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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.  5487     of 2013 (Arising out of SLP(C) No.13099 of 2008)

M/s. TVC Skyshop Ltd. ... Appellant

Versus

M/s. Reliance Communication and Infrastructure Ltd.        ...Respondent

J U D G M E N T

G.S. SINGHVI, J.

1.      Having failed to persuade the learned Single Judge and the Division  

Bench of the Bombay High Court to entertain its prayer for setting aside the  

decree passed in favour of the respondent under Order XXXVII Rule 3 of  

the Code of Civil Procedure, the appellant has filed this petition.

2. The appellant and respondent entered into an agreement whereby the  

respondent provided 54 mobile phone connections to the former in 2003.  

Due  to  non-payment  of  the amount due, the respondent sent legal notice  

dated  22.9.2004  and demanded Rs.13,31,800.59.   After  some time,  the  

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respondent filed a petition under Sections 433 and 434 of the Companies  

Act, 1956, which came to be registered as Company Petition No.910/2005  

for  winding  up  of  the  appellant  by  alleging  that  it  has  failed  to  pay  

Rs.19,69,417.11  despite  demand.   The  learned  Company Judge  passed  

order  dated  13.4.2006  and  directed  the  appellant  to  deposit  a  sum of  

Rs.11,00,000/-  to  avoid  advertisement  of  the  petition  filed  by  the  

respondent.

3. The respondent also filed a Summary Suit No.1989/2006 under Order  

XXXVII for passing a decree of Rs.25,83,078.35 with interest at the rate of  

30% per annum from the date of suit.  The summon issued by the Court was  

duly served upon the appellant, but neither an application was filed for leave  

to  defend nor any one appeared on the date  specified in the summons.  

Therefore,  the  learned  Single  Judge  passed  order  dated  7.11.2006  and  

decreed the suit in terms of clauses (a) and (b) of the plaint.  4. Soon  

thereafter, the appellant filed application dated 18.12.2006 in the form of an  

affidavit of its  Company Secretary Shri Mahesh Katudia and prayed for  

setting aside decree dated 7.11.2006.  In paragraphs 5 and 6 of his affidavit,  

Shri  Katudia  referred  to  order  dated  13.4.2006  passed  by  the  learned  

Company Judge in Company Petition No.910/2005 and averred that a sum  

of Rs.11,00,000/- was deposited by the appellant on 8.6.2006.  In paragraph  

7, he averred that Shri Pradeep Bhandekar, who was working as Executive  

Assistant to the Chairman had resigned in September,  2006 and on that  

count, proper instructions could not be given to Shri R.A.Shaikh, Advocate.  

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It was also averred that summons for judgment was served on Shri R.A.  

Shaikh, Advocate in September, 2006 but no application for leave to defend  

was filed and that resulted in passing of ex parte decree dated 7.11.2006.

5. When the appellant’s prayer for setting aside decree dated 7.11.2006  

was taken up for consideration, counsel appearing on its behalf relied upon  

Order IX Rule 13 CPC.  The learned Single Judge referred to the relevant  

provision and held that the two grounds contemplated by Rule 13 are not  

available  for  setting aside  decree  dated  7.11.2006.   The learned  Judge  

observed that it is not a case in which the summons had not been served  

upon the judgment debtor or that there was sufficient cause for its non-

appearance on 7.11.2006.

6. The appellant appealed against the order of the learned Single Judge  

but could not convince the Division Bench of the High Court to entertain its  

prayer for setting aside decree dated 7.11.2006.  Paragraphs 4 and 5 of the  

judgment of the Division Bench, which contain the reasons for dismissal of  

the appeal read as under:

“ 4. The    question   of going into the  infirmity or  legality   or     illegality  pertaining to  the rate of interest  or to what extent the  amount has already been paid by the appellant would have  arisen  in  case  there  was  any  material  placed  by  the  appellant    in that regard before the learned Single Judge  after  obtaining  necessary  leave  to  defend  the  suit  in  accordance with the  law.     The    appellate Court's going  into  the  documentary  evidence,  if  such  evidence  have  been found on record before the trial Court and that too  without following the procedure prescribed under Order  41 Rule 27 of the Code of Civil Procedure, does not arise  at all.  In any case,  the appellant having failed to seek  

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leave  to  defend  before  the  learned  Single    Judge  in  accordance  with  the  law,  the  question  of  going  into  various contentions sought to be raised which essentially  relate to the evidence does not arise, at this stage.

