Set aside exparte decree - the suit claim was for damages. The damages to the property if any, can be ascertained only after the parties adduce the oral and documentary evidence. We have no reason to believe that the appellant would have benefitted by deliberately not contesting the suit as they would in any event be saddled with interest if their conduct was to drag and prolong the suit.
whether appellant was served or not and entered appearance in the suit, we are not inclined to go into the merits of the contentions. In our view, an opportunity has to be given to the appellant for contesting the suit. It is because the suit was filed for recovery of damages of Rs.1 crore and respondent No.1 claimed interest @ 24% per annum. By the judgment dated 07.10.2003, the Court has directed the appellant and respondent No.2 to pay a sum of Rs.77,02,500/- and Rs.42,70,772.46, total amount payable under decree is Rs.1,20,03,282.96. The Court also directed the payment of subsequent interest @ 6% per annum on the said amount of Rs.77,02,500/- till date of reliasation. 16. As pointed out earlier, the suit claim was for damages. The damages to the property if any, can be ascertained only after the parties adduce the oral and documentary evidence. We have no reason to believe that the appellant would have benefitted by deliberately not contesting the suit as they would in any event be saddled with interest if their conduct was to drag and prolong the suit. Considering the nature of the claim and other facts and circumstances and in the interest of justice, we are of a view that an opportunity has to be given to the appellant to contest the suit 12 subject to terms. The appellant has also in that regard shown its bona fide by depositing Rs.60,00,000/- in compliance of the order dated 18.02.2019. By the order dated 24.01.2020, we have also directed the appellant to deposit further sum of Rs.35,00,000/- for which the appellant sought for some more time for compliance. Considering the request, two months further time is granted to the appellant for deposit of the said amount.
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1890-1891 OF 2020
(Arising out of SLP(C) Nos.5374-5375 of 2019)
AVIATION TRAVELS PVT. LTD. ...Appellant
VERSUS
BHAVESHA SURESH GORADIA
AND OTHERS ...Respondents
J U D G M E N T
R. BANUMATHI, J.
Leave granted.
2. These appeals arise out of the impugned judgment dated
09.07.2018 passed by the High Court of Judicature at Bombay in
Appeal (Lodging) No.224 of 2018 in Notice of Motion No.580 of
2018 in Suit No.2865 of 1994 in and by which, the High Court
dismissed the Notice of Motion filed by the appellant and declined to
set aside ex-parte judgment and decree dated 07.10.2003 passed
against the appellant in Suit No.2865 of 1994 and the impugned
order dated 26.10.2018 passed in Review Petition (Lodg.) No.20 of
2018 whereby the review petition filed by the appellant was
dismissed.
3. Brief facts which led to the filing of these appeals are as
under:- Respondent No.1 filed a suit being Suit No.2865 of 1994
1
before the High Court of Bombay against the appellant and
respondents No.3 to 24 for permanent injunction and compensation
of Rs.1 crore for trespass, nuisance and damages allegedly made
by appellant-Defendant No.1. It is stated that respondents No.3 to 6
are present trustees of a private trust known as “Parikh Goradia
Trust” and respondents No.7 to 24 are beneficiaries of the said
private trust. The appellant carries on business as travel agent and
also inter alia of running a restaurant called “Woodlands Garden
Cafe” i.e. respondent No.2. It was stated by respondent No.1 that
the trust-Parikh Goradia Trust came into existence under an
Indenture of trust dated 01.04.1976. Clause 3 of the said Indenture
provides that the trust shall come to an end on 30.09.1985 and the
trust fund will be divided amongst beneficiaries of the trust.
However, despite the trust having come to an end on the stipulated
date, the trustees thereof have failed and neglected to distribute the
property and fund of the trust amongst the beneficiaries.
4. By an agreement dated 06.10.1978 executed between the
trust and the petitioner and a letter dated 06.08.1982, the trust
agreed to sell to the appellant a part of the said property for a
consideration of Rs.10,00,000/-. Defendant No.1A-respondent
No.2-M/s. Woodlands Garden Cafe is a partnership firm registered
2
under Indian Partnership Act, 1932 by virtue of a partnership deed
executed on 01.04.1989. The appellant executed a leave and
licence agreement dated 10.04.1989 with respect to the said
premises in favour of respondent No.2-M/s. Woodlands Garden
Cafe for a period of ten years to run the restaurant therein. Since
the year 1989, respondent No.2-M/s.Woodland Garden Cafe is in
occupation and possession of the said premises by doing restaurant
business thereon. Case of the first respondent is that respondent
No.2- M/s.Woodland Garden Cafe was closed down for repairs and
renovations in the year 1992 and in the course of these repairs, the
appellant caused considerable damage to the property and carried
out unauthorized and illegal construction.
