Rajasthan High Court

Ifci Ltd vs M/S Sayatej Mercantile Pvt Ltd on 4 November, 2022

Bench: Sudesh Bansal

        HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

               S.B. Civil First Appeal No. 718/2019

  IFCI Ltd.
                                                        ----Appellant/Defendant
                                     Versus
  M/s Satyatej Mercantile Pvt Ltd.
                                                        ----Respondent/Plaintiff

For Appellant(s) : Mr. J P Goyal, Sr. Adv. assisted by Ms. Jyoti Swami For Respondent(s) : Mr. R K Mathur, Sr. Adv. assisted by Mr. Ram Prasad Sharma

HON'BLE MR. JUSTICE SUDESH BANSAL

Order

04/11/2022 REPORTABLE

1. Appellant-Defendant has moved application (I.A.No.1/2022),

stating inter alia that appellant-IFCI Limited is a Government of

India undertaking and Public Financial Institution, which has

preferred this first appeal, assailing the judgment and decree

dated 12.02.2019, whereby and whereunder suit for payment of

Rs.18 lakhs and Rs.50,000/- per month continuously, as rent and

warehousing charges, has been decreed against the appellant, on

account of non-removal of 24 looms from the property of Modern

Syntax (India) Limited, which was put in public auction under the

Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest (SARFAESI) Act, 2002 , for which

respondent-plaintiff stood highest bidder and therefore, after

finalizing his bid, sale deed dated 20.11.2009 has been executed

in favour of plaintiff. It has been stated that in execution of the

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impugned decree, respondent-decree holder has already

recovered amount of Rs.68,58,555/- on 20.09.2019 and

thereafter, again bank account of appellant has been attached for

an amount of Rs.21,24,000/- vide order dated 10.10.2022 in

execution proceedings by the Court of Additional District Judge

No.1, Alwar, therefore, there is urgency in the matter and it has

been prayed that since first appeal is delayed by 57 days, so an

application (CMCC 1367/2019) under Section 5 of the Limitation

Act, 1963 (hereinafter referred as 'the Act of 1963') has also been

filed. Hence in such circumstances matter may be heard earliest.

2. For reasons mentioned in the application, supported with the

order-sheet of the Court of Additional District Judge No.1, Alwar,

dated 10.10.2022, in respect of attachment of bank account of the

appellant, the application for early hearing (I.A.No.1/2022), is

allowed.

3. With consent of learned counsel for both parties, heard on

the application (CMCC 1367/2019), filed under Section 5 of the

Act of 1963, seeking condonation of delay in filing first appeal.

4. In the application, appellant has indicated that there is delay

of 64 days in filing first appeal but Registry of High Court has

pointed out the delay of only 57 days, therefore, appellant has

moved application (I.A.No.1/2020) to correct the period of delay

from 64 days to 57 days only.

5. Respondent-plaintiff filed reply on 07.08.2019, to the

application of appellant, filed under Section 5 of the Act of 1963,

and has seriously opposed the application.

6. This Court, vide Order dated 11.11.2019, directed the

counsel for appellant to file additional affidavit in order to explain

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the delay. In compliance thereof, an additional affidavit of Mr. V.

Sreekumaran Nair, General Manager (Law), of appellant has been

placed on record on 20.11.2019. Respondent-plaintiff has also

filed counter affidavit on 06.12.2019.

7. It has been stated in the application under Section 5 of the

Act of 1963 that the impugned judgment and decree dated

12.02.2019 was passed ex parte and appellant came to know

about the judgment and decree only on 04.07.2019, thereafter,

the first appeal has been filed immediately on 15.07.2019. It has

been indicated in the application that the counsel for appellant-

defendant had ensured that he will inform and shall call upon the

appellant-defendant, as and when its presence shall be necessary,

but he did not call upon appellant-defendant at the time when

appearance of appellant was necessary. Later on, when appellant-

IFCI contacted to its counsel, then he informed that suit has been

decreed ex parte vide judgment and decree dated 12.02.2019 and

supplied the copy of the judgment. It is stated that though the

counsel for appellant had obtained certified copy of the judgment

on 20.02.2019, but he never informed the appellant. It has been

submitted that on account of negligence on the part of counsel,

the party should not be punished and the delay in filing the appeal

be condoned. In additional affidavit, it has been stated that since

there is no branch/office of appellant-IFCI at Alwar and the office

of appellant-IFCI at Jaipur has also been closed for administrative

reasons, as such appellant was dependent on the information

given by the counsel, who had ensured the appellant that he will

inform and shall call upon the authorized person of IFCI Limited as

and when it shall be necessary. It has also been stated in the

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additional affidavit that prior to 04.07.2019, appellant had no

knowledge about the judgment and decree dated 12.02.2019.

