Without giving convincing and cogent reasons delay should not be condoned: Supreme Court 2018

NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTIO
CIVIL APPEAL NO(S). 4266-4267 OF 2018
ATCOM TECHNOLOGIES LIMITED …..APPELLANT(S)
VERSUS
Y.A. CHUNAWALA AND CO. & ORS. …..RESPONDENT(S)
J U D G M E N T
A.K. SIKRI, J.
The present appeal is filed impugning the final judgment
and order dated November 21, 2016 passed by the High Court of
Judicature at Bombay in Commercial Appeal No. 33 of 2016 in
Notice of Motion No. 1211 of 2015 in Suit No. 3813 of 2000 with
Notice of Motion No. 1706 of 2016 in Appeal No. 420 of 2016 in
Notice of Motion No. 1211 of 2015 in Suit No. 3813 of 2000,
whereby the High Court has dismissed the appeal filed by the
appellant challenging the order dated March 15, 2016 passed by
the learned Single Judge in Notice of Motion No. 1211 of 2015 in
Suit No. 3813 of 2000.
2. The Notice of Motion filed by the respondents was for
condonation of delay in filing the written statement. Delay was of
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15 years and 54 days (though according to the appellant it is 14
years and 166 days). The learned Single Judge condoned the
delay vide order dated March 15, 2016 with a cost of Rs.5 lakhs
which was ordered to be paid by the respondents to the
appellant. Aggrieved by the said order condoning such an
inordinate delay, the appellant preferred appeal before the
Division Bench which has affirmed the order passed by the Single
Judge and dismissed the appeal of the appellant.
3. The dispute between the parties is with regard to the dues
allegedly payable by the respondents to the appellant of about
Rs.11.9 crores with additional interest as per the particulars of
claim annexed to the suit. According to the appellant and as per
the arrangement between the parties, the respondents have
failed and neglected deliberately with ulterior motives and mala
fide intentions to refund the money or handover possession of
certain flats in a building named ‘Emerald Court’ situated at
Andheri (E) in Mumbai in respect of which Agreements for Sale
have been executed.
4. The case set up by the appellant is somewhat like this:
(a) It may be mentioned that respondent Nos. 1, 3 and 4 are
the owners of a parcel of land admeasuring 30,262 sq. mtrs.
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situated at Village Kondivita, Ramkrishna Mandir Marg, Andheri
(E), Mumbai (hereinafter referred to as the ‘Kondivita Plot’).
Respondent No. 1 and respondent No. 2 (partner of M/s. Shree
Siddhivinayak Developers Ltd.) entered into an agreement
whereby respondent No. 2 was permitted to develop the
Kondivita Plot by constructing buildings and sell the premises on
ownership basis. Memorandum of Understanding was executed
between M/s. Shree Siddhivinayak Developers Ltd. and ATCO
Securities and Finance Ltd. (sister concern of the appellant – now
known as Kimaya Wellness Ltd.) (hereinafter referred to as the
‘appellant’s sister concern’) pursuant to which appellant’s sister
concern was granted development and marketing rights of
2,00,000 sq. ft. FSI in a property to be constructed on the piece
and parcel of land bearing S. No. 3(P) and 4(P) CST No. 5P and
6 admeasuring 26,033 sq. mtrs. and further S. No. 3(P) CST No.
5(P), 6(P) and 7(P) admeasuring 7,341 sq. mtrs. of the Revenue
Village Kopri, Powai Road, Taluka Kurla within Greater Bombay
(hereinafter referred to as the ‘Kopri Plot’) for a consideration of
Rs.44,00,00,000/- (Rupees Forty Four Crores) only.
Earlier Kimaya Wellness Ltd. name was ATCO Securities
and Finance Ltd. The name was subsequently changed to Saral
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Disha Investments Ltd. and again the said name changed to
Kimaya Wellness Ltd.
(b) Pursuant to the MOU dated December 20, 1995, appellant’s
sister concern advanced a sum of Rs.14,23,50,000/- (Rupees
Fourteen Crore Twenty Three Lakhs Fifty Thousand) only to M/s.
Shree Siddhivinayak Developers Ltd. All the payments are made
through proper banking channels. Thereafter, a Tripartite
Agreement dated April 1, 1996 was executed between the
appellant, appellant’s sister concern and M/s. Shree
Siddhivinayak Developers Ltd. whereby it was agreed that the
development and marketing rights under the MOU dated
December 20, 1995 would be shared equally between the
appellant’s sister concern and the appellant. It was further
agreed that out of the sum of Rs.14,23,50,000/- already
advanced by appellant’s sister concern to M/s. Shree
Siddhivinayak Developers Ltd., 50% would be treated as having
been advanced by the appellant and the remaining 50% would be
treated as having been advanced by the appellant’s sister
concern. It was followed by MOU dated May 30, 1996 between
the appellant and M/s. Shree Siddhivinayak Developers Ltd.
regarding the terms of the aforesaid Tripartite Agreement dated
April 1, 1996.
