Gujarat High Court
Salil Dinkarlal Gandhi vs Gandevi Peoples Cooperative Bank Ltd ... on 22 March, 2024
NEUTRAL CITATION
C/AO/46/2019 ORDER DATED: 22/03/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/APPEAL FROM ORDER NO. 46 of 2019
With
CIVIL APPLICATION (FOR STAY) NO. 2 of 2018
In R/APPEAL FROM ORDER NO. 46 of 2019
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SALIL DINKARLAL GANDHI
Versus
GANDEVI PEOPLES COOPERATIVE BANK LTD GANDEVI THRU
CHAMPAKBHAI R MALI
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Appearance:
MR MEHUL S SHAH FOR THAKKAR AND PAHWA ADVOCATES(1357) for
the Appellant(s) No. 1
MR TARAK DAMANI(6089) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 22/03/2024
ORAL ORDER
1. The present Appeal From Order is filed by the appellant - original defendant No.10 by challenging the impugned order dated 02.02.2010 passed by the learned Principal Civil Judge, Gandevi dismissing Misc. Civil (Restoration) Application No.6 of 2009 whereby the application preferred by the appellant under the provisions of Order IX Rule 13 of the Code of Civil Procedure seeking for setting aside ex-parte decree has been dismissed and by the said Appeal From Order, the appellant has also challenged the impugned judgment and order dated 08.10.2015 passed by the learned Page 1 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined Principal District Judge, Navsari whereby the present appellant had filed Misc. Civil Appeal No.8 of 2010 challenging the order dated 02.02.2010, which ultimately was dismissed.
2. Heard Mr. Mehul Shah, the learned Senior Counsel for Thakkar And Pahwa Advocates for the appellant and Mr. Tarak Damani, the learned counsel for the respondent.
3.1 Mr. Mehul Shah, the learned Senior Counsel for Thakkar And Pahwa Advocates for the appellant the impugned order passed by the court below is illegal, unjust, unreasonable, contrary to law and facts and is therefore, liable to be quashed and set aside. Furthermore, he has submitted that the court below has erred in not appreciating that the suit amount pertains to the transactions of the year 1999, when the appellant was not a Director in the Company. Furthermore, he has submitted that the court below erred in not appreciating that the appellant was appointed only as Additional Director for the period from 15.5.2001 to 15.5.2002 without any remuneration. The appellant was not in Page 2 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined charge and responsible for the day to day affairs of the company. Furthermore, he has submitted that the court below erred in not appreciating that the appellant retired on 15.5.2002 even before the summons of the suit was served by public notice and thereafter under bonafide impression and assurance given by other defendant Directors that they will contest and defend the suit, the appellant could not put up the defence separately. Furthermore, he has submitted that the court below has failed to appreciate the bonafide and plausible reasons made out by the appellant in restoration application for setting aside the ex-parte judgment and decree qua the appellant. Furthermore, he has submitted that the court below has erred in not appreciating that by giving opportunity to the appellant to put forth his defence that he was not liable for the suit amount as he was not even appointed as a Director when the suit transactions took place in the year 1999. Furthermore, he has submitted that the court below ought to have restored the suit by setting aside the ex-parte judgment and decree as it would not cause any prejudice to the plaintiff, whereas by not restoring the suit, serious prejudice and irreparable loss is caused to the appellant Page 3 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined as the appellant is held jointly and severally liable though in fact, the appellant is not liable as he was not in charge and responsible for the dealings of the Company. Furthermore, he has submitted that the court below has erred in not appreciating that even Security and Exchange Board of India has in the proceedings u/s. 11 and 11(b) of the Act specifically held that the appellant was appointed only for a short period of 1 year and was not liable for abdication of duties, liabilities and obligations of the Company. Furthermore, he has submitted that even otherwise the impugned order passed by the learned Judge is unreasonable, unjust, improper and bad in the eye of law and therefore, the same deserves to be quashed and set aside and the appeal deserves to be allowed.
3.2 In support of his submissions, he has relied upon following judgments:
(i) Robin Thapa vs. Rohit Dora reported in (2019) 7 SCC 359, more particularly, paragraphs 7 to 12 are relevant.
(ii) The Commissioner, Mysore, Urban Development Page 4 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined Authority vs S.S. Sarvesh reported in (2019) 5 SCC 144, more particularly, paragraphs 16 to 20 are relevant.
4.1 Mr. Tarak Damani, the learned counsel for the respondent has submitted that the present proceedings have been initiated by the appellant under Order 43 of the Code of Civil Procedure, which even otherwise are neither maintainable nor tenable in the facts of the present case. Even otherwise the appellant herein has not approached this Court with clean hands and has suppressed material facts from this Court and thereby even on the said ground itself the Appeal From Order preferred by the appellant deserves to be dismissed with costs. Furthermore, he has submitted that all the averments, allegations and contentions as raised by the appellant in his present Appeal From Order are deemed to have been denied by me unless and until the same is specifically admitted hereinafter.