7.1 It has also been stated that property was auctioned by the

appellant to the respondent on the principle of "As is where is

basis" under the SARFAESI Act, 2002, and respondent purchased

the property in public auction, having full knowledge of fact that at

the time of auction and taking the possession of the property, 24

looms of M/s Modern Syntax (India) Limited, were kept in the

premises, which had been attached by the Custom and Excise,

Department. These Looms were handed over to respondent-

plaintiff on Superdari. There was no agreement or condition

between the appellant and respondent, for payment of rent or

warehousing charges, in case of non-removal of the 24 looms

from the property, purchased by the respondent in the public

auction. However, learned trial court vide impugned ex parte

judgment and decree dated 12.02.2019, has saddled the liability

upon the appellant to pay arrears of rent to the tune of

Rs.18,00,000/- and regular rent/warehousing charges @ Rs.

50,000/- per month to the plaintiff until removal of 24 looms.

8. Learned counsel for appellant submits that there is no mala

fides on the part of appellant in filing first appeal with delay of 57

days and taking the cause assigned by the appellant as "Sufficient

Cause", delay of 57 days be condoned and the first appeal be

considered, heard and decided on merits. He has placed reliance

on the judgment delivered in case of Collector (L.A.) Vs. Katiji

[(1987) 2 SCC 107] and N. Balakrishnan Vs. M

Krishnamurhty [(1998) 7 SCC 123]. On the basis of principles

laid down in the aforesaid judgments, it has been urged that court

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should adopt a liberal approach in construing the term "Sufficient

Cause" so as to advance substantial justice and since first appeal

is a valuable right, therefore, in the interest of justice, the delay of

only a period of 57 days, in filing first appeal, may be condoned.

9. Per contra, learned counsel for respondent has fervently and

vehemently opposed the application filed under Section 5 of the

Act of 1963, seeking condonation of delay, in filing first appeal

alleging inter alia that appellant has not given the name of

advocate who gave such an assurance as alleged by the appellant.

Respondent has pointed out that appellant-defendant has

submitted written statement of the suit before the trial court, but

thereafter no one appeared on their behalf, so the trial court

passed an order dated 06.05.2016 to proceed ex parte against the

defendant. In counter affidavit, it has been contended that on

17.11.2018, Advocate Sh. Sudarshan Pandit appeared on behalf of

appellant-defendant before the trial court, but later on he too did

not appear on 14.12.2018. Respondent stated that it is not

understandable that appellant, which is a Government of India

undertaking, did not have a watch upon day-to-day proceedings of

the suit. It has been denied that appellant came to now about the

judgment and decree dated 12.02.2019 only on 04.07.2019 and it

has been contended that appellant himself was negligent in

contesting the suit is also negligent in filing the first appeal too

after a considerable delay, therefore, the delay is not liable to be

condoned.

10. Learned counsel for respondent has argued that the cause

assigned by the appellant may not be construed as "Sufficient

Cause" in the given facts and circumstances and therefore, the

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delay be declined to be condoned. Learned counsel for respondent

has placed reliance on the judgment delivered in case of Oriental

Aroma Chemical Industries Ltd. Vs. Gujarat Industrial

Development Corporation [(2010) 5 SCC 459] and Maniben

Devraj Shah Vs. Municipal Corporation of Brihan, Mumbai

[(2012) 5 SCC 157].

11. Heard. Considered.

12. At the outset, this Court finds that it is not disputed fact

between parties that appellant is a Public Financial Institution and

a Govt. of India undertaking, which is custodian of the public

money. In the additional affidavit of appellant, it has been stated

that since there is no branch/office of IFCI at Alwar and the Office

of IFCI at Jaipur has also been closed for administrative reasons,

therefore, counsel for appellant had ensured that he will inform

and shall call upon the authorized person of IFCI Limited as and

when it shall be necessary. However, counsel did not call upon the

appellant in any manner either in writing or orally at any time and

it is a negligence on the part of counsel for appellant for not giving

information about the judgment and decree dated 12.02.2019,

despite obtaining certified copy of the same on 20.02.2019. It has

been stated that appellant-IFCI came to know about the judgment

and decree dated 12.02.2019 only on 04.07.2019, when they

contacted to his counsel and then he supplied copy of judgment

and decree. Respondent in their counter affidavit, has nowhere

denied/disputed that there is no branch/office of the appellant-

IFCI at Alwar. Undisputedly, respondent himself has indicated the

address of appellant-defendant as 61-Nehru Place, New Delhi-

110019. Merely on account of the fact that appellant has not

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mentioned the name of his advocate, the reason assigned by the

appellant that his advocate did not inform about passing of the

judgment and decree dated 12.02.2019, cannot be disbelieved.

