Aviation Travels Pvt. Ltd. vs Bhavesha Suresh Goradia on 2 March, 2020


Supreme Court of India

Aviation Travels Pvt. Ltd. vs Bhavesha Suresh Goradia on 2 March, 2020

Author: R. Banumathi

Bench: R. Banumathi, A.S. Bopanna

                                                                 NON-REPORTABLE
                                        IN THE SUPREME COURT OF INDIA
                                         CIVIL APPELLATE JURISDICTION
                                     CIVIL APPEAL NOS. 1890-1891 OF 2020
                                  (Arising out of SLP(C) Nos.5374-5375 of 2019)
                         AVIATION TRAVELS PVT. LTD.                         ...Appellant

                                                      VERSUS
                         BHAVESHA SURESH GORADIA
                         AND OTHERS                                        ...Respondents

                                                  JUDGMENT

R. BANUMATHI, J.

Leave granted.

2. These appeals arise out of the impugned judgment dated

09.07.2018 passed by the High Court of Judicature at Bombay in

Appeal (Lodging) No.224 of 2018 in Notice of Motion No.580 of

2018 in Suit No.2865 of 1994 in and by which, the High Court

dismissed the Notice of Motion filed by the appellant and declined to

set aside ex-parte judgment and decree dated 07.10.2003 passed

against the appellant in Suit No.2865 of 1994 and the impugned

order dated 26.10.2018 passed in Review Petition (Lodg.) No.20 of

2018 whereby the review petition filed by the appellant was

dismissed.

Signature Not Verified

Digitally signed by
MAHABIR SINGH
Date: 2020.03.02

3. Brief facts which led to the filing of these appeals are as
16:16:39 IST
Reason:

under:- Respondent No.1 filed a suit being Suit No.2865 of 1994

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before the High Court of Bombay against the appellant and

respondents No.3 to 24 for permanent injunction and compensation

of Rs.1 crore for trespass, nuisance and damages allegedly made

by appellant-Defendant No.1. It is stated that respondents No.3 to 6

are present trustees of a private trust known as “Parikh Goradia

Trust” and respondents No.7 to 24 are beneficiaries of the said

private trust. The appellant carries on business as travel agent and

also inter alia of running a restaurant called “Woodlands Garden

Cafe” i.e. respondent No.2. It was stated by respondent No.1 that

the trust-Parikh Goradia Trust came into existence under an

Indenture of trust dated 01.04.1976. Clause 3 of the said Indenture

provides that the trust shall come to an end on 30.09.1985 and the

trust fund will be divided amongst beneficiaries of the trust.

However, despite the trust having come to an end on the stipulated

date, the trustees thereof have failed and neglected to distribute the

property and fund of the trust amongst the beneficiaries.

4. By an agreement dated 06.10.1978 executed between the

trust and the petitioner and a letter dated 06.08.1982, the trust

agreed to sell to the appellant a part of the said property for a

consideration of Rs.10,00,000/-. Defendant No.1A-respondent

No.2-M/s. Woodlands Garden Cafe is a partnership firm registered

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under Indian Partnership Act, 1932 by virtue of a partnership deed

executed on 01.04.1989. The appellant executed a leave and

licence agreement dated 10.04.1989 with respect to the said

premises in favour of respondent No.2-M/s. Woodlands Garden

Cafe for a period of ten years to run the restaurant therein. Since

the year 1989, respondent No.2-M/s.Woodland Garden Cafe is in

occupation and possession of the said premises by doing restaurant

business thereon. Case of the first respondent is that respondent

No.2- M/s.Woodland Garden Cafe was closed down for repairs and

renovations in the year 1992 and in the course of these repairs, the

appellant caused considerable damage to the property and carried

out unauthorized and illegal construction.

5. Respondent No.1 filed Suit No.2865 of 1994 to direct the

appellant (defendant No.1) to pay a sum of rupees one crore to the

trust together with interest @ 24% per annum and for permanent

injunction restraining the appellant from carrying on repairs and

renovations in the premises and also to ensure that no damage or

loss or injury is caused to the said property of the trust either in the

course of the renovation or the repairs carried out by the appellant

and other reliefs. Vide order dated 07.10.2003, the Court noted that

no written statement has been filed and the Court held that the first

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respondent’s claim in the suit is clearly unchallenged. Vide ex-parte

decree dated 07.10.2003, the High Court decreed the suit and

directed the appellant and respondent No.2 to pay respondent No.1

and the beneficiaries of the said trust a sum of Rs.77,02,500/- with

interest thereon @ 6% per annum from the date of filing the suit till

the date of payment or realization. By the said ex-parte decree

dated 07.10.2003, the Court also granted relief in terms of Clause

(b), (c) and (g) (i.e. permanent injunction, mandatory injunction and

costs of the suit) of the prayer clause against the appellant and

respondent No.2.

