Notice of Motion No. 2578 of 2000,Suit No. 1482 of 1992

25th September, 2000

Petitioner Counsel: Mr. N. G. THAKKAR,M. V. KINI & Co.
Respondent Counsel: Mr. U. J. MAKHIJA,MOTIWALLA & Co.

Cases Cited:
Dhanwantrai R. Joshi Vs. Satish J. Dave, 1998 (3) Mh. LJ 924 [Para 9]
Sangram Singh Vs. Election Tribunal, AIR 1955 SC 425 [Para 11]
Arjun Singh Vs. Mohindra Kumar, AIR 1964 SC 993 [Para 11]
Balraj Taneja Vs. Sunil Madan, AIR 1999 SC 3381 [Para 12]
M/s. Shalimar Rope Works Ltd. Vs. Abdul Hussain H. M. Hasan Bhai Rassiwala, AIR 1980 SC 1163 [Para 14]
Ashokkumar S. Shah Vs. State Bank of India, AIR 1990 Bom. 16314
Pritam Chand Vs. Sham Sher Singh, AIR 1986 Punjab and Haryana 300 [Para 15]
V. Bhagat Vs. Ms. Usha Bhagat, AIR 1987 Del 74 [Para 15]
Babu Vs.Dewan Singh, AIR 1952 All 749 [Para 15]
R. R. Khatik Vs. Sahadeo Gopala Koshti, AIR (32) 1945 Nagpur 185 [Para 15]
Long Life Carpet Industries Vs. Smt. Kesar Jahan, AIR 1988 All 55 [Para 15]
Akola Zilla Parishad Vs. Laxman B. Manatkar, 1980 Mh. LJ 675 [Para 17]

JUDGMENT

JUDGMENT :- Plaintiffs waive service. Heard forthwith.

2. Defendant No. 2, by the present Motion, has sought a relief to set aside the ex parte decree dated 4th December, 1998 and also for a relief to set aside the ex parte order dated 26-6-1998 whereby the suit was restored. A brief narration of facts is necessary for disposing off the Motion.

3. Defendant No. 2 is an undertaking of the Government of India and also registered under the Companies Act as a Limited Company. Defendant No. 2 exports and imports various metals and other precious goods. In the course of import and export during the year 1986-87 they had availed the service of the first Defendant's ship. The shipping charges were duly paid in accordance with the Arbitral Award sometime in the year 1989.

4. On 28th August, 2000 to the utter surprise of Defendant No. 2, the bailiff from the office of the Sheriff of Bombay visited the office of Defendant No. 2 and attached Defendant No. 2's office premises at Maker Bhavan-II. On 29th August, 2000 the bailiff attached the second Defendant's office premises at Mittal Towers, A & B Wings, 2nd floor, Nariman Point, Bombay. The Bailiff has also attached the Bank Account of the Defendant No.2 with Indian Overseas Bank. From the aforesaid attachment proceedings, Defendant No. 2 came to know that a suit had been filed against Defendant No. 2 and ex parte decree obtained therein. Defendant No. 2 was not aware of the filing of the suit or the service of summons. The matter has thus gone unattened. There are no dues of whatsoever nature due and payable by Defendant No. 2 to the Plaintiff nor is there any contractual obligation between the parties.

5. Defendant No. 2 further pointed out that the Plaintiffs themselves have set out that Defendant No.2 is carrying on business at Mittal Towers, Bombay. It is true that the Head Office of Defendant No.2 is at Delhi. The suit has been filed at Bombay where according to the Plaintiff the Defendant No.2 carries on business. Yet, according to Defendant No.2, the Plaintiffs claimed to have served the writ of summons on Defendant No. 2 at Delhi. Defendant No.2 denies that the writ of summons was served on Defendant No.2. Enquiries were made at the New Delhi Office. The Defendant No.2 has, however, been unable to find any document indicating the receipt of the postal cover of the case proceedings. The Defendant No.2 points out that in the affidavit they have shown sufficient cause for their non-appearance and consequently the decree should be set aside. It is further pointed out that on 12-6-1998 the suit was dismissed for want of prosecution. It was restored based on the application by the Plaintiff. No notice of restoration was served on Defendant No.2. The Defendant No.2 was also not given notice of any further hearing.

