SCA/12139/2008 1/13 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 12139 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ========================================================= M/S KIRTI ENTERPRISES & 1 - Petitioner(s) Versus NIRMA CONSUMER CARE LTD - Respondent(s) ========================================================= Appearance : MR PM DAVE for Petitioner(s) : 1 - 2. MR MB GANDHI for Respondent(s) : 1, MR CHINMAY M GANDHI for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE M.R. SHAH Date : 22/12/2008 ORAL JUDGMENT 1. By way of this petition under Article 227 of the Constitution of India, petitioners have prayed for an appropriate writ, order or direction, quashing and setting aside SCA/12139/2008 2/13 JUDGMENT the condition imposed on the petitioners for depositing a further sum of Rs.6.00 lakhs by the learned Chamber Judge, City Civil Court at Ahmedabad vide order dated 2.9.2008 below Exh.1 in Civil Misc. Application No.50 of 2008. 2. Respondent herein-original plaintiff had instituted Civil Suit No.1044 of 1999 in the City Civil Court at Ahmedabad under Order 37 of the Code of Civil Procedure claiming Rs.31,73,093.53 ps/- with interest at the rate of 24% p.a. It appears that an ex-parte decree came to be passed by the learned Judge of the City Civil Court at Ahmedabad on 27.8.1999 in the aforesaid Civil Suit No.1044 of 1999. It is the case on behalf of the petitioners that they were never aware of the suit proceedings as also above the decree passed by the learned trial court in the aforesaid suit and for the first time they came to know on 11.1.2008 about the suit proceedings when the respondent initiated execution proceedings in 2008. It is also the case on behalf of the petitioners that they were never served with any summonses in the suit proceedings and SCA/12139/2008 3/13 JUDGMENT they were unaware about the suit proceedings and the decree passed by the trial court. That thereafter immediately on coming to know about the aforesaid ex-parte decree, the petitioners preferred Civil Misc.Application No.50 of 2008 before the City Civil Court at Ahmedabad for setting aside the ex-parte judgment and decree. In the said application the petitioners took out notice of motion requesting to stay the execution proceedings. That the learned Judge of the City Civil Court at Ahmedabad granted the stay of the execution proceedings vide order dated 21.1.2008 on condition that the petitioners deposit an amount of Rs.6.00 lakhs within four weeks and file undertaking for the same within two days. It appears that the petitioners have deposited Rs.6.00 lakhs with the trial court in compliance of the order dated 21.1.2008. 2.1 The said Civil Misc. Application No.50 of 2008 was resisted by the respondent-original plaintiff. The respondent preferred Special Civil Application No.2666 of 2008 before this Court challenging the aforesaid order of staying the execution SCA/12139/2008 4/13 JUDGMENT proceedings dated 21.1.2008 and the said Special Civil Application came to be disposed of by this Court vide order dated 12.8.2008 directing the City Civil Court at Ahmedabad to decide and dispose of application Exh.13 in the aforesaid Civil Misc. Application No.50 of 2008 as expeditiously as possible. 2.2 That thereafter vide impugned order dated 2.9.2008 the learned Judge of the City Civil Court at Ahmedabad has been pleased to allow the Civil Misc.Application No.50 of 2008 on merits by quashing and setting aside the ex-parte decree dated 27.8.1999 passed in Civil Suit No.1044 of 1999, however, while setting aside the ex-parte decree on merits, the learned Judge has imposed a condition on the petitioners to deposit a further sum of Rs.6.00 lakhs within four weeks from the date of the said order. 2.3 Being aggrieved and dissatisfied with the condition imposed by the learned Judge of the City Civil Court at Ahmedabad directing the petitioners to deposit a further sum SCA/12139/2008 5/13 JUDGMENT of Rs.6.00 lakhs, while allowing the said application for quashing and setting aside the ex-parte decree, the petitioners-original defendants have preferred present petition under Article 227 of the Constitution of India. 