13. This Court has observed that the respondent has nowhere

stated that there is mala fides on the part of appellant for not

filing first appeal within statutory period of limitation, if appellant

was having knowledge of the judgment and decree dated

12.02.2019. Even if for a moment, it is assumed that the

appellant has been remained negligent in not filing first appeal

within time, but no mala fides have been attributed on the part of

appellant and therefore it may not be assumed that the delay of

57 days is deliberate and suffer from any mala fides. This Court

finds that though there may be negligence on the part of appellant

in not pursuing the proceedings of suit vigilantly and appellant

remained ex parte, after filing written statements, nevertheless it

is undisputed that delay in filing first appeal is only for a short

period of 57 days. It is difficult to believe that the appellant has

gained any benefit, by not filing the first appeal within time.

14. It cannot be disputed that first appeal is a statutory and

valuable right of party, which should not be curtailed ordinarily,

that too only on account of delay of 57 days, which too does not

suffer from mala fides. Stakes of appellant in the first appeal are

high.

15. It is also well settled that the term "Sufficient Cause" should

be construed liberally and there is no hard and fast straight jacket

formula to determine as to what cause is sufficient and what is

not. It depends upon the facts and circumstances of each case.

This Court is not oblivious to the legal position that first appeal is

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a statutory and valuable right of party, which should not be

curtailed ordinarily and the court should made an endeavor to

decide the first appeal on merits, instead of dismissing the first

appeal for technical grounds. In case at hand, delay in filing first

appeal is only for a period of 57 days, which too does not suffer

from any mala fides and stakes of appellant, being a public sector

institution, are high in the present first appeal.

16. This Court deems it just and proper to refer few of the

judgments of Hon'ble the Supreme Court, in order to gather

fundamental principles, which are required to be taken into

consideration at the time of considering application for

condonation of delay in filing appeals and in what manner, the

term "Sufficient Cause" should be construed:

16.1 In case of Improvement Trust, Ludhiana Vs. Ujagar

Singh [(2010) 6 SCC 786], the property of trust was auctioned

in execution of award for compensation. Appellant-trust filed

application under Order 21 Rule 90 CPC, but such application was

dismissed in default due to non-appearance. Appellant-trust filed

Miscellaneous Appeal before the District Judge, Ludhiana, but the

said appeal was barred by limitation by two months and few days.

So an application under Section 5 of the Limitation Act, was filed

to condone the delay, but the appellate court dismissed the

application stating that no good and sufficient ground was given to

condone the delay and consequently the appeal was also

dismissed. Appellant preferred appeal before the High Court,

which was treated as Civil Revision, but the same was also

dismissed by the High Court. Review application was filed by

appellant but the same too was dismissed. Matter went to the

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Supreme Court. Hon'ble the Supreme Court, while allowing the

appeal and condoning the delay, observed that "Be that as it may,

we are of the opinion that the delay in filing first appeal before the

District Judge, Ludhiana, for setting aside the sale has not been so

huge warranting its dismissal on such hypertechnical ground". It

was observed that no sooner the appellant came to know about

dismissal of its objection filed before the executing court, under

Order 21 Rule 90 CPC, he made inquiries and filed the appeal.

Honble the Supreme Court clearly observed that "it is pertinent to

point out that unless mala fides are writ large on the conduct of

party, generally as a normal rule, delay should be condoned. In

the legal arena, an attempt should always be made to allow the

matter to be contested on merits rather than to through it out on

such technicalities."