5. Respondent No.1 filed Suit No.2865 of 1994 to direct the
appellant (defendant No.1) to pay a sum of rupees one crore to the
trust together with interest @ 24% per annum and for permanent
injunction restraining the appellant from carrying on repairs and
renovations in the premises and also to ensure that no damage or
loss or injury is caused to the said property of the trust either in the
course of the renovation or the repairs carried out by the appellant
and other reliefs. Vide order dated 07.10.2003, the Court noted that
no written statement has been filed and the Court held that the first
3
respondent’s claim in the suit is clearly unchallenged. Vide ex-parte
decree dated 07.10.2003, the High Court decreed the suit and
directed the appellant and respondent No.2 to pay respondent No.1
and the beneficiaries of the said trust a sum of Rs.77,02,500/- with
interest thereon @ 6% per annum from the date of filing the suit till
the date of payment or realization. By the said ex-parte decree
dated 07.10.2003, the Court also granted relief in terms of Clause
(b), (c) and (g) (i.e. permanent injunction, mandatory injunction and
costs of the suit) of the prayer clause against the appellant and
respondent No.2.
6. The matter remained as such for quite some time. The
appellant took Notice of Motion No.580 of 2018 dated 02.02.2018
praying to set aside the ex-parte judgment and decree dated
07.10.2003 and that the appellant be permitted to file written
statement and defend the suit. It was stated that the summons of
the original suit and the proceeding thereof were never served upon
the appellant at its registered address and/or any other address
where the appellant was carrying on its business and also on the
ground that Rule 90 of the Bombay High Court (Original Side) Rules
(for short “Bombay High Court Rules”) has not been followed.
4
7. Vide order dated 19.04.2018, learned Single Judge dismissed
the Notice of Motion No.580 of 2018. The learned Single Judge
noted that the ex-parte decree dated 07.10.2003 shows that an
advocate was engaged on behalf of the appellant and respondent
No.2 and the said advocate has filed vakalatnama and there is no
question of having to thereafter serve a party personally. The High
Court held that along with the affidavit, a Power of Attorney dated
29.04.1993 was said to have been executed by the appellant in
favour of one K. Shrinivas Rao and there is also a rubber
stamp and circular common seal of the appellant in the Power of
Attorney and the Power of Attorney is said to have been notarized in
Mumbai and the seal of the Notary is also visible. Pointing out that
the defendant No.1 through its Power of Attorney had engaged a
lawyer and there was a validly executed vakalatnama by a
constituted attorney K. Shrinivas Rao and also that writ of summons
was in fact served on the appellant and respondent No.2 (original
defendant No.1A) by bailiff attached to the office of Sherrif of
Mumbai, the learned Single Judge dismissed the Notice of Motion
No.580 of 2018.
8. Being aggrieved, appellant preferred Appeal (Lodging) No.224
of 2018 challenging the order declining to set aside the ex-parte
5
decree. The said appeal was dismissed by the Division Bench vide
impugned judgment dated 09.07.2018. The Division Bench of the
High Court opined that the appellant had engaged M/s. Narayanan
& Narayanan, Advocates who placed on record of the suit a
vakalatnama duly signed by the constituted attorney of the
appellant. The Division Bench also noted that the record indicates
that the advocate for the appellant represented the appellant in the
suit on several dates including appearing at interlocutory application
stage and engaging a senior advocate to argue on behalf of the
appellant. The Division Bench held that appellant’s Notice of Motion
as well as the appeal is misconceived. The appellant then filed
Review Petition (Lodg.) No.20 of 2018 along with the Notice of
Motion for condonation of delay of 27 days in filing the review
petition. The said review petition also came to be dismissed vide
impugned order dated 26.10.2018 on the ground that there was no
error apparent on the face of the order or any other ground is made
out to entertain the review petition.
9. We have heard the submissions of Mr. R.F. Totala, learned
counsel for the appellant and Mr. Shree Prakash Sinha, learned
counsel for respondents No.1, 9 and 10 and carefully perused the
contentions and impugned judgment and other materials on record.
