Deemed presence under Order XVII and personal liability on a secured loan support decision on merits and jurisdiction.

Order XVII Rules 2 and 3 were construed to mean that when a party's counsel appears on an adjourned date and seeks adjournment, the party is deemed present; if the party then defaults in doing the act for which time was granted, the court may proceed to decide the suit on merits. The decision also states that a loan secured by pledged shares does not, by itself, limit recovery only to the shares where the borrower remains personally bound to repay with interest. On the facts noted, the suit was treated as within limitation and territorial jurisdiction was found at Gonda because part of the cause of action arose there.

---

---

Issues: (i) whether the suit was rightly decided under Order XVII Rule 3 of the Code of Civil Procedure, 1908 on the adjourned date of hearing when the defendant's counsel appeared and sought adjournment; (ii) whether the defendant was personally liable for the loan or whether the plaintiffs could proceed only against the pledged shares; (iii) whether the suit was within limitation; (iv) whether the Civil Judge, Gonda had territorial jurisdiction.

Issue (i): whether the suit was rightly decided under Order XVII Rule 3 of the Code of Civil Procedure, 1908 on the adjourned date of hearing when the defendant's counsel appeared and sought adjournment.

Analysis: The provisions of Order XVII Rules 2 and 3 were construed to mean that Rule 3 applies where a party, having been granted time to perform an act necessary for the progress of the suit, appears or is deemed to be present and then defaults in performing that act. A party represented by counsel who appears and seeks adjournment is deemed present by virtue of the Explanation to Rule 2. The Court held that the defendant's counsel's appearance and adjournment application brought the case within the sphere of deemed presence, and the later departure of counsel after rejection of adjournment did not make the defendant absent. The Court also rejected the contention that Rule 3 required disposal on the very same day in an inflexible sense, holding that the suit could still be decided within a reasonable time after proceeding under Rule 3.

Conclusion: The suit was validly decided under Order XVII Rule 3, and the challenge based on absence and ex parte procedure failed.

Issue (ii): whether the defendant was personally liable for the loan or whether the plaintiffs could proceed only against the pledged shares.

Analysis: The loan agreement showed that the shares were given only as security and that the lender was to have a lien until repayment. The arrangement did not convert the transaction into a liability enforceable only against the shares. The borrower remained bound to repay the loan amount with interest, and the pledge did not relieve him of personal liability or impose on the lender a duty to first get the shares transferred in their own names.

Conclusion: The defendant was personally liable, and the decree was not invalid on the ground that recovery could be sought only against the shares.

Issue (iii): whether the suit was within limitation.

Analysis: The plea of limitation was not pressed as an issue, and in any event the payment of interest evidenced by the receipt dated 6-7-1972 constituted a relevant payment within the limitation period for the suit as filed thereafter.

Conclusion: The suit was within limitation.

Issue (iv): whether the Civil Judge, Gonda had territorial jurisdiction.

Analysis: The evidence showed that the loan transaction and execution of the agreement were connected with the place at Gonda, and therefore part of the cause of action arose within that territorial jurisdiction. The objection that the loan was advanced only at Basti was rejected on the evidence.

Conclusion: The Civil Judge, Gonda had territorial jurisdiction.

Final Conclusion: The decree of the court below was upheld on all material grounds, and the appellant obtained no relief in appeal.

Ratio Decidendi: For purposes of Order XVII Rules 2 and 3, a party whose counsel appears and seeks adjournment on an adjourned date is deemed present, and if that party then defaults in producing evidence or performing the act for which time was granted, the court may proceed to decide the suit on merits.

---