4.2 Furthermore, he has submitted that before dealing with the application preferred by the present appellant, it is important to bring some true and correct facts for the kind consideration of this Court which are as under: Page 5 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024
NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined 4.2.1 The Respondent Bank herein is a co-operative body established under the provisions of the Gujarat Co-
operative Societies Act and Banking Regulation Act at Gandevi. The Respondent Bank is carrying out Banking activities as per the license issued by the Reserve Bank of India. The Head office of the Respondent bank is situated at Gandevi and the Respondent Bank is having its four branch offices within Navsari District. Hometrade Limited (hereinafter referred to as "the said Company" for the sake of convenience and brevity) was a company registered and incorporated under the provisions of the Companies Act, 1956 and the said company was registered at National Stock Exchange as Shares and Stock Broker. The said company was engaged in buying and selling of shares and stock as well as Government Securities. The Appellant herein was one of the Director of the said company, who was also part of the said company, looking after and managing the affairs of the said company. According to the order passed by the Reserve Bank of India, all the banks including the respondent bank had to make investment in Government Securities and maintain Statutory Liquid Ratio, thereby Page 6 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined the by the Respondent Bank had made transaction of buying and selling the Government Securities with the said Company during the financial period from 1999- 2000, 2000-2001, 2001-2002 and 2002-2003. The respondent bank had made several transactions with the said company and as on 10.06.2002, the respondent bank had to recover an amount of Rs. 2,96,45,114.58 from the said Company. The said company had issued cheque no. 984153 dated 10.06.2002 drawn on HDFC Bank, Nariman Point, Mumbai for an amount of Rs. 2,96,45,114.58ps. in favour of the respondent bank. The said cheque was returned vide return memo dated 13.06.2002 with the endorsement of 'Account Blocked'. Thereafter, the respondent bank had issued legal notice to the said company as well as to its Directors but they failed to repay the dues of the respondent bank. Furthermore, he has submitted that in the interregnum period as the respondent bank along with various other Banks of Gujarat and Maharashtra were cheated in the similar fashion by the said Company and its Directors and thereby the respondent bank herein had preferred a complaint against the said company and its Directors, for the offences punishable under Section 406, 409, 420, 421, Page 7 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined 422, 423 and various other provisions of Indian Penal Code before the Ld. Judicial Magistrate, at Gandevi. Thereafter, charge sheet was filed on 04.12.2002 against various accused including the present appellant herein. Thereafter, the said case is being tried by learned Judicial Magistrate, Gandevi and the said case is registered as Criminal Case no. 2778 of 2004 and the present Appellant is accused no.8 in the said case and has been appearing in the proceedings before the Ld. Judicial Magistrate, Gandevi.
4.2.2 Furthermore, the Respondent Bank on 16.10.2002 had preferred Summary Suit no.1 of 2002 before the Court of Principal Senior Civil Judge, Gandevi against the said Company and its Directors including the present appellant, with a view to recover an amount of Rs. 3,12,82,499.53 ps. due as on 01.10.2002 along with compound interest thereon @ 18% p.a. The appellant herein was Defendant no. 10 in the suit preferred by the respondent bank and the appellant herein appeared through his advocate in the suit proceedings on issuance of public summons. Ultimately, the Ld. Court after taking into consideration the documents on record and Page 8 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined the conduct of the parties, the Ld. Principal Sr. Civil Judge, Gandevi by its order dated 22.10.2008 allowed the suit preferred by the respondent bank and the defendants in the suit were held to be jointly and severally liable to pay an amount of Rs. 3,12,82,499.53 ps. from the date of filing of the suit till realisation, with compound interest @ 18% p.a. After the above judgment and order was passed, the appellant herein on 31.12.2008 along with two others preferred separate applications under Order IX Rule 13 of the Code of Civil Procedure, 1908 before the Ld. Principal Sr. Civil Judge, Gandevi to set aside the ex-parte decree dated 22.10.2008 passed below Summary Suit No.1 of 2002. The application preferred by the appellant herein under Order IX Rule 13 of Code of Civil Procedure, 1908 was numbered as Misc. Civil (Restoration) Application no. 6 of 2009. After hearing together all the applications, the learned Judge had taken into consideration the fact that the appellant herein had appeared in the said suit through his advocate but never bothered to file any written statement even after giving ample opportunity, the appellant herein was regularly appearing in the criminal case pending before the same Court and the Page 9 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined advocate appearing for the appellant on various occasions had even sought for adjournments and thereby also the decree passed by the Ld. Principal Sr. Civil Judge could not have been said to be an ex-parte decree. In view thereof, the Ld. Principal Sr. Civil Judge by its order dated 02.02.2010 dismissed the Misc. Civil (Restoration) Application no. 6 of 2009 and other applications preferred by the appellant herein and two others. Thereafter, the appellant herein on 06.03.2010 preferred Misc. Appeal no. 8 of 2010 before the Ld. Principal District Judge at Navsari challenging the order dated 02.02.2010 passed by the Ld. Principal Sr. Civil Judge, Gandevi below Misc. Civil (Restoration) Application no. 6 of 2008. The Ld. District Judge after hearing the parties at length and after taking into consideration the facts of the case, by an order dated 08.10.2015 dismissed the appeal on the ground that the said appeal is neither maintainable nor tenable in the eyes of law nor the said Court had pecuniary jurisdiction