6
10. The High Court has noted that on behalf of the appellant,
M/s. Narayanan & Narayanan, Advocates has entered appearance
and filed a vakalatnama duly signed by the constituted attorney of
the appellant. The Power of Attorney dated 29.04.1993 was
executed by the Chairman and Managing Director, Mr. Kudralli
Subanna Nagraj of the appellant company and the same was
executed before the Notary on 29.04.1993 and the signature of the
executant was also identified by the advocate. The High Court
noted that the said Power of Attorney inter alia authorized the
attorney to accept the summons, notice and other processes issued
to the advocate from any Court, Government or authority
concerning the suit premises. The High Court also pointed out that
there are several clauses in the Power of Attorney which authorize
the constituted attorney to do acts in regard to the litigation. The
High Court has referred to the affidavit filed by K. Shrinivas Rao in
reply dated 20.07.1994 to the Notice of Motion No.1847 of 1994 for
interim relief wherein, it was stated that he is a constituted attorney
of the appellant (defendant No.1). K. Shrinivas Rao also stated that
he was Director of appellant company till the year 1989 and at the
time of filing the affidavit in 1994, he was a partner in respondent
No.2-firm.
7
11. Insofar vakalatnama dated 20.07.1994 filed by M/s.
Narayanan & Narayanan, Advocates on behalf of the appellant and
respondent No.2, contention of the appellant is that they never
instructed the said M/s. Narayanan & Narayanan, Advocates to
appear on behalf of the appellant in the original suit. Case of the
appellant is that vakalatnama dated 20.07.1994 was signed by K.
Shrinivas Rao claiming himself to be a constituted attorney of
defendant No.1. The stand of appellant is that defendant No.1 never
authorized the said K. Shrinivas Rao to sign vakalatnama on behalf
of the appellant in the original suit. Insofar as the Power of Attorney
dated 29.04.1993 is concerned, the appellant contends that it was a
general Power of Attorney and the appellant company never passed
any board resolution nor executed any such Power of Attorney
authorizing K. Shrinivas Rao to sign vakalatnama on
behalf of the appellant in the suit; the said K. Shrinivas Rao signed
the vakalatnama for and on behalf of respondent No.2. Stand of the
appellant is that the appellant never authorized K. Shrinivas Rao to
appear on behalf of the appellant in the original suit No.2865 of
1994.
12. The High Court rejected the stand of the appellant and
observed that page 18 of the Power of Attorney is a typed name of
8
the Chairman and Managing Director and there is also a rubber
stamp and circular common seal of the appellant and the Power of
Attorney was executed by the Chairman and Managing Director of
the appellant company Mr. Kudralli Subanna Nagraj. The High Court
has also pointed out that the Power of Attorney dated 29.04.1993
has been notarized in Mumbai on 29.04.1993 and the seal of the
Notary is also seen in the Power of Attorney.
13. On behalf of the appellant, it was contended before the High
Court that even assuming that the vakalatnama was filed on behalf
of the appellant through Power of Attorney, Rule 79 of the Bombay
High Court Rules requires personal service of the writ of summons
on a defendant even if appearance was entered on his behalf by an
advocate. To the said contention, the High Court opined that Rule
79 of the Bombay High Court Rules speaks of a waiver of the
requirement of serving the writ of summons personally, if the
advocate undertakes in writing to accept service of that writ of
summons and to file a vakalatnama. The High Court pointed out
that Rule 79 contemplates a stage before the vakalatnama is in fact
filed and once the vakalatnama is filed, there is no question of
having to serve a party personally thereafter. The High Court
pointed out that in Suit No.2865 of 1994, vakalatnama was filed by
9
the Power of Attorney in the suit itself and there is no question of
having to thereafter serve a party personally. After referring to the
affidavit in reply at pages 62 and 63 of the paper book, the High
Court observed that summons was in fact served on the advocates
for the appellant and respondent No.2 by bailiff attached to the
office of Sherrif of Mumbai and there is an affidavit of service dated
18.08.1999 made by the bailiff’s clerk to that effect. Observing that
the Court has personally checked the original affidavit of the bailiff
and the file and pointing out that there is no affidavit in rejoinder, the
learned Single Judge has dismissed the Notice of Motion No.580 of
2018.
