2016 (6) TMI 1454 - HC - Indian Laws

Court sets aside ex-parte decree, emphasizing 'special circumstances,' defendant's right to defend. Procedural fairness ensured.

Ganpatraj K. Sanghvi Versus Vishal Udyog and Ors.

The court set aside the ex-parte decree under Order 37 Rule 4 of the Code of Civil Procedure 1908, emphasizing the requirement of 'special circumstances.' ... Principles of natural justice - service of writ of summons - whether the applicant has set out 'special circumstances' to set aside the ex-parte decree? - HELD THAT:- The Apex court in Rajnikumar Vs. Suresh Kumar Malhotra [2003 (3) TMI 774 - SUPREME COURT] has held that non-service of summons will undoubtedly be a special circumstance. It is satisfying that the summons has not been served upon the defendants and therefore, it will be a special circumstance under Order 37 Rule 4 to recall the ex-parte decree passed. Substituted service may be good service in law but the fact that leave to serve by substituted service was granted without valid reason will go to the root of the matter. In my view leave was granted without valid reasons. Substituted service can be permitted only when there are reasons to believe that the defendant is keeping out of the way to avoid service or if summons cannot be served. There was nothing in the present case to believe the defendants were keeping out of the way to avoid service. The defendant has shown some material for the Court to consider at the hearing of the summons for Judgment as to whether the defendant should be granted leave to defend the suit or not. It is not that the defendant has been totally silent. The ex-parte decree passed on 1.4.2013 is recalled - the question of executing ex-parte decree will not arise and therefore, Thane court is directed to return the process. Issues:Setting aside an ex-parte decree under Order 37 Rule 4 of the Code of Civil Procedure 1908 based on special circumstances. Validity of substituted service in the absence of valid reasons. Defendant's entitlement to leave to defend the suit.Analysis:Issue 1: Setting aside ex-parte decree based on special circumstancesThe judgment revolves around the application to set aside an ex-parte decree passed on 1.4.2013 under Order 37 Rule 4 of the Code of Civil Procedure 1908. The critical consideration is whether the applicant demonstrated 'special circumstances' to warrant setting aside the ex-parte decree. The court emphasized the need for exceptional or extraordinary circumstances justifying the reversal of the decree. The absence of summons' service on the defendants was highlighted as a significant special circumstance, as per the precedent set by the Supreme Court in Rajnikumar Vs. Suresh Kumar Malhotra (AIR 2003 SC 1322).Issue 2: Validity of substituted service without valid reasonsThe judgment scrutinized the validity of substituted service granted in this case without valid reasons. It questioned the basis for granting leave to serve by substituted service, emphasizing that such permission should only be given when there are genuine reasons to believe the defendant is avoiding service or summons cannot be served conventionally. The court stressed the importance of proving that the defendant was deliberately evading service before resorting to substituted service, highlighting the onus on the plaintiff to establish this.Issue 3: Defendant's entitlement to leave to defend the suitThe defendant's entitlement to leave to defend the suit was also a crucial aspect of the judgment. The defendant's actions, including shifting business locations and informing the plaintiff about material defects before the suit, were cited as factors demonstrating the defendant's engagement in the legal proceedings. The court emphasized that the defendant had presented material for the court to consider during the hearing on whether to grant leave to defend the suit, underscoring that the defendant had not remained silent in the legal process.In conclusion, the judgment set aside the ex-parte decree, highlighting the need for valid reasons for substituted service and the defendant's right to present a defense. The court directed the return of the process to the Thane court, addressed procedural matters regarding legal representation, and instructed the plaintiff to amend the cause title in light of the defendant's demise. The stay on the order to set aside the decree for four weeks was also noted, ensuring procedural fairness and compliance with legal requirements.