Holding

Special circumstances must be supported by facts showing an entitlement to defend; absent such facts, the court may rightly refuse to set aside an ex‑parte decree under Order 37 Rule 4.

Summary

The landlord sued the tenant for unpaid water and electricity charges under a suit filed pursuant to Order 37 of the CPC. The trial court decreed the suit ex‑parte, deeming service of summons as effected by registered post. The tenant applied under Order 37 Rule 4 to set aside the decree, alleging special circumstances such as non‑service of notice and an advance deposit. Both the trial court and the Delhi High Court dismissed the application, holding that the tenant had not disclosed any facts that would entitle him to defend the suit. On appeal, the Supreme Court held that ‘special circumstances’ must be accompanied by facts showing a right to defend; mere sufficient cause for absence is insufficient. Consequently, the High Court’s refusal to set aside the decree was affirmed, though the Court reduced the interest rate from 18% to 6% as the liability did not arise from a commercial transaction. The appeal was dismissed.

Issues considered

Whether the High Court erred in refusing to set aside the ex‑parte decree under Order 37 Rule 4 on the ground that the appellant failed to disclose facts entitling him to defend the suit.
Interpretation of ‘special circumstances’ under Order 37 Rule 4 of the CPC.
Whether the procedure for granting leave to defend under Order 37 differs from that under Order 9.
Appropriate rate of interest applicable to the liability.

Legislation cited

Code of Civil Procedure, 1908s. Order 37 Rule 4, s. Order 9 Rule 11, s. Order 9 Rule 13, s. Order 9 Rule 3, s. Section 34

Subjects

ex‑parte decreeOrder 37special circumstancesleave to defendCivil Procedure Codeinterest rateleasewater and electricity charges

Judgment

A RAJNI KUMAR
v.
SURESH KUMAR MALHOTRA AND ANR.

MARCH 28, 2003

B [SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN. JJ.]

Practice and Procedure:

Civil Procedure C'ode,1908: 0.9. Rules II and 13, 0.34 und0.37, R.4:
C Suit for recove1y-Trial Court decreed suit ex-parte-Dismissed application
under Order 37 Rule 4 thereafter holding no spe.:ial circumstances/facts averred
in the app/icationjustifj;ing entitlement ofpetitioner to defend the suit-Revision
petition dismissed by High Court-On appeal, held, though appellant has
shown sufficient cause for his absence on the date when court passed ex-parte
D decree, he failed to disclose facts which would entitle him to defend the case-
Hence, High Court rightly declined to se1 aside ex-parte decree under 0.37 \
Rule 4-Since liability does not arise out of commercial transactiom, rate of
interest reduced from 18% to 6% p.a.-Directions issued.

0.37-leave w defend-Procedure--Grant of-Held: Since 0.37 does
E not speak of the procedure while granting leave to defend, the procedure
applicable to suit instituted in the ordinaiy manner will apply.

Suits instituted in the ordinmy manner and suits filed under 0.37. R.4-
Distinction between-Discussed.
F
Words & Phrases:

'Special circumstances '---Meaning of in the can/ext of suit filed under
0.37 C'PC.

G Respondent-landlord filed a suit for recovery of certain amount
towards water and electricity charges due from his tenant-appellant for
the period of tenancy. Civil Court decreed the suit ex-parte. Aggrieved
tenant filed application under 0.37 Rule 4 to set 11side the ex-parte decree.
Application was dismissed by the Trial Co11rt holding that no special

H 66
RAJNI KUMAR v. SURESH KUMAR MALHOTRA 67
circumstances had been disclosed in the application which would entitle A
him to defend the suit. Revision petition was dismissed by the Hih Court.
Hence the present appeal.

It was contended for the appellant that in the absence of proof of
service of notice to appellant he was having special reason for non-
appearance; and that since sufficient amount as an advance had already B
been deposited with the respondent, 0.37 CPC was not applicable to the
facts of the case and appellant had good defence to the suit.