14. According to the appellant, the High Court erred in holding
that the Power of Attorney dated 29.04.1993 is genuine. It was
urged that the alleged Power of Attorney is said to have been
notarized at Mumbai before Advocate Raja who was representing
respondent No.2 in the original suit whereas, the appellant company
is located in Bangalore. Learned counsel for respondent No.1 has
submitted that the appellant herein surrendered and/or sold all its
rights and interest in the property in question to respondent No.2 on
30.04.1993 and the present appeal is a proxy litigation on behalf of
respondent No.2. It is the contention of respondent No.1 that since
10
K. Shrinivas Rao duly constituted the Power of Attorney of the
appellant has filed his reply on 20.07.1994 and the said reply was
filed through M/s. Narayanan & Narayanan, Advocates in which the
appellant through the Power of Attorney has stated that the
premises in question was acquired by the appellant with the
contribution made by respondent No.2- M/s. Woodland Garden
Cafe and therefore, respondent No.2 also should be heard before
any order is passed in the suit. It was submitted that based on the
reply affidavit filed by K. Shrinivas Rao, respondent No.1 filed
application for amendment and the amendment application was
allowed on 26.07.1994 and respondent No.2 was impleaded as
defendant No.1A. It is therefore, submitted that filing of vakalatnama
on behalf of the appellant by its duly constituted Power of Attorney
K. Shrinivas Rao and subsequent impleading of respondent No.2
clearly shows that the appellant and respondent No.2 were duly
served and participated in the proceedings and were aware of the
decree dated 07.10.2003. It was contended that the appellant has
not approached with the correct averments and in view of the
incorrect stand taken by the appellant, the High Court rightly
rejected the Notice of Motion refusing to set aside the ex-parte
decree dated 07.10.2003.
11
15. Though various contentions have been raised as to whether
appellant was served or not and entered appearance in the suit, we
are not inclined to go into the merits of the contentions. In our view,
an opportunity has to be given to the appellant for contesting the
suit. It is because the suit was filed for recovery of damages of Rs.1
crore and respondent No.1 claimed interest @ 24% per annum. By
the judgment dated 07.10.2003, the Court has directed the
appellant and respondent No.2 to pay a sum of Rs.77,02,500/- and
Rs.42,70,772.46, total amount payable under decree is
Rs.1,20,03,282.96. The Court also directed the payment of
subsequent interest @ 6% per annum on the said amount of
Rs.77,02,500/- till date of reliasation.
16. As pointed out earlier, the suit claim was for damages. The
damages to the property if any, can be ascertained only after the
parties adduce the oral and documentary evidence. We have no
reason to believe that the appellant would have benefitted by
deliberately not contesting the suit as they would in any event be
saddled with interest if their conduct was to drag and prolong the
suit. Considering the nature of the claim and other facts and
circumstances and in the interest of justice, we are of a view that an
opportunity has to be given to the appellant to contest the suit
12
subject to terms. The appellant has also in that regard shown its
bona fide by depositing Rs.60,00,000/- in compliance of the order
dated 18.02.2019. By the order dated 24.01.2020, we have also
directed the appellant to deposit further sum of Rs.35,00,000/- for
which the appellant sought for some more time for compliance.
Considering the request, two months further time is granted to the
appellant for deposit of the said amount.
17. Insofar as the amount of Rs.60,00,000/- deposited by the
appellant, by our order dated 24.01.2020, we have permitted
respondent No.1-plaintiff to withdraw the said amount. Since there
are number of other beneficiaries of the trust viz. respondents No.7
to 24, the amount has to be disbursed to the trustees/beneficiaries
as per their entitlement. It is open to respondent No.1 and other
trustees/beneficiaries of the trust to file appropriate application
before the High Court for disbursement of the amount (pending
disposal of the suit) and the High Court shall consider and pass
appropriate order as per the entitlement of the respective parties.
The disbursement of the said amount will be subject to the outcome
of said suit. Permission for withdrawal of the amount of
Rs.60,00,000/- by respondent No.1 and other trustees/beneficiaries
is without prejudice to the contention of both the parties in the suit.
13
18. In the result, the impugned judgment dated 09.07.2018
passed by the High Court of Judicature at Bombay in Appeal
(Lodging) No.224 of 2018 in Notice of Motion No.580 of 2018 in Suit
No.2865 of 1994 and the impugned order dated 26.10.2018 passed
in Review Petition (Lodg.) No.20 of 2018 are set aside and these
appeals are allowed. The Suit No.2865 of 1994 is ordered to be
restored. The appellant and respondent No.2 shall file their written
statement within four weeks from today and learned Single Judge of
the High Court shall afford sufficient opportunity to both the parties
to adduce evidence and dispose the said suit in accordance with
law.
19. Insofar as direction for deposit of Rs.35,00,000/-, two months
further time is granted to the appellant for deposit of the said
amount and on such deposit, the same shall be invested in a
nationalized Bank for a period of six months with a provision of auto
renewal. Deposit of Rs.35,00,000/- would be subject to the outcome
of the suit. No costs.
