Madras High Court
M/S.Shivsu Canadian Clear ... vs Freightcan Global Logistics Private ... on 10 April, 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 10.04.2013 Coram The Honourable Mr.Justice S.NAGAMUTHU C.R.P.(NPD) No. 97 of 2013 and M.P.Nos.1 and 2 of 2013 M/s.Shivsu Canadian Clear International Limited Shivsu Towers No.149, EVR Lane Kilpauk Chennai-600 010 Represented by its Director. ... Petitioner -vs- Freightcan Global Logistics Private Limited Rep. by its Managing Director Mr.Arun K.Nair No.41, 3rd Floor Thambusamy Road Kilpauk Chennai-600 010. ... Respondent Civil Revision Petition filed under Article 227 of the Constitution of India against the order dated 10.10.2012 passed in I.A.No.13159 of 2012 in O.S.No. 3413 of 2012 on the file of XVII Assistant Judge, City Civil Court, Chennai. For Petitioner : Mr.P.R.Raman For Respondent : Mr.P.Giridharan * * * O R D E R
The primary question involved in this revision filed under Article 227 of the Constitution of India is, "Whether the right of appeal against a decree to be passed consequent upon the dismissal of an Interlocutory Application under Order 37 Rule 3 (5) of C.P.C., thereby, declining to grant leave to defend is a bar for the aggrieved defendant to challenge the said order by way of revision ?". The facts leading to this revision are thus.
2. The petitioner is the defendant in O.S.No.3413 of 2012 on the file of the learned XVII Assistant Judge, City Civil Court, Chennai. The respondent is the plaintiff in the suit. The respondent has filed the said suit under Order 37 Rule 1 to 3 of the Code of Civil Procedure, as a summary suit for recovery of a sum of Rs.5,21,691/-, with interest at the rate of 18% per annum from the defendant. On service of summons, the petitioner/defendant appeared before the lower Court and filed an Interlocutory Application in I.A.No. 13159 of 2012, seeking leave to defend the suit. The lower Court, by an order dated 10.10.2012, dismissed the said Interlocutory Application. Challenging the same, the petitioner/defendant is before this Court with this Civil Revision Petition under Article 227 of the Constitution of India.
3. According to the plaint, the plaintiff is carrying on business as cargo consolidators, clearing and forwarding agents and logistics providers. In the course of business, according to the plaintiff, the plaintiff was nominated as forwarder by one M/s. Fruitta-Life Beverages, having its office at No.1, Samuel Adedoyin Street, Lekki, Lagos, Nigeria, to arrange for the shipment of cargo manufactured by the defendant. For the purpose of shipping the cargo from the defendant's office in Chennai to the office of M/s. Fruitta-Life Beverages, Nigeria, the plaintiff was to supply the containers to the defendant and the defendant was obligated to stuff the cargo in the containers and thereafter, complete all the other formalities within a period of seven days. It is further contended in the plaint that on 30.07.2011, as requested by the defendant by E-Mail message dated 25.07.2011, two containers were sent for stuffing. But, the defendant took more than seven days to complete the stuffing and other formalities and therefore, the defendant is liable to pay the detention charges as per the detention rates stated hereinbelow:-
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S.No No. of Days Charges in $ per day Charges in $ per day for 20 FT FR for 40 FT GP
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1 0-7 days Free Free
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2 Next 5 days 17 8.50
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3 Next 5 days 27 13.50
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4 Next 5 days 35 17.50
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5 Thereafter 96 48
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According to the plaintiff, the above are the terms and conditions relating to detention charges for detaining the containers for stuffing beyond seven days. There were also E-Mail exchanges in respect of the delay. It is further stated that the containers were made ready to be picked up by the plaintiff from the factory of the defendant on 24.09.2011 and the same were subsequently exported to M/s. Fruitta-Life Beverages, Nigeria. Thus, for the above said period of delay, as per the plaint, the defendant is liable to pay the detention charges to the tune of Rs.4,68,938.35.
