The Supreme Court dismissed a civil revision petition and civil miscellaneous appeal seeking to condone delay and set aside an ex parte decree against a director in a suit against a company.
Civil Revision Petition and Civil Miscellaneous Appeal dismissed; each party to bear own costs.
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THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO C.R.P.5146 OF 2007
&
C.M.A.944 OF 2007
COMMON ORDER:
Both the matters arise out of a common order passed by the Principal District Judge, Ongole in I.A.Nos.1022 and 1023 of 2007 in O.S.No.10 of 1998.
The suit O.S.No.10 of 1998 is filed by the plaintiff, for recovery of arrears of salary, who is said to have been employed by the second respondent and the suit was decreed ex parte. The petitioner herein is the fifth defendant in the suit. I.A.1022 of 2007 was filed to condone the delay of 1418 days in filing a petition to set aside the ex parte decree and I.A.No.1023 of 2007 was filed to set aside the ex parte decree passed on 17-04-2003.
Both the applications were dismissed and aggrieved by the order in I.A.No.1022 of 2007 the C.R.P was filed and aggrieved by the order in I.A.No.1023 of 2007 the C.M.A is filed.
The claim of the revision petitioner is that he was a partner in the second respondent-Company and the plaintiff was not at all an employee and the plaintiff furnished vague address of the petitioners and obtained an ex parte decree. The petitioner came to know on 20-04-2007 about the ex parte decree passed on 1704-2003 and further came to know about filing of E.P. No. 33 of 2003 and property worth Rs.80 lakhs was purchased by the auction purchaser only for a sum of Rs.9,10,000/-. There is no service at all as contemplated under Civil Procedure Code. The petitioner has got a good case to succeed. The petitioner also further claimed that he is one of the directors in the second respondent-Company.
The application was opposed by the respondent/plaintiff on the ground that the allegation about the fraud or mischief pleaded
by the respondent is not true. The knowledge pleaded by the petitioner is also not true. The suit was filed as the salary was not paid and the present petitioner is well aware of the proceedings and the court gave sufficient opportunity and there are no grounds to condone the delay or to set aside the ex parte decree.
On considering the rival contentions along with some other applications, the learned District Judge dismissed the above applications and hence the Revision and C.M.A
The point that arises for consideration in both Revision and Appeal is:-
Whether there are sufficient and reasonable grounds to condone the delay and to set aside the ex parte decree? POINT:
It is not in doubt that the petitioner herein is the fifth defendant and there was no personal service and there was only a paper publication at the place where he resides. It is to be mentioned that in the petition affidavit no collusion was specifically mentioned between the plaintiff and the Company or its other Directors. No specific allegations against the first and second defendants were made so as to cause loss to the petitioner. Evidently, there is no personal decree against the revision petitioner and it was only decree against the Company. The Company represented by its Managing Director and in fact the defendant Nos.1 and 2 in the main suit have filed written statement but however it was not pursued. Before considering the claim of the petitioner, it is to be noted that except being a Director of the Company, the petitioner does not have any independent liability and evidently as the matter stands application for liquidation of the Company was allowed and the proceedings were initiated. The auction sale conducted by the executing court and the legality of it are quite different matters. Even if for any reason the person who was in management of the Company did not properly pursue the
cause, the claim of the appellant/petitioner herein has to be worked out otherwise. But sofar as the decree against the first defendant who is said to be Company which has employed the plaintiff stands and became final and becomes indivisibly, the application under Order IX Rule 13 cannot be maintained. In this connection, it is useful to refer the Order IX Rule,13 C.P.C, as under:-
Order IX Rule.13: Setting aside decree ex parte against defendant:--
In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit:
Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also.
Evidently, in this case as against the ex parte decree, the appeal was preferred by the defendant Nos.1 and 2 and an application ASMP 2199 of 2008 was filed to condone the delay of 1915 days in filing of the appeal and the petitioner herein is also the fourth respondent in the said appeal. He did not evidently participate in that appeal and this court in its order dated 10-112010 dismissed the appeal finding that no grounds are available to condone the delay. The court also considered the decision about the liquidation proceedings etc., but however for a decision in these matters it is suffice to say that the decree has become final and the present petitioner is only a part of the first defendantCompany and is also a party to the above ASMP 2199 of 2008 and
in fact as can be seen from the order of this court dated 12-082010 the court passed the following order:-
“It is represented by Sri Sudhakar Rao, Advocate, learned counsel for the revision petitioner/appellant that respondents 2 and 3 herein filed an appeal against the ex parte decree and judgment along with a petition to condone delay in ASMP No.403 of 2009 in ASSR No.10681 of 2008 which is pending on the file of this court.