6. The Plaintiff have put in their appearance. It is their case that the Application under Order IX Rule 13 is not maintainable. The case of the Plaintiff is that the judgment and decree were passed under Order VIII Rule 5(2). That being the case, no application under Order IX Rule 13 would be maintainable. It is further their case that they have served Defendant No. 2 at the registered address as contemplated by Order XXIX of the Code of Civil Procedure. Once the Defendants were duly served there can be no complaint that service was not properly effected as in terms of Order XXIX Sub-Rule (2) a Corporation has to be served by Summons by leaving it or sending by post addressed to the Corporation at the Registered Office, or if there is no registered office then at the place where the Corporation carries on the business. In the instant case it is pointed out that Defendant No.2 has a registered address and consequently they have served at the registered address as mandated by law.

7. With the above background the Motion may now be decided. The first question, therefore, is whether the decree is under Order VIII Rule 5 (2) or under Order IX Rule 13. There is an affidavit of service filed by Mr. Mukund H. Gulhane, a Clerk and Bailiff of Sheriff of Bombay. With the affidavit is annexed registered post A.D. which shows that on 25-2-1997 Defendant No.2 were served at New Delhi at the address given in the plaint. Defendants did not put in any appearance. On 12th June, 1997 there is an order of the Prothonotary and Sr. Master that no written statement was filed by the defendants and as such the suit was transferred to the list of undefended suits on Board after two weeks. On 12th June, 1998 when the matter came up before the Court, the Court observed that the suit is fixed for passing ex parte decree. The learned Counsel for the Plaintiffs was not in a position to produce the original documents on the basis of she Plaintiff which the suit has been filed. On behalf of Counsel sought time. The Court noted that no explanation has been given as to why the documents have not been produced as the suit is of the year 1992. The reason given for non-production of document was rejected and accordingly the suit was dismissed as the Plaintiffs were not in a position to produce the original documents. It seems thereafter on 26th June, 1998 the Plaintiffs by a precipe moved the matter to set aside the order dismissing the suit. On the date the court relying on the affidavit in support and for reasons disclosed therein restored the suit. No notice of restoration of the suit has been given to any of the Defendants.

8. On 4th December, 1998 when the matter came up before the Court, Plaintiff sought to withdraw the suit against Defendant No. 1 as Defendant No. 1 was in liquidation and with leave to file their claim before the Official Liquidator. A statement made on behalf of the Plaintiff was recorded, that all the original documents were produced in Criminal Complaint bearing No. 59/S of 1990 in the Metropolitan Magistrate's Court against Defendant No. 1 and its Managing Director under Section 409 read with Section 34 of the Cr. P.C. The Xerox copies of documents were produced. They were taken on record and marked Exhibit-B Colly. The Court was thereafter pleased to pass the decree.

9. From the above, is it possible to say that decree passed is a decree under Order VIII Rule 5 (2). I need not delve at length with the case law as in my opinion, it is discussed in the judgment of the Division Bench of this Court in Dhanwantrai R. Joshi v/s. Satish J. Dave (1998 (3) MH. L. J. 924). One important aspect however which has to be noted is that in so far ex-parte decrees are concerned, the suit can be decreed ex parte, only on recording evidence. At the highest, the normal procedure of framing issues can be dispensed with, if the Defendants at the first hearing of the suit makes no defence as contemplated under Order XIV Rule 1(6). What is material, therefore, is that evidence must be recorded. Unlike an ex parte decree, in so far as Order VIII Rule 5 (2) is concerned, the Court can proceed to pass decree on the basis of facts pleaded in the plaint. There is, however, discretion in the Court which may call on the Plaintiff to prove any fact. Order VIII Rule 5 (2) comes into play on failure of the Defendants to comply with the Order VIII Rule (1). Order VIII Rule 1 as amended by this Court reads as under :

"Written Statement. - The Defendant may, and if so required by the Court, shall within such time as may be specified in that behalf or within such extended time as the Court may permit, present a written statement of his defence, after serving a copy thereof on the plaintiff or his pleader or before the date fixed for presenting the same in Court, or file in Court for the use of the Plaintiff a copy of the written statement while presenting the same in Court.

Provided that the first adjournment for filing the written statement shall not ordinarily exceed four weeks and no further adjournment shall be granted except for reasons to be recorded in writing."

