Case: M/S Tvc Skyshop Ltd Vs. M/S Reliance Communciation &amp; Infra.Ltd

1. Having failed to persuade the learned Single Judge and the Division Bench of the Bombay High Court to entertain its prayer for setting aside the decree passed in favour of the respondent under Order XXXVII Rule 3 of the Code of Civil Procedure, the appellant has filed this petition.2. The appellant and respondent entered into an agreement whereby the respondent provided 54 mobile phone connections to the former in 2003. Due toof the amount due, the respondent sent legal notice dated 22.9.2004 and demanded Rs.13,31,800.59. After some time, the respondent filed a petition under Sections 433 and 434 of the Companies Act, 1956, which came to be registered as Company Petition No.910/2005 for winding up of the appellant by alleging that it has failed to pay Rs.19,69,417.11 despite demand. The learned Company Judge passed order dated 13.4.2006 and directed the appellant to deposit a sum of Rs.11,00,000/to avoid advertisement of the petition filed by the respondent.3. The respondent also filed a Summary Suit No.1989/2006 under Order XXXVII for passing a decree of Rs.25,83,078.35 with interest at the rate of 30% per annum from the date of suit. The summon issued by the Court was duly served upon the appellant, but neither an application was filed for leave to defend nor any one appeared on the date specified in the summons. Therefore, the learned Single Judge passed order dated 7.11.2006 and decreed the suit in terms of clauses (a) and (b) of the plaint. 4. Soon thereafter, the appellant filed application dated 18.12.2006 in the form of an affidavit of its Company Secretary Shri Mahesh Katudia and prayed for setting aside decree dated 7.11.2006. In paragraphs 5 and 6 of his affidavit, Shri Katudia referred to order dated 13.4.2006 passed by the learned Company Judge in Company Petition No.910/2005 and averred that a sum of Rs.11,00,000/was deposited by the appellant on 8.6.2006. In paragraph 7, he averred that Shri Pradeep Bhandekar, who was working as Executive Assistant to the Chairman had resigned in September, 2006 and on that count, proper instructions could not be given to Shri R.A.Shaikh, Advocate. It was also averred that summons for judgment was served on Shri R.A. Shaikh, Advocate in September, 2006 but no application for leave to defend was filed and that resulted in passing of ex parte decree dated 7.11.2006.5. When the appellant?s prayer for setting aside decree dated 7.11.2006 was taken up for consideration, counsel appearing on its behalf relied upon Order IX Rule 13 CPC. The learned Single Judge referred to the relevant provision and held that the two grounds contemplated by Rule 13 are not available for setting aside decree dated 7.11.2006. The learned Judge observed that it is not a case in which the summons had not been served upon the judgment debtor or that there was sufficient cause for itson 7.11.2006.6. The appellant appealed against the order of the learned Single Judge but could not convince the Division Bench of the High Court to entertain its prayer for setting aside decree dated 7.11.2006. Paragraphs 4 and 5 of the judgment of the Division Bench, which contain the reasons for dismissal of the appeal read as under:? 4. The question of going into the infirmity or legality or illegality pertaining to the rate of interest or to what extent the amount has already been paid by the appellant would have arisen in case there was any material placed by the appellant in that regard before the learned Single Judge after obtaining necessary leave to defend the suit in accordance with the law. The appellate Courts going into the documentary evidence, if such evidence have been found on record before the trial Court and that too without following the procedure prescribed under Order 41 Rule 27 of the Code of Civil Procedure, does not arise at all. In any case, the appellant having failed to seek leave to defend before the learned Single Judge in accordance with the law, the question of going into various contentions sought to be raised which essentially relate to the evidence does not arise, at this stage.5. As regards the contention that the appellant has already paid a substantial amount, nothing would prevent the appellant from bringing such fact to the notice of the Executing Court in case the respondent files an execution application in accordance with the decree passed in its favour.?

Court's reasoning:
10. In the present case, we find that the application filed by the appellant for setting aside decree dated 7.11.2006 did not disclose any special circumstance which could justify an order under Order XXXVII Rule 4. In his affidavit, Shri Mahesh Katudia had merely stated that sum of Rs.11,00,000/had been paid in terms of order dated 13.4.2006 passed by the learned Company Judge and proper instructions could not be given to the Advocate engaged for defending the suit. Therefore, it is not possible to find any fault with the view taken by the Division Bench of the High Court on the tenability of the appellant?s prayer for setting aside decree dated 7.11.2006.11. The argument of Shri Rohan Thawani, learned counsel for the appellant that even though the appellant had not applied for leave to defend, the learned Single Judge was duty bound to scrutinise the claim of the respondent and the suit could have been decreed only if the Court felt satisfied that the claim was bonafide and not vexatious which finds some support from the judgment in Neebha Kapoor v. Jayantilal Khandwala (2008) 3 SCC 770 sounds attractive in the first flash but we do not find any valid ground to overturn the impugned judgment because, as mentioned above, the affidavit filed by Shri Mahesh Katudia did not disclose any special circumstances which could warrant exercise of power under Order XXXVII Rule 4. He did not even contest the liability of the appellant to pay the amount claimed in the plaint. The mere fact that one of the officials of the appellant had resigned would not constitute a valid ground for negating the policy underlying Order XXXVII in general and Rule 3(5) in particular.12. Equally meritless is the argument of Shri Thawani that the rate at which the respondent claimed interest is highly excessive. According to Shri Jaideep Gupta with whom we agree, the interest was charged as per the terms of the agreement and the appellant had always paid the bills in which interest was claimed at the rate of 30% per annum.