4. In the Interlocutory Application filed before the lower Court seeking leave to defend the suit, the defendant submitted that there was no such agreement at all, either oral or written, under which, the defendant agreed to pay the detention charges. The defendant has further submitted that the following issues are involved in the suit, which are required to be tried.
i.Whether the plaintiff can file a suit in the absence of any written contract or oral with the defendant ?
ii.Whether the plaintiff can file a suit against this defendant when the plaintiff was appointed by a third party for the said work ?
iii.In the absence of any privity of contract between plaintiff and the defendant whether a suit is maintainable under Order XXXVII Rule 1 of C.P.C. ?
iv.Whether there is any agreement for interest between the plaintiff and defendant ?
v.Whether the document filed along with the plaint can be treated as a written contract or agreement in the absence of the signature of this defendant ?
Rejecting the above contentions of the petitioner/defendant, the lower Court dismissed the Interlocutory Application, thereby, declining to grant leave to defend. That is how, the petitioner is before this Court with this Civil Revision Petition.
5. I have heard the learned counsel on either side and I have also perused the records carefully.
6. At the outset, the learned counsel for the respondent/plaintiff raised a preliminary objection regarding the maintainability of the revision itself. According to him, under Order 37 Rule 3 (5) of C.P.C., when the request for leave to defend the suit is rejected, passing of decree automatically follows. He would further submit that once such a decree is passed in favour of the plaintiff as prayed for, then the only remedy available for the defendant is to file an appeal. According to the learned counsel, since, there is a remedy of appeal available to the defendant, he is not entitled to file a revision. The learned counsel further submitted that, in the case on hand, subsequent to the impugned order, decree has been passed by the trial Court and thus, the petitioner/defendant has got right of appeal and therefore, this revision is not at all maintainable. In order to substantiate the said contention, the learned counsel for the respondent placed reliance on a judgment of the Hon'ble Supreme Court in Ajay Bansal vs. Anup Mehta and Others, reported in (2007) 2 Supreme Court Cases 275 and a judgment of the Delhi High Court in V.S.Saini and others vs. D.C.M. Limited, reported in 2004 (74) DRJ 65.
7. But, the learned counsel appearing for the petitioner/defendant would submit that the petitioner has got right to file a revision before this Court, that too under Article 227 of the Constitution of India. According to him, an order made under Order 37 Rule 3 (5) of C.P.C., declining to grant leave to defend the suit, can be challenged either under Article 227 of the Constitution of India or under Section 115 of C.P.C. He would further submit that, though, it is true that passing of a decree in favour of the plaintiff follows automatically on the dismissal of the Interlocutory Application filed under Order 37 Rule 3 (5) of C.P.C., such a decree passed will not be a bar for the petitioner/defendant to challenge the order of the trial Court declining to grant leave to defend the suit. According to him, the right of appeal as against the decree is an independent right, which has got nothing to do with the right of the petitioner/defendant to challenge the order of the trial Court declining to grant leave. In order to substantiate his contention, the learned counsel has relied on the judgment of the Hon'ble Supreme Court in Wada Arun Asbestos Private Limited vs. Gujarat Water Supply and Sewerage Board, reported in (2009) 2 Supreme Court Cases 432 and a judgment of the learned Single Judge of this Court in G.Rajarajan vs. AIG Consumer Financial Services (India) Limited, reported in 2012 (2) MWN (Civil) 785.
8. I have considered the above submissions.
9. Admittedly, there is no appeal provided for in the Code of Civil Procedure as against an order made under Order 37 Rule 3(5) of C.P.C. Now, the question is as to whether an order made under the said provision can be subjected to revision under Section 115 of C.P.C. and whether the party aggrieved by such an order can invoke the jurisdiction of this Court under Article 227 of the Constitution of India.
10. Of course, it is true that after the dismissal of the Interlocutory Application filed under Order 37 Rule 3(5) of C.P.C. what follows is a decree against the defendant. There is also no controversy that such a decree passed is appealable and the party aggrieved has got right of appeal. Now, the controversy is whether the right of such appeal against the decree can be a bar for the defendant to challenge the order declining to grant leave to defend the suit made under Order 37 Rule 3(5) of C.P.C.
