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indraprastha Finance Company Vs. Diamond Pictures - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 953 of 1978 and Interim Application Nos. 622 and 828 of 1979
Judge
Reported in18(1980)DLT44
ActsCode of Civil Procedure (CPC), 1908 - Order 37; Delhi High Original Side Rules
Appellantindraprastha Finance Company;indraprastha Finance Company
RespondentDiamond Pictures;motion Pictures Distributors and ors.
Advocates: K.K. Mehra,; Anjna Kalia and; Kailash Vasdev, Advs
Excerpt:
.....that unless the order 37 of the code, was applicable for some reason, it would be tried under the original side rules and not in accordance with the amended provision provided by the code - it was ruled that the suit brought on a written contract or on an enactment or guarantee would be tried only under the amended procedure under order 37 of the code - - (1) at this stage of the present suit which has been instituted under order 37 of the code of civil procedure, a number of interesting problems regarding the application of the amended code vis-a-vis the existing original side rules have arisen. the suit is for realisation of the principal sum advanced as a loan which is secured by pledge as well as the promissory note) and the amount claimed in the suit is the amount of the loan as..........wrong and not in accordance with the law. in any case if there is any delay in the present suit in appearance the court has power under order 37 rule 3(7) of the code to condone the delay. when a mistake is by the court or by the registry of that court, the court will naturally give benefit to the party concerned. (7) having stated the legal position it now remains to see whether the present suit is one brought on a promissory note, bill of exchange or on a written contract. as it happens, without going into the intricacies of the pleadings and the facts, it appears to me that the suit has been brought on a written document which is a pledge of 12 prints of the motion picture 'aap ki khatir' and for securing repayments of the sum of rs. 2 lacs with interest. the persons taking.....
Judgment:

D.K. Kapoor, J.

(1) At this stage of the present suit which has been instituted under Order 37 of the Code of Civil Procedure, a number of interesting problems regarding the application of the amended Code vis-a-vis the existing original Side Rules have arisen. I may here say that these problems have not arisen for the first time and before dealing with the same I think it should be stated that the Delhi High Court Original Side Rules, 1967 require to be amended to take due consideration of the fact that the Civil Procedure Code has been amended in respect of summary suits.

(2) The legal position regarding the Original Side Rules is not only set out in the Delhi High Court Act (26 of 1966) but is also stated in Section 122 & 129 of the Code of Civil Procedure, 1908. Section 129 makes the Original Side Rules take effect even if the rules set out in the Code of Civil Procedure are inconsistent therewith; hence the result is that the amendments made in Order 37 do not have the effect of varying the Original Side Rules of the High Court. This proposition leads to considerable difficulty in the present suit.

(3) Firstly, in the Original Side Rules, Chapter 15 which deals with summary suits. As it happens the first rule in this chapter states 'The provisions of this Chapter shall apply to all suits upon bills of exchange, hundies and promissory notes'. The subsequent portions of the Chapter show that a notice has to issue to the defendant to obtain leave from the Court to appear and defend the suit within twenty days from the date of service of the notice. As this Chapter over-rides the Code of Civil Procedure, it would follow that if there is a suit brought on a bill of exchange, hundi or promissory note it shall not be decided according to Order 37 of the Code but according to Chapter 15 of the Original Side Rules and the procedure set out in the amended Order 37 will not apply to such suits. The problem which is now to be faced, is that the present Order 37 of the Code deals not only with summary suits brought on bill of exchange, promissory notes etc., but .also provides for suits based on written contracts, enactments or guarantees. This class of suits cannot be governed by the existing Chapter 15 of the Original Side Rules, so I have first to decide whether such suits can be brought in the Original Side of the Delhi High Court or whether such suits are barred because there are no provisions for them in the Original Side Rules as existing.

(4) The legal position appears to be as follows. Order 37 Rule 1 states that the Order shall apply to High Courts and some other courts mentioned. thereforee, unless Order 37 is not applicable for some reason, it must also apply to the Original Side of this High Court. The bar constituted by Chapter 15 of the Original Side Rules read with Section 129 of the Code only operates when a suit is brought on a bill of exchange, hundi or promissory note. In such a case the suit has to be tried under the Original Side Rules and not in accordance with the amended procedure provided by the Code of Civil Procedure (Order 37). If the suit a brought on a written contract or on an enactment or guarantee, these additional causes of action which are now triable as summary suits are not dealt with by the Original Side Rules and thereforee, perforce can be tried only under the amended procedure provided by Order 37 of the Code. This position is reinforced by Rule 19 of Chapter I of the Original Side Rules which says :

'EXCEPT to the extent otherwise provided in these rules, the provisions of the Civil Procedure Code shall apply to all proceedings on Original Side'.

