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Kuri Lal Rungta Vs. Smt. Banarsi Devi and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 74 of 1978
Judge
Reported inAIR1986All94
ActsCode of Civil Procedure (CPC) , 1908 - Order 17, Rules 1, 2 and 3; Contract Act, 1872 - Sections 176; Evidence Act, 1872 - Sections 70
AppellantKuri Lal Rungta
RespondentSmt. Banarsi Devi and ors.
Appellant AdvocateH.S. Sahai, Adv.
Respondent AdvocateK.B. Sinha, ;S.K. Bartariya, ;P.N. Mathur and ;B.N. Dutta, Advs.
DispositionAppeal dismissed
Excerpt:
(i) civil - appearance in court - order 17 rules 2 and 3 of code of civil procedure, 1908 - rule 2 regarding appearance of parties in court applies in cases where adjournment granted generally - rule 23 applies in cases where the parties are in default of doing the thing for which adjournment was granted on previous date. (ii) repeated adjournments - order 17 rules 1 and 2 of code of civil procedure, 1908 - several adjournments granted - evidence not produced - next application for adjournment can be legally refused. (iii) money decree - section 176 of contract act, 1872 - shares held as security against loan advanced - lender has lien over shares - lender still has power to apply for money decree against borrower. - - ga-1/35) was made and it was endorsed by the learned counsel for the.....k.n. misra, j.1. this first appeal under section 96 of the code of civil procedure (for short the code) is directed against the judgment and decree dated 24-8-1978 passed by civil judge, gonda decreeing the plaintiff's suit with costs.2. briefly stated, the facts of the case are that the plaintiffs filed a suit for recovery of rs. 50,000/- with interest, pendente lite and future, till the date of recovery. it was averred that the defendant koori lal rungta had taken a sum of rs. 30,000/- as loan from one deceased baij nath rajgariya at place seksaria sugar mills private limited, babhanan bhabhinpur, tahsil utraul, district gonda at the rate of interest of 9 per cent per annum. the interest was payable at every three months. it was averred in para 1 of the plaint that the defendant had.....
Judgment:

K.N. Misra, J.

1. This First Appeal under Section 96 of the Code of Civil Procedure (for short the Code) is directed against the judgment and decree dated 24-8-1978 passed by Civil Judge, Gonda decreeing the plaintiff's suit with costs.

2. Briefly stated, the facts of the case are that the plaintiffs filed a suit for recovery of Rs. 50,000/- with interest, pendente lite and future, till the date of recovery. It was averred that the defendant Koori Lal Rungta had taken a sum of Rs. 30,000/- as loan from one deceased Baij Nath Rajgariya at place Seksaria Sugar Mills Private Limited, Babhanan Bhabhinpur, Tahsil Utraul, District Gonda at the rate of interest of 9 per cent per annum. The interest was payable at every three months. It was averred in para 1 of the plaint that the defendant had pledged certain shares to Sri Baij Nath Rajgariya as security for the payment of the loan amount. An agreement is said to have been executed in respect of the said loan transaction on 27th July, 1959. The plaintiffs, who are heirs and successors of the creditor deceased Baij Nath Rajgariya, have given the details of payment made by the defendant in para 4 of the plaint and it is stated that the interest up-till 31st October, 1965 has been paid. The defendant had issued cheque No. 002766 of Rs. 2,700/- dated 15-12-1967 and cheque No. 002792 of Rs. 2,700/- dated 31-12-1967 drawn on State Bank of India, but the same were dishonoured. The defendant had, however, in his letter dated 3-2-1968 had assured the husband of the plaintiff No. 5 that he will send a bank draft. But no bank draft was sent by the defendant as was promised. The defendant had written another letter dated 9-3-1969 in which he had assured to send money by 15th April, 1969 and again wrote several letters about the debt but no money was paid according to the promise. The defendant had, however, paid on 6-/-1972 a sum of Rs. 1000/-towards payment of interest on the above-mentioned debt and had further assured to get the above-mentioned shares, on the security of which said loan of Rs. 30,000/- was taken, transferred in the name of the plaintiffs otherwise the amount was promised to be paid. The defendant is said to have given this in writing (paper No. Ga 1/35), but since the defendant had neither transferred the shares nor he had made any payment, and, as such, the plaintiffs filed the present suit against the defendant for recovery of said amount within three years from the date of the payment of Rs. 1,000/- towards interest on the loan amount, which was paid on 6-/-1972 and evidenced by paper No. Ga-1/35- Ext. 9. The defendant-appellant contested the suit alleging that the said loan amount was advanced to him at Basti and not at the aforesaid place in district Gonda. It was, thus, pleaded that the Court at Gonda has no jurisdiction to try the suit. It was further pleaded that the aforesaid loan is not recoverable personally from the defendant since in lieu of the loan taken by the defendant he had handed over the shares and blank transfer was duly executed in respect of his shares in the Seksaria Sugar Mills Private Limited and it was agreed between the parties that the plaintiff will get the shares duly transferred in lieu of the debt and the defendant will have no liability to pay it in cash. The facts regarding payment of the amount by the defendant towards the debt, as detailed in the plaint, were not disputed by the defendant and in the written statement it was asserted that the payments shown in the plaint were all made to the plaintiffs. It was, however, asserted that the suit is not within limitation and is not maintainable and the defendant is not personally liable to make payment of the aforesaid debt as the shares were handed over to the plaintiff for transfer by executing blank transfer form in favour of the plaintiff and it was the responsibility of the plaintiff to have got those shares transferred in his name. It was, thus, asserted that the suit deserves to be dismissed with costs. In the replication it was asserted by the plaintiffs that the shares have no market value and the defendant had not signed the transfer form nor he had taken any permission from the Directors for transferring the shares. It was asserted that the defendant is personally liable to pay the loan amount together with interest thereon and the shares were only given as security for the loan taken by the defendant. It was further averred by the plaintiffs in the replication that the sum of Rs. 30,000/- was paid by the plaintiff through cheque at Seksaria Sugar Mills Private Limited, Babhanan Bhabhinpur, Tahsil Utraula, District Gonda and the agreement was also written and executed at said place hence the suit is maintainable in Civil Court at Gonda.

