Punjab-Haryana High Court
M/S Karvy Consultants Limited vs Umesh Jain And Others on 1 February, 2012
Author: Rajesh Bindal
Bench: Rajesh Bindal
Civil Revision No. 2187 of 2006 [1]
IN THE PUNJAB AND HARYANA HIGH COURT
AT CHANDIGARH
Date of decision : 1.2.2012
1. Civil Revision No. 2187 of 2006 (O&M)
M/s Karvy Consultants Limited .. Petitioner
vs
Umesh Jain and others .... Respondents
2. Civil Revision No. 748 of 2008 (O&M) M/s Karvy Consultants Limited .. Petitioner vs Umesh Jain and others .... Respondents
3. Civil Revision No. 5443 of 2009 (O&M) Umesh Jain and others .. Petitioners vs M/s Vatsa Corporation and another .... Respondents Coram: Hon'ble Mr. Justice Rajesh Bindal Present: Mr. Puneet Kansal, Advocate, for M/s Karvy Consultants Limited.
Mr. Amit Jain, Advocate, for Umesh Jain and others.
Rajesh Bindal J.
1. This order shall dispose of the aforesaid three petitions.
2. Civil Revision No. 2187 of 2006 has been filed by M/s Karvy Consultants Limited (for short, 'Karvy'), seeking a direction to the learned court below to decide the application dated 3.10.2005 praying for stay of execution proceedings. Further prayer is for setting aside of order dated 11.3.2006 whereby the learned court below had issued bailable warrants for arrest of the officers of the Karvy for non-compliance of the decree.
Prayer in Civil Revision No. 748 of 2008 is for setting aside the order dated 8.10.2007 passed by the learned District Judge, Hisar, Civil Revision No. 2187 of 2006 [2] whereby the appeal filed by the Karvy against the order dated 8.8.2006 passed by the learned Civil Judge (Junior Division), Hisar dismissing the application for setting aside the ex-parte decree dated 1.12.2000, was dismissed.
Prayer in Civil Revision No. 5443 of 2009 is for quashing of order dated 19.1.2008 vide which the application filed by the plaintiffs/decree- holders for disbursement of ` 2,07,550/- as compensation to them was dismissed.
3. All the three revision petitions arise out of the proceedings in the suit filed by Umesh Jain son of Hans Raj Jain, Hans Raj Jain son of Des Raj Jain and Rajeev Jain son of Bimal Jain (hereinafter to be referred as 'the plaintiffs/decree-holders), all residents of 18/14-3, Sharma Gali, Tilak Bazar, Hisar against Karvy and in execution of decree dated 1.12.2000 passed in their favour.
4. Briefly the facts of the case are that the plaintiffs/decree- holders filed a civil suit for mandatory injunction directing M/s Vatsa Corporation Limited (for short, 'Vatsa Corporation') and Karvy - defendants to deliver share certificate nos. 502336-502355, 506565- 506567 and 677214-677260 pertaining to 7,000 shares of Vatsa Corporation. The suit was filed on 8.6.1999. The defendants in the suit were proceeded against ex-parte and civil court passed the decree in the suit on 1.12.2000 directing the defendants to deliver the required share certificates after registration of transfer in the name of the plaintiffs/decree-holders within one month from the date of the order.
5. The execution of the aforesaid decree was sought by the the plaintiffs/decree-holders on 7.4.2001 under Order XXI rule 32 CPC. Service of Vatsa Corporation could not be effected, however, Karvy was represented before the learned Executing Court. During the course of execution proceedings, the application filed for stay of execution proceedings on various grounds raised by Karvy was not decided and bailable warrants of arrest of its officers were issued, Karvy filed a petition in this court challenging that order.
6. Prior to the passing of the aforesaid order, Karvy had filed an Civil Revision No. 2187 of 2006 [3] application before the Civil Court for setting aside of the ex-parte decree passed against it. The trial court dismissed that application and the Lower Appellate Court having upheld that order, the same have been impugned before this court by Karvy. The execution proceedings having been adjourned sine-die, the plaintiffs/decree-holders are also before this court. In this factual matrix, all the three petitions are required to be considered.
