Skip to content


Asian Steel and Metals (P.) Ltd. Vs. Pari Maganlal Hiralal and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany;Limitation
CourtGujarat High Court
Decided On
Judge
Reported in(1977)18GLR606
AppellantAsian Steel and Metals (P.) Ltd.
RespondentPari Maganlal Hiralal and anr.
Cases ReferredAher Devshi Hardas v. Hamir Karsan
Excerpt:
.....by him held that evidence of arvindbhai patel is not reliable and does not inspire confidence. 2. refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. gor would have effectively represented the company yet application for adjournment is given on the ground that party is out of ahmedabad or on 25th november 1974 on the ground that the party did not turn up. gor was present suit could have very well proceeded. i am satisfied that the petitioner has moved swiftly thereafter and cannot be accused of inaction. desai whether the plaintiff would like to have full costs of the suit irrespective of the decision of t suit or i should direct the petitioner to deposit some amount in the court. 2500 in each suit..........a decree as contemplated by rule 2 has been made. if the court thinks it proper to set aside the decree rule 4 enables the court to give leave to the defendant to appear to the summons and defend the suit on such terms as the court thinks fit. power of the court to permit appearance in response to the summons and grant leave to defend the suit would unmistakably show that an experts decree was made in a suit governed by rule 2 in which there was no appearance in response to the summons or leave to defend was not granted or it was granted subject to the condition and condition was not fulfilled and suit ended in a decree. it is such a decree, which can be set aside under rule 4. failure to appear in response to the summons or the failure to obtain leave or if leave is granted.....
Judgment:

D.A. Desai, J.

1. Petitioner in these three revision applications is Asian Steel and Metals Private Limited a company registered under the Companies Act, 1956. Petitioner questions the legality and correctness of the order made by the learned City Civil Court Judge on 30th April 1976, by which the application made by the petitioner who is original defendant No. 2 to set aside experts decree made in three suits and permit it to participate in the suit and defend the suit was dismissed with costs. Parties are the same in all the three petitions and contentions are entirely identical and therefore, all the three Civil Revision Applications can be conveniently disposed of by this common judgment.

2. A few facts leading to the Revision Petition may be stated. Oppo nent No. 1 in each petition filed three different suits being Civil Suits Nos. 1942 of 1972, 1941 of 1972 and 2161 of 1972 for recovering various amounts from the present petitioner and opponent No. 2. Each suit was a summary suit and on summons for judgment being taken out, the defendants in the suit including the present petitioner applied for and obtained unconditional leave to defend the suits. On the leave being gran ted, the suits were transferred as Long Cause and were pending for hearing. All the three suits were first notified for final hearing on 10th November, 1974 and came to be adjourned in course of time to 3rd December, 1974 when the Advocate appearing for the present petitioner who was defendant No. 2 submitted a statement saying that he had no further instructions in the matter on behalf of both the defendants and both the defendants were absent. Evidence on behalf of the plaintiff was recorded and experts decree was made on 5th December 1974. Original defendant No. 1 has accepted the decree because he has neither applied for setting aside the decree nor has preferred appeal against the decree. Present peti tioner original defendant No. 2 gave an application on 24th February 1975 in each suit for setting aside the experts decree and permit it to participate in the proceeding and to hear the proceedings from the stage where suits were proceeded experts. These Applications were Civil Miscellaneous Application No. 68 of 19/5 in Suit No. 1942 of 1975, 67 of 1975 in Suit No. 2161 of 1972 and 69 of 1975 in Suit No. 1941 of 1972. Original plaintiff resisted three applications and the learned Judge by his identical order dated 30th April 1976 rejected the applications with costs. Petitioner has preferred the present three revision applications being 660 of 1976, 661 of 1976 and 662 of 1976 respectively questioning the correctness of the aforementioned decision of the learned City Civil Court Judge refusing to set aside the experts decree.

