Arti Dixit & Anr. vs Sushil Kumar Mishra & Ors.

1.2 As regards the question whether the Application is in conformity with the proviso to Section 17 and did the applicant furnish any security on 06.05.2014, the answer can only be in the negative. The appellant did not seek for dispensing with deposit as such. Therefore, the appellant had not in the said sense complied with the mandatory requirement of Section 17. [Para 21][749-F]

1.3 The High Court in the impugned order finds that no application for dispensing with surety was filed and that this will be read against the appellants. The High Court perseveres in this observation on three occasions. It is observed that what Section 17 of the Act contemplates in the proviso is that the applicant seeking to set aside an ex-parte decree inter alia must either make a deposit of the amount in question or give security. In Kedarnath’s case it has been laid down that the provision as to deposit can be dispensed with by the Court. The applicant can, in other words, seek a dispensing with of the deposit and seek leave for furnishing such security as the Court may direct. Therefore, the High Court was not correct in proceeding on the basis that appellants did not make any application for dispensing with surety. No doubt, at one place, the High Court states that there is no prayer for dispensing with the surety or the amount sought to be deposited by way of security. The prayer of the appellants was to permit deposit/furnishing surety of Rs.50000/- which was part of the decretal amount. This could be treated impliedly as seeking a direction within the meaning of Section 17. An applicant could no doubt also propose the security which he wishes to give. In fact, ordinarily, an application for dispensing with the cash deposit and for direction to furnish security should be made prior to application under Order IX Rule 13 of CPC. On the order passed on the same, the applicant is to comply with the same and furnish the security at the time when he files the application under Order IX Rule 13. Since an application under Section 17 which is really required only in the absence of the cash deposit can be filed up to the date of the application under Order IX Rule 13 ordinarily, the security must be made available along with such application. There then arises the aspect that the application under Order IX Rule 13 can be filed within 30 days as provided in Article 123 of the Limitation Act. Undoubtedly, the deposit or security must be furnished within 30 days. This is on the basis that the application can be made under Order IX Rule 13 upto the 30th day but at the same time, the conditions in the proviso, namely, the deposit or the security must be furnished at the time of presenting the application under Order IX Rule 13. But if the application under Section 17 can be moved along with the application under Order IX Rule 13, then if a direction is required for furnishing security and the Court grants permission and time, then it may be possible to furnish the security only after the date of the application under Order IX Rule 13. The Court is expected to pass an order promptly on the application which may be filed under Section 17 which may be of the same date as the application under Order IX Rule 13. Any delay on the part of the Court cannot prejudice the applicant. [Para 22][750-A-H; 751-A]

1.4 The appellants filed the application both under Section

17 of the Act and under Order IX Rule 13 on the same day, namely, 06.05.2014. The application under Order IX Rule 13 is premised on knowledge of the ex parte decree being obtained on 05.05.2014 in the Execution Proceedings. There was no security offered on 06.05.2014. Though a direction as such was not expressly sought for but permission was sought for to furnish security, it could be said that in substance the appellants essentially sought for direction within the meaning of the proviso to Section 17. The High Court was in error in finding that the appellants did not seek for dispensing with the security, and therefore, apparently holding the same against the appellants. When the appellants sought for permission to furnish security, if the permission was granted and a direction to furnish security was given on the same date and it had been complied with within the time, then the appellants would have been compliant with Section 17. No orders were passed on the application under Section 17 dated 06.05.2014. Within 6 days, on 12.05.2014, the appellants on their own purported to furnish security. The surety was the 7th proforma respondent in the appeal. The security was however, a shop. The shop was not owned by the surety. The Municipal Corporation, Lucknow was the owner. The surety was a tenant. A security to be provided under Section 17 by a surety is to be enforced under the provisions of Section 145 of the Code of Civil Procedure as contemplated in Section 17 (2) of the Act. Section 145 of the CPC inter alia provides that the security provided by a surety can be enforced by effecting sale of the property. It has been held that the security provided by the appellants through the surety is not acceptable in law having regard to Section 17 (2) as the shop belonged to the Municipal Corporation, Lucknow and it could not be sold for enforcing the surety. [Para 23][751-B-G]

1.5 While it is true that no order was passed on the application under Section 17 on 06.05.2014, the fact remains that the appellants on their own furnished a surety as stated. The High Court reasons that the security so provided was unacceptable on two grounds. Firstly, it was not furnished along with the application under Order IX Rule 13 on 06.05.2014. Secondly, it is found that it was not acceptable in law. [Para 24][751-G-H]

1.6 It is true that the High Court in the order dated 03.12.2015 proceeded to find that the “security was accepted by the court below”. This is by way of accepting the submission of the counsel for the plaintiffs. It was on this basis that the matter was remanded. Following the remand, the trial court allowed the application filed by the appellants and also the application under Order IX Rule 13. This has been set aside by the ADJ and the matters stood remanded back by Order dated 01.08.2017. This order was not challenged by the appellants. It is thereafter that the courts have concurrently found that there was non-compliance of Section 17. The earlier order of the High court dated 03.12.2015 has been overcome by finding that there was a sweeping statement before the High Court in the earlier round that the surety furnished had been accepted. The High Court further finds that actually the prayer made in application dated 12.05.2014 was only to take the surety on record. The order dated 25.04.2014 only shows that only the surety was taken on record. It is further found that the application dated 12.05.2014 was filed after 06.05.2014 and could not be the basis for a valid order under Section 17. [Para 25][752-A-D]

1.7 It is accepted that the security furnished by the appellants in the form of the rented shop belonging to a third party cannot be accepted as security in law. It is patent. It is not clear from the order dated 24.05.2014 that the Court had applied its mind to the sufficiency of the security or as to whether it was acceptable security. If security is given, which is later found to be unacceptable even if it is within 30 days within the meaning of Article 123 of the Limitation Act, then it would not be complying with Section 17. [Para 26][752-E-F]

Ram Bharose v. Ganga Singh AIR 1931 Allahabad 727 – approved.

1.8.While it is true that there may have been a failure on the part of the court to pass orders on the application dated 06.05.2014 apparently, the appellants proceeded to furnish the security in this case on 12.05.2014. Therefore, it is proceeded on the basis that within 30 days of the date of knowledge of the decree, as alleged by the appellants, but after the date of the application under Order IX Rule 13, the appellants have furnished security. No order was passed by the Court on 06.05.2014. Even proceeding to consider the security however it is found clearly unacceptable in law. The effect of the order of the High Court dated 03.12.2015 must be understood with reference to the concession made by the counsel and may not withstand the requirement of law under Section 17 of the Act being fulfilled. The Court cannot be unmindful of the fact that the appellants did not challenge the order of the Additional District Judge dated 01.08.2017. The trial Judge was bound by the same as the appellants did not challenge the order dated 01.08.2017. The fact that the appellants, after participating in the remanded proceedings mounted a challenge in a writ to the order dated 01.08.2017 appears as not advancing the case of the appellants. This is both for the reason of the belated challenge as also the nature of the earlier order involved. In the facts, having regard to the Order dated 01.08.2017 and the security being found unacceptable, there is no merit in the appeal. [Para 27, 28][752F-H; 753-A-C]

Kedarnath v. Mohan Lal Kesarwari and others AIR 2002 SC 582 : [2002] 1 SCR 144; Bhagwan Dass Arora v. First Additional District Judge, Rampur and others (1983) 4 SCC 1 : [1983] 3 SCR 493 – referred to.