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ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL SUMMARY SUIT NO. 32 OF 2020
NATIONAL COMMODITY CLEARING LTD.(NCCL))...PLAINTIFF
Mr.Kevic Setalvad, Senior Advocate a/w. Mr.Jehaan Lalkaka, Ms.Shirley
Mody i/by K. Ashar & Co., Advocate for the Plaintiff.
Mr.Pesi Modi a/w. Ms.Kalpana Desai i/by Mr.Prakash Shah, Advocate for the Defendant.
ORAL JUDGMENT
1. Pursuant to order dated 2nd April 2025, today when the matter is called out, Mr.Setalvad, learned Senior Counsel appearing for the Plaintiff, has tendered across the bar Non-deposit Certificate dated 9th April 2025 submitting that as directed by this Court by order dated 2nd April 2025, application had been made to the Prothonotary & Senior Master in view of the order dated 18th February 2025 of the Hon’ble Supreme Court observing that the Hon'ble Supreme Court was not inclined to interfere with the order of this Court, however, extending avk 1/16 the time to deposit till 31st March 2025 and that a fresh Non-deposit Certificate has been obtained which clearly indicates that the Defendant in the matter had not deposited the sum of Rs.6,92,49,487.19 in this Court on or before 31st March 2025. Mr.Setalvad submits that this Court may, therefore, pass an ex-parte decree in favour of the Plaintiff in view of Order XXXVII Rule 3(6)(b) of the Code of Civil Procedure, 1908 (the “CPC”).
2. On the other hand, Mr.Modi, learned Senior Counsel appearing for the Defendant has submitted that since this Court had found triable issues warranting filing of written statement, no order can be passed simply on the ground of non deposit of amount. Mr.Modi has drawn this Court’s attention to paragraph 70 of the order dated 29th January 2024 in the Summons for Judgment granting conditional leave and in particular to the observations of this Court that prima facie it cannot be said that the issue of counterclaim stands concluded and even if there is an issue of limitation in raising the same, that can be an issue framed in the Suit after filing of the written statement and that these are triable issues. avk 2/16
3. Mr.Modi, learned Senior Counsel for the Defendant, further drawing this Court’s attention to paragraph 71 of the said order, submits that this Court had also recorded in the said paragraph that it could not be ignored that the order dated 12th February 2020 of the MCSGF Committee had not been challenged by the Defendant by way of an appeal and that the defences to the claim, therefore, also raise reasonable doubt and that, therefore, this Court was inclined to grant conditional leave to defend.
4. Referring to the Writ Petition No.8142 of 2021 filed by the Defendant before the Delhi High Court, Mr.Modi has submitted that in the order dated 29th January 2024, this Court has referred to the said writ petition which has been filed challenging the order dated 12th February 2020 of the MCSGF Committee as well as the actioning circulars and the notice of demand and that this Court has observed that this Court cannot foreclose the outcome of the writ petition by signing judgment in favour of the Plaintiff while refusing to make the Summons for Judgment absolute and decree in the Suit as prayed for while granting conditional leave to the Defendant. Mr.Modi would submit that the said writ petition is still pending. That, the reply has avk 3/16 already been filed by the Plaintiff herein and that the matter is now listed on 14th July 2025.
5. Mr.Modi further submits that as per (iii) of paragraph 73 of the order dated 29th January 2024, if the conditional order of deposit is not complied with within the period stipulated above, the Plaintiff is entitled to apply for an ex-parte decree against the Defendant after obtaining non-deposit certificate from the Prothonotary & Senior Master of this Court. That, no such application has been made by the Plaintiff and that, if any such application is made, the Defendant be permitted to file a reply to the same before passing any order or decree in the matter.
6. Since the hearing of the matter had commenced before lunch and heard partly, due to lunch break the Court had to rise, accordingly, the matter was called out in the afternoon session, however, since none appeared on behalf of the Defendant in the matter, the matter was kept back. The matter has, thereafter, been mentioned jointly by the learned Senior Counsel for the Plaintiff and the learned Counsel for the Defendant and has been taken up. avk 4/16
7. Ms.Kalpana Desai, learned Counsel for the Defendant submits that the word “forthwith” in Order XXXVII Rule 3(6)(b) of the CPC be considered keeping in mind the aforesaid findings and submissions.