6. The matter remained as such for quite some time. The

appellant took Notice of Motion No.580 of 2018 dated 02.02.2018

praying to set aside the ex-parte judgment and decree dated

07.10.2003 and that the appellant be permitted to file written

statement and defend the suit. It was stated that the summons of

the original suit and the proceeding thereof were never served upon

the appellant at its registered address and/or any other address

where the appellant was carrying on its business and also on the

ground that Rule 90 of the Bombay High Court (Original Side) Rules

(for short “Bombay High Court Rules”) has not been followed.

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7. Vide order dated 19.04.2018, learned Single Judge dismissed

the Notice of Motion No.580 of 2018. The learned Single Judge

noted that the ex-parte decree dated 07.10.2003 shows that an

advocate was engaged on behalf of the appellant and respondent

No.2 and the said advocate has filed vakalatnama and there is no

question of having to thereafter serve a party personally. The High

Court held that along with the affidavit, a Power of Attorney dated

29.04.1993 was said to have been executed by the appellant in

favour of one K. Shrinivas Rao and there is also a rubber

stamp and circular common seal of the appellant in the Power of

Attorney and the Power of Attorney is said to have been notarized in

Mumbai and the seal of the Notary is also visible. Pointing out that

the defendant No.1 through its Power of Attorney had engaged a

lawyer and there was a validly executed vakalatnama by a

constituted attorney K. Shrinivas Rao and also that writ of summons

was in fact served on the appellant and respondent No.2 (original

defendant No.1A) by bailiff attached to the office of Sherrif of

Mumbai, the learned Single Judge dismissed the Notice of Motion

No.580 of 2018.

8. Being aggrieved, appellant preferred Appeal (Lodging) No.224

of 2018 challenging the order declining to set aside the ex-parte

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decree. The said appeal was dismissed by the Division Bench vide

impugned judgment dated 09.07.2018. The Division Bench of the

High Court opined that the appellant had engaged M/s. Narayanan

& Narayanan, Advocates who placed on record of the suit a

vakalatnama duly signed by the constituted attorney of the

appellant. The Division Bench also noted that the record indicates

that the advocate for the appellant represented the appellant in the

suit on several dates including appearing at interlocutory application

stage and engaging a senior advocate to argue on behalf of the

appellant. The Division Bench held that appellant’s Notice of Motion

as well as the appeal is misconceived. The appellant then filed

Review Petition (Lodg.) No.20 of 2018 along with the Notice of

Motion for condonation of delay of 27 days in filing the review

petition. The said review petition also came to be dismissed vide

impugned order dated 26.10.2018 on the ground that there was no

error apparent on the face of the order or any other ground is made

out to entertain the review petition.

9. We have heard the submissions of Mr. R.F. Totala, learned

counsel for the appellant and Mr. Shree Prakash Sinha, learned

counsel for respondents No.1, 9 and 10 and carefully perused the

contentions and impugned judgment and other materials on record.

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10. The High Court has noted that on behalf of the appellant,

M/s. Narayanan & Narayanan, Advocates has entered appearance

and filed a vakalatnama duly signed by the constituted attorney of

the appellant. The Power of Attorney dated 29.04.1993 was

executed by the Chairman and Managing Director, Mr. Kudralli

Subanna Nagraj of the appellant company and the same was

executed before the Notary on 29.04.1993 and the signature of the

executant was also identified by the advocate. The High Court

noted that the said Power of Attorney inter alia authorized the

attorney to accept the summons, notice and other processes issued

to the advocate from any Court, Government or authority

concerning the suit premises. The High Court also pointed out that

there are several clauses in the Power of Attorney which authorize

the constituted attorney to do acts in regard to the litigation. The

High Court has referred to the affidavit filed by K. Shrinivas Rao in

reply dated 20.07.1994 to the Notice of Motion No.1847 of 1994 for

interim relief wherein, it was stated that he is a constituted attorney

of the appellant (defendant No.1). K. Shrinivas Rao also stated that

he was Director of appellant company till the year 1989 and at the

time of filing the affidavit in 1994, he was a partner in respondent

No.2-firm.