11. In this regard, we may read the judgment of the Hon'ble Supreme Court in Ajay Bansal's case (cited supra), upon which much reliance has been placed by the learned counsel for the respondent. In this case, though, a question arose, as to whether an independent challenge could be made to an order made under Order 37 Rule 3(5) of C.P.C., under the provisions of the Constitution of India under Article 226 and 227, the said question was not at all gone into by the Hon'ble Supreme Court. We are able to find the same in paragraph No. 17 of the said judgment. In paragraph No.17 of Ajay Bansal's case (cited supra), the Hon'ble Supreme Court has made the following observations:-
"17. A contentious issue viz., maintainability of writ petition without challenging the decree has been raised. We, however, in this case, do not intend to go into the said issue, inter alia, for the reason that the learned Judge has not assigned any reason in support of the impugned judgment..." (emphasis supplied) In view of the above categorical statement made by the Hon'ble Supreme Court in paragraph No.17 of the judgment that the Supreme Court did not go into the question of maintainability, this judgment cannot be taken as a judgment laying down the law that such a challenge against the order made under Order 37 Rule 3(5) of C.P.C., cannot be entertained by the High Court under Article 227 of the Constitution of India.
12. The learned counsel appearing for the respondent would rely on paragraph Nos. 13 and 14 of the judgment of Ajay Bansal's case (cited supra), wherein, the Hon'ble Supreme Court has held as follows:-
"13. Ordinarily, an application under Article 227 of the Constitution of India would not be maintainable where an appeal lies. An appeal lay from the decree under Section 96 of the Code. When an appeal could be filed, ordinarily, an application under Article 227 of the Constitution of India would not be entertained.
14. A decree passed subsequent to the refusal of leave to defend could either be under Order 37 Rule 3(6) of the Code or it could be based on the affidavit evidence on the side of the plaintiff and the documents produced or even based on oral evidence formally proving, say, the execution of a promissory note by the defendant. It may not be proper or necessary to apply the theory of "dependent order" in such circumstances. For one, the theory may not apply. Even if this Court were to set aside the order of the court below and give the defendant leave to defend the suit, the decree that is passed may not go automatically. It may have to be set aside. Secondly, the defendant can always go to the court which passed the decree and move under Rule 4 of Order 37 of the Code to reopen the decree".
13. A reading of the above paragraphs would go to show that the Hon'ble Supreme Court has not at all held in these paragraphs that the party aggrieved by an order of the trial Court declining to grant leave has got no remedy to approach the High Court under Article 227 of the Constitution of India. What the Hon'ble Supreme Court has held in this judgment is that in the event, there is dismissal of the application filed by the defendant seeking leave to defend, then passing of decree as prayed for is almost automatic. After holding so, the Hon'ble Supreme Court went on to examine the question as to whether such decree will stand set aside automatically in the event, in exercise of the power under Article 227 of the Constitution of India, the High Court sets aside the order made under Order 37 Rule 3(5) of C.P.C. In this regard, the Hon'ble Supreme Court had extensively gone into the applicability of the theory of "dependent order".
14. It is needless to point out that applying the theory of "dependent order", normally, if once the first order is set aside by the Court, then, it is axiomatic that all the consequential orders, which are "dependent orders" shall stand set aside. In this judgment, the Hon'ble Supreme Court has stated that though, a decree passed in a summary suit after the dismissal of the application under Order 37 Rule 3(5) of C.P.C. is a "consequential order"; that will not automatically stand set aside, because, it is for the defendant to approach the trial Court with an application under Order 37 Rule 4 of C.P.C., to reopen the decree. This is consequential. Therefore, the Hon'ble Supreme Court has only declared that the theory of "dependent order" is not applicable to a decree passed in pursuance of the dismissal of the application filed under Order 37 Rule 3 (5) of C.P.C. In this judgment, the Hon'ble Supreme Court has not at all held that after the dismissal of an application under Order 37 Rule 3(5) of C.P.C., the defendant has to wait until a decree is passed and then to file an appeal against the decree. Of course, the Hon'ble Supreme Court has held that such remedy is also available for the defendant and in the event, the defendant waits till the decree is passed and prefers an appeal, he can very well raise the grounds upon which he could challenge the order declining to grant leave to him to defend the suit. Therefore, this judgment cannot be understood in such a way to hold that the Hon'ble Supreme Court has declared that the party aggrieved by an order declining to grant leave to defend the suit has got no remedy at all to approach the High Court under Article 227 of the Constitution of India. 15. The learned counsel for the respondent would nextly rely on the judgment of a learned Single Judge of Delhi High Court in V.S.Saini and others vs. D.C.M. Limited, reported in 2004 (74) DRJ 65. I have carefully gone through the said judgment. I find it very difficult to subscribe to the view taken in the said judgment. My reasons follow.