3. On the pleadings of the parties, the following issues were framed :--

1. Whether the defendant is personalty liable to pay the debt in question, besides the lien on the shares of the defendant, alleged in the plaint.

2. Whether the defendant is not personally liable and the plaintiff is entitled only to get transferred the said shares or to sell them as alleged in the written statement?

3. Whether this Court has no territorial jurisdiction to try this suit?

4. To what relief, if any, is the plaintiff entitled?

4. No other issue was pressed. The plaintiffs filed five papers per list 59-Ga and thirteen papers per list 22-Ga. The defendant had admitted papers Nos. 1, 2, 5, 7, 9, 11 and 13. These were marked as Exhibits 3 to 9. The aforesaid agreement regarding advance of loan dated 27th July, 1959 (paper No. Ga-23/1 and Ga-23/2) was admitted by the defendant. Receipt regarding payment of said loan amount of Rs. 30,000/- through cheque drawn on State Bank of India, Basti was also admitted by the defendant and it was marked as Exhibit 4. Qualifying admission regarding execution of document (paper No. Ga-1/35) was made and it was endorsed by the learned counsel for the defendant that, 'only the signature of the defendant admitted. After his signature 'VARNA RUPIYA DOONGA' is addition not in presence of defendant but afterwards.' This document was exhibited as Exhibit No. 9.