16.2. In case of Ram Nath Sao Vs. Gobardhan Sao [(2002) 3

SCC 195], the expression of "Sufficient Cause" within the

meaning of Section 5 of the Limitation Act, 1963, was considered

by Hon'ble the Supreme Court, placing reliance on its previous

judgments delivered in case of State of W.B. Vs. Administrator,

Howrah Municipality [(1972) 1 SCC 366], it was held that

while considering the expression "Sufficient Cause" within the

meaning of Section 5 of the Act of 1963, this Court laid down that

the said expression should receive liberal construction so as to

advance substantial justice when no negligence or inaction or

want of bona fides is imputable to a party. The Hon'ble Supreme

Court, after discussing the umpteen number of judgments,

observed that "Acceptance of explanation furnished should be the

rule and refusal, an exception, more so when no negligence or

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inaction or want of bona fides can be imputed to the defaulting

party." It was observed that while considering the matter, the

courts have to strike a balance between the resultant effect of the

order it is going to pass upon the parties either way as whereas by

taking a pedantic and hypertechnical view, the explanation

furnished for condonation of delay should not be rejected when

stakes are high and/or arguable points of fact and law involved in

the case, causing enormous loss and irreparable injury to the

party against whom the lis terminates, either by default or

inaction and defeating valuable right of such party to have a

decision on merits. Simultaneously, if a valuable right has accrued

to the opposite party, same should not be lightly defeated by

condoning the delay in a routine-like manner.

16.3 In the case of N. Balakrishnan (Supra), there was a delay

of 883 days in filing application for setting aside ex parte decree

for which application for condonation of delay was filed. The trial

court having found that sufficient cause was made out for

condonation of delay, condoned the delay but when the matter

was taken to the High Court of Judicature at Madras in a revision

application under Section 115 of the Code, it was observed that

the delay of 883 days in filing the application was not properly

explained and it was held that the trial court was not justified in

condoning the delay resulting into reversal of its order whereupon

this Court was successfully moved which was of the view that the

High Court was not justified in interfering with order passed by

trial court whereby delay in filing the application for setting aside

ex parte decree was condoned and accordingly order of the High

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Court was set aside. K.T.Thomas, J., speaking for the Court

succinctly laid down the law observing thus in paras 8, 9 and 10:

'8. The appellant's conduct does not on the whole warrant to castigate him as an irresponsible litigant. What he did in defending the suit was not very much far from what a litigant would broadly do. Of course, it may be said that he should have been more vigilant by visiting his advocate at short intervals to check up the progress of the litigation. But during these days when everybody is fully occupied with his own avocation of life an omission to adopt such extra vigilance need not be used as a ground to depict him as a litigant not aware of his responsibilities, and to visit him with drastic consequences.

9. It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion.

Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court.

10. The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice. The time- limit fixed for approaching the court in

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different situations is not because on the expiry of such time a bad cause would transform into a good cause."

16.4 In case of Oriental Aroma Chemical Industries (Supra), as

relied upon by learned counsel for respondent, the Hon'ble

Supreme Court affirmed the principles laid down in respect of

condonation of delay in cases of Collector (L.A.) (Supra) and N.

Balakrishnan (Supra), as referred by learned counsel for appellant

and has observed in Paras 14 & 15 as under:

"14. We have considered the respective submissions. The law of limitation is founded on public policy. The legislature does not prescribe limitation with the object of destroying the rights of the parties but to ensure that they do not resort to dilatory tactics and seek remedy without delay. The idea is that every legal remedy must be kept alive for a period fixed by the legislature. To put it differently, the law of limitation prescribes a period within which legal remedy can be availed for redress of the legal injury. At the same time, the courts are bestowed with the power to condone the delay, if sufficient cause is shown for not availing the remedy within the stipulated time.

15. The expression "sufficient cause" employed in Section 5 of the Limitation Act, 1963 and similar other statutes is elastic enough to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice. Although, no hard and fast rule can be laid down in dealing with the applications for condonation of delay, this Court has justifiably advocated adoption of a liberal approach in condoning the delay of short duration and a stricter approach where the delay is inordinate - Collector (L.A.) Vs. Katiji [(1987) 2 SCC 107], N. Balakrishnan Vs. M. Krishnamurthy [(1998) 7 SCC 123] and Vedabai Vs. Shantaram Baburao Patil [(2001) 9 SCC 106]."

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In this case, the appellant was allotted a peace of land for

setting up an industrial unit subject to the terms embodied in the

agreement of licence, which provided for payment of 70% of the

cost of agreed quantity of water irrespective of consumption.

