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1991 (2) TMI 417

NT 1. These are two applications filed by defendant No.6. These were filed on 4-4-1988. First application is under O. 9, R. 13 and S. 151 of the Code of Civil Procedure and the second u/S. 5 of the Limitation Act, 1963. The ex parte judgment and decree which are sought to be set aside are dated 10-3-1987. The circumstances that led to the filing of these two applications may be stated in brief in so far as these are relevant. 2. The plaintiff is constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. On 30-8-1982 it filed a suit for recovery of ₹ 91,58,480.08 against defendants numbering six. Defendant No. 1 is a partnership firm, of which defendants 2, 3, 4 and 5 are the partners. 6th defendant, who is now the applicant, is the body incorporates under the laws of West Germany and is said to be a foreign company within the meaning of the Companies Act, 1956. On the request of defendants No. 1 to 5, the plaintiff on 26-6-1979 established an irrevocable Letter of Credit for US $6,10,900/- (equivalent to about ₹ 50,00,000/-) for import of PVC Resins in favor of one M/s. Bentrex and Co., Singapore. This Letter of Credit was expressly ma .....

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the ship, which was carrying the goods from Singapore to a Port in India sank. The plaintiff, therefore, claimed that defendants Nos. 1 to 5 on one hand and defendant No. 6 on the other denied their respective liability to repay to the plaintiff the amounts claimed in the suit and that the plaintiff was in doubt as to the person from whom it was entitled to redress and so the plaintiff had joined defendants No. 1 to 5 as well as defendant No. 6 as parties to the suit in order to determine the question as to which of the defendants, i.e. defendants No. 1 to 5 and defendant No. 6, were liable to the plaintiff and to what extent. The suit was under O. 1, R. 7 of the Code of Civil Procedure. The plaintiff claimed the suit amount as under :- "1. Amount payable under the Letter of Credit for US $ 6,10,740 ₹ 49,65,365.85 2. Interest at the rate of 21% per annum from 5-9-79 till 30-8-82 ₹ 41,93,114.23 Total ₹ 91,58.48O.08 3. In the alternative to the interest, plaintiff also claimed a sum of ₹ 41,93,114.23 as damages as mentioned in the plaint. The plaintiff, therefore, wanted a decree against defendant No. 6 and in the alternative against defendants No. 1 to 5 .....

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to bear their own costs. The court held issues No. 1, 4 and 5 in favor of the plaintiff and against defendant No. 6. Issue No. 2 was held in favor of defendants 1 to 5. No decision was given on issues No. 3 and 8. Interest was awarded at the rate of 18% per annum, which was covered by issue No. 6. On issue No. 7, the court held that nothing was shown as to how the suit in the alternative was not maintainable, meaning thereby that the suit in the alternative was maintainable. 8. Then these two applications, which are subject matter of this order, were filed on 4-4-1988. 9. After replies were filed by the non applicants, i.e. the plaintiff and defendants 1 to 5, the following issues were framed: I.A. 1655/1988: Whether there is sufficient cause for setting aside the ex parte decree? I.A.1656/1988: Whether there is sufficient cause for condo nation of delay in filing the application for setting aside the ex parte decree by defendant No. 6? 10. Parties led evidence by means of affidavits. 11. It appears that defendants 1 to 5 were having dealings with the plaintiff bank earlier to the opening of the Letter of Credit in the present suit. Defendants No. 1 to 5 contended that they had dep .....

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638 / 89 filed u/ S. 151 of the Code is by defendants No. 1 to 5. They seek permission of the court to withdraw from these proceedings and also seek clarification that as far as they are concerned, the judgment and decree dated 10-3-1987 is final and that the contest is only between the plaintiff and defendant No. 6. 14. I.A. 6948/89 is filed by plaintiff. It is under O. 39, Rr. 1 and 2 and S. 151 of the Code. The plaintiff seeks a restriction on defendants No. 1 to 5 from dealing with or disposing of, selling, mortgaging, leasing or alienating certain property stated to be subject of mortgage and also restraining defendants No. 1 to 5 from getting certain securities released from the court of the District Judge, Delhi. Mr. Khanna, learned counsel for defendants 1 to 5, said that these two applications should be taken up for consideration after the decision in the two applications subject matter of the present order, 1, therefore, leave these two applications at that. 15. Defendant No. 6 has filed the affidavits of (1) Mr. Kalam Singh, a court clerk working in the office of the J.B. Dadachanji & Co., a firm of lawyers who were engaged by defendant No. 6, to show that he did not .....