This provision makes it clear that if the rules are silent on any particular point then the Civil Procedure Code will apply. Because there is no provision in the Original Side Rules for the trial of summary suits based on written contracts, guarantees or enactments such suits can only be tried under the amended Civil Procedure Code.

(5) It is very important to note the consequences of this distinction. If a suit is brought on a bill of exchange, promissory note or a hundi then the old procedure typified by the fact that the defendant has himself to seek leave to defend will apply and not the amended provisions of order 37 of the Code. On the other hand, the amended code which requires the defendant to put in appearance within a specified time and then the plaintiff has to apply for a judgment on the ground that no defense exists will apply to suits filed in this High Court in suits filed on written contracts, etc., unless the original Side Rules are altered. Thus two procedures will apply in this Court.

(6) To clarify, if a suit is brought on a bill of exchange, promissory note, etc., then the summons served upon the defendant must provide for his appearance within twenty days of service. This notice will be in compliance with Chapter 15 of the Original Side Rules. If the suit is not brought on abill of exchange hundi, etc., and is brought on a written contract etc., under the additional provisions introduced by Order 37 of the Code as amended, then the summons to be served on the defendant will be as in the Code of Civil Procedure, i.e., it will require the defendant to put in appearance within ten days of service. What has happened in the present case is that the registry has issued a composite notice of its own invention which is for putting in appearance within twenty days. Such a notice cannot be issued under the Code of Civil Procedure and cannot be issued under the High Court (Original Side) Rules. It is a notice which is completely wrong and not in accordance with the law. In any case if there is any delay in the present suit in appearance the Court has power under Order 37 Rule 3(7) of the Code to condone the delay. When a mistake is by the Court or by the Registry of that Court, the Court will naturally give benefit to the party concerned.

(7) Having stated the legal position it now remains to see whether the present suit is one brought on a promissory note, bill of exchange or on a written contract. As it happens, without going into the intricacies of the pleadings and the facts, it appears to me that the suit has been brought on a written document which is a pledge of 12 prints of the motion picture 'AAP Ki KHATIR' and for securing repayments of the sum of Rs. 2 lacs with interest. The persons taking the loan also executed a demand promissory note or so it is stated in the plaint. The suit is for realisation of the principal sum advanced as a loan which is secured by pledge as well as the promissory note) and the amount claimed in the suit is the amount of the loan as allegedly reduced by the amount realised from the exhibition of the pledged prints of the film aforementioned. Of course, it can be remotely said that this is a suit also on a promissory note but generally speaking it must be considered to be a suit which is brought under the amended Civil Procedure Code. Certainly, the plaint would not have taken the present form if it was a suit brought on the unamended Civil Procedure Code. I will assume that it is a suit brought under the amended Code and thereforee, appearance had to be put in within ten days after the date of service of summons.

(8) It so happened that appearance has not been put in within ten days in accordance with law by any of the defendants and consequently I.A. 622/79 has been moved by the plaintiff claiming that the suit should be decreed. A reply has been filed by only one of the defendant i. e., defendant No. 6, but arguments have also been advanced on behalf of the other defendants. Admittedly, the position of all the defendants in this case is somewhat peculiar. The provisions of the amended Order 37 of the Code have not really provided fully for all situations and it is for this reason that an elaborate analysis of the facts has been made.

(9) As the law now stands, under the amended Order 37 of the Code, the defendant is required to put in appearance within a specified time and if does not do so the allegations in the plaint are deemed to be admitted. This is so provided in Order 37 Rule 2(3). The question for consideration is whether the defendants have failed to put in appearance or if they have put in appearance; if they have appearance late or have appeared before the Court for some other reason. Certainly, all the defendants are physically present in the Court through counsel and the vakalatnama of all the defendants has been filed. Yet a problem has arisen as to whether they have 'appeared' within the meaning of the Code. It is submitted by the learned counsel for the plaintiff that appearance under Order 37 of the Code is an artificial concept. It is not physical appearance but 'appearance' as indicated and described in Order 37 Rule 3(1) of the Code which is necessary.

