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Sam. M. Haeems Vs. Samson J. BenjamIn and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Judge
Reported in(1966)7GLR87
AppellantSam. M. Haeems
RespondentSamson J. BenjamIn and ors.
Cases ReferredAmbalal Purushottamdas and Co. v. Jawarlal
Excerpt:
.....rule 3 provides that at the hearing of summons for judgment, if the defendant has not applied for leave to defend or if such application has been made and is refused the plaintiff shall be entitled to judgment forthwith, or if the defendant be permitted to defend as to the whole or any part of the claim the judge shall direct that on failure to complete the security (if any) or to carry out such other directions as the judge may have given within the time limited in the order, the plaintiff shall be entitled to judgment forthwith. rule 143 deals with appearance of the defendant and provides that if the defendant enters or files a vakalatnama, the plaintiff shall apply for summons for judgment returnable not less than ten clear days from the date of service to the sitting judge in..........when the learned judge of the city civil court, ahmedabad, passed an order granting conditional leave to defend provided that each of the two defendants, namely, the petitioner and the third respondent, furnished to the satisfaction of that court adequate security in the sum of rs. 32,000/-. the petitioner and the third respondent, being aggrieved by that order, filed in this court two revision applications, being revision applications nos. 245 and 295 of 1963. those two revision applications were heard by bhagwati j. who, for the reasons set out in his order dated june 18, 1963, set aside the aforesaid order and remanded the summons to the trial court. on august 16, 1963 that court heard the summons again when the learned judge who heard that summons granted unconditional leave to.....
Judgment:

J.M. Shelat, C.J.

1. Respondents 1 and 2 to this petition filed a suit, being Summary Suit No. 1462 of 1962, on December 12, 1962 for the recovery of Rs. 35,000/- said to have been advanced to the petitioner and respondent No. 3. According to respondents 1 and 2 these moneys were advanced from time to time on the request of the petitioner and respondent No. 3, and the aforesaid advances were made by cheques, drafts and sometimes in cash. Thereafter, respondents 1 and 2 took out a summons for judgment on January 31, 1963. In answer to that summons, the petitioner and the third respondent filed their respective affidavits in reply. The summons for judgment came up for hearing on February 28, 1963, when the learned Judge of the City Civil Court, Ahmedabad, passed an order granting conditional leave to defend provided that each of the two defendants, namely, the petitioner and the third respondent, furnished to the satisfaction of that Court adequate security in the sum of Rs. 32,000/-. The petitioner and the third respondent, being aggrieved by that order, filed in this Court two revision applications, being Revision Applications Nos. 245 and 295 of 1963. Those two revision applications were heard by Bhagwati J. who, for the reasons set out in his order dated June 18, 1963, set aside the aforesaid order and remanded the summons to the trial Court. On August 16, 1963 that Court heard the summons again when the learned Judge who heard that summons granted unconditional leave to defend to the second defendant i.e. the third respondent. He also granted to the petitioner unconditional leave to defend to the extent of Rs. 17,000/- out of the aforesaid claim of Rs. 32,000/-. But as regards the balance of Rs. 15,000/- and interest on the amount of Rs. 32,000/-, the learned Judge granted conditional leave, stating that the petitioner would be at liberty to defend the suit provided he furnished security to the extent of Rs. 15,000/- within the time prescribed in his order. The petitioner thereupon filed the present Civil Revision Application. Respondents 1 and 2 also filed Civil Revision Application No. 887 of 1963, contending therein that the learned Judge was not right in ordering security to the extent only of Rs. 15,000/- and that there was an irregularity in the exercise of his jurisdiction in not directing the petitioner as also the third respondent to furnish security to the extent of the entire of amount Rs. 32,000/- and costs. Mr. Shah, who appears for respondents 1 and 2 in this petition and for the petitioners in Civil Revision Application No. 887 of 1963 stated that he was not pressing that petition and that the same may be dismissed for want of prosecution. The result, therefore, is that Civil Revision Application No. 887 of 1963 is dismissed for want of prosecution and, in view of Mr. Vyas not pressing for the costs therein, there will be no order as to costs so far as that petition is concerned.

