Case Law Details

Case Name : Sree Rajendra Mill Ltd. Vs IOCEE Exports Ltd. (Madras High Court)
Appeal Number : O.S.A. NO. 414 OF 2010
Date of Judgement/Order : 23/02/2011
Related Assessment Year :
Courts : All High Courts (3783) Madras High Court (283)

HIGH COURT OF MADRAS

Sree Rajendra Mill Ltd.

v/s.

IOCEE Exports Ltd.

O.S.A. NO. 414 OF 2010

FEBRUARY 23, 2011

JUDGMENT

R. Banumathi, J. – This appeal arises out of the order of the learned single judge in Application No. 4291 of 2010 in C. S. No. 698 of 2001 dated November 19, 2010, dismissing the application filed by the appellant under section 5 of the Limitation Act, 1963, declining to condone the delay of 1,932 days in filing the application to set aside the ex parte decree dated April 5, 2005.

2. The respondent/plaintiff filed C. S. No. 698 of 2001 for recovery of Rs.13,94,815 along with subsequent interest. In October 2001, the appellant engaged a counsel to represent their case and had also given the vakalat. For non-filing of written statement, the suit was decreed ex parte on April 5, 2005. The appellant filed an application to set aside the ex parte decree along with A. No. 4291 of 2010 to condone the delay of 1,932 days in filing the application to set aside the ex parte decree. The application was filed on the ground that by the order dated September 6, 2001, the appellant-company was declared as sick company by the Board for Industrial and Financial Reconstruction (“the BIFR”) and case has been registered under No. 311 of 2001 and the said matter was pending even in the year 2010. When the proceedings were pending before the BIFR and under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short “the SICA), the company being sick, no proceedings could continue before the court and the court has to await the proceeding and final orders before the BIFR and on that ground, the appellant prayed for condonation of delay of 1,932 days in filing the application to set aside the ex parte decree dated April 5, 2005.

3. Denying the averments, the respondent/plaintiff filed a counter stating that the long range of delay of 1,932 days has not been satisfactorily explained. According to the respondent, on July 31, 2006, the respondent/plaintiff sent a letter requesting the appellant to settle their dues pursuant to the decree dated April 5, 2005, along with a copy of the decree and the said letter was acknowledged by one Kasi Viswanathan, an employee of the appellant-company on August 2, 2006, for which there had been no response. Therefore, according to the respondent even though the appellant had knowledge of the decree on August 2, 2006, they have not chosen to file the application and therefore, the delay is not satisfactorily explained. Further according to the respondent, the appellant has not included the name of the respondent in the list of creditors filed before the BIFR.

4. Pointing out that the letter has been sent by the respondent on July 31, 2006 and that in spite of receipt of the same, the appellant had not responded to the same, the learned single judge held that the appellant had knowledge of the decree. The learned single judge further held that once the defendant had knowledge of the decree, defendant ought to have taken steps to set aside the decree and the inordinate delay has not been satisfactorily explained.

5. Challenging the impugned order, Mr. V. Raghavachari, learned counsel for the appellant contended that in view of the BIFR proceedings where by an order dated September 6, 2001, the appellant-company had been declared as sick company and in view of bar under section 22 of the SICA, no proceedings could continue before the court and the court has to await the proceedings and final orders before the BIFR and the decree passed on April 5, 2005, is unsustainable. It was further contended that notwithstanding the long range of delay and in view of the bar under section 22 of the SICA, the learned single judge ought to have condoned the delay.

6. Mr. M. Aravind Subramaniam, learned counsel for the respondent submitted that the employee of the appellant-company, Kasi Viswanathan had received the letter and in spite of receipt of the letter on August 2, 2006, the appellant had not taken steps to set aside the ex parte decree. Placing reliance upon Oriental Aroma Chemical Industries Ltd. v. Gujarat Industrial Development Corpn. [2010] 5 SCC 459, it was further submitted that in cases of extraordinary delay, there has to be a strict approach and the learned single judge has rightly declined to condone the delay and the same cannot be interfered with.

7. Main contention of the appellant is that by the order dated September 6, 2001, the appellant/defendant-company had been declared as sick company by the BIFR and a case has been registered under No. 311 of 2001 and the same is pending before the BIFR and in view of the bar under section 22 of the SICA, no proceedings could continue and the proceedings shall remain suspended and the decree passed on April 5, 2005, is non est.