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No. 6 right up to Supreme Court. Mr. Udeshi has then said that he had signed and verified the written statement on behalf of defendant No. 6 and then he referred to practice prevailing in the Bombay High Court as to how much time it takes to conclude the trial and how the hearings are notified. He said it was in this background he made no enquiries from J. B. Dadachanji Co. to the further progress of the suit. He said it was only by letter dated 7-3-1988 from the Advocates of the plaintiff that he did come to know that a decree has been passed in the sum of over ₹ 49.65 lakhs with interest at the rate of 18% per annum from 5-9-1979 and that the decree was passed on 10-3-1987. This made him sit up and he immediately sent a telex to J. B. Dadachanji & Co. for clarification and meanwhile there was a court recess from 27-3-1988 to 3-4-1988. Present application (I.A. 1655/88) was immediately filed on 4-4-1988 duly supported by his affidavit and the affidavit of Mr. Ravinder Narain, Mr. Kalam Singh and Mr. Swapan Kumar Sahoo. The application u/ S. 5 of the Limitation Act was also filed the same day. Mr. Udeshi said that prior to the letter dated 7-3-1988 of the Advocates of the .....

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....... Explanation :- . . ........................... Section 5 Limitation Act: 5. Extension of prescribed period in certain case: - Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period. Explanation: - The fact that the appellant or the applicant was misted by any order practice or judgment of the High Court in ascertaining or computing the prescribed period may be sufficient cause within the meaning of this section. XX XX XX XX XX XX XX (See table below) (Contd, on col.2) Article 123: Description of suit Period of Time from which period begins Limitation to run. 123. To set aside a decree passed Thirty days The date of the decree or where the ex parte or to rehear an appeal summons or notice was not duly decreed or hear ex parte. Served, when the applicant had knowledge of the decree. Explanation:............ In the present case, since the summons of the -suit had been duly served on defendant No. 6 .....

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e understanding between these two parties to expedite the hearing and to get the ex parte decree against defendant No. 6 who had earlier been proceeded expert. Mr. Gupta then said that though in the suit the relief against defendants 1 to 5 was claimed in the alternative, the plaintiff on his own admission had said that it was defendant No. 6 who was the main defendant. Mr. Gupta also said that there was no occasion for this suit to be listed in the category of 'short cause' and in normal course it should have been listed in the category of 'long cause' as per practice directions of the High Court. This, he said, showed an understanding between the plaintiff and defendants 1 to 5 at the cost of defendant No. 6 with the result that the suit was not decided in the normal course as per procedure prescribed. Mr. Gupta referred to various decisions of the Supreme Court and High Courts if a client should suffer on account of the negligence of his lawyer. Mr. Gupta said that in the circumstances of the present case, while setting aside the ex parte judgment and decree, the court should not impose any terms, especially regarding payment of decretal amount into court as that .....

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d be caused to the plaintiff. He said plaintiff has sued defendants 1 to 5 on the one, hand, and defendant No. 6 on the other, in the alternative, and the plaintiff had to get a decree against one set of defendants 1n any case. Dr. Ghosh referred to the definition of "decree" as appearing in S. 2(2) of the Code which says that decree means "the formal expression of an adjudication which, so far as regards the court expressing it, conclusively determines the rights of the parties......". Dr.Ghosh said that in the present case the adjudication was that because defendant No. 6 was liable therefore defendants 1 to 5 were not liable. This he said was one whole indivisible adjudication and if the decree is to be set aside it is this adjudication which is to be set aside, and, therefore, whole of the decree has to be set aside. He said, decree only means an adjudication of the rights of the parties and it does not mean that any formal drawing up of a decree would be necessary. Lastly, Dr. Ghosh said that the decision of a single Judge of this Court in Civil Revision (C.R. No. 556/88) would not be res judicata as defendant No. 6 was not a party in those proceedings. He .....

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not recognise any firm of lawyers to represent a party. Appearance in court has to be made or done by the party in person or by his recognised agent or by pleader appearing, applying or acting, as the case may be, on his behalf. A lawyer who is authorised to appear on behalf of the party has to file his vakalatnama in his favor in the court. No lawyer as a partner of J. B. Dadachanji and Company or this firm itself ever filed any power of attorney in its favor by the party. It would not, therefore, expect its name to appear in the daily cause list and no grievance can be made of that. As per practice on the Original Side of this Court dates are given in each case every day unless such case is in the category of 'Others' or 'Finals'. The present case was not in either of these two categories. No responsible person in the firm was looking after this case and it was left to be followed up by Court Clerk. No one in the firm appears to have ever checked the progress of the case when various dates were fixed either before the Deputy Registrar or in the Court. No proper diary of case file is shown to have been maintained. The affidavits filed in support of the plea are sa .....