2. Reverting now to the present petition, Mr. Vyas for the petitioner raised two contentions. The first contention relates to the validity of Order 37, Rules 2 and 3 of the Civil Procedure Code as amended by the Bombay High Court in 1936 and 1940, and Rule 142(3) of the Ahmedabad City Civil Court Rules, 1961, framed by this Court under Sections 122 and 128 of the Civil Procedure Code, Article 227 of the Constitution and all other powers enabling this High Court to frame the aforesaid rules. The second contention is on merits, and that contention is that the petitioner and the third respondent had in their respective affidavits raised a triable issue and that therefore, the learned Judge was bound to give unconditional leave to defend to both of them. That triable issue was that at the material time, respondents 1 and 2 were carrying on business as money lenders within the meaning of Section 2(10) of the Bombay Money Lenders Act, XXXI of 1947 and that they, not having obtained the requisite licence under that Act, were act entitled to file a summary suit under Order 37 of the Code.

3. Order 37, Rule I provides that it shall apply only to the High Courts of Judicature at Fort William, Madras and Bombay and any District Court or other Court specially empowered in that behalf by the State Government. Rule 2 provides that all suits upon bills of exchange, hundis or promissory notes may, in case the plaintiff desires to proceed thereunder, be instituted by presenting a plaint in the form prescribed; but the summons shall be in Form No. 4 in Appendix B or in such other form as may from time to time be prescribed. Sub-rule (2) of Rule 2 provides that in any case in which the plaint and summons are in such forms respectively, the defendant shall not appear or defend the suit unless he obtains from a Judge as thereinafter provided so to appear and defend; and, in default of his obtaining such leave or of his appearance and defence in pursuance thereof, the allegations in the plaint shall be deemed to be admitted, and the plaintiff shall be entitled to a decree, etc. Rules 1 and 2 were, as aforesaid, amended by the High Court of Bombay and, as amended, Rule 2 of Order 37 provides that- 'All suits upon bills of exchange, hundis or promissory notes and all suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant with or without interest, arising on contract express or implied, or on an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty, or on a guarantee, where the claim against the principal is in respect of a debt or a liquidated demand only, or in suits in which the landlord seeks to recover possession of immovable property, with or without a claim for rent or mesne profits against a tenant whose term has expired or has been duly determined by notice to quit, or has become liable to forfeiture for non-payment of rent or against persons claiming under such tenant may, in case the plaintiff desires to proceed hereunder, be instituted by presenting a plaint in the form prescribed but the summons shall be in Form No. 4 in Appendix B or in such other form as may be from time to time 'prescribed. 'Sub-rule (2) of Rule 2 provides that in any case in which the plaint and summons are in such forms respectively, the defendant shall not defend the suit unless he enters an appearance and obtains leave from a Judge so to defend; and in default of his entering an appearance and of his obtaining such leave to defend, the allegations in the plaint shall be deemed to be admitted, and the plaintiff shall be entitled to a decree for possession and/or as the case may be for any sum not exceeding the sum mentioned in the summons, together with interest at the rate specified (if any) to the date of the decree, and such sum for costs as may be prescribed unless the plaintiff claims more than such fixed sum, in which case the costs shall be ascertained in the ordinary way, and such decree may be executed forthwith. Rule 3 provides that the plaintiff shall together with the writ of summons under Rule 2 serve on the defendant a copy of the plaint and exhibits thereto, and the defendant may at any time within ten days of such service enter an appearance. It also provides that on the day of entering such appearance, notice of appearance shall be given to the plantiff's attorney (or if the plaintiff sues in person to the plaintiff himself) either by notice delivered at or sent by prepaid letter directed to the address of the plaintiff's attorney or the plaintiff, as the case may be. Sub-rule (2) of Rule 3 then provides that if the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment returnable not less than two clear days from the date of service, supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit. Sub-rule (3) of Rule 3 provides that the defendant may at any time within ten days from the service of such summons for judgment by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend the suit. Leave to defend may be granted to him unconditionally or upon such terms as to the Judge appear just. Sub-rule (4) of Rule 3 provides that at the hearing of summons for judgment, if the defendant has not applied for leave to defend or if such application has been made and is refused the plaintiff shall be entitled to judgment forthwith, or if the defendant be permitted to defend as to the whole or any part of the claim the Judge shall direct that on failure to complete the security (if any) or to carry out such other directions as the Judge may have given within the time limited in the order, the plaintiff shall be entitled to judgment forthwith. This was the state of the law when the then State of Bombay was bifurcated by the Bombay Re-organisation Act, 1960.

4. In 1961, the State Legislature passed the Ahmedabad City Courts Act, 1961, providing inter alia for the constitution of a City Court for the city of Ahmedabad, and in accordance with the provisions of that Act, the City Civil Court was established by the State Govern-ment as from November 4, 1961, by a notification issued under Section 3 of the Act. In exercise of its power under Clause (b) of Rule 1 of Order 37 of the Code, the State Government also issued a notification dated May 4, 1961, specially empowering the City Civil Court set up as aforesaid to exercise summary jurisdiction. This High Court also in its turn made rules for the City Civil Court, called the Ahmedabad City Civil Court Rules in exercise of its powers under Article 227 of the Constitution and Sections 122 and 128 of the Code, and all other powers enabling it to make such rules.