(10) What is that appearance The provision states that a defendant has 'appeared' when he comes either in person or through pleader and files in Court an address for service of notice. If he does this, he has put in appearance. If he does not do so, it is submitted, he has not put in appearance. It so happened that the defendants I to 5 appeared in response to a notice sent in I. A. 3229/78 which was an application for an interim relief and learned counsel for these defendants was physically present in the Court on September 25, 1978. It is also the undoubted case that these defendants were served with the Court summons on September 17, 1978. thereforee, by the relevant rule they were required to put in appearance within ten days that is by September 27, 1978. It is submitted that the appearance of the learned counsel for the defendants 1 to 5 on September 25, 1978 in an inter-locutory application is not really an 'appearance' but 'appearance' would be complete only if he had filed an address for service and mere physical appearance is not sufficient. It so happened that the learned counsel for these defendants did file a vakalatnama on September 22, 1978 which is also within the period of ten days and this does give his address. The problem is : Is this an appearance? It is contended that this is also not an appearance because appearance under Order 37 Rule 3(3) of the Code requires that not only should the defendant put in appearance but also the defendant should give a notice addressed to the plaintiff or plaintiff's pleader of the fact that he has put in appearance and this notice is required to be given or sent on the very date on which the appearance is put in. Admittedly, no notice was sent, no notice was given and no notice was posted as required by this rule. What are the consequences? The law is quite silent on the consequences. The Order does not say what is to happen if this notice is not given. Learned counsel for the plaintiff urges that if the notice is not given then he cannot apply for a summons for judgment and the suit will remain in the air. I do not agree. I think that the rule is quite clear. Once the plaintiff has got the defendants served, then the defendants get ten days in which they have to appear. If they come within ten days the plaintiff will know this fact either by receipt of a notice under Order 3 7 Rule 3 (3) of the Code or by seeing the defendant or the defendant's pleader physically appearing in the Court or any hearing. In either case the plaintiff can apply for summons for judgment. If during this period of ten days or so, the plaintiff does not hear from-the defendant or does not see the defendant present in Court then he can claim under Order 37 Rule 2(3) of the Code for a judgment based on the fact that the defendant has not appeared. In any case, the problem of waiting for the defendant to write a letter or give a notice will not arise.

(11) The reason why Order 3 7 Rule 3 (3) of the Code requiring the defendant to give notice to the plaintiff of his appearance has been introduced in the Code is a very simple one. The initial summons served on the defendant requires him to appear within ten days. The defendant may appear within one day or he may appear within ten days. There may be delay in serving the defendant so the plaintiff can never be sure on which date the defendant as appeared or whether ten days have expired. To serve the interests of the plaintiffs convenience and not leave him in the dark, the law requires the defendant to serve a notice. The notice is merely information of a fact which the plaintiff would not otherwise know. But if the defendant puts in appearance in the presence of the plaintiff then the information is physical and known to the plaintiff and does not require to be the subject matter of a notice. Consequently, there is no necessity of the notice.

(12) In consequence of this discussion I come to the conclusion that the defendants 1 to 5 did put in appearance on September 25, 1978 which was within ten days of service and consequently, the suit cannot be decreed against these defendants under Order 37 Rule 2(3) of the Code on the ground of these defendants failing to enter appearance.