to determine the said appeal. The respondent bank thereafter in December, 2017 has initiated execution proceedings by filing Execution Application no. 138 of 2017 before the Hon'ble High Court of Judicature at Bombay (Ordinary Original Civil Page 10 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined Jurisdiction), seeking to execute the decree dated 22.10.2008 passed by the Ld. Principal Sr. Civil Judge, Gandevi below Summary Civil Suit no.1 of 2002. The Appellant herein has appeared in the said execution proceedings and on 17.09.2018, when the said execution proceedings was on board and was called out, the advocate appearing for the Respondent no. 10 had stated that his client is "in the process of taking the necessary steps" before this Court. The Court by its order dated 17.09.2018 had directed all the respondents to the said proceedings to disclose all assets, both movable and immovable as also their Income-Tax Returns and Investments complete in all respects. The Hon'ble Court had further granted ad-interim injunction pending, hearing and final disposal whereby the respondents therein are restrained by an order of injunction from transferring, alienating and/or creating third party rights upon their assets/properties. Pursuant to the above order, the appellant herein on 24.10.2018 has filed an affidavit before the Bombay High Court below Chamber Summons no. 34 of 2018 in Commercial Execution Application (L) no. 138 of 2017, disclosing his assets as directed by the Court by its order dated 17.09.2018. Thereafter, the Page 11 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined appellant herein has preferred the present proceedings before this Court on 31.10.2018. The present proceedings initiated by the appellant itself are neither maintainable nor tenable in the eyes of law, in lieu of the fact that the present Appeal From Order has been filed challenging the legality and validity of the judgment and order dated 08.10.2015 passed by the Ld. District Judge, Navsari dismissing the Misc. Civil Appeal No.6 of 2010 filed by the appellant herein below Order 43 Rule 1 of the Code of Civil Procedure, 1908. The present proceedings are Appeal From Order under Order 43, Rule 1 of the Code of Civil Procedure, 1908 and in view thereof neither the present proceedings are maintainable nor tenable in the eyes of law. Furthermore, the Appellant herein has never challenged the decree passed by the Ld. Principal Sr. Civil Judge, Gandevi on 22.10.2008 below Summary Civil Suit no.1 of 2002. Admittedly, the appellant herein had appeared in the said proceedings in the Summary Civil Suit no. 1 of 2002 through his advocate and thereafter the decree was passed thereunder, even if it is assumed that the same has been passed without affording an opportunity of hearing to the appellant but then also the said decree Page 12 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined cannot be said an ex-parte decree. Whereas in the present case, the learned advocate for the appellant was present all throughout the proceedings and willingly the appellant did not bother to file any written statement in such circumstances by no stretch of imagination the decree passed by the Ld. Principal Civil Judge, Gandevi below Summary Civil Suit no.1 of 2002 can be said to be an ex-parte decree. After the decree was passed, the appellant herein with malafide intention and ulterior motive did not challenge the decree but preferred an application before the Ld. Principal Civil Judge, Gandevi under Order 9 Rule 13 of the Code of Civil Procedure, 1908 seeking to set aside the decree. Though the appellant was very well aware that the said decree is neither an ex-parte decree nor bad but then also preferred an application under Order 9 Rule 13 of the Code of Civil Procedure, 1908 which proceedings were neither maintainable nor tenable in the eyes of law. In view thereof the Ld. Principal Civil Judge, Gandevi by its order dated 02.02.2010 rightly dismissed the application preferred by the appellant. In view of the above facts and in lieu of the conduct on the part of the Appellant himself is such that even otherwise no Page 13 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined indulgence deserves to be granted by this Court. Even otherwise the present proceedings initiated by the Appellant challenging the Order dated 08.10.2015 passed by the Ld. District Judge, Navsari are neither maintainable nor tenable in the eyes of law. 4.3 He has further submitted that now I would like to deal parawise with the application preferred by the appellant as under:
4.3.1 With regard to para-1 of the application filed by the Appellant, he has submitted that the appellant herein has suppressed material facts from this Hon'ble Court and has not approached this Court with clean hands. Admittedly, the decree was passed by the Ld. Principal Sr. Civil Judge, Gandevi on 22.10.2008 below Summary Civil Suit no.1 of 2002. Aggrieved by the said order, the Appellant herein on 31.12.2008 preferred an application to condone delay of 40 days in filing an application under Order 9 Rule 13 of CPC. Thereafter, the application preferred by the Appellant below Order 9 Rule 13 of CPC was numbered as Misc. Civil (Restoration) Application no. 6 of 2009 which after bi-Page 14 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024
NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined parte hearing was dismissed by the Ld. Principal Sr. Civil Judge, Gandevi by its judgment and order dated 02.02.2010. Being aggrieved by the same, the appellant herein thereafter preferred Misc. Appeal no. 8 of 2010 before the Ld. District Court, Navsari. The Ld. District Judge, Navsari by its order dated 08.10.2015 dismissed the Misc. Appeal no. 8 of 2010 filed by the appellant herein. In view thereof the contents in para-1 are contrary to the facts as the judgment and order in Misc. Civil (Restoration) Application no. 6 of 2009 has been passed on 02.02.2010, whereas the order has been passed on 08.10.2015 below Misc. Appeal no. 8 of 2010, in view thereof the appellant has not stated true and correct facts while filing the present application. Furthermore, the present proceedings under Order 43 are not maintainable as far as challenge to order dated 08.10.2015 passed below Misc. Appeal no. 8 of 2010 is concerned and thereby also the present appeal deserves to be dismissed.