5. As  regards  the  contention that  the  appellant  has  already paid a substantial amount, nothing would prevent  the appellant from bringing such fact to the notice of the  Executing Court in case the respondent files an execution  application in accordance with the decree  passed  in its  favour.”

7. We have heard learned counsel for the parties.  Order XXXVII Rules  

1 to 4 CPC,  which have bearing on the decision of this appeal read as  

under:    

“1. Courts and classes of suits to which the Order is to apply. —(1) This Order shall apply to the following Courts, namely:— (a) High Courts, City Civil Courts and Courts of Small Causes;  and (b) other Courts:

Provided that in respect of the Courts referred to in clause  (b), the High Court may, by notification in the Official Gazette,  restrict the operation of this Order only to such categories of  suits as it deems proper, and may also, from time to time, as the  circumstances  of  the  case  may  require,  by  subsequent  notification in the Official Gazette,  further restrict,  enlarge or  vary, the categories of suits to be brought under the operation of  this Order as it deems proper.  

(2) Subject to the provisions of sub-rule (1), the Order applies to  the following classes of suits, namely:— (a)suits upon bills of exchange, hundies and promissory notes; (b) suits in which the plaintiff seeks only to recover a debt or  liquidated demand in money payable by the defendant, with or  without interest, arising,— (i) on a written contract; or (ii) on an enactment, where the sum sought to be recovered is a  fixed sum of money or  in the  nature  of  a  debt  other  than a  penalty; or (iii) on a guarantee, where the claim against the principal is in  respect of a debt or liquidated demand only.

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(iv) suit for recovery of receivables instituted by any assignee of  a receivable.

2.  Institution of  summary suits.—(1)  A suit,  to  which this  Order applies, may if the plaintiff desires to proceed hereunder,  be instituted by presenting a plaint which shall contain,— (a) a specific averment to the effect that the suit is filed under  this Order; (b) that no relief, which does not fall within the ambit of this  rule, has been claimed in the plaint; and (c) the following inscription, immediately below the number of  the suit in the title of the suit, namely:— “(Under Order XXXVII of the Code of Civil Procedure, 1908)” (2) The summons of the suit shall be in Form No.4 in Appendix  B  or  in  such  other  Form  as  may,  from  time  to  time,  be  prescribed. (3) The defendant shall not defend the suit referred to in sub-rule  (1) unless he enters an appearance and in default of his entering  an appearance the allegations in the plaint shall be deemed to be  admitted and the plaintiff shall be entitled to a decree for any  sum, not exceeding the sum mentioned in the summons, together  with interest at the rate specified, if any, up to the date of the  decree and such sum for costs as may be determined by the High  Court from time to time by rules made in that behalf, and such  decree may be executed forthwith.

3. Procedure for the appearance of defendant.—(1) In a suit  to which this Order applies, the plaintiff shall, together with the  summons under rule 2,  serve on the defendant a  copy of the  plaint and annexures thereto and the defendant may, at any time  within ten days of such service, enter an appearance either in  person or by pleader and, in either case, he shall file in Court an  address for service of notices on him.

(2) Unless  otherwise  ordered,  all  summonses,  notices  and  other judicial processes, required to be served on the defendant,  shall be deemed to have been duly served on him if they are left  at the address given by him for such service.

(3)  On  the  day  of  entering  the  appearance,  notice  of  such  appearance  shall  be  given by  the  defendant  to  the  plaintiff's  pleader, or, if the plaintiff sues in person, to the plaintiff himself,  either by notice delivered at or sent by a pre-paid letter directed  to the address of the plaintiff's pleader or of the plaintiff, as the  case may be.

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(4)  If  the  defendant  enters  an  appearance,  the  plaintiff shall  thereafter serve on the defendant a  summons for judgment in  Form No.  4A in Appendix B or such other Form as  may be  prescribed from time to time, returnable not less than ten days  from the date of service supported by an affidavit verifying the  cause of action and the amount claimed and stating that in his  belief there is no defence to the suit.

