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CASE NO.: Appeal (civil) 1123  of  2001

PETITIONER: SRI NARESH CHANDRA AGARWAL

       Vs.

RESPONDENT: BANK OF BARODA & ORS.

DATE OF JUDGMENT:       08/02/2001

BENCH: CJI, R.C. Lahoti, & N. Santosh Hegde.

JUDGMENT:

SANTOSH HEGDE, J. L...I...T.......T.......T.......T.......T.......T.......T..J

   Leave granted.

   This  appeal  arises out of an application filed by  the appellant under Order 9 Rule 13 read with Section 151 of the Code  of Civil Procedure (CPC) before an Additional District Judge/Special  Judge/Special  Judge  (S.C.   &  S.T.   Act), Pilibhit, wherein the appellant had prayed for setting aside the ex-parte judgment and decree dated 9.5.1995 made in O.S. No.107/84.  The said application of the appellant came to be dismissed  and an appeal filed against the said dismissal of the application also came to be dismissed by the High Court, hence, this appeal before us.

   The case of the appellant is that the plaintiff-Bank had filed  a suit against a partnership firm by name M/s.  Ashok Khad  Agency  for  the  recovery of certain  sums  of  money advanced  to it by the plaintiff-Bank.  It is stated in  the original  suit defendants 2 & 3 who are the brothers of  the appellant  were partners of the Ist defendant firm which was the debtor to the bank and along with them defendants 4 to 8 were  the guarantors to the loan advanced by the Bank to the said  firm.   It is also stated that during the pendency  of the  said  suit  Defendant No.8 who was the  father  of  the appellant  died,  hence, an application to bring  his  legal representatives was made in which appellant was sought to be included as one of the legal representatives of the deceased 8th  defendant.   It is also alleged that the notice of  the said  application  so far as the appellant is concerned  was addressed  to  91, Mohalla Dalchand, Pilibhit and  the  said notice  issued  by  the  Court was  returned  back  with  an endorsement  as  refused.  The trial court  without  being satisfied  as  to the correctness of the service of  notice, mechanically  held the service as sufficient and allowed the substitution application of the plaintiff-Bank and proceeded to decree the suit ex parte.

   When  the appellant came to know of the ex parte  decree

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he  filed the above-mentioned application for setting  aside the  said  decree  on the ground that at the time  when  the notice  of substitution was issued by the trial court to him he  was working as an officer at Balrampur Chini Mills Ltd., Bahabhan,  Distt.  Gonda., therefore, he could not have been served  with  the said notice at Pilibhit and the  refusal endorsement  made  in the notice was obviously an  incorrect endorsement.   In the said application for setting aside the ex parte decree the appellant had also contended that during the life time of his father he had filed a written statement contending  that  he  had  been released by the  bank  as  a guarantor  and  he had no legal obligation to discharge  the loan  or  amounts due from the first  defendant  partnership firm.   It was further contended by the appellant in view of the  said  pleadings  of  his father an issue  No.9  to  the following effect was framed by the trial court:

   9.  Are defendants Nos.  4 to 8 never stood sureties as alleged in paras 28, 31 and 33 of the W.S.

   and  that this issue was not at all decided by the trial court  in  the  judgment which led to the decree.   He  also alleged that there was sufficient material on record to show that  the bank earlier to the filing of the suit itself  had discharged  the original 8th defendant i.e.  his father as a guarantor.   He also contended that it is only after he came back  to  Mohalla Dalchand on a permanent basis he  came  to know  of  the  ex  parte  decree  and  immediately  he  made necessary inquiries and found out that the application filed by  the plaintiff-Bank to bring the legal representatives of his  deceased  father,  so  far  as  he  is  concerned,  was addressed  to  an  incorrect  address,   hence,  he  had  no knowledge  of  the impleadment application and since he  has inherited  a  portion of his fathers estate same cannot  be made a subject matter for satisfaction of the decree without he being heard in the suit.

   The respondent-Bank in its affidavit filed in opposition to the application of the appellant did not dispute the fact that at the relevant point of time the appellant was working in  Gonda District but its main contention in opposition was that  the  estate  of  the   deceased  8th  respondent   was sufficiently  represented  through  his other  children  and after  the  passing  of the decree none  had  preferred  any appeal  against  the said decree which has become final  and further  the interest of the appellant in the estate of  the deceased  8th defendant was very limited and remote,  hence, he is not prejudiced in any manner.

   The   trial  court  rejected   the  application  of  the appellant for setting aside the ex parte decree primarily on the ground that the appellant had not made any allegation of collusion between his two brothers the original defendants 2 and  3 and the plaintiff-Bank and as per proviso to Rule  13 of  Order 9 an ex parte decree cannot be set aside merely on the ground of irregularity in service of summons.

   On appeal High Court also proceeded on a tangent without deciding  the question of service of notice.  The High Court was  influenced  more  by the fact that the  estate  of  the deceased was sufficiently represented and what was inherited by the appellant was only a limited share.  Further, none of the  defendants  who were parties in the suit  had  appealed against the original decree.

