Pradeep Bhatnagar v. Housing Development Finance Corporation Ltd. & Anr.

1. This appeal is for setting aside an order dated 20.08.2015 as well as the judgment which had rejected the application under Order XXXVII Rule 4ofthe Code ofCivil Procedure (CPC). The appellant had requested that the decree of the learned Single Judge dated 12.11.2013 be set aside.

2. The facts necessary to decide the case are that the appellant had entered into atripartite agreement with the first respondent (plaintiff) and the builder - arrayed as the second defendant in the suit. The summary suit is one filed under Order XXXVII CPC. The claim was based upon the sum of?26 lakhs disbursed to the builder pursuant to R.F.A.(OS) 112/2015 Page I of[7] 2016:DHC:8829-DB the loan agreement entered into between the appellant and the respondent bank remitted to the builder by the first respondent cooperation. Just before the said agreement, a loan agreement had been entered into between the appellant and the respondent cooperation. The suit had claimed that the appellant had defaulted in the discharge of its obligations inasmuch as several equated monthly instalments (EMI) remained unpaid and the suit claim was ^27,58,887/- with 18% per annum. Summons in the suit was issued. Apparently, within 10 days ofthe receipt ofsummons, the appellant^ caused appearance to be entered through a counsel on 22.05.2013. However, that appearance was not taken on record. Consequently, the learned Single Judge decreed the suit on the ground of failure to comply with the mandatory stipulations under Order XXXVII Rule 2 and 3. This resulted in a situation where a deemed decree was drawn pursuant to the judgment dated 12.11.2013. The cooperation/creditor took out execution proceedings. Upon receipt of notice in these execution proceedings, the appellant claimed to have become aware that the appearance caused by him was in fact not taken on the record and that the decree was made without his knowledge. He therefore^ applied for setting aside of the decree under Order XXXVII Rule 4 read with Section 151 CPC. Learned Single Judge by the impugned order dismissed the said application which was also accompanied by an application for condonation ofdelay.

3. We have heard learned counsel for the parties. We also called for records of this court. Apparently, the Memo of Appearance was in fact filed (vide diary No.61120 of2013 on 22.05.2013). R.F.A.(OS) 112/2015 ^ ^ r

4. Counsel for the cooperation/creditor contended that the appellant cannot claim to be innocent because he had entrusted his papers and the entire conduct of the case to the counsel. He was primarily under a duty to ensure that the defence ofsuit was properly monitored. The lapse of the counsel therefore cannot be distanced from his own conduct. Learned counsel relied upon ajudgment ofthe Supreme Court reported in Salil Dutta vs. T.M. and M. C. Private Ltd. (1993) 2 see 185. Counsel for the appellant on the other hand relied upon the judgment of the Supreme Court reported in N. €0 Balakrishnan vs. M. Krishnamurthy AIR 1998 SCC 3222 and Rajni Kumar vs. Suresh KumarMalhotra 2003 AIR (SC) 1322.

5. The decision in Rajni Kumar''s case {supra) in this court's opinion is quite appropriate for the discussion in this appeal. There too the power of the court under Order XXXVII Rule 4 was in issue. The Supreme Court observed as follows: ^ But in a suit under Order 37 the procedurefor appearance ofdefendant is governed by provisions ofRule 3 thereof A defendant is not entitled to defend the suit unless he enters appearance within ^ ten days ofservice ofsummons either in person orby a pleader and files in court an address for service of notices on him. In default of his entering an appearance, the plaintiff becomes entitled to a decree for any sum not exceeding the sum mentioned in the summons together with interest at the rate specified, if any, upto the date of the decree together with costs. The plaintiffwill also be entitled tojudgment in terms of Sub-rule (6) of Rule 3. If the defendant enters an appearance, the plaintiff is required to serve on the R.F.A.(OS) 112/2015 Page 3of[7] defendant a summons for judgment in the prescribed form. Within ten days from the service of such summons for judgment, the defendant may seek leave ofthe court to defend the suit, which will begranted on disclosing such facts as may be deemed sufficient to entitle him to defend and such leave may be granted to him either unconditionally or on such terms as the court may deem fit. Normally the court will not refuse leave unless the court is satisfied that facts disclosed by the defendant do not indicate substantial defence or that defence intended to be put up is frivolous or vexatious. Where a part of the amount claimed by the ^ plaintiff is admitted by the defendant to be duefrom him, no leave to defend the suit can be granted unless the admitted amount is deposited by him in Court. Inasmuch as Order 37 does not speak ofthe procedure when leave to defend the suit is granted, theprocedure applicable to suits instituted in the ordinary manner, will apply.