16. The Hon'ble Supreme Court in Wada Arun Asbestos Private Limited vs. Gujarat Water Supply and Sewerage Board, reported in (2009) 2 Supreme Court Cases 432, had an occasion to consider the issue in extenso. In this case, the earlier judgment of the Hon'ble Supreme Court in Ajay Bansal's case [reported in (2007) 2 Supreme Court Cases 275)] discussed above, was also referred to. The exact question before the Hon'ble Supreme Court in this case could be noticed in paragraph No.16 of the judgment, wherein, the Hon'ble Supreme Court has observed as follows:-
"16. It is in the aforementioned backdrop, the question as to whether a revision petition was maintainable against an order granting conditional leave must be considered. We will proceed on the basis that an order imposing a conditional leave to defend the suit was a jurisdictional question and, thus, a revision application would be maintainable as has been held by various high Courts, notable amongst them are New Ashapuri Coop. Housing Society Ltd. v. Arvindkumar Manilal Patel (AIR 1975 Gujarat 76), Fateh lal v. Sunder Lal (AIR 1980 Rajasthan 220), Modi Ram v. Sugan Bai (AIR 2005 Rajasthan 12) and A.K.Velan v. Narayanan and Co. (P) Ltd. (AIR 1972 Madras 118). (emphasis supplied)
17. But if a right of appeal from the decree is conceded to a defendant, in our opinion, he cannot be denied a right to challenge an order which was subject to revision in his memorandum of appeal filed from the decree ultimately passed." (emphasis supplied)
17. After having a detailed discussion and after having referred to a number of judgments, including Ajay Bansal's case (cited supra) in paragraph No.22, the Hon'ble Supreme Court has declared the law as follows:-
"22. A statutory right conferred on a litigant cannot ordinarily be taken away. A civil revision application might have been maintainable as against the order dated 27.11.2002 granting conditional leave.The said remedy was also available where leave to defend a suit is refused. Leave to defend a suit, as noticed hereinbefore, should ordinarily be granted. It was, therefore, permissible for the defendant to raise the said contention in the appeal although it had asked for time to comply with the conditions.
(emphasis supplied)
18. The learned counsel for the petitioner would further rely on the judgment of a learned Single Judge (Hon'ble Justice K.Ravichandra Baabu) of this Court in G.Rajarajan vs. AIG Consumer Financial Services (India) Limited, reported in 2012(2) MWN (Civil) 785, wherein also, this Court has taken a similar view. Yet another judgment of a learned Single Judge of this Court in Praveenkumar Vs. The Honghong and Shanghai Banking Corporation Limited reported in 2013 (1) MWN (Civil) 213 has also been brought to my notice. In that case also, the question of maintainability of a revision as against an order made under Order 37 Rule 3(5) came up for consideration. The learned Judge has referred to the judgment in Ajay Bansal Vs. Anup Mehta of the Honble Supreme Court referred to above and V.S.Saini Vs. D.C.M. Ltd., of the Delhi High Court referred to above. After having considered these two judgments, in paragraph 53, the learned Judge finally held:
53. In view of the ratio laid down in the above cited decision, when the appeal is maintainable against the dismissal of the leave to defend the suit petition under Section 96, C.P.C., the revision petition under Section 115, C.P.C. is not maintainable.
19. But unfortunately, the subsequent judgment of the Honble Supreme Court in Wada Arun Asbestos Private Limited Vs. Gujarat Water Supply and Sewerage Board, reported in (2009) 2 SCC 432 was not brought to the notice of the learned Judge. As I have pointed out, in the said case, the Honble Supreme Court, after having considered the judgment in Ajay Bansal's case, has ultimately held, in paragraph 17 and 22 (as extracted above), that a civil revision application is maintainable under Section 115 of the Code of Civil Procedure. I am sure, had this judgment of the Honble Supreme Court in Wada Arun Asbestos Private Limited (cited supra) been brought to the notice of the learned Judge, the conclusion of the learned Judge would have been different. Above all, an order of dismissal of a request for leave to defend is not an appealable order under the Code of Civil Procedure. In view of the law declared by the Honble Supreme court in Wada Arun Asbestos Private Limited case (cited supra), with respect, I regret to state that the view taken in Praveenkumar's case (cited supra) is per incuriam.