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   Learned  counsel  for the appellant contended before  us that   both  the  courts  below   failed  in  not   properly appreciating  the  case of the appellant inasmuch as it  was his  primary ground that he was impleaded as a party to  the suit without being served with the notice of application for substitution  and  any decree passed without notice  to  him will not be binding on him, therefore, in law he was obliged to  make an application to set aside the decree so far as it affected  his right in the estate inherited by him after the death  of  his father.  He also contended that the  original decree  against his father could not have been passed  since he  was  not a guarantor to the loan advanced to  the  first defendant  partnership  firm  and  he had  no  liability  to discharge  any  loan due from the said firm.   Consequently, the  estate  of 8th defendant was not liable to be  burdened with  the liability to discharge the loan due from the first respondent  firm.  He also contended that the Court  gravely erred  in not deciding the issue No.9 which has caused grave prejudice to the estate of the deceased defendant NO.8.

   Per  contra,  the  counsel for Bank submitted  that  the application of the appellant is only an attempt to frustrate and  delay the decree obtained by the bank and he  submitted the  findings  of  the courts below that  the  appellant  in reality  has  not been prejudiced in any manner was  correct and the estate of 8th defendant was sufficiently represented before  the  trial court by other legal representatives  who never  chose to contest the decree.  Therefore, this type of delaying tactics should not be encouraged.

   From  the facts narrated herein above, it is clear  that the  appellant  is  one of the legal heirs of  deceased  8th defendant  and  an  application to bring him on  record  was made.  Having made such application, it was the bounden duty of  the plaintiff as also that of the court to see that  all the  legal  heirs     the  proposed  legal  representatives (including  the  appellant) were duly served.  It is not  in dispute  that at the relevant point of time when the  notice of  application was issued by the trial court, the appellant was  serving  in Gonda District and was not in  Pilibhit  to which  address  the notice of substitution was sent.  It  is not  even  the  case of the plaintiff that at  the  time  of service  of notice the appellant in fact was present in  the address  to  which  the notice was sent even on  a  visiting basis.   Therefore,  it  is reasonable to presume  that  the appellant was not served with the notice of substitution and the  endorsement  made  therein  as to the  refusal  of  the service  cannot  be attributed to any act of the  appellant. When  a  party  is  sought  to   be  impleaded  in  a  legal proceedings service of notice on such party cannot be a mere formality but should, in fact, be a reality.  In the instant case,  neither  the trial court nor the High Court gave  any definite  finding  as  to  the  service  of  notice  on  the appellant.   The  mere fact that when the appellant made  an application  for  setting  aside  the ex  parte  decree,  he happened  to give his permanent residential addresses  which incidentally  happened to be the address to which notice  of substitution  was sent by the Court will not ipso facto lead to  the  conclusion that the notice of substitution  was  in fact  served  on the appellant.  No inquiry or  attempt  was made  by  the trial court to find out the truth of the  fact whether the notice of substitution was in fact served on the appellant.   Even  the plaintiff in its affidavit  filed  in opposition  to the appellants application did not deny  the fact  that the appellant was working in Gonda Distt.  at the

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relevant time.

   The  trial  court  proceeded to reject  the  appellants application  on  twin  reasoning:  that, it was  a  case  of irregularity  in  service of summons, and that, the  other two  brothers  of the appellant having participated  in  the proceedings  in the suit, there was no material prejudice to the  appellant.   This,  in our opinion, was not  a  correct approach.  Firstly, the present one is a case of non-service of  notice  on  the  appellant  and   not  a  case  of  mere irregularity  in  the service of summons.  Secondly, a  plea was  raised  in  the suit that the guarantee given  by  late Satish  Chandra  Agarwal  stood  discharged  on  account  of another  guarantee  in  supersession of or in  lieu  of  the guarantee  given by late Satish Chandra Agarwal having  been accepted  by the petitioner.  On such pleadings, issue Nos.9 and  12  were framed but were not decided.  In the  peculiar facts  and  circumstances of this case failure to  determine the  issue  as  to the guarantee furnished  by  late  Satish Chandra  Agarwal having been discharged and consequently the liability of late Satish Chandra Agarwal and his legal heirs having  come  to  an  end did spell  out  prejudice  to  the interest  of  the  appellant on account  of  opportunity  to defend  having not been afforded to him.  Be that as it may, we  are  satisfied that since the appellants share  in  the estate  of  his  father  is  bound to  be  affected  by  the execution  of  the decree, the appellant ought to have  been served  with the notice of the application for  substitution which having not been done, the application filed by him was entitled to be granted.

   We  are  of  the opinion that the  interest  of  justice requires  that the application of the appellant for  setting aside  the  decree  be allowed and the suit be  disposed  of after hearing the appellant on merits.  We, however, make it clear  that  we have not expressed any opinion in regard  to the  other contentions of the appellant as to the  discharge of  original 8th defendant as a guarantor by the Bank or the effect  of  not deciding issue Nos.9 and 12 in the  original suit by the trial court.

   For the reasons stated above, the appeal is allowed, the impugned judgments of the High Court and the trial court are set  aside.  The application under Order 9 Rule 13 read with Section  151  of  the  C.P.C.  filed  by  the  appellant  on 25.3.1996  shall  stand  allowed.  The  appellant  shall  be afforded  opportunity  of contesting the suit in  accordance with law.  No order as to costs.