3. Shri P.M.Dave, learned advocate appearing on behalf of the petitioners has vehemently submitted that when the Civil Misc.Application No.50 of 2008 submitted by the petitioners- defendants for setting aside the ex-parte decree has been allowed by the learned Judge on merits, the condition imposed by the learned Judge to deposit further sum of Rs.6.00 lakhs is absolutely unwarranted and/or arbitrary which deserves to be quashed and set aside. It is further submitted that when the learned Judge has specifically held that the summonses were not duly served upon the defendants and observing the same when the learned Judge has quashed and set aside the ex- parte judgment and decree, further condition to deposit a further sum of Rs.6.00 lakhs is absolutely unreasonable more particularly when while granting the stay of execution SCA/12139/2008 6/13 JUDGMENT proceedings the petitioners had deposited Rs.6.00 lakhs. It is further submitted that as such by directing the petitioners to deposit a further sum of Rs.6.00 lakhs would tantamount to taking away the right of the petitioners-defendants to submit an appropriate application for leave to defend more particularly when there are so many serious triable issues and therefore it is requested to allow the present petition. 4. Petition is opposed by Shri Chinmay Gandhi, learned advocate appearing on behalf of respondent-original plaintiff. Relying upon Order 37 Rule 4 of the CPC it is submitted that while quashing and setting aside the ex-parte judgment and decree the trial court may impose any condition and accordingly when while quashing and setting aside the ex- parte judgment and decree the learned Judge has imposed the condition of further deposit of Rs.6.00 lakhs, it cannot be said that the learned Judge has committed any error in imposing the condition of further deposit of Rs.6.00 lakhs while setting aside the ex-parte judgment and decree. It is SCA/12139/2008 7/13 JUDGMENT submitted that the said direction is in consonance with the provisions of Order 37 Rule 4 of the CPC. Shri Gandhi, learned advocate appearing on behalf of the respondent- original plaintiff has relied upon the decision of learned Single Judge of this Court in the case of SUBHSAGAR ENTERPRISES VS. J.K.SYNTHETICS CO. LTD., reported in 1997(2) GLH 273. Relying upon the above decision and making the above submission, it is requested to dismiss the present petition. 5. Heard the learned advocates appearing on behalf of the respective parties. 6. At the outset it is required to be noted that while allowing the notice of motion in Civil Misc. Application No.50 of 2008 while granting stay of execution of decree, the petitioners were directed to deposit a sum of Rs.6.00 lakhs which the petitioners had deposited. For setting aside the ex-parte judgment and decree dated 27.8.1999, the petitioners submitted Civil Misc.Application No.50 of 2008 on the ground SCA/12139/2008 8/13 JUDGMENT that the petitioners were not served with the summonses of the aforesaid summary suit and therefore they were unaware of the suit proceedings and consequently the judgment and decree. While accepting the contention on behalf of the petitioners that the petitioners were not properly served with the process of the suit, the learned Judge has set aside the ex-parte judgment and decree on merits, however while setting aside the ex-parte judgment and decree the learned Judge has imposed the condition on the petitioners to deposit a further sum of Rs.6.00 lakhs. It is to be noted that the learned Judge has specifically held that the defendants i.e. the applicants were not properly served with the process of the suit and therefore ex-parte judgment and decree deserves to be set aside. The petitioners have challenged that part of the impugned order by which the condition is imposed upon the petitioners to deposit a further sum of Rs.6.00 lakhs, while setting aside the ex-parte decree. It is the contention on behalf of the respondent-original plaintiff that considering Order 37 Rule 4 of the CPC while setting aside the ex-parte SCA/12139/2008 9/13 JUDGMENT decree the learned trial court may impose reasonable condition and therefore while setting aside the ex-parte decree when a condition is imposed to deposit a further sum of Rs.6.00 lakhs, it cannot be said that the learned trial court has acted contrary to the provisions of law. However, considering the facts of the case, strictly speaking, it cannot be said that Order 37 Rule 4 of the CPC would be applicable. Order 37 Rule 4 of the CPC would be made applicable in a case where in spite of service of summons upon the defendants, the