7. Learned counsel for the plaintiffs/decree-holders submitted that the learned Executing Court had gone wrong in adjourning the execution petition sine-die merely noticing that the arrest of Judgment- debtor has been stayed by this court and further no damages/ compensation could be awarded in case the decree remains unsatisfied as for the purpose the plaintiffs/decree-holders may have to file a fresh suit. It was further noticed in the order impugned that no steps have been taken against Vatsa Corporation. The submission is that Order XXI Rule 32 CPC (3) clearly provides that in case a decree remains uncomplied with, the court can always award compensation. In the present case though the account of Karvy was attached, they were even sought to be summoned through bailable warrants but still the decree remained uncomplied with. Hence, the court had jurisdiction to award compensation. In support of arguments, he relied upon judgment of Hon'ble the Supreme Court in Jai Dayal and others vs Krishan Lal Garg and another (1996) 11 Supreme Court Cases
588.
8. In response to the contentions raised by learned counsel for the plaintiffs/decree-holders and also in support of Civil Revision Nos. 2187 of 2006 and 748 of 2008, learned counsel for Karvy submitted that the decree in the present case is incapable of compliance. Karvy was earlier working as transfer agent for Vatsa Corporation, however, as Vatsa Corporation was not fair in its dealings, Karvy had left the work of Vatsa Corporation. Karvy is not at all involved in the present case. The share certificates were not submitted to Karvy by the plaintiffs/decree-holders. The aforesaid facts were brought to the notice of the plaintiffs/decree- holders in response to the legal notice issued by them and also by way of a communication sent to the Court. However, he did not dispute the fact that none had appeared on behalf of Karvy in the court. He further referred to Civil Revision No. 2187 of 2006 [4] the documents produced on record by the plaintiffs/decree-holders in support of the case set up by them to show that even on the basis thereof, no case was made out against Karvy.
9. He further submitted that a letter dated 20.6.1998 (Ex. P-71), written by Umesh Jain, one of the plaintiffs/decree-holders, to Vatsa Corporation, shows that 100 share certificates of 100 shares each were submitted in the office of Vatsa Corporation for transfer in January 1997, out of which 30 share certificates of 100 shares each were received by the transferees in January 1998. However, the remaining 70 share certificates of 100 shares each had not been returned back. On account of default of Vatsa Corporation, the plaintiffs/decree-holders even made a complaint on 24.6.1998 (Ex. P-72) to the Securities & Exchange Board of India, Mumbai (for short, 'the SEBI'), specifically naming Vatsa Corporation as the defaulter. A copy of the letter dated 20.6.1998 was annexed with the complaint giving the details. Reminder was sent to the SEBI on 16.8.1998 (Ex. P-74). It was for the first time in the legal notice dated 11.2.1999 (Ex. P-76) sent to Vatsa Corporation, that Karvy was also shown as one of the addressee. Even in that legal notice there is no specific allegation that the share certificates were ever sent to Karvy. The aforesaid legal notice was duly replied to by Karvy vide letter dated 16.2.1999 (Ex. P-80) clearly stating that Karvy was not the Registrars and Share Transfer Agents of Vatsa Corporation and the legal notice sent by the plaintiffs/decree-holders was forwarded to Vatsa Corporation under intimation to counsel for the plaintiffs/decree-holders. He further submitted that after receipt of notice dated 12.8.1999 from the court, a communication was sent to the court mentioning that Karvy was no more Registrars and Transfer Agents for Vatsa Corporation and was unable to file reply with regard to the allegations made in the plaint and the name of Karvy be struck off from the memo of parties.
10. Referring to the aforesaid contentions, it was argued that except the aforesaid documents and copies of the share certificates, which were sent for transfer by the plaintiffs/decree-holders, no evidence was led in the trial court showing that the share certificates were ever sent to Karvy for transfer. In the absence thereof, the learned court below could not have Civil Revision No. 2187 of 2006 [5] decreed the suit against Karvy. Even if the defendants were proceeded against ex-parte, the plaintiffs were to stand on their own legs and prove their case beyond doubt.
11. As far as prayer for setting aside of the ex-parte decree dated 1.12.2000 passed by the learned court below is concerned, it was submitted that the service of Karvy in the suit was not effected in terms of the procedure provided in the CPC. The summons were not sent through the process serving agency of the court and only sent through registered post, which cannot be held to be a valid service and Karvy could not have been proceeded against ex-parte.