4.3.2 With regard to grounds 1(a) to 1(c) of the appeal filed by the appellant, he has submitted that the Court below after considering and appreciating the facts Page 15 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined on record had been pleased to pass the impugned judgment and order dated 31.12.2008 and the appellant had got ample opportunity to present its case before the Court below but the Appellant had failed to provide any such evidence and now at a belated stage all allegations and contentions are being levelled. There cannot be any dispute to the fact that when the impugned transaction was ongoing, the appellant was a Director in the said company and thereby what is relevant is the fact as to who all were liable and responsible when the impugned transaction had taken place, it would not make any difference if the Appellant at a later stage had resigned as a Director from the said company.
4.3.3. With regard to grounds 1(d) to 1(g) of the appeal filed by the appellant, he has submitted that the Court below after taking into consideration the overall scenario of the case and taking into consideration the facts of the case on the basis of the documents produced by the parties had been pleased to pass the impugned judgment and order. The Appellant herein was given ample opportunity but for the reasons best known, the appellant herein never bothered to produce any Page 16 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined documents for the defence being contended in the grounds herein. There cannot be any dispute to the order passed by SEBI but even SEBI has held that the appellant was a Director of the said Company for a period of one year and it is our contention that the alleged transaction has taken place during the period when the appellant was a Director in the said Company. 4.3.4 With regard to para 2 to 4 of the appeal filed by the appellant, he has submitted that when the impugned transaction had taken place between the said Company and the respondent bank at that juncture the Appellant herein was a Director in the said Company and he was also managing the affairs of the said Company. I am not aware nor concerned with the fact as to whether the Appellant had attended any of the Board Meetings of the said Company. The Respondent Bank had made transaction of buying and selling the Government Securities with the said Company during the financial period from 1999-2000, 2000-2001, 2001-2002 and 2002-2003 and thereby transaction had also taken place when the Appellant was a Director, for which Summary Suit no. 1 of 2002 came to be instituted before Page 17 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined the Ld. Principal Sr. Civil Judge, Gandevi, wherein the present Appellant was joint as Defendant no. 10. 4.3.5 With regard to para 5 and 6 of the appeal filed by the Appellant, he has submitted that it is true that originally the appellant was not served with the notice of the suit along with few others and thereby public notice was issued in the daily newspaper, pursuant to which the appellant and some others appeared in the suit and filed the Vakalatnama of their advocate. The fact is that the appellant being fully aware as to how he can be held to be liable and responsible never bothered to file its written statement in the suit, as the appellant did not have any answers to the contentions as raised by the Respondent Bank. The Appellant was regularly appearing in the criminal case filed by the respondent bank. There is no dispute to the order passed by SEBI on 16.02.2006, but the same cannot be said to be helpful to the appellant herein in any manner in the facts of the present case. 4.3.6 With regard to para 7 to 9 of the appeal filed by the Appellant, he has submitted that there is no Page 18 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined dispute to the facts stated in para 7 of the appeal except the fact that the impugned transaction with the said company had taken place during the financial period from 1999-2000, 2000-2001, 2001-2002 and 2002-2003. It is true that as the said Company failed to pay the due amount to the Respondent Bank and thereby the Respondent Bank was constrained to file the Summary Suit against the said company and its Directors/officers. The Company and its various Directors appeared through their advocates but failed to defend the suit and thereby the suit was decreed by the Ld. Principal Sr. Civil Judge, Gandevi vide judgment and decree dated 22.10.2008. With regard to para 10 and 11 of the appeal filed by the appellant, he has submitted that after the impugned judgment came to be passed by the Ld. Principal Sr. Civil Judge, Gandevi on 22.10.2008, the Appellant on 31.12.2008 along with two others preferred separate application numbered as Misc. Civil (Restoration) Application no. 6 of 2009 under Order IX Rule 13 of the Code of Civil Procedure, 1908 before the Ld. Principal Sr. Civil Judge, Gandevi to set aside the ex-parte decree dated 22.10.2008. The Ld. Principal Sr. Civil Judge, Gandevi by its order dated 02.02.2010 dismissed the Page 19 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined Misc. Civil (Restoration) Application no. 6 of 2009 filed by the Appellant. Being aggrieved by the judgment and decree dated 22.10.2008 and the order dated 02.02.2010, the appellant herein preferred Misc. Appeal no. 8 of 2010 before the Ld. Principal District Judge, Navsari. The Ld. District Judge by its order dated 08.10.2015 dismissed the appeal on the ground that neither the said appeal is maintainable nor tenable nor the said court had pecuniary jurisdiction to determine the said appeal. With regard to grounds 12(a) to 12(c) of the appeal filed by the Appellant, he has submitted that the appellant has preferred the present appeal challenging the order dated 08.10.2015 and against the said order the present appeal can neither be said to be maintainable nor tenable in the eyes of law. The order passed by the Court below is completely legal, just, reasonable, proper and inconsonance with the settled position of law and facts and thereby also the present appeal deserves to be dismissed. The suit is for recovery of money which is pertaining to continuous transactions which had taken place during the financial period from 1999-2000, 2000- 2001, 2001-2002 and 