which, vide order dated 6 th July, 2012 of the Division

Bench, notice was issued but in the meanwhile the defendant was directed to

deposit 25% of the principal amount instead of 50% as directed by this

Bench.

7. The defendant filed CM No.13358/2012 in FAO(OS) No.278/2012

supra for modification of the order dated 6th July, 2012 but which application

was dismissed on 6th August, 2012.

8. The defendant preferred SLP(C) No.27916-27917/2012 against the

orders dated 6th July, 2012 and 6th August, 2012 aforesaid of the Division

Bench but which SLP was dismissed in limine on 21st September, 2012.

9. When FAO(OS) No.278/2012 came up before the Division Bench on

24th September, 2012, in view of dismissal of the SLP, the appeal was

disposed of with a direction that in case the defendant deposits 25% of the

principal amount within a period of one month from that day, the order dated

20th April, 2012 of this Bench would stand varied to that extent and failing

which consequences of not depositing the amount would follow.

10. The defendant did not deposit 25% of the principal amount and vide

order dated 30th January, 2013 this Bench decreed the suit for recovery of

Rs.4,05,67,347/- along with pendente lite and future interest at 18% per

annum.

11. The defendant preferred RFA(OS) No.79/2013 against the decree

aforesaid but which appeal was dismissed vide judgment dated 3 rd

September, 2013.

12. The plaintiff, as stated in the plaint itself, on the basis of the same

cheques had also initiated proceedings under Section 138 read with Section

141 of the Negotiable Instruments Act, 1881 against the defendant and its

directors and which proceedings were put to trial and vide judgment dated

18th February, 2013 therein, the defendant and its directors were acquitted

inter alia holding that the cheques forming basis of the proceedings were

without consideration.

13. I may at this stage notice that the aforesaid order of acquittal of the

defendant and its directors is of a date before dismissal on 3rd September,

2013 of RFA(OS) No.79/2013 aforesaid preferred by the defendant.

However in the judgment dated 3rd September, 2013 there is no mention of

the said order of acquittal.

14. The plaintiff preferred criminal leave to appeal which was dismissed

by a Single Judge of this Court vide 23rd April, 2014 running into as many as

14 pages, also opining that on the date when the cheques in question were

issued, it was not possible for the plaintiff to convey to the defendant a valid

transferable right in the land and that even on the date of three agreements

for purchase entered into by the plaintiff with others, the plaintiff‟s right to

the land were inchoate and contingent upon both the parties to the said three

agreements performing their respective obligations.

15. The defendant preferred SLP(C) No.36155/2013 against the judgment

dated 3rd September, 2013 aforesaid of the Division Bench and the plaintiff

preferred SLP Criminal No.8336-8341/2014 against the order dated 23rd

April, 2014 of dismissal of criminal leave to appeal preferred by the

plaintiff.

16. Vide order dated 11th March, 2016, the Supreme Court „dismissed‟

SLP (C) No.36155/2013 and in view of dismissal thereof, „disposed of‟ SLP

Criminal No.8336-8341/2014 preferred by the plaintiff.

17. The defendant has filed this application pleading that since with

respect to the same cheques it has been held that the same were without

consideration, the decree against the defendant be set aside under Order

XXXVII Rule 4 of the CPC.

18. This application came up earlier on 21st October, 2016 when though I

prima facie observed that Order XXXVII Rule 4 does not apply to such a

contingency but in view of the evident unjustness of the outcome flowing

from the civil and the criminal proceedings, an opportunity was given to the

counsels to address further arguments today.

19. Today, the senior counsel for the plaintiff/non-applicant has raised a

preliminary objection to the maintainability of the application. It is

contended that the decree of this court which is sought to be set aside having

been appealed against in RFA(OS) No.79/2013 and the SLP thereagainst

having been dismissed by the Supreme Court, the decree of this court has

merged in the decree of the Division Bench and hence this Bench cannot

entertain this application.

20. The senior counsel for the plaintiff/non-applicant has relied upon

Kunhayammed Vs. State of Kerala (2000) 6 SCC 359 and Chandi Prasad

Vs. Jagdish Prasad (2004) 8 SCC 724 on the principle of merger of the

decrees.