..…………………….J.
[R. BANUMATHI]
..…………………….J.
[A.S. BOPANNA]
New Delhi;
March 02, 2020.
14
whether appellant was served or not and entered appearance in the suit, we are not inclined to go into the merits of the contentions. In our view, an opportunity has to be given to the appellant for contesting the suit. It is because the suit was filed for recovery of damages of Rs.1 crore and respondent No.1 claimed interest @ 24% per annum. By the judgment dated 07.10.2003, the Court has directed the appellant and respondent No.2 to pay a sum of Rs.77,02,500/- and Rs.42,70,772.46, total amount payable under decree is Rs.1,20,03,282.96. The Court also directed the payment of subsequent interest @ 6% per annum on the said amount of Rs.77,02,500/- till date of reliasation. 16. As pointed out earlier, the suit claim was for damages. The damages to the property if any, can be ascertained only after the parties adduce the oral and documentary evidence. We have no reason to believe that the appellant would have benefitted by deliberately not contesting the suit as they would in any event be saddled with interest if their conduct was to drag and prolong the suit. Considering the nature of the claim and other facts and circumstances and in the interest of justice, we are of a view that an opportunity has to be given to the appellant to contest the suit 12 subject to terms. The appellant has also in that regard shown its bona fide by depositing Rs.60,00,000/- in compliance of the order dated 18.02.2019. By the order dated 24.01.2020, we have also directed the appellant to deposit further sum of Rs.35,00,000/- for which the appellant sought for some more time for compliance. Considering the request, two months further time is granted to the appellant for deposit of the said amount.
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1890-1891 OF 2020
(Arising out of SLP(C) Nos.5374-5375 of 2019)
AVIATION TRAVELS PVT. LTD. ...Appellant
VERSUS
BHAVESHA SURESH GORADIA
AND OTHERS ...Respondents
J U D G M E N T
R. BANUMATHI, J.
Leave granted.
2. These appeals arise out of the impugned judgment dated
09.07.2018 passed by the High Court of Judicature at Bombay in
Appeal (Lodging) No.224 of 2018 in Notice of Motion No.580 of
2018 in Suit No.2865 of 1994 in and by which, the High Court
dismissed the Notice of Motion filed by the appellant and declined to
set aside ex-parte judgment and decree dated 07.10.2003 passed
against the appellant in Suit No.2865 of 1994 and the impugned
order dated 26.10.2018 passed in Review Petition (Lodg.) No.20 of
2018 whereby the review petition filed by the appellant was
dismissed.
3. Brief facts which led to the filing of these appeals are as
under:- Respondent No.1 filed a suit being Suit No.2865 of 1994
1
before the High Court of Bombay against the appellant and
respondents No.3 to 24 for permanent injunction and compensation
of Rs.1 crore for trespass, nuisance and damages allegedly made
by appellant-Defendant No.1. It is stated that respondents No.3 to 6
are present trustees of a private trust known as “Parikh Goradia
Trust” and respondents No.7 to 24 are beneficiaries of the said
private trust. The appellant carries on business as travel agent and
also inter alia of running a restaurant called “Woodlands Garden
Cafe” i.e. respondent No.2. It was stated by respondent No.1 that
the trust-Parikh Goradia Trust came into existence under an
Indenture of trust dated 01.04.1976. Clause 3 of the said Indenture
provides that the trust shall come to an end on 30.09.1985 and the
trust fund will be divided amongst beneficiaries of the trust.
However, despite the trust having come to an end on the stipulated
date, the trustees thereof have failed and neglected to distribute the
property and fund of the trust amongst the beneficiaries.
4. By an agreement dated 06.10.1978 executed between the
trust and the petitioner and a letter dated 06.08.1982, the trust
agreed to sell to the appellant a part of the said property for a
consideration of Rs.10,00,000/-. Defendant No.1A-respondent
No.2-M/s. Woodlands Garden Cafe is a partnership firm registered
2
under Indian Partnership Act, 1932 by virtue of a partnership deed
executed on 01.04.1989. The appellant executed a leave and
licence agreement dated 10.04.1989 with respect to the said
premises in favour of respondent No.2-M/s. Woodlands Garden
Cafe for a period of ten years to run the restaurant therein. Since
the year 1989, respondent No.2-M/s.Woodland Garden Cafe is in
occupation and possession of the said premises by doing restaurant
business thereon. Case of the first respondent is that respondent
No.2- M/s.Woodland Garden Cafe was closed down for repairs and
renovations in the year 1992 and in the course of these repairs, the
appellant caused considerable damage to the property and carried
out unauthorized and illegal construction.
