Thekkumthara Service Co-Operative Bank Ltd. v. E.P. Rajan Nair and M. Madhavan Nambiar

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH** **MONDAY, THE 10TH OCTOBER 2011 / 18TH ASWINA 1933** ## **OP(C).No. 242 of 2011(O)** **------------------------------------** **OS.44/2001 of SUB COURT, SULTHAN BATHERY** **....................** **PETITIONER:** ## **-------------------** **THEKKUMTHARA SERVICE CO-OPERATIVE BANK LTD., REPRESENTED BY ITS SECRETARY, VENGAPPALLI AMSOM, VYTHIRI TALUK, WAYANAD DISTRICT.** **BY ADV. SRI.GRASHIOUS KURIAKOSE** ## **RESPONDENT(S):** **-------------------------** **1. E.P. RAJAN NAIR, S/O.NARAYANA KURUP, AGED 61 YEARS, AGRICULTURE, KOTTATHARA AMSOM DESOM, VYTHIRI TALUK, 673 576.** **2. M. MADHAVAN NAMBIAR,** **S/O.THENAMANGALATH KRISHNAN NAIR, AGED 61 YEARS, BANK SECRETARY, KOTTATHARA AMSOM DESOM, VYTHIRI TALUK, 673 576.** ## **BY** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 10/10/2011,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **rs** ## **OP(C).No. 242 of 2011(O)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXT.P1: COPY OF THE AMENDED PLAIN O.S. NO.44/2001 FILED BY THE 1ST RESPONDENT BEFORE THE SUB COURT, SULTHAN BATHERY.** **EXT.P2: COPY OF THE WRITTEN STATEMENT FILED BY THE BANK IN O.S. NO.44/2001 BEFOE THE SUB COURT, SULTHAN BATHERY.** **EXT.P3: COPY OF THE ORDER DATED 25/06/2008 IN I.A. NO.336/2008 IN O.S. NO.44/2001.** **EXT.P4: COPY OF THE JUDGMENT DATED 04/07/2008 IN O.S. NO.44/2001 OF THE SUB COURT, SULTHAN BATHERY.** **EXT.P5: COPY OF THE DECREE DATED 04/07/2008 IN O.S. NO.44/2001 OF THE SUB COURT, SULTHAN BATHERY.** **EXT.P6: COPY OF THE COMMON ORDER DATED 30/10/2010 IN I.A. NO.923/2008 & 924/2008 IN O.S. NO.44/2001 OF THE SUB COURT, SULTHAN BATHERY.** **EXT.P7: COPY OF THE COMMON ORDER DATED 30/10/2010 IN I.A. NO.921/2008 & 922/2008 IN O.S. NO.44/2001 OF THE SUB COURT, SULTHAN BATHERY.** **EXT.P8: COPY OF THE SALE PROCLAMATION.** ## **RESPONDENT'S EXHIBITS:NIL.** **//TRUE COPY//** **P.A. TO JUDGE** **rs** ## **THOMAS P. JOSEPH, J. -------------------------------------O.P.(C) No.242 of 2011 -------------------------------------Dated this the 10[th] day of October, 2011.** ## **JUDGMENT** Respondents are served but, there is no response. 2. This Court while admitting this Original Petition had granted a stay of proceedings in E.P.No.60 of 2009 in O.S.No.44 of 2001 of the court of learned Sub Judge, Sulthan Bathery, including sale as per Ext.P8, for a period of one month and that order of stay was being extended thereafter. E.P.No.60 of 2009 is filed by the 1[st] respondent in whose favour the exparte decree which is sought to be set aside by the petitioner has been passed., 3. 1[st] respondent filed O.S.No.44 of 2001 in the court of learned Sub Judge, Sulthan Bathery for a decree for specific performance of an agreement for sale dated 16.10.2000 allegedly executed by the 2[nd] respondent and alternatively for recovery of advance money. Petitioner, who obtained an award against the 2[nd] respondent, learning about the suit got itself impleaded in the suit as per order on I.A.No.369 of 2004 and filed written statement contending that the unregistered agreement for sale (allegedly) executed between respondents 1 and 2 is the result of fraud and collusion and intended to defeat petitioner. When the case came up for trial in the list, the 2[nd] respondent/1[st] defendant (in the suit) remained exparte, 1[st] respondent/plaintiff filed I.A.No.336 of 2008 to delete petitioner from the array of parties, that application was allowed against the **OP(C)No.242/2011** 2 objection of petitioner and that was followed by an exparte decree in favour of the 1[st] respondent and against 2[nd] respondent for recovery of advance money with charge over the suit property. Petitioner filed I.A.No.924 of 2008 under Order XLVII Rule 1 of the Code of Civil Procedure (for short, “the Code”) for a review of the order on I.A.No.336 of 2008 and I.A.No.923 of 2008 to condone the delay of 36 days. Petitioner also filed I.A.Nos.921 of 2008 and 922 of 2008 to set aside the exparte judgment and decree the 1[st] respondent obtained against the 2[nd] respondent and condone the delay of 11 days in filing that application. Learned Sub Judge dismissed I.A.Nos.923 and 924 of 2008 by Ext.P6, order and I.A.Nos.921 and 922 of 2008 by Ext.P7, order. The said orders are under challenge. 