21. I have enquired from the senior counsel for the plaintiff/non-applicant

that since the SLP against the judgment of the Division Bench dismissing

the RFA(OS) No.79/2013 has been dismissed in limine, whether the

Division Bench would have jurisdiction to entertain an application under

Order XXXVII Rule 4 CPC or the application if at all would lie before the

Supreme Court only.

22. The senior counsel for the plaintiff/non-applicant has fairly stated that

in view of the dismissal in limine of the SLP preferred against the judgment

dated 3rd September, 2013 in RFA(OS) No.79/2013 of the Division Bench,

in law the application though not maintainable before this Bench, would lie

before the Division Bench.

23. The senior counsel for the plaintiff/non-applicant has also handed

over in the court copy of the SLP (C) No.36155/2013 preferred by the

defendant to demonstrate that the defendant therein also had taken the same

grounds as taken in this application to urge that the decree was liable to be

set aside but states that the SLP was still dismissed. Attention is also invited

to para 4 of the application under consideration where the defendant has

pleaded that the Supreme Court in SLP (C) No.36155/2013 vide order dated

9th December, 2013 "taking into consideration the fact that the defendant

stands acquitted in the criminal proceedings filed under Section 138

Negotiable Instruments Act, allowed the defendant to deposit the interim

amount as required to defend the present suit" and to para 9 of the

application where the defendant has pleaded that on 11th March, 2016 SLP

preferred by the defendant as well as SLP preferred by the plaintiff were

taken up together for hearing and on the basis thereof contends that the

Supreme Court was seized of the inconsistent outcome in the two

proceedings and inspite thereof „dismissed‟ the SLP preferred by the

defendant and „disposed of‟ the SLP preferred by the plaintiff.

24. The counsel for the defendant draws attention to the order dated 2 nd

May, 2014 in SLP(C) No.36155/2013 whereby the order dated 9th

December, 2013 was recalled. However I am unable to understand the

consequence thereof to the present controversy inasmuch as ultimately the

SLP (C) No.36155/2013 was dismissed.

25. The counsel for the defendant/applicant has referred to Pasupuleti

Venkateswarlu Vs. The Motor & General Traders (1975) 1 SCC 770 but

which is not found to be of any relevance on the said aspect. He has not cited

any judgment to show that notwithstanding the decree of this court having

merged with the judgment of the Division Bench, the application under

Order XXXVII Rule 4, if maintainable, would lie before this Bench.

26. In Kunhayammed supra it was held that the logic underlying the

doctrine of merger is that there cannot be more than one decree or operative

orders governing the same subject-matter at a given point of time; when a

decree or order passed by inferior court was subjected to a remedy available

under the law before a superior forum, then, though the decree or order

under challenge continues to be effective and binding, nevertheless its

finality is put in jeopardy; once the superior court has disposed of the lis

before it either way - whether the decree or order under appeal is set aside or

modified or simply confirmed, it is the decree or order of the superior court

which is the final, binding and operative decree or order wherein merges the

decree or order passed by the court below. In Chandi Prasad supra it was

held that when a judgment is pronounced by a High Court in exercise of its

appellate power upon entertaining the appeal and a full hearing in presence

of both parties, the same would replace the judgment of the lower court and

only the judgment of the High Court would be treated as final; the doctrine

of merger was held to be based on the principles of propriety in the

hierarchy of justice delivery system and the said doctrine does not make a

distinction between an order of reversal, modification or an order of

confirmation passed by the appellate authority.

27. Order XXXVII Rule 4 enables the Court to, under special

circumstances, set aside the decree. I agree with the contention of the senior

counsel for the plaintiff/non-applicant that the power to set aside decree can

be exercised only by the Court whose decree governs the subject matter at a

given point of time and in accordance with the principles aforesaid there can

be only one decree governing the parties at a given point of time and since

the decree though originally passed by this Bench was appealed against and

the Division Bench in exercise of its appellate power entertained the appeal

and after a full hearing in the presence both the parties has dismissed the

appeal, the decree in existence today or on the day when this application

under Order XXXVII Rule 4 was filed would be the decree of the Division

Bench and it would be the Division Bench only which would be empowered

to entertain the application under Order XXXVII Rule 4 of the CPC, if at all

maintainable.

