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SREI International Finance Ltd. Vs. Fairgrowth Financial Services Ltd. & Anr [2005] Insc 418 (12 August 2005)

Cji R.C.Lahoti & P.K.Balasubramanyan

With C.A.No.10281/2003 Srei International Finance Ltd. ...Appellant VERSUS Fairgrowth Financial Services Ltd.& Anr. ... Respondents The Special Court(Trial of Offences Relating to Transactions in Securities) at Bombay has passed two decrees (both exparte) against the appellant-One decree is for recovery of Rs. 14,53,327.23 ps. and interest thereon and is dated 3.7.2003 passed in Misc . Petition No. 50 of 2000 and the other decree is for recovery of Rs. 17,70,015.58 ps. and interest and is dated 9.7.2003 passed in Misc. Petition No. 81 of 2000. Both the decrees were passed ex-parte as none appeared for the appellant on the date of hearing before the Special Court. In Misc. Petition No. 81 of 2000 (M.A. No. 243/2003) application was moved for setting aside ex-parte decree and seeking re-hearing on merits. The application has been rejected vide order dated 17.9.2003 by the Special Court, as in its opinion, sufficient cause for default in appearance by the appellant or its counsel was not made out. Feeling aggrieved,C.A.No.10280/2003 has been filed. The ex-parte decree passed in Misc.Petition No.50 of 2000 dated 3.7.2003 is directly challenged in Civil Appeal No. 10281/2003.

Having heard the learned counsel for the parties, we are satisfied that the approach adopted by the Special Court in rejecting the application for setting aside the ex-parte decree moved by the appellant has been too rigid. It is well settled that, ordinarily, a litigant should not be denied a hearing on merits unless something akin to gross negligence or misconduct on his part in contesting the proceedings is made out.

Admittedly, in the present case, the appellant is a company having its corporate office at Kolkata. According to it, it had instructed its solicitors at Kolkata who, in their turn, had instructed solicitors in Bombay to appear and plead for the appellant. It is pointed out that, initially, there was an appearance by the Bombay solicitors but, later on, there was a default in the appearance and sometime before the matters were taken up for hearing by the Special Court, one of the members of the firm of solicitors for the appellant at Kolkata, who was looking after the appellant's cases, had suffered a serious accident and remained immobilized for a period of about nine months. In such circumstances, we agree with the learned senior counsel for the appellant that a liberal view ought to have been taken by the Special Court and the ex-parte decree should have been set aside. We place on record the plea vehemently raised by the learned senior counsel for the appellant that it is the same claim which forms part of two proceedings and there has been in effect a double decree for the same amount passed against the appellant and if only the appellant would have been given an opportunity of defending itself, it would have demonstrated that the payments made by the appellant have more than satisfied the respondents' claim. We note the pleas, but we are not expressing any opinion thereon.

In the totality of the facts and circumstances of the two cases, we are satisfied that the appellant deserves to be allowed an opportunity of hearing and contesting the two cases on merits.

The appeals are allowed as per the condition expressed hereunder. The impugned order dated 17.9.2003 rejecting the application for setting aside ex-parte decree dated 9.7.2003 is set aside and the ex-parte decree dated 9.7.2003 is set aside. The ex-parte decree dated 3.7.2003 is also set aside.

Both the cases shall stand restored to the file of the Special Court.

The appellant is allowed the liberty of filing written statements in both the cases and contesting on merits but subject to the condition that the appellant shall within a period of four weeks from today deposit an amount of Rs.14,53,327.23 ps with the Special Court which amount shall be retained in deposit by the Special Court. The Court may invest the amount in an interest bearing account with any Scheduled Bank. The amount shall be available to be disbursed subject to final decision in the cases by the Special Court. Failing compliance with the above-said direction, the decrees passed by the Special Court shall stand and these appeals shall be deemed to have been dismissed.

The parties through their respective counsel are directed to appear before the Special Court on 12.9.2005. The written statements shall be filed by the appellant within four weeks from today in both the matters.




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