4. Learned Senior Advocate, Shri Grashious Kuriakose appearing for petitioner has contended that the learned Sub Judge was not correct in disallowing I.A.Nos.921 to 924 of 2008. It is pointed out by the learned Senior Advocate that petitioner had got itself impleaded in the suit being a necessary party to the litigation as per order on I.A.No.369 of 2004 and the order on I.A.No.336 of 2008 filed by 1[st] respondent to delete petitioner from the array of parties amounted to a review of the order on I.A.No.369 of 2004 by which petitioner was impleaded as additional defendant in the suit as it was a necessary or proper party to the suit. It is also submitted that circumstances would reveal that the alleged agreement for sale and the suit are nothing but the **OP(C)No.242/2011** 3 result of fraud and collusion between respondents 1 and 2 to defeat execution of the award which petitioner has obtained against the 2[nd] respondent. It is contended by the learned Senior Advocate that once it is found that dismissal of I.A.Nos.923 and 924 of 2008 for review of the order on I.A.No.336 of 2008 is not justified and is to be allowed, it follows that petitioner continued to be the additional defendant in the suit in which case, having regard to the contentions petitioner has raised in the written statement, learned Sub Judge was not correct in passing an exparte judgment and decree in favour of 1[st] respondent and against the 2[nd] respondent. 5. To understand the contentions it is necessary to refer to the facts of the case. The 2[nd] respondent was the Secretary of petitioner and allegedly misappropriated funds of petitioner. Petitioner initiated arbitration proceeding against the 2[nd] respondent and on 23.05.2002 an award was passed against the 2[nd] respondent allowing petitioner to recover `5,47,836/- with interest. Petitioner contends that anticipating the arbitration proceeding, the alleged agreement for sale was created between respondents 1 and 2 concerning 1.47 acres of land belonging to the 2[nd] respondent based on which 1[st] respondent filed O.S.No.44 of 2001 seeking specific performance of the said agreement for sale. It is pointed out by the learned Senior Advocate that instruction given to him is that the said property is the only property belonging to the 2[nd] respondent. Learned Senior Advocate points out that though the sale consideration mentioned in the **OP(C)No.242/2011** 4 agreement is `7.5 lakhs, it is stated in the agreement that `6.7 lakhs was given to the 2[nd] respondent by way of advance on the date of agreement itself. According to the learned Senior Advocate, that alone would show the fraudulent intention behind creation of the agreement for sale. It is also pointed out that in Ext.P2, written statement petitioner had contended that the agreement is not genuine and valid and it is forged and concocted between respondents 1 and 2 to defeat the claim of petitioner against the 2[nd] respondent. It is in the view of that contention that petitioner was allowed to be impleaded as additional defendant in the suit by order on I.A.No.369 of 2004 filed by the petitioner. It is also pointed out that when the case came for trial in the list, the 2[nd] respondent remained exparte, the 1[st] respondent did not pursue the prayer for specific performance of the agreement for sale and was instead satisfied with a decree for recovery of `6.7 lakhs with charge over the property with the sole intention of defeating execution of the award which petitioner obtained against the 2[nd] respondent. 6. I have gone through Ext.P7, order by which learned Sub Judge dismissed I.A.Nos.921 and 922 of 2008 to set aside the exparte decree and to condone the delay in filing that application. There, the main reason stated by the learned Sub Judge is that since petitioner has been deleted from the array of parties and it no more continued to be a defendant in the suit. Order IX Rule 13 of the Code of Civil Procedure (for short, “the Code”) permits only a **OP(C)No.242/2011** 5 defendant to seek setting aside the exparte judgment and decree. Learned Sub Judge was also not inclined to accept the explanation offered for the delay of 11 days (as learned Senior Advocate submits) in requesting to set aside the exparte decree. 