2002-2003 and thereby the ground raised by the Appellant is completely contrary to the Page 20 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined facts on record. The Appellant was a Director in the said Company and had been managing the affairs of the Company and thereby the Appellant though may have been Director for only a period of one year but that would not mean that the Appellant is not liable or responsible. With regard to grounds 12(d) to 12(f) of the appeal filed by the Appellant, he has submitted that the appellant herein all throughout was very well aware with regard to the impugned proceedings which had been pending. The Appellant was regularly appearing in the criminal case filed by the Respondent Bank before the said Court but then it is shocking that the appellant never bothered to inquire about the civil case pending before the same Court after appointing an advocate. In fact, many of the Directors did not even bother to appear in the impugned suit after service of notice and the Appellant has not made it clear as to upon whom allegations are being made by the Appellant in ground
(d) of the appeal. The Appellant failed to raise any bonafide and genuine reasons in its application under Order IX Rule 13 for setting aside the ex-parte judgment and decree and thereby the Court below rightly dismissed the same. The Appellant has been trying to Page 21 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined confuse the Court by alleging that the transactions had taken place in the year, 1999 but as a matter of fact there was continuous transactions of buying and selling of securities that had taken place during the financial period from 1999-2000, 2000- 2001, 2001-2002 and 2002- 2003. With regard to grounds 12(g) to 12(i) of the appeal filed by the Appellant, I most humbly and respectfully say and submit that the Court below before passing the judgment and decree had given ample opportunity to the parties and thereafter considering the settled position of law and facts impugned judgment and decree came to be passed and thereby by not setting aside the same, it has not caused any prejudice to the Appellant as the Appellant had been granted sufficient time and opportunity to present his case and having failed to do so, no further time and opportunity deserves to be granted to the Appellant. Even if it is assumed and presumed then the Appellant was a Director for only a period of one year in the said Company but then also the Appellant herein is liable responsible to the Respondent Bank. The impugned order passed by the Court below is completely legal, just, reasonable, proper and inconsonance with the settled position of law and Page 22 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined facts and thereby also the present appeal deserves to be dismissed.
4.4 Furthermore, he has submitted that in view of the conduct of the appellant and in view of the peculiar facts of the preset case, neither any injustice nor hardship would be caused to the appellant and thereby also the present appeal deserves to be dismissed with costs.
4.5 In support of his submissions, he has relied upon the follow judgments:
(i) Vishwabandhu vs. Sri Krishna reported in 2021 (0) AIJEL SC 67807, more particularly, paragraphs 19 to 21 are relevant.
(ii) Parimal vs. Veena Alias Bharti reported in (2011) 3 SCC 545, more particularly, paragraphs 10 to 16, 27 and 28 are relevant.
(iii) Gujarat State Elecricity Corp. Ltd. vs. Vipuliumar Rameshbhand Jain reported in 2019 (0) AIJEL-HC Page 23 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined 241286, more particularly, paragraphs 16 and 17 are relevant.
5.1 I have duly considered the rival submissions presented at the bar by the respective parties, as well as the additional affidavit filed by the respondent herein. Upon careful examination, it becomes apparent that the core of the dispute revolves around a loan transaction advanced by the respondent bank, with the present appellant, who was original defendant No.10 in the suit, having been impleaded as Director of the said company. Furthermore, it is evident that Summary Suit No.1 of 2002 was initiated and subsequently decreed by the trial court on 22.10.2008, with the decree amounting to Rs. 3,12,82,499.53. Despite the service of notice upon the present appellant, no objection or written statement has been filed in response to the suit. The appellant's contention in the current appeal is that at the time the cheque was issued to the respondent bank, and the liability of the company was established, he was not serving as a director. He asserts that his directorship was for a limited period and that throughout the entirety of the transaction on the basis of the decree Page 24 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined passed by the trial court, he held no position, neither as a Director nor in any other capacity. Consequently, he argues that and, therefore, the decree passed against him is erroneous, improper and without affording proper opportunity to defend the suit. His further submission is that he has no knowledge about the passing of decree prior to that, as the advocate appointed by defendant Nos.3 and 10 have not appeared and defendant no.2 was in prison as an under-trial prisoner in criminal case from 20.05.2003 to 02.05.2005. Accordingly, the application is filed on the basis of the Order 9 Rule 13 of the C.P.C. by vide Misc. Civil (Restoration) Application No.8 of 2009 by stating that the said decree is passed ex-parte. It is filed jointly by two other applicants also, whereby the present appeal is filed only by the original No.10. It also transpires that in the interregnum period, the appellant has preferred the Appeal From Order before the learned lower appellate court, whereby due to change in jurisdiction, the appeal is required to be filed before this Court. Accordingly, the present Appeal From is filed by challenging the legality and validity of the judgment and order dated 08.10.2015 passed by learned Principal District Judge, Navsar dismissing restoration Page 25 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined application for setting aside the ex-parte judgment and decree and further the order passed by Ld. Principal Senior Judge, Navsari in dismissing Misc. Civil Appeal No.6 of 2009.
