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2002 DIGILAW 307 (CAL)

G. Poddar and Sons v. Draupadi Debi Tibrewal

2002-05-06

Jayanta Kumar Biswas, Tarun Chatterjee

body2002
JUDGMENT Tarun Chatterjee, J. On or about 12th July, 2001 Smt. Draupadi Debi Tibrewal as a plaintiff (now in this appeal the respondent) has filed a suit for judgment under Order 37 of the Code of Civil Procedure in the Original Side of this Court. In the suit the respondent had taken out a Master's summons dated 9th of August, 2001 praying, inter alia, for a decree for Rs. 17,47,092.44/- which was registered as G.A. No. 3210 of 2001. The appellants also had taken out an application seeking unconditional leave to defend the suit. By a judgment and order dated 22nd of November, 2001 a learned Interlocutory Judge of this Court granted leave to the appellants to defend the suit upon furnishing a bank guarantee to the tune of Rs. 5 lakh and upon furnishing security to the extent of Rs. 5 lakh to the satisfaction of the Registrar, Original Side of this Court within the time fixed in the said order. Steps were taken by the appellants to furnish the bank guarantee and the security in terms of the aforesaid order of the learned Trial Judge. Thereafter, the appellants approached a bank for obtaining a bank guarantee for a sum of Rs. 5 lakh in favour of the Registrar, Original Side of this court in terms of the aforesaid order dated 22nd of November, 2001. The appellants were informed by the bank authorities that unless the full sum of Rs. 5 lakh was kept in deposit with them, it would not be possible for the bank authorities to extend any bank guarantee to the appellants. The appellants were unable and are unable to arrange the bank guarantee for a sum of Rs. 5 lakh to be kept in deposit in terms of the order dated 22nd of November, 2001. According to the appellants, their landed properties which are valuable much more than the claim sought to be secured can be kept as security in lieu and in place and stead of furnishing bank guarantee for a sum of Rs. 5 lakh. Accordingly the appellants approached the Trial Court for modification of the order dated 22nd of November, 2001 by filing an application which was registered as G.A. No. 466 of 2001. 5 lakh. Accordingly the appellants approached the Trial Court for modification of the order dated 22nd of November, 2001 by filing an application which was registered as G.A. No. 466 of 2001. By a judgment and order dated 20th of December, 2001, the learned Interlocutory Judge disposed of the same by extending the time to furnish security and bank guarantee in terms of the order dated 22nd of November, 2001. The learned Interlocutory Judge however rejected the prayer for modification of the order dated 22nd November, 2001 on the ground that as the landed properties are situate outside the West Bengal, the question of keeping such landed properties as security could not arise at all. 2. Being aggrieved by and dissatisfied with the judgment and order dated 22nd November, 2001 and the order dated 20th December, 2001 by which the prayer for modification of the order dated 22nd November, 2001 was rejected, two appeals being APOT No. 121 of 2001 and APOT No. 41 of 2002 have been preferred by the defendants /appellants which were heard in presence of the learned Counsel for the parties. In the aforesaid two appeals two interlocutory applications being GA No. 726 of 2002 and GA No. 213 of 2002 were also filed. 3. When the applications for grant of interim relief were taken up for hearing, the learned Counsel for the parties suggested before us that instead of disposing the applications for grant of interim relief, the two appeals as aforesaid may be treated as on day's list and taken up for hearing. Such being the stand taken, we heard the learned Counsel for the parties on merits of the appeals by treating the said two appeals as on that day's list. 4. Before us, the learned Counsel for the respondent however raised two preliminary objections as to the maintainability of the appeals against the orders dated 20th December, 2001 and the order dated 22nd November, 2001. According to the learned Counsel for the respondent, the appeal filed against the order dated 22nd November, 2001 was not maintainable in law as from this order it would be evident that in default of furnishing the bank guarantee and the security by the defendants/appellants, within the time specified therein, there will be a decree and therefore, no appeal shall lie against such an order but an appeal could be filed against the decree. At this juncture, the learned Counsel for the respondent raised another short submission on the question of maintainability of the appeal against the order dated 22nd of November, 2001. According to the learned Counsel for the respondent no appeal lies against the order granting leave on condition in a suit filed under Order 37 of the Code of Civil Procedure in view of section 104 read with Order 43 Rule 1 of the Code of Civil Procedure. According to the learned Counsel for the respondent, since Order 43 Rule 1 of the Code of Civil Procedure read with section 104 of the Code of Civil Procedure does not confer