(5) The defendant may, at  any time within ten days from the  service of such summons for judgment, by affidavit or otherwise  disclosing such facts as may be deemed sufficient to entitle him  to defend, apply on such summons for leave to defend such suit,  and leave to defend may be granted to him unconditionally or  upon such terms as may appear to the Court or Judge to be just:

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 defence to raise or that the  defence intended to be put up by the defendant is frivolous or  vexatious:

Provided further that, where a part of the amount claimed  by the plaintiff is admitted by the defendant to be due from him,  leave to defend the suit shall not be granted unless the amount so  admitted to be due is deposited by the defendant in Court.

(6) At the hearing of such summons for judgment,— (a) if the defendant has not applied for leave to defend, or if such  application has been made and is refused, the plaintiff shall be  entitled to judgment forthwith; or (b) if the defendant is permitted to defend as to the whole or any  part of the claim, the Court or Judge may direct him to give such  security and within such time as may be fixed by the Court or  Judge and that, on failure to give such security within the time  specified  by  the  Court  or  Judge  or  to  carry  out  such  other  directions as may have been given by the Court or Judge, the  plaintiff shall be entitled to judgment forthwith.

(7) The Court or Judge may, for sufficient cause shown by the  defendant,  excuse  the  delay  of  the  defendant  in  entering  an  appearance or in applying for leave to defend the suit.

4.  Power to set  aside decree.—After decree the Court may,  under  special  circumstances  set  aside  the  decree,  and  if  

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necessary stay or set aside execution, and may give leave to the  defendant to appear to the summons and to defend the suit, if it  seems reasonable to the Court so to do, and on such terms as the  Court thinks fit.”

8. An analysis of Order XXXVII shows that the provisions contained  

therein  are  applicable  to  the  suits  specified  in  Rule  1(2).   Rule  2(1)  

prescribes the particulars to be incorporated in the suit.  Sub-rule (3) of  

Rule 2 lays down that the defendant shall not defend the suit unless he  

enters  appearance  and  in  default  of  his  appearance,  the  allegations  

contained in the plaint shall be deemed to be admitted and the plaintiff shall  

be entitled to a decree for a sum not exceeding the sum specified in the  

summons together with interest at the specified rate, if any.  Rule 3 contains  

the procedure for the appearance of the defendant.  Sub-rule (5) prescribes  

time limit of ten days from the service of summons for judgment within  

which the defendant can apply for leave to defend.  The concerned Court  

can grant leave to defend unconditionally or conditionally.  First proviso to  

this sub-rule lays down that leave to defend cannot be refused unless the  

Court is satisfied that the facts disclosed by the defendant do not indicate  

that he has substantial defence or that the defence is frivolous or vexatious.  

Second proviso to sub-rule (5) lays down that if the defendant admits part  

of the amount claimed by the plaintiff then he shall not be granted leave to  

defend unless the admitted amount is deposited in the Court.  Sub-rule (6)  

provides for the consequences of the defendant’s failure to apply for leave  

to defend or refusal of prayer for leave to defend.  In such an eventuality,  

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the plaintiff is entitled to judgment forthwith.  Sub-rule (7) lays down that if  

the defendant is able to show sufficient cause, the Court can excuse the  

delay in entering of appearance or in making an application for leave to  

defend.  Rule 4 gives power to the Court to set aside the decree provided  

special circumstances exist for doing so.  The Court can also stay or set  

aside execution and grant leave to the defendant to defend the suit.  

9.  The  expression  “special  circumstances”  appearing  in  Order  

XXXVII Rule 4 was considered by this Court in Rajni Kumar v. Suresh  

Kumar Malhotra (2003) 5 SCC 315 and it was observed:

“The expression “special circumstances” is not defined in  the Civil Procedure Code nor is it capable of any precise  definition by the court because problems of human beings  are  so  varied  and  complex.  In  its  ordinary  dictionary  meaning it connotes something exceptional in character,  extraordinary, significant, uncommon. It is an antonym of  common, ordinary and general.  It  is  neither practicable  nor  advisable  to  enumerate  such  circumstances.  Non- service  of  summons  will  undoubtedly  be  a  special  circumstance.  In an application under Order 37 Rule 4,  the court has to determine the question, on the facts of  each case,  as  to  whether circumstances  pleaded are  so  unusual or  extraordinary as  to  justify putting the clock  back by setting aside the decree; to grant further relief in  regard to post-decree matters, namely, staying or setting  aside  the  execution  and  also  in  regard  to  pre-decree  matters viz. to give leave to the defendant to appear to the  summons and to defend the suit.”

