Delhi High Court

Delhi High Court

A.R. Electronic Private Ltd. vs R.K. Graphics Pvt. Ltd. on 15 March, 2002
Equivalent citations: 2002 VAD Delhi 651, 97 (2002) DLT 913
Author: M A Khan
Bench: M A Khan
JUDGMENT
Mahmood Ali Khan, J.
1. This revision petition filed under Section 115 CPC is field by the petitioner. Which is plaintiff in the suit,
assailing the order of the Commercial Civil Judge dated 28.11.1998 by which he had allowed the application
of the respondent (defendant) filed under Order 37 Rule 4 CPC and had set aside a decree passed under Order
37 Rule 2 CPC.
2. Briefly, the facts are that the petitioner/plaintiff filed a civil suit for recovery of the price of the goods
supplied to the defendant by invoice No. 635 dated 9.6.1994 for Rs. 33.948/- plus compound interest with
monthly rests @ 5% over and above 18% per annum from 11.6.1994 to 10.5.1997 amounting to Rs. 35.302/-
making the total amount outstanding to Rs. 69.250/-. It was alleged that the amount due was not paid despite
service of the notice of demand.
3. The summons prescribed in Form 4 of Appendix B of CPC was served on the defendant which failed to
enter appearance in accordance with Order 37 Rule 3 91) CPC. The court accordingly allowed the claim of the
plaintiff and passed a decree for recovery of Rs. 69.250/- Along with cost and compound interest with
monthly rest @ 5% over and above 18% per annum pendente lite as well as future interest till realisation of
the decretal amount by order dated 1.11.1997.
4. The defendant filed an application on 27.3.1998 under Order 37 Rule 4 CPC for setting aside the decree
dated 1.11.1997, inter alia, pleading that the summons of the suit was not serve don it; the defendant was
earlier functioning at A-2/177 Safdarjung Enclave. New Delhi but had shifted to the new address (C-9) Sector
8. NOIDA. UP); the present occupant of the premises at Safdarjung Enclave informed the defendant that a
warrant of attachment was brought by the bailiff from the court to the said premises on 16.3.1998; the
defendant contacted the counsel and learnt about the passing of the impugned decree on 1.11.1997; before that
the defendant had no knowledge of the suit and the decree; no amount was due or recoverable from the
defendant since the goods were never purchased under the invoice in question; notice of demand was also not
served; there was no agreement about compound interest as claimed and lastly; the suit for recovery of the
price of the gods cannot be filed under Order 37 CPC.
5. This application was resisted by the plaintiff. It field a reply in which the allegations made in the
application was refuted. It was asserted that the summons of the suit was duly served on the defendant and
that the defendant failed to enter appearance within the prescribed period of 10 days in accordance with Rule
3(1) of Order 37 CPC, therefore, the trial court was justified in passing the decree. It was further alleged that
for getting a relief under Order 37 Rule 4 CPC the defendant was not only to show that the summons was not
served on it in accordance with Order 37 Rule 3 (1) CPC but he was further required to show that it had
substantial defense to the suit. The learned trail Judge has held that the summons under Order 37 Rule 3 CPC
was served on the defendant. Therefore, his view that he defendant had disclosed substantial defense in the
application and it was entitled to defend the suit unconditionally was erroneous and illegal. He prayed that the
application should be dismissed.
6. Notice of the petition was served on the respondent but it failed to contest it. Arguments of the counsel for
the petitioner were heard and the case law cited in support was taken into consideration. The learned
Commercial Civil Judge in the impugned order granted leave to defend the sit to the defendant mainly on the
A.R. Electronic Private Ltd. vs R.K. Graphics Pvt. Ltd. on 15 March, 2002
Indian Kanoon - http://indiankanoon.org/doc/1576988/ 1
ground that the suit was file don the basis of an invoice and the plaintiff had failed to prove that there was a
written contract indicating the terms thereof between the parties, therefore special reasons have been disclosed
in the application for which the defendant is entitled to unconditional leave to defend. On the question of
service of summons he held that there was service of the summons on the registered address of the defendant.
7. The first and foremost question that arises for determination is whether a suit under the provisions of Order
37 CPC could be filed on the basis of a invoice of the goods supplied to the defendant. The original invoice
which is the basis of the suit had been placed on record by the plaintiff. The invoice which is dated 7.6.1994
has simply given the description of the goods. the quantity, the unit the price the rate and the price of the
goods supplied. The value of the goods was Rs. 33.120/- plus sales tax of Rs. 828/- making the total to rs.
33.948/- There is an endorsement recorded by Reghvender Singh regarding the acknowledgement of the
receipt of the goods sold. There is no other terms and conditions printed over this invoice. The question is
whether such an invoice amounted to was written contract within the meaning of Order 37 Rule (1) CPC. Sub
Clause (2) of Rule 1 of Order 37 CPC provides that the provision of summary provision provided in this
Order will apply to the classes of the suits mentioned in Sub-clauses (a) and (b). Sub-clause (1) of Clause (b)
included the suit in which the plaintiff seeks to recover a debt or liquidated demand in money payable by the
defendant.with or without interest arising "on a written contact". The invoice which is the basis of the suit of
he plaintiff does not contain any terms and conditions entered into between t he parties regarding the supply of
the goods and its payment. The invoice shows that certain quantity of goods at a total price of Rs. 33.948/-
including sales tax was delivered to he defendant on 10.6.1994. It by no stretch of reasoning could be treated
to be as written contract between the parties as envisaged under clause (b) of Sub-rule (2) or Order 37 CPC.
