High Court Of Delhi
BANK OF INDIA - Appellant
Versus
MEHTA BROTHERS - Respondent
Interim Application 1656 of 1988
Decided On : 02/28/1991
The court set aside an ex parte decree against defendant No. 6 and allowed the application for condonation of delay in filing the application for setting aside the ex parte decree. The court held that the negligence of the lawyer was not relevant and that the party had done everything possible for the conduct of the case by engaging a lawyer and giving him instructions, it cannot be denied justice on account of the negligence of its lawyer. The court also held that the decree could not be set aside only against defendant No. 6 and had to be set aside in its entirety as the liability of defendants 1 to 5 was on the one hand and defendant No. 6 was in the alternative and that the decree was one and indivisible.
Fact of the Case:
Defendant No. 6, a foreign company, was sued by the plaintiff bank for recovery of an amount of Rs. 91,58,480.08. The suit was filed under Order I Rule 7 of the Code of Civil Procedure, as the plaintiff was in doubt as to which of the two sets of defendants, i.e., defendants No. 1 to 5 and defendant No. 6, were liable to the plaintiff and to what extent. The suit was decreed against defendant No. 6 with costs, while the suit against defendants No. 1 to 5 was dismissed. Defendant No. 6 filed two applications, one under Order 9 Rules 13 and section 151 of the Code of Civil Procedure and the second under section 5 of the Limitation Act, 1963, seeking to set aside the ex parte decree and condone the delay in filing the application for setting aside the ex parte decree.
Finding of the Court:
The court held that defendant No. 6 had shown sufficient cause for setting aside the ex parte decree and for condonation of delay in filing the application for setting aside the same. The court also held that the decree could not be set aside only against defendant No. 6 and had to be set aside in its entirety as the liability of defendants 1 to 5 was on the one hand and defendant No. 6 was in the alternative and that the decree was one and indivisible.
Issues: 1. Whether defendant No. 6 had shown sufficient cause for setting aside the ex parte decree and for condonation of delay in filing the application for setting aside the same? 2. Whether the decree could be set aside only against defendant No. 6 or had to be set aside in its entirety?
Ratio Decidendi: 1. The court held that the negligence of the lawyer was not relevant and that the party had done everything possible for the conduct of the case by engaging a lawyer and giving him instructions, it cannot be denied justice on account of the negligence of its lawyer. 2. The court held that the decree could not be set aside only against defendant No. 6 and had to be set aside in its entirety as the liability of defendants 1 to 5 was on the one hand and defendant No. 6 was in the alternative and that the decree was one and indivisible.
Final Decision: The court set aside the ex parte decree against defendant No. 6 and allowed the application for condonation of delay in filing the application for setting aside the ex parte decree. The court also held that the decree could not be set aside only against defendant No. 6 and had to be set aside in its entirety.
( 1 ) THESE are two applications filed by defendant No. 6. These were filed on 4-4-1988. First application is under Order 9 Rules 13 and section 151 of the Code of Civil Procedure and the second under section 5 of the Limitation Act, 1963. The ex parte judgment and decree which are sought to be set aside are dated 10-3-1987. The circumstances which led to the filing of these two applications may be stated in brief in so far as these are relevant.
( 2 ) THE plaintiff is constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1971 ). On 30-8-1982 it filed a suit for recovery of Rs. 91,58,480. 08 against defendants numbering six. Defendant No. I is a partnership firm, of which defendants 2, 3, 4 and 5 are the partners, 6th defendant, who is now the applicant, is the body incorporate under the laws of West Germany and is said to be a foreign company within the meaning of the Companies Act, 1956. On the request of defendants No. I to 5, the plaintiff on 26-6-1979 established an irrevocable Letter of Credit for US $ 6,10,900 (equivalent to about Rs. 50,00,000) for import of PVC Resins in favour of one M/s. Bentrex and Co. , Singapore. The Letter of Credit was expressly made subject to the terms of Uniform Customs and Practice for Documentary Credits (1974 Revision ). International Chamber of Commerce Publication No. 290. Negotiation of the documents under the Letter of Credit was permitted through any bank at Singapore. It was also provided in the said Letter of Credit that the negotiating bank was to claim reimbursement from the New York Branch of the plaintiff. Such reimbursement, however, was required to be made with the certificate of the negotiating bank that the terms of the credit had been fulfilled. The beneficiaries M/s. Bentrex and Company drew a Sight Draft for an amount of US $ 6,10,740. 00 on 1-9-1979 and presented the same with other documents, to defendant No. 6 at Singapore, being their bankers, for negotiation. On 4-9-1979, defendant No. 6, after negotiating the said documents, despatched the original and duplicate set of the documents from Singapore directly to the Chandni Chowk Branch of the plaintiff and called upon the New York Branch of the plaintiff for reimbursement under the said Credit. But the plaintiff claimed that this was done without furnishing the necessary certificate required under the credit. The New York Branch of the plaintiff the plaintiff claims, in good faith paid and reimbursed to the defendant No. 6 on 5-9-1979 the said amount of US $ 6,10,740. 00. When the plaintiff received the documents, which was on or about 13-9 -. 1979, it found that there were various discrepancies and the same did not conform to the terms of the credit. It, therefore, called upon defendant No. 6 to reverse the reimbursement already claimed by it from the plaintiff s New York Branch. The defendant No. 6, however, rejected the claim of the plaintiff. Defendants No. I to 5 also did not honour and retire the said documents contending that there were discrepancies in the documents and further stated that they had made a claim with the insurance company (M/s. Oriental Fire and General Insurance Company Limited), which was likely to be finalised and that the amount payable thereunder would be received by the plaintiff directly from the insurance company for the adjustment of the due and payable by defendants No. 1 to 5 under the Letter of Credit. These defendants also advised the plaintiff that they had instituted a suit against the insurance company in the Delhi High Court, it being Suit No. 475/89. It appears that the ship which was carrying the goods from Singapore to a Port in India sank. The plaintiff, therefore, claimed that defendants Nos. 1 to 5 on one hand and defendant No. 6 on the other denied their respective liability to repay to the plaintiff the amounts claimed in the suit and that the plaintiff was in doubt as to the person from whom it was entitled to redress (an
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