CIVIL APPEAL 11767 of 2009 on 15 December 2006

1. This is an application filed under Order 37 Rule 4 CPC for settingaside of the judgment and decree of this Court dated 15.12.2006 wherebythe suit of the plaintiff under Order 37 CPC was decreed on account offailure of the defendants, including the applicants/defendant Nos.2 and 3, tofile their applications for leave to defend.

2. On being served of the summons of the suit, the defendants enteredappearance through counsel as noted in the order sheet dated 27.11.2000.>1Summons for judgment were thereafter issued. For 8.5.2001,'the serviceCS(OS) No. 1636/2000 Page I of 8

report was that the defendants could not be served as they were not residingat the given address. Thereafter, though there are some defaults on behalf ofthe plaintiff, however, the court even issued court notice to the counsel forthe defendant who failed to appear in spite of his being served. Ultimately,summons for the judgment were directed to be effected by the publicationand which publication was done in two newspapers. One in 'TheStatesman', New Delhi Edition for 15.6.2005 and qua the defendant nos. 2to 4 in Amar Ujala (Punjab Edition) on 1.9.2006.3. Though, the suit was filed as under Order 37 CPC, this aspect escapedthe attention of a learned Single Judge of this court as it was not so pointedout, and consequently, the case was fixed for filing of the affidavit by way ofevidence by the plaintiff vide order dated 11.10.2006. This affidavit by wayof evidence was filed on behalf of the plaintiff, and the plaintiff proved andexhibited the necessary documents. I may note that the subject suit was asuit for recovery of money on a factoring agreement as per which thedefendant sells the goods to its customers but receives money of the invoicesin advance from the plaintiff/finance company by discounting the invoicesi.e. defendant receives the money from the plaintiff for the invoices and the plaintiff company thereafter receives the money of the invoices from theCS(OS) No. 1636/2000 Page 2 of 8 - customers of the defendant no. 1.

4. On 5.12.2006 noting that the plaintiff had duly proved its case in!Jterms of the affidavit by way of evidence filed, however, noting that the suitwas under Order 37 CPC, the suit was decreed as the applications for leaveto defend were not filed by the defendants after service of the summons forjudgment by publication.

5. Now the present application has been filed seeking to setting asidethe judgment and decree dated 15.12.2006 making essentially the followingaverments

(i) The plaintiff did not make sufficient effort for service of thedefendants of summons for judgment and the order for publication was notjustified.

(ii) The counsel appearing for the defendants was guilty of negligence ashe did not pursue the case properly on behalf of the defendant.

(hi) The applicant/defendant nos. 2 and 3 have a good case on merits asstated in para 23 of this application.stated in para 23 of this application.

6. In my opinion, the application is a gross abuse of process of law.When the summons for judgment were issued, the defendants somehow or the other seem to have got a service report that they have left the address,CS(OS) No. 1636/2000 Page 3 of 8

however, the fact of the matter is that the defendants had not left the statedaddress inasmuch as admittedly (and this being not disputed) the defendantsare still as on today very much present at the address which is stated in theplaint. The result was that the plaintiff was put to unnecessary expense ofpublication in two newspapers. Not only that, negligence (and if I say sodeliberate negligence) of the applicants/defendants is writ large because inthe application under Order 37 Rule 4 CPC it is not stated as to for the longperiod of time from filing appearance till the present application was filed,what was the correspondence/communication by these defendants with theirthen lawyer, with respect to the suit. As is not unusual in these cases ofrecovery of monies, all endeavors are made by the defendants who have topay moneys to delay and drag the suit. Merely making averments that theirearlier counsel was negligent," in my opinion, will not help the defendants,because, in cases such as the present, there is also a bounden duty of thedefendants , at least at some infrequent intervals, to pursue their advocatewith respect to the status of the case. For a few weeks or a few months thedefendants may not keep in touch, however, once this period expands tomore than a year, ! am not able to accept the explanation of the blame beinglaid at the door of the earlier counsel. Further, an aspect to be noted is that inCS(OS) No. 1636/2000 ... Page 4 of 8

Order 37 CPC, it is provided that once appearance is entered, the summonfor judgment need only be "left" at the stated address. The object of thisprovision is to avoid any delay in trial of an Order 37 suit for which a specialprocedure is carved out. The fact of the malafides of the defendants can alsobe seen from the fact that its earlier counsel did not appear even after courtnotice was issued to him pursuant to the orders of this Court.