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(c) As per the appellant, in December 1996, by mutual consent,
parties cancelled the said Tripartite Agreement dated April 1,
1996.
(d) Various further documents were executed between the
parties and it is not necessary to give detailed narration thereof.
Suffice is to state that as per the version of the appellant, it was
agreed that out of Rs.7,11,75,000/- advanced by the appellant to
M/s. Shree Siddhivinayak Developers Ltd., Rs.3,77,30,000/-
would be adjusted towards purchased consideration for 11 flats
that would be purchased by the appellant in a building known as
‘Emerald Court’ at the Kondivita Plot. The balance amount of
Rs.3,34,45,000/- was agreed to be refunded by M/s. Shree
Siddhivinayak Developers Ltd. to the appellant. This
arrangement was on account of M/s. Shree Siddhivinayak
Developers Ltd. expressing their inability to repay the appellant
entirely. However, even when some additional amounts were
paid towards the aforesaid flats, the respondent No. 2 failed to
deliver the 11 flats in respect of which agreement was entered
into. The appellant and respondent No. 2 has also entered into
12 separate registered Agreements for purchase of 12 more flats.
According to the appellant, these flats were also not delivered.
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(e) To cut the long story short, it is suffice to note that when the
possession of the flats was not delivered, the appellant
demanded back the amount paid to respondent No. 2. According
to the appellant, the amount paid was not refunded. It led to filing
of the following three cases:
(i) Summary Suit No. 4870 of 1999 by the sister concern of
the appellant in the High Court of Judicature at Bombay seeking
decree of Rs.4,91,60,000/- along with interest @18% p.a.
(ii) Suit No. 3813 of 2000 by the appellant in the High Court of
Judicature at Bombay for decree in the sum of Rs.7,88,90,000/-
along with interest @18% p.a.
(iii) M/s. Shree Siddhivinayak Developers Ltd. (respondent
No. 2) and its all partners also filed suit No. 305/2001 against
Saral Disha Investment Limited (sister concern of the appellant).
5. Various developments which took place in these three suits need
not be noted except that in Notice of Motion taken out by the
appellant in its suit, Court Receiver was appointed to take
physical possession of 23 flats in ‘Emerald Court’. Further,
unconditional leave to defend was granted to the respondents in
Suit No. 4870 of 1999 vide order dated March 16, 2002 and the
Court also directed that all the three suits shall be tried together.
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When these suits were listed for hearing before the Single Judge
on January 29, 2015, it was noticed that no written statement was
filed in Suit Nos. 4870 of 1999 and 3813 of 2000 filed by the
appellant’s sister concern and appellant respectively. The Court
adjourned the case to February 12, 2015 for ex-parte decree.
These cases were again adjourned and came up for hearing on
May 06, 2015 on which date order was passed recording that
written statement in these two suits was yet to be filed. Cases
were adjourned to June 22, 2015. When the things rested at that
stage, respondent No. 2 filed Notice of Motion No. 1212 of 2015
in Suit No. 4870 of 1999 on July 24, 2015 seeking setting aside of
order dated January 29, 2015 and further sought condonation of
delay of 13 years and 41 days in filing the written statement.
Likewise, Notice of Motion No. 1211 of 2015 was also filed in Suit
No. 3813 of 2000 seeking condonation of delay of 5 years and 54
days in filing the written statement (though as per the appellant,
delay was 14 years and 166 days).
6. Notice of Motion No. 1212 of 2015 in Suit No. 4870 of 1999 was
taken up for hearing and vide order dated October 28, 2015, it
was dismissed by the learned Single Judge who refused to
condone the delay with, inter alia, following observations:
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“4. It is obvious from the affidavit in support of Notice of
Motion that the defendants had completely and knowingly
neglected the proceedings.
………….
The facts of the case on hand disclose patent inordinate
delay on the part of the defendants and as such attracts
the doctrine of prejudice. The delay is to the extent of
completely ignoring the proceedings. Taking a liberal view
of such gross facts would amount doing injustice to the
plaintiff and allowing premium on the negligence of the
defendants.”
