Back
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S.S. SUBRAMANI
Nicco Corporation Limited
Versus
Cethar Vessels Ltd., by its Joint Managing Director, R.T. Arasu & Another
C.R.P. No. 345 of 1997
Decided On :Decided on : 04-07-1997
CIVIL PROCEDURE CODE - ORDER 9, RULE 6(1)(C) - SUMMONS - SERVICE - SUFFICIENT TIME TO APPEAR - EX PARTE DECREE - JURISDICTION - NATURAL JUSTICE - ARTICLE 227 OF THE CONSTITUTION OF INDIA - SUPERVISION AND CONTROL OVER INFERIOR COURTS - INTERFERENCE - EXTRAORDINARY JURISDICTION - ALTERNATIVE REMEDY - INJUNCTION - BANK GUARANTEE - IRREVOCABLE AND UNCONDITIONAL - FRAUD - IRRETRIEVABLE HARM OR INJUSTICE - JUDICIAL PROPRIETY.
Fact of the Case:
The petitioner, a corporation, entered into an agreement with the first respondent for the manufacture and supply of a Waste Heat Recovery Boiler for Twin Hearth Furnace. The petitioner gave an advance of Rs. 29 lakhs to the first respondent for part execution of the contract, and in order to guarantee the execution of the work, the second respondent-Canara Bank stood as guarantor for the first respondent. The Guarantee was extended two times, and the last period was to expire by 30-9-1996. At that time, the first respondent rushed to Court and got an ex parte order of injunction. The petitioner challenged the ex parte decree and the injunction order in a Civil Revision Petition under Article 227 of the Constitution of India.
Finding of the Court:
The Court held that the lower Court had no jurisdiction to pass an ex parte decree against the petitioner without giving it sufficient time to appear and defend the suit. The Court also held that the lower Court had violated the principles of natural justice by not complying with the provisions of the Civil Procedure Code and by not considering the petitioner's evidence before passing the decree. The Court further held that the lower Court had erred in granting an injunction restraining the petitioner from invoking the bank guarantee, as there was no evidence of fraud or irretrievable harm or injustice to the plaintiff if the injunction was not granted.
Issues: 1. Whether the lower Court had jurisdiction to pass an ex parte decree against the petitioner without giving it sufficient time to appear and defend the suit? 2. Whether the lower Court had violated the principles of natural justice by not complying with the provisions of the Civil Procedure Code and by not considering the petitioner's evidence before passing the decree? 3. Whether the lower Court had erred in granting an injunction restraining the petitioner from invoking the bank guarantee?
Ratio Decidendi: 1. The Court held that the lower Court had no jurisdiction to pass an ex parte decree against the petitioner without giving it sufficient time to appear and defend the suit, as required under Order 9, Rule 6(1)(c) of the Civil Procedure Code. The Court relied on several precedents to support its holding, including A.I.R. 1963 Punjab 122 (Works Manager, C&W Shops v. Ghanshyam) and A.I.R. 1953 T.C. 126 (Ahmed v. Abdul). 2. The Court held that the lower Court had violated the principles of natural justice by not complying with the provisions of the Civil Procedure Code and by not considering the petitioner's evidence before passing the decree. The Court relied on several precedents to support its holding, including 1961 Kerala Law Times page 876 (Joseph v. Kunjan) and 1980 Suppl. SCC 420 (Grindlays Bank Ltd. v. Industrial Tribunal). 3. The Court held that the lower Court had erred in granting an injunction restraining the petitioner from invoking the bank guarantee, as there was no evidence of fraud or irretrievable harm or injustice to the plaintiff if the injunction was not granted. The Court relied on several precedents to support its holding, including 1997 (5) Supreme 291 (Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. and another).
Final Decision: The Court allowed the Civil Revision Petition, set aside the ex parte decree and the injunction order, and directed the lower Court to restore the suit to its file and proceed with the same in accordance with law.
1. This Revision is by the first defendant in O.S. 376 of 1996, on the file of Subordinate Judge, Tiruchirappalli. In this Revision, petitioner has sought for setting aside the ex parte decree of permanent injunction passed on 5-7-1996 by the Subordinate Judge, Tiruchy, and to permit the petitioner to invoke and enforce the Bank Guarantees referred to therein and also to recover costs.
2. In the grounds of Revision, it is said that the first respondent herein entered into an agreement with the revision petitioner for manufacturing and supply of Waste Heat Recovery Boiler for Twin Hearth Furnace. These Furnaces were meant for Durgapur Steel Plant. Petitioner had given an advance of Rs. 29 lakhs to the first respondent herein for part execution of the contract, and in order to guarantee the execution of the work, second respondent-Canara Bank stood as guarantor for the first respondent. As per the terms of the Guarantee, petitioner was to have recourse to enforce the Guarantee without demur, and the Guarantee could not be revoked by notice or otherwise, and it is unconditional. The Guarantee was extended two times, and the last period was to expire by 30-9-1996. At that time, first respondent rushed to Court and got an ex parts order of injunction.
It is alleged that even the ex parte order of injunction was not in accordance with law, and the petitioner was not given any time to pursue his remedy in Court. The suit itself is one for bare injunction and the interim application was also for the same. It is alleged that while granting the ex parte order of interim injunction, the Court has granted the final relief itself, without notice to the affected person. It is alleged that the order is invalid for the very reason that the papers have not been served as required under Order 39, Rule 3, C.P.C. It is further alleged that by accepting the suit, the Court has done an irretrievable and irremediable damage to the petitioner. The Bank Guarantee was an unconditional one, and by granting an injunction, the Court has violated all the settled principles of law declared by the Supreme Court and High Courts. It is further said that the lower Court has neglected to apply the Statutory Rules laid down in the Civil Procedure Code with regard to Summons and the law regarding injunction. These Rules are to protect the interest of the Opposite Party and are in consonance with the rules of natural justice. It is said that the case was posted on 1-8-1996 when no notice was served by any officer of the Court. Petitioner-Corporation is having its Office at Calcutta, outside the jurisdiction of Trichy Sub Court, and even the summons were not served on the person authorised to receive the same. It is said that there was no valid service of summons. It is further said that on 1-8-1996 itself, petitioner was declared ex parte and a decree was passed on 5-8-1996. It is further said that copy of the summons has to be served on the petitioner or his agent, and receipt of summons must also be acknowledged. None of these procedures was followed. It is said that after the passing of the ex parte order of injunction, the main case itself was proceeded with when no service was effected by an Officer of Court. But the lower Court proceeded on memo filed by the counsel for plaintiff and no notice has been given regarding the suit and there is no valid service of summons. It is said that there was no service of summons and when no opportunity was given to the petitioner to contest the suit, the Court has no jurisdiction to set the petitioner ex parte and also to proceed with the suit ex parte. The decree is, therefore, violative of the principles of natural justice, and it is also one passed against the settled legal position, and, even on the evidence adduced, a decree should not have been granted.
3. First respondent/plaintiff filed a counter affidavit stating that along with the plaint, an interlocutory application was filed as I.A. 506 of 1996, and
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