5. It would be relevant to mention here that the plaintiff had filed in Court the above referred 13 papers on 22-3-1976 vide application No. 217C-2. The plaintiff had also moved an application (paper No. 19/C) on 23-3-1976 for attachment before judgment of the house and the learned Court below was pleased to order, 'Issue notice to the defendant to furnish security in the sum of Rs. 50,000/- or show cause by 7-4-1976'. The defendant on the said date moved an application seeking one month's time to file written statement and objection against said application 19/C. This application was allowed and time till 8-5-1976 was granted to the defendant on payment of Rs. 50/- as costs. This cost was paid on 8-5-1976 and the defendant filed objection against said application 19/C. No written statement was filed and the defendant again sought time to file written statement. The prayer was allowed and he was granted time to file written statement till 20-5-1976. The defendant again did not file written statement on 20-5-1976 and the case was listed for orders on 5-7-1976. On that date the case was, however, adjourned and it was listed for orders on 30-7-1976 as the Presiding Officer was transferred. The defendant, however, did not file written statement on 30-7-1976 and the case was fixed for 20-8-1976 for disposal of applications Nos. 19/C and 41/C. Learned counsel for the defendant, however, moved an application on 20-8-1976 seeking further time to file written statement. This application was allowed on payment of Rs. 50/- as costs and the defendant was given time to file written statement by 4-10-1976. The counsel for the defendant had given an undertaking on 20-8-1976 vide paper No. 47/B for not transferring the house sought to be attached and so in view of said undertaking the defendant was restrained from transferring said property till disposal of the suit under Order 38, Rule 5 of the Code. It would be relevant to notice that the defendant again failed to file any written statement on 4-10-1976 and the case was directed to be put up on the date fixed, i.e. 6-10-1976. Since no written statement was filed by the defendant and none had appeared on his behalf on 6-10-1976 when the case was taken up, as such, the suit was ordered to proceed ex parte against the defendant and 27-10-1976 was fixed for hearing. The defendant had, however, moved an application on 8-10-1976 for setting aside the ex parte order dated 6-10-1976. This application was taken up lor disposal on 27-10-1976, which was the date earlier fixed for hearing. But none, appeared on behalf of the defendant on said date. The Court below had, however, in the interest of justice allowed the aforesaid application moved by the defendant by setting aside the order dated 6-10-1976 by which the case was directed to proceed ex parte against the defendant. This application was allowed on payment of Rs. 75/- as costs to be paid by 15-11-1976 with the condition that the written statement shall also be filed by the said date and in case of default or non-compliance of said order, the application was ordered to stand dismissed and the case was directed to be heard ex parte on 18-11-1976 in case of non-compliance. It was further directed that the issues will be framed on 18-11-1976 and the parties shall appear in person on that date for statement under Order X, Rule 2 of the Code. The attachment application was also fixed for disposal on that date. As the Presiding Officer was on leave on 18-11-1976, and, as such, the case was adjourned to 21-12-1976 and on that date the plaintiff was granted time to file replication by 6-1-1977 to the written statement filed by the defendant on 15-11-1976 and the case was fixed for 1-2-1977 for framing of issues, appearance of parties and disposal of all the applications. The plaintiffs filed replication on said date and on 1-2-1977 statement of the defendant was recorded by Court under Order X, Rule 2 of the Code wherein he had admitted to have taken Rs. 30,000/- as loan on the shares. He also admitted to have paid to the brother of the husband of the plaintiff (Devar) a sum of Rs. 1000/- on 6-7-1972 and the receipt (Paper No. 35-C Exhibit-9) was executed by him and handed over to the plaintiff's Devar. He also admitted to have executed agreement (paper No. 23-Ga-Ext. 3). He stated to have taken loan from the plaintiff on its basis and admitted his signatures on the said document. He, however, asserted that this document was got typed at Basti Court and it was brought to him by Baij Nath Rajgariya. In the next breath he stated that it was not typed in his presence. The plaintiff was required by the Court to file replication with a clear version in the light of the pleadings contained in the written statement and the case was ordered to be put up on 15-2-1977 for framing of issues and appearance of parties and on that date the plaintiff filed replication. No one appeared on behalf of the defendant, and, thus, the case was ordered to proceed ex parte against him and 11-3-1977 was fixed for hearing. The defendant thereupon moved an application 9-3-1977 for settting aside the said order dated 15-2-1977 by which the case was directed to proceed ex parte against him. This application was allowed vide order dated 11-3-1977 on payment of Rs. 100/- as costs, which were directed to be paid on 30th March, 1977 failing which the application was ordered to stand dismissed and the case was fixed on 30-3-1977 for framing of issues. Thus, after prolonged proceedings issues were framed on 30-3-1977 and the case was fixed for final hearing on 2-5-1977. The case could not be taken up on 2-5-1977 as the Presiding Officer was on leave and it was adjourned to 1-6-1977. But on that date it was adjourned and fixed for final hearing on 26-7-1977 on the application of the plaintiffs as their counsel was ill. The case however could not be taken up for hearing on 26-7-1977 as defendant moved application for adjournment. It was adjourned and fixed for hearing on 30-8-1977. But on that date, the suit was dismissed in default as none appeared for the parties when the case was called for hearing. It was, however, restored vide order dated 1-10-1977 and summonses were issued to the defendant fixing 17-11-1977 for hearing. The defendant was served with the notice, but the case was adjourned and listed for final hearing on 2-1-1978. On this date none appeared on behalf of the defendant and, thus, the case was ordered to proceed ex parte against the defendant fixing 4-1-1978 for ex parte hearing. On 4-1-1978 the case was adjourned to 14-1-1978 as the Presiding Officer was on leave. No one, however, appeared on behalf of the defendant even on said date. The defendant, however, moved an application on 14-1-1978 for recalling of the order dated 2-1-1978 by which the case was directed to proceed ex parte against the defendant. This was the third such application moved by the defendant. It was, however, allowed on payment of Rs. 50/- as costs vide order dated 14-1-1978 and 23-2-1978 was fixed for payment of costs. The costs were paid and the case was fixed for 22-3-1978 for final hearing. But on that date an application for adjournment (paper No. Gha-105) was moved by the defendant. It was allowed as unopposed and the case was fixed for final hearing on 19-4-1978. Again on 19-4-1978 an application was moved by the defendant for adjournment on the ground of his illness. This was third such application for adjournment after restoration. The learned lower Court, however, gave last opportunity to the defendant and allowed the application on payment of Rs. 50/- as costs. It was specifically ordered that . no further adjournment will be allowed and the case was fixed for 15-5-1978. The case however, could not be taken up on 15-5-1978 as the Presiding Officer was on leave and so it was fixed for hearing on 11-7-1978. On 11-7-1978 an application for adjournment was again moved by the defendant. This was allowed on payment of Rs. 30/- as costs and the case was fixed for evidence on 10-8-1978. It was also mentioned that no further date will be given. But on 10-8-1978 when the case was taken up for hearing, an application for adjournment (Paper No. 113-D) was moved on behalf of the defendant. This was opposed by the plaintiffs. The learned lower Court after hearing the parties rejected the said application for adjournment and directed the case to proceed under Order XVII, Rule 3, C.P.C. as earlier the case was adjourned at the instance of the defendant, who had failed to bring his evidence on the adjourned date fixed for hearing. The Court thereupon proceeded to record evidence of the plaintiffs. The defendant's counsel intimated that he has no farther instructions in the case, and, as such, he was unable to take part in the proceedings and left the Court. The Court before proceeding to record evidence of the plaintiff also rejected another application moved by the defendant's counsel (Paper No. 114-B) wherein it was indicated that the defendant's witnesses could not come for reasons indicated therein. The plaintiff had produced two witnesses; P. W. 1 Ratan Lal and P. W. 2 Mohan Lal. After hearing the arguments the learned lower Court fixed 14-8-1978 for pronouncement of judgment.

6. The defendant moved an application on 14-8-1978 (paper No. 119/C-2) for setting aside the order dated 10-8-1978. He also moved another application (paper No. 121/C2) for staying further proceedings. The plaintiff was granted time to file objection on these applications and the same were ordered to be put up for disposal on 21-8-1978. Delivery of judgment was also postponed till disposal of said applications. These applications were rejected by the learned lower Court vide order dated 24-8-1978 and the suit of the plaintiffs was decreed by the impugned order dated 24-8-1978.