7. In my opinion, therefore, it does not lie in the mouths of thedefendants to show that the ex parte decree has been wrongly passed againstthem and they have not been validly served of the summons for judgment. Ialso, discard in limine the arguments on behalf of the defendant nos. 2 and 3that once there is a subsequent order for service, an earlier order of servicestands waived though of course the argument is really such which I fail tounderstand inasmuch as since it is reported that the defendants were notfound at the given address, the only way in which service could have beeneffected was by substituted service, and which was done.

8. In my opinion, the application is also misconceived inasmuch as nowit is settled law that an application under Order 37 Rule 4 CPC must alsocontained the necessary ingredients as to why leave to defend should begranted as held in the case of Rajni Kumar Vs. Suresh Kumar Malhotra &CS(OS) No. 1636/2000 Page 5 of8

Anr. (2003) 5 SCC 315 wherein the Supreme Court has clarified that theexpression "special circumstances" as found under Order 37 Rule 4 CPCmeans stating merits on which leave to defend would have been granted.With regard to the merits firstly I must bring on record the crucial fact thatthe plaintiff in the plaint has made necessary averments with respect to thedefendants acknowledging debt in writing under the signatures, and onwhich aspect there is no denial in the present application under Order 37Rule 4 CPC. The only averments which have been made by the applicantson this aspect are contained in para 23 of the application which read aSunder:- "23. That without prejudice to the aforementionedsubmissions, the plaintiff submits that the present suit is evenotherwise is not maintainable for the following-reasons/grounds:

a) The present suit s devoid of any cause of action and nocause of action whatsoever has been pleaded by the Plaintiff inthe present suit. A bare perusal of the plaint would show thatthe plaint is lacking in material particulars and even fails togive a single instance of any of the defendant's customersfailing to make the payment and also fails to give a singleinstance of benefit under the factoring agreement being givento the Defendants.

b) Except for a bald assertion that most of Defendants'clients did not make payment to the Plaintiff, the Plaintiff evendoes not mention:

I) What payments were made by the Plaintiff to theDefendant no.l as pre-payments and on behalf of whichcustomers and for which invoices;

II) Which of Defendant no.l's customers failed to make thepayment to the Plaintiff;

III) What payments was defendant no.l liable to make andin lieu of which pre-payments by the Plaintiff to Defendant .no.l;

IV) The suit does not contain any statement of accounts toshow as to what amount is pending/outstanding against theDefendants, and, if so, how.

c) That the Plaintiff has not come to the Hon'ble Courtwith clean intention and has tried to mislead the court intobelieving that the applicants have signed the deed of guaranteedated 09.01.1998 and 02.02.1998. No such has been signed bythe applicants."

In my opinion, the aforesaid para 23, with its various sub-paras are only in the nature of negative defences and there is no denial with respect to this specific averment in the plaint of the defendant no.l being grantedfactoring financing facility and that the defendant no.l in fact enjoyed suchfacility and took monies from the plaintiff. Vague averments do not justifygrant of leave to defend in cases such as the present especially where there isno denial of the written acknowledgment of debt. Once monies have beenborrowed they have to be repaid. Of course, some businessmen think that money borrowed is money earned, however, obviously a Court cannotCS(OS) No. 1636/2000 Page 7 of 8 , subscribe to such a view.

9. I may finally state that there is a prayer in this application thatreferring the matter to arbitration under Section 8 of the Arbitration andConciliation Act, 1996, and which prayer I need not look into inasmuch as,the ex parte decree has otherwise being sustained by me, and this prayerwould have been examined only if the suit was revived by allowing theapplication which is being disposed of by this order. This prayer forreference of the disputes in the suit to arbitration is accordingly rejected.

J- •10. In view of the above, the present application is dismissed with costs of? 25,000/-. Costs be paid within two weeks from today.

I.A No. 11768/2009 (U/S 5 of the Limitation Act filed by D-2 & 3)

Since I have heard the application under Order 37 Rule 4 CPC of theapplicants/defendant Nos.2 and 3, counsel for the plaintiff very fairly doesnot oppose this application and therefore, this application for condonation ofdelay is allowed subject to just exceptions.

JULY 30,2012ib

VALMIKI J. MEHTA, J

CS(OS) No. 1636/2000