5. Respondent No.1 filed Suit No.2865 of 1994 to direct the
appellant (defendant No.1) to pay a sum of rupees one crore to the
trust together with interest @ 24% per annum and for permanent
injunction restraining the appellant from carrying on repairs and
renovations in the premises and also to ensure that no damage or
loss or injury is caused to the said property of the trust either in the
course of the renovation or the repairs carried out by the appellant
and other reliefs. Vide order dated 07.10.2003, the Court noted that
no written statement has been filed and the Court held that the first
3
respondent’s claim in the suit is clearly unchallenged. Vide ex-parte
decree dated 07.10.2003, the High Court decreed the suit and
directed the appellant and respondent No.2 to pay respondent No.1
and the beneficiaries of the said trust a sum of Rs.77,02,500/- with
interest thereon @ 6% per annum from the date of filing the suit till
the date of payment or realization. By the said ex-parte decree
dated 07.10.2003, the Court also granted relief in terms of Clause
(b), (c) and (g) (i.e. permanent injunction, mandatory injunction and
costs of the suit) of the prayer clause against the appellant and
respondent No.2.
6. The matter remained as such for quite some time. The
appellant took Notice of Motion No.580 of 2018 dated 02.02.2018
praying to set aside the ex-parte judgment and decree dated
07.10.2003 and that the appellant be permitted to file written
statement and defend the suit. It was stated that the summons of
the original suit and the proceeding thereof were never served upon
the appellant at its registered address and/or any other address
where the appellant was carrying on its business and also on the
ground that Rule 90 of the Bombay High Court (Original Side) Rules
(for short “Bombay High Court Rules”) has not been followed.
4
7. Vide order dated 19.04.2018, learned Single Judge dismissed
the Notice of Motion No.580 of 2018. The learned Single Judge
noted that the ex-parte decree dated 07.10.2003 shows that an
advocate was engaged on behalf of the appellant and respondent
No.2 and the said advocate has filed vakalatnama and there is no
question of having to thereafter serve a party personally. The High
Court held that along with the affidavit, a Power of Attorney dated
29.04.1993 was said to have been executed by the appellant in
favour of one K. Shrinivas Rao and there is also a rubber
stamp and circular common seal of the appellant in the Power of
Attorney and the Power of Attorney is said to have been notarized in
Mumbai and the seal of the Notary is also visible. Pointing out that
the defendant No.1 through its Power of Attorney had engaged a
lawyer and there was a validly executed vakalatnama by a
constituted attorney K. Shrinivas Rao and also that writ of summons
was in fact served on the appellant and respondent No.2 (original
defendant No.1A) by bailiff attached to the office of Sherrif of
Mumbai, the learned Single Judge dismissed the Notice of Motion
No.580 of 2018.
8. Being aggrieved, appellant preferred Appeal (Lodging) No.224
of 2018 challenging the order declining to set aside the ex-parte
5
decree. The said appeal was dismissed by the Division Bench vide
impugned judgment dated 09.07.2018. The Division Bench of the
High Court opined that the appellant had engaged M/s. Narayanan
& Narayanan, Advocates who placed on record of the suit a
vakalatnama duly signed by the constituted attorney of the
appellant. The Division Bench also noted that the record indicates
that the advocate for the appellant represented the appellant in the
suit on several dates including appearing at interlocutory application
stage and engaging a senior advocate to argue on behalf of the
appellant. The Division Bench held that appellant’s Notice of Motion
as well as the appeal is misconceived. The appellant then filed
Review Petition (Lodg.) No.20 of 2018 along with the Notice of
Motion for condonation of delay of 27 days in filing the review
petition. The said review petition also came to be dismissed vide
impugned order dated 26.10.2018 on the ground that there was no
error apparent on the face of the order or any other ground is made
out to entertain the review petition.
9. We have heard the submissions of Mr. R.F. Totala, learned
counsel for the appellant and Mr. Shree Prakash Sinha, learned
counsel for respondents No.1, 9 and 10 and carefully perused the
contentions and impugned judgment and other materials on record.