7. We have heard the learned counsel for the parties at some length and have perused the record very carefully.

8. Learned counsel for the appellant had urged that the lower Court had acted illegally and with material irregularity in exercise of jurisdiction in proceeding to decide the case under Order XVII, Rule 3 of the Code. His contention was that since the learned counsel for the defendant Sri S. P. Shukla, who had moved the adjournment application on 10-8-1978, had no further instructions from the defendant except for moving adjournment application, and. as such he had left the Court when the adjournment applications moved by him were rejected. The learned lower Court, therefore, could not proceed to decide the case under Order XVII, Rule 3 of the Code as the learned counsel for the defendant had left the Court room intimating the learned Court that he has got no further instructions on behalf of the defendant. Learned counsel, thus, contended that in these, circumstances the defendant could not be taken to be present on the said date of hearing and the provisions of 0. 17, Rule 3 could not be invoked for deciding the case on merits after taking evidence of the plaintiffs, whose witnesses could not be cross-examined as none was present on behalf of the defendant at the time of recording the statements of the witnesses examined by the plaintiffs. In other words his contention was that since the Court could not legally proceed under Order XVII, Rule 3 of the Code as the defendant was neither personally present nor he could be deemed to be present on the said date of hearing, and, as such, the impugned judgment and decree passed in the suit cannot be sustained and deserves to be set aside. His further contention was that the impugned judgment and decree could best be treated to have been passed under Order XVII, Rule 2 of the Code, according to which, where, on any date to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit.' Learned counsel further contended that although the defendant-appellant had not applied for setting aside the said ex parte decree under Order IX, but in the present appeal under Section 96 of the Code this Court can go into the question about the sufficiency or insufficiency of the cause shown for seeking adjournment by the defendant on the aforesaid date of final hearing. Learned counsel, thus, contended that the judgment and decree, which has been passed in purported exercise of jurisdiction under Order XVII, Rule 3, deserves to be set aside as the defendant was not present in Court in person on account of unavoidable circumstances shown by him. It was vehemently asserted by the learned counsel for the defendant-appellant that since the defendant's counsel had instructions only to put in appearance on behalf of the defendant and to move application for adjournment and besides that he had no further instructions to conduct the case on behalf of the defendant, and, as such, the defendant could not be treated to be present on the said date of hearing when the Court, after rejecting the applications for adjournment, proceeded under Order XVII, Rule 3, to decide the case on merits.

9. In reply learned counsel for the plaintiffs-respondents urged that since on the previous date of final hearing the suit was adjourned and fixed for final hearing on 14-8-1978 on an application moved by the defendant himself and the defendant had failed to bring his evidence on said date for which time was granted to him, and, as such, the learned court below rightly proceeded to decide the case under Order XVII, Rule 3 of the Code by rejecting the application moved for adjournment by the learned counsel for the defendant. Learned counsel also referred to various adjournment applications moved by the defendant on earlier hearing in the suit and contended that the learned Court below rightly rejected those applications for adjournment as there was no just and sufficient cause for adjournment and the defendant had been adopting dilatory tactics to prolong the disposal of the suit. Learned counsel further pointed out that when on 19-4-1978 an application for adjournment was moved by the defendant, it was allowed although it was third such application after restoration and the case was adjourned and fixed for evidence on 15-5-1978 as a last opportunity given to the defendant. It was specifically mentioned in the order that no further adjournment will be granted. But in spite of it, when the case was taken up for hearing on 11-7-1978 the defendant had again applied for adjournment. This application was again allowed by the learned Court below and the case was fixed for evidence on 10-8-1978. It was again mentioned that no further date will be given. The Court had, thus, granted further adjournment at the behest of the defendant. Since the defendant had failed to bring his evidence on the said date of final hearing, i.e. 10-8-1978, on the adjournment application moved by the defendant himself on 11-7-1978 as mentioned above, and, as such, the provisions of Order XVII, Rule 3 of the Code were attracted and the Court below rightly proceeded to decide the case under Order XVII, Rule 3 of the Code. Learned counsel urged that since the defendant's counsel had put in appearance and had moved adjournment application and he had left the Court only when the adjournment applications were rejected, and, as such, the defendant would be deemed to have been present in view of the Explanation to Rule 2 of Order XVII of the Code added by the Allahabad High Court. He further urged that the provisions of Order XVII, Rule 2 of the Code could only be attracted where on the date of hearing the parties or any one of them fails to appear while Order XVII, Rule 3 would apply where any party to a suit to whom time has been granted appears but fails to produce his evidence, or to cause the attendance of his witnesses, or to perform any other act necessary to the further progress of the suit, for which time has been allowed, the Court may, notwithstanding such default proceed to decide the suit forthwith, if the parties are present. Learned counsel urged that since in the present case the defendant's counsel was present on the said date of hearing and had moved an application for adjournment, and, as such, the defendant would be deemed to be present and the Court below rightly proceeded to decide the suit under Order XVII, Rule 3 of the Code and no exception can to taken to the judgment and decree passed by the Court below on the aforesaid argument urged by the learned counsel for the appellant.

10. We have considered the aforesaid arguments very carefully and we find no substance in the argument urged by the learned counsel for the defendant-appellant.

11. The foremost crucial question for consideration in the present case would be whether the Court below could proceed to decide the suit under Order XVII, Rule 3 of the Code on the facts and circumstances of the case stated above, or not.

12. Having perused very carefully the provisions of Order XVII, Rules 2 and 3 we are of the Opinion that Rule 2 applies, where the adjournment has been generally granted and not at the instance of any party for any specific purpose mentioned in Rule 3 of Order XVII. It is also clear that Rule 2 would not apply where the party has failed to apear at the hearing. The Court in that event may proceed to dispose of the suit under one of the modes directed in that behalf by Order IX or make such other order as it thinks fit. Rule 3, on the other hand, empowers the Court to decide the suit forthwith where any party to a suit to whom time has been granted, fails to produce his evidence, or to cause the attendance of his witnesses, or to perform any other act necessary to the further progress of the suit, for which time has been granted. The Court in such circumstances can proceed to decide the suit on merits if the parties are present or deemed to be present. But if the parties are not present and any of them is absent, the Court can proceed to decide the suit under Rule 2 and not under Rule 3 of Order XVII of the Code.

