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2018 Supreme(Kar) 1156

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
ARAVIND KUMAR, J.
Smt. M. Lakshmi Shetty, W/o Sri. B.V. Nitin Kumar - Appellants
Versus
Karnataka State Financial Corporation No.1/1, Thimmaiah Road Benagluru 560 032 – Respondent
Miscellaneous First Appeal No.1246 of 2016 (CPC)
Decided on : 13-03-2018

Advocates:
Advocate Appeared:
For the Appellant :SRI. MADHUKAR DESHPANDE, ADVOCATE
For the Respondent: SRI. P.S. MALIPATIL, ADV

Headnote:

Civil Procedure Code,1908 - Order 9 Rule 13 - State Financial Corporations Act, 1951 - Section 31(1)(aa) and 32(1) - Limitation Act - Section 5 - notice - schedule property for realization - fruits of the decree - First respondent – Karnataka State Financial Corporation. (for short ‘Corporation’) filed Misc. Petition No.225/2001 under Section 31(1)(aa) and 32(1) of the State Financial Corporations Act, 1951 against petitioners and three others praying for an order that a sum of Rs.97,48,226/- is due as on 10.09.2000 payable to the Corporation by first respondent with future interest at 22% p.a. on a sum of Rs.95,17,487/- towards term loan of Rs.30 lakhs and @ 3.5% p.a. on a sum of Rs.2,30,739/- towards soft loan of Rs.2 lakhs borrowed, until entire amount is realized; for a direction to respondents 2,3,4 & 5 jointly and severally to pay the said sum. Though notice came to be issued to the respondents therein and same had been served, there was no representation on their behalf and as such, trial Court taking into consideration the unrebutted evidence tendered on behalf of the Corporation’s official and the documents relied upon by the Corporation marked as Exs.P1 to P8, petition came to be allowed and it was ordered that respondents 2 to 5 would be liable to pay jointly and severally a sum – Held, Court which adjudicated Misc.No.225/2001 had passed an exparte order. There is no material on record to show that order of attachment effected by the Corporation by invoking Order 38 Rule 5 CPC was infact served on appellant or service of attachment notice was effected on the appellants. In the absence thereof, appellants cannot be put on terms. However, it is made clear that no opinion is expressed in that regard and Corporation would be at liberty to work out its rights in the proceedings i.e., Misc.No.225/2001, inasmuch as, petition filed under Order 9 Rule 13 which has been dismissed in Misc.No.385/2011 is now being set aside by this Court and matter is being remitted back to the trial Court for adjudication afresh. Hence, no orders are passed in that regard and contentions of both parties are kept open to be adjudicated before the trial Court - Miscellaneous First Appeal is hereby allowed

JUDGMENT :

Appellants who are petitioners in Misc.No.385/2011 are assailing the order dated 04.12.2015 passed in Misc.No.385/2011 by VI Addl.City Civil & Sessions Judge, Bengaluru City whereunder petition filed by them under Order 9 Rule 13 CPC came to be dismissed on the ground that cause shown for their non appearance in Misc.No.225/2001 is not duly supported by material on record or in other words, they were not able to establish that they had no notice of the proceedings pending in Misc.No.225/2001 and they had not made out a case for setting aside the exparte order dated 09.08.2005 passed in Misc.No.225/2001.

2. Facts in brief which led to filing of this appeal can be crystallised as under:

First respondent – Karnataka State Financial Corporation. (for short ‘Corporation’) filed Misc. Petition No.225/2001 under Section 31(1)(aa) and 32(1) of the State Financial Corporations Act, 1951 against petitioners and three others praying for an order that a sum of Rs.97,48,226/- is due as on 10.09.2000 payable to the Corporation by first respondent with future interest at 22% p.a. on a sum of Rs.95,17,487/- towards term loan of Rs.30 lakhs and @ 3.5% p.a. on a sum of Rs.2,30,739/- towards soft loan of Rs.2 lakhs borrowed, until entire amount is realized; for a direction to respondents 2,3,4 & 5 jointly and severally to pay the said sum. Though notice came to be issued to the respondents therein and same had been served, there was no representation on their behalf and as such, trial Court taking into consideration the unrebutted evidence tendered on behalf of the Corporation’s official and the documents relied upon by the Corporation marked as Exs.P1 to P8, petition came to be allowed and it was ordered that respondents 2 to 5 would be liable to pay jointly and severally a sum of Rs.97,48,226/- with interest @ 22% p.a. from the date of filing of the petition till actual payment. Corporation was also permitted to sell petition schedule property for realization of the said amount.

3. In order to execute the order passed in the said proceedings or to have the fruits of the decree, Corporation filed execution petition No.1603/2008 and in the said proceedings, petitioners herein were served with the notice and it is thereafter they filed a Misc.petition in Misc.No.385/2011 under Order 9 Rule 13 CPC for setting aside the exparte order passed in Misc.No.225/2001 on 09.08.2005. Since there was delay in filing said petition, an application under Section 5 of the Limitation Act came to be filed seeking condonation of delay. In the said proceedings, first petitioner got herself examined as P.W.1 and she also produced 5 documents to substantiate her claim of not being in the knowhow of the proceedings of Misc.No.225/2001. Corporation examined one of its official as R.W.1. After considering the rival contentions raised by the respective learned Advocates appearing for the parties, trial Court condoned the delay in filing Misc. petition No.385/2011, but on the issue as to “whether petitioners/appellants had knowledge about pendency of the proceedings in Misc.No.225/2001 initiated by the Corporation?” has arrived at a conclusion there was no documentary evidence on record to support the version of P.W.1 (Smt.M.Lakshmi Shetty) that when she came to know of passing of the exparte decree on 22.02.2011. It was also opined by the trial Court that on account of Corporation being unable to effect service of notice on petitioners herein namely, respondents 2 & 4 in Misc.No.225/2001, Corporation had been permitted to take out notice on them by substituted service namely, through paper publication and paper publication was carried out and as such, it came to be held there was due service of notice on the petitioners. Hence, it arrived at a conclusion that petitioners had knowledge of proceedings pending in Misc.No.225/2001. On these amongst other grounds as discussed in its order dated 04.12.2015, Misc. Petition No.385/2011 filed under Order 9 Rule 13 CPC came

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