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2008 (3) GCD 1799 (Guj)
Hon’ble Mr. Justice S.R. Brahmbhatt
Sanjay Hiralal Shah [Vadodara]
Versus
HDFC Bank Limited
Civil Revision Application No. 28 of 2005—Decided on 04/04/2008
Held :
It may also be noted that summery suit is provided in very few crystallized claims suit so to say for the convenience. The plausibility of hardship likely to be caused to a genuine party for genuine reasons by operation of various stringent provisions like failure to file appearance within 10 days entitling the plaintiff to have decree against the defaulting defendant on the only basis of the averments made in the plaint as the defendant has no right to contest the suit without having condoned the delay in filing the appearance and without obtaining leave to defend has warranted enactment of provisions like Order 37 Rule 4 conferring widest possible powers upon the Courts to set aside the decree if the “special circumstances” pressed into service so warranted. In this context it would be quite expedient to refer to the positively couched proviso to Rule 5 of the Order 37 which makes it incumbent upon the Court to grant leave to defend in all cases where there is indication of substantial defense it says that provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defense to raise or that the defense intended to be put up by the defendant is frivolous or vexatious. [Para 67]
The Defendant No. 7 was served. It was also served with summons for judgment and it engaged Advocate. When the Advocate is engaged the party is justified in drawing presumptions and act upon the presumption that he would do the needful in defending their case. The instant case is not such as wherein the party i.e. Defendant No. 7 completely neglected and did not engage Advocate for months to gather and allowed the Courts to pass ex parte decrees. If the concerned Advocate had taken due care in filing delay condonation application and leave to defend and delay condonation therein than perhaps scenario would have been different. The other Defendants No. 1 to 6 filed Leave to defend whereas in or around that time the Defendant No. 7’s Advocate filed Written Statement pointing out as to why the Defendant No. 7 was wrongly joined. The Advocate for the Defendant No. 7 filed application Exhibit 37 under Order 7 Rule 11 for dismissing the suit qua them as no cause of action had been disclosed in the plaint. The trial Court stated it for reply as well as for hearing which never took place as the plaintiff succeeded in obtaining decree only on the ground of Defendant No. 7’s default in filing appearance within stipulated time. [Para 70]
The trial Court of the first instance did not insist upon the original instruments to be produced before it nor did it observed anywhere that before passing final decree against Defendant No. 7 it perused the original instruments. [Para 71]
For obtaining summary judgment ordinarily original Documents must be produced, if not produced that the party is under an obligation to prove its veracity as well as it’s genuine loss. In the instant the plaintiff has proved neither. This requirement is equally applicable in cases where there are no disputes with regards to signature, genuineness etc as the original documents are most essential for passing decree as the entire suit is based thereon. In the instant case production of original instruments before the Court while passing the decree finally against the Defendant No. 7 was all the more necessary as the very nature of instruments, the MICR Code inscribed thereon, and the fact that whether they were cheques or demand drafts were going to the very roots of the matter. [Para 71]
This Court is unable to accept the submissions of the Counsel for the plaintiff that the trial Court while hearing application under Order 37 Rule 4 cannot look into the merits of the case at all without first being satisfied about existence of special circumstances that prevented the applicant from complying the time-table of Order 37. As the very provisions of Rule 4 of Order 37 provides that while hearing the plea for setting aside the decree the Court may grant leave to file appearance, condone delay and may grant leave to defend the Court is duty bound to hear the applicant on merits so as to be satisfied as to whether any case of substantial defense is made out or not. [Para 74]
Thus, the bundle of facts narrated herein above constituted “Special Circumstances” and strong substantial defense on the part of Defendant No. 7 warranted setting aside of decree dated 15.09.2003. [Para 76]
Application Dismissed
Based on the provided legal document, the key points are as follows:
The case involves a challenge to an order setting aside a decree passed in a Special Summary Suit, specifically regarding whether the trial court was justified in doing so under the provisions of Order 37 Rule 4 of the Civil Procedure Code (CPC) (!) (!) .
The suit was initiated by the plaintiff for the recovery of a substantial amount, based on alleged agreements and issuance of demand drafts or cheques, which the defendant disputes as being without consideration or not in the nature of demand drafts (!) (!) (!) .
The defendant, HDFC Bank, was served with summons but did not appear within the stipulated time, leading to the court passing a decree against it based on default (!) (!) .
Subsequently, the defendant filed an application under Order 37 Rule 4 to set aside the decree, claiming "special circumstances" and a strong substantial defense, including issues regarding the nature of the instruments (whether cheques or demand drafts), and alleged procedural irregularities such as non-service of certain applications upon them (!) (!) (!) .
The trial court initially passed an ex parte decree against the defendant, which was later challenged and set aside by the revisional court, citing that the trial court should have examined the merits of the case and the existence of "special circumstances" before setting aside the decree (!) (!) .
The revisional court emphasized that the provisions of Order 37 Rule 4 allow the court to set aside decrees under "special circumstances" after a proper assessment of the facts, including whether the defendant has a substantial defense and whether procedural irregularities justify setting aside the decree (!) (!) .
The court noted that the defendant’s failure to appear within the stipulated time was not due to neglect but was influenced by procedural issues, such as the non-filing of a delay condonation application or leave to defend, which could be considered "special circumstances" warranting intervention (!) (!) .
The court also observed that the original instruments (cheques or demand drafts) were not produced before the court at the time of passing the decree, which is a procedural requirement especially in summary suits based on negotiable instruments (!) (!) .