12. In response to the aforesaid submissions made by learned counsel for Karvy regarding ex-parte proceedings, learned counsel for the plaintiffs/decree-holders submitted that once intimation about the filing and pendency of the suit against Karvy had been given to it by adopting any mode and the same was duly acknowledged by it, it cannot be accepted that Karvy could not be proceeded against ex-parte merely because the summons were not served through the court. He further submitted that immediately after passing of the judgment and decree by the civil court on 1.12.2000, a legal notice was sent to Karvy on 30.1.2001, which was even replied to by it on 5.2.2001. It shows that the judgment and decree passed by the learned court below against it was well within its knowledge. The ex-parte judgment and decree was passed on 1.12.2000 and the application for setting aside that decree was filed on 21.11.2005, which was dismissed as hopelessly time barred. Hence, no illegality has been committed by the learned court below in dismissing the application.
13. Heard learned counsel for the parties and perused the relevant referred record.
14. Taking up the petition filed by Karvy challenging the order passed by the learned court below dismissing the application filed for setting aside of the ex-parte decree first, the case set up by Karvy is that as there was no proper service of notice in terms of the provisions as provided in CPC, Karvy could not be proceeded against ex-parte. Once that order goes, all subsequent proceedings namely passing of ex-parte decree and orders passed in execution proceedings also fall. However, the Civil Revision No. 2187 of 2006 [6] fact that a notice dated 12.8.1999 was served upon Karvy by registered post intimating about pendency of the suit and a letter written by it to the Court that Karvy was no more working as Registrars and Transfer Agents for Vatsa Corporation, shows that filing and pendency of the suit against it was in its knowledge. Merely because the notice had not been served through the process of the court will not be material as the object is to intimate any party to the litigation about its pendency.
15. The application for setting aside of the ex-parte decree was filed raising the plea that Karvy came to know about the passing of the ex- parte decree against it when it received letter dated 29.9.2005 from HDFC Bank intimating it that the account of Karvy has been attached by the court order in execution proceedings. Immediately thereafter, the application was filed for setting aside of the ex-parte decree in execution of which the bank account of Karvy was attached. Though learned counsel for the plaintiffs/decree-holders has submitted that intimation about the passing of the ex-parte decree dated 1.12.2000 was sent to Karvy by way of notice on 30.1.2001 and in response thereto, reply had been received on 5.2.2001, but there is no document produced on record before the learned court below showing the aforesaid two communications.
16. As far as the merits of the controversy are concerned, in support of the submissions for setting aside of the ex-parte decree, learned counsel for Karvy has referred to the pleadings and evidence produced on record by the plaintiffs/decree-holders, on the basis of which ex-parte decree was passed. The dispute is pertaining to the 70 share certificates of 100 shares each allegedly sent by the plaintiffs/decree-holders to Vatsa Corporation, which were not received back by the plaintiffs/decree-holders after these were submitted for transfer. Out of the total 100 share certificates of 100 shares each, only 30 share certificates of 100 shares each were received back duly transferred. A letter dated 20.6.1998 (Ex. P-
71), written by Umesh Jain, one of the plaintiffs/decree-holders to Vatsa Corporation shows that 100 share certificates of 100 shares each were submitted in the office of Vatsa Corporation in January 1997 for transfer, which were duly acknowledged. Name of Karvy was no where in the picture. The complaint was made to SEBI on 24.6.1998 (Ex. P-72) Civil Revision No. 2187 of 2006 [7] specifically naming Vatsa Corporation as a defaulter. A copy of the letter dated 20.6.1998 was also annexed with the complaint. Ex. P-74 is a reminder sent to the SEBI on 16.8.1998 with reference to the complaint dated 24.6.1998. This also does not mention about receipt of shares by Karvy for transfer. Legal notice dated 11.2.1999 (Ex. P-76) was sent by the plaintiffs/decree-holders to Vatsa Corporation and also to Karvy. The contents of the notice also do not show any specific allegation regarding the share certificates having been sent to or received by Karvy. It only states that the plaintiffs/decree-holders had sent shares in January 1997 for transferring the same in their names. The aforesaid notice was duly replied by Karvy vide letter dated 16.2.1999 (Ex. P-80) addressed to counsel for the plaintiffs/decree-holders specifically stating therein that Karvy is not the Registrars and Share Transfer Agents of Vatsa Corporation. It was requested that the correspondence be addressed to Vatsa Corporation Limited. The legal notice sent by the plaintiffs/decree-holders was forwarded to Vatsa Corporation under intimation to counsel for the plaintiffs/decree-holders. After receipt of notice dated 12.8.1999 from the court, a communication was sent to the court mentioning that Karvy was not acting as Registrars and Transfer Agents for Vatsa Corporation. The prayer was made for striking off its name from the memo of parties.