A reading of the Rule as amended will show that the written statement has to be filed within such time as may be specified or within such extended time as the Court may permit, present Defendant to file written statement of defence. It is, therefore, clear on the conjoint reading of Order VIII Rule 1 and Order VIII Rule 5 that on the date fixed or within such time as the Court may permit, if the Defendant does not file the written statement, the Court in its discretion may pass a decree based on the pleadings itself. If within the extended time granted for filing written statement, if the Defendant chooses not to file the Written Statement; the Court can still proceed to pass decree under Order VIII Rule 10. Order VIII Rule 10 states that if within the extended time of filing written statement, the Defendants fail to file its written statement, the Court shall pronounce judgment against him or make such order in relation to the suit as it thinks fit. Order VIII Rule 5 (2) was inserted by Act 104 of 1976. It is, therefore, clear that Order VIII Rule 5 operates when the Defendant has to appear in answer to the writ of summons and file written statement. Order VIII Rule 10 operates when the Court instead of passing judgment on the failure of defendant to file written statement on the date given, grants additional time. However, what is clear is whether under Order VIII Rule (5) or Rule (10), the Court proceeds to pass judgment based on the pleadings before it unless it directs the Plaintiff to prove a fact as set out under Order VIII Rule 5 (2). There is otherwise no requirement of the Court calling on the Plaintiff to lead evidence, whether oral or documentary, in support of the reliefs sought in the suit.

10. If the Court does not decree the suit under Order VIII Rule 5 on the date given for filing written statement then Court has to proceed under Order XVII. In terms of Order XVII Rule (1) the Court may grant time and adjourn the hearing of the suit. In terms of Order XVII Rule 2 if on the day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in the behalf by Order IX or make such other order as it thinks fit. Under Order XVII Rule 3 where one party to a suit to whom time has been granted fails to produce evidence, or to cause the attendance of his witnesses or to perform any act necessary to the further progress of the suit, for which time has been allowed, the Court may, notwithstanding such default if the parties are present, proceed to decide the suit forthwith or if the parties are, or any of them is, absent proceed under Rule 2. It is, therefore, clear that when any of the parties are not present the Court must proceed under Order XVII Rule 2. Order XVII Rule 2 requires the Court to dispose of the suit in one of the modes directed in that behalf by Order IX.

11. Coming to order IX, we first have order IX Rule 2. We are not much concerned in the present Motion in so far as Rule 2. Suffice it to say the Court may make an order dismissing the suit on the failure of the plaintiffs to do any of the things set out therein. We have the Order IX Rule 3. This Rule requires that if both the parties do not appear when the suit is called on for hearing, the Court may make an order that the suit be dismissed. If the suit is either dismissed under Order IX Rule 2 or Rule 3, the Plaintiff may subject to the Law of Limitation bring a fresh suit or he may apply to set aside the decree and order on showing sufficient cause. Order IX Rule 5 sets out the consequences on the failure of the Plaintiff failing to take steps to serve an unserved Defendant. The Court can direct dismissal of the suit against such Defendants unless the Plaintiffs satisfy the Court in circumstances set out in the said Rules. Under Order IX Rule 6 when the Plaintiff appears and the Defendant does not appear when the suit is called out for hearing when Summons was duly served, the Court may make an order that the suit be heard ex parte. If an order is passed to proceed ex parte the Court can in the absence of the written statement proceed to dispose of the suit under Order VIII Rule 10. Then there are other situations which need not be gone into. Under Order IX Rule 7 if the suit is adjourned for hearing ex parte and the Defendant appears before such hearing and assigns good cause for his previous non-appearance, the Court can direct, subject to costs or otherwise, to be heard in answer to the suit as if he had appeared on the previous day. Under Order IX Rule 8 when the Defendant appears and the Plaintiff does not appear, the Court has to make an order that the suit be dismissed, unless the Defendant admits the claim or part of the claim whereupon the Court shall pass a decree against the Defendant upon such admission. Under Order IX Rule 9 where a suit is dismissed wholly or partly, the Plaintiff is precluded from bringing a fresh suit on the same cause of action but he may apply to the Court for setting aside the dismissal by showing sufficient cause for his non-appearance when the suit was called out for hearing. Under Order IX Rule 13 if a decree is passed ex parte, the Defendant may apply to the Court, by which the decree was passed for an order to set aside the decree by satisfying the Court that the summons was not duly served or that the Defendant was prevented by any sufficient cause from appearing when the suit was called out for hearing. The Court if satisfied shall make an order setting aside the decree as against such defendant upon such terms as to costs, payment to Court or otherwise. The law as to what is sufficient cause or good cause and the scheme of Order IX need not be delved at length, as, in my opinion, the matter is no longer res integra, having being covered by the judgments of the Apex Court in the case of Sangram Singh v/s. Election Tribunal (AIR 1955 S.C. 425) and in the case of Arjun Singh v/s. Mohindra Kumar and Ors. (AIR 1964 S.C. 993). Suffice it to say and it may be made clear that instead of passing an ex parte decree, the Court passes an order directing the suit to proceed ex parte against Defendants, it does not mean that the Defendants on the adjourned date of hearing cannot participate in the proceedings. All that happens is that the clock cannot be set back. In other words, Defendant cannot contend to be relegated to the position on the day the matter was adjourned. In such a case Defendant must apply for setting aside the ex parte order by showing good cause for non-appearance. Otherwise, if ex parte decree is not passed on that day Defendant can participate in all further proceedings, including cross-examination of the witnesses on behalf of the Plaintiff.