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s agent. The answer obviously is in the negative. May be that the learned Advocate absented deliberately or intentionally. We have no material for ascertaining that aspect of the matter. However, we cannot be a party to an innocent party suffering injustice merely because his chosen advocate defaulted." 26. In the present case, however, defendant No. 6 does not come from any rural area but certainly can be ignorant of court procedure though the suit was being tried on the original side, but then perhaps it was misled by its constituted attorney Crawford Bayley and Co. as the constituted attorney took upon itself the conduct of the case. 27. In Collector, Land Acquisition, Anantnag v. Mst. Katiji, , the Supreme Court observed that it had been making a justifiably liberal approach with reference to the expressions sufficient cause and held that this expression was adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice and that being the life-purpose for the existence of the institution of the Courts. The court laid down six principles of which I find the following principles to be relevant in this case :- 2. Refusing t .....

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beyond challenge, and this legal right which has accrued to the decree-holder by lapse of time should not be light-heartedly disturbed, The other consideration which cannot be ignored is that if sufficient cause for excusing delay is shown discretion is given to the Court to condone delay and admit the appeal. This discretion has been deliberately conferred on the Court in order that judicial power and discretion in that behalf should be exercised to advance substantial justice. " It further held that it was, however, necessary to emphasize that even after sufficient cause had been shown a party was not entitled to the condensation of delay in question as a matter of right though the proof of a sufficient cause was a condition precedent for the exercise of the discretionary jurisdiction vested in the court by S. 5. 31. Could a lawyer take his client for a ride on a spacious plea of his negligence, is a question which does not fall for consideration in view of the law as prevailing now. In Rafiq v. Munshi Lai (supra), the Supreme Court directed the imposition of cost to be recovered from Advocate who absented himself. This I will consider at the time of setting the terms for se .....

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, if not, defendants 1 to 5 would be so liable. Mr. Khanna wanted me to go through the pain threadbare to show that the case of the plaintiff was in effect against defendant No. 6 only and the suit against defendants 1 to 5 could not have been decreed. I am afraid I will not go into this question at this stage. Plaintiff has clearly stated in paras 16 and 17 of the plaint as under :- "16. Since the defendants No.1 to 5 as also defendant No. 6 have denied their respective liability to repay to the plaintiff the amounts claimed by plaintiff and the plaintiff is in doubt as to the person from whom it is entitled to redress, the plaintiff has joined the defendants Nos.1 to 5 as well as defendant No. 6 as parties to this suit in order to determine the question as to which of the defendants 1.e. defendants No.1 to 5 or defendant No. 6 is liable to the plaintiff and to what extent. The plaintiff further submits that if separate suits are brought against defendants Nos.1 to 5 and defendant No. 6 common question of law and fact would arise and that it has a right to relief against the defendants Nos.1 to 5 or defendant No. 6 in the alternative. The plaintiff has, therefore filed this c .....

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in the present case could not have filed an appeal and, two, he was quite satisfied with the decree against defendant No. 6 whom he had sued in the alternative and it cannot be held against him that he could have filed an appeal against dismissal of his suit against defendants 1 to 5 and he did not do that, and, three, he is precluded from filing any appeal as on the basis of his plea in the plaint he is not an aggrieved person. Some cases were cited before me with reference to relied claimed in the alternative under O. 6, R. 2 as well, though in the present case provisions of O. 1, R. 7 of the Code are applicable. In these judgments also distinction has been made between the primary relief and the other reliefs in the alternative. It has been held in these cases also that if the plaintiff read as a whole discloses that the plaintiff will be satisfied with either of the reliefs claimed, he cannot be allowed to appeal, if one of the reliefs is granted. Some of these cases are: Ramesh Chandra Chandiok v. Chuni Lal Sabharwal (dead) by his legal representatives and other, ; Union of india v. Garbhu Sao, ; Sint. Sunder Bai (died) by L. R. Kishorilal v. Anandi Lal died and after him Smt. .....

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The most contentious question that now arises for consideration is, if the decree should be set aside only against defendant No. 6/ applicant, or also as against defendants 1 to 5. Defendant No. 6 in its application has not said anything on this score and is only concerned with its own problem. As a matter of fact it has said in so many words that defendant 1 to 5 had no locus stand to oppose its application. It is the plaintiff who has raised this plea that under proviso to R. 13 of O. 9 the decree should be set aside as a whole. Though there is no specific issue on that but then no issue is required to be framed. It is for the court to see the nature of the decree and if it cannot be set aside only against the defendant applying it may be set aside against other defendants as well. The question that arises for consideration is of considerable importance. If the decree has to be set aside against the other defendants as well. Further can it be set aside only as regards those defendants against whom the decree is passed and cannot be set aside respecting those defendants 1n whose favor the decree is, i.e., the suit against them has been dismissed. The arguments of defendants 1 to .....