17. Due to non-appearance of the defendants in the suit, they were proceeded against ex-parte. What was produced by the plaintiffs/decree- holders in evidence was the copies of share certificates, Ex. P-1 to P-70, letter dated 20.6.1998 (Ex. P-71), addressed to Vatsa Corporation, copy of complaint dated 24.6.1998 to SEBI (Ex. P-72), acknowledgment of the complaint by SEBI (Ex. P-73), reminder by the complainant to the SEBI on 16.8.1998 (Ex. P-74), acknowledgment to the aforesaid reminder by SEBI (Ex. P-75), legal notice dated 11.2.1999 (Ex. P-76) sent by the plaintiffs/decree-holders through counsel to Vatsa Corporation and Karvy, postal receipts and acknowledgments as Ex. P-77 to Ex. P-79. Reply to the notice given by Karvy vide letter dated 16.2.1999 (Ex. P-80).
18. In the oral evidence led before the court below, Umesh Jain has appeared as PW1. It was submitted that the 100 share certificates of 100 share each were sent to Karvy which is the Transfer Agent of Vatsa Civil Revision No. 2187 of 2006 [8] Corporation in January 1997 through courier. Out of which 30 share certificates of 100 shares each were received back duly transferred, however, the balance 70 share certificates of 100 shares each were not received back. The numbers thereof were mentioned. Copies of the share certificates were produced. It was stated that despite number of requests, the balance share certificates were not sent back duly transferred. Reference was made to letter dated 20.6.1998, complaint made to SEBI, its acknowledgment, reminder sent to the SEBI with its acknowledgment and the legal notice got issued by the plaintiffs/decree-holders. The aforesaid oral statement made by PW1 Umesh Jain before the learned court below was not in line with the documents produced in evidence. No document which was produced on record showing that the certificates were ever sent to Karvy and the same were acknowledged. It was not even the case in the initial complaint made to Vatsa Corporation or in the legal notice. The response of Karvy to the notice was produced on record before the court below by the plaintiffs and also a communication sent by Karvy in response to the notice in the suit intimating that Karvy was not the transfer agent for the Vatsa Corporation. No doubt, there was no written statement filed in the court but the aforesaid facts and circumstances of the case and the material produced on record by the plaintiffs/decree-holders and a letter written to the court shows that Karvy had the knowledge about the pendency of the suit against it.
19. The plaintiffs/decree-holders had approached the court claiming relief. Even if the defendants were proceeded against ex-parte, the plaintiffs had to make out a case against the defendants impleaded in the suit for the relief claimed. They had to stand on their own legs. Courts cannot act blindly merely because no written statement has been filed. Necessity of proof by the plaintiff of his case to the satisfaction of the court cannot be dispensed with. Though in a case where the defendant is ex-parte, the court is not bound to frame issues, yet it is duty bound to consider the pleadings and the evidence produced on record and consider the contentions raised in detail. Courts have to be more careful in passing decrees where the defendants are proceeded against ex-parte. In a case where there are more than one defendants, the role of each one need to be Civil Revision No. 2187 of 2006 [9] examined before passing a decree. Question of limitation is another aspect which requires careful scrutiny.