5.2 Furthermore, it is undisputed fact that the summons is served to appellant - original defendant No.10 in the aforesaid suit. It it also undisputed fact that he has engaged advocate on his behalf, and also appearance is filed in the suit. Hence, it transpires that at no point of time, the appellant had cared to file any written statement or objection to the suit in question. Since no resistance is filed by the present appellant, the suit is proceeded further and order of decree is passed. Now, in this background, it is required to consider the provisions of Order 9 Rule 13 of the C.P.C., as under:
"13. Setting aside decree ex parte against defendant.--In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him Page 26 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit:
Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also:
Provided further than no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim.
Explanation.--Where there has been an appeal against a decree passed ex parte under this rule, and the appeal has been disposed of an any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under this rule for setting aside that ex parte decree."
5.3.1 It is also relevant to refer the judgment cited at the bar by learned advocate for the appellant in the case of Robin Thapa (supra), more particularly, paragraphs 7 to 12 are relevant, as under:
"7. Ordinarily, a litigation is based on adjudication on the Page 27 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined merits of the contentions of the parties. Litigation should not be terminated by default, either of the plaintiff or the defendant. The cause of justice does require that as far as possible, adjudication be done on merits.
8. The disputed agreement is dated 18.04.2012. Summons was issued and it was received but according to the appellant, by his mother. The Trial Court has apparently accepted the case of the appellant that the mother did not bring the receipt of the summons to the notice of the appellant and that it was sometime in June, 2014 that the appellant can be credited with knowledge of the Suit. The Order dated 02.07.2014 reads as follows:
"On behalf of the plaintiff ex-parte evidence by way of affidavit (20A2) is filed.
The ex-parte proceeding against the defendant is allowed.
The application is submitted to engage an advocate by the defendant. However, the suit is declared ex-parte evidence, therefore, the same is rejected. Now the matter is fixed for ex-parte argument on dated 08.08.2014."
9. Order further appears to reveal that the plaintiff was present in person. The plaintiff has filed his proof affidavit. It was decided to proceed against the appellant ex parte. There is, however, a reference to the application to engage an advocate by the appellant. The case stood posted for ex parte argument on 08.08.2014. As parties were not present Page 28 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined on the said day, the case was posted to 15.09.2014. However, on 12.09.2014, the case stood transferred to another Court. No intimation was given under Rule 89A to the appellant.
10. The further case of the appellant is that he came to know from the plaintiff that the case was fixed for judgement on 17.11.2015. He has alleged that he contacted his counsel but he did not get a satisfactory reply. He also has a case that he appeared on 17.11.2015 in court, and then, he only came to know that judgement was rendered on 09.10.2014. A new counsel was engaged on 26.11.2015. Thereafter, the application was filed.
11. One fact stands out and that is, that the appellant came to be served notice of the execution proceedings through said messenger on 27.03.2015. Thus, the case of the appellant that appellant came to know about the passing of the decree only on 17.11.2015, cannot be acted upon. This is besides noticing that in execution of the decree, the sale deed has been executed in favour of the respondent and it is only thereafter that despite receipt of the notice dated 27.03.2015, the appellant has set up the case that he came to know of the passing of the decree only several months thereafter.
12. The matter arises from a suit for specific performance. It may be true that there is a case for the respondent that the appellant has actually let out the building on rent. The appellant's case is that this is the appellant's residential Page 29 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined house and the matter is a loan transaction. Specific relief is undoubtedly a discretionary relief. Appellant has submitted that the appellant is prepared to deposit the entire amount spent by the respondent towards getting sale deed executed. We would think that the interest of justice demands that subject to putting the appellant on terms, an opportunity should be given to the appellant to contest the case and the case must be directed to be disposed of within the time limit."
5.3.2 It is also relevant to refer the judgment cited at the bar by learned advocate for the appellant in the case of The Commissioner, Mysore, Urban Development Authority (supra), more particularly, paragraphs 16 to 20 are relevant, as under:
"16. Indeed, this case reminds us of the subtle observations of the learned JudgeVivian Bose, J., which His Lordship made in one of the leading cases of this Court in Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC 425.
17. Vivian Bose J., speaking for the Bench, in his distinctive style of writing made the following observations while dealing with the case arising out of Order 9 and reminded the Courts of their duty while deciding the case. The observations are apt and read as under:
"16..........A code of procedure must be regarded as Page 30 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined such. It 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.
17.....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 exceptions 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."
18. Keeping the aforementioned statement of law in consideration and applying the same to the facts of this case, we have no hesitation in allowing this appeal and set aside the impugned order.