Respondents demanded water charges to the tune of

Rs.22,96,207/-, which was challenged by the appellant by filing

civil suit. The suit was decreed vide judgment dated 30.10.2004

and appellant was held not liable to pay minimum charges for

consumption of water, claimed by respondents. Respondents filed

an appeal against the judgment and decree dated 30.10.2004,

which was delayed by a period of four years and twenty eight

days. The Division Bench of High Court, condoned the delay by

making cryptic observation that the cause shown by respondent is

sufficient and period of delay was treated as 1067 days, whereas

the period of delay was four years and twenty eight days. This

order of division bench was challenged by the appellant before the

Supreme Court. Hon'ble the Supreme Court, on appreciation of

the details for explaining the delay of more than four years,

observed that respondents did not approach High Court with clean

hands. It was observed that Law Department of respondent was

very much aware of the proceedings of first as well as the second

suit and an officer of the rank of General Manager (Law) issued

instructions to advocate to appear and file Vakalatnama in the

month of May 2001, thereafter, again in Month of May 2005,

however, respondent boldly stated that Law Department came to

know about the ex parte decree in January/February 2008. The

Supreme Court noticed that respondents went to the extent of

suggesting that the parties may have arranged or joined hands

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with some employee of the Corporation and that may be the

reason why after engaging advocates, nobody contacted to the

Law Department for the purpose of filing written statement. The

Supreme Court noticed that the conduct of respondents is unfair

and mala fides, therefore, without proper explanation of huge

delay of four years and twenty eight days, the Supreme Court

declined to condone the delay.

The facts of the present case are entirely different as

discussed hereinabove and in the present case the delay is only of

57 days and further no mala fides are attributed on the part of

appellant, therefore, the ratio propounded by Hon'ble the

Supreme Court in case of Oriental Aroma Chemical Industries

(Supra) is not applicable to the present case.

16.5 In case of Maniben Devraj Shah Vs. Municipal

Corporation of Brihan, Mumbai [(2012) 5 SCC 157], as

referred by learned counsel for respondent, after considering all

the previous judgments referred by appellant as well as

respondent, the Hon'ble Supreme Court observed that a

distinction must be made between the delay of few days and

inordinate delay, causing prejudice to the other side. For ready

reference, Para Nos.20, 21, 22, 23 and 24 are being extracted as

under:

"20. In Vedabai v. Shantaram Baburao Patil [(2001) 9 SCC 106], the Court observed that a distinction must be made between a case where the delay is inordinate and a case where the delay is of few days and whereas in the former case the consideration of prejudice to the other side will be a relevant factor, in the latter case no such consideration arises.

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21. In State of Nagaland v. Lipok Ao [(2005) 3 SCC 752], the Court referred to several precedents on the subject and observed that the proof of sufficient cause is a condition precedent for exercise of discretion vested in the Court:

8.....What counts is not the length of the delay but the sufficiency of the cause and shortness of the delay is one of the circumstances to be taken into account in using the discretion.

22. The Court also took cognizance of the usual bureaucratic delays which takes place in the functioning of the State and its agencies/instrumentalities and observed:

13. Experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file-pushing, and passing- on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. The State which represents collective cause of the community, does not deserve a litigant-non-grata status. The courts, therefore, have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression of sufficient cause. Merit is preferred to scuttle a decision on merits in turning down the case on technicalities of delay in presenting the appeal.

23. What needs to be emphasised is that even though a liberal and justice-oriented approach is required to be adopted in the exercise of power under Section 5 of the Limitation Act and other similar statutes, the Courts can neither become oblivious of the fact that the successful litigant has acquired certain rights on the basis of the judgment under challenge and a lot of time is consumed at various stages of litigation apart from the cost.

24. What colour the expression "sufficient cause" would get in the factual matrix of a given case would largely depend on bona fide nature of the explanation. If the Court finds that

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there has been no negligence on the part of the applicant and the cause shown for the delay does not lack bona fides, then it may condone the delay. If, on the other hand, the explanation given by the applicant is found to be concocted or he is thoroughly negligent in prosecuting his cause, then it would be a legitimate exercise of discretion not to condone the delay.

17. Keeping in mind judgments of Hon'ble the Supreme Court

and views opined by the Hon'ble Supreme Court, required to be

considered at the time of condonation of delay and at the time of

construing the term "Sufficient Cause", this Court is of unequivocal

opinion that at least for the purpose of condonation of delay in

filing first appeal, the term "Sufficient Cause" should be construed

liberally and unless and until, there are no mala fides attributed on

the part of appellant in causing delay in first appeal deliberately

and knowingly to achieve some undue advantage, ordinarily the

delay should be condoned, more so when the delay is not too

much enormous and stakes of appellant are high. Applying such

proposition of law to facts of the present case, which have been