The court held that the nature of the instruments (cheques vs. demand drafts) and the associated MICR codes are material facts that impact the liability of the defendant and that the trial court should have examined these aspects before passing the decree (!) (!) .
The court clarified that while the provisions of Order 37 Rule 4 confer wide discretion, they require the defendant to establish "special circumstances" and a substantial defense, which in this case were demonstrated by procedural irregularities, misrepresentations, and issues regarding the instruments’ genuineness (!) (!) (!) .
Ultimately, the revisional court dismissed the revision application, upholding the order setting aside the decree, affirming that the trial court’s decision was justified given the facts and legal principles involved (!) .
The court also noted that the defendant’s advocate’s actions, such as filing the written statement without leave and the non-service of certain applications, contributed to the "special circumstances" justifying the setting aside of the decree (!) (!) .
The decision underscores that procedural irregularities and the absence of original documents at the time of decree can constitute "special circumstances" under Order 37 Rule 4, justifying the court’s intervention to prevent miscarriage of justice (!) (!) .
The court emphasized that the primary concern in such summary proceedings is the integrity of the instruments and the procedural fairness, and that the court must examine the merits where "special circumstances" are claimed (!) .
The order finally dismissed the revision application, confirming that the trial court’s order was appropriate and justifiable under the circumstances, with costs to be borne by the respective parties (!) .
These points collectively reflect the court’s reasoning regarding procedural fairness, the importance of original documents, the nature of "special circumstances," and the scope of powers under Order 37 Rule 4 to set aside decrees in summary suits.
S.R. Brahmbhatt, J.—The applicant, original plaintiff [hereinafter referred to as the plaintiff] has approached this Court under Section l15 of the Code of Civil Procedure, 1908, challenging the order dated 28.12.2004 passed by learned 4th Jt. Civil Judge, (S.D.), Vadodara, below Exhibit 64 in Civil Misc. Application No. 179 of 2003 preferred by the original Defendant No. 7 respondent hereinabove, under provision of Order XXXVII Rule 4 of Civil Procedure Code for setting aside the decree dated 15.09.2003 passed by 9th Jt. Civil Judge (S.D.), Vadodara, in Special Summary Suit No. 202 of 2001 preferred by the plaintiff against Cherotar Nagrik Sahkari Bank, a Co-operative Bank, and others, including the present respondent i.e. HDFC Bank for recovery of Rs. 7,08,10,040 (Rs. Seven crore eight lacs ten thousand and forty only).
2. Facts in brief giving rise to this revision application deserve to be set out as under.
The original plaintiff runs his business in the name of Apex Chemicals and is also a freelance Financial Consultant. Defendants No. 1 is Charotar Nagrik Sahakari Bank a co-operative bank, Defendant Nos. 2 to 4 were its Directors, and Defendants No. 5 & 6 were its Branch Managers, while Defendant No. 7, respondent herein above, is HDFC Bank, a banking company incorporated under the Companies Act, 1956.
3. It was the case of the plaintiff that the Charotar Nagrik Sahkari Bank Ltd, which has now been under liquidation, at the relevant time consulted the plaintiff and hired his services and expertise for procuring deposits worth about Rs. 200 Crores. The Defendant Nos. 1 to 6 agreed to pay to the plaintiff, 6% of Rs. 200 Crores deposits that might be procured with his help and expertise.
4. The plaintiff has averred in the plaint that the Defendant No. l’s Directors and Chief Managers were taken to various offices at Delhi, particularly in the Ministry of Agriculture, who were ready to deposit Rs. 200 Crores in four installments and also took them to Mineral Corporation of India, New Delhi which finalized the scheme of depositing Rs. 200 crores on 05.11.1999 and also finalized scheme of depositing with Coal India Ltd, Calcutta.
5. The Defendant Nos. l to 6 were to arrange for providing repayment guarantee from any Nationalized Bank, as it was most essential condition for loan. Defendant Nos. l to 6 were to obtain repayment guarantee from HDFC Bank, which they could not obtain and they informed plaintiff that instead thereof they would then make arrangement with Central Bank of India for such repayment guarantee. The plaintiff averred in Paragraph 6 of the plaint that thus the entire deposit of Rs. 200 crores was available to the Defendant No. l Bank and acceptance of deposit was however through Central Bank of India and stated that Defendant Nos. l to 6 procured deposits worth Rs. 200 Crores.
6. The Defendant Nos. l to 6 in the meantime realized that 6% of 200 crore rupees would be a huge amount for such expertise and help rendered, and, therefore, after much persuasion and negotiations ultimately with great reluctance plaintiff agreed to settle the matter for Rs. 7 crores for his professional service charges. The plaintiff prepared bill for Rs. 7 Crores alongwith his letter dated 20.11.1999 requesting the Defendants No. 1 to 6 to pay Rs. 6.65 Crores after deducting 5 % TDS, accordingly the Defendants No. l to 6 issued total 7 Demand Drafts/ Bankers Cheques dated 6.12.1999 for the amounts mentioned therein-totaling Rs. 6,50,00000/-. The plaintiff has given the details in Paragraph 8 of the plaint.
7. As per the say of the plaintiff in Para-8 of the plaint the Defendant No. l to 6 issued seven demand drafts/Banker’s cheques for the amounts mentioned therein. These Banker’s cheques dated 06.12.1999 were drawn upon HDFC Bank. The plaintiff presented 6 demand drafts / bankers’ cheques through his banker Union of India to HDFC bank for encashment on two occasions, which returned the same under “Stop Payment” instructions from
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