7. Intra-Court appeal was filed by the respondents against the said
order before the Division Bench of the High Court which was also
dismissed by the Division Bench on January 6, 2016 holding that
‘the Defendants had completely and knowingly neglected the
proceedings’. It would be pertinent to mention at this stage that
Special Leave Petition was filed challenging the order of the
Division Bench dated January 6, 2016 (SLP No. 28775 of 2016)
has been dismissed by this Court on September 4, 2017.
8. Insofar as Notice of Motion No. 1211 of 2015 in Suit No. 3813 of
2000 is concerned, it resulted in altogether opposite outcome.
The learned Single Judge passed the order dated March 15,
2016 allowing the same thereby condoning the delay in filing the
written statement with the imposition of cost of 5 lakhs upon the
respondents. The reason given by the learned Single Judge was
that till the year 2009, Writ of Summons had not been served
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upon the respondents and, therefore, the delay was of 5 years
and 54 days and was condoned on the ground that the appellant
also took number of years in serving the summons upon the
respondent. Appeal against this order filed by the appellant has
been dismissed vide impugned order dated April 18, 2016
affirming the order of the learned Single Judge. The entire
reasoning in support of this order is contained in para 5 of the
judgment of the High Court which reads as under:
“5 In the impugned order, the learned Judge has assigned
reasons. He has found from the record and the affidavits
placed, that even the Appellant / Plaintiff did not take any
concrete steps. In a suit filed in the year 2000, the writ of
summons was not prepared and served till 2009. In
paragraph 6 of the impugned order, the explanation that
the writ of summons was served promptly has not been
accepted. The learned Judge has found that the writ of
summons was not served for a period of nine years after
institution or filing of the suit. In such circumstances an
overall view of the matter was taken and by balancing the
rights and equities, the learned Judge has granted the
request of the Respondents to allow them to file the Written
Statement and defend the suit / claim on merits. In the
process, the learned Judge has relied upon well settled
principle that all procedural rules are handmaids of justice.
So long as there is no irreparable loss or prejudice or a
case made out of malafides ordinarily a party should be
allowed to defend legal proceedings is the rule invoked and
applied, then, we do not think that in the facts and
circumstances of the present case, the application of such
rule can be faulted. Once the rights and equities have been
balanced, then, we do not think that in further appellate
jurisdiction such an order deserves interference. The
Appeal is devoid of merits and is dismissed. By consent of
parties, the time to take inspection of the documents and
complete pretrial formalities is extended by eight weeks.”
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9. As is clear from the above, the circumstance which weighed with
the High Court in condoning the delay was that though the suit
was filed in the year 2000, summons were served only in the year
2009. Plea of the appellant that summons were actually served
in the year 2000 itself was not accepted. On this basis, the High
Court came to the conclusion that since appellant itself took time
of 9 years after institution or following of the suit, to serve the
summons upon the respondents herein, equities were balanced
by allowing the respondents to file the written statement, more so,
when no irreparable loss or prejudice was caused to the appellant
and no case of mala fides was made out against the respondents.
10. Notice in the Special Leave Petition was issued on July 18, 2017
which was duly served upon all the five respondents. However,
none of the respondents have entered appearance. Accordingly,
the Registry processed the matter for listing before the Court and
it was listed for hearing on March 26, 2018. On that day also,
nobody appeared on behalf of the respondents. Still in order to
give one more opportunity, the matter was directed to be listed
after three weeks. It again came up for hearing on April 20, 2018.
Since respondents failed to appear in spite of all the aforesaid
chances given to them, this Court is left with no option but to
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proceed ex-parte against the respondents and heard the matter in
their absence.
11. Mr. Amar Dave, learned counsel appearing for the appellant
submitted that the reason given by the High Court in condoning
the delay was totally erroneous inasmuch as Writ of Summons
were served upon the respondents immediately after the filing of
the suit and not in the year 2009 as mentioned. It was further
argued that, in any case, even if when the summons were served
in the year 2009, there was no satisfactory explanation submitted
by the respondents seeking condonation of delay which was
more than 5 years 54 days even on counting the period from the
year 2009. He also submitted that the High Court failed to notice
that, on identical grounds, Notice of Motion No. 1212 of 2015 in
Suit No. 4780 of 1999 for condonation of delay in filing the written
statement was filed by the respondents which was dismissed by
the learned Single Judge and that order was affirmed by the
Division Bench (and now even by this Court). While dealing with
the instant matter, the High Court failed to consider those orders
passed by the co-ordinate Benches.
12. We find force and due merit in the aforesaid submissions of the
learned counsel for the appellant.