We may also refer to Order XVIII Rule 2. On the day fixed for hearing of the suit or to any other date to which the hearing is adjourned, the party having the right to begin shall state his case and produce his evidence in support of the issues which have to be proved. The other party there may do likewise.

12. From the above what is the position in so far as the present suit is concerned ? Can it be said that the decree was passed under Order VIII Rule 5 (2) as contended by the Plaintiff or the decree was passed after the Court proceeded under Order IX Rule 6 as contended on behalf of Defendant No.2. The record does not indicate whether the Court exercised its power under Order VIII Rule 5. A Court before passing a judgment under Order VIII has to scrutinise the facts set out in the plaint carefully to find out if the suit can be disposed of. Gainful reference may be made to the judgment of the Apex court in the case of Balraj Taneja and Anr. Vs. Sunil Madan and Anr., (AIR 1999 S.C. 3381). In the said judgment the Apex Court has again referred to its earlier judgment in the case of Sangram Singh (supra). Apart from Order IX the Apex Court also has discussed the ambit and scope of Order VIII. The Apex Court in Sangram Singh's case (supra) has noted that if the Defendant does not appear at the first hearing, the Court can proceed ex parte which means that it can proceed without a written statement and Order IX Rule 7 makes it clear that unless good cause is shown, the Defendant cannot be relegated to the position that he would have occupied if he had appeared. That means that he cannot put in a written statement unless he is allowed to do so and in a case which the Court considered a written statement should have been filed, the consequences of Order VIII Rule 10 must be suffered. It is, therefore, clear that even on the adjourned date of hearing if the Court passes an order to proceed ex parte and the Court finds a written statement is required and not filed then the Court can proceed to pass a decree in terms of Order VIII Rule 10. Order VIII, Rule 5 and Order VIII Rule 10, therefore, operate at different stages of the proceedings. In the instant case, considering the stage of the proceedings, it is not Order VIII Rule 5 (2) which will be applicable, if it applied, but Order VIII Rule 10.

13. In the instance case, firstly we have the situation where the Court on 12th June, 1998 observed that the suit is fixed for passing ex parte decree. In other words, the stage of passing a decree under Order VIII Rule 5 (2) had passed. The Court was proceeding in terms of Order IX Rule 7 to pass a decree ex parte. The Court further noted that to pass a decree it had to have original documents which the Plaintiffs had failed to produce. Immediately one notes Order XVII Rule 3 which contemplates that on the adjourned date of hearing if the suit is kept for a specific purpose and the party fails to produce evidence, the Court may either decide the suit forthwith or proceed under Rule 2. In the present case, therefore, Court had to proceed under Order XVII Rule 2. Under Order XVII Rule 2 the Court could proceed under any of the modes directed in that behalf by Order IX on failure of any of the parties to appear. It may be noted that on that date there was no written statement, yet the Court did not proceed to pass a decree in terms of Order VIII Rule 10 but proceeded to dismiss the suit. This order was thereafter set aside by the Court on 26th June, 1998.

14. On 4th December, 1998 the Court took on record the documents and marked them. Marking of documents can be said to be recording of evidence. Whether the procedure followed is available under C.P.C. is debatable, as private documents have to be proved in the manner provided under the Indian Evidence Act. It is, however, seen that on the Original Side of this Court routinely matters are placed on Board under the caption "Ex-parte" hearing. The Court then proceeds to pass judgment after taking the original documents on record and marking them as Exhibits. Documentary evidence is taken on record including private documents without they being proved in the manner required. As can be seen from the judgment in Sangram Singh (supra) even on an adjourned day if the Court proceeds ex-parte, on failure to file written statement, the Court can still pass a judgment under Order VIII Rule 10 on failure to file written statement based on the pleadings as they stand. At any rate, in the instant case the Court proceeded to pass the judgment after perusing the averments in the plaint and the documents taken on record. No oral evidence was recorded. However, the Court had not passed any decree under Order VIII Rule 5 or on the adjourned date in terms of Order VIII Rule 10, as it did not proceed to pass decree, but fixed the date for production of documents. It is, therefore, clear that in the instant case the decree can be said to be an ex parte decree, as Defendant was not present and consequently the Motion under Order IX Rule 13 would be maintainable. At this point it may be noted that reliance was placed on the judgment of M/s. Shalimar Rope Works Ltd. v/s. Abdul Hussain H. M. Hasan Bhai Rassiwala (AIR 1980 S.C. 1163) and the case of Ashokkumar S. Shah v/s. State Bank of India (AIR 1990 Bom. 163) in the matter of service on the Company. I do not propose to go into the issue as in my opinion defendants have shown sufficient cause and for the order that will be passed hereinafter.

