Gujarat High Court
Styrenix Performance Materials ... vs Anoli Polymers Private Limited on 21 November, 2024
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/SCA/846/2019 ORDER DATED: 21/11/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 846 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 15670 of 2018
With
CIVIL APPLICATION (FOR DIRECTION) NO. 1 of 2023
In R/SPECIAL CIVIL APPLICATION NO. 15670 of 2018
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STYRENIX PERFORMANCE MATERIALS LIMITED
Versus
ANOLI POLYMERS PRIVATE LIMITED & ORS.
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APPEARANCE IN SCA NO. : 846 OF 2019
MR SP MAJMUDAR(3456) for the Petitioner No.1.
MS. SHIVANI RAJPUROHIT for the Respondent (s) No. 1,2,3
APPEARANCE IN SCA NO. : 15670 OF 2018:
SHIVANI RAJPUROHIT(5377) for the Petitioner(s) No. 1,2,3
MR SP MAJMUDAR(3456) for the Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 21/11/2024
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)
1. The writ petition being Special Civil Application No. 846 of 2019 is preferred by the petitioner who is original plaintiff in Regular Civil Suit being Commercial Civil Suit No. 249 of 2016 and the respondent is defendant in Commercial Civil Suit No. 249 of 2016 (hereinafter referred to as 'petitioner' and 'respondent' accordingly). The petitioner has preferred Page 1 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined writ petition challenging order dated 3.8.2018 (hereinafter referred to as 'the impugned order' for short) passed by the learned Judge, Commercial Court, Vadodara (hereinafter referred to as 'the Commercial Court') in Commercial Civil Misc. Application No. 6 of 2018. The respondent has also challenged the very same order by preferring writ petition being Special Civil Application No. 15670 of 2018. As both the matters are arising from a common impugned order, they have been heard together and are being decided by a common judgment. For the sake of convenience, the petitioner and respondent are referred to as per the cause-title in the Special Civil Application No. 846 of 2019.
2. The factual matrix which has led to filing of the writ petitions is that the petitioner is a Company incorporated under the Companies Act, 1956 and is engaged, inter alia, in the business of manufacturing, sale and supply of various chemicals. The respondent No.1 is also a Company incorporated under the provisions of the Companies Act, 1956 and, inter alia, are mega dealers of chemicals. The respondent Nos. 2 and 3 are Directors of respondent No.1 Company [for Page 2 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined sake of convenience all the respondents are addressed together as ' respondents' (colly).]
3. It is the case of the petitioner that the respondents approached the petitioner and assured that due to good reputation of the respondents, a very good business of chemicals can be done in and around Tamil Nadu. In view of the business terms, the petitioner sold goods to the respondents on credit. Various invoices were raised pursuant to the goods supplied by the petitioner. In total around 44 invoices were raised. It is the case of the petitioner that after adjusting amount of payments made, the net outstanding towards all 44 invoices was Rs.4,22,60,976.99. The details of the invoices were given by the petitioner in the plaint itself. The dispute arose betwen the parties as the petitioner demanded the outstanding amount of Rs. 4,22,60,976.99 from the respondents, which was not paid. The petitioner, therefore, was constrained to file the suit which came to be numbered as Commercial Civil Suit No. 249 of 2016. It was a Summary Suit under Order XXXVII of the Code of Civil Procedure (hereinafter referred to as 'CPC'). Page 3 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024
NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined
4. Pursuant to the filing of the Civil Suit under Order XXXVII of CPC, the summons for judgment were served upon the respondent. As per the provision of Order XXXVII, the period of limitation for filing an application for leave to appear and defend is 10 days from the date when the summons is served. The summons for judgment admittedly, was served upon the respondent on 24.4.2017. However, despite the service of summons for judgment, the respondent did not file any application for leave to defend. On the last day of hearing, the learned advocate for the respondent appeared and, thereafter, the case was adjourned. No one appeared on behalf of the respondent, thereafter. No application for condonation of delay in filing leave to defend was preferred by the respondent.
5. Taking these facts into consideration it was observed by the learned Commercial Court that the petitioner/ plaintiff had complied with all the conditions to bring the suit under the provisions of Order XXXVII of CPC. The service of summons was duly effected on the defendant/ respondent and as the respondent failed to put appearance after service of summons for judgment, the provisions of sub-rule (3) of Rule 2 of Order Page 4 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined XXXVII of CPC would come into play whereby the respondent shall not be permitted to defend the suit. On account of default in entering an appearance, the allegations made in the plaint shall be deemed to be admitted and the petitioner- plaintiff shall be entitled for the decree for any sum, not exceeding the sum mentioned in the summons together with interest.
6. With the aforesaid, the Commercial Court partly allowed the commercial Suit by judgment and order dated 29.6.2017 ordering that the petitioner was entitled to recover a sum of Rs.4,31,78,125.21 from the respondents along with 9% running interest from the date of filing of the suit till the realisation of the amount.
7. Consequent to the order passed by the Commercial Court, the respondent preferred an application being Commercial Misc. Application No. 6 of 2018 to set aside the judgment, order and decree and refer the dispute to arbitration. This application was preferred under Order XXXVII Rule 4 of CPC. The learned Commercial Court allowed the application by the impugned order dated 3.8.2018 setting Page 5 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined aside the decree without entering into the merits observing that the respondent be allowed the leave to defend the suit on the condition that the respondent-defendant shall deposit the entire decretal amount along with interest within a period of 15 days from the date of the impugned order.
8. The petitioner being aggrieved by the impugned order dated 3.8.2018 allowing the application under Order XXXVII Rule 4 of CPC, has preferred the writ petition being Special Civil Application No. 846 of 2019. The respondent, on the other hand, being aggrieved by the condition imposed in the impugned order dated 3.8.2018 and, more particularly, the condition of depositing the entire decretal amount, has preferred the writ petition being Special Civil Application No. 15670 of 2018.
9. We have heard Mr. S.P. Majmudar, learned advocate for the petitioner and Ms.Shivani Rajpurohit, the learned advocate for the respondent.
10. Mr. S.P. Majmudar, learned advocate for the petitioner submitted that the impugned order is contrary to law and Page 6 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined evidence on record. The application preferred under Order XXXVII Rule 4 of CPC itself being time barred was required to be rejected at the threshold, on the ground of limitation only. No special reason has been assigned to allow the application to recall the decree. Further, no case is made out by the respondent for making out any special circumstances as required under the provision of Order XXXVII Rule 4 of CPC which can result into allowing the application. In absence of any special circumstances, learned Commercial Court had no justification to grant the prayers made in the application. It was further submitted that it is an undisputed fact that the summons in the original civil suit were served upon the respondent and they did not file leave to defend. Therefore, there was no infirmity with the order and the judgment dated 29.6.2017 passed in Commercial Civil Suit No. 249 of 2016 and, as such, the application as preferred under Order XXXVII Rule 4 ought not to have been allowed. With these submissions, Mr. Majmudar has prayed to allow the writ petition being Special Civil Application No. 846 of 2019.
11. Per contra, Ms. Shivani Rajpurohit, learned advocate appearing for the respondent has made only one submission. Page 7 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024
NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined It was submitted by Ms. Shivani Rajpurohit that there was a specific arbitration clause in the agreement between parties. If there was specific arbitration clause, then the civil suit could not have been gone ahead with. This was brought to the notice of the Commercial Court by preferring an application under Order XXXVII Rule 4 of CPC. Therefore, the learned Commercial Court has rightly allowed the application, however, it was not justified in passing an order in depositing the whole decretal amount. With the above, Ms. Shivani Rajpurohit has prayed to dismiss the writ petition being Special Civil Application No. 846 of 2019 and allow the writ petition being Special Civil Application No. 15670 of 2018. However, it was candidly admitted by Ms. Shivani Rajpurohit that the respondent had failed to file leave to defend in the Commercial Civil Suit No. 249 of 2016 to abide by the provisions of Order XXXVII of CPC.
12. Having heard the learned advocates for both the parties and perused the material on record, one aspect is very crystal clear that there was no infirmity with the order dated 29.6.2017 in allowing the Commercial Civil Suit No. 249 of 2016. The suit was preferred under Order XXXVII of CPC. The Page 8 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined petitioner-original plaintiff had followed all the provisions of Order XXXVII. The respondent-original defendant had failed to appear and file application for leave to defend. Therefore, infirmity cannot be attached to the order dated 29.6.2017 passed in Commercial Civil Suit No. 249 of 2016. Therefore, the pivotal question in facts of the present case remains that whether the Commercial Court was justified in allowing the application under Order XXXVII Rule 4 and whether there were any special circumstances to set-aside the judgment and order dated 29.6.2017 passed in Commercial Civil Suit No. 249 of 2016.
13. The only argument canvassed by learned advocate for the respondent is that there was an arbitration clause in the contract between the parties and, therefore, the civil suit was not a proper remedy and the matter ought to have been referred to an Arbitrator. Unfortunately such argument is fallacious for variety of reasons. First of all, the respondent has failed to file application seeking leave to defend. Further, there is no application preferred by the respondent under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the dispute to an Arbitrator. Even otherwise such an Page 9 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined application could be preferred before filing the written statement. Once that has not been done the issue of maintainability of civil suit does not arise. The respondent has not taken any part in the Civil Suit despite service of summons of judgment. Therefore, the argument as canvassed by Ms. Shivani Rajpurohit is totally mis-conceived and baseless.
14. The other pertinent aspect which needs to be noted is the reason given by the learned Commercial Court for allowing the application preferred by the respondent under Order XXXVII Rule 4. The reason given by the learned Commercial Court taking a lenient view, and following the principles of natural justice, is that one more opportunity can be extended so that respondent- defendant can contest their claims in accordance with law. It was also observed that without dwelling into technicality and observing the principles of natural justice and relying upon the Order XXXVII Rule 4, the application requires to be allowed. Considering the above, we may note that the provisions of Order XXXVII Rule 7 providing a summary procedure is a self-contained Code. It needs to be emphasized that an application under Rule 4 of Page 10 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined Order XXXVII of setting aside of ex-parte decree in a summary suit, is different from an application preferred under Rule 13 of Order IX of CPC. Under Order XXXVII Rule 4, the defendant has to show not only special circumstances which prevented the applicant from appearing or preferring an application for leave to defend, but reasons to allow defendant to leave to defend must also be made out. On the other hand, an application under Order IX Rule 13 could be filed on any of the grounds mentioned thereunder only after a decree is passed ex-parte against defendant, such as: (1) summons was not duly served, or (2) he was prevented by sufficient cause from appearing when the suit was called for hearing. The Court if satisfied can pass an order setting aside the decree against the defendants on such terms as to cost or payment into court or otherwise as it thinks fit and, thereafter, on the day fixed for hearing by court, the suit would proceed as if no ex-parte decree had been passed.
15. But in a summary suit under Order XXXVII, the procedure for appearance of the defendant is governed by provisions of Rule 3 thereof. It is important to note here that the power of recall under Rule 4 of Order XXXVII is not confined to setting aside the ex-parte decree, it extends to Page 11 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined staying or setting aside the execution and giving leave to the defendant to appear to the summons and defined the suit. It is, therefore, not enough for the defendant to show special circumstances which prevented him from appearing or applying for leave to defend, but also to show by affidavit or otherwise, such facts which would entitle him a leave to defend the suit.
It would be useful to refer to Rule 4 Order XXXVII, for ready reference:
"4. Power to set aside decree:- After decree the Court may, under special circumstances set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit".
Considering the above, we find that the defendant has to give special circumstances or plead such circumstances which can be said to be so extra-ordinary, which would entitle the defendant the leave to appear and defend the suit. Page 12 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024
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16. Now adverting to the facts of the present case, the respondent has shown no cause or provide no reasons whatever for his absence on the date of passing of the ex- parte decree. The respondent did not abide by the provisions of Order XXXVII to defend the summary suit. The only justification that was garnered by the respondent is availability of the arbitration clause. No other justification is provided by respondent to defend the suit. The Commercial Court by taking a lenient view by following the principles of natural justice and on the plea of arbitration clause could not construe them as a ground to determining the special circumstances as envisaged under Rule 4 of Order XXXVII. The order passed by the Commercial Court dated 3.8.2018 in Commercial Civil Misc. Application No. 6 of 2018 is misconceived, unjustified, devoid of merits and is, therefore, required to be quashed and set-aside. Accordingly, the order dated 3.8.2018 passed by the Commercial Court in Commercial Civil Misc. Application No. 6 of 2018 is hereby quashed and set-aside.
17. Resultantly, the writ petition being Special Civil Application No. 846 of 2019 is allowed and the writ petition Page 13 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024 NEUTRAL CITATION C/SCA/846/2019 ORDER DATED: 21/11/2024 undefined being Special Civil Application No. 15670 of 2018 is dismissed. No order as to costs.
18. Resultantly, the pending Civil Application stands disposed of.
(SUNITA AGARWAL, CJ ) (PRANAV TRIVEDI,J) SAJ GEORGE Page 14 of 14 Uploaded by SAJ GEORGE(HC01069) on Sat Nov 30 2024 Downloaded on : Fri Dec 06 22:22:06 IST 2024