Case: Purnendu Shekharmal Jain Vs. M/S. Acg Associated Capsules P Limited

2. This Appeal was admitted on 29th March, 2016. Thereafter, by an order dated 18th July, 2016 passed by this Court in Notice of Motion (L) no.788 of 2016 this Court disposed off the said Notice of Motion and granted interim relief in terms of prayer clause (a) thereof, subject to the condition that the Appellant deposit with the Prothonotary and Senior Master of this Court a sum of Rs. 3,20,34,110/within a period of three months from the said date and subject to a further condition that 50% of the amount shall be deposited within a period of six weeks from the aforesaid date. On failure to deposit any amount, the interim relief granted was to stand vacated without any further reference to the Court. It is not in dispute that the order of this Court dated 18th July, 2016 passed in this Appeal has not been complied with. In any event, now the matter has come up for hearing and final disposal before us and that is how we have heard the respective parties. For the sake of convenience, we shall refer to the parties as they were arrayed before the Trial Court.3. Before we deal with the rival contentions, it would be necessary to set out a few facts. It is the case of the Plaintiff that in the month of June, 2010, a company by the name M/s Ankur Drugs and Pharma Ltd (for short the said Company), through one of its Directors approached the Plaintiff and requested for an Inter Corporate Deposit (for short, ICD) of Rs. 2.50 Crores. This ICD was for a period of 365 days and was to carry interest @ 18% per annum. Keeping in line with this request, the Plaintiff, by its letter dated 1st July, 2010 agreed to the same on certain terms and conditions. Accordingly, on receipt of the said ICD, the said Company (Ankur Drugs and Pharma Limited), issued a receipt dated 7th July, 2010 confirming the receipt of a sum of Rs.2.50 Crores from the Plaintiff drawn on Standard Chartered Bank.4. As per the terms and conditions agreed to between the parties, the said Company also issued six post dated cheques for a total sum of Rs.2,90,49,998/which included return of the principal amount as well as the interest. To secure the repayment of the aforesaid ICD along with the interest (and this also being one of the conditions on which the ICD was given to the said Company), the Defendant also executed a personal guarantee on 7th July, 2010. The said guaranteestipulated that the Defendant personally undertook to pay the said ICD and interest thereon on its maturity date in the event the said Company committed default in repayment.5. Since thecheques given by the said Company in the sum of Rs.2,90,49,998/were dishonoured on presentation, there was admittedly a default committed. Accordingly, the Plaintiff by its notice dated 31st July, 2012 addressed to the Defendant, invoked the personal guarantee and called upon him to pay the amount under the said personal guarantee. The said notice was sent by RPAD on 1st August, 2012 and the same was refused by the Defendant on 7th August, 2012. Since the Defendant did not comply with the requisitions contained in the notice dated 31st July, 2012, the above Summary Suit was filed against the Defendant on the basis of the said deed of guarantee and claiming a sum of Rs.It is in this Summary Suit, and since the Defendant did not enter an appearance, that andecree came to be passed on 12th March, 2013.6. It is the case of the Defendant that the Defendant came to know of the passing of thisdecree only on 14th July, 2015 when he was served with a copy of the insolvency notice bearing No.34 of 2014 dated 12th December, 2014 issued by the Insolvency Registrar, High Court, Bombay, calling upon the Defendant to pay to the Plaintiff a sum of Rs.4,07,54,607.It is only thereafter that this Notice of Motion was filed on or around 1st December, 2015. As mentioned earlier, it is this Notice of Motion that has been dismissed by the learned Single Judge and hence the present Appeal.

