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2014 Supreme(Del) 1548

High Court of Delhi
NAJMI WAZIRI, J.
Rajendra Singh Rathore
Versus
Delhi Metro Rail Corporation
CM (M) No. 1117 of 2012
Decided on : 28-05-2014

Advocates appeared:
For the Petitioner:Tushar Singh, Advocate.
For the Respondent:B.L. Wali, Advocate.

Headnote:

The Court set aside the ex-parte decree passed against the petitioner under Order XXXVII of the Code of Civil Procedure (CPC) and granted him leave to defend the suit, subject to certain conditions. The Court held that the amount specified in the contract as liquidated damages was a penalty and not a genuine pre-estimate of the likely damage arising from a breach of the contract.

Fact of the Case:

The petitioner, a trainee, had executed a deed agreeing to serve the respondent, a company, for a period of five years. The deed provided that if the petitioner breached the contract, he would be liable to pay the respondent an amount of Rs. 5,00,000/- as liquidated damages. The petitioner breached the contract by failing to attend the training program. The respondent filed a suit under Order XXXVII of the CPC, claiming payment of the liquidated damages. The Trial Court passed an ex-parte decree in favor of the respondent. The petitioner filed an application to set aside the ex-parte decree, which was rejected by the Trial Court.

Finding of the Court:

The Court found that the petitioner had been served with the summons by Registered Post, but he had refused to accept service. The Court also found that the amount specified in the contract as liquidated damages was a penalty and not a genuine pre-estimate of the likely damage arising from a breach of the contract.

Issues: 1. Whether the petitioner was duly served with the summons. 2. Whether the amount specified in the contract as liquidated damages was a penalty or a genuine pre-estimate of the likely damage arising from a breach of the contract.

Ratio Decidendi: 1. The Court held that the petitioner had been duly served with the summons by Registered Post, as evidenced by the postal department's report. The Court rejected the petitioner's contention that the statement on oath/affirmation as to non-service of summons ought to prevail over the presumption of service under section 114 of the Evidence Act, 1872 and section 27 of the General Clauses Act, 1897. 2. The Court held that the amount specified in the contract as liquidated damages was a penalty and not a genuine pre-estimate of the likely damage arising from a breach of the contract. The Court considered the fact that the amount was payable in various eventualities, including if the petitioner was dismissed by the respondent for any reason, and that it did not make any distinction between the amount payable if the contract was broken immediately or at a later stage.

Final Decision: The Court set aside the ex-parte decree passed against the petitioner and granted him leave to defend the suit, subject to the condition that he deposit an amount of Rs. 1,00,000/- with the Trial Court within a period of four weeks. The petitioner was also directed to file his Written Statement, along with his list of documents, in the Trial Court within a period of thirty days from the date of the order.

Judgment :

Najmi Waziri, J.

1. The present petition has been preferred by the petitioner under Article 227 of the Constitution of India against the order dated 24th September, 2012 (“impugned order”) of the Additional District Judge – I, Patiala House Courts, New Delhi (“Trial Court”). The impugned order came to be passed upon an application under Order XXXVII rule 4 (“Application”) of the First Schedule to the Code of Civil Procedure (“Code”) by the petitioner (who was defendant) in Suit 281/11 (“Suit”), which was filed under Order XXXVII of the Code. By the impugned order, the learned Trial Court rejected the Application, holding that the appellant has failed to demonstrate any special circumstances justifying setting aside the ex-parte decree dated 7th December, 2011.

2. Although extensive arguments were made by the respondent as to the maintainability of the petition, this Court finds it unnecessary to consider the same in detail. The petitioner has preferred the petition under Article 227 to contend, primarily, that (i) the summons was actually never served upon him and (ii) the Suit was not maintainable and ought to not be considered under Order XXXVII of the Code. The respondent contended that the petition is not maintainable inasmuch as an appeal would be maintainable against the decree. This Court does not wish to opine on whether an appeal would have been maintainable against the impugned order, although the Rajasthan High Court has, in one matter, held the same in the negative. Mohan Lal v Om Prakash, AIR 1989 Raj 138, at p. 184. The proceedings having been instituted under Article 227, this Court shall consider the same under the said provision, while bearing in mind the inherent as well as self-imposed limitations on the powers of superintendence, and refrain from converting itself into a court of appeal. Surya Devi Rai v Ram Chander Rai & Ors., (2003) 6 SCC 675.

Facts

3. The genesis of the dispute, according the Suit, can be traced to an agreement in the form of a letter of offer from the respondent to the petitioner, dated 16th July, 2010 (“letter of offer”). The letter offered to the petitioner an appointment to the position of Executive Trainee (Civil) in the respondent’s organisation, and to undergo a course for a Post-Graduate Diploma in Metro Technology and Management, at the Indian Institute of Technology, Delhi. The training was to be at the risk and cost of the respondent, who further offered an amount of Rs. 25,000/- (Rupees twenty five thousand only) per mensem as stipend for the duration of the training. The letter of offer further provided that upon successful completion of the training, the petitioner shall be appointed as Assistant Manager (Civil) at a pay scale of Rs. 26,000 - 46,500/- (Rupees twenty six thousand to forty six thousand five hundred only) by issuance of a formal letter of appointment (“appointment assured”).

4. The letter of offer contained certain other clauses that are relevant to the dispute:

4.1. That the petitioner shall execute a deed, termed as a “bond”, binding himself to serve the respondent for a period of five years from his date of joining the course. Further, in the eventuality of the petitioner being dismissed for serious misconduct, the bond shall be forfeit.

4.2. That the petitioner ought to obtain the Diploma by scoring the minimum percentage of marks or more, as required by the Institution. If the petitioner fails to secure the minimum percentage required to obtain the Diploma, he will not be provided the appointment assured. The petitioner, in this eventuality, ought to pay to the respondent an amount of Rs. 5,00,000/- (Rupees five lakh only), which is termed as “bond amount”.

4.3. That the petitioner ought to maintain inter alia discipline, good conduct, and 100% attendance at the institution for the duration of the course; absence, if any, ought to be authorised by the respondent. In case anything adverse is received from the institution in respect of the p




































































































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