any right to aggrieved party to file an appeal against an order granting or refusing to grant leave to defend a suit under Order 37 of the Code of Civil Procedure, no appeal can be entertained by the Division Bench of this Court under clause 15 of the Letters Patent. In support of this submission, the learned Counsel for respondent relied on a Division Bench decision of this Court in the case of Hiralal Deb Gupta vs. Salil Kumar Paul & Anr., AIR 1973 CAL 320 . In our view, this contention of the learned Counsel for the respondent can not at all be accepted in view of a Special Bench decision of this Court in the case of M/s. Tanusree Art Printers & Anr. vs. Rabindra Nath Pal, (2000) 3 CLT 412. The Special Bench decision clearly says that an appeal lies against an order refusing or granting leave on condition in a suit under Order 37 of the Code of Civil Procedure as such an order comes within judgment under clause 15 of the Letters Patent. Accordingly this contention of the learned counsel for the respondent is hereby overruled. A further objection was also raised by the learned counsel for the respondent that since the appellants had obtained an order granting stay by the Appellate Court by giving an undertaking that the order impugned in the appeal would be complied with, the appeals were not maintainable after the appellants had given an undertaking to comply with the order of the Appellate Court passed on the application for grant of interim relief. This question raised by the learned Counsel for the respondent has also, in our view, been settled by the Hon'ble Supreme Court in the case of P.R. Deshpande vs. Maruti Balaram Haibatti, AIR 1998 SC 2979 . When an appeal was preferred against the order dated 22nd of November, 2001, an application for grant of stay of operation of that order was also filed by the appellants. It is true that the appellants gave an undertaking to the Division Bench that the order of the Trial Court shall be complied with. The question, therefore is whether an appellant after giving an undertaking to the Court at the time of obtaining stay of operation of the judgment and order during the pendency of the appeal, would be entitled thereafter to proceed with the appeal. In our view, this question must be answered against the respondent. The appeal was already filed against the order dated 22nd of November, 2001 and the undertaking was given to the Appellate Court at the time of disposal of the application for grant of interim relief. Therefore, in order to obtain an order of stay, the undertaking was given. In our view, by filing an undertaking, it cannot be said that right of appeal which is the creature of statute can be taken away. However, it would not be necessary for us to deliberate on this question in view of a recent decision of the Supreme Court on this point reported in AIR 1998 SC 2979 , P.R. Deshpande vs. Maruti Balaram Haibatti. Paragraphs 11 and 12 of the said decision of the Supreme Court would clinch this issue. Accordingly we reproduce the said paragraphs 11 and 12 which are as follows:- "11. A party to a lis can be asked to given an undertaking to the Court if he requires stay of operation of the judgment. It is done on the supposition that the order would remain unchanged. By directing the party to give such an undertaking no Court can scuttle or foreclose a statutory remedy of appeal or revision much less a constitutional remedy. If the order is reversed or modified by the Superior Court or even the same Court on a review the undertaking given by the party will automatically cease to operate. By directing the party to give such an undertaking no Court can scuttle or foreclose a statutory remedy of appeal or revision much less a constitutional remedy. If the order is reversed or modified by the Superior Court or even the same Court on a review the undertaking given by the party will automatically cease to operate. Merely because a party has complied with the directions to give an undertaking as a condition for obtaining stay he cannot be presumed to communicate to the other party that he is thereby giving up his statutory remedies to challenge the order. No doubt he is bound to comply with his undertaking so long as the order remains alive and operative. However, it is open to such Superior Court to consider whether the operation of the order or judgment challenged before it need be stayed or suspended having regard to the fact that the concerned party has given undertaking in the lower Court to abide by the decree or order within the time fixed by that court. 12. We are therefore, in agreement with the view of Sahai and Venkatachala, JJ. that the appeal filed under Article 136 of the Constitution by special leave cannot be dismissed as not maintainable on the mere ground that appellant has given an undertaking to the High Court on being so directed, in order to keep the High Court's order in abeyance for some time." (Emphasis supplied.) 