20. The issue as to the manner in which the court has to deal with the cases where the defendants are ex-parte has been gone into by Hon'ble the Supreme Court in Balraj Taneja v. Sunil Madan, 1999(8) SCC 396. Paragraph 29 thereof is extracted below:
"29. As pointed out earlier, the Court has not to act blindly upon the admission of a fact made by the defendant in his written statement nor the court should proceed to pass judgment blindly merely because a written statement has not been filed by the defendant traversing the facts set out by the plaintiff in the plaint filed in the court. In a case, specially where a written statement has not been filed by the defendant, the court should be a little cautious in proceeding under Order 8 Rule 10 CPC. Before passing the judgment against the defendant it must see to it that even if the facts set out in the plaint are treated to have been admitted, a judgment could possibly be passed in favour of the plaintiff without requiring him to prove any fact mentioned in the plaint. It is a matter of court's satisfaction and, therefore, only on being satisfied that there is no fact which need be proved on account of deemed admission, the court can conveniently pass a judgment against the defendant who has not filed the written statement. But if the plaint itself indicates that there are disputed questions of fact involved in the case regarding which two different versions are set out in the plaint itself, it would not be safe for the court to pass a judgment without requiring the plaintiff to prove the facts so as to settle the factual controversy. Such a case would be covered by the expression "the court may, in its discretion, require any such fact to be proved" used in sub-rule (2) of Rule 5 of Order 8, or the expression "may make such order in relation to the suit as it thinks fit" used in Rule 10 of Order 8."Civil Revision No. 2187 of 2006 [10]
21. In Ramesh Chand Ardawatiya v. Anil Panjwani, 2003(7) SCC 350, Hon'ble the Supreme Court opined as under:
"33. ....Even if the suit proceeds ex-parte and in the absence of a written statement unless the applicability of Order 8 Rule 10 of the CPC is attracted and the court acts thereunder, the necessity of proof by the plaintiff of his case to the satisfaction of the court cannot be dispensed with. In the absence of denial of plaint averments the burden of proof on the plaintiff is not very heavy. A prima facie proof of the relevant facts constituting the cause of action would suffice and the court would grant the plaintiff such relief as to which he may in law be found entitled. In a case which has proceeded ex-parte the court is not bound to frame issues under Order 14 and deliver the judgment on every issue as required by order XX rule 5. Yet the trial court would scrutinize the available pleadings and documents, consider the evidence adduced, and would do well to frame the `points for determination' and proceed to construct the ex-parte judgment dealing with the points at issue one by one. Merely because the defendant is absent the court shall not admit evidence the admissibility whereof is excluded by law nor permit its decision being influenced by irrelevant or inadmissible evidence."
22. Vatsa Corporation, whose shares are in dispute, which were sent by the plaintiffs/decree-holders for transfer neither appeared in the suit nor in the execution proceedings. It was pointed out at the time of hearing that the company had been closed.
23. No doubt Karvy had the knowledge about the pendency of the suit against it. Still it had chosen not to appear but sent a communication to the court. The knowledge about the passing of the decree is sought to be claimed through a communication from the HDFC Bank where the account of Karvy has been attached by the court in execution proceedings. Immediately thereafter, the application for setting aside of the ex-parte decree was filed. Both the courts below having found the application filed after thirty days from the date of passing of the decree, dismissed the same Civil Revision No. 2187 of 2006 [11] being time barred. However, considering the totality of the facts and circumstances of the case, as referred to above, in my opinion, the ex-parte judgment and decree dated 1.12.2000 deserves to be set aside. But keeping in view unnecessary harassment to the plaintiffs/decree-holders and also wasting the time of the court, Karvy is burdened with costs of ` 50,000/-. Payment of costs shall be a condition precedent for setting aside of the ex- parte decree. The costs shall be paid to the plaintiffs/decree-holders on the first date of hearing when the parties appear before the Civil Judge (Senior Division), Hisar. The parties are directed to appear before the Civil Judge (Senior Division) on 17.3.2012 for further proceedings, who may either keep the suit with him or entrust the same to any other court. Endeavour should be made for its early disposal.
24. In view of the setting aside of the ex-parte decree against Karvy, the prayer made in other revision petitions has become infructuous. The same are dismissed as infructuous.
25. Nothing observed herein shall be construed as an expression of opinion on the merits of the controversy. The learned court below shall decide the case on the basis of evidence and material produced before it.
1.2.2012 (Rajesh Bindal)
vs/mk Judge
(Refer to Reporter)