5. Chapter XI of these rules is headed 'Summary Suits' and contains Rules 142 to 148. Rules 142 provides for the institution of summary suits. The rule states that all suits upon bills of exchange, hundis or promissory notes and all suits in which the plaintiff seeks only to receive a debt or liquidated demand in money payable by the defendant with or without interest, arising on contract express of implied, or an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty, or on a guarantee, where the claim against the principal is in respect of a debt or a liquidated demand only may in case the plaintiff desires to proceed thereunder, be instituted by presenting a plaint which shall be instituted as a 'Summary Suit' and which shall contain an averment that the plaintiff is suing under the Summary Procedure under Order XXXVII of the Code. Sub-rule (2) inter alia provides that the plaintiff in such a suit shall serve upon the defendant a copy of the plaint and exhibits thereto together with a writ of summons in Form No. 5 and the defendant may at any time within ten days of such service enter an appearance. The sub-rule provides that the defendant, on the day of entering such appearance, shall serve a notice of his appearance on the plaintiff's advocate (or if the plaintiff sues in person to the plaintiff) in the manner prescribed therein. Sub-rule (3), which has been challenged by Mr. Vyas, provides as follows: 'In any suit under this Rule the defendant shall not defend the suit unless he enters an appearance and obtains leave from a Judge as hereinafter provided so to defend; and in default of his entering an appearance and of his obtaining such leave to defend, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree for any sum not exceeding the sum mentioned in the summons together with interest at the rate specified (if any) to the date of the decree, and such sum for costs as may be prescribed.' etc. Rule 143 deals with appearance of the defendant and provides that if the defendant enters or files a Vakalatnama, the plaintiff shall apply for summons for judgment returnable not less than ten clear days from the date of service to the Sitting Judge in Chambers for the amount claimed, together with interest (if any) and costs, and the Judge may thereupon, unless the defendant by affidavit or declaration shall satisfy him that he has a good defence to the action on the merits, or disclose such facts as may be deemed sufficient to entitle him to defend, pass a decree for the plaintiff accordingly. Sub-rule (3) of Rule 143 deals with default in filing appearance, and provides that if the defendant does not enter an appearance or file a Vakalatnama within ten days of the service upon him of the writ of summons and the plaint and exhibits thereto, the plaintiff shall be at liberty to apply to put down the suit for hearing forthwith thereafter before the Sitting Judge in Chambers. In such application the plaintiff shall state the date which the defendant was served and also state the fact of the affidavit of service of the writ of summons having been filed. Rule 145 inter alia provides that if it appears to the Judge that any defendant has a good defence to or ought to be permitted to defend the action, and that any other defendant has not such defence and ought not to be permitted to defend, the former may be permitted to defend, and the plaintiff shall be entitled to enter final judgment against the latter, and may issue execution upon such judgment without prejudice to his right to proceed with his action against the former.

6. The contention of Mr. Vyas was that Order 37 Rules 1 and 3 and sub-rule (3) of Rule 142 of the Ahmedabad City Civil Court Rules, 1961, are invalid inasmuch as (a) they are violative of the principles of natural justice, and (b) are violative of Article 14 of the Constitution. The contention was that the rules which require that a defendant shall not defend unless leave is granted to him violate the principles of natural justice and create discrimination between one set of defendants and the rest of the defendants though causes of action against all of them arise within the jurisdiction of the same Court, and also make distinction between Courts and Courts and defendants and defendants within the State of Gujarat and that, therefore, such rules are violative of Article 14. Mr. Vyas argued that a rule under which a defendant in a suit filed under Order 37 of the Code would have to file an appearance and obtain leave before he could put in his defence and the fact that in such a suit, if no leave is granted to him, an exparte decree can be passed against him without hearing and averments in a plaint in such a suit are deemed to have been admitted by him, is obviously violative of the principles of natural justice. He contended that a rule which gives liberty to a plaintiff to resort to summary procedure under Order 37 of the Code clearly results in discrimination where a plaintiff is permitted to exercise liberty in some cases and chooses not to exercise such liberty in other cases and therefore also, such a rule is contrary to the provisions of Article 14.