20. In my considered opinion, the law on the subject has been very clearly and clinchingly declared by the Hon'ble Supreme Court in the case in Wada Arun Asbestos Private Limited vs. Gujarat Water Supply and Sewerage Board, reported in (2009) 2 Supreme Court Cases 432. If one reads this judgment along with the judgment of the Hon'ble Supreme Court in Ajay Bansal's case (reported in (2007) 2 Supreme Court Cases 275) (cited supra), what emerge are as follows:-
i.After the dismissal of the application filed under Order 37 Rule 3(5) of C.P.C., thereby, declining to grant leave to defend the suit, what follows is a decree, which is almost automatic.
ii.The defendant in such a situation need not wait until a decree is passed. He has got every right to challenge the said order either under Article 227 of the Constitution of India or under Section 115 of C.P.C. before this Court.
iii.It is also available for the defendant to wait till the decree is passed and thereafter, to challenge the decree by means of an appeal, in which case, in the appeal itself, he can also challenge the order made by the trial Court declining to grant leave to defend the suit.
iv.Simply because, a decree has been passed by the trial Court after the dismissal of the application under Order 37 Rule 3(5) of C.P.C., the right of the defendant to challenge such an order before this Court will not be taken away.
v.In the event, such an order made under Order 37, Rule 3(5) of CPC is set aside in the revision, the decree passed in the suit shall not stand automatically set aside as the theory of dependent order is not applicable and so, it is for the defendant to approach the trial court under Order 37, Rule 4 of CPC to reopen the decree.
21. As per the proviso to Section 115 (1) of C.P.C., which was introduced by means of amendment, a revision shall not be entertained by this Court, if the order under challenge does not finally dispose of the suit or other proceedings. In this case, the dismissal of the application seeking leave to defend the suit, not only, disposes of the defence available to the defendant, but also, finally disposes of the suit, because, according to the Hon'ble Supreme Court, passing a decree is automatic. In view of the above legal position, I hold that the aggrieved defendant has got right of revision under Section 115 of C.P.C., because, it terminates the proceedings in its entirety and he can also approach the High Court under Article 227 of the Constitution of India. Hence, I hold that the present revision is maintainable.
22. Next, coming to the merits of the revision, as per the plaint, the detention charges are to be paid by the defendant as per the terms and conditions. But, according to the defendant, there was neither an oral agreement nor any written agreement, under which, the terms and conditions were agreed upon, by which, the detention charges are to be paid by the defendant. This, in my considered opinion, is really a contentious issue. Apart from that, in the plaint, the interest at the rate of 18% per annum is also prayed for. But, there is no averment any where in the plaint as to how the plaintiff is entitled for interest, that too, at the rate of 18% per annum. This is yet another contentious issue. There is also a question as to who is responsible for the detention of the containers. Whether it is the defendant or the owner of the goods, who caused the delay is also a contentious issue. Thus, there are number of contentious issues, which are to be resolved only on evidence to be let in by the parties. As has been held by the Hon'ble Supreme Court in the judgment in Mechelee Engineers & Manufacturers vs. Basic Equipment Corporation, reported in AIR 1977 SC 577, only in cases where defence is patently dishonest or so unreasonable that it could not reasonably be expected to succeed that exercise of discretion by Trial Court to grant leave unconditionally may be questioned. In the case on hand, it cannot be stated that the defence is either not available or the defence is dishonest or totally baseless. Therefore, the lower Court ought to have granted leave to the petitioner/defendant and the lower Court ought to have allowed the parties to let in evidence to resolve the issues between them.
23. In view of all the above, this Civil Revision Petition is allowed. The impugned order of the lower Court dated 10.10.2012 is set aside and unconditional leave is granted to the defendant to defend the Suit. Consequently, the connected Miscellaneous Petitions are closed. No costs.
24. After the order was dictated, the learned counsel for the respondent/plaintiff submitted that atleast there may be a direction issued to the petitioner/defendant to file the written statement and consequently, there may be a direction to the lower Court to dispose of the suit as expeditiously as possible.
25. I find justification in the above submission. Therefore, I am inclined to direct the petitioner/defendant to file the written statement within a period of four weeks after getting the decree reopened by filing an appropriate application under Order 37 Rule 4 of C.P.C. and thereafter, the trial Court shall dispose of the suit in O.S.No. 3413 of 2012, as expeditiously as possible.
paa To
1. The XVII Assistant Judge City Civil Court Chennai