Court's reasoning:
9. Looking to the report of the Bailiff as well as thefiled by the Plaintiff in the Notice of Motion, what becomes quite apparent is that the refusal of the service of the writ of summons was actually by the husband who instructed his wife not to accept service. Once this is the factual position emanating from the record before us, then, we are not required to decide any larger or wider controversy, whether the provisions of Order V Rule 15 would apply or whether service would have to be effected as per the Bombay amendment. What is important to note is that Mr. Godbole fairly did not dispute the contents of the report of the Bailiff. What we must also note is that the Bombay High Court (Original Side) Rules, 1980 also provide for procedure for service of writ of summons.Mode of service ofWrit of Summons shall be served within the local limits of the Ordinary Original Civil Jurisdiction of the High Court by personal service or, if the plaintiff so desires, by registered postfor acknowledgment. Where the Writ of Summons is to be served at a place situate beyond the said limits, it may be served by registered postfor acknowledgment. An acknowledgment purporting to be signed by the defendant or an endorsement by a postal servant that the defendant refused service shall be deemed to be prima facie proof of service. In all other cases, the Court shall hold such inquiry as it thinks fit and either declare the summons to have been duly served or order such further service as may in its opinion be necessary.As the said provision clearly indicates, after the decree is passed by the Court, it 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 summons 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 words special circumstances have some importance. Unlike Order IX Rule 13 which talks about sufficient cause being shown to set aside andecree, the words used under Order XXXVII Rule 4 are special circumstances. These words (special circumstances) were considered by the Supreme Court in the case of Rajni Kumar v/s Suresh Kumar Malhotra (2003) 5 SCC 315  )wherein the Supreme Court heldA careful reading of Rule 4 shows that it empowers, under special circumstances, the court which passed an ex parte decree under Order 37 to set aside the decree and grant one or both of the following reliefs, if it seems reasonable to the court so to do and on such terms as the court thinks fit:(i) to stay or set aside execution, and(ii) to give leave to the defendant (a) to appear to the summons, and (b) to defend the suit.9. The expression special circumstances is not defined in the Civil Procedure Code nor is it capable of any precise definition by the court because problems of human beings are so varied and complex. In its ordinary dictionary meaning it connotes something exceptional in character, extraordinary, significant, uncommon. It is an antonym of common, ordinary and general. It is neither practicable nor advisable to enumerate such circumstances.of summons will undoubtedly be a special circumstance. In an application under Order 37 Rule 4, the court has to determine the question, on the facts of each case, as to whether circumstances pleaded are so unusual or extraordinary as to justify putting the clock back by setting aside the decree; to grant further relief in regard tomatters, namely, staying or setting aside the execution and also in regard tomatters viz. to give leave to the defendant to appear to the summons and to defend the suit.10. In considering an application to set aside ex parte decree, it is necessary to bear in mind the distinction between suits instituted in the ordinary manner and suits filed under Order 37 CPC. Rule 7 of Order 37 says that except as provided thereunder the procedure in suits under Order 37 shall be the same as the procedure in suits instituted in the ordinary manner. Rule 4 of Order 37 specifically provides for setting aside decree, therefore, provisions of Rule 13 of Order 9 will not apply to a suit filed under Order 37. In a suit filed in the ordinary manner a defendant has the right to contest the suit as a matter of course. Nonetheless, he may be declared ex parte if he does not appear in response to summons, or after entering appearance before framing issues; or during or after trial. Though addressing arguments is part of trial, one can loosely say that a defendant who remains absent at the stage of argument, is declared ex parte after the trial. In an application under Order 9 Rule 11, if a defendant is set ex parte and that order is set aside, he would be entitled to participate in the proceedings from the stage he was set ex parte. But an application under Order 9 Rule 13 could be filed on any of the grounds mentioned thereunder only after a decree is passed ex parte against the defendant. If the court is satisfied that (1) summons was not duly served, or (2) he was prevented by sufficient cause from appearing when the suit was called for hearing, it has to make an order setting aside the decree against him on such terms as to cost or payment into court or otherwise as it thinks fit and thereafter on the day fixed for hearing by court, the suit would proceed as if no ex parte decree had been passed. But in a suit under Order 37, the procedure for appearance of the defendant is governed by provisions of Rule 3 thereof. A defendant is not entitled to defend the suit unless he enters appearance within ten days of service of summons either in person or by a pleader and files in court an address for service of notices on him. In default of his entering an appearance, the plaintiff becomes entitled to a decree for any sum not exceeding the sum mentioned in the summons together with interest at the rate specified, if any, up to the date of the decree together with costs. The plaintiff will also be entitled to judgment in terms of(6) of Rule 3. If the defendant enters an appearance, the