Arijit Banerjee, J
(1) The defendant has taken out this application for recalling of a decree dated 11 September, 2015 which was passed when the suit appeared under
the heading ‘undefended suit’. The defendant contends that there was sufficient cause for it not to appear on the date when the decree was
passed and hence, the decree should be recalled and the defendant should be given an opportunity to contest the suit.
(2) The undisputed facts of the case are that the suit was filed on April 8, 2015. In the suit the plaintiff claimed a money decree for Rs. 2,60,00,000/-
along with interest at the rate of 24 per cent per annum. The writ of summons and the copy of the plaint were served at the defendant’s office on
19 April, 2015. The defendant neither entered appearance nor filed written statement within the prescribed date. Accordingly, the plaintiff caused the
suit to appear in the list as ‘undefended suit’ on 11 September, 2015. The plaintiff’s witness was examined. Upon being satisfied that the
plaintiff had proved its case this court decreed the suit.
(3) The case of the defendant/applicant is that in the month of April 2015 the defendant’s office was totally closed. The defendant did not have
any employee by the name of Manab Basu, who accepted the service of the writ of summons on behalf of the defendant. If anything was received on
behalf of the defendant on 29 April, 2015, the same could not reach the defendant and as a result the writ of summons cannot be treated to have been
served upon the defendant company.
(4) The applicant’s further case is that the defendant company was facing Central Bureau of Investigation (in short ‘CBI’) enquiry
between February and October, 2015. First Information Report was registered against the directors of the defendant company on 15 May, 2015. On
16 May, 2015 one of the directors of the defendant company namely Mr. Azgar Ali Shaikh was arrested by the CBI. Mr. Asraf Ali Shaikh, another
director of the defendant company was in China at that time. On his return to India he was also arrested on 28 May, 2015. Mr. Azgar Ali Shaikh was
enlarged on bail on 15 July, 2015. Mr. Asraf Ali Shaikh was released on bail on 29 July, 215. The entire office of the defendant was in doldrums. The
directors in control of the defendant company were mostly behind bars. For all those reasons the defendant could not engage an advocate to enter
appearance on its behalf nor could take any step for contesting the suit. This is the sufficient cause for recalling the ex parte decree.
(5) The defendant relied on a decision of the Hon’ble Apex Court in the case of M. K. Prasad-vs.-P. Arumugam, (2001) 6 SCC 176 and in
particular reliance was placed on the following portion of paragraph 10 of the reported judgment which reads as follows:-
“10……….While deciding the application for setting aside the ex parte decree, the Court should have kept in mind the judgment impugned, the
extent of the property involved and the stake of the parties. We are of the opinion that the inconvenience caused to the respondent for the delay on
account of the appellant being absent from the court in this case can be compensated by awarding appropriate and exemplary costs. In the interest of
justice and under the peculiar circumstances of the case we set aside the order impugned and condone the delay in filing the application for setting
aside the ex parte decree. To avoid further delay, we have examined the merits of the main application and feel that sufficient grounds exist for setting
aside the ex parte decree as well.â€
(6) Learned Counsel also relied on a decision of the Apex Court in the case of Tea Auction Ltd.-vs.-Grace Hill Tea Industry & Anr., (2006) 12 SCC
104 and in particular he relied on the following portion of paragraph 15 of the reported judgment which reads as follows:-
“15………………….A discretionary jurisdiction has been conferred upon the court passing an order for setting aside an ex parte decree not
only on the basis that the defendant had been able to prove sufficient cause for his non-appearance even on the date when the decree was passed, but
also on other attending facts and circumstances. It may also consider the question as to whether the defendant should be put on terms. The court,
indisputably, however, is not denuded of its power to put the defendants to terms. It is, however, trite that such terms should not be unreasonable or
harshly excessive. Once unreasonable or harsh conditions are imposed, the appellate court would have power to interfere therewith. But, it would not
be correct to hold that no error has been committed by the Division Bench in holding that the learned Single Judge did not possess such power. The
learned Single Judge exercised his discretionary jurisdiction keeping in view that the matter had been disposed of in fact finally at the interim stage at
the back of the defendant and it was in that view of the matter a chance was given to it to defend the suit, but, then the learned Single Judge was not
correct to direct securing of the entire sum of Rs. 37 lakhs in the form of bank guarantee or deposit the sum in cash. The condition imposed should
have been reasonable. What would be reasonable terms would depend upon the facts and circumstances of each case.â€
(7) Reliance was also placed by the defendant’s learned Counsel on a decision of the Madras High Court in the case of Karumuri Surayya-vs.-
Thadepalli Pushpavalli Thayaramma, AIR 1950 Mad 618, in support of his submission that while setting aside a decree, conditions can be imposed but
such conditions should not be unreasonable or oppressive.
(8) Learned counsel for the defendant finally submitted that the defendant has an excellent defence on merits. Hence, an opportunity should be given
to the defendant to contest the plaintiff’s claim.
(9) Learned Counsel for the plaintiff/decree-holder/respondent submitted that the present application is barred by limitation. The decree was passed on
11 September, 2015. The recalling petition has been affirmed on 24 March, 2017 and reaffirmed on 11 May, 2017. There is no explanation for the
delay in filing the application. The application for execution of the decree dated 11 September, 2015 was served on the defendant on 14 February,
2017. Even assuming for the sake of argument that the defendant became aware of the decree only on that date, there is no explanation as to why the
application was filed more than a month thereafter.
(10) Learned Counsel then submitted that the defendant’s case of non-service or improper service of the writ of summons is absolutely frivolous.
The Sheriff’s report at page 37 of the petition shows personal service as well as postal service on the defendant company. This is not disputed. At
page 21A of the plaintiff’s A/O, there is a document which shows receipt of the writ of summons by one Manab Basu on behalf of the defendant
and the defendant’s official seal is there next to the signature of Manab Basu.
(11) The defendant had three directors since its incorporation. The third director is Sk. Muzaffar. There is no whisper in the recalling petition as to
why the Sk. Muzaffar could not take steps on behalf of the defendant to contest the suit.
(12) Learned Counsel relied on two decisions. The first one is a decision of the Delhi High Court in the case of Mediterranean Shipping Company,
S.A. and Anr.-vs.-Margra Industries Ltd., 128 (2006) DLT 51. In that case also the defendant had contended that service of writ of summons was
accepted by an unauthorised person. The learned Judge rejected such contention observing that the service at the defendant’s address was under
seal of the defendant corporation and was thus signed by a duly authorized person. The plea cannot be accepted that the seal of the defendant
company would be with an unauthorised person. The provisions of O. 29 R. 2 of the CPC prescribe that service can be on a principal officer of a
corporation and the person holding the seal of a company would be the duly authorised person to receive summons on behalf of the company.
The second decision relied on is also a decision of the Delhi High Court in the case of Bright Star Hotels P. Ltd.-vs.-Aircon Engineers P. Ltd., 2008
(106) DRJ 764. A Division Bench of the Delhi High Court referred to the decision in the case of Mediterranean Shipping Company, S. A. and Anr.
(supra) and rejected the defendant’s case of non-service of summons observing that the address of the defendant as shown in the plaint was the
address wherefrom communications were being effected on its behalf. The service on that address was under the seal of the defendant corporation
and reflected that it was signed by a duly authorized person. Learned Counsel prayed for dismissal of the application. Court’s View:-
(13) As regards the service of the writ of summons, the defendant’s case of non-service or improper service has no merit at all. In paragraph 3 of
the supplementary affidavit affirmed on behalf of the defendant on 12 May, 2017 it has been categorically admitted that the writ of summons was
served on the defendant/applicant on 29 April, 2015. This is in deviation from the defendant’s stand in the recalling petition that the defendant did
not have any employee by the name of Manab Basu who accepted service of the writ of summons. This shifting stand makes a huge dent into the
credibility of the defendant. It is difficult to believe a party who makes contradictory and/or inconsistent statements in its pleadings.
(14) As regards the lack of authority of Manab Basu to receive the writ of summons on behalf of the defendant, this contention of the defendant also
cannot be accepted. The said Manab Basu while acknowledging receipt of the writ of summons put the defendant company’s seal next to his
signature. An employee of a limited company who has in his custody the company’s seal must be deemed to be authorized by the company to
accept service of notices, summons etc.. I completely agree with the decisions of the Delhi High Court in Mediterranean Shipping Company, S. A.
and Anr. (supra) and in Bright Star Hotels P. Ltd. (Supra).
(15) O. 29 R. 2 of the CPC provides that where a suit is against a corporation the summons may be served on the secretary or any director or any
principal officer of the corporation (emphasis is mine). An employee of a corporation/company holding the seal of the company must be taken to be
duly authorized by the company to receive summons on behalf of the company.
(16) Once I have held that the summons was duly served on the defendant, the only other question that falls for determination is whether or not the
defendant was prevented by any sufficient cause from appearing when the suit was heard and decreed ex parte.
(17) The defendant has stated that between February and October 2015 it was facing CBI enquiry. One of the directors of the defendant namely Mr.
Azgar Ali Shaikh was arrested and was in jail between 16 May, 2015 and 15 July, 2015. Another director namely Mr. Asraf Ali Shaikh was in jail
between 28 May, 2015 and 29 July, 2015. This is the cause as to why the defendant could not contest the suit by entering appearance. I cannot accept
this to be sufficient cause. The defendant did not disclose that from its inception it had three directors. The third director namely, Sk. Muzaffar was
not arrested and was not in jail. It is the plaintiff who has produced documents to show that Sk. Muzaffar was also a director. Once this fact came
into light the least that the defendant could have done was to explain why Sk. Muzaffar did not or could not take steps to defend the suit. No such
explanation was offered.
(18) Even otherwise, the defendant is a limited company and must be having a secretary and other officers. A commercial incorporated entity like the
defendant company cannot be treated at par with an ordinary citizen who may not be aware of the legal procedures and the nitty-gritties of contesting
a litigation. A commercial entity like the defendant company ought not to be given the benefit of doubt that an elderly rustic person or the like may
deserve.
(19) For yet another reason I am inclined to dismiss the application and that is suppression of a material fact as I have indicated earlier. The defendant
approached this Court with the recalling application making out a case that both of its directors were in jail for several days and hence, they could not
take steps to contest the suit. The defendant suppressed the fact that it had a third director. Even in the supplementary affidavit affirmed on behalf of
the defendant on 12 May, 2017, there is no mention that Sk. Muzaffar was also a director of the defendant company. In the A/O filed by the plaintiff
in connection with such supplementary affidavit the plaintiff has disclosed a copy of Form No. 32 (filed pursuant to Sec. 303 (2) of the Companies
Act, 1956) pertaining to the defendant company wherefrom it came to light that the defendant had a third director since incorporation. This, in my
opinion, is a material suppression and the defendant deliberately suppressed that it had a third director since the defendant is not in a position to explain
the inaction on the part of the third director. It is settled law that if a party approaches the court with unclean hands, he is not entitled to any relief.
(20) There is also an aspect of delay in making the present application. It is not in dispute that the execution application was served on the defendant
on 14 February, 2017. Even I proceed on the basis that it was on that date that the defendant became aware of the ex parte decree, there is no
explanation at all as to why the recalling application was affirmed on 24 March, 2017 i.e., more than a month after becoming aware of the decree.
This also shows the indifferent attitude of the defendant.
(21) I am aware that the merits of the defendant’s defence are not strictly germane to an application under O. 9 R. 13 of the CPC. However, I
am of the view that if the defendant has taken the point in the recalling application that it has a good defence on merits the same should be looked into
and if the defence as pleaded appears to be disclosing an arguable case, the same at times weighs with the court to exercise discretion in favour of the
defendant. In the present case, the purported defence that the defendant has pleaded in the recalling application, is no defence at all. Rather it
amounts to an admission that the defendant received Rs. 2.6 crores from the plaintiff as advance and the cheques for the said amount which the
defendant gave to the plaintiff as security, were dishonoured for lack of funds in the defendant’s concerned bank account. There is a clear
admission of the plaintiff’s claim rather than denial.
(22) The decisions relied upon by the defendant do not help the defendant at all. All the three decisions are authorities for the proposition that while
recalling an ex parte decree, the court may impose conditions on the defendant but the same must be reasonable and not excessively harsh. The
question of imposing terms on the defendant as a pre-condition for recalling an ex parte decree under O. 9 R. 13 would arise only if the court is
satisfied that the defendant has made out a sufficient cause which prevented the defendant from appearing on the date when the suit was decreed ex
parte. Since I am not satisfied for the reasons indicated above, that a sufficient cause has been made out by the defendant, I am not inclined to recall
the ex parte decree and as such the question of imposing costs or other terms does not arise.
(23) While I am conscious that the term ‘sufficient cause’ appearing in O. 9 R. 13 of the CPC should receive a liberal interpretation, yet, an ex
parte decree passed in favour of the plaintiff following the provisions of the Original Side Rules of this Court and the Code of Civil Procedure ought
not to be recalled for the mere asking by the defendant and certainly not when the defendant has approached the court with unclean hands.
(24) For the reasons aforestated I am of the view that there is no merit in the recalling application. Sufficient cause has not been made out as to why
the decree dated 11 September, 2015 should be recalled. This application fails and is dismissed with costs assessed at Rs. 15,000/-.
(25) Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance with necessary formalities.
