Omaxe Limited vs Madhu Sudan Sharma and Others

Hima Kohli, J.—Vide order dated 07.05.2010, the leave to defend application filed by the defendants under Order 37 Rule 3(5) CPC and registered as I.A. No. 15502/2009 was conditionally allowed upon the defendant No. 1 furnishing a bank guarantee for the principal cheque amount of 65 lacs to the satisfaction of the Registrar General within six weeks. Aggrieved by the aforesaid conditional leave to defend granted to the defendant No. 1, an intra-court appeal was preferred by him, registered as FAO(OS) 551/2010. Vide order dated 27.09.2011, The aforesaid appeal was disposed of by the Division Bench and while upholding the impugned order dated 07.05.2010, the same was modified only to the extent that instead of furnishing a bank guarantee to the tune of ''65 lacs, the defendant was called upon to furnish an alternative solvent security to the satisfaction of the Registrar General within one month from the date of passing of the said order, i.e., on or before 28.10.2011.

Counsel for the defendant No. 1 states that the said defendant has filed a copy of the sale deed of an immoveable property with a valuation report on 14.12.2011.

The aforesaid documents are not on record. Counsel for the defendants states that they have been filed in the appeal proceedings. Counsel for the plaintiff denies having received copies of the aforesaid documents and states that the aforesaid documents ought to have been filed by the defendant No. 1 in the suit proceedings. He submits that in any case, the said documents were filed much beyond the timeline prescribed by the Division Bench and therefore, could not be taken on record. He further states that defendant No. 1 is not serious as he has not taken any step to pursue the matter and have the said documents scrutinized to the satisfaction of the Registrar General, as directed by the Division Bench.

Counsel for the defendant No. 1 concedes the fact that the sale deed offered as an alternative solvent security was neither filed within the time granted by the Division Bench nor has the said defendant approached the Division Bench for seeking extension of time or for condonation of delay. He also concedes that though an application was filed in the Registry alongwith the aforesaid documents for acceptance of the title deeds of a property to the satisfaction of the Registrar General, the same has not been pursued by the defendant.

In view of the aforesaid submissions, the sequence of events that emerge are that vide order dated 7.5.2010, the leave to defend application filed by defendant No. 1 was allowed but only after putting him to terms. In other words, defendant No. 1 was granted conditional leave to contest the suit upon his furnishing a bank guarantee for the principal amount of Rs. 65 lacs only, to the satisfaction of the Registrar General of this Court within a period of six weeks from the date of passing of the order dated 7.5.2010. Admittedly, defendant No. 1 did not comply with the aforesaid order. On the next date of hearing, i.e., on 8.7.2010, counsel for defendant No. 1 sought further time of two weeks for moving an appropriate application for seeking extension of time for furnishing the bank guarantee in terms of the order dated 7.5.2010. The aforesaid request made on behalf of defendant no. 1 was acceded to, subject to imposition of costs of Rs. 5,000/- on him.

On 12.7.2010, defendant No. 1 filed an application(IA No. 11817/2010) for seeking extension of time to furnish the bank guarantee. The aforesaid application was accompanied by an application(IA No. 11818/ 2010) for waiver of costs imposed on 8.7.2010. However, on 22.12.2010, counsel for defendant No. 1 submitted that he did not wish to press the aforesaid applications and instead wanted to seek appropriate relief from the Appellate Court. Both the applications were accordingly dismissed, as not pressed. In January 2011, defendant No. 1 filed an application, registered as IA No. 420/2011 requesting that the matter be proceeded with, without insisting upon furnishing of the bank guarantee, till the disposal of an appeal that had been preferred by him. The court however did not find any merit in the said application and observed that it was nothing but an attempt to seek review of the order dated 7.5.2010 and accordingly the said application was disposed of.

Subsequently, the appeal preferred by defendant No. 1 against the order dated 7.5.2010 and 8.7.2010 registered as FAO(OS) No. 551/2010 was disposed of by the Division Bench vide order dated 27.9.2011, with the observation that the objective of the impugned order requiring defendant No. 1 (appellant in the appeal) to furnish the bank guarantee was to secure the amount in case a decree would be passed against him. It was further observed that any alternative security would also serve the same purpose and therefore, the order dated 7.5.2010 was modified to the extent that the requirement of furnishing a bank guarantee to the tune of Rs. 65 lacs was permitted to be substituted with defendant No. 1 furnishing an alternative solvent security to the satisfaction of the Registrar of this Court for the said amount within one month from the date of passing of the aforesaid order. The period of one month granted by the Division Bench had expired on or around 28.10.2011.

Pertinently, till date, defendant No. 1 has not placed on record any documents to establish that he had taken any steps to furnish an alternative solvent security within the stipulated time, in terms of the order of the Division Bench. However, learned counsel for defendant no. 1 submits that the aforesaid document along with a valuation report were filed with an application in the appeal proceedings. It is rather surprising that defendant No. 1 chose to file the aforesaid documents in an appeal, which stood disposed of vide order dated 27.9.2011 and more so, when the Division Bench had only modified the order passed in the suit proceedings by substituting the requirement of furnishing a security by way of bank guarantee to an alternative solvent security.

It is, therefore, apparent that leave to defend granted to the defendant No. 1 had remained a conditional order, but with a limited change of the nature of security permitted to be offered by the Division Bench. It was thus incumbent upon the defendant No. 1 to have filed any subsequent document furnishing an alternative solvent security in the present proceedings and not in the appeal. Even if it is assumed that the aforesaid documents were erroneously filed by defendant no. 1 in the appeal proceedings, they were filed much beyond the timeline granted by the Division Bench and therefore, he ought to have sought enlargement of time/condonation of delay in filing the said documents. Admittedly, defendant No. 1 took no such steps. Instead, after filing the documents in question which are not on the record, he proceeded to sleep over the entire matter.

To show his seriousness, defendant No. 1 ought to have pursued the matter further by approaching the Division Bench and seeking condonation of delay for belatedly filing the documents in question and diligently following up the matter in the Registry so as to have the same placed before the Registrar General for purposes of acceptance of the security offered by him. Over nine months have already lapsed since the date of passing of the order dated 27.9.2011 by the Division Bench. Even if the period of delay is reckoned from the date when counsel for defendant No. 1 states that the documents in question were filed in the appeal proceedings, i.e., from 14.12.2011, over six months have expired ever since, but the defendant No. 1 has not been able to demonstrate that he took any steps to approach the Registrar General for acceptance of the alternative solvent security allegedly offered by him. In the aforesaid circumstances, this Court has no option but to hold that as the leave to defend granted to the defendant No. 1, vide order dated 7.5.2010, was conditional and in view of the breach of the said condition imposed on him and further, as defendant No. 1 has chosen not to approach the Division Bench for seeking condonation of delay in offering a solvent security in terms of the order dated 27.9.2011 passed in the intra court appeal, the present suit is decreed in favour of the plaintiff and against the defendants, for a sum of '' 65 lacs, being the value of the cheque amount issued by the defendant No. 1 in favour of the plaintiff. As the counsel for the plaintiff has not been able to demonstrate from the Memorandum of Understanding dated 2.5.2005 (Annexure-A to the plaint) executed between it and the defendant No. 1 that the plaintiff is entitled to claim any amount towards interest from the defendant No. 1 on the principal amount of Rs. 65 lacs, the plaintiff cannot be granted any interest on the said amount for the period anterior to the institution of the present suit. However, the plaintiff is held entitled to receive interest @ 9% per annum from the defendant No. 1 on the amount of Rs. 65 lacs from the date of institution of the suit till realization alongwith costs of the proceedings. Decree sheet be drawn accordingly.