PTE Limited Vs. M/S. Umesh Kumar Kajaria & Anr  INSC 38 (11 January 1995)
Jagdish Saran (J) Verma, Jagdish Saran (J) Bharucha S.P. (J)
1995 SCC Supl. (1) 443 JT 1995 (2) 102 1995 SCALE (1)124
appellant filed a suit on the Original Side of the High Court at Calcutta under the provisions of Order 37 of
the Code of Civil Procedure. The two respondents entered appearance upon the
summons for judgment taken out by the appellant. On 2nd July, 1991, leave to defend the suit was given to the respondents on
condition that they deposited "a sum of Rs. 30 lakhs with the Registrar,
Original Side within a month from date either by cash or by a bank guarantee or
any real properties within the jurisdiction of this Court to the satisfaction
of the Registrar. Original Side failing which there will be a decree for a sum
of Rs. 37,63,250.60 against the defendants which will carry interest at the
rate of 12 per cent per annum". The respondents having failed to make a
deposit as ordered, a decree was passed. The respondents were ordered and
decreed to pay to the appellant the sum of Rs. 37,73,250.60 with interest
thereon at the rate of 12 per cent per annum from the date of decree till realisation.
3.On 26th November, 1991, an order was passed by a Division
Bench of the High Court upon an appeal filed by the second respondent against
the order of conditional leave to defend.
to make the deposit was extended by 3 weeks after the vacation, in default
whereof the appellant was at liberty to execute the decree. The respondents
failed to make the de- posit even within the said extended period and,
consequently, the appellant became entitled to execute the decree.
further order was passed in the aforesaid appeal on 19th February, 1992. The second respondent was directed to furnish
security in the sum of Rs. 15 lakhs by way of bank guarantee or cash to the
satisfaction of the Registrar, Original Side, within two weeks, during which
period an unconditional stay of the decree was ordered. If security as aforestated
was furnished, the stay was to continue till further orders. The bank guarantee
was required to be, initially, for the period of one year, renewable from year
to year atleast three weeks before the date of expiry. In default of renewal,
the bank was required to pay the amount covered thereby to the appellant. On 16th March, 1992, a bank guarantee in the
aforementioned terms was furnished.
5. On 19th March, 1992, a Division Bench of the High Court
passed an order in the appeal filed by the first respondent on the order
granting conditional leave to defend. The order stated: "In view of the
security furnished in term of the earlier order passed in the appeal preferred
by the appellant company M/s. Merchants & Traders (P) Ltd, (the second
respondent) no further security need be furnished by Umesh Kumar Kajaria (the
first respondent) in terms of the order under appeal".
6. On 26th April, 1993, upon a special leave petition
filed by the appellant .against the order passed on 19th February, 1992 in the appeal filed in the High Court by the first
respondent, this Court ordered:
order which commends to us is to convert the order of the High Court of tile
respondents furnishing Bank Guarantee to the tune of Rs. 15 lacs (Rs. fifteen lacs
only) to deposit in cash the said sum of Rs. 15 lacs in court to await disposal
by the High Court.
High Court on its part is requested not to retain the said sum of Rs. 15 lacs
unduly and consider the feasibility of passing it over to the
plaintiff-appellant. The High Court is also requested to dispose of the appeal
of the respondents expeditiously.
the said sum of Rs. 15 lacks be deposited by the respondent in the High Court
within two weeks and in order thereon to the above effect be passed within the
following two weeks. The appeal is allowed accordingly. Costs to abide by the
29th June, 1992, orders were passed upon applications for stay in, broadly,
common terms in the appeals filed in the High Court by the first and the second
respondents against the order granting conditional leave to defend. The orders
stated that, in view of the fact that the first respondent had furnished a bank
guarantee in the sum of Rs. 15 lakhs pursuant to the order dated 19th February,
1992, no further order was required except that the pendency of the appeals
would not affect the hearing of the suit, and directions in regard to pleadings
and discovery were given. Against the order dated 29th June, 1992, passed in
the appeal filed by the first respondent as aforesaid, the present special
leave petition was preferred.
is relevant to mention now what has transpired after the special leave petition
was filed. The bank guarantee which was valid upto 15th March, 1993, and which
was to be renewed from year to year, was not renewed by the second re- spondent
and lapsed. On 28th July, 1993, the bank that had issued the bank guarantee,
ANZ Grindlays Bank, was directed by the High Court to deposit the amount of the
bank guarantee with its Registrar. Upon being informed of the order on 29th
July, 1993, the bank deposited the amount with the Registrar on 10th September,
15th March, 1994, on this Special Leave Petition, it was ordered that the amount
deposited with the Registrar by the bank be paid over to the appellant upon the
appellant furnishing security to the satisfaction of the High Court for refund
thereof if the final outcome of the matter so required. Further, the bank was
issued notice and required to state on affidavit the circumstances in which the
amount of the bank guarantee was paid and whether the bank guarantee was
subsisting at the time of payment.
The bank has filed an affidavit ex- 105 plaining the circumstances of the payment;
it has stated that, notwithstanding the expiry of the one year period mentioned
in the bank guarantee on 15th March, 1993, the bank guarantee was valid on the
date of payment "because the usual limitation period was available to the
beneficiary for enforcing the payment of the guaranteed amount within such
period". We accept the explanation given by the bank; no further action as
against the bank is required.
Insofar as this appeal is concerned, it will be seen that each of the two
respondents tiled separate appeals in the High Court against the order giving
them conditional leave to defend. No appeal against the decree made as
aforesaid has been filed by either respondent.
the appeal filed by the second respondent the order of the Division Bench of
the High Court was modified by this Court on 26th April, 1993. The second respondent was directed to deposit the sum of Rs.
15 lakhs in the High Court instead of furnishing, a bank guarantee in that
amount. The failure of the second respondent to deposit the sum of Rs. 15 lakhs
in the High Court as ordered by this Court and its failure to renew the bank
guarantee as required by the High Court has led to the deposit by the bank of
the amount of the bank guarantee, namely, Rs. 15 lakhs, in the High Court. The
required deposit of Rs. 15 lakhs in court on behalf of the second respondent,
therefore, is satisfied, though not in the manner contem- plated either by this
Court or by the High Court.
The liability of the respondents to the appellant as claimed in the suit is
joint and several. It is, therefore, appropriate that the deposit of Rs. 15 lakhs
as aforesaid be treated as having been made on behalf of both respondents as a
condition of stay of the execution of the decree, pending the disposal of the
appeals in the High Court. It is now not necessary for this Court to make any
further order. It is for the Division Bench of the High Court to consider, upon
the appeals, which shall be heard together, whether, having regard to the
decree against which no appeal is filed, the merits of the case and the conduct
of the respondents as hereinabove set out, leave, to defend the suit should now
be given and on terms other than those im- posed by the learned Single Judge on
the. summons for judgment.
The appeal is disposed of accordingly. There shall be no order as to costs.