10. It is important to note here that the power under Rule 4 of Order 37 is not confined to setting aside the ex parte decree, it extends to staying or setting aside the execution and giving leave to appear to the summons and to defend the suit. We maypoint out that as the very purpose of Order 37 is to ensure an expeditious hearing and disposal of the suit filed thereunder. Rule 4 empowers the court to grant leave to the defendant to appear to summons and defend the suit if the Court considers it reasonable so to do, on such terms as court thinks fit in addition to setting aside the decree. Where on an application, more than one among the specified reliefs may be granted by the R.F.A.(OS) 112/2015 Court all such reliefs must be claimed in one application. It is not permissible to claim such reliefs in successive petitions as it would be contrary to the letter and spirit ofthe provision. That is why where an application under Rule 4 ofOrder 37 is filed to set aside a decree either because the defendant did not appear in response to summons and limitation expired, or having appeared, did not applyfor leave to defend the suit in the prescribed period, the court is empowered to grant leave to defendant to appear to the summons and to defend the suit in the same ^ application. It is, therefore, not enough for the defendant to show special circumstances which prevented himfrom appearing or applyingfor leave to defend, he has also to show by affidavit or otherwise, facts which would entitle him leave to defend the suit In this respect. Rule 4of Order 37 is differentfrom Rule 13 ofOrder 9.

11. Now adverting to the facts of this case, though appellant has shown sufficient causefor his absence on the date of passing ex parte decree, he failed to disclose facts which would entitle him to defend the case The respondent was right in his submission that ^ in the application under Rule 4 of Order 37, the appellant did not say aword about any amount being in deposit with the respondent or that the suit was not maintainable under Order 37. From aperusal ofthe order under challenge, it appears to us that the High Court, was right in accepting existing of special circumstances justifying his not seeking leave of the court to defend, but in declining to grant reliefsince he d^e circumstances justifying any Page 5 of[7]

6. The decision in N. Balakrishnan's case {supra) had noticed that the expression "sufficient cause" is of wide ampHtude and embraces all manner ofcircumstances. In the present case, we notice that the appellant had entrusted the defence of his case to a counsel who had even filed aMemo ofAppearance within the time stipulated by law i.e. under Order XXXVII Role 3 of CPC. However, unfortunately, for the appellant, the said Memo of Appearance was not taken on the record due to some technical defects/deficiencies. The appellant's counselhowever did not care or bother to inform him^ about this. As a result the learned Single Judge proceeded to decree the suit - quite naturally so since there was a.bsence of any information with respect to the Memo of Appearance having been filed on 22.05.2013. However, the fact remains that this aspect is a matter ofrecord though not gone into either at the stage when the suit was decreed or when the application for setting aside the decree under Order XXXVII Rule 4 was considered. Now that this fact has been ascertained, the Court is of the opinion that the interest of justice clearly lies in setting aside the impugned order as well as the decree which was drawn as aconsequence ofthe court's conclusion that the^ appellant did not cause an appearance to be filed within the time prescribed. As aresult the order dated 20.08.2015 and deemed decree dated 12.11.2013 are hereby set aside. Ifso advised the appellant is at liberty to prefer an application for leave to defend within 10 days from today. Parties are directed to be present before the learned Single Judge on 21.03.2016. It is open to the appellant to seek R.F.A.(OS) 112/2015 ^ ^ defences as are available to him including filing of such amendment application as are necessary for the prosecution ofhis defence.

7. The appeal is allowed in the above terms. The pending applications stands disposed ofaccordingly.

S. RAVINDRA BHAT

(JUDGE) —"•

DEEPASHARMA (JUDGE) MARCH 03, 2016 rb