Dismissing the appeal, the Court

HELD: 1.1. The expression 'special circumstances' is not defined in C
the CPC nor is it capable of any precise definition by •the court because
problems of human beings are so varied and complex. In its ordinary
dictionary meaning it connotes something exceptional in character, extra-
ordinary, significant, uncommon. It is an antonym of common, ordh1ary
and general. It is neither practicable nor advisable to enumerate such D
circumstances. Non-service of summons will undoubtedly be a special
circumstance. (71-D]

1.2. In an application under Order 37, Rule 4, the court has to
determine the question, on the facts of each case, as to whether the
circumstances pleaded are so unusual or extra ordinary as to justify E
putting the clock back by setting aside the decree; to grant further relief
in regard to post-decree matters, namely, staying or setting aside the
execution and also in regard to pre decree matters. (71-E]

1.31n considering an application to set aside an ex-parte decree, it F
is necessary to bear in mind the distinction between suits instituted in the
ordinary manner and suits filed under Order 37 CPC. Rule 4 of Order
37 specifically provides for setting aside decree. Therefore, provisions of
Rule 13 of Order 9 will not apply to a suit filed under Order 37. In a suit
filed in the ordinary manner a defendant has the right to contest the suit
as a matter of course. Nonetheless, he may be declared ex-pa rte if he does G
not appear in response to summons, or after trial. In an application under
Order 9 Rule 11, if a defendant is set ex parte and that order is set aside,
he would be entitled to participate in the proceedings from the stage he
was set ex-parte. But an application under Order 9 Rule 13 could be filed
on any of the grounds mentioned thereunder only after a decree is passed H
J
68 SUPREME COURT REPORTS [2003) 3 S.C.R.

A ex parte against defendant. If the court is satisfied that (I) summons was
not duly served, or (2) he was prevented by sufficient cause from appearing
when the suit ~as called for hearing, i1t has to make an order setting aside
the decree against him on such terms as to cost or payment into court or
otherwise as it thinks fit and thereafter on the day fixed for hearing by
B court, the suit would proceed as if no ex parte dec:ee had been passed.
But in a suit under Order 37 the procedure for appearance of defendant
is governed by provisions of Rule 3 thereof. In default, the plaintiff
becomes entitled to a decree for the sum mentioned in the summons
together with interest at the rate specified, if any, upto the date of the
decree together with costs. The plaintiff will also be entitled to judgment
C in terms of sub-rule (6) of Rule 3. If the defendant enters an appearance,
the plaintiff is required to serve on the defendant a summons for judgment
in the prescribed form. Within the time prescribed, the defendant may
seek leave of the court to defend the suit, which will be i;ranted on
disclosing such facts as may be deemed sufficient to entitle him to defend
D and such leave may be granted to him either unconditionally or on such
terms as the court may deem fit. Inasmuch as Order 37 does not speak of
the procedure when leave to defend t.he suit is granted, the procedure
applicable to suits instituted in the ordinary manner, will apply.
(71-F, G, H; 72-A-G]

E 1.4. Power under Rule 4 of Order 37 is not confined to setting aside
the ex parte decree., it extends to stayin:~ or setting aside the execution and
giving leave to appear to the summons and to defend the suit. The very
purpose of Order 37 is to ensure an e1'peditious hearing and disposal of
the suit filed thereunder. Rule 4 empowers the court to grant leave to the
F defendant to appear to summons and ddend the suit if the Court considers
it reasonable so to do, on such terms as court thinks fit in addition to
setting aside the decree. It is not enough for the defendant to show special
circumstances which prevented him from appearing or applying for leave
to defend, he has also to show by affidavit· or otherwise, facts which would
entitle him leave to defend the suit. (72-H; 73-A-C]
G
1.5. In the instant case, though the appellant has shown sufficient
cause for his absence on the date of passing ex parte decree, he failed to
disclose facts which would entitle him to defend the case. The respondent
was right in his submission that in the application under Rule 4 of Order
H 37, the appellant did not say a word all>out any amount being in deposit
l
RAJNI KUMAR v. SURESH KUMAR MALHOTRA (QUADRI, J.] 69
with the respondent or that the suit was not maintainable under Order A
37. The High Court was right in accepting existence of special
circumstance justifying his not seeking leave of the court to defend, but
in declining to grant relief since he had mentioned no circumstances
justifying any defence. Inasmuch as having regard to the provision of
Section 34 C.P.C. and the facts of the case the liability does not arise out B
of a commercial transaction. The grievance of the appellant with regard
to rate of interest is justified. Hence the rate of interest is reduced from
18 per cent to 6 per cent per annum. (73-E, F, GJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2538 of2003.