6
10. The High Court has noted that on behalf of the appellant,
M/s. Narayanan & Narayanan, Advocates has entered appearance
and filed a vakalatnama duly signed by the constituted attorney of
the appellant. The Power of Attorney dated 29.04.1993 was
executed by the Chairman and Managing Director, Mr. Kudralli
Subanna Nagraj of the appellant company and the same was
executed before the Notary on 29.04.1993 and the signature of the
executant was also identified by the advocate. The High Court
noted that the said Power of Attorney inter alia authorized the
attorney to accept the summons, notice and other processes issued
to the advocate from any Court, Government or authority
concerning the suit premises. The High Court also pointed out that
there are several clauses in the Power of Attorney which authorize
the constituted attorney to do acts in regard to the litigation. The
High Court has referred to the affidavit filed by K. Shrinivas Rao in
reply dated 20.07.1994 to the Notice of Motion No.1847 of 1994 for
interim relief wherein, it was stated that he is a constituted attorney
of the appellant (defendant No.1). K. Shrinivas Rao also stated that
he was Director of appellant company till the year 1989 and at the
time of filing the affidavit in 1994, he was a partner in respondent
No.2-firm.
7
11. Insofar vakalatnama dated 20.07.1994 filed by M/s.
Narayanan & Narayanan, Advocates on behalf of the appellant and
respondent No.2, contention of the appellant is that they never
instructed the said M/s. Narayanan & Narayanan, Advocates to
appear on behalf of the appellant in the original suit. Case of the
appellant is that vakalatnama dated 20.07.1994 was signed by K.
Shrinivas Rao claiming himself to be a constituted attorney of
defendant No.1. The stand of appellant is that defendant No.1 never
authorized the said K. Shrinivas Rao to sign vakalatnama on behalf
of the appellant in the original suit. Insofar as the Power of Attorney
dated 29.04.1993 is concerned, the appellant contends that it was a
general Power of Attorney and the appellant company never passed
any board resolution nor executed any such Power of Attorney
authorizing K. Shrinivas Rao to sign vakalatnama on
behalf of the appellant in the suit; the said K. Shrinivas Rao signed
the vakalatnama for and on behalf of respondent No.2. Stand of the
appellant is that the appellant never authorized K. Shrinivas Rao to
appear on behalf of the appellant in the original suit No.2865 of
1994.
12. The High Court rejected the stand of the appellant and
observed that page 18 of the Power of Attorney is a typed name of
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the Chairman and Managing Director and there is also a rubber
stamp and circular common seal of the appellant and the Power of
Attorney was executed by the Chairman and Managing Director of
the appellant company Mr. Kudralli Subanna Nagraj. The High Court
has also pointed out that the Power of Attorney dated 29.04.1993
has been notarized in Mumbai on 29.04.1993 and the seal of the
Notary is also seen in the Power of Attorney.
13. On behalf of the appellant, it was contended before the High
Court that even assuming that the vakalatnama was filed on behalf
of the appellant through Power of Attorney, Rule 79 of the Bombay
High Court Rules requires personal service of the writ of summons
on a defendant even if appearance was entered on his behalf by an
advocate. To the said contention, the High Court opined that Rule
79 of the Bombay High Court Rules speaks of a waiver of the
requirement of serving the writ of summons personally, if the
advocate undertakes in writing to accept service of that writ of
summons and to file a vakalatnama. The High Court pointed out
that Rule 79 contemplates a stage before the vakalatnama is in fact
filed and once the vakalatnama is filed, there is no question of
having to serve a party personally thereafter. The High Court
pointed out that in Suit No.2865 of 1994, vakalatnama was filed by
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the Power of Attorney in the suit itself and there is no question of
having to thereafter serve a party personally. After referring to the
affidavit in reply at pages 62 and 63 of the paper book, the High
Court observed that summons was in fact served on the advocates
for the appellant and respondent No.2 by bailiff attached to the
office of Sherrif of Mumbai and there is an affidavit of service dated
18.08.1999 made by the bailiff’s clerk to that effect. Observing that
the Court has personally checked the original affidavit of the bailiff
and the file and pointing out that there is no affidavit in rejoinder, the
learned Single Judge has dismissed the Notice of Motion No.580 of
2018.