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e whether the suit was dismissed or decreed against the defendants who appeared on the first hearing and even contented. Deka J. said that he was inclined to give wider connotation to the word decree as defined in the Code itself. He held as under :- "What is to be considered is not whether the plaintiff is estopped from claiming further relief against the defendant without going to the appellate court, since there has been an adjudication between him and the defendant who appeared at the earlier hearing, but whether the defendant who was absent at the time (for sufficient reasons) should not get a chance to reopen the entire suit in his interest, if the justice of the case so demands. To my mind, the intention of the legislature is to give him such relief and therefore, the proviso to. O. 9, R. 13, Civil P.C. admits of no narrower interpretation, and when the decree is of such a nature that proper relief cannot be given to the applying defendant without setting aside the decree against other defendants (no matter in what shape it existed), the decree may be set aside as against the other defendants also." 42. In Ghannu Mal v. Bawa Sant Das, 1913 (Vol. 18) Indian Cases 32 .....

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. The suit against the first set was dismissed on merits but was decree d ex parte against the second set for recovery of a certain amount. The second set of the defendants filed for setting aside of the ex parte decree and the learned trial court not only set aside the ex parte decree against the second set of defendants but also set aside the decree passed in favor of the first set. The court observed that there were three possible classes of cases in which an application under O.9, R .13 could be made and these were:- (i) where the suit has been decreed ex parte against all the defendants; (ii) where the suit has been decreed on merits against some defendants and ex parte against the others; and (iii) where the suit has been dismissed on merits against some defendants and has been decreed ex parte against the remaining. The court was, of course, concerned with the case which fell in the third class and the question was whether in such a case the court had jurisdiction to set aside the decree passed in favor of some defendants on merits, while setting aside the ex parte decree passed against the other defendants. After dealing with two earlier cases of the court which took differ .....

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and the question of fact and law of one set of defendants could not but have a bearing on the other set and that under the circumstances the whole of the decree could be set aside and not merely that part of the decree which was against the defendants 1 to 4. This is how the court considered the matter (at page 371; 1958 ALJ): We have given our earnest consideration to the facts set out in the present plaint and we are of opinion that the setting aside, of the decree as against defendants 1 to 4 who had made the application under O. IX, R. 13 rendered it necessary in the interests of justice, particularly having regard to the disowning of the liability inter se between the two sets of the defendants, as averred by them in their defenses, that the whole decree should be reopened. " 45. The court also expressed the view that ordinarily an ex parte decree can, and should, be set aside only against the defendant applying. But if a decree is indivisible, or where the liabilities of the defendants as set out in the plaint are not separable, the decree in view of the proviso to O. IX, R. 13, CPC. may be set aside in to and not in part. This bench decision of the court, it appears, w .....

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the proviso would not empower the court to set aside the same. This, to my mind, seems to be the extreme view to take. I will opt for the first view. 47. In the present case, the liability of defendants 1 to 5 is on the one hand and defendant No. 6 is in the alternative. It will also be seen that liability of these two sets of defendants as claimed in the plaint and the defense raised in their respective written statements are very much inter-woven and inextricably mixed up. It appears to me if it is held that the documents were in order and that defendant No. 6 submitted a certificate of compliance to the plaintiff and had observed due care in negotiating the same, it could be absolved from its liability and in that event defendants 1 to 5 might be held liable to pay the amount in suit, and, on the other hand, if it is held that defendant No. 6 failed to perform its functions well and did not observe due care in negotiating the documents submitted by the beneficiary, then in that case defendant No. 6 might not be discharged from its liability. Moreover, Issue No. I related to the question whether defendant No. 6 complied with the terms of the Letter of Credit and Issue No. 2 rela .....

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applications and the ex parte decree has to be set aside in its entirety. Then the question arises as to on what terms. Defendant No. 6 is a bank and it is nobody's case that if decree is passed against this defendant, plaintiff would not be able to execute the same and recover the amount. I agree with Mr. Gupta that it is not a case where I should direct payment into Court of the suit amount. In this connection Mr. Gupta referred to a decision of this Court in Dharam Vir Singh v. M / s. Goodwill India Limited , which in turn relied upon a bench decision of the Rajasthan High Court in Chhagan Raj v. Sugan Mal, . I think imposition of cost only should serve the ends of justice and that to make up for the expense and inconvenience that the plaintiff and defendants 1 to 5 have undergone for the fault of defendant No. 6. I do not think I should order that cost should be recovered from the counsel for defendant No. 6 as done by the Supreme Court in Rafiq v. Munshi Lal (supra). This will be for defendant No. 6 and its counsel to decide as to who bears the cost. 5O. As noted somewhere above, as of today the decretal amount would be over ₹ 1.50 crores and now that judgment and d .....

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