19. In our view, the Courts below should have seen that the first appeal is a valuable right of the appellant and, Page 31 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined therefore, the appellantAuthority was entitled for an opportunity to prosecute their appeal on merits. If the appellant's advocate did not appear may be for myriad reasons, the Court could have imposed some cost on them for restoration of their appeal to compensate the respondent(plaintiff) instead of depriving them of their valuable right to prosecute the appeal on merits. This is what Justice Vivian Bose has reminded to the Courts while dealing with the cases of this nature in Sangram Singh (supra) to do substantial justice to both the parties to the lis. Indeed, dismissal of the appeal in default and dismissal of the appeal on merits makes a difference. The former dismissal is behind the back of the litigant and latter dismissal is after hearing the litigant. The latter is always preferred than the former.
20. We have perused the application made by the appellant- Authority for recalling of the order and we find that it constitutes a sufficient cause within the meaning of Order 41 Rule 19 of the Code. The application, therefore, deserves to be allowed. However, it is subject to payment of cost of Rs.10,000/ payable by the appellantAuthority to the respondent(plaintiff). Let the cost be paid before hearing of the appeal."
5.4.1 It is also relevant to refer the judgment cited at the bar by learned advocate for the respondent in the case of Vishwabandhu (supra), more particularly, Page 32 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined paragraphs 19 to 21 are relevant, as under:
"19. The summons issued by registered post was received back with postal endorsement of refusal, as would be clear from the order dated 19.02.1997. Sub-Rule (5) of Order V Rule 9 of the Code states inter alia that if the defendant or his agent had refused to take delivery of the postal article containing the summons, the court issuing the summons shall declare that the summons had been duly served on the defendant. The order dated 19.02.1997 was thus completely in conformity with the legal requirements. In a slightly different context, while considering the effect of Section 27 of the General Clauses Act, 1897, a Bench of three Judges of this Court in C.C. Alavi Haji vs. Palapetty Muhammed and Anr2 made following observations:-
"14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is Page 33 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed. [Vide Jagdish Singh v. Natthu Singh : State of M.P. vs. Hiralal & Ors. and V. Raja Kumari vs. P. Subbarama Naidu & Anr.5]. ... ...."
20. Even after the passing of the ex-parte decree, the report filed by the process server on 04.04.2000 clearly indicated that notice was served upon Respondent No.1 which was duly acknowledged by him by putting signature on the copy of the notice. Despite such knowledge, Respondent No.1 allowed AIR 2007 SC (Supp) 1705 AIR 1992 SC 1604 (1996) 7 SCC 523 (2004) 8 SCC 774 the property to be put to auction in the month of December, 2000. It was only after the auction was so undertaken, that he preferred the application under Order IX Rule 13 of the Code. The High Court, therefore, rightly observed in its order dated 21.04.2006 that Respondent No.1 was not vigilant. Yet, the High Court proceeded to grant relief in favour of Respondent No.1.
21. In the light of the features indicated above and the fact that the auction was allowed to be undertaken, Respondent No. 1 was disentitled from claiming any relief as was prayed for. Further, after completion of proceedings in auction, sale certificate was also issued in favour of the Appellant."
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NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined 5.4.2 It is also relevant to refer the judgment cited at the bar by learned advocate for the respondent in the case of Parimal (supra), more particularly, paragraphs 10 to 16, 27 and 28 are relevant, as under:
"10. We have considered the rival submissions made by learned counsel for the parties and perused the record. Order IX, R.13 CPC:
11. The aforesaid provisions read as under: "Setting aside decree ex-parte against defendant In any case in which a decree is passed ex-parte against a defendant, he may apply to the Court by which the de- cree was passed for an order to set it aside; and if he sat- isfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit;
Provided further that no Court shall set aside a decree passed ex-parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim.
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NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined (Emphasis added)
12. It is evident from the above that an ex-parte decree against a defendant has to be set aside if the party satisfies the Court that summons had not been duly served or he was prevented by sufficient cause from appearing when the suit was called on for hearing. However, the court shall not set aside the said decree on mere irregularity in the service of summons or in a case where the defendant had notice of the date and sufficient time to appear in the court. The legislature in its wisdom, made the second proviso, mandatory in nature. Thus, it is not permissible for the court to allow the application in utter disregard of the terms and conditions incorporated in the second proviso herein.
13. "Sufficient Cause" is an expression which has been used in large number of Statutes. The meaning of the word "sufficient" is "adequate" or "enough", in as much as may be necessary to answer the purpose intended. Therefore, word "sufficient" embraces no more than that which provides a platitude which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case and duly examined from the view point of a reasonable standard of a cautious man. In this context, "sufficient cause" means that party had not acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or the party cannot be alleged to have been "not acting diligently"
or "remaining inactive". However, the facts and Page 36 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined circumstances of each case must afford sufficient ground to enable the Court concerned to exercise discretion for the reason that whenever the court exercises discretion, it has to be exercised judiciously. (Vide: Ramlal & Ors. v. Rewa Coalfields Ltd., AIR 1962 SC 361; Sarpanch, Lonand Grampanchayat v. Ramgiri Gosavi & Anr., AIR 1968 SC 222; Surinder Singh Sibia v. Vijay Kumar Sood, AIR 1992 SC 1540; and Oriental Aroma Chemical Industries Limited v. Gujarat Industrial Development Corporation & Another, (2010) 5 SCC 459)
14. In Arjun Singh v. Mohindra Kumar & Ors., AIR 1964 SC 993, this Court observed that every good cause is a sufficient cause and must offer an explanation for non- appearance. The only difference between a "good cause" and "sufficient cause" is that the requirement of a good cause is complied with on a lesser degree of proof than that of a "sufficient cause". (See also: Brij Indar Singh v. Lala Kanshi Ram & Ors., AIR 1917 P.C. 156; Manindra Land and Building Corporation Ltd. v. Bhutnath Banerjee & Ors., AIR 1964 SC 1336; and Mata Din v. A. Narayanan, AIR 1970 SC 1953).
