KEYWORDS:-Ex parte decree-SUFFICIENT CAUSE-
AIR 2007 SC 67 : (2006) 6 Suppl. SCR 163 : (2006) 12 SCC 104 : JT 2006 (12) SC 9 : (2006) 9 SCALE 223
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| Tea Auction Ltd | Appellant |
| Versus | |
| Grace Hill Tea Industry and Another | Respondent |
(Before : S. B. Sinha And D. K. Jain, JJ.)
Civil Appeal No. 4100 of 2006 (arising out of SLP (C) No. 18059 of 2005), Decided on : 13-09-2006.
Civil Procedure Code, 1908—Order 9, Rule 13—Ex parte decree—Recalling order—Suit claiming money decree for a sum of ` 37,26,498/- with interest—Despite service of notice by registered post, defendant did not appear—Court competent to ask defendant to pay portion of decretal amount while setting aside ex parte decree, but condition imposed should not be unreasonable or harshly excessive—Order of single Judge directing respondent to furnish security of ` 37 lakhs modified to the extent of ` 5 lakhs.
Counsel for the Parties:
Bhaskar P. Gupta, Sr. Advocate, K. Katta, K. V. Mohan, Nitin Jain, Adv., with him, for Appellant
B. Reghunath, Gireesh Kamal, R. Naduraman, Adv., for Respondents.
JudgmentJudgment The statement given by the Judge on the grounds of a decree or order - CPC 2(9). It contains a concise statement of the case, points for determination, the decision thereon, and the reasons for such decision - Order 20 Rule 4(2). Section 354 of CrPC requires that every judgment shall contain points for determination, the decision thereon and the reasons for the decision. Indian Supreme Court Decisions > Law declared by Supreme Court to be binding on all courts (Art 141 Indian Constitution) Civil and judicial authorities to act in aid of the Supreme Court (Art 144) Supreme Court Network On Judiciary – Portal > Denning: “Judges do not speak, as do actors, to please. They do not speak, as do advocates, to persuade. They do not speak, as do historians, to recount the past. They speak to give Judgment. And in their judgments, you will find passages, which are worthy to rank with the greatest literature….” Law Points on Judgment Writing > The judge must write to provide an easy-to-understand analysis of the issues of law and fact which arise for decision. Judgments are primarily meant for those whose cases are decided by judges (State Bank of India and Another Vs Ajay Kumar Sood SC 2022)
S. B. Sinha, J—Leave granted.
2. Interpretation and application of the provisions of Order IX, Rule 13 of the Code of Civil Procedure, 1908 (for short, ‘CPC’) is in question in this appeal which arises out of a judgment and order dated 2nd May, 2005 passed by a Division Bench of the Calcutta High Court in A.P.O.T.No.86 of 2005 arising out of C.S.No.234 of 2002 modifying an order passed by a learned Single Judge of the said court.
3. The plaintiff is the appellant before us. It filed a suit on the original side of the Calcutta High Court claiming a decree for a sum of Rs.37,26,498/- with interest against the respondents. Leave under Clause 12 of the Letters Patent of the said court was also obtained. An application was filed for recording a decree under Order XII, Rule 6 of Code of Civil Procedure on 23rd May, 2002. On the said application, notice of motion was to be served upon the defendants/respondents. The notice was returnable on 12th June, 2002. On the said notice, nobody had appeared on behalf of defendant No.1. A direction for filing of AffidavitAffidavit An ex parte statement in