Writ Petition No.4879 of 2007

4th July, 2008

Petitioner Counsel: Shri. SANJAY V. GANGAPURWALA
Respondent Counsel: Shri. SHRIKANT V. ADWANT,Shri. SACHIN DESHMUKH

Cases Cited:
Rani Kusum Vs. Kanchan Devi, 2006(1) ALL MR 63 (S.C.)=(2005)6 SCC 705 [Para 6]
Nandalal Vitthaldas & Co. Vs. A.P.M.C., Shegaon, 2006(1) ALL MR 607=2006(1) Mh.L.J. 128 [Para 6]
Chintaman Sukhdeo Kaklji Vs. Shivaji Bhausaheb Gadhe, 2004(4) Mh.L.J. 739 [Para 6]
Jerry Alex Brazanza @ Jeronimo Oriculo Alex Braganza Vs. Rajeshree @ Rayeshri Ramdas Borkar @ Shobhavati Ramdas Borkar, 2003(4) Mh.L.J. 1034 [Para 6]
Sangramsing Vs. Election Tribunal, Kotah, AIR 1955 SC 425 [Para 7]
Topline Shoes Ltd. Vs. Corporation Bank, 2002(6) SCC 33 [Para 7]

JUDGMENT

JUDGMENT :- Heard Mr. Sanjay V. Gangapurwala, Advocate for the petitioners and Shri. Shrikant Adwant, Adv. for resp. no.1.

2. Rule. By consent, Rule is made returnable forthwith.

3. By this petition, petitioners seek to challenge the legality and propriety of the order dt.4/1/2007, passed by the learned District Judge - III, Aurangabad, below Exh.33 in Miscellaneous Application Requiring Judicial Enquiry No.303/2002.

4. Facts in brief, giving rise to this petition, are as under :-

The petitioner no.1 - M/s. Shahaji Alloy Steel Pvt. Ltd., a private limited company registered under the Companies Act, 1956, availed loan of rupees one crore from resp. No.1 SICOM Ltd., which is a deemed Financial Corporation.

As there was default in repayment of the loan, resp.no.1 initiated proceedings under Section 31(1)(aa) of the State Financial Corporations Act, 1951, for enforcing the liability against the original debtor and guarantors [petitioner nos.1 to 3 and resp. nos.2 and 3]. (The name of resp. no.3 is deleted by order dt.23/1/2008.) The proceedings were initiated in the District Court on 4/12/2002.

Admittedly, the petitioner nos.1 to 3 and resp. nos.2 were served and even they appeared before the Court through advocate on 20/2/2003. It appears that, since March, 2003, till this date, for more than five years, nothing has happened in the said proceedings and the proceedings, in fact, remained in cold storage, despite the fact that proceedings were initiated as per the provisions of the State Financial Corporations Act and pertains to the public money.

Be that as it may, on 7/8/2004, learned District Judge - III, Aurangabad, pleased to pass order of "No Say". This position is not disputed by the respective counsel and that is to be mentioned here, as record from the court below is not called for deciding this petition. It is only after period of more than two years i.e. on 18/11/2006, an application was filed on behalf of the original resp. nos.1 to 4 [petitioner nos.1 to 3 and resp. no.2 herein] at Exh.33, praying for setting aside the "No Say" order dt.7/8/2004.

It is significant to note the contents or the reasons for not filing the "Say". Para no.3 and 4 of application at Exh.33 are reproduced in verbatim, as under :-

"3. The respondents submit that the respondent No.2 & 4 was continuously out of station due to business assignments and as such, could not contact his Advocate to give necessary instruction for filing say.

4. The respondents further submit that before 2 - 3 days, the respondent No.2 and 4 met with his Advocate and then only came to know about the status of the present petition. After that, the respondent immediately rushed to the Hon'ble Court with this application to file say by setting aside no say order."

Thus, for the reasons stated above, the prayer was made by the petitioners herein for setting aside the order of "No Say" passed two years back. In fact, the reasons given in the application cannot be said to be sufficient.

It appears that, original applicant - resp. no.1 herein - SICOM opposed the said application by filing its say.

After hearing, the learned District Judge - III, Aurangabad, was pleased to pass the following order :-

" .....

The Advocate for resp. Shri. Gangapurwala is absent inspite of calling time to time. The respondents are also absent.

The matter was filed by the petitioner on 4.12.2002. The respondents appeared through Adv. Gangapurwala on 20.2.2003.

No say order against the respondent was passed by the court on 7.8.2004 and finally on 18.11.2006 this application is filed for setting aside no say order.

Para No.3 of this application read that the respondent was continuously out of station for work, therefore, he could not meet the advocate.

In my opinion such reason is not sufficient for setting aside no say order and for accepting the say.