5. In view of the aforesaid observations of the Supreme Court, we are unable to agree with the learned Counsel for the respondent that this appeal is not maintainable in law against the order dated 22nd of November, 2001 in view of an undertaking given by the appellants to the Division Bench at the time of disposal of the application for grant of interim relief. Let us now consider the other preliminary objection raised by the respondent to the extent that an order passed in the Original Side of this Court directing the defendant in a suit to furnish security to the extent of the amount shown in the said order and in default whereof the plaintiff was entitled to a decree for the amount claimed in the suit is not appeal-able under clause 15 of the Letters Patent. This preliminary objection of the plaintiff/respondent is also according to us, devoid of any merit. This preliminary objection of the plaintiff/respondent is also according to us, devoid of any merit. This question has also been decided by a Division Bench of this Court in the case of Mitra Mukherjee and Co. & Anr. vs. Ajit Kumar Sarkar, AIR 1963 CAL 9 , in which it has been clearly held that an order passed in the Original Side directing the defendant in a suit to furnish security to the extent of the amount claimed in the suit in default whereof the plaintiff was to be entitled to a decree for the amount claimed in the suit is appealable even though a decree has been drawn up as a result of the failure of the defendant to furnish the security. In paragraph 8 of the aforesaid decision of the Division Bench of this Court, G.K Mitter, J. (as His Lordship then) made the following observations:- "It is absurd to suggest that such an order is not appealable or that there is any reason to hold that the appeal from the order directing security to be furnished is not maintainable. The effect of non-compliance with the order as I have already pointed out is to deprive the defendants of a valuable right namely, to defend the suit and clearly in such a case it can not be said that the order directing security, in default whereof a decree was to be drawn up against the defendants is not appealable. This point in my opinion has no merits." (Emphasis supplied.) 6. For the reasons aforesaid, we are therefore, of the view that this preliminary objection as raised by the learned Counsel for the respondent is also liable to rejected. 7. The main attack of the learned Advocate for the appellants to the order dated 22nd November, 2001 is to the extent that the learned Interlocutory Judge having found that the defence of the defendants was a good defence and not a moonshine, the defendants/ appellants were entitled to defend the suit unconditionally. In support of his contention the learned Advocate for the appellants had drawn our attention to the findings of the Interlocutory Judge made in the order dated 22nd November, 2001 and thereafter relying on a decision of the Supreme Court in the case of M/s. Sunil Enterprises & Anr. In support of his contention the learned Advocate for the appellants had drawn our attention to the findings of the Interlocutory Judge made in the order dated 22nd November, 2001 and thereafter relying on a decision of the Supreme Court in the case of M/s. Sunil Enterprises & Anr. vs. SBI Commercial and International Bank Ltd., AIR 1998 SC 2317 , contended that if the defendants satisfied the court that he had a good defence to the claim on merits, the defendant was entitled to unconditional leave to defend. It is true that from the interlocutory order dated 22nd November, 2001 it appears that the learned Interlocutory Judge found that the grounds made out to defend the suit were bona fide and the defendants were entitled to obtain leave to defend the suit as he was primarily satisfied with the submission made by the learned Counsel for the defendants and having found this, the learned Judge, however, granted such leave on the conditions indicated in the said order. In the case of Mechalec Eng. & Mfg. vs. Basic Equipment Corporation, AIR 1977 SC 577 , the propositions laid down for granting leave to defend to a defendant were summed up as follows:- "(a) If the defendant satisfies the Court that he has a good defence to the claim on merits, the defendant is entitled to unconditional leave to defend. (b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence, although not a possibly good defence, the defendant is entitled to unconditional leave to defend. (c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is, if the affidavit discloses that at the trial he may be able to establish a defence to the plaintiffs claim the Court may impose conditions at the time of granting leave to defend the conditions being as to time of trial or more of trial but not as to payment into Court or furnishing security. (Emphasis supplied) (d) If the defendant has no defence, or if the defence is sham or illusory or practically moonshine, the defendant is not entitled to leave to defend. (Emphasis supplied) (d) If the defendant has no defence, or if the defence is sham or illusory or practically moonshine, the defendant is not entitled to leave to defend. (e) If the defendant has no defence or the defence is illusory or sham or practically moonshine, the Court may show mercy to the defendant by enabling him to try to prove a defence but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into Court or otherwise secured." 