From the Judgment and Order dated 15.10.2001 of the Delhi High
c
Court in C.R. No. 138 of 200 I.

A. Sharan, Amit Kumar, Mrs. Madhu Sharan, Samit Ali Khan, Amit
Anand Tiwari and C.D. Singh for the Appellant.
D
In-person, for Respondent No. I.

The Judgment of the Court was delivered by

SYED SHAH MOHAMMED QUADRI, J. Leave is granted.
E
In this appeal, from the Judgment and Order of the High Court of Delhi
in C.R. No.138 of2001 dated October 15, 2001, the short point that arises
for consideration is : whether the High Court committed jurisdictional error
in declining to set aside the ex parte decree on the application of the appellant
under Rule 4 of Order 37, on the ground that he failed to disclose facts F
sufficient to entitle him to defend the suit.

The facts relevant for the disposal of this appeal may be noted here.

The appellant-tenant had taken on rent residential flat No.C 4 70, Sarita
Vihar, Ground Floor, New Delhi • 110 004, from the respondent-landlord for G
a period of nine months under an agreement of lease reduced to writing on
November 26, 1993. After the expiry of the term of tenancy she continued
to occupy the said premises as tenant till January 11, 1997. Alleging that the
appellant did not pay the electricity and water consumption charges for the
period starting from November 26, 1993 to January 11, 1997, the respondent H
J
70 SUPREME COURT REPORTS [2003] 3 S.C.R.

A filed suit No.597 of 1997 in the Court of Senior Civil Judge, Delhi, under
Order 37 of Code of Civil Procedure (C.P.C.), for recovery of Rs.33,661. On
the ground that on April 21, 1999 sumrP.ons for judgment was sent by
registered post A.O. to the appellant pursuant to the order of the Court dated
April 16, 1999 the Court drew inference of deemed service on him, proceeded
with the case and decreed the suit ex parte on August 12, 1999. The appellant,
B however, filed application under Rule 4 of Order 37 C.P.C. in the trial court
to set aside the ex parte decree. On January 6, 200 I, the application was
dismissed as no special circumstanc:es were stated in the petition both in
regard to there being illegality in deeming service of summons for judgment
on the appellant as well facts sufficient to entitle him to defend the suit.
C Aggrieved by the order of the trial court, the appellant filed revision
C.R.No.138 of 2001 in the High Court, which was also dismissed on October
15, 200 I. That order of the High Court is assailed in appeal before us.

Mr. A. Sharan, learned senior counsel appearing for the appellant,
strenuously contended that there was no proof or record to show that any
D notice by registered post with acknowledgment due was issued to the appellant
by the respondent who had taken the notice from the court but did not file
any proof of issuing the notice to the appellant, therefore, there was special
reason for the appellant not to appear in response to the summons for judgment.
He argued that sufficient amount was deposited with the respondent as advance
E and that Order 37 C.P.C. was not applicable to the facts of the case, therefore,
the appellant had good defence to the suit. The trial court as well as the High
Court, submitted Mr. Sharan, erred in dismissing the application under Rule
4 of Order 37 C.P.C.

