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CASE NO.: Appeal (civil)  10280 of 2003

PETITIONER: Srei International Finance Ltd.                                               

RESPONDENT: Fairgrowth Financial Services Ltd. & Anr.                                      

DATE OF JUDGMENT: 12/08/2005

BENCH: CJI R.C.LAHOTI & P.K.BALASUBRAMANYAN

JUDGMENT: JUDGMENT 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

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    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

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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

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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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