15. While deciding whether there is a sufficient cause or not, the court must bear in mind the object of doing substantial justice to all the parties concerned and that the technicalities of the law should not prevent the court from doing substantial justice and doing away the illegality perpetuated on the basis of the judgment impugned before it. (Vide: State of Bihar & Ors. v. Kameshwar Prasad Singh Page 37 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined & Anr., AIR 2000 SC 2306; Madanlal v. Shyamlal, AIR 2002 SC 100; Davinder Pal Sehgal & Anr. v. M/s. Partap Steel Rolling Mills (P) Ltd. & Ors., AIR 2002 SC 451; Ram Nath Sao alias Ram Nath Sao & Ors. v. Gobardhan Sao & Ors., AIR 2002 SC 1201; Kaushalya Devi v. Prem Chand & Anr. (2005) 10 SCC 127; Srei International Finance Ltd., v. Fair growth Financial Services Ltd. & Anr., (2005) 13 SCC 95; and Reena Sadh v. Anjana Enterprises, AIR 2008 SC 2054).
16. In order to determine the application under Order IX, Rule 13 CPC, the test has to be applied is whether the defendant honestly and sincerely intended to remain present when the suit was called on for hearing and did his best to do so. Sufficient cause is thus the cause for which the defendant could not be blamed for his absence. Therefore, the applicant must approach the court with a reasonable defence. Sufficient cause is a question of fact and the court has to exercise its discretion in the varied and special circumstances in the case at hand. There cannot be a strait- jacket formula of universal application." 5.4.3 It is also relevant to refer the judgment cited at the bar by learned advocate for the respondent in the case of Gujarat State Elecricity Corp. Ltd. (supra), more particularly, paragraphs 16 and 17 are relevant, as under:
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NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined "16 In such circumstances referred to above, Mr. Dave prays that there being being merit in this petition, the same be allowed and the impugned order be quashed.
17 Mr. Dave, in support of his submissions, has placed reliance on the following decisions:
[1] Parimal vs. Veena @ Bharti [2011 (3) SCC 545 [2] Andhra Bank vs. Bhanu Engineering Corporation [(2005) 10 SCC 593 [3] GMG Engineering Industries & Ors vs. ISSA Green Power Solution & Ors [2015 (15) SCC 659 [4] Ramesh and others vs. Ratnakar Bank Ltd. [(2006) 12 SCC 111."
5.5 Considering the aforementioned judgments and taking into account the facts and circumstances of the present case, it is undisputed fact that the appellant was served with notice at the pertinent juncture. Presently, he has engaged advocate to defend his case. Somehow, the case of the appellant was never defended by filing any written statement or by making any further submission in the suit and, therefore, it cannot be said Page 39 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined that the appellant is prevented from any reasonable cause, which amounts to sufficient cause for contesting the suit.
5.6 It is worth noting that trial court has to consider only whether there is sufficient cause for the Court to interfere with the findings of the trial court by setting aside the ex-parte decree. In the present case, firstly, it cannot be said that the decree was passed without service of summons or without giving proper opportunity to the parties. Though the opportunity was given, the appellant did not avail. There is nothing on record to indicate that the appellant, at any point in time, issued any notice to the advocate, who represented the case, requesting a proper explanation as to why the written statement was not filed or why contestation was not made in the suit. There is nothing on record, except for a bald assertion in the application before the concerned Court for setting aside the decree that appellant was prevented due to genuine cause to contest suit. The contentions raised in this Appeal From Order will not be helpful to the appellant's case. Normally, this Court considers that legal proceedings can be decided on merits Page 40 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024 NEUTRAL CITATION C/AO/46/2019 ORDER DATED: 22/03/2024 undefined by giving proper opportunity to the parties. However, in the present case, when no such material is available indicating that the appellant was prevented by sufficient cause from contesting the suit on merits, the Court should not exercise its powers under Order 9 Rule 13 of the C.P.C. to set aside the ex-parte decree. Therefore, the findings in the judgment and order passed by the trial court are correct and in accordance with the materials available on record and also in accordance with the law. I find no perversity or illegality in the findings given by the learned court concerned while deciding the application under Order 9 Rule 13 of the C.P.C. by exercising its discretion, and it is also found that the discretion used by the learned Judge is in judicious manner. Therefore, no interference is required to be called for by this Court. Accordingly, the present Appeal From Order is required to be dismissed.
6. Resultantly, the present Appeal From Order is dismissed with no order as to costs. Civil Application stands disposed of accordingly.
(SANDEEP N. BHATT,J) DIWAKAR SHUKLA Page 41 of 41 Downloaded on : Fri Apr 05 21:29:36 IST 2024