28. Merit is thus found in the preliminary contention/objection of the

plaintiff/non-applicant as to the maintainability of the application under

Order XXXVII Rule 4 of the CPC and the application is liable to be rejected

on this ground alone.

29. I may however add my reasons for expressing doubts in the order

dated 21st October, 2016 as to the very applicability of Order XXXVII Rule

4 CPC to the present factual situation and for observing hereinabove that the

application under Order XXXVII Rule 4 of the CPC, if maintainable, would

lie before the Division Bench.

30. Order XXXVII Rule 4 is as under:-

"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 so to do, and on such terms as the court thinks fit".

31. Order XXXVII Rule 4, as per its language, postulates a decree under

Order XXXVII having been passed either (i) without the defendant against

whom decree has been passed appearing and applying for leave to defend or;

(ii) the defendant though having appeared and applied for leave to defend,

the application for leave to defend having not been considered and in such a

situation empowers the Court to "under special circumstances, set aside the

decree".

32. Rule 4 of Order XXXVII in my view does not provide for a situation

where leave to defend has been filed and considered and declined.

33. This is evident from the language thereof requiring the Court to, "after

decree" "under special circumstances, set aside the decree" and to thereafter

proceed to "give leave to the defendant to appear to the summons and to

defend the suit". The only inference from the language used in Rule 4 of

Order XXXVII is that the power thereunder is to be exercised only where

the defendant has had no opportunity to show to the Court that he is entitled

to leave to defend.

34. The language of Rule 4 of Order XXXVII cannot in my view be

interpreted as empowering the Court to, after it has on an earlier occasion

considered the application of the defendant for leave to defend and held the

defendant not entitled to leave to defend, in a second round change its view

and grant leave to defend. Rule 4 of Order XXXVII in my view, is akin to

Order IX Rule 13 of the CPC and which is not applicable to Order XXXVII.

Rule 4 can thus be invoked only when the defendant has missed the chance

to have his claim for leave to defend considered by this Court and has no

application where the decree is as a consequence of not finding the

defendant entitled to leave to defend.

35. Not only does the language of Rule 4 of Order XXXVII does not

permit such an interpretation but such an interpretation would also be

contrary to the principle of finality of judgments and orders of the Courts

and which in Rupa Ashok Hurra Vs. Ashok Hurra (2002) 4 SCC 388

reiterated in Indian Council for Enviro-Legal Action Vs. Union of India

(2011) 8 SCC 161 has been held to be for public good, in the interest of the

State and sacrosanct even if observance thereof entails hardship on

individual litigants as the mischief arising from that source is small in

comparison with the great mischief which would necessarily result from

doubt being thrown upon finality of decisions. I have also had occasion to

deal with the said aspect in Yaro Khan Vs. Union of India

MANU/DE/3686/2011, Government of NCT of Delhi Vs. Sant Gurbaksh

Singh MANU/DE/2533/2012 (DB), Ram Chander Aggarwal Vs. UOI 187

(2012) DLT 370 (DB) and Sh. Ashok Kumar Vs. Smt. Surjit Kaur AIR

2014 Delhi 1. If the said principle of finality is breached, it would erode the

faith in the judicial system. After all dispensation of justice, though a divine

function, has to be by human beings and no two human beings can think

alike even though governed by judicial principles. If it were to be held that

after an application for leave to defend has been dismissed by one Judge and

the suit decreed, a successor Judge can re-hear the matter of grant of leave to

defend and if finds special circumstances, change the decision from that of

refusal of leave to defend to grant of leave to defend and consequently set

aside the decree, the consequences thereof would be grave for the judicial

system.

36. I may clarify that in this respect it matters not whether the leave to

defend has been dismissed on merits or has been dismissed as a consequence

of non-compliance of condition subject to which it was granted.