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11. Insofar vakalatnama dated 20.07.1994 filed by M/s.

Narayanan & Narayanan, Advocates on behalf of the appellant and

respondent No.2, contention of the appellant is that they never

instructed the said M/s. Narayanan & Narayanan, Advocates to

appear on behalf of the appellant in the original suit. Case of the

appellant is that vakalatnama dated 20.07.1994 was signed by K.

Shrinivas Rao claiming himself to be a constituted attorney of

defendant No.1. The stand of appellant is that defendant No.1 never

authorized the said K. Shrinivas Rao to sign vakalatnama on behalf

of the appellant in the original suit. Insofar as the Power of Attorney

dated 29.04.1993 is concerned, the appellant contends that it was a

general Power of Attorney and the appellant company never passed

any board resolution nor executed any such Power of Attorney

authorizing K. Shrinivas Rao to sign vakalatnama on

behalf of the appellant in the suit; the said K. Shrinivas Rao signed

the vakalatnama for and on behalf of respondent No.2. Stand of the

appellant is that the appellant never authorized K. Shrinivas Rao to

appear on behalf of the appellant in the original suit No.2865 of

1994.

12. The High Court rejected the stand of the appellant and

observed that page 18 of the Power of Attorney is a typed name of

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the Chairman and Managing Director and there is also a rubber

stamp and circular common seal of the appellant and the Power of

Attorney was executed by the Chairman and Managing Director of

the appellant company Mr. Kudralli Subanna Nagraj. The High Court

has also pointed out that the Power of Attorney dated 29.04.1993

has been notarized in Mumbai on 29.04.1993 and the seal of the

Notary is also seen in the Power of Attorney.

13. On behalf of the appellant, it was contended before the High

Court that even assuming that the vakalatnama was filed on behalf

of the appellant through Power of Attorney, Rule 79 of the Bombay

High Court Rules requires personal service of the writ of summons

on a defendant even if appearance was entered on his behalf by an

advocate. To the said contention, the High Court opined that Rule

79 of the Bombay High Court Rules speaks of a waiver of the

requirement of serving the writ of summons personally, if the

advocate undertakes in writing to accept service of that writ of

summons and to file a vakalatnama. The High Court pointed out

that Rule 79 contemplates a stage before the vakalatnama is in fact

filed and once the vakalatnama is filed, there is no question of

having to serve a party personally thereafter. The High Court

pointed out that in Suit No.2865 of 1994, vakalatnama was filed by

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the Power of Attorney in the suit itself and there is no question of

having to thereafter serve a party personally. After referring to the

affidavit in reply at pages 62 and 63 of the paper book, the High

Court observed that summons was in fact served on the advocates

for the appellant and respondent No.2 by bailiff attached to the

office of Sherrif of Mumbai and there is an affidavit of service dated

18.08.1999 made by the bailiff’s clerk to that effect. Observing that

the Court has personally checked the original affidavit of the bailiff

and the file and pointing out that there is no affidavit in rejoinder, the

learned Single Judge has dismissed the Notice of Motion No.580 of

2018.

14. According to the appellant, the High Court erred in holding

that the Power of Attorney dated 29.04.1993 is genuine. It was

urged that the alleged Power of Attorney is said to have been

notarized at Mumbai before Advocate Raja who was representing

respondent No.2 in the original suit whereas, the appellant company

is located in Bangalore. Learned counsel for respondent No.1 has

submitted that the appellant herein surrendered and/or sold all its

rights and interest in the property in question to respondent No.2 on

30.04.1993 and the present appeal is a proxy litigation on behalf of

respondent No.2. It is the contention of respondent No.1 that since

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K. Shrinivas Rao duly constituted the Power of Attorney of the