(13) The case of the 6th defendant is quite different. This defendant did not put in appearance at the hearing of the inter-locutory application. In fact, this defendant did not put in appearance within ten days and this fact is admitted even in the reply to the application filed by the plaintiff (1. A. 622/79). In fact, this applicant has filed another application (1. A 828/ 79) praying that the delay in entering appearance, if any, should be condoned under Order 37 Rule 3(7) of the Code. Before dealing with these applications on the merits, the necessary facts can now be set out. There were six defen- dants in the suit. Five of these defendants are residents of New Delhi. They are: M/s. Diamond Picture, a partnership firm, which has four partners. This firm had acquired distribution, exhibition and exploitation rights of motion picture 'AAP Kl KHATIR' for Delhi and U.P. and had pledged 12 prints of this picture together with publicity materials, distribution rights etc. The 6th defendants M/s Indu Pictures of Bombay is the producer of the film.Clearly, the 6th defendant is in a different position from the other defendants. In reply to the application praying for judgment on account of non-appearance, an affidavit, being the affidavit of Shri Harsh Kohli, staling that he is the proprietor of defendant No. 6 M/s. Indu Picture, has been filed. In this affidavit it is stated that the .summons was served on the deponent on December 19, 1978 and the date of hearing was indicated to the December 20, 19 78. A telegram was sent on December 19, 1978 addressed to the Registrar of this Court requesting an adjournment. A vakalatnama was sent as the deponent knew that the Courts would open on January 2, 1979 after winter recess. It is claimed that there is no delay in entering appearance. I do not regard the sending of this telegram as being an appearance in any sense of the word. If this defendant was served on December 8, 1978, the clear provision of Jaw regarding appearance would suggest that the defendant had to appear within ten days of service. I reproduce here the relevant portion of Rule 3 (1) of Order 37 which states 'the defendant may, at any time within ten days of such service, enter an appearance either in person or by pleader and, in either case, he shall file in Court an address for service of notices on him.' This means that the last date on which this defendant could have entered appearance was December 18, 1978. The sending of a telegram on December 19, 1978 etc. was clearly not an appearance within time. I must say here that the notice issued to this defendant required him to appear within twenty days. This notice is not in accordance with law and I have already remarked about this. I have also said that a party to whom a wrong notice has been issued cannot be treated as being in default because as far as he is concerned the time for appearance is twenty days from the date of service and not ten days. The time of twenty days expires on December 28, 1978. On December 28, 1978 the High Court was closed. So it can be said that on 'January 2, 1979 when this defendant actually filed a vakalatnama was in appearance within the time indicated in the summons. Nevertheless, no intimation of this was given to the counsel for the plaintiff. The provisions of Order 3 7 Rule 3 (1) of the Code require intimation to be given to the learned counsel. I have already analysed this very provision in. the case of the other defendants. There it could be said that as the hearing took place in Court and the counsel was present, so the plaintiff was fully aware that the appearance had been put in within ten days and no notice was unnecessary to the counsel. This is not the case with the 6th defendant. The physical appearance of this defendant through counsel took place before the Court on January 24, 1979. I may also say that the Court record indicates as per my order passed on December 20, 1978 that a telegram had been received from the defendant No. 6 complaining that he had been served too late and could not appear on December 20, 1978. There are thus two consequences and two possible lines for analysis which would apply to the 6th defendant. Clearly, he has not put in appearance within the time required by Order 37 Rule 3, and thereforee, must be deemed to have put in appearance late. The provisions of Order 37 Rule 3 cannot be amended by the Registry. Even if the notice stated that a period of twenty days was available for putting in appearance, it would not change the language of Order 37 Rule 3(1). So, I must come to the conclusion that this defendant has put in appearance late. If we treat the period of time allowed by law as 20 days, then appearance has been put in within time because on December 28, 1978 the Court was closed. So, appearance could not be put in on any date prior to the re-opening of the Court which was January 2, 1979. However, the learned counsel did not intimate the fact that he has put in appearance to the counsel for the plaintiff. As I have remarked no penality has been prescribed by the Rule for failure to inform the counsel for the plaintiff. If the rule is to be enforced. I think it will be necessary to treat the notice as being mandatory otherwise it will not be obeyed or put into effect by any defendant. So my interpretation of Rule 3(1) is that not only has the defendant to put in appearance within the requisite time but he has also to give a notice to the counsel for the plaintiff that he has in fact put in appearance and if he does not give this notice or the plaintiff is not even otherwise aware of this appearance, then it will be deemed that the defendant has not put in appearance.

(14) Even if there is a default in appearing within the time required by law, there is a power in the Court to excuse the delay which is set out in Order 37 Rule 3(7) of the Code. That provision reads : 'The Court of Judge may, for sufficient cause shown by the defendant, excuse the delay of the defendant in entering appearance 'or in applying for leave to defend the suit.' I think, considering all the circumstances of the case, that the present is a suitable case for condoing the delay of the defendant No. 6 in putting in appearance. My reasons for condoing the delay in appearance. are as follows: Firstly, the notice served on this defendant wrongly intimated to him that twenty days was the time available for him for putting in appearance. This being a mistake of the Court Registry is sufficient ground for condoning the delay. Secondly, the notice intimated to this party that the date of hearing was December 20,1978. So, he sent a telegram saying he could not reach as the time was too short. This is another ground for condoning the delay as the date of hearing should not have been included in the notice. Thirdly, this party is a resident of Bombay and the fact that he had to put in appearance within a short time at Delhi is itself a ground for extending the time. Fourthly, this party did appear as soon as it could on the assumption that the period for putting in appearance was twenty days, and lastly, what is perhaps the most important reason, this defendant does not seem to have a direct contractual relationship with the plaintiff in as much as there does not appear prima fade to be a written contract between the plaintiff and the 6th defendant. So, it is even doubtful whether Order 37 applies to him. But I would leave this question for decision on the merits. In any event, I would allow I.A. 828/79 and condone the delay of the 6th defendant in putting in appearance.

(15) Having held that the defendants I to 5 had appeared in time and the late appearance of defendant No. 6 was being condoned, it would follow that no judgment in favor of the plaintiff can be delivered and consequently I. A. 622/79 will stand dismissed. The suit will now be listed on April 2 1979 for enabling the plaintiff to fake further steps in the suit.


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