1985 (5) TMI 241 - HC - Indian Laws

Court affirms judgment, defendant personally liable for loan repayment.

The court dismissed the appeal, affirming the lower court's judgment and decree. The defendant was found personally liable to pay the loan amount with ... Order XVII, Rule 3, Civil Procedure Code - Order XVII, Rule 2, Civil Procedure Code - Explanation to Order XVII, Rule 2 (deemed presence) - Adjournment - repeated applications and dilatory tactics - Forthwith - meaning in procedural context - Personal liability despite pledge as security (lien on shares) - Limitation - fresh acknowledgement by part payment - Admissibility of document notwithstanding subsequent interpolation where execution admitted - Territorial jurisdiction - cause of action accruing where loan was advancedOrder XVII, Rule 3, Civil Procedure Code - Explanation to Order XVII, Rule 2 (deemed presence) - Whether the trial Court properly proceeded under Order XVII, Rule 3 when the defendant's counsel, who had sought adjournment, left after rejection of the adjournment application - HELD THAT: - The Court held that Rule 3 applies where a party to whom time has been granted appears or is deemed to be present and then defaults in doing the act for which time was given; Rule 2 applies where a party fails to appear. The Explanation to Order XVII, Rule 2 (deeming presence of a party represented by a pleader even if engaged only to move an application) makes the party deemed present. On the facts the defendant's counsel had put in an appearance and moved for adjournment; hence the defendant was to be treated as present and the case fell under Rule 3. The counsel's walking out after rejection of the application did not amount to effective withdrawal such as to render the party absent, since discharge requires notice to client. The lower Court therefore rightly proceeded under Order XVII, Rule 3 to record evidence and decide the suit on merits. [Paras 11, 12, 16, 17, 20]Proceeding under Order XVII, Rule 3 was lawful; the defendant was deemed present through his counsel and the Court rightly proceeded to decide the suit on merits.Order XVII, Rule 3, Civil Procedure Code - Forthwith - meaning in procedural context - Whether 'forthwith' in Order XVII, Rule 3 mandates decision on the same day - HELD THAT: - The Court rejected the strict same day interpretation. 'Forthwith' qualifies 'proceed' rather than mandating decision on the same calendar day; it requires the Court to proceed to dispose of the suit within a reasonable period. The Full Bench authority supports a flexible meaning compatible with the Court proceeding with hearing and deciding as soon as practicable. [Paras 21, 22]'Forthwith' does not require decision on the same day; the Court may adjourn to conclude within a reasonable time and still act under Rule 3.Adjournment - repeated applications and dilatory tactics - Order XVII, Rule 3, Civil Procedure Code - Whether the lower Court erred in rejecting the adjournment application moved on 10-8-1978 - HELD THAT: - The Court found no illegality in rejection: the defendant had repeatedly sought adjournments after restoration despite orders that no further adjournment would be granted; the applications on 10-8-1978 lacked supporting affidavits and the defendant had not taken steps to produce evidence for which time had been given. These circumstances justified refusal and engagement of Rule 3 to proceed with trial. [Paras 23, 24]Refusal to grant adjournment on 10-8-1978 was proper and justified by the plaintiff's showing of repeated delays and absence of adequate support for the application.Personal liability despite pledge as security (lien on shares) - Whether a personal money decree could be entered against the defendant notwithstanding that shares were pledged as security for the loan - HELD THAT: - The agreement expressly provided that the lender had a lien on the shares until repayment; it did not extinguish the borrower's personal liability. The deed showed the shares were security and that the borrower agreed not to transfer them without lender's consent; consequently the plaintiffs were entitled to proceed against the defendant personally for recovery of the loan and interest rather than being restricted to remedies limited to transferring or selling the shares. [Paras 25, 26]The defendant is personally liable for the loan; a personal decree for recovery was properly granted despite the pledge of shares as security.Limitation - fresh acknowledgement by part payment - Whether the suit was barred by limitation - HELD THAT: - Although limitation was pleaded, it was not pressed; further, the receipt evidencing payment of Rs. 1000 as interest on 6-7-1972 (Exhibit 9) constituted an acknowledgement or fresh cause of action sufficient to keep the suit within limitation. The Court thus held the suit to be timely. [Paras 28, 29]The suit is within limitation, the 1972 payment bringing the claim within the prescribed period.Admissibility of document notwithstanding subsequent