14. According to the appellant, the High Court erred in holding
that the Power of Attorney dated 29.04.1993 is genuine. It was
urged that the alleged Power of Attorney is said to have been
notarized at Mumbai before Advocate Raja who was representing
respondent No.2 in the original suit whereas, the appellant company
is located in Bangalore. Learned counsel for respondent No.1 has
submitted that the appellant herein surrendered and/or sold all its
rights and interest in the property in question to respondent No.2 on
30.04.1993 and the present appeal is a proxy litigation on behalf of
respondent No.2. It is the contention of respondent No.1 that since
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K. Shrinivas Rao duly constituted the Power of Attorney of the
appellant has filed his reply on 20.07.1994 and the said reply was
filed through M/s. Narayanan & Narayanan, Advocates in which the
appellant through the Power of Attorney has stated that the
premises in question was acquired by the appellant with the
contribution made by respondent No.2- M/s. Woodland Garden
Cafe and therefore, respondent No.2 also should be heard before
any order is passed in the suit. It was submitted that based on the
reply affidavit filed by K. Shrinivas Rao, respondent No.1 filed
application for amendment and the amendment application was
allowed on 26.07.1994 and respondent No.2 was impleaded as
defendant No.1A. It is therefore, submitted that filing of vakalatnama
on behalf of the appellant by its duly constituted Power of Attorney
K. Shrinivas Rao and subsequent impleading of respondent No.2
clearly shows that the appellant and respondent No.2 were duly
served and participated in the proceedings and were aware of the
decree dated 07.10.2003. It was contended that the appellant has
not approached with the correct averments and in view of the
incorrect stand taken by the appellant, the High Court rightly
rejected the Notice of Motion refusing to set aside the ex-parte
decree dated 07.10.2003.
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15. Though various contentions have been raised as to whether
appellant was served or not and entered appearance in the suit, we
are not inclined to go into the merits of the contentions. In our view,
an opportunity has to be given to the appellant for contesting the
suit. It is because the suit was filed for recovery of damages of Rs.1
crore and respondent No.1 claimed interest @ 24% per annum. By
the judgment dated 07.10.2003, the Court has directed the
appellant and respondent No.2 to pay a sum of Rs.77,02,500/- and
Rs.42,70,772.46, total amount payable under decree is
Rs.1,20,03,282.96. The Court also directed the payment of
subsequent interest @ 6% per annum on the said amount of
Rs.77,02,500/- till date of reliasation.
16. As pointed out earlier, the suit claim was for damages. The
damages to the property if any, can be ascertained only after the
parties adduce the oral and documentary evidence. We have no
reason to believe that the appellant would have benefitted by
deliberately not contesting the suit as they would in any event be
saddled with interest if their conduct was to drag and prolong the
suit. Considering the nature of the claim and other facts and
circumstances and in the interest of justice, we are of a view that an
opportunity has to be given to the appellant to contest the suit
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subject to terms. The appellant has also in that regard shown its
bona fide by depositing Rs.60,00,000/- in compliance of the order
dated 18.02.2019. By the order dated 24.01.2020, we have also
directed the appellant to deposit further sum of Rs.35,00,000/- for
which the appellant sought for some more time for compliance.
Considering the request, two months further time is granted to the
appellant for deposit of the said amount.
17. Insofar as the amount of Rs.60,00,000/- deposited by the
appellant, by our order dated 24.01.2020, we have permitted
respondent No.1-plaintiff to withdraw the said amount. Since there
are number of other beneficiaries of the trust viz. respondents No.7
to 24, the amount has to be disbursed to the trustees/beneficiaries
as per their entitlement. It is open to respondent No.1 and other
trustees/beneficiaries of the trust to file appropriate application
before the High Court for disbursement of the amount (pending
disposal of the suit) and the High Court shall consider and pass
appropriate order as per the entitlement of the respective parties.
The disbursement of the said amount will be subject to the outcome
of said suit. Permission for withdrawal of the amount of
Rs.60,00,000/- by respondent No.1 and other trustees/beneficiaries
is without prejudice to the contention of both the parties in the suit.
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18. In the result, the impugned judgment dated 09.07.2018
passed by the High Court of Judicature at Bombay in Appeal
(Lodging) No.224 of 2018 in Notice of Motion No.580 of 2018 in Suit
No.2865 of 1994 and the impugned order dated 26.10.2018 passed
in Review Petition (Lodg.) No.20 of 2018 are set aside and these
appeals are allowed. The Suit No.2865 of 1994 is ordered to be
restored. The appellant and respondent No.2 shall file their written
statement within four weeks from today and learned Single Judge of
the High Court shall afford sufficient opportunity to both the parties
to adduce evidence and dispose the said suit in accordance with
law.
19. Insofar as direction for deposit of Rs.35,00,000/-, two months
further time is granted to the appellant for deposit of the said
amount and on such deposit, the same shall be invested in a
nationalized Bank for a period of six months with a provision of auto
renewal. Deposit of Rs.35,00,000/- would be subject to the outcome
of the suit. No costs.
..…………………….J.
[R. BANUMATHI]
..…………………….J.
[A.S. BOPANNA]
New Delhi;
March 02, 2020.
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