The respondent appeared in-person and argued his case with precision
F and perfection.He submitted that summons for judgment was issued on April
21, 1999 and that the court had rightly drawn presumption of service on the
appellant; that nowhere in her application had the appellant stated anything
about her defence to the suit and therefore the order under challenge was
rightly passed by the courts below.
G
To appreciate the contentions of the parties it would be useful to refer
to Rule 4 of Order 37 C.P.C. which is in the following terms :

"Order XXXVll -Summary Procedure

H (I) to (3) xxx xxx xxx
RAJNI KUMAR v. SURESH KUMAR MALHOTRA (QUADRI, J.] 71
(4) Power to set aside decree - After decree the Court may, under A
special circumstances, set aside the decree, and if necessary stay or
set aside execution, and may give leave to the defendant lo 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."

A careful reading of Rule 4 shows that it empowers, under special B
circumstances, the court which passed an ex parte decree under Order 37 to
set aside the decree and grant one or both of the following reliefs, if it seems
reasonable to the court sq to do and on such terms as the court thinks fit :

(i) to stay or set aside execution and c
(ii) to give leave to the defendant (a) to appear to the summons and
(b) to defend the suit.

The expression 'special circumstances' is not defined in the C.P.C. nor
is it capable of any precise definition by the court because problems of D
human beings are so varied and complex. In its ordinary dictionary meaning
it connotes something exceptional in character, extra-ordinary, significant,
uncommon. It is an antonym of common, ordinary and general. It is neither
practicable nor advisable to enumerate such circumstances.Non-service of
summons will undoubtedly be a special circumstance. In an application under E
Order 37, Rule 4, the court has to determine the question, on the facts of each
case, as to whether circumstances pleaded are so unusual or extra ordinary
as to justify putting the clock back by setting aside the decree; to grant
further relief in regard to post-decree matters, namely, staying or setting
aside the execution and also in regard to pre decree matters viz., to give leave
to the defendant to appear to the summons and to defend the suit. F

In considering an application to set aside ex parte decree, it is necessary
to bear in mind the distinction between suits instituted in the ordinary manner
and suits filed 1mder Order 37 C.P.C.Rule 7 of Order 37 says that except as
provided thereunder the procedure in suits under Order 37 shall be the same G
as the procedure in suits instituted in the ordinary manner. Rule 4 of Order
37 specifically provides for setting aside decree, therefore, provisions of Rule
13 of Order 9 will not apply to a suit filed under Order 37. In a suit filed in
the ordinary manner a defendant has the right to contest the suit as a matter
of course. Nonetheless, he may be declared ex parte if he does not appear in
response to summons, or after entering appearance before framing issues; or, H
)
72 SUPREME COURT REPORTS [2003] 3 S.C.R.

A during or after trial. Though addressing arguments is part of trial, one can
loosely say that a defendant who remains absent at the stage of argument, is
declared ex parte after the trial. In an application under Order 9 Rule 11, if
a defendant is set ex parte and that order is set aside, he would be entitled
to participate in the proceedings from the stage he was set ex parte. But an
B application under Order 9 Rule 13 could be filed on any of the grounds
mentioned thereunder only after a decree is passed ex parte against defendant.
If the court is satisfied that (I) summons was not duly served, or (2) he was
prevented by sufficient cause from appearing when the suit was called for .
hearing, it has to make an order setting aside the decree against him on such
terms as to cost or payment into court or otherwise as it thinks fit and
C thereafter on the day fixed for hearing by court, the suit would proceed as if
no ex parte decree had been passed. Buit in a suit under Order 37 the procedure
for appearance of defendant is governed by provisions of Rule 3 thereof. A
defendant is not entitled to defend the suit unless he enters appearance within
ten days of servic:e of summons either in person or by a pleader and files in
D court an address for service of notices on him. In default of his entering an
appearance, the plaintiff becomes entitled to a decree for any sum not
exceeding the sum mentioned in the summons together with interest at the
rate specified, if any, upto the date of the decree together with costs. The
plaintiff will also be entitled to judgment in terms of sub-rule (6) of Rule 3.
If the defendant enters an appearance, the plaintiff is required tc serve on the
E defendant a summons for judgment in the prescribed form. Within ten days
from the service of such summons for judgment, the defendant may seek
leave of the court to defend the suit, which will be granted on disclosing such
facts as may be deemed sufficient to entitle him to defend and such leave
may be granted to him either unconditionally or on such terms as the court
F may deem fit. Normally the coun will not refuse leave unless the court is
satisfied that facts disclosed by the defendant do not indicate substantial
defence or that defence intended to be put up is frivolous or vexatious.
Where a part of the amount claimed by the plaintiff is admitted by the
defendant to be due from him, no leave to defend the suit can be granted
unless the admitted amount is deposited by him in Court. Inasmuch as Order
G 37 does not speak of the procedure when leaw to defend the suit is granted,
the procedure applicable to suits instituted in the ordinary manner, will apply.