8. Counsel for the petitioner has referred to the judgment of this Court in Beacon Electronics v. Sylvania and
Laxman Ltd.. in which this Court has held that the suit filed on
the basis of the bills of the goods supplied amounted to written contract between the parties. The court had
relied upon the judgment of this Court in where it was held
"when the goods are supplied through a bill on certain terms and conditions duly agreed between the parties,
there is no escape from the conclusion that it amounts to a written contract between the parties. : The court in
the cited case also considered the original bills/invoices. which formed the basis of the suit. Which amongst
others included the terms that the interest @ 24.5% p.a would be charged if the bill was not paid within one
month and that no complaint regarding the bill and no reduction in rate(s) would be entertained if not made in
writing within a week of the date of the bill and that the disputes between the parties were subject o the
jurisdiction of the courts in Delhi. The court had further observed that it could not be said that it was a case of
simplicitor of goods supplied to the defendant without any written terms and conditions between the parties.
Conversely in the instant case there is no terms and conditions agreed to between the parties on the invoice
dated 9.6.1994. No terms and conditions are written or printed which the defendant could be said to have
agreed while taking the delivery of the goods. It is a case of simplicitor invoice which as not a case before the
court in Beacon Electronics (supra) or Punjab Pen House (supra). This court considered an identical question
in Simbha F.R.P. (P) Ltd. v. Department of Tourism. Lucknow. UP. . The court took not of the judgment in
Punjab Pen
House (supra) and made the following observations:
In the case cited a suit under Order xxxvII C.P.C. was held to be maintainable abased on an invoice since the
invoice embodied all the terms and conditions of the contract. It was the admitted position between the parties
that the supply of the goods had been under he terms and conditions as per invoice. In the case before us the
invoice does nt contain the terms and conditions of the contract and it cannot be said that all the terms and
conditions of supply had been agreed to between the parties in the correspondence exchanged."
9. I am in respectfully agreement with the observations of the learned Judge in that case.
A.R. Electronic Private Ltd. vs R.K. Graphics Pvt. Ltd. on 15 March, 2002
Indian Kanoon - http://indiankanoon.org/doc/1576988/ 2
10. The result of the above discussion is that the suit by the plaintiff cannot be held to be friable under the
summary procedure prescribed by Order 37 CPC. For this reason also the learned Commercial Civil Jude was
justified in allowing the application of the defendant and permitting it to file written statement.
11. Since the suit is not friable under Order 37 CPC. as a necessary corollary the summons in the prescribed
Form IV Appendix B CPC sent and serve don the defendant would be inconsequential. A decree could not be
passed against the defendant on its failure to enter appearance within 10 days from the date of the service. No
presumption of admission which arises under Order 37 Rule 2 CPC could be drawn in favor of the case of the
plaintiff pleaded in the plaint on the basis of which the suit was decreed against the defendant.
12. The other argument of the counsel for the petitioner is that under Order 37 Rule 4 CPC the defendant is
not only required to prove that the summons prescribed in Form IV of Appendix B of CPC Along with plaint
was not served on him or that he was prevented by sufficient cause from entering appearance before the court
within the stipulated period of 10 days from the date of service but in addition thereto the defendant was
further required to rove that it had substantial defense. It was contended that the ex-parte decree could be set
aside only if special circumstances were shown by the defendant. The counsel for the petitioner has cited B.L.
Gupta v. Smt. Sunita Khanna. 1994 (IV) Ad (Delhi) 842 in support of his argument. The argument has force
The relevant provisions of Rule 4 of Order 37 CPC in accordance with which an ex-parte decree under Order
37 CPC could be set aside is extracted below:
"4. Power to set aside decree- After decree the court may, under special circumstances set said the decree and
if necessary stay or set aside execution., and may give leave to the defendant to appear to the summons and to
defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit."
13. It is clear from this provision that it is not identical or synonym to the provisions of Order 9 Rule 13 CPC
where an ex-parte decree in a suit could be set aside on sufficient cause being shown for non-appearance of
the defendant on the date of hearing. For setting aside a decree under Order 37 CPC the defendant has to
establish "special circumstances" which cannot be equated with 'sufficient cause" envisaged under Order 9
Rule 13 CPC. Moreover, before a decree passed under Order 37 CPC is set aside under this rule the defendant
has to prove 91) that the summons in Form 4 of Appendix B of CPC was not served or that he was prevented
by sufficient reason from entering appearance within a period of 10 days from the date of service as required
by Rule 3 of Order 37 CPC; and (2) that the defendant has been able to disclose such facts as may be deemed
sufficient and reasonable to entitle him to defend the suit. In other words, the defendant has to prove
substantial defense to raise in the suit of which he has been deprived of by the ex-parte decree. In addition to
establishing the fact that there was no due service of requisite summons and the defendant was prevented by
sufficient cause in entering appearance within the period of 10 days from the date of receipt of summons the
defendant was further required to disclose in his application such fact as may be deemed sufficient to entitle
him to defend the suit. The defendant was to satisfy the court that the facts disclose by him in the application
indicated that he had a good substantial; and meritorious defense to raise and the defense which is entitled to
put up was not frivolous or vexatious or in other words, bogus. illusory or practically moonshine. The learned
Commercial Civil Judge has allowed the application of the defendant holding that the suit on the basis of the
invoice in question cannot be tried under the summary procedure prescribed under Order 37 CPC. There is no
legal infirmity in this view. The finding of the learned Commercial Civil Judge that the summons in Form IV
of Appendix B of CPC was duly served on the defendant becomes inconsequential.
14. For the reasons stated I do not find any error of jurisdiction illegality or material irregularity in the
exercise of jurisdiction by the learned Commercial Civil Judge. The petition has no merit. It is dismissed.
A.R. Electronic Private Ltd. vs R.K. Graphics Pvt. Ltd. on 15 March, 2002
Indian Kanoon - http://indiankanoon.org/doc/1576988/ 3