8. Mr. Talukdar appearing on behalf of the appellants however, had drawn our attention to clause (a) of these propositions laid down by the Hon'ble Supreme Court in which it has been stated that if the defendant satisfies the Court that he has a good defence to the claim on merits, the defendant is entitled to unconditional leave to defend. In this case the learned Interlocutory Judge has come to a finding that the ground shown by the defendants was a good defence and therefore leave should be granted. In our view, even on merits it would not be possible for us to interfere with the order dated 22nd November, 2001. We have carefully examined the findings made by the learned Interlocutory Judge in the impugned order. After closely examining the said findings, we are of the view that the findings made by the Interlocutory Judge squarely satisfied clause (c) of the aforesaid decision of the Supreme Court in which the Supreme Court has observed that Courts are empowered to impose conditions at the time of granting leave to defend the suit. Such being the position, the order dated 22nd November, 2001 cannot at all be upset in appeal. The decision of the Supreme Court in the case of M/s. Sunil Enterprises & Anr. vs. SBI Commercial and International Bank Ltd., AIR 1998 SC 2317 , has accepted the principles laid down in its earlier decision in the case of Mechalec Engineering & Manufacturing vs. Basic Equipment Corporation, AIR 1977 SC 577 . Relying and applying such principles in the facts of this case we have already held that clause (c) would be applicable to the facts of this case. That apart, there is another aspect of this matter. Relying and applying such principles in the facts of this case we have already held that clause (c) would be applicable to the facts of this case. That apart, there is another aspect of this matter. There is no dispute that an application for modification of the order dated 22nd November, 2001 was filed by the defendant/appellant before the learned Interlocutory Judge after taking steps to comply with the said order. The defendants/appellants had collected the proforma for the bank guarantee required to be furnished in favour of the Registrar, Original Side of this Court for a sum of Rs. 5 lakhs. It is the case of the defendants/appellants that the defendants/appellants had approached the banks and financial institutions for obtaining the bank guarantee. Approach being made to the banks for bank guarantee, the banks have laid down the defendants/appellants by directing that the entire amount of the bank guarantee must be deposited with the bank before such bank guarantee would be made available to defendants/appellants. When it was found by the defendants/appellants that they had no cash money to be deposited with the bank for the purpose of obtaining a bank guarantee from the bank, only then the appellant filed an application for modification of the order dated 22nd November, 2001 by alleging inter alia, that since the defendants/appellants had landed properties measuring one bigha 17.5 cottas lying and situated at Purnia in the State of Bihar which is valued in excess of 15 lakhs and as the quantum of security directed to be furnished by the order dated 22nd November, 2001 was Rs. 10 lakhs, the modification of the order dated 22nd November, 2001 was prayed for by the appellants. This application for modification was rejected by the learned Interlocutory Judge on the ground that the properties mentioned in the application for modification which could be kept for security, are situate outside the jurisdiction of the State of West Bengal and therefore such properties cannot be kept as a security in compliance with the order dated 22nd November, 2001. In our view, in view of our discussions made herein earlier, the order dated 22nd November, 2001 out of which APOT No. 121 of 2001 has arisen, may not also be interfered with at this stage. In our view, in view of our discussions made herein earlier, the order dated 22nd November, 2001 out of which APOT No. 121 of 2001 has arisen, may not also be interfered with at this stage. It is well settled law now that the order that has been passed by the learned Interlocutory Judge while refusing or granting leave to defend a suit either conditionally or unconditionally is also passed by using his discretionary power. But only thing that is to be seen is whether such discretion used by the Interlocutory Judge was an arbitrary use of discretion. In appeal also the order impugned in the appeal may not be interfered with in the proper exercise of discretion of the Appellate Court in view of the subsequent events that had occurred subsequent to the passing of the order dated 22nd November, 2001 and in view of subsequent steps being taken by the appellants by accepting the order. It was therefore open to the appellate court not to interfere with the said order in the exercise of its discretionary power. That being the position, in the facts and circumstances of the case and in view of the steps taken by the appellants to comply with the order dated 22nd November, 2001 of the learned Interlocutory Judge, and as the appellants had approached the bank for furnishing bank guarantee and thereafter failed to obtain such bank guarantee from banks and thereafter made an application for modification of the order dated 22nd November, 2001 in which the landed property in Bihar was placed for the purpose of using the same as a security in compliance with the order dated 22nd November, 2001, we are of the view that the appellants had accepted the order dated 22nd November, 2001 and therefore, we, in our discretionary jurisdiction need not interfere with such an order passed by the learned Interlocutory Judge. 