Hence, all the three matters together be posted before the same Bench.”
Therefore, the petitioner is aware of the filing of the appeal and he did not canvass the nature of the decree passed and the liability to set aside the decree in those proceedings but however the present revision and C.M.A were subsequently separated and the order in ASMP No.2199 of 208 was passed. Therefore, the petitioner being aware of the above finality of the judgment having voluntarily did not get these matters decided simultaneously and did not plead for the case for condonation of delay at least on the ground of non-service on the revision petitioner. The claim of the petitioner at this stage is not open to be canvassed. The decree is definitely indivisible and when once it has become final against the first defendant, which is Company, it is binding on the all Directors who are part of it. In fact there is also no need to add the independent Directors as parties to a suit. When a suit is filed against the Company for the reliefs since a decree against the Company only entitles for proceeding in its assets and there is no personal decree to be passed against any of the Directors. Therefore the contention of the present petitioner does not stand to strength of law for expressing his grievances.
The learned counsel for the revision petitioner relied on the following decisions:-
1. Bank of India Vs. Mehta Brothers and others([1] )
2. Rabindra Singh Vs. Financial Commissioner,
Cooperation, Punjab and others([2] )
3. Loh Vanizya Udyog (P) Limited Vs. Rickie Khosla and another([3] )
4. Mahesh Yadav and another Vs. Rajeshwar Singh and others ([4] )
In the above decisions, the general principles of condonation of delay and setting up aside of ex parte decree were considered and in view of the facts in this case as the decree is indivisible though the courts may be having wide power to condone the delay in the interest of justice, the above decisions are of no help to the petitioner. In this case the nature of the proceedings are quite different. In fact the learned counsel for the respondent relied on a decision reported in Shyam Sunder Sarma Vs. Pannalal Jaiswal and others ([5] ) , wherein it was held that an appeal against an ex parte decree was filed and it was dismissed as being time barred. Without condonation of delay, the application under Order IX Rule 13 was held to be not applicable, even if the said appeal was filed subsequent to the filing of the application under Order IX, Rule 13 CPC. In view of the above circumstances, I find no merits either in the appeal or in the revision and accordingly they are liable to be dismissed.
In the result both Civil Revision Petition as well as Civil Miscellaneous Appeal are dismissed. Each party do bear their own costs.
_______________________ N.R.L.NAGESWARA RAO,J
26-04-2011 TSNR
[1] (2008) 13 SCC 466 [2] (2008) 7 SCC 663 [3] (2007) 14 SCC 356
[4] (2009) 2 SCC 205 [5] AIR 2005 S.C. 226
2 issues framed by the court
Whether sufficient and reasonable grounds exist to condone delay and set aside an ex parte decree against a non-serviced defendant in a suit against a company?
Whether an application to set aside an ex parte decree is maintainable when the main decree against the company has already become final and indivisible?
Colour shows how this judgement treated each authority
Bank of India Vs. Mehta Brothers and othersDistinguished¶25
(2008) 13 SCC 466 · Who else cites this
Rabindra Singh Vs. Financial Commissioner, Cooperation, Punjab and othersDistinguished¶26
(2008) 7 SCC 663 · Who else cites this
Loh Vanizya Udyog (P) Limited Vs. Rickie Khosla and anotherDistinguished¶27
(2007) 14 SCC 356 · Who else cites this
Mahesh Yadav and another Vs. Rajeshwar Singh and othersDistinguished¶29
(2009) 2 SCC 205 · Who else cites this
Shyam Sunder Sarma Vs. Pannalal Jaiswal and othersRelied on¶29
AIR 2005 S.C. 226 · Who else cites this
1 provisions across 1 enactments
Fifth Defendant in O.S.No.10 of 1998
Plaintiff/Applicant in I.A.Nos.1022 and 1023 of 2007
N.R.L.NAGESWARA RAO
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