7. It is not disputed that Rules 1 to 3 of Order 37 as amended by the High Court of Bombay, and Rules 142 to 148 in Chapter XI of the City Civil Court Rules, Ahmedabad, 1961, are rules made under the powers reserved to the High Court under Article 227 of the Constitution and Section 122 of the Civil Procedure Code. It is conceded that these rules have been made with jurisdiction. The only question, therefore, that has to be determined on the contention raised by Mr. Vyas is whether Rules 1 to 3 of Order 37 as amended by the High Court of Bombay, and sub-rule (3) of Rule 142 of the Ahmedabad City Civil Court Rules, 1961, are illegal and void on either of the two grounds urged by him.

8. Rules 1 to 3 of Order 37 as also Rules 142 of the Ahmedabad City Civil Court Rules affect all defendants against whom suits are filed under the provisions of Order 37. The defendants in such suits who are affected by these rules, fall in a classification at least on two factors, (a) defendants against whom causes of action arise in the city of Ahmedabad and in respect of which the City Civil Court has jurisdiction, and (b) defendants against whom suits are filed on the categories of clauses set out in Rule 2 of Order 37 as amended by the High Court of Bombay and Rule 142 of the Ahmedabad Rules, 1961. Clearly, therefore, the defendants affected by these rules form a class and that class is based on these two considerations. It is well-settled that in order that a provision of law may avoid the mischief of Article 14 of the Constitution, the classification that is made by such a provision must be a rational one and that rational classification must have a nexus with the object to achieve which that provision is enacted. The object of providing summary procedure is to avoid delay and unnecessary cost in respect of pauses of action such as those based on negotiable instruments, contracts, etc., and in respect of which there is a claim for a liquidated amount. The object of providing summary procedure under Order 37 and the rules made by the High Court is therefore to avoid delay and unnecessary costs in suits which can be easily disposed of and which do not involve elaborate issues or require elaborate evidence. If a suit is based on a negotiable instrument, the policy of the Legislature is that consideration would be presumed, and if a defendant were to deny such consideration, the Legislature has thrown the burden of proof upon such a defendant. In such a case, it would be for the defendant to establish that there was absence of consideration disentitling the plaintiff to sue under or in respect of such a negotiable instrument. Though Order 37, as framed by the Legislature, restricted itself to suits on negotiable instruments and such other allied causes of action, the High Court of Bombay, under powers reserved to it under Section 122 of the Code, amended the rules and extended the scope of summary procedure by including suits on contracts amongst other things wherein the demand is for a liquidated amount. Even when the scope of the summary procedure was so extended, the manifest object was to give benefit of an expeditious disposal to a plaintiff if he desired to have resort to such summary procedure and also to see that on obtaining a decree, such a plaintiff would not have to go through a lengthy and elaborate procedure of execution. It was therefore that power has been given to the Judge hearing a summons for judgment to grant conditional leave to defend where the affidavit raises an issue but which in the view of the Judge is not a bona fide issue. Though the impugned rules cause differentiation the classification is a reasonable one and such classification has a rational nexus with the object sought to be achieved by the Legislature in providing summary procedure. An identical challenge on similar grounds was made before the Calcutta High Court impugning similar rules framed by that High Court under Section 122 of the Code in Ambalal Purushottamdas and Co. v. Jawarlal : AIR1953Cal758 The contention there raised also was that a defendant has in law the right to appear and defend without having to obtain leave from the Court. Yet discrimination was made under Order 37 where such right was denied to a defendant because the law stipulated that such a defendant must first obtain leave of the Court to appear and then defend. The contention was that such a procedure created inequality amongst defendants in different suits which resulted in deprivation of equal protection of law, as some defendants got the right to defend while others did not. The contention was a three-fold one, (1) that under the summary procedure there was no right to appear and defend without leave, (2) that the rules provided that the allegations in the plaint were deemed to be admitted without proof either on the failure of the defendant to file his appearance or to obtain leave, and (3) that the rules created discrimination between the same kind of suits in different courts. P.D. Mukherji J. repelled the contention on the ground that there would be infringement of Article 14 only where similarly situated or similarly circumstanced individuals were treated differently by the same law. If the law created classification which was reasonable and had a basis not capricious or arbitrary, then such classification was not discrimination so as to constitute violation of Article 14. No doubt, the procedure under Order 37 does create a difference between defendants in ordinary suits and defendants in suits to which summary procedure applies. But as already pointed out, there is a good reason for such classification and for providing different treatment to defendants in different varieties of suits. It is not possible to say that defendants against whom suits are filed on causes of action set out in the impugned rules are similarly situated or similarly circumstanced, as defendants in suits to which the summary procedure does not apply, Similarly, it is also not possible to say that defendants against whom suits are filed even on causes of action set out in the impugned rules are similarly situated or circumstances as defendants against whom suits on such causes of action are filed in other parts of the State outside the city of Ahmedabad. In a commercial city like Ahmedabad it is necessary that a special procedure should be provided for certain types of suits, such as those set out in Rule 142, so as to expedite the disposal of such suits and to avoid delays not only in the disposal of such suits but also in the satisfaction of decrees passed in such suits. Considerable part of litigation in a city like Ahmedabad would be of a commercial nature and though suits which can be filed as summary suits would be on negotiable instruments, contracts, etc., those negotiable instruments and contracts would be in relation to commercial transactions. If such suits are classified and to which summary procedure is made applicable, it cannot be said that such classification is unreasonable either in respect of defendants or suits. On the other hand, circumstances do exist outside such cities where it would not be proper or expedient to apply such a procedure. Litigants in towns outside the city of Ahmedabad are often times so scattered in different localities that they cannot reasonably be expected to file appearances or affidavits in time prescribed under the impugned rules. If, in consideration of such circumstances existing in different parts of the State, different procedures are prescribed for different Courts and even for defendants residing in different parts of the State, such differentiation cannot be said to be unreasonable, capricious or arbitrary and cannot invite the mischief of Article 14. That being so, it is impossible to agree with Mr. Vyas that the impugned provisions violate the provisions of Article 14.