8. Per contra, learned counsel for the respondent/plaintiff has submitted that the respondent has not received any communication either from the BIFR or from the appellant about the pendency of Case No. 311 of 2001. According to the respondent, its name has not been included in the list of creditors filed before the BIFR and the decree passed by this court in C. S. No. 698 of 2001 has not been brought to the notice of the BIFR. Even though, the proceedings in the BIFR has been averred in the affidavit, the learned single judge did not advert to the same. We also do not propose to express any opinion on the proceedings said to be pending before the BIFR and the effect of the same on the suit.

9. Point falling for consideration is whether the appellant had notice of the decree and the delay has been satisfactorily explained. As pointed out earlier, on receipt of the suit notice, the appellant had engaged a counsel in October, 2001. Since they have not filed the written statement, ex parte decree came to be passed on April 5, 2005. In an application under section 5 of the Limitation Act, 1963, the court has to see whether there is sufficient cause for the delay.

10. In the matter of condonation of delay, two important matters are relevant, viz., (i) the right to the respondent accrued to him by lapse of time should not be disturbed light-heartedly ; and (ii) that if sufficient cause is proved by the appellant or the applicant, he does not acquire automatically the right to have the delay condoned, but section 5 of the Limitation Act vests in the court with the discretion to condone the delay.

11. In the matter of condonation of delay, it is not the length of the delay that is the criterion for deciding whether the delay should be condoned or not but the acceptability of the explanation is the criterion. It is also settled principle that if the party is not vigilant about his right, he must explain the delay. The conduct of the party seeking condonation is a relevant factor to be considered by the court in allowing or refusing the condonation. The expression “sufficient cause” under section 5 of the Limitation Act, 1963, to receive liberal construction so as to advance substantial justice. Ordinarily, delay in filing the appeal should be condoned, when no negligence in action or want of bona fides is imputable to the applicant and that in an application for condonation of delay “sufficient cause” should receive liberal construction so as to advance substantial justice. While condoning the delay, the discretion has to be exercised to advance substantial justice.

12. Though a liberal approach has to be made in a matter of condoning delay in filing appeals, it must not give a licence to litigants to ignore the statutory provisions, which mandates that application has to be filed within a particular time. Liberal approach is also not a licence to encourage gross negligence, irresponsible and inactive attitude of the party. However, in every case of delay there can be some lapse on the part of the litigant. That alone is not enough to turn down his plea and to shut the door against him.

13. As pointed out earlier, in October 2001, the appellant had engaged counsel to represent the case and had also filed vakalat. In the affidavit, the appellant has stated that since they engaged counsel, they were under the bona fide belief that the company’s rights were duly protected and that they had no knowledge of the decree being passed. The copy of the decree dated April 5, 2005, was sent to the appellant by the respondent vide a letter dated July 31, 2006 and the same was said to have been received by one Kasi Viswanathan, an employee of the appellant-company on August 2, 2006.

14. The point is whether knowledge could be attributed to the appellant on the ground that the said Kasi Viswanathan had received the said letter on August 2, 2006. In the rejoinder filed by the appellant, it is clearly averred that the said Kasi Viswanathan had left the services of the appellant-company even on May 31, 2006 and that he has tendered his resignation letter as early as April, 2006. In the typed set of papers, the appellant had also produced the copy of resignation letter of the said Kasi Viswanathan and also Form No. 10 filed by the appellant under the Employees’ Provident Funds Scheme. It is seen from Form No. 10 that Kasi Viswanathan is said to have left the service on May 31, 2006. Even though the said letter dated July 31, 2006, addressed to the appellant-company, since the same is said to have been received by the erstwhile employee (Kasi Viswanathan), in our considered view, no negligence can be attributed to the appellant.

15. When the defendant has alleged non-receipt of the said letter dated July 31, 2006 and urges the same for not taking steps, the reasons stated by the appellant do not appear to be false or frivolous. It must be remembered that in every case of delay, there is some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea. As held by the Supreme Court in N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123 if the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor.

16. In our considered view, the learned single judge did not keep in view the averments in the rejoinder filed by the appellant. In any event, in view of the BIFR proceedings, the effect of the decree passed has to be considered. We are of the view that even though the delay is a long range of delay, the same has been satisfactorily explained by the appellant and the order of the learned single judge is liable to be interfered with.

17. In the result, the order of the learned single judge in A. No. 4291 of 2010 in C. S. No. 698 of 2001 dated November 19, 2010, is set aside and this appeal is allowed. The registry is directed to number the application filed under Order 14, rule 8 of the Madras High Court Original Side Rules, 1956 read with Order 9, rule 13 of the Code of Civil Procedure, 1908 and we request the learned single judge to consider the application and pass appropriate orders. Consequently, connected M. P. is closed. No costs.

 

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