plaintiff is required to serve on the defendant a summons for judgment in the prescribed form. Within ten days from the service of such summons for judgment, the defendant may seek leave of the court to defend the suit, which will be granted on disclosing such facts as may be deemed sufficient to entitle him to defend and such leave may be granted to him either unconditionally or on such terms as the court may deem fit. Normally the court will not refuse leave unless the court is satisfied that facts disclosed by the defendant do not indicate substantial defence or that defence intended to be put up is frivolous or vexatious. Where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, no leave to defend the suit can be granted unless the admitted amount is deposited by him in court. Inasmuch as Order 37 does not speak of the procedure when leave to defend the suit is granted, the procedure applicable to suits instituted in the ordinary manner, will apply.11. It is important to note here that the power under Rule 4 of Order 37 is not confined to setting aside the ex parte decree, it extends to staying or setting aside the execution and giving leave to appear to the summons and to defend the suit. We may point out that as the very purpose of Order 37 is to ensure an expeditious hearing and disposal of the suit filed thereunder, Rule 4 empowers the court to grant leave to the defendant to appear to summons and defend the suit if the court considers it reasonable so to do, on such terms as the court thinks fit in addition to setting aside the decree. Where on an application, more than one among the specified reliefs may be granted by the court, all such reliefs must be claimed in one application. It is not permissible to claim such reliefs in successive petitions as it would be contrary to the letter and spirit of the provision. That is why where an application under Rule 4 of Order 37 is filed to set aside a decree either because the defendant did not appear in response to summons and limitation expired, or having appeared, did not apply for leave to defend the suit in the prescribed period, the court is empowered to grant leave to the defendant to appear to the summons and to defend the suit in the same application. It is, therefore, not enough for the defendant to show special circumstances which prevented him from appearing or applying for leave to defend, he has also to show by affidavit or otherwise, facts which would entitle him leave to defend the suit. In this respect, Rule 4 of Order 37 is different from Rule 13 of Order 9.12. Now adverting to the facts of this case, though the appellant has shown sufficient cause for his absence on the date of passing ex parte decree, he failed to disclose facts which would entitle him to defend the case. The respondent was right in his submission that in the application under Rule 4 of Order 37, the appellant did not say a word about any amount being in deposit with the respondent or that the suit was not maintainable under Order 37. From a perusal of the order under challenge, it appears to us that the High Court was right in accepting existence of special circumstances justifying his not seeking leave of the court to defend, but in declining to grant relief since he had mentioned no circumstances justifying any defence.13. As clearly held by the Supreme Court, it is not enough to show the special circumstances which prevented him from appearing or applying for leave to defend, he has also to show by affidavit or otherwise, the facts which would entitle him to leave to defend the suit. In that respect, Rule 4 of Order XXXVII is different from Order IX Rule 13. In other words, not only must the Defendant show that there was good cause in not appearing in answer to the writ of summons, but that he hasprima facie material which would entitle him to leave to defend the suit filed under the provisions of Order XXXVII.14. In the facts of the present case we have found that service was properly effected. However, even if we were to assume that there was some irregularity in effecting service, it would not carry the case of the Defendant any further. On a careful perusal of the affidavit in support of the Notice of Motion filed by the Defendant, there is not a word that is mentioned that refers to the merits of the matter. The only point raised in the affidavit in support is that M/s Ankur Drugs and Pharma Limited (the said Company) was before the BIFR and therefore a stay would operate by virtue of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. To our mind, firstly, this can never be a defence touching the merits of the matter. On the basis of this, the Defendant cannot say that he is entitled for leave to defend the suit. At the highest what he can contend is that only once the company comes out of BIFR, or until the Plaintiff obtains permission from the BIFR to proceed with the suit, the same has to be stayed. It does not mean that he would be entitled to leave to defend the suit. Even otherwise, in the facts of the present case, we find that admittedly when thedecree was passed, the said company (M/s Ankur Drugs and Pharma Limited) was not before the BIFR. It approached the BIFR only thereafter. Therefore, there was no impediment in this Court passing the decree on the date that it did. Apart from this, there is absolutely no defence raised on merits in the affidavit in support. This being the case and going by the ratio as laid down by the Supreme Court in the case of Rajni Kumar v/s Suresh Kumar Malhotra (2003) 5 SCC 315  ), we have no hesitation in holding that the learned Single Judge was fully justified in dismissing the Notice of Motion filed by the Defendant for setting aside thedecree. There were no special circumstances (as required under Order XXXVII Rule 4) even pleaded in the affidavit in support for the learned Judge to exercise his discretion and set aside the