13. It is well settled that where the facts of the case show that it is covered by Rule 2, the mere fact that the Court remarks while passing the orders that it is acting under Rule 3 will not make the order of the Court one under this Rule. See Raja Singh v. Manna Singh : AIR1940All217 . The default must have been committed by the party for doing an act for which time was granted and the case was adjourned at his instance. The case would, however, not be covered by Rule 3 if the defendant, to whom time has been granted to produce his evidence and the case is adjourned and listed for final hearing on an application moved by him in that behalf, but on the adjourned date of hearing he fails to put in appearance in the case. In such circumstances the Court would proceed under Rule 2 as is provided under Sub-clause (b) of Rule 3 of Order XVII of the Code. But where the defendant is present or js deemed to be present and the default has been committed by him in doing an act for which time has been granted, the case would be covered by Rule 3 of Order XVII and the Court can proceed to decide the suit forthwith.

14. In the present case it has not been disputed that the case was fixed for final hearing on 11-7-1978 and the parties were to produce evidence on that date. The defendant had, however, applied for adjournment and on this application, which was his fourth such application for adjournment, the case was adjourned and fixed for evidence on 10-8-1978. It was also mentioned in the order that no further date will be given. When the case was taken up for hearing on 10-8-1978 an application for adjournment was again moved by the learned counsel for the defendant. This application was rejected and the Court proceeded to decide the case under Order XVII, Rule 3 of the Code.

15. Learned counsel for the defendant-appellant had strenuosly contended that since after the rejection of the application for adjournment, the learned counsel for the defendant had left the Court as he had no further instructions in the case and was instructed only to move application for adjournment and, thus, the defendant cannot be deemed to be present at the time of hearing. The case would, therefore, not be covered under Rule 3 and the decree passed in the suit could be taken to be an ex parte decree falling under Order XVII, Rule 2 read with Order IX of the Code, In other words his contention was that since the defendant was not physically present at the time of hearing and his counsel Sri S. P. Shukla was engaged to move application for adjournment and he had no further instructions to proceed with the suit on behalf of the defendant, and, as such, the defendant cannot be deemed to be present at the time of hearing although the defendant had, on the previous date of hearing, obtained adjournment and was granted time to lead evidence on the said adjourned date of hearing. We have carefully considered the submissions of the learned counsel, but do not find any substance in it.

16. It appears to be well settled that a party appearing by a pleader and asking for adjournment must be deemed to have appeared in view of the Explanation added by this Code to Rule 2 of Order XVII of the Code, which provided that, no party shall be deemed to have failed to appear if he is either present or represented in Court by agent or pleader, though engaged only for the purpose of making an application.' In M. S. Khalsa v. Chiranji Lal : AIR1976All290 it has been held, as per majority view, that :--

'A case in which the defendant obtains an adjournment on the date of final hearing of the suit and fails to appear on the adjourned date would be covered by Order 17, Rule 2 of the Civil P. C. and an application under Order 9, Rule 13 will lie, even if the Court professes to act under Order 17, Rule 3. Rule 3 applies when a party is present, or is deemed to be presented has defaulted in doing the acts mentioned in Rule 3.'

In para 97 of the report Satish Chandra, J. (as he then was) with whom K. B. Asthana, C.J. and H. N. Seth, J. agreed, observed that :--

'On facts, the position in the appeal is that the defendants do not dispute that 1-8-1969 was an adjourned date and that on that day their counsel moved an application for adjournment. In view of the Explanation to Rule 2, the defendants will be deemed present. The defendants having failed to establish that they were absent, could not maintain the restoration application.'

In para 117-118 C. S. P. Singh, J. with whom R. L. Gulati, J. agreed, observed that :--

'In cases where the defendant fails to appear either personally or through counsel the case would be covered by Order XVII, Rule and not by Order XVII, Rule 3. If, however, he has engaged a counsel to make an application for adjournment, the case would be covered by Order XVII, Rule 3 only in case he has failed to do any of the acts envisaged by Order XVII, Rule 3 and further only in case the Court decides the suit forthwith.

17. We have very carefully gone through the aforesaid decision of the Full Bench in M. S. Khalsa's case (supra) and to us it appears that there was no difference of opinion among the learned Judges on that point that if, however, where a party has engaged counsel to make an application for adjournment the case would be covered by Order XVII, Rule 3 only in case he has failed to dp any of the acts envisaged by Order XVII, Rule 3. In such circumstances the party would not be taken to be absent, but would be deemed to be present in view of the Explanation added to Order XVII, Rule 2. Thus, on the facts and circumstances of the present case, we are of the opinion that the defendant would be deemed to be present on the said adjourned date of hearing as his counsel- had put in appearance and had moved an application for adjournment. The case was, thus, covered by Order XVII, Rule 3 as the defendant had failed to produce evidence on the adjourned date of hearing for which he was granted time.