It is important to note here that the power under Rule 4 of Order 37 is
not confined to setting aside the ex patte decree, it extends to staying or
H s.:tting aside the execution and giving leave to appear to the summons and
RAJN! KUMAR v. SURESH KUMAR MALHOTRA [QUADRL J.] 73

..... to defend the suit. We may point out that as the very purpose of Order 37 is A
to ensure an expeditious hearing and disposal of the suit tiled thereunder,
Rule 4 empowers the court to grant leave to the defendant to appear to
summons and defend the suit if the Court considers it reasonable so to do,
on such terms as court thinks fit in addition to setting aside the decree. Where
on an application, more than one among the specified reliefs may be granted B
by the Court all such reliefs must be claimed in one application. It is not
permissible to claim such reliefs in successive petitions as it would be contrary
to the letter and spirit of the provision. That is why where an. application
under Rule 4 of Order 37 is filed to set aside a decree either because the
ddendant did not appear in response to summons and limitation expired, or
having appeared, did not apply for leave to defend the suit in the prescribed C
period, the court is empowered to grant leave to defendant to appear to the
summons and to defend the suit in the same application. It is, therefore, not
enough for the defendant to show special circumstances which prevented him
from appearing or applying for leave to defend, he has also to show by
affidavit or otherwise, facts which would entitle him leave to defend the suit.
In this respect, Rule 4 of Order 37 is different from Rule 13 of Order 9. D

Now adverti~g to the facts of this case, though appellant has shown
sufficient cause for his absence on the date of passing ex pa11e decree, he
failed to disclose facts which would entitle him to defend the case. The
respondent was right in his submission that in the application under Rule 4 E
of order 37, the appellant did not say a word about any amount being in
deposit with the respondent or that the suit was not maintainable under Order
37. From a perusal of the order under challenge, it appears to us that the High
Court was right in accepting existence of special circumstances justifying his
not seeking leaw of the court to defend, but in declining to grant relief since
... he had mentioned no circumstances justifying any defence. F

In this view of the matter, we do not find any illegality much less
jurisdictional error in the order under challenge to warrant interference of this
Court. Inasmuch as having regard to the provisions of Section 34 of the
C.P.C. and the facts of the case that the liability does not arise oui of a G
commercial transaction, we are of the view that the grievance of the appellant
with regard to rate of interest is justified. We, therefore, reduce the rate of
interest from 18 per cent to 6 per cent per annum.

We directed the appellant to deposit the decree amount to serve as
security for the suit amount in the event of this Court granting him leave to H
74 SUPREME COURT REPORTS [2003] 3 S.C.R.

A defend the suit.Since that relief is not granted to him, it will be open to him
to withdraw the said amount or have it adjusted in satisfaction of the decree.
Subject to above modification of the order of the trial court as confirmed by
the High Court the appeal is dismissed.

No costs.
B
S.K.S. Appeals dismissed.