9. For the reasons aforesaid we do not find any reason to interfere with the order of the learned Interlocutory Judge dated 22nd November, 2001 nor with the order dated 20th December, 2001 by which time to furnish security in compliance with the order of the learned Interlocutory Judge dated 22nd November, 2001 was extended. 9. For the reasons aforesaid we do not find any reason to interfere with the order of the learned Interlocutory Judge dated 22nd November, 2001 nor with the order dated 20th December, 2001 by which time to furnish security in compliance with the order of the learned Interlocutory Judge dated 22nd November, 2001 was extended. As the period for furnishing bank guarantee has already expired, we extend the time to furnish such bank guarantee and security in compliance with the order dated 22nd November, 2001 within a period of two months from the date of communication of this order. Before we conclude that one more aspect of the matter need to be gone into. It is in respect of the order dated 20th December, 2001 of the learned Interlocutory Judge. According to the respondents no appeal lies against such an order. We have heard the learned Counsel for the parties on this question. In our view, an appeal lies against the order refusing to modify an earlier order granting conditional leave to the appellants to defend the suit. From the order dated 22nd November, 2001 it is clear that in the event appellants had failed to furnish security and bank guarantee in the manner indicated in the said order a decree would follow. By the order dated 20th December, 2001 the appellants had applied to modify the order dated 22nd November, 2001 praying for furnishing security of its landed properties at Bihar instead of furnishing bank guarantee as the appellants had at the material point of time no liquid cash to deposit with the bank who would furnish bank guarantee in favour of the appellants. In the case of Shah Babu Lal Khimji vs. Jayaben D. Kania & Anr., AIR 1981 SC 1786 , it has been clearly held that an intermediary or interlocutory judgment which contains the equity of finality must be held to be "judgments" within the meaning of the Letters Patent and therefore appealable. In this case the appellant would loose to defend the suit for his default in furnishing the bank guarantee if prayer for modification of the order dated 22nd November, 2001 was rejected which was in fact done by the Interlocutory Judge. In this case the appellant would loose to defend the suit for his default in furnishing the bank guarantee if prayer for modification of the order dated 22nd November, 2001 was rejected which was in fact done by the Interlocutory Judge. For this reason by filing the application for modification by which the right of the appellants was taken away to defend the suit, by not modifying the order dated 22nd November, 2001 and as the appellants had failed to furnish bank guarantee in compliance with the order dated 22nd November, 2001, in our view, an appeal also lies against the order dated 20th December, 2001 as that would be a "judgment" within the meaning of clause 15 of the Letters Patent. Accordingly, we hold that the appeal against the order dated 20th December, 2001 under clause 15 of the Letters Patent is maintainable in law. 10. Before we conclude we may add that a submission was made by the respondent that appeal was barred by limitation and in support of this contention a Division Bench decision of this Court in the case of State of W.B. vs. Biswanath Ghosh, 97 CALCUTTA WEEKLY NOTES Page 199, was relied on by the learned Counsel for the respondent. In view of our discussions made hereinabove and in view of the fact that the appeals have been dismissed by this judgment on merit, we are of the view that the question of limitation in these two appeals may not be gone into. 11. In view of our discussions made hereinabove, we do not find any reason to interfere with the orders impugned in these appeals. Accordingly the appeals are dismissed excepting that time to furnish bank guarantee and security in terms of the order dated 22nd November, 2001 stands extended for a further period of two months from this date. 12. In view of this order disposing of the appeals, the applications being G.A. No. 726 of 2002 and G.A. No. 213 of 2002, for grant of interim relief have become infructuous and accordingly they are also disposed of. 13. There will be no order as to costs. All parties are to act on a xerox singed copy of this judgment on the usual undertaking. Jayanta Kumar Biswas, J.: I agree. Appeals dismissed.