18. Learned counsel for the appellant had, however, referred to a decision in Smt. Gulab Bai, Bhopal v. Dr. Moti Lal AIR 1983 All 191 wherein learned single Judge by quoting certain observations of the judgment delivered by K. B. Asthana, J. had observed that :--

'Rule 3 can only be resorted to when the party, to whom time was given to produce evidence or to cause attendance of the witnesses or to perform any other act necessary for further progress of the suit is actually present on the adjourned date of hearing but fails to do any act for which the time was granted. For this purpose the fictional presence envisaged by explanation to Rule 2 is not to be taken into consideration. It is only the factual presence which is to be taken into account.'

Referring to aforesaid decision, learned counsel for the appellant urged that the case would fall under the provisions of Order XVII, Rule 3 only if the defendant is physically present and the fictional presence envisaged by Explanation to Rule 2 cannot be taken into consideration. Learned counsel contended that admittedly the defendant was not physically present at the time of hearing on 10-8-1978. His counsel had moved an application for adjournment and he had no further instructions in the case and, as such, the defendant cannot be deemed to be present at the time of hearing so as to attract the provisions of Order XVII, Rule 3 and the Court could not proceed to decide the case on merits, We do not find any substance in the aforesaid argument.

19. We have carefully gone through the decision rendered by K. B. Asthana, CJ. in M. S. Khalsa's case : AIR1976All290 (supra) and to us it appears that in para 13 of the report, K. B. Asthana, C J. had noticed the defects in Rules 2 and 3 and had ventured to suggest that the fictional presence envisaged by Explanation to Rule 2 is not to be taken into consideration. It is only the factual presence which is to be taken into account. The said observation in para 13 of the report cannot be taken to be majority decision by the Full Bench rendered in M. S. Khalsa's case (supra). In para 15 K. B. Asthana, C J. clearly observed that, 'on the deep consideration of the solutions suggested, I would agree with the opinion of brother Satish Chandra and would answer the questions referred accordingly and also agre that appeal he dismissed.' As already observed Satish Chandra, J. (as he then was) has expressed the opinion that : 'Rule 3 applies only when a party is present or is deemed to be present and has defaulted in doing the acts mentioned in Rule 3.' This was also the view expressed on the point by C. S. P. Singh, J. with whom R. L. Gulati, J. had agreed. Thus, the observations made by K. B. Asthana, CJ. in para 18 of the report, which have been quoted by N. N. Mithal, J. in Smt. Gulab Bai's case (AIR 1983 All 191) (supra) cannot be taken as the view expressed by the Full Bench on the aforesaid point, and we are unable to persuade ourselves to take the view expressed in Smt. Gulab Bai's case for holding that it is only factual presence which has to be taken into consideration and not the fictional presence envisaged by Explanation to Rule 2 for determining whether the case would fall under Order XII, Rule 3 or under Order XVII, Rule 2 of the Code. In our opinion the case would be covered by Order XVII, Rule 3 where the defendant is either personally present at the time when the case is taken up on the adjourned date of hearing or is deemed to be present as is envisaged by Explanation to Rule 2 of Order XVII of the Code. With due respect to the learned Judge we are unable to agree with the view expressed in Smt. Gulab Bai's case (supra) on the said point and this decision is hereby overruled.

20. In the present case it is not disputed that the learned counsel for the defendant had put in appearance on 10-8-1978 and had moved applications for adjournment, which were rejected. Since the defendant was represented by a counsel, though allegedly engaged only for moving an application for adjournment, he would be taken to be present at the hearing of the case as envisaged by Explanation I to Order XVII, Rule 2 of the Code, and, thus, the Court, in our opinion, rightly proceeded to decide the suit under Order XVII, Rule 3 because the defendant had defaulted in performing the acts mentioned in Rule 3 for which he had obtained adjournment on the previous date of hearing. The alleged leaving of Court by the defendant's counsel on the rejection of the application for adjournment of the case without further taking any steps by moving an application for withdrawing his power from the case could not amount to his effective withdrawal from the case, and so the defendant could not be taken to be absent at the hearing. It appears to be fairly well settled that leave of discharge from the case to a counsel shall be granted only when the counsel asks for it with notice to his client, and, as such, the discharge of the counsel from the case cannot be taken to occur merely from the fact that the counsel of his own volition had left the Court room when an adverse order was passed on his application for adjournment. The counsel who had without effectively withdrawing from the case, walked out of the Court room on his own accord, could at any time walk in and take part in the proceedings and there could be no impediment in his way in doing so. He could also cross-examine the witnesses examined by the plaintiff whose evidence was recorded by the Court while proceeding to decide the case on merits under Order XVII, Rule 3 of the Code. Thus, in our opinion, the defendant cannot be taken to be absent at the hearing on the said date on the ground that his counsel had left the Court room after rejection of the adjournment application. The Court below, thus, rightly proceeded to decide the case under Order XVII, Rule 3 of the Code.