8. I have heard the learned Senior Counsel and the Counsel for the parties.
9. As has been noted in the order dated 29th January 2024, the Summary Suit has been filed by the Plaintiff under Order XXXVII of the CPC praying for a decree against the Defendant for a sum of Rs.9,81,24,358.59 along with interest at the rate of 18% p.a. from 30th November 2019 till realization. Pursuant to default arising out of the Defendant’s pay-in obligation as also mentioned in the show cause notice dated 17th October 2019 which referred to sum of Rs.9,81,24,358.59 which amount had not been paid to the Plaintiff despite demands as recorded in order dated 29th January 2024, the Suit came to be filed as a summary Suit and the Summons for Judgment was heard and the order on the Summons for Judgment was pronounced on 29th January 2024, where after hearing the submissions of the learned Counsel for the parties at length, this Court had granted conditional leave to the Defendant. The operative paragraph 73 of the said order is usefully quoted as under: avk 5/16 “73. In the circumstances, in view of the principles laid down by the Hon’ble Supreme Court in the case of IDBI Trusteeship Services Ltd. vs. Hubtown Limited (supra), as well as in the case of B L Kashyap and Sons Ltd Vs. M/s. JMS Steels and Power Corporation and Anr.(supra), the following order is passed:- ORDER
(i) Leave to defend the present suit is granted to the
Defendant, subject to depositing a sum of Rs. 6,92, 49, 487.19, in this Court within a period of six weeks from the date of uploading of this order.
(ii) If the aforesaid deposit is made within the stipulated period, this suit shall be transferred to the list of Commercial Causes and the Defendant shall file written statement within a period of six weeks from the date of the deposit.
(iii) If the conditional order of deposit is not complied with within the period stipulated above, the Plaintiff shall be entitled to apply for an ex-parte decree against the Defendant after obtaining non-deposit certificate from the Prothonotary and Senior Master of this Court.
(iv) Summons for Judgment stands disposed of in the aforesaid terms.”
10. Thereafter, it has been submitted that the Defendant approached the Hon'ble Supreme Court and as noted above, the Hon'ble Supreme Court had declined to interfere with the order of this Court, however, extending the time period to deposit till 31st March 2025. avk 6/16
11. Also as noted above, when the matter came up before this Court on 2nd April 2025, this Court had directed the Plaintiff to obtain fresh Non-deposit Certificate in view of the extension of the time to deposit by the Hon'ble Supreme Court, after which this Court would consider the Plaintiff’s entitlement for ex-parte decree.
12. Today, as noted above, Mr.Setalvad has tendered across the bar Certificate of Non-deposit dated 9th April 2024 issued by the Prothonotary & Senior Master of this Court, which clearly records that the deposit has not been made till 31st March 2025. It is submitted by Mr.Setalvad, learned Senior Counsel, that no deposit has been made till date.
13. In paragraph 73(iii) of the order granting conditional leave, this Court has observed that if the conditional order of deposit is not complied with within the time period stipulated above, the Plaintiff shall be entitled to apply for an ex-parte decree against the Defendant after obtaining non-deposit certificate from the Prothonotary and Senior Master of this Court. avk 7/16
14. Order XXXVII Rule 3(6)(b) of the CPC is usefully quoted as under: “Order XXXVII Rule 3(6)(b) - if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security within the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or judge, the plaintiff shall be entitled to judgment forthwith.”
15. It has been provided that at the hearing of the Summons for Judgment, if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security within the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or judge, the plaintiff shall be entitled to judgment forthwith.
16. This Court in the case of K. R. Patel (HUF), Mumbai vs. M. M. Developers, Mumbai and Others[1], has, in a case where the Defendant had not complied with the conditional order in making deposit of the 1 2015(3) Mh.L.J. 260 avk 8/16 amount upon which leave to defend was granted, observed that a reading of Order XXXVII Rule 3(6)(b) of the CPC makes it clear that on failure of the Defendant to comply with the condition imposed by the Court, the Plaintiff is entitled to judgment forthwith, citing the decision of a Division Bench of this Court in the case of M/s. D. Shanalal and Etc. vs. Bank of Maharashtra[2] where the Division Bench observed that when the Defendant fails to comply with the conditional order passed under Order XXXVII of the CPC, the Defendant is precluded from further contesting the Plaintiff’s claim and that the facts stated in the plaint must be considered to have been admitted by the Defendant and the Plaintiff becomes entitled to judgment, further observing that Order XXXVII not only provides for abridgment of the procedure of Suits covered by the said provisions but also the said provisions restrict and / or curtail the rights of the Defendant in these Suits to contest the Plaintiff’s claim. Paragraphs 3, 4, 5, 7 and 8 of the said decision are usefully quoted as under: “3. The said order has been challenged on the ground that the course of action sought to be followed by the learned Judge of the City Civil Court is not contemplated by Order XXXVII, Rule 3(6)(b) of the Civil Procedure Code. In the said context, it is required to be noted that the Respondents herein were granted conditional leave by the City Civil Court by order dated 4-8-2014 on the condition that the Respondents