TMI Blog2013 (11) TMI 1804X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No. 2 (defendant no. 1) being CS(OS) No. 1982/1999 was decreed on 21.2.2006. The controversy in the present appeal revolves around the question whether the ex-parte decree is liable to be set aside inasmuch as, it is contended that the plaintiff is a shareholder of defendant No. 1 and being in control of defendant No. 1 did not take any steps to contest the suit and consequently defendant No. 2 who was not in any manner personally liable for the debts of defendant No. 1 has suffered the decree. 2. Briefly stated the facts are that respondent No. 2 is a company incorporated under the companies Act. Respondent No. 1 sanctioned a credit limit of Rs. 15,00,000/- for financing the bills drawn on respondent No. 2 by various suppliers for the supplies made to respondent No. 2. Respondent No. 1 had discounted various bills drawn on respondent No. 2 and made payments to various suppliers on behalf of respondent No. 2. Respondent No. 2 defaulted in repayment of the said loan. The appellant, who was a director of the respondent No. 2 at the material time is stated to have sent a letter dated 31.5.1996 whereby he undertook to pay to respondent No. 1 the outstanding dues of respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 2 company and if the corporate veil is lifted it would be found that respondent No. 2 is controlled by respondent No. 1 and as such, the decree obtained by respondent No. 1 is a collusive decree. With regard to the service of summons in the suit, it was admitted that the appellant received the summons, however, it was contended that the same were handed over to respondent No. 2 on the alleged assurances that the appellant would be duly represented by respondent No. 1. 7. We have heard the learned Counsel for the parties. 8. The contention that since the respondent No. 1 is a shareholder of respondent No. 2, the decree passed at the instance of respondent No. 1 is a collusive decree does not appear to be sustainable. While, it is correct that the respondent No. 1 holds approximately 10% of the entire issued and paid up share capital of respondent No. 2 company, it is equally true that the appellant and his family members also own substantial shares of the respondent No. 2 company. 9. For considering the controversy whether the ex parte decree is liable to be set aside, Rule 13 of Order IX of Code of Civil Procedure is relevant and is reproduced as under: 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to answer the purpose intended. Therefore, word 'sufficient' embraces no more than that which provides a platitude which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case and duly examined from the viewpoint of a reasonable standard of a cautious man. In this context, 'sufficient cause' means that the party had not acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or the party cannot be alleged to have been 'not acting diligently' or 'remaining inactive'. However, the facts and circumstances of each case must afford sufficient ground to enable the Court concerned to exercise discretion for the reason that whenever the Court exercises discretion, it has to be exercised judiciously. [Vide Ramlal v. Rewa Coalfields Ltd., AIR 1962 SC 361; Lonand Grampanchayat v. Ramgiri Gosavi, AIR 1968 SC 222; Surinder Singh Sibia v. Vijay Kumar Sood, (1992) 1 SCC 70 and Oriental Aroma Chemical Industries Ltd. v. Gujarat Industrial Development Corpn., (2010) 5 SCC 459]. xxx 15. While deciding whether there is sufficien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wide discretion in deciding the sufficient cause keeping in view the peculiar facts and circumstances of each case. The 'sufficient cause' for nonappearance refers to the date on which the absence was made a ground for proceeding ex parte and cannot be stretched to rely upon other circumstances anterior in time. If 'sufficient cause' is made out for non-appearance of the defendant on the date fixed for hearing when ex parte proceedings were initiated against him, he cannot be penalised for his previous negligence which had been overlooked and thereby condoned earlier. In a case where the defendant approaches the Court immediately and within the statutory time specified, the discretion is normally exercised in his favour, provided the absence was not mala fide or intentional. For the absence of a party in the case the other side can be compensated by adequate costs and the lis decided on merits. 13. Following the aforesaid decisions, we do not feel that the appellant has been able to show sufficient cause for not appearing in the proceeding. In the present case, the appellant has admitted the service of summons. Admittedly, the appellant was aware of the pendenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