9. The second branch of his argument was that these rules are also illegal as they violate the principles of natural justice. It is somewhat difficult to appreciate this branch of the argument, for the rules under Order 37 and our Rules 142 to 148 confer right to a defendant in a summary suit to file his appearance and an affidavit in reply to a summons for judgment taken out by a plaintiff. It is only after the Judge dealing with such a summons has considered the affidavit filed by the defendant showing cause against the summons for judgment and has heard the parties, that he can dispose of such a summons. Since the rules expressly provide for the right to appear, to file affidavit disclosing the defence and to be heard it is difficult to understand how it can be said that they are in breach of the principles of natural justice. It is true that where a defendant fails to file his appearance within the time prescribed, or where he fails to obtain leave to defend, or where he fails to comply with the order passed by the Judge on such summons, such as for instance where he fails to furnish the deposit as ordered by the Judge, the averments made in the plaint are deemed to be admitted by such a defendant. But the deeming provision comes into play only where any of these things happens and not otherwise. It is, therefore, not possible to say that a defendant to whom the summary procedure applies is not afforded an opportunity of defending himself or being heard. Principles of natural justice, therefore, cannot be said to have been violated by any of the provisions impugned in this petition. The contention, therefore, that sub-rule (3) of Rule 142 of the Ahmedabad City Civil Court Rules, 1961 or Rules 2 and 3 of Order 37 as amended by the High Court suffer from invalidity, cannot be accepted.

9.1 On merits, the contention of Mr. Vyas was that so far as the claim of Rs. 15,000/- was concerned and in respect of which the learned Judge has ordered security to be furnished by the petitioner, there was clearly a triable issue inasmuch as respondents 1 and 2 were money lenders within the meaning of the Bombay Money Lenders Act, 1946 and that therefore, it was incumbent upon the learned Judge to grant unconditional leave. There is however no substance in this contention. No doubt, the petitioner urged that the Bombay Money Lenders Act, 1946, applied but it is significant that in the present petition no averment has been made to the effect that respondents 1 and 2 were at the material time carrying on business of money lending, or that they had a place of such business in the State of Gujarat. Even in the affidavit in reply filed by the petitioner on February 2, 1963, the only averment made was that the plaintiffs had not obtained a licence under that Act and that therefore their suit should be dismissed. The plaintiffs, however, would require such a licence provided that they were money lenders within the meaning of Section 2(10) of the Act. The defence that the plaintiffs were money lenders can arise only if there are the necessary averments bringing the case of the petitioner under the Bombay Money Lenders Act. Even though these averments were absent in the affidavit, the learned Judge has in his order dated August 16, 1963, dealt with this aspect and come to the conclusion that the petitioner had not placed before him any material to show that money lending was at the material time the occupation or vocation of respondents 1 and 2, or that they had indulged in such occupation for profit or for their livelihood. That being the position, it is not possible to say that the learned Judge, having come to that conclusion, was bound to grant unconditional leave to the petitioner.

10. Mr. Vyas therefore fails on both the contentions and the revision application has to be rejected. Rule discharged. Stay order obtained by the petitioner vacated. The petitioner will pay to respondents 1 and 2 the costs of this civil revision application. The petitioner will furnish the security directed by the learned Judge in the order dated August 19, 1963 within a fortnight from today.


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