3. Mr. R.N. Shah, learned Advocate who appeared for the petitioner in each of these petitions urged that the applications for setting aside experts decree and restoring the suit to file would be governed by Order 37 Rule 4 of the Code of Civil Procedure and would accordingly be governed by residuary Article 137 of the Limitation Act and, therefore, limitation would be of three years from the date when the experts decree was made. Alternatively it was contended that if proceeding would be governed by Order 9 Rule 13 Article 123 of the Limitation Act, 1963 would apply and the application for restoring the suit to file would be time barred, but the evidence led by the petitioner would affirmatively show that he was prevented by sufficient cause from riling the application in time and therefore, delay should have been condoned.

4. Mr. R.N. Shah con ended that the suit filed by the plaintiff was governed by Order 37 Rule 2 and, therefore, if an experts decree is made in such a suit it could be set aside as provided in Rule 4 and in view of the decision of the Bombay High Court in P.N. Films v. Overseas Films Corp. 59 Bom. L.R. 406, relevant Article of the Limitation Act would be residuary Article 137 and application would between times. Undoubtedly suit filed was one, which would be governed by Order 37 of the Civil Procedure Code. That is not in dispute. On a summons for judgment taken out by the plaintiff one Mr. Gor, Manager of the present petitioner company appeared and applied for leave to defend and it is admitted that unconditional leave to defend was granted and accordingly suit was transferred to Long Cause List. When the suit came up for hearing first in November 1974 and came to be adjourned to 3rd December 1974 no one on behalf of the petitioner was present and the Advocate appearing for the petitioner gave no-instruction statement and suit proceeded experts. Question is whether such an experts decree would be governed by Rule 4 of Order 37. Rule 4 reads as under:

4. After decree the Court may, under special circumstances, set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summers and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit.

The jurisdictional fact for invoking Rule 4 would be that a decree as contemplated by Rule 2 has been made. If the Court thinks it proper to set aside the decree Rule 4 enables the Court to give leave to the defendant to appear to the summons and defend the suit on such terms as the Court thinks fit. Power of the Court to permit appearance in response to the summons and grant leave to defend the suit would unmistakably show that an experts decree was made in a suit governed by Rule 2 in which there was no appearance in response to the summons or leave to defend was not granted or it was granted subject to the condition and condition was not fulfilled and suit ended in a decree. It is such a decree, which can be set aside under Rule 4. Failure to appear in response to the summons or the failure to obtain leave or if leave is granted conditionally, failure to satisfy condition are three jurisdictional Facts any one which if satisfied, a decree passed in such circumstances can be set aside under Rule 4. This becomes abundantly clear upon the proper construction of Rule 4 itself. The language of Rule 4 is clear and unambiguous and does not admit of any other construction.

5. Rule 4 permits such a decree in a suit to be set aside in which there was no appearance in response to the summons, or leave to defend was not granted, or granted conditionally, and conditions were not satisfied, then alone a decree can be set aside if it seems reasonable to the Court so to do on terms as may be prescribed by Court. In the present case Rule 4 cannot be invoked. In this case undoubtedly the suit was governed by Rule 2. Summons was served upon the Manager of the present petitioner. It is an incorporated Company. There is no dispute that summons was not properly served. In fact in response to the summons Mr. Gor, Manager on whom the summons was served has not only accepted the service as correct and valid service but he appeared in the suit and it was on his affidavit that application for leave to defend unconditionally was granted. Therefore three things follow from this position namely (i) that the summons was properly served, (ii) leave to defend was applied for, and (iii) it was granted unconditionally. Thereafter suit was transferred to Long Cause List. And after the suit was called on for hearing petitioner failed to appear. In these circumstances, jurisdictional facts for attracting Rule 4 are not established and therefore it cannot be invoked. If Rule 4 cannot be invoked, the decision in P.N. Film's case (supra) cannot assist the petitioner because the case would not be governed by the residuary Article 137.

6. It is an admitted position that suit was transferred to the Long Cause List. It was called on for hearing first on 10th November 1974 and suit came to be adjourned to 19th November 1974 when application was given on behalf of the present petitioner by its Advocate that the party responsible for defending the action is out side Ahmedabad and matter may be adjourned. Suit was adjourned to 25th November 1974. Defendant No. 1 was present but defendant No. 2 did not attend on 25th November 1974. Suit came to be adjourned to 28th November 1974 and then to 3rd December 1974. The learned Advocate who appeared for both the defendants retired from the suit stating that he had no further instructions in the matter, and suit ended in an experts decree after the plaintiff's evidence was recorded.