i.e. Defendants deposit an avk 9/16 amount of Rs. 64,63,096/- in the said Court within six weeks. The said order came to be challenged in this Court by way of Writ Petition No. 9973 of 2014. The said Writ Petition came to be dismissed by this Court by order dated 13th November, 2014. The said order was thereafter challenged by the Defendants before the Apex Court by way of SLP No. 35412 of 2014. The Apex Court whilst dismissing the said SLP granted time of six weeks from the date of its order to deposit the said amount of Rs. 64,63,096/-. The Defendants thereafter filed an application Exh. 6 for seeking extension of time in the City Civil Court, Mumbai. A Learned Judge of the City Civil Court extended the time by two weeks from 4th February, 2015 by order dated 4th February, 2015: The said order came to be challenged in this Court by the Plaintiff by way of Writ Petition No. 1244 of 2015. The said Writ Petition came to be allowed by this Court, as the learned Counsel appearing on behalf of the Defendants fairly conceded in the light of the order passed by the Apex Court in SLP No. 35412 of 2014 that the City Civil Court did not have the jurisdiction to extend the time. However, after the said Writ Petition came to be disposed by this Court by order dated 6th February, 2015, wherein the statement made by the learned Counsel for the Defendants Shri. Javeed Hussein was recorded, the Defendants did not approach the Apex Court for seeking extension of time, though time had already expired long prior thereto. The upshot of the aforesaid facts is that the Defendants have not complied with the conditional order dated 4th August, 2014 in the matter of making deposit of the amount of Rs. 64,63,096/- in the City Civil Court which was a condition imposed on the Defendants so as to entitle them for leave to defend the suit.
4. The suit was thereafter listed before the City Civil Court on 18- 2-2015, where the Plaintiffs have filed the documents in original. However, the trial Court has recorded that the suit to proceed without the written statement of the Defendants meaning thereby that the trial Court seems to be labouring under an impression that the suit is to be proceeded on the basis that the avk 10/16 written statement has not been filed by the Defendant and therefore, the provisions which are applicable when the Defendant does not file the written statement would have to be followed.
5. Heard the learned Counsel for the parties. The learned Counsel appearing on behalf of the Petitioner/original Plaintiff Shri. Sharan Jagtiani would contend that the procedure adopted by the trial Court is contrary to the procedure prescribed by Order XXXVII, Rule 3(6)(b) of the Civil Procedure Code. The learned Counsel would contend that once the condition by which leave was granted has not been complied by the Defendants, the Plaintiffs are entitled to a judgment. The learned Counsel seeks to rely upon a judgment of the Division Bench of this Court reported in 1988 Mh. LJ. 956: AIR 1989 Bombay 150 in the matter of D. Shanalal and etc. v. Bank of Maharashtra and also the judgment of a learned Single Judge of the Delhi High Court reported in AIR 1995 Delhi 252 in the matter of Standard Chartered Bank v. M.S. Handa.
7. Having heard the learned Counsel for the parties, in my view the course of action that is proposed to be followed by the trial Court can be said to be in contravention of the mandate of Order XXXVII, Rule 3(6)(b) of the Civil Procedure Code. A reading of the said provision makes it clear that on failure of the Defendant to comply with the condition imposed by the Court, the Plaintiff is entitled to judgment forthwith. The said provision was the subject matter of the judgment of a Division Bench of this Court in D. Shanalal's case (supra), where the Division Bench has observed that when the Defendant fails to comply with a conditional order passed under Order XXXVII, the Defendant is precluded from further contesting the plaintiffs claim and that the facts stated in the plaint must be considered to have been admitted by the Defendant and the Plaintiff becomes entitled to judgment. The Division Bench has further observed that Order XXXVII not only provides for abridgment of the procedure of suits covered by the said provisions but also the said provisions restrict avk 11/16 and/or curtail the rights of the Defendants in these suits to contest the Plaintiff's claims.
8. Insofar as the judgment in Standard Chartered Bank's case (supra) is concerned, a learned Single Judge of the Delhi High Court in the said case has relied upon the judgment of the Division Bench of this Court in D. Shanalal's case (supra), the learned Single Judge has reiterated the proposition of law that the condition having not been fulfilled by the Defendant, leave to defend would be deemed to have been refused to the said Defendant and the Plaintiff becomes entitled to a judgment. In the light of the aforesaid judgments, it is not possible to countenance the submissions urged on behalf of the Defendants by Shri. Javeed Hussein. There is no scope for any further enquiry and the Plaintiff would be entitled to judgment forthwith. The trial Court would therefore have to proceed on the basis that the claim in the plaint is accepted and has to proceed to pass judgment in terms of the law which has been enunciated by the Division Bench of this Court in D. Shanalal's case (supra). With the aforesaid observations, the Writ Petition is disposed of. The learned Counsel to inform the developments in the above Writ Petition to the trial Court when the suit comes up for hearing. The above Writ Petition is allowed to the aforesaid extent. Rule is accordingly made absolute in the aforesaid terms, with parties to bear their respective costs.”
