The judgment emphasizes the importance of demonstrating special circumstances and triable issues in setting aside an ex-parte judgment and decree under Rule 4 of Order 37. It also reaffirms the limited liability of directors and the absence of personal guarantee as factors influencing the liability of directors.

1. This petition is directed against the order dated 14.2.2002 passed by the learned Additional District Judge, Delhi thereby dismissing an application under Order XXXVII Rule 4 CPC filed by the petitioners/defendants praying for the setting aside of the ex-parte judgment and decree dated 10.02.1999 passed in favour of the respondent/plaintiff in a suit filed by him under Order XXXVII CPC.

2. Facts necessary to dispose of the present petition are that on 22.10.97 respondent filed a suit under Order XXXVII CPC against the petitioners for recovery of Rs.1,72,000/-. Suit was based upon three cheques dated 21.10.94 issued under the signatures of petitioner no.2 as director of petitioner No.1 in favour of the respondent.

.3. Backdrop to the cheques aforesaid, as pleaded in the plaint, was that petitioner no.1 Sangeeta Jewels Pvt. Ltd. was a company incorporated under the Indian Companies Act and petitioner no.2 Mr.Vipin Sehgal and petitioner no.3

.Ms.Sangeeta Sehgal were its directors. That the plaintiff Mr.Ajay Kumar Jain agreed to advance a friendly loan in sum of Rs.80,000/- to the petitioners. That the petitioners agreed to pay interest @ 24% p.a. and to refund the entire amount within a period of one year. That in lieu of same, petitioner no.2 acting on behalf of petitioner no.1 company issued the aforesaid three cheques. That when said the cheques were presented for encashment same were returned unpaid for want of funds.

4. It is relevant to note that there were no averments in the plaint filed by the respondent vis-a-vis petitioner no.3 save and except that she is the director of petitioner no.1 company.

5. On being served with summons in the suit, on 8.12.97, petitioners entered appearance. In the memo of appearance filed by the petitioners address furnished by them for the purposes of service of summons for judgment was ‘D-10, Green Park, New Delhi’.

6. Since there was delay in entering appearance petitioners filed an application under Order XXXVII Rule 3(7) CPC for condonation of delay which application was allowed by the learned trial court vide order dated 5.6.98. On said date learned trial court directed the respondent to apply for summons for judgment and adjourned the matter to 14.9.98.

7. On next date i.e. 14.9.98 respondent filed an application under Order XXXVII Rule 3(4) CPC seeking fresh summons for judgment. The petitioners were directed to be served and matter was adjourned to 30.01.98.

8. On 30.01.98 it was found that the summons for judgment were returned unserved thus trial court directed that the petitioners be served by way of affixation and matter was adjourned to 10.02.99.

9. Petitioners were served by way of affixation at D-10, Green Park, New Delhi.

10. Order dated 10.02.99 shows that the counsel for the petitioners appeared before the learned trial court and prayed for an adjournment, which was declined.

.11. Noting that the aforesaid three cheques were issued by petitioner no.2 on behalf of petitioner no.1 company and that no application for leave to defend has been filed by the petitioners, vide judgment and decree dated 10.02.99 learned trial court decreed the suit against petitioners nos.1 and 2. Vis-a-vis petitioner no.3 suit was dismissed on the ground that the no liability could be fastened upon her based on the three cheques merely because she was a director of petitioner No.1.

12. Petitioners filed an application under Order XXXVII Rule 4 CPC seeking to set aside the ex-parte decree.

13. Averments made in the said application were that at the time when petitioners entered appearance, petitioner no.2 was working as a manager in the company M/s Crystal Gold Pvt Ltd which was carrying its business from the premises D-10, Green Park, New Delhi and that is why petitioners furnished said address for the purposes of service of summons for judgment. That soon thereafter petitioner no.2 resigned from the said company but was assured by his colleagues/associates in the said comp