interpolation where execution admitted - Whether subsequent addition of words in the receipt (Exhibit 9) rendered it inadmissible or fatal to the plaintiffs' case - HELD THAT: - The execution of the receipt was admitted by the defendant except for the disputed words. The Court held that subsequent insertion of words does not render the document inadmissible where execution is admitted; even without the added words the admitted receipt and surrounding facts sustain the plaintiffs' claim. Moreover, the defendant's signature on the receipt was acknowledged. [Paras 30, 31]The receipt (Exhibit 9) remains admissible and is not vitiated by the alleged subsequent addition of words; the contention therefore fails.Territorial jurisdiction - cause of action accruing where loan was advanced - Whether the Civil Court at Gonda had territorial jurisdiction to try the suit - HELD THAT: - Witness testimony established that the loan was advanced at Seksaria Sugar Mills, Babhanan Bhabhinpur (within Gonda). Because part of the cause of action arose within the jurisdiction of the Civil Judge, Gonda, territorial jurisdiction was properly exercised by that Court. [Paras 32, 33]The Gonda Court had territorial jurisdiction; the objection to jurisdiction is rejected.Final Conclusion: All grounds raised by the appellant were considered and rejected. The High Court affirmed the trial Court's decision: the lower Court lawfully proceeded under Order XVII, Rule 3; the defendant was personally liable for the loan despite pledge of shares; limitation and interpolation objections fail; and the Civil Judge, Gonda had territorial jurisdiction. The appeal is dismissed with costs. Issues Involved:1. Personal Liability of the Defendant2. Territorial Jurisdiction3. Limitation of the Suit4. Validity of Adjournments and Proceedings under Order XVII, Rule 3 of the Code of Civil ProcedureIssue-wise Detailed Analysis:1. Personal Liability of the Defendant:The court examined whether the defendant was personally liable to pay the debt in question besides the lien on the shares. The defendant contended that the shares were handed over as security and that the plaintiffs should have transferred them to recover the debt. However, the court found that the shares were merely pledged as security and did not absolve the defendant from personal liability. The agreement dated 27th July 1959 (Exhibit 3) explicitly stated that the defendant would repay the loan amount with interest and that the lender would have a lien on the shares until full repayment. Thus, the court held that the defendant was personally liable to pay the loan amount together with interest.2. Territorial Jurisdiction:The defendant argued that the loan transaction occurred in Basti, not in District Gonda, and thus, the court at Gonda had no jurisdiction. However, the court found that the loan was advanced at Seksaria Sugar Mills Private Limited, Babhanan Bhabhinpur, District Gonda, as evidenced by the testimonies of P.W. 1 and P.W. 2. Therefore, the court concluded that part of the cause of action arose within its territorial jurisdiction, making the suit maintainable in Civil Court at Gonda.3. Limitation of the Suit:The defendant claimed that the suit was barred by limitation. However, the court noted that a sum of Rs. 1,000 was paid by the defendant towards interest on 6-7-1972, evidenced by Exhibit 9. This payment extended the limitation period, making the suit filed within the permissible time frame. The court dismissed the contention regarding the limitation.4. Validity of Adjournments and Proceedings under Order XVII, Rule 3 of the Code of Civil Procedure:The defendant's counsel argued that the lower court acted illegally by deciding the case under Order XVII, Rule 3, as the defendant was not present in court when the case was taken up for hearing. The court examined whether the case could be decided under Order XVII, Rule 3, which applies when a party to whom time has been granted fails to produce evidence or perform necessary acts for the suit's progress. The court found that the defendant's counsel had appeared and moved an adjournment application, which was rejected. Despite multiple adjournments granted previously, the defendant failed to produce evidence. The court held that the defendant was deemed present through his counsel, as per Explanation to Rule 2 of Order XVII, and thus, the court rightly proceeded under Rule 3 to decide the case on merits. The court also rejected the argument that the judgment should be considered an ex parte decree under Order XVII, Rule 2.Conclusion:The appeal was dismissed with costs, affirming the lower court's judgment and decree. The court found no merit in the arguments regarding personal liability, territorial jurisdiction, limitation, and the validity of proceedings under Order XVII, Rule 3. The defendant was held personally liable to pay the loan amount with interest, and the suit was maintainable within the jurisdiction of Civil Court at Gonda and within the limitation period.