7. If the order on I.A.Nos.923 and 924 of 2008 seeking review of the order on I.A.No.336 of 2008 and to condone the delay is not sustainable and, the said applications are to be allowed, it would mean that petitioner continues to be the additional 2[nd] defendant in the suit, the exparte judgment and decree are apparently illegal and hence petitioner is entitled to seek the exparte judgment and decree to be set aside since in view of the contentions raised by petitioner in Ext.P2, written statement and petitioner is very much on record as a defendant opposing the suit learned Sub Judge could not have passed an exparte judgment and decree in favour of 1[st] respondent against the 2[nd] respondent. 8. So far as Ext.P6, order on I.A.Nos.923 and 924 of 2008 is concerned, learned Sub Judge has observed that the order on I.A.No.369 of 2004 (allowing impleadment of petitioner as additional defendant in the suit) is not a speaking order and it does not show the reason for allowing that application. I am not inclined to think that assuming that the order on I.A.N.369 of 2004 (impleading the petitioner as additional defendant in the suit) is not a speaking order, learned Sub Judge could have allowed I.A.No.336 of 2008 for that reason. Power to review is not inherent. It is a statutory right. Petitioner got **OP(C)No.242/2011** 6 itself impleaded as an additional defendant in the suit on its application as the court was satisfied that it is a necessary or atleast proper party to the lis. If the 1[st] respondent was aggrieved by that order, he should have challenged it at the appropriate time as provided under law. At a later point of time 1[st] respondent could not think that presence of the petitioner is not required for an effective adjudication of the dispute in the suit and ask for deletion of petitioner. In that situation it was not open to the learned Sub Judge to have entertained and allowed I.A.No.336 of 2008 and deleted petitioner from the array of parties particularly when petitioner has raised a contention that the agreement for sale and the suit are the result of fraud and collusion between respondents 1 and 2 and, the decree if executed against the property of 2[nd] respondent might affect the right of petitioner in that it is not possible for it to execute the award against 2[nd] respondent and realise the amount. 9. No doubt, an application under Order XLVII Rule 1 of the Code is permissible only when there is an error apparent on the face of records or other circumstances referred to therein exist. I.A.No.336 of 2008 was allowed and petitioner deleted from the array of defendants notwithstanding that petitioner was impleaded as additional defendant on its request by a judicial order passed on I.A.No.369 of 2004 and that order remained in force. The order on I.A.No.336 of 2008 amounted to a review of the order on I.A.No.369 of 2004. In the absence of any error apparent on the face of the record or other justifiable reason as stated in Rule 1 of Order XLVII of the Code, learned Sub Judge could **OP(C)No.242/2011** 7 not have reviewed the order on I.A.No.369 of 2004. Nor could in the circumstances stated, the 1[st] respondent could request the court to delete petitioner from the array of parties to facilitate an exparte judgment and decree against the 2[nd] respondent on the face of the contentions petitioner has raised in the suit. In that view of the matter there is an error apparent on the face of the order on I.A.No.336 of 2008 which is amenable to a review under Order XLVII Rule 1 of the Code as prayed for in I.A.N.924 of 2008. It is true that the said application is filed with a delay of 36 days but the delay has been explained in the affidavit filed in support of I.A.No.923 of 2008. Having regard to the facts and circumstances I am inclined to hold that the delay has been properly explained. 