appellant has filed his reply on 20.07.1994 and the said reply was

filed through M/s. Narayanan & Narayanan, Advocates in which the

appellant through the Power of Attorney has stated that the

premises in question was acquired by the appellant with the

contribution made by respondent No.2- M/s. Woodland Garden

Cafe and therefore, respondent No.2 also should be heard before

any order is passed in the suit. It was submitted that based on the

reply affidavit filed by K. Shrinivas Rao, respondent No.1 filed

application for amendment and the amendment application was

allowed on 26.07.1994 and respondent No.2 was impleaded as

defendant No.1A. It is therefore, submitted that filing of vakalatnama

on behalf of the appellant by its duly constituted Power of Attorney

K. Shrinivas Rao and subsequent impleading of respondent No.2

clearly shows that the appellant and respondent No.2 were duly

served and participated in the proceedings and were aware of the

decree dated 07.10.2003. It was contended that the appellant has

not approached with the correct averments and in view of the

incorrect stand taken by the appellant, the High Court rightly

rejected the Notice of Motion refusing to set aside the ex-parte

decree dated 07.10.2003.

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15. Though various contentions have been raised as to whether

appellant was served or not and entered appearance in the suit, we

are not inclined to go into the merits of the contentions. In our view,

an opportunity has to be given to the appellant for contesting the

suit. It is because the suit was filed for recovery of damages of Rs.1

crore and respondent No.1 claimed interest @ 24% per annum. By

the judgment dated 07.10.2003, the Court has directed the

appellant and respondent No.2 to pay a sum of Rs.77,02,500/- and

Rs.42,70,772.46, total amount payable under decree is

Rs.1,20,03,282.96. The Court also directed the payment of

subsequent interest @ 6% per annum on the said amount of

Rs.77,02,500/- till date of reliasation.

16. As pointed out earlier, the suit claim was for damages. The

damages to the property if any, can be ascertained only after the

parties adduce the oral and documentary evidence. We have no

reason to believe that the appellant would have benefitted by

deliberately not contesting the suit as they would in any event be

saddled with interest if their conduct was to drag and prolong the

suit. Considering the nature of the claim and other facts and

circumstances and in the interest of justice, we are of a view that an

opportunity has to be given to the appellant to contest the suit

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subject to terms. The appellant has also in that regard shown its

bona fide by depositing Rs.60,00,000/- in compliance of the order

dated 18.02.2019. By the order dated 24.01.2020, we have also

directed the appellant to deposit further sum of Rs.35,00,000/- for

which the appellant sought for some more time for compliance.

Considering the request, two months further time is granted to the

appellant for deposit of the said amount.

17. Insofar as the amount of Rs.60,00,000/- deposited by the

appellant, by our order dated 24.01.2020, we have permitted

respondent No.1-plaintiff to withdraw the said amount. Since there

are number of other beneficiaries of the trust viz. respondents No.7

to 24, the amount has to be disbursed to the trustees/beneficiaries

as per their entitlement. It is open to respondent No.1 and other

trustees/beneficiaries of the trust to file appropriate application

before the High Court for disbursement of the amount (pending

disposal of the suit) and the High Court shall consider and pass

appropriate order as per the entitlement of the respective parties.

The disbursement of the said amount will be subject to the outcome

of said suit. Permission for withdrawal of the amount of

Rs.60,00,000/- by respondent No.1 and other trustees/beneficiaries

is without prejudice to the contention of both the parties in the suit.

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18. In the result, the impugned judgment dated 09.07.2018

passed by the High Court of Judicature at Bombay in Appeal

(Lodging) No.224 of 2018 in Notice of Motion No.580 of 2018 in Suit

No.2865 of 1994 and the impugned order dated 26.10.2018 passed

in Review Petition (Lodg.) No.20 of 2018 are set aside and these

appeals are allowed. The Suit No.2865 of 1994 is ordered to be

restored. The appellant and respondent No.2 shall file their written

statement within four weeks from today and learned Single Judge of

the High Court shall afford sufficient opportunity to both the parties

to adduce evidence and dispose the said suit in accordance with

law.

19. Insofar as direction for deposit of Rs.35,00,000/-, two months

further time is granted to the appellant for deposit of the said

amount and on such deposit, the same shall be invested in a

nationalized Bank for a period of six months with a provision of auto

renewal. Deposit of Rs.35,00,000/- would be subject to the outcome

of the suit. No costs.

..…………………….J.

[R. BANUMATHI]

..…………………….J.

[A.S. BOPANNA]

New Delhi;

March 02, 2020.

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