21. Learned counsel for the appellant had next contended that the impugned judgment and decree rendered by the Court below cannot be taken to be covered by Order XVII, Rule 3, which, according to him, would be applicable only in a case where the Court below having decided to proceed under Order XVII, Rule 3 of the Code must have also decided the case 'forthwith'. Learned counsel urged that since in the present case the learned Court below after having purported to proceed under Order XVII, Rule 3, recorded the statement of the witnesses examined by the plaintiff but it did not decide the case on that very day. The case was adjourned to 14-8-1978. He, thus, contended that the judgment and decree which was passed in the suit by the learned Court below on 24-8-1978 cannot be treated to be covered by Order XVII, Rule 3 of the Code and it is merely an ex parte decree and deserves to be set aside as the defendant has shown sufficient cause for his absence on 10-8-1978 when the Court had proceeded to record the evidence of the plaintiff in purported exercise of jurisdiction under Order XVII, Rule 3 of the Code to decide the case on merits. In support of his contention learned counsel placed reliance upon a decision in Dayalji Wasanji v. Kedarnat Onkarmal, AIR 1953 Nag 222 wherein it has been held that, 'As I understand this rule, a Court proceeding under this provision must decide the suit 'forthwith' that is, on the same date, and it cannot adjourn the hearing of the suit to some other date and then purport to decide it under Order 17, Rule 3'. We are unable to agree with the view expressed in aforesaid decision. The word 'forthwith' appearing in Order XVII, Rule 3 of the Code cannot be so construed as held in the aforesaid decision in Dayalji's case (supra). This question had also cropped up in another case in Tripathi Sansnath v. Tripathi Bhagwat Nath AIR 1966 All 615 wherein D. S. Mathur, J. (as he then was) had observed as follows :--

'The word 'forthwith' means within a reasonable period. It is, therefore, necessary for the Court, while proceeding with the trial under the Rule to decide suit within a reasonable period. What is a reasonable period shall depend upon the circumstances of each case.'

This question was also considered in the aforesaid Full Bench decision in M. S. Khosla's case ( : AIR1976All290 ) (supra) wherein it was urged on behalf of the appellant that Order XVII, Rule 3 entitles the Court to 'proceed to decide the suit forthwith'. It was argued that forthwith' is a direction to decide the suit on the the same day as a penalty for default. The said contention was repelled and it was observed by Satish Chandra, J., with whom K. B. Asthana, C.J. and H. N. Seth, J. had agreed, that:--

'.....the Court can decide the suit by proceeding with the suit forthwith by determining the issues, giving findings and then pronouncing judgment accordingly. The phrase 'proceed to decide the suit forthwith' in Rule 3 appears to be somewhat similar in its import to Order XV Rule 3. The word forthwith' qualifies the word 'proceed' rather than the word 'decide'. All that the Rule directs is that notwithstanding the default the court is to proceed with the further hearing or trial of the suit with a view to dispose it of, if possible on that very day, in accordance with law.'

22. It was further observed by referring to decision in Sangram Singh v. Election Tribunal : [1955]2SCR1 that :--

'.....The same principle is applicable to Order XVII, Rule 3. If on a particular date of hearing Rule 3 is attracted, the court can proceed to try the suit on that day, and if for some reason it is unable to conclude the hearing or decision of the suit on that day and adjourns the further hearing to another day, the next date will not automatically be governed by Rule 3. It will depend on the circumstances prevailing on that day. The party who had defaulted on the previous date will be entitled to participate in the proceedings though it will not be allowed to put the clock back by seeking to do what it ought to have done on the previous date.'

In view of above we do not find any substance in the aforesaid argument of the learned counsel for the appellant that since the court below had not decided the suit forthwith on that very day, i.e. 10-8-1978 when it had proceeded to decide the case under Order XVII, Rule 3 of the Code and had recorded evidence of the plaintiff. In our opinion, the word 'forthwith' used in Order XVII Rule 3 cannot be taken to be a mandate to decide the suit the same day as a penalty for default. Thus, the judgment and decree dated 24-8-1978 passed by the Court below is clearly covered by the provisions contained in Order XVII, Rule 3 of the Code and no exception can be taken to it on the aforesaid ground urged by the learned counsel for the appellant.

23. Learned counsel for the appellant had next contended that the court below had acted illegally and with material irregularity in exercise of jurisdiction in refusing to adjourn the case on an application for adjournment moved by the defendant's counsel on 10-8-1978 wherein sufficient cause was shown for the non-appearance of the defendant and his witnesses. Learned counsel had further contended that the past conduct of the defendant in seeking adjournment could not be taken to be a ground for rejecting the application for adjournment, which contained good grounds justifying the adjournment of the case to some other date in view of the facts stated therein. In support of his contention, learned counsel for the defendant placed reliance upon a decision of this Court reported in 1980 All Civil J 570 : (1981 UPLT NOC 129) wherein it has been held that the. previous conduct of the party would be immaterial while considering the application for adjournment, which deserved to be allowed on the facts and circumstances indicated therein.

24. There cannot be any dispute with the said proposition laid down in the aforesaid decision, but we are unable to persuade ourselves to take the view that the learned lower court erred in rejecting on merit the application for adjournment moved on behalf of the defendants on 10-8-1978, which was a date fixed for recording evidence of parties and it was specifically observed that no further date will be given. Such three other similar applications for adjournment were moved on behalf of the defendant after restoration of the suit. In the order dated 19-4-1978 it has been observed that this is third adjournment after restoration. However, last opportunity was given to the defendant with the observation that no further adjournment will be given. But in spite of it, the defendant had again applied for adjournment on 11-7-1978 and the learned court below had again granted adjournment on payment of Rs. 30/- as costs with the observation that no further date will be given it would also be relevant to mention that on 10-8-1978 the applications for adjournment, which were moved on behalf of the defendant, were not even supported by affidavit. It is no doubt correct to say that the application for adjournment cannot be rejected merely on the ground that on previous hearing the same party had obtained adjournment by moving adjournment application on more or less the similar grounds, but at the same time one cannot lose sight of the fact that the defendant had repeatedly sought adjournment on one ground or the other and failed to bring evidence for which time was allowed, and, so the case could squarely fall under the provisions of Order XVII Rule 3 of the Code and the lower court could proceed to decide the suit by rejecting the adjournment application. Since in the present case these applications were also not supported by affidavits and the defendant had taken no steps for producing his evidence, and, as such, we are unable to hold that the learned lower court had acted illegally or improperly in not granting adjournment to the defendant, who, as already observed above, had got the case adjourned several times and it was specifically mentioned that no further adjournment will be granted. Thus, in our opinion, no error has been committed by the learned court below in rejecting the adjournment applications moved on behalf of the defendant and in proceeding to decide the suit under Order XVII Rule 3 of the Code.