10. Coming to Ext.P6, order I found that dismissal of I.A.Nos.923 and 924 of 2008 is not justified and that the said applications ought to have been allowed. It follows that presence of petitioner as additional 2[nd] defendant in the suit revives in which case with petitioner/additional 2[nd] defendant on the party array, no exparte judgment and decree could have been passed in favour of the 1[st] respondent in view of the contentions petitioner raised in the suit as to the validity of the agreement for sale. 11. The main reason for dismissing I.A.Nos.921 and 922 of 2008 is that petitioner not being a defendant, cannot apply under Order IX Rule 13 of the Code. No doubt, going by the said provision it is so. The Allahabad High Court in **Surajdeo v. Board of Revenue, U.P. Allahabad and others (AIR** **OP(C)No.242/2011** 8 **1982 Allahabad 23)** has considered the issue and held that when the provisions of Order IX Rule 13 of the Code is not applicable, it is open to the court to exercise the inherent power under Section 151 of the Code. No doubt the power to set aside an exparte decree is not an inherent power of the court but conferred under Order IX Rule 13 of the Code. Therefore to cases where provision of Order IX Rule 13 of the Code applies, use of inherent power under Sec.151 of the Code is not permissible. Another decision is **Subahu Kumar** ## **Jain v. Jagdish Prasad Choudhury and others (AIR 1990 Gauhati** **66),** following the decision in **Budhai Nepal Chandra Lalit Mohan Saha Firm and another v. Sudhangshu Ranjan Dev and others** **(AIR 1976 Gauhati 7)** . In the former, a minor defendant who was not represented by a guardian wanted the exparte decree to be set aside. There, it was held that the exparte decree does not bind the minor who was not represented by a legal guardian and hence the question of setting aside the exparte decree under Order IX Rule 13 did not arise. In **Subahu Kumar** **Jain v. Jagdish Prasad Choudhury** and others an exparte decree for eviction was passed. A person who was not a party to the proceeding wanted the exparte decree to be set aside. Distinguishing the decision of the Allahabad High Court in **Surajdeo v. Board of Revenue, U.P. Allahabad and others** the Gauhati High Court held that the third party who **OP(C)No.242/2011** 9 is not a party to the suit and not bound by it cannot request to set aside the exparte decree. The present case is distinguishable on facts. The exparte judgment and decree grants a charge in favour of the 1[st] respondent over the property of the 2[nd] respondent which according to the petitioner is the only property of the 2[nd] respondent. It is true that learned Sub Judge has left to the decision of the executing court who among petitioner and the 1[st] respondent has got first charge over the property. But the exparte judgment and decree directly affects the interest of petitioner. Therefore if not Rule 13 of Order IX, Sec.151 of the Code should come to the aid of the court. More so when petitioner has a specific contention that the (alleged) agreement for sale and the suit are the result of fraud and collusion between the respondents. 12. I found that Ext.P6, order is liable to be set aside and I.A.Nos.923 and 924 of 2008 allowed, in which case position of petitioner as additional 2[nd] defendant in the suit revives and the exparte judgment and decree are therefore exfacie, illegal. Though rejection of an application to set aside the exparte decree is amenable to an appeal, having regard to the facts and circumstances above stated, I am inclined to think that this Court should interfere to correct the patent illegalities. That the question as to who among petitioner and 1[st] respondent has first charge over the suit property is relegated to the executing court for decision is no reason why there could be an exparte judgment and decree in the circumstances stated above. 13. Having heard learned Senior Advocate and gone through the **OP(C)No.242/2011** 10 records I am satisfied that Exts.P6 and P7, orders are liable to be set aside and the relevant applications allowed. Resultantly this Original Petition is allowed. Exts.P6 and P7, orders are set aside. I.A.Nos.921, 922, 923 and 924 of 2008 in O.S.No.44 of 2001 of the court of learned Sub Judge, Sulthan Bathery will stand allowed. Learned Sub Judge shall proceed with the suit with petitioner on the party array as additional 2[nd] defendant and dispose of the same as provided under law. In case respondents 1 and 2 or any of them do not appear, learned Sub Judge may issue summons/notice to such of them as is required under the law and dispose of the suit as early as possible untrammelled by any observation in this judgment as to the merit of contentions raised by the parties in the suit. I.A.Nos.14991 and 14988 of 2011 will stand closed. **THOMAS P.JOSEPH, Judge.** **cks**