The new amendment to C.P.C. has specially prescribed time of 30 days for filing W.S. from the date of service of summons.

According to me the respondent could not make out a positive case for accepting their say at such late stage.

Hence, the application is rejected.

Sd/- 4/1/2007."

This order has been challenged in this petition under Articles 226 and 227 of the Constitution of India.

5. Heard learned counsel Shri. Sanjay Gangapurwala, for the pensioners, Shri. S. V. Adwant, learned counsel for the resp. No.1 and Advocate Shri. Sachin Deshmukh, for the resp. No.2.

6. Shri. Sanjay Gangapurwala, Adv. for petitioners, vehemently contends that, provisions of the Code of Civil Procedure, particularly amended provisions of Code of Civil Procedure, are not applicable to the proceedings initiated under the provisions of the State Financial Corporations Act and particularly the proceedings under Section 31 of the State Financial Corporations Act for enforcing the liability under the agreement i.e. Contract of Guarantee and Mortgage.

On the other hand, Shri. S. V. Adwant, learned counsel for resp. No.1 - SICOM [original applicant] submits that, the provisions of the Code of Civil Procedure are applicable and even if it is held that, provisions of the Code of Civil Procedure are not applicable, the purpose laid down under the Code can be taken to be a guide for deciding the proceedings under the State Financial Corporations Act. He further submits that, by way of amendment dt.1/7/2002, Written Statement is required to be submitted by defendant/opponent/respondent within a period of 30 days from the date of service of a copy of the plaint. He is at pains to submit that, this provision is squarely applicable in the instant case and as such, the order passed by the court below calls for no interference.

In support of the above contention, Shri. S. V. Adwant, learned counsel for resp. No.1, has placed reliance on the decision of the Hon'ble Apex Court in case of Rani Kusum Vs. Kanchan Devi [(2005)6 SCC 705 : (2006(1) ALL MR 63 (S.C.))]. He submits that, though the provisions of the Order VIII, Rule 1 and proviso thereto (as amended by Act of XXII of 2002 w.e.f.1/7/2002) is held to be directory, rather than mandatory, under current of the said provision cannot be ignored. He further submits that, the parties which adopt dilatory tactics are not entitled for discretionary relief. He further submits that, powers under Article 227 of the Constitution of India are supervisory powers and petitioners in this case are not entitled for relief from this court, having regard to the facts and circumstances of the instant case.

On the other hand, Shri. Gangapurwala, relied upon the decisions of this court in case of Nandalal Vitthaldas & Co. Vs. A.P.M.C., Shegaon [2006(1) Mh.L.J. 128 : (2006(1) ALL MR 607)], particularly para nos.11 to 15, as quoted hereinbelow :-

"11. On facts, the petitioners have made out a case, which is exceptional namely the days lost between the date of appearance and failure to file Written Statement were spent in hearing on Exh.12. The learned Advocate for the petitioners while he submitted Exh.12 and proceeded for hearing thereof could have very well filed an application for grant of extension to file Written Statement until decision of Exh.12. However, no such application was filed, apparently on mistaken belief that the objection pertains to the jurisdiction of the Court and filing of Written Statement may not be necessary until said point is decided.

12. Though the notion, due to which written statement was not filed, is not legally correct, however, a litigant always acts under legal advice and cannot be blamed for failing to file Written Statement when in such peculiar situation, said lapse cannot be described as negligence on the part of party - defendants.

13. On facts, it is seen that the written statement was punctually filed on the very next date after the application Exh.12 was rejected. Therefore, such a lapse on the part of the party is not one which can be said to be intentional or for which there is no excuse. When the learned Advocate had filed an application raising preliminary objection, it was raised purely on a question of law. The same learned Advocate was expected to make application for grant of time to file written statement till decision of the preliminary objection raised by him. Ordinarily, the client is responsible for acts done by his advocate, however, the lawyer who has to act as per his legal expertise has to do certain acts, which he alone knows that he has to do those. Thus, the application for enlargement of time was to be filed by the Advocate who was representing the defendants. His failure to submit such application, is not attributable to the defendants as their failure, since they had reasonably depended on their Advocate for doing all legitimate acts and taking legitimate steps.

14. While Their Lordships of the Supreme Court held in case of Kailash Vs. Nanhku, 2005(2) Mh.L.J. (SC) 775 = 2005 AIR SCW 2346 : [2005(5) ALL MR (S.C.) 689] (supra) that time could be extended only 'in exceptional circumstances', will have to be viewed in the light of the facts of the case and the circumstances in which the party has failed to file Written Statement.