15. The next contention is the challenge by Defendant No. 2 of the Order directing restoration of the suit, which was dismissed for default and without notice to the Defendant. The suit was dismissed on 12th June, 1998. Admittedly no notice for restoration was given to Defendant No. 2. The question is whether it is a requirement that notice must be given.

For the proposition that restoring a suit no notice is required, reliance is sought on the judgment in the case of Pritam Chand v/s. Sham Sher Singh (AIR 1986 Punjab and Haryana 300). In that case the Court held that when a suit is dismissed under Order IX Rule 3 for non-appearance of both parties, the Court has jurisdictional power to restore the suit if sufficient cause is shown for non-appearance. As may be noted, Order IX Rule 3 comes into place only when both the parties are absent. In such a case subject to limitation, the Plaintiff can institute a fresh suit or apply for setting aside by showing sufficient cause for non-appearance. Next reliance is placed in the case of V. Bhagat v/s. Ms. Usha Bhagat (AIR 1987 Del. 74). In that case the suit was dismissed for non-appearance of Plaintiff in the absence of the Defendant. The facts therein would show that the suit was kept for examination of the plaint and summons had not been served on the Defendants. To a similar effect is the judgment in the case of Babu v/s. Dewan Singh and Ors. (AIR 1952 All. 749). There again as has been pointed out it is on the case when the suit is dismissed under Order IX Rule 3 when both the parties were absent. In the case of R. R. Khatik and Ors. v/s. Sahadeo Gopala Koshti and Ors. (AIR (32) 1945 Nagpur 185) a learned single Judge of Nagpur High Court has held that if a suit is restored under Order IX Rule 4 without notice to the Defendant, the same would be bad as Defendant must be given notice of the hearing of the suit. Similar view is taken by a Division Bench of the Allahabad High Court in Long Life Carpet Industries v/s. Smt. Kesar Jahan (AIR 1988 All. 55) when the Division Bench noted that notice must be given to the Defendants.

16. As noticed earlier, in view of the view taken by the Apex Court in Sangram Singh (supra) and Arjun Singh's case (supra), a Defendant is entitled to participate at all subsequent hearings. A Defendant only cannot be relegated back to the position unless he applies and shows sufficient or good cause for failure to appear on that date. What that means is that Defendant is entitled to participate in all further proceedings. If, therefore, a suit is dismissed and the Plaintiff applies for restoration, they will have to be heard as defendant can participate in all subsequent proceedings. The judgments which take a different view, that notice is not required, in my opinion, therefore, in view of the judgment of the Apex Court are not good law. In the instant case it is an admitted position that Defendants were not served when the suit was restored.

17. The question, however, is whether this court would pass any order upholding the dismissal of the suit on the ground that notice of restoration had not been given to the Defendants. In Akola Zilla Parishad v/s. Laxman B. Manatkar (1980 Mh. L.J. 675) a learned single Judge of this Court noted that once a suit dismissed for default is restored it revives all further orders. Therefore, on the same reasoning it is sought to be argued that if an ex parte decree is set aside, the dismissal of the suit setting aside is revived and this Court cannot, therefore, interfere with that order. I do not propose to enter into that arena as, in my opinion, though Defendants had to be given notice of the hearing, on the facts and circumstances of the case, I do not propose to interfere with the discretion exercised by the Court in restoring the suit.

18. In the light of that, the following order.

Motion made absolute to the extent that the ex parte decree dated 4th December, 1998 is set aside. Defendant No. 2 waives notice. Defendant No. 2 is directed to file written statement within eight weeks from today. On filing of such a written statement, suit to stand transferred to the list of Long Causes.

In the circumstances of the case, there shall be no order as to costs.

Certified copy expedited. Order accordingly.

Order accordingly.