37. Thus, in my view, the application under Order XXXVII Rule 4 of the

CPC is not even maintainable.

38. Though my sympathies are with the defendant/applicant, who inspite

of it having held by this Court in criminal leave to appeal emanating from

proceedings under Sections 138 and 141 of the Negotiable Instruments Act

that the cheques, on the basis inter alia whereof the suit has been decreed,

are without consideration.

39. The senior counsel for the plaintiff/non-applicant has also drawn

attention to Kishan Singh Vs. Gurpal Singh (2010) 8 SCC 775 to contend

that considering the standard of proof in the civil and the criminal

proceedings, there is neither any statutory nor any legal principle that

findings recorded in the court either in civil or criminal proceedings shall be

binding between the same parties while dealing with the same subject

matter.

40. The said judgment is not in relation to Section 138 of the Negotiable

Instruments Act. In my opinion adjudication under Section 138 of the

Negotiable Instruments Act is akin to adjudicating civil suit. In the

proceedings under Section 138 of the Negotiable Instruments Act, on the

basis of the same cheques and the same agreement, it has been held that the

cheques were without consideration. It is incredulous that in a civil suit a

decree for recovery is passed on the basis of the very same cheques and

agreement.

41. I will however be failing in my duty if do not mention that a Single

Judge of this Court in Daya Sapra Vs. Vishnu Dutt Sharma

MANU/DE/8922/2007 rejected the plaint in a suit under Order XXXVII of

the CPC as having been filed in abuse of the process of the Court owing to

the defendant having been exonerated in the proceedings under Section 138

of the Negotiable Instruments Act and reasoning that the forum and the

action, whether civil or criminal, may be different but the substance of both

actions is likely to be the same and that if the subsequent civil action raises

same questions of law and fact which have been already disposed of and

same set of evidence with same probative value is sought to be used, the

civil action would be an abuse of the process of the law. However Supreme

Court in appeal reported as Vishnu Dutt Sharma Vs. Daya Sapra (2009) 13

SCC 729 set aside the judgment of the Single Judge of this Court and

restored the suit reasoning that principles of res judicata are not applicable

and a judgment of a Criminal Court cannot be binding on a Civil Court.

42. The counsel for the defendant/applicant has also referred to Jet Ply

Wood Private Ltd. Vs. Madhukar Nowlakha 2006 (3) SCC 699 to contend

that this court is entitled to re-call the decree under Section 151 of the CPC.

43. The aforesaid contention is contrary to Ramkarandas Radhavallabh

Vs. Bhagwandas Dwarkadas AIR 1965 SC 1144 laying down that express

provision having been made for setting aside of a decree under Rule 4 of

Order XXXVII, there is no scope to resort to Section 151 of the CPC. The

judgment cited by the counsel for the defendant/applicant is not with respect

to Order XXXVII Rule 4 of the CPC but in the context of correction of

mistakes.

44. The counsel for the defendant/applicant has also handed over copies

of (i) Rajni Kumar Vs. Suresh Kumar Malhotra (2003) 5 SCC 315; (ii)

Indian Express Newspapers (Bombay) Ltd. Vs. Shiv Kapooria AIR 2003

Bom 496; (iii) State Bank of Hyderabad Vs. Rabo Bank (2015) 10 SCC

521; (iv) Baldev Krishan Vs. Satya Narain 2013 (14) SCC 179; (v)

Sahakari Khand Udyog Manda Ltd. Vs. Commissioner of Central Excise

2005 (3) SCC 738; (vi) State Farm Corporation of India Limited Vs.

Regional Labour Commissioner 134 (2006) DLT 137; and, (vii) K.K.

Velusamy Vs. N. Palanisamy 2011 (11) SCC 275 but which are not found to

be relevant in the aforesaid context and are either generally on Order

XXXVII or on the principle of unjust enrichment and need to burden this

judgment with details thereof is not felt.

45. Dismissed.

No costs.

RAJIV SAHAI ENDLAW, J

NOVEMBER 7, 2016 „pp‟ (Corrected and released on 19th November, 2016).