25. Learned counsel for the appellant next contended that the judgment and decree passed by the court below cannot be sustained on the fact and law. His contention was that the defendant-appellant had taken loan on the security of the shares of the Seksaria Sugar Mills Pvt. Limited, and so no personal money decree could be passed against the defendant on the loan transaction evidenced by agreement dated 17th July, 1959 (Exhibit 3). In other words he contended that the plaintiffs could proceed only against the 465 shares enumerated in the said agreement for realising the amount due to them. Learned counsel contended that it was the responsibility of the plaintiffs to have got the shares transferred in their names and having failed to do so, he could not recover the amount from the defendant. He, thus, contended that the decree passed by the court below deserves to be set aside. We have carefully considered the aforesaid argument of the learned counsel for the appellant and have also perused the agreement dated 17-7-1969 very carefully.

26. It is evident from the said document (Exhibit 3) that on the security of the shares, the lender had agreed to advance to the defendant-appellant a sum of Rs. 30,000/- at the rate of nine per cent interest per annum with quarterly rests. It was specifically mentioned in the deed of agreement that the lender will have lien on these shares till the borrower repays the full amount of the loan with all accrued interest up to the date of repayment. The borrower further agreed that he will not in any way assign, sell or dispose of the aforesaid 465 shares without previous knowledge and consent of the lender and without repaying in full the amount of Rs. 30,000/- advanced to him with interest as stipulated in the deed. It is, thus, clear that the defendant was liable to pay to the lender the aforesaid amount of Rs. 30,000/- together with interest thereon and the 465 shares of Sekseriya Sugar Mills Private Limited belonging to the borrower were merely pledged as security with the lender Baij Nath Rajgadia. The plaintiffs could, therefore, proceed to recover the amount due against the defendant and the decree passed by the court below cannot be said to be illegal on the aforesaid ground urged by the learned counsel for the appellant. The plaintiffs, in our opinion, were not obliged to proceed to get the said shares transferred in their names or to proceed to recover the amount by proceeding only against said security.

27. It is not disputed that the defendant had taken loan of Rs. 30,000/- at the aforesaid rate of interest from Baij Nath Rajgadia. It is also not disputed that the interest was paid to the plaintiffs from time to time.

28. Learned counsel for the appellant had however next contended that the present suit filed by the plaintiffs was barred by limitation. We are unable to agree with this contention as well.

29. Firstly we find that this plea, though taken in the written statement, was not pressed in issue. But apart from it, this suit appears to be well within limitation. A sum of Rs. 1000/-, the receipt of which has been filed and marked Exhibit-9, was paid as interest on 6-7-1972 on the aforesaid loan amount, and, as such, the suit filed by the plaintiffs was well within limitation.

30. Learned counsel for the appellant next contended that there were interpolations in the receipt dated 6-7-1972 (Exhibit 9) and the words 'Varna Roopaiya doonga' were subsequently written in the said document. We have perused the said receipt Exhibit-9 and we do not find any substance in the aforesaid argument.

31. It is not disputed that a sum of Rs. 1000/- was paid by the defendant to the plaintiffs on 6-7-1972 vide aforesaid receipt, Exhibit-9. The execution of the said document is admitted except for the aforesaid words, which, according to the, defendant, were subsequently added. In our opinion, the addition of these words in the receipt subsequently would not make the said receipt inadmissible in evidence because its execution has been admitted by the defendant. We have already held above that the defendant was personally liable to pay the loan amount which he had taken from Baij Nath Rajgadia by pledging the shares as security for the said loan amount. Even if the aforesaid words 'VARNA RUPAIYA DOONGA' be treated to have been subsequently written in the said document, the defendant cannot be absolved from the personal liability of paying the loan amount due against him. Even without those words being there in the said receipt the defendant is personally liable to pay the loan amount for the recovery of which suit has been filed within limitation. Apart from it, we find that just below the words 'VARNA RUPAIYA DOONGA' the signatures of the defendant are there. The defendant's counsel had made an endorsement on the receipt admitting the signatures of the defendant on the said receipt. We, therefore, do not find any substance in the argument of the learned counsel for the defendant-appellant that simply because the said words were subsequently added, and, as such, the said receipt cannot be taken into consideration.

32. Learned counsel for the appellant had, in the end, contended that the lower court had no jurisdiction to entertain and decide the suit for want of territorial jurisdiction. Learned counsel urged that the loan was taken in district Basti and not at Sekseriya Sugar Mills, district Gonda. We are unable to agree with this contention as well.

33. It is well established from the evidence of P. W. 1 and P. W. 2 that the loan was advanced to the defendant at Sekseriya Sugar Mills Private Limited, and as such part of action had accrued to the plaintiffs within the territorial jurisdiction of Civil Judge, Gonda. There thus appears to be no substance in the aforesaid argument of the learned counsel for the appellant and it is accordingly rejected.

34. No other point is pressed before us.

35. In the result, the appeal fails and it is accordingly dismissed with costs.


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