17. Mr.Modi, learned Senior Counsel for the Defendant has sought to raise objections to the grant of ex-parte decree quoting paragraphs 70, 71 and 72 of the order granting conditional leave and also submitted that no application has been made on behalf of the Plaintiff under paragraph 73(iii) of the said order. avk 12/16
18. I am afraid, I am unable to appreciate the submissions made by Mr.Modi, learned Senior Counsel appearing for the Defendant. As has been noted above and in the order dated 2nd April 2025, Mr.Setalvad on behalf of the Plaintiff had already made an application for ex-parte decree pursuant to paragraph 73(iii) of the order granting conditional leave along with certificate of non-deposit. There is no requirement that the said application be made in writing. Therefore, this objection is untenable. Secondly, the reliance by Mr.Modi on paragraphs 70, 71 and 72 to submit that no judgment can be given forthwith is also not tenable in view of the two decisions cited above where it has been held that:
(i) in a case where the Defendant had not complied with the conditional order in making deposit of the amount upon which leave to defend was granted, reading of Order XXXVII Rule 3(6)(b) of the CPC makes it clear that on failure of the Defendant to comply with the condition imposed by the Court, the Plaintiff is entitled to judgment forthwith;
(ii) when the Defendant fails to comply with the conditional order passed under Order XXXVII of the CPC, the Defendant is precluded from further contesting the Plaintiff’s claim and that the facts stated in avk 13/16 the plaint must be considered to have been admitted by the Defendant and the Plaintiff becomes entitled to judgment;
(iii) Order XXXVII not only provides for abridgment of the procedure of Suits covered by the said provisions but also the said provisions restrict and / or curtail the rights of the Defendant in these Suits to contest the Plaintiff’s claim.
19. Moreover, as noted above, paragraph 73(iii) of the very same order granting conditional leave, itself provides that if the conditional order of deposit is not complied with within the period stipulated, the Plaintiff shall be entitled to apply for an ex-parte decree against the Defendant after obtaining non-deposit certificate from the Prothonotary and Senior Master of this Court which application as noted above had been made and certificate of non-deposit also has been obtained.
20. Ergo, in view of the clear provisions of Order XXXVII Rule 3(6) (b) of the CPC and the decisions of this Court in the cases of K. R. Patel (HUF), Mumbai vs. M. M. Developers, Mumbai and Others (supra) and M/s. D. Shanalal and Etc. vs. Bank of Maharashtra (supra), I am of the view that the Suit deserves to be decreed in favour of the Plaintiff forthwith. avk 14/16
21. Further, Ms.Kalpana, learned Counsel for the Defendant has submitted that the word ‘forthwith’ may be considered in the circumstances of the case keeping in mind the findings based on which the conditional leave was granted. I am unable to accept any other interpretation of the word ‘forthwith’ except as interpreted by this Court in the two decisions cited above. In my view, once the condition for deposit has not been complied with, the provisions of Order XXXVII Rule 3(6)(b) become applicable and the word ‘forthwith’ has to be interpreted as it is understood in general parlance, which means without delay; at the very same time, no other meaning can be attributed to it.
22. The Defendant having failed to comply with the condition granting leave to defend within the stipulated period as also extended by the Hon’ble Supreme Court and the Non-deposit Certificate dated 9th April 2025 having already been furnished by the Plaintiff, and having held that the Plaintiff has become entitled to a judgment forthwith in view of Order XXXVII Rule 3(6)(b) of the CPC, the suit deserves to be decreed in favour of the Plaintiff.
23. I, therefore, pass the following order:avk 15/16 ORDER
(i) Suit is decreed in terms of prayer clause (a), which reads thus:- “(a) that this Hon'ble Court be pleased to pass a decree and order directing the Defendant to pay to the Plaintiff a principal amount of Rs.9,81,24,358.59 being the outstanding liability of the said Defendant to the Plaintiff together with interest at the rate of 18% p.a. from 30th November, 2019 till payment and/or realization thereof, as per the particulars of claim set out in Exhibit ‘M’ hereto.”
(ii) Refund of Court fees as per rules.
(iii) The drawn up decree is dispensed with.