7. It is again an admitted position that application for restoration was filed on 24th February 1975. This application would be governed by Article 123 of the Limitation Act.

8. Article 123 of the Limitation Act, 1963 provides limitation of 30 days and limitation would begin to run from the date of the decree or where summons or notice was not duly served, when the applicant had knowledge of the decree. There is no dispute that notice or summons was duly served in this case. Limitation would begin to run from the date of the decree and it would be of 30 days. In other words, within 30 days application for setting aside the decree has to be made. Admittedly application has not been made within 30 days. Therefore, application filed by the petitioner to set aside the decree would be barred by limitation within the meaning of Article 123 of the Limitation Act.

9. According to the petitioner he was prevented by sufficient cause from applying for setting aside the decree within time. Section 5 of the Limitation Act provides for extension of prescribed period in case of any appeal or application, if the applicant or appellant satisfied the Court that he had sufficient cause for not preferring the appeal or making the application within such period. Petitioner invokes Section 5 of the Limitation Act in this case.

10. In order to understand the contention whether the cause put forth by the petitioner is sufficient or not certain dates may be taken into con sideration. Ishvarbhai Naranbhai Patel who is the director of the petitioner company is a non-resident Indian. He left for Kenya on 14th September 1974. He went to London in November 1974 because his wife was ailing. He returned to India on 1st January 1975 and stayed in Bombay till 20th January 1975. Then he went to Rudel village near Borsad in Khaira District. He was there up to 31st January 1975. Plaintiff filed execution application on 14th February 1975 and obtained order for attaching the machinery belonging to the petitioner company. Application to set aside the decree was made on 24th February 1975. Question is whether in the circumstances herein mentioned the learned Judge was right in coming to the conclusion that the plaintiff has failed to show that he was prevented by sufficient cause in making the application in time. It may be mentioned here that oral evidence was led in this case while hearing application for restoration of suit. One Arvind Patel nephew of Ishvarbhai and a clerk serving in the Petitioner Company and Ishvarbhai the director were examined on behalf of the petitioner. Shankarbhai a partner Narandas Minimum of plaintiff firm were examined on behalf of the opponent No. 1, Undoubtedly, the learned Judge has appreciated the evidence and has come to the conclusion that the present petitioner has failed to show that he was prevented by sufficient cause from making application in time for setting aside the decree.

11. The learned (under examining the evidence recorded by him held that evidence of Arvindbhai Patel is not reliable and does not inspire confidence. The learned Judge accepted the evidence led on behalf of opponent No. 1 (original plaintiff) that Mr. Gor, Manager of the Company was present in the Court both on 25th November 1974 and 28th November 1974. The learned Judge also did not believe evidence of Ishvarbhai that he did not come to know on his return to India that experts decree has been made in all the three suits. On these observations, the learned Judge has rejected the applications of the petitioner.

12. What constitutes 'sufficient cause' within the meaning of Section 5 of the Limitation Act has been the subject matter of observation by various Courts. Very recently this position was examined threadbare by my learned brother M.P. Thakkar, J, in Karim Abdullaa v. Heirs of Deceased Bai Hoorbai Jama 16-Guj. L.R. 835. After exhaustively examining the ratio of the decision in Ramanial v. Rewa Coalfields : [1962]2SCR762 and State of West Bengal v. The Administrator Howrah Municipality : [1972]2SCR874a in both of which the Supreme Court in terms observed that the expression 'sufficient cause' employed in Section 5 of the Limitation Act is to be interpreted in a liberal manner so as to advance the cause of substantial Justice particularly when 1:0 negligence or inaction or want of bona fides is imputable to a party, the learned Judge further observed (hat examining the matter on principle when the Court is confronted with the question of condoning delay the mental radar must flash the following messages:

1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.

3. 'Every day's- delay must be condoned' does not mean that a pedantic unpragmatic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.

4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a nondeliberate delay.

5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. The presumption would be just the other way round.'

6. x x x x x

7. x x x x x

It has been laid down threadbare that the Court while examining whether the cause pleaded by a party in default is sufficient cause or not its approach must only be broad liberal approach and not highly technical narrow and constricted one. In fact I had myself to deal with this problem in Aher Devshi Hardas v. Hamir Karsan, Special Civil Application No. 1839 of 1974 decided on 4th April 1975, a brief reference of which is made in 12 Guj. Law Times, 236, where after examining various precedents bearing on the subject one more test was formulated, namely, party in default can be accused of such gross inaction as to be indicative of his giving up the litigation. In a case where an experts order is made, and party against whom it is made, moves for setting aside the same, there is bound to be some element of negligence. Over emphasising the element of negligence, which is bound to be there, would lead to Court missing the real point required to be determined, namely, negligence was such as to be indicative of giving up the litigation. If the party is not at all negligent, there would be no occasion for expert's orders being made. If it is said that something happened at the last minute, which prevented the party from attending the Court or communicating his lawyer, it can still be said that there was some negligence in not making alternative arrangement to communicate with the lawyer. A very careful party attending to litigation, keeping an eye on all eventuality will have never to resort to Section 5 of the Limitation Act. Therefore, in such matters, there is bound to be some element of negligence and the question is whether penalty for that negligence must be such as to refuse the fundamental right of being heard. Refusal to set aside experts decree is tantamount to refusal to give any opportunity to the party to put forth his case and to be burdened with the decision adverse to it. I would, therefore, examine the matter from this standpoint.

13. Before however I examine the rival contentions in this case, I must dispose of one contention of Mr. Desai learned Advocate for the opponent. He pointed out very frankly that I am dealing with a revision application. That is a fact. He also pointed out that my jurisdiction is very limited. He is indisputably correct. The question really is whether the learned Judge who has dealt with the question of 'sufficient cause' has misdirected himself by not applying the correct legal principle and therefore, that is an error apparent on the record. No where the learned Judge defines or determines as to what would constitute sufficient cause and then proceed to apply the standard or yardstick to the case placed before him. He was in the frame of mind such as when hearing suit where he believes or disbelieves evidence and reaches a conclusion. In a matter of this nature, it is absolutely necessary for a correct approach in exercising jurisdiction for condoning delay to be first mentally informed as to how question of 'sufficient cause' is required to be examined and according to the ratio of the decision of the highest Court in our country. I no where find that proposition in the order. The result has been that the learned Judge has completely miscarried himself and decision has led to manifest injustice denial of jurisdiction and it calls for interference.

14. Mr. Desai was keen to point out that once the Court accepts that Mr. Gor the Manager of 'the Company was present both on 25th November 1974 and 28th November 1974, the case of the petitioner must be thrown out. A bare enumeration of events would show that this averment of the plaintiff couldn't be accepted at all. Mr. K.M. Bhatt was the Advocate for both the defendants. Mr. K.M. Bhatt has not filed affidavit nor has Mr. Gor filed the affidavit. However, the record shows that Mr. K.M. Bhatt was engaged by Mr. Gor and Vakalatnama was signed by Mr. Gor. It was Mr. Gor the Manager who on behalf of the petitioner company made an application supported by affidavit for obtaining leave to defend. And on the contentions put forth by him, the learned Judge granted unconditional leave to defend. There must be very serious contentions put forth by Mr. Bhatt. There fore, for the purpose of record. Mr. Gor was really the defendant who represented the Company. Now, if Mr. Gor attended the Court on 25th November 1974 and 28th November 1974, there was no reason for Mr. Bhatt to ask for adjournment on the ground that the party is out of Ahmedabad. Evidence on behalf of the petitioner is to the effect that Mr. Gor was not present because he was suffering from asthama and at the relevant time he was not in the employment of the petitioner. Once Mr. Gor was present Mr. Bhatt had the presence of a person who was in possession of such facts, which enabled Mr. Bhatt to obtain unconditional leave to defend. Mr. Bhatt would not have cared for the presence of Ishvarbhai and Mr. Gor would have effectively represented the company yet application for adjournment is given on the ground that party is out of Ahmedabad or on 25th November 1974 on the ground that the party did not turn up. Of course on 25th November 1974 original defendant No. 1 had not turned up. But if Mr. Gor was present suit could have very well proceeded. Mr. Bhatt would not be handicapped by the absence of Ishvarbhai. In this background, it is impossible to believe that Mr. Gor was present on 28th November 1974.

15. It was next contended that the register shows that Arvindbhai Patel continued to serve the petitioner company till he joined service with Gujarat University on 21st October 1974. In the mean time it is said that Arvindbhai Patel met someone on behalf of the plaintiff in Manekchowk locality and talk disclosed that the factory was working. Mr. Desai pointed out that along with this two missing pages of the register produced by the petitioner company to show that factory was closed would unmistakably show that not only the factory was working but there was someone always available and most probably Mr. Gor who was in charge of the affairs of the factory and he should have attended the Court. The whole argument is based on surmises. Oral talk in such matters would be hardly of any significance. A clerk, though he was undoubtedly nephew of Ishvarbhai, Arvindbhai would be the last to be thrown out of the company, yet it is not in dispute that on 21st October 1974 he joined service of the University. It may be that he was paid some salary thereafter. If the specific date is given when he joined University that date must be believed because he might be confronted with the record of the University if he were to make an incorrect state ment. Therefore, it appears that since 21st October 1974 even Arvindhai had left the factory. It is not possible to believe that a clerk would be running a factory on his own responsibility and his mere presence would not help. Therefore, not only the factory was closed earlier and in any case latest by October 1974, no one was in charge of closed factory. And remember that experts decree was made in December 1974, no one was available at that time to attend on behalf of the petitioner.

16. It may here be pointed out that even according to the learned Judge, Ishvarbhai was away from India till 1-1-1975. In paragraph 29 the learned Judge has observed: 'It is mot improbable that the said Managing Director had not come to know at least immediately on his return to India on 1.1.75 that three decrees had been passed against the applicant as stated hereinabove.' This would show that even according to the learned Judge it was not possible for Ishvarbhai to know about the experts decree till 1-1-1975. Ishvarbhai himself has taken oath to say that he came to know about the decree after 19-2-1975 when the Darkhast was filed and machinery of the factory was attached. The question then is whether he moved swiftly thereafter or was guilty of such inaction as to show any persistent default on his part so as to deny him benefit of discretionary order of the Court. I am satisfied that the petitioner has moved swiftly thereafter and cannot be accused of inaction. It is, therefore, most satisfactorily established keeping in view the correct approach to the subject, that petitioner was prevented by sufficient cause from preferring application in time and, therefore, delay ought to have been condoned in this case.

17. Question is whether we should put the petitioner to some terms. Undoubtedly, discretion is being exercised in favour of the petitioner. Petitioner has undoubtedly obtained an unconditional leave to defend but now that he has been guilty of default and lapse some condition ought to be imposed upon him. I even suggested to Mr. Desai whether the plaintiff would like to have full costs of the suit irrespective of the decision of t suit or I should direct the petitioner to deposit some amount in the Court. I left the choice to Mr. Desai and Mr. Desai's choice was for directing the petitioner to deposit some amount in each suit keeping in view the fact that petitioner had obtained unconditional leave to defend. I think petitioner should, be directed to deposit Rs. 2500 in each suit within four weeks from today and on condition being satisfied the experts decree made in each suit would be set aside and petitioner should be given an opportunity to appear and cross-examine the plaintiff's witnesses and to lead his own evidence in the matter.

18. Accordingly, these three revision applications are allowed and experts decree made in Civil Suits Nos. 1942, 2161 and 1941 all of 1972 are set aside and Civil Miscellaneous Applications Nos. 68,67 and 69 all of 1975 respectively are allowed setting aside the order made by the learned Judge rejecting them. Petitioner is permitted to appear in the suits on a condition that he deposits Rs. 2500 in each suit within four weeks, and each suit should be tried de now from the stage of recording evidence, meaning thereby the plaintiff's evidence should also be recorded afresh. Rule made absolute with no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //