IMPORTANT POINT
High Court has not committed any jurisdictional error in declining to set aside the ex-parte decree on the application of the appellant under Rule 4 of Order 37 CPC 1908 on the ground that he failed to disclose facts sufficient to entitle him to defend the suit.

Headnote:(i) Civil Procedure Code, 1908-Order 9 Rule 13 and Order 37 Rule 4-Difference (see paras 9 and 10).
       (ii) Civil Procedure Code, 1908-Order 37 Rule 4 and Section 115-Ex-parte decree passed under Order 37-Application to set aside under Order 37 Rule 4-Applicant alleging non-issuance of summons but mentioned no circumstances justifying any defence e.g. any amount was in deposit with plaintiff or that suit was not maintainable under order-Trial Court dismissing the application and High Court upheld it in revision-Appeal to Supreme Court-Whether High Court was right? (Yes).
       Held : Now adverting to the facts of this case, though appellant has shown sufficient cause for his absence on the date of passing ex-parte decree, he failed to disclose facts which would entitle him to defend the case. The respondent was right in his submission that in the application under Rule 4 of Order 37, the appellant did not say a word about any amount being in deposit with the respondent or that the suit was not maintainable under Order 37. From a perusal of the order under challenge, it appears to us that the High Court was right in accepting existence of special circumstances justifying his not seeking leave of the court to defend, but in declining to grant relief since he had mentioned no circumstances justifying any defence. (Para 12)
       (iii) Civil Procedure Code, 1908-Section 34 r/w Order 37 Rule 3-Suit under summary procedure-Suit not based on any commercial transaction-Court decreeing with interest @ 18% p.a.-Whether rate of interest be reduced to 6% p.a.? (Yes)-Interim order to deposit decretal amount-Relief not granted-Liberty given to withdraw or adjust in satisfaction of decree-Appeal dismissed with these modifications.
       Held : In this view of the matter, we do not find any illegality much less jurisdictional error in the order under challenge to warrant interference of this Court. Inasmuch as having regard to the provisions of Section 34 of the C.P.C. and the facts of the case that the liability does not arise out of a commercial transaction, we are of the view that the grievance of the appellant with regard to rate of interest is justified. We, therefore, reduce the rate of interest from 18 per cent to 6 per cent per annum. We directed the appellant to deposit the decree amount to serve as security for the suit amount in the event of this Court granting him leave to defend the suit. Since that relief is not granted to him, it will be open to him to withdraw the said amount or have it adjusted in satisfaction of the decree. Subject to above modification of the order of the trial court as confirmed by the High Court the appeal is dismissed. No costs. (Paras 13, 14 and 15)

Judgement Key Points

Key Points: - The High Court did not commit jurisdictional error in declining to set aside the ex parte decree because the appellant failed to disclose facts sufficient to entitle him to defend the suit (!) (!) . - Under Order 37, Rule 4, special circumstances must be shown to set aside the decree, and mere absence is insufficient without facts justifying leave to defend (!) (!) . - A defendant must specifically disclose facts entitling him to defend; general allegations are not enough (!) (!) . - Where the liability does not arise from a commercial transaction, interest at 18% p.a. is not permissible; the rate was reduced to 6% p.a. (!) (!) . - The appellant was directed to deposit the decree amount as security for the suit amount if leave to defend were granted; since relief was denied, he may withdraw or adjust the amount against the decree (!) (!) . - The appeal was dismissed with the above modifications, and no costs were awarded (!) (!) .

What is the scope of power under Rule 4 of Order 37 of the Code of Civil Procedure to set aside an ex parte decree?

How to determine whether a defendant has shown sufficient cause and disclosed facts entitling him to defend a suit under Order 37, Rule 4?

What is the permissible rate of interest when a suit is not based on a commercial transaction under Section 34 read with Order 37 Rule 3?

JUDGMENT

Syed Shah Mohammed Quadri, J.-Leave is granted.

2. In this appeal, from the Judgment and Order of the High Court of Delhi in C.R. No.138 of 2001 dated October 15, 2001, the short point that arises for consideration is : whether the High Court committed jurisdictional error in declining to set aside the ex parte decree on the application of the appellant under Rule 4 of Order 37, on the ground that he failed to disclose facts sufficient to entitle him to defend the suit.

3. The facts relevant for the disposal of this appeal may be noted here.

4. The appellant-tenant had taken on rent residential flat No. C 470, Sarita Vihar, Ground Floor, New Delhi - 110 004, from the respondent-landlord for a period of nine months under an agreement of lease reduced to writing on November 26, 1993. After the expiry of the term of tenancy she continued to occupy the said premises as tenant till January 11, 1997. Alleging that the appellant did not pay the electricity and water consumption charges for the period starting from November 26, 1993 to January 11, 1997, the respondent filed suit No. 597 of 1997 in the Court of Senior Civil Judge, Delhi, under Order 37 of Code of Civil Procedure (C.P.C.), for recovery of Rs. 33,661. On the ground that on April 21, 1999 summons for judgment was sent by registered post A.D. to the appellant pursuant to the order of the Court dated April 16, 1999 the Court drew inference of deemed service on him, proceeded with the case and decreed the suit ex parte on August 12, 1999. The appellant, however, filed application under Rule 4 of Order 37 C.P.C. in the trial court to set aside the ex parte decree. On January 6, 2001, the application was dismissed as no special circumstances were stated in the petition both in regard to there being illegality in deeming service of summons for judgment on the appellant as well facts sufficient to entitle him to defend the suit. Aggrieved by the order of the trial court, the appellant filed revision C.R.No.138 of 2001 in the High Court, which was also dismissed on October 15, 2001. That order of the High Court is assailed in appeal before us.

5. Mr. A. Sharan, learned senior counsel appearing for the appellant, strenuously contended that there was no proof or record to show that any notice by registered post with acknowledgment due was issued to the appellant by the respondent who had taken the notice from the court but did not file any proof of issuing the notice to the appellant, therefore, there was special reason for the appellant not to appear in response to the summons for judgment. He argued that sufficient amount was deposited with the respondent as advance and that Order 37 C.P.C. was not applicable to the facts of the case, therefore, the appellant had good defence to the suit. The trial court as well as the High Court, submitted Mr. Sharan, erred in dismissing the application under Rule 4 of Order 37 C.P.C.

6. The respondent appeared in-person and argued his case with precision and perfection. He submitted that summons for judgment was issued on April 21, 1999 and that the court had rightly drawn presumption of service on the appellant; that nowhere in her application had the appellant stated anything about her defence to the suit and therefore the order under challenge was rightly passed by the courts below.

7. To appreciate the contentions of the parties it would be useful to refer to Rule 4 of Order 37 C.P.C. which is in the following terms :

"Order XXXVII -Summary Procedure

(1) to (3) xxx xxx xxx

(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."

8. A careful reading of Rule 4 shows that it empowers, under special circumstances, the court which passed an ex parte decree under Order

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2003 Supreme(SC) 367

IMPORTANT POINTHigh Court has not committed any jurisdictional error in declining to set aside the ex-parte decree on the application of the appellant under Rule 4 of Order 37 CPC 1908 on the ground that he failed to disclose facts sufficient to entitle him to defend the suit.

What is the scope of power under Rule 4 of Order 37 of the Code of Civil Procedure to set aside an ex parte decree?

How to determine whether a defendant has shown sufficient cause and disclosed facts entitling him to defend a suit under Order 37, Rule 4?

What is the permissible rate of interest when a suit is not based on a commercial transaction under Section 34 read with Order 37 Rule 3?

IMPORTANT POINT
High Court has not committed any jurisdictional error in declining to set aside the ex-parte decree on the application of the appellant under Rule 4 of Order 37 CPC 1908 on the ground that he failed to disclose facts sufficient to entitle him to defend the suit.