defendants have failed to appear before the Court and have failed to submit the application within 10 days for leave to defend and ex-parte decree is passed. In that case while setting aside the ex-parte decree under Order 37 Rule 4 of the CPC, the Court may set aside the ex-parte decree on such terms as the Court think fit. However in a case where it is found that the defendants were not properly duly served and accordingly ex-parte judgment and decree is set aside in that case the learned trial court is not justified in imposing such condition of further depositing a sum of Rs.6.00 lakhs. As SCA/12139/2008 10/13 JUDGMENT such to impose a condition of deposit of Rs.6.00 lakhs in the aforesaid facts and circumstances when the summons were not properly duly served upon the defendants and an ex-parte decree is passed, and when such an ex-parte decree is set aside and such a condition is imposed, in that case, it can be said that the right of the defendants to submit the application for leave to defend as required under Order 37 of the CPC can be said to have been taken away. It cannot be disputed that the defendant is to be given 10 days time from the date of service of summons. 7. In view of the above, the decision of the learned Single Judge of this Court in the case of Subhsagar Enterprises (supra) will not be applicable. As in the case before the learned Single Judge, in spite of service of notice, leave to defend application was not submitted within 10 days, and for setting aside the ex-parte decree, application was submitted under Order 37 Rule 4 of the CPC. In the present case, as stated above, it is observed by the trial court that the SCA/12139/2008 11/13 JUDGMENT summonses were not properly duly served upon the defendants and therefore an ex-parte decree came to be passed. Under the circumstances and in the aforesaid facts and circumstances of the case, the learned Judge has materially erred in imposing the condition of depositing a further sum of Rs.6.00 lakhs upon the petitioners-defendants. 8. As stated above, by imposing such a condition, it can be said that the right of the petitioners-defendants to submit the application for leave to defend is taken away. Under the circumstances, the impugned order of imposing a condition of depositing Rs.6.00 lakhs by the petitioners-defendants while setting aside ex-parte judgment and decree deserves to be quashed and set aside by observing that it will be open for the petitioners to submit an appropriate application for leave to defend on or before 16th January, 2009, and such application is to be decided by the trial court in accordance with law and on merits after giving an opportunity to all concerned. It is reported that pursuant to the impugned order passed by the SCA/12139/2008 12/13 JUDGMENT learned Judge, the petitioners have deposited a further sum of Rs.6.00 lakhs to avoid any further complication. 9. For the reasons stated above, the petition succeeds. The condition imposed by the learned Judge of the City Civil Court at Ahmedabad directing the petitioners to deposit a further sum of Rs.6.00 lakhs while allowing Civil Misc.Application No.50 of 2008 and setting aside the ex-parte judgment and decree dated 27.8.1999 passed in Summary Suit No.1044 of 1999 is hereby quashed and set aside. It will be open for the petitioners to submit an appropriate application for leave to defend on or before 16th January, 2009, as stated above, and as and when such an application is made, the learned Judge of the City Civil Court at Ahmedabad is directed to decide and dispose of the same in accordance with law and on merits at the earliest but not later than three months from the date of receipt of this order. Until then the amount of Rs.6.00 lakhs deposited by the petitioners pursuant to the impugned order is to be retained by the trial court subject to SCA/12139/2008 13/13 JUDGMENT the ultimate outcome of notice of motion that may be filed by the petitioners, and if the conditional leave is granted to the petitioners, the same shall be refunded to the petitioners by an account payee cheque, and if any conditional order is passed, in that case an appropriate order to be passed by the learned Judge to appropriate the same from the aforesaid amount of Rs.6.00 lakhs. Rule is made absolute to the aforesaid extent. There shall be no order as to costs. D.S. permitted. ( M.R. SHAH, J. ) syed/