15. As narrated hereinbefore, it seems that the Written Statement is filed on 1st date soon the application Exh.12 was rejected. Thus, it cannot be said that the party was indifferent and negligent. It was entitled to raise legal objection as to jurisdiction which it has raised. Lapse in filing documents had occurred due to improper legal advice. Failure to file Written Statement, based on failure to file application for seeking time to file Written Statement until the decision of the application for extension of time is thus, fully attributable to the legal advice and not a lapse attributable to the wish and or negligence of the client."

Shri. Gangapurwala also pressed into service the decision of this Court in case of Chintaman Sukhdeo Kaklji & others Vs. Shivaji Bhausaheb Gadhe & others [2004(4) Mh.L.J. 739], as also, decision in case of Jerry Alex Brazanza @ Jeronimo Oriculo Alex Braganza and anr. Vs. Rajeshree @ Rayeshri Ramdas Borkar @ Shobhavati Ramdas Borkar and others [2003(4) Mh.L.J. 1034].

7. It is significant to note that, in case of Sangramsing Vs. Election Tribunal, Kotah & anr. [AIR 1955 SC 425], while dealing with the discretionary provisions of the Code of Civil Procedure, the Hon'ble Apex Court observed thus :-

".... Code of Procedure is "procedure" something designed to facilitate justice and further its ends not a penal enactment for punishment and penalties, not a thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it. Our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exception and where they are clearly defined they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle."

In another case, the Hon'ble Apex Court had an occasion to consider similar provisions contained under the Consumer Protection Act, 1986. In Topline Shoes Ltd. Vs. Corporation Bank, 2002(6) SCC 33, the Hon'ble Apex Court considered the question - whether or not the State Consumer Disputes Redressal Commission, could grant time to the respondent to file his reply, beyond a total period of 45 days, in view of Section 13(2) of the Consumer Protection Act, 1986. It was held that :-

"Thus the intention to provide a time frame to file reply, is really meant to expedite the hearing of such matters and to avoid unnecessary adjournments to linger on the proceedings on the pretext of filing reply. The provision, however, as framed, does not indicate that it is mandatory in nature. IN case the extended time exceeds 15 days, no penal consequences are prescribed therefor. The period of extension of time "not exceeding 15 days" does not prescribe any time of period of limitation. The provision appears to be directory in nature, which the consumer forums (fora) are ordinarily supposed to apply in the proceedings before them. We do not find force in the submission made by the appellant in person that in no event, whatsoever the reply of the respondent could be taken on record beyond the period of 45 days. The provision is more by way of procedure to achieve the object of speedy disposal of such disputes."

8. Thus, having regard to the peculiar facts and circumstances of this case, interest of justice is served, if the petitioners and the resp. no.2 herein [original respondent nos.1 to 4 before the District Court] are permitted to contest the said proceedings on merit. It is pertinent to note that, the claim involved in the petition is for recovery of amount to the tune of Rs.1,53,00,000/- [Rupees one crore fifty three lacs only]. Interest of the SICOM may be served by giving time bound programme for expeditious hearing of the proceedings. Further, petitioners and resp. No.2 can be asked to pay cost instead of penalizing them by throttling the litigation by not accepting the Written Statement.

9. The learned counsel appearing for the petitioners and respondents agreed for adopting such a course and thus, the following order is passed :-

[a] This writ petition is allowed.

[b] Order under challenge dt.4/1/2007, passed by the learned District Judge - III, Aurangabad, in MARJI No.303/2002, below Exh.33, is hereby qushed & set aside.

[c] Application at Exh.33 filed before the District Court is allowed and the original respondents are permitted to place on record the Written Statement, which is already submitted by petitioner nos.1 to 3 herein [original resp. nos.1, 2 and 4].

[d] The resp. no.2 herein, original resp. no.3, who is represented by Adv. Mr. Sachin Deshmukh, orally prays for grant of similar relief at par with petitioner nos.1 to 3 herein, since he is also sailing in the same boat. The resp. no.2 herein [original resp. no.3] is also permitted to submit Written Statement, on or before 31/7/2008.

[e] The learned District Judge, Aurangabad, who is dealing with the proceedings in question, is directed to hear and complete the proceedings by 31/12/2008.

[f] The petitioner nos.1 to 3 herein [original resp. nos.1, 2 and 4] are hereby directed to pay cost of Rs.11,000/- [Rupees eleven thousand only], jointly and the resp. no.2 herein [original resp. no.3] is also directed to pay cost of Rs.11,000/- [Rupees eleven thousand only]. The total amount of cost [Rs.22,000/-] would be paid to the District Court Bar Library. The learned counsel appearing for the respective parties undertake to file payment receipts before this court on 14/7/2008.

[g] Writ petition disposed of. Rule made absolute in above terms.

Petition allowed.