In the same judgment, the Court considered the scope of order XXXVII  

Rule 4 and observed:

“It is important to note here that the power under Rule 4  of Order 37 is not confined to setting aside the ex parte  decree, it extends to staying or setting aside the execution  and giving leave to appear to the summons and to defend  

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the suit. We may point out that as the very purpose of  Order 37 is to ensure an expeditious hearing and disposal  of the suit filed thereunder, Rule 4 empowers the court to  grant leave to the defendant to appear to summons and  defend the suit if the court considers it reasonable so to  do,  on such terms as the court thinks fit in addition to  setting aside the decree. Where on an application, more  than one among the specified reliefs may be granted by  the  court,  all  such  reliefs  must  be  claimed  in  one  application. It is not permissible to claim such reliefs in  successive petitions as it would be contrary to the letter  and  spirit  of  the  provision.  That  is  why  where  an  application under Rule 4 of Order 37 is filed to set aside a  decree  either  because  the  defendant  did  not  appear  in  response  to  summons and limitation expired,  or  having  appeared, did not apply for leave to defend the suit in the  prescribed period, the court is empowered to grant leave  to the defendant to appear to the summons and to defend  the  suit  in  the  same  application.  It  is,  therefore,  not  enough for the defendant to show special circumstances  which prevented him from appearing or applying for leave  to defend, he has also to show by affidavit or otherwise,  facts which would entitle him leave to defend the suit. In  this respect, Rule 4 of Order 37 is different from Rule 13  of Order 9.”

10. In the present case, we find that the application filed by the appellant  

for  setting  aside  decree  dated  7.11.2006  did  not  disclose  any  special  

circumstance which could justify an order under Order XXXVII Rule 4.  In  

his  affidavit,   Shri  Mahesh  Katudia  had  merely  stated  that  sum  of  

Rs.11,00,000/- had been paid in terms of order dated 13.4.2006 passed by  

the learned Company Judge and proper instructions could not be given to  

the Advocate engaged for defending the suit.  Therefore, it is not possible  

to find any fault with the view taken by the Division Bench of the High  

Court on the tenability of the appellant’s prayer for setting aside decree  

dated 7.11.2006.

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11. The  argument  of  Shri  Rohan  Thawani,  learned  counsel  for  the  

appellant that even though the appellant had not applied for leave to defend,  

the learned Single Judge was duty bound to scrutinise the claim of the  

respondent and the suit  could have been decreed only if the Court  felt  

satisfied that the claim was bonafide and not vexatious which finds some  

support  from the  judgment in Neebha  Kapoor  v.  Jayantilal  Khandwala  

(2008) 3 SCC 770 sounds attractive in the first flash but we do not find any  

valid ground to overturn the impugned judgment because,  as  mentioned  

above,  the affidavit filed by Shri Mahesh Katudia did not  disclose  any  

special circumstances which could warrant exercise of power under Order  

XXXVII Rule 4.  He did not even contest the liability of the appellant to  

pay the amount claimed in the plaint.  The mere fact that one of the officials  

of  the  appellant  had  resigned  would  not  constitute  a  valid  ground  for  

negating the policy underlying Order XXXVII in general and Rule 3(5) in  

particular.

12. Equally meritless is the argument of Shri Thawani that the rate at  

which the respondent claimed interest is highly excessive.  According to  

Shri Jaideep Gupta with whom we agree, the interest was charged as per  

the terms of the agreement and the appellant had always paid the bills in  

which interest was claimed at the rate of 30% per annum.

13. In the result, the appeal is dismissed.

…………………………..J. (G.S. SINGHVI)

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………………………….J. (V. GOPALA GOWDA)

New Delhi; July 15, 2013.

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