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13. We shall proceed on the basis that summons in Suit No. 4870 of
1999 were served only in the year 2009. In this behalf, it may be
stated that in this suit, unconditional leave to defend was granted
by the learned Single Judge on March 16, 2002. By the same
order, all three suits were directed to be tried together. Therefore,
Vakalatnama in the suit was also filed and on the dates fixed
before the Court, respondents were appearing having knowledge
about the Suit No. 4870 of 1999 as well. Obviously, this leave to
defend was granted after the respondents had put in appearance
and filed application for grant of leave to defend. Thus, summons
in the suit were served upon the respondents, albeit, in Form 4 of
Appendix B, as stipulated in Rule 2 of Order XXXVII of the Code
of Civil Procedure, 1908. May be, thereafter, Writ of Summons
were not served again upon the respondents. However, in any
case, these summons were served in the year 2009. Therefore,
it was incumbent upon the respondents to show as to in what
manner they were prevented from filing the written statement.
14. It has to be borne in mind that as per the provisions of Order VIII
Rule 1 of the Code of Civil Procedure, 1908, the defendant is
obligated to present a written statement of his defence within
thirty days from the date of service of summons. Proviso thereto
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enables the Court to extend the period upto ninety days from the
date of service of summons for sufficient reasons. Order VIII
Rule 1 of the Code of Civil Procedure, 1908 reads as under:
“1. Written statement.- The defendant shall, within
thirty days from the date of service of summons on
him, present a written statement of his defence:
Provided that where the defendant fails to file the
written statement within the said period of thirty days,
he shall be allowed to file the same on such other day,
as may be specified by the Court, for reasons to be
recorded in writing, but which shall not be later than
ninety days from the date of service of summons.”
15. This provision has come up for interpretation before this Court in
number of cases. No doubt, the words ‘shall not be later than
ninety days’ do not take away the power of the Court to accept
written statement beyond that time and it is also held that the
nature of the provision is procedural and it is not a part of
substantive law. At the same time, this Court has also mandated
that time can be extended only in exceptionally hard cases. We
would like to reproduce the following discussion from the case of
Salem Advocate Bar Association, Tamil Nadu v. Union of
India, (2005) 6 SCC 344:
“21. …There is no restriction in Order 8 Rule 10 that after
expiry of ninety days, further time cannot be granted. The
court has wide power to “make such order in relation to the
suit as it thinks fit”. Clearly, therefore, the provision of Order
8 Rule 1 providing for the upper limit of 90 days to file
written statement is directory. Having said so, we wish to
make it clear that the order extending time to file written
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statement cannot be made in routine. The time can be
extended only in exceptionally hard cases. While extending
time, it has to be borne in mind that the legislature has
fixed the upper time-limit of 90 days. The discretion of the
court to extend the time shall not be so frequently and
routinely exercised so as to nullify the period fixed by Order
8 Rule 1.”
16. In such a situation, onus upon the defendant is of a higher degree
to plead and satisfactorily demonstrate a valid reason for not filing
the written statement within thirty days. When that is a
requirement, could it be a ground to condone delay of more than
5 years even when it is calculated from the year 2009, only
because of the reason that Writ of Summons were not served till
2009?
17. We fail to persuade ourselves with this kind of reasoning given by
the High Court in condoning the delay, thereby disregarding the
provisions of Order VIII Rule 1 of the Code of Civil Procedure,
1908 and the spirit behind it. This reason of the High Court that
delay was condoned ‘by balancing the rights and equities’ is farfetched
and, in the process, abnormal delay in filing the written
statement is condoned without addressing the relevant factor, viz.
whether the respondents had furnished proper and satisfactory
explanation for such a delay. The approach of the High Court is
clearly erroneous in law and cannot be countenanced. No doubt,
the provisions of Order VIII Rule 1 of the Code of Civil Procedure,
Civil Appeal Nos. 4266-4267 of 2018 Page 14 of 15
1908 are procedural in nature and, therefore, hand maid of
justice. However, that would not mean that the defendant has
right to take as much time as he wants in filing the written
statement, without giving convincing and cogent reasons for
delay and the High Court has to condone it mechanically. It is
also to be borne in mind that when the matter was listed on
January 29, 2015, it was specifically recorded that no written
statement was filed and the two suits were adjourned for ex-parte
decree. In other suit i.e. Suit No. 3813 of 2000, similar Notice of
Motion seeking condonation of delay was rejected though it
contained same kind of explanation and that order has been
upheld till this Court. On this ground also, there was no reason to
take a contrary view in the instant matter when both the suits
were taken up together and proceed simultaneously.
18. We accordingly allow these appeals, set aside the impugned
order and dismiss Notice of Motion No. 1212 of 2015.
No cost.
………………………………………J.
(A.K. SIKRI)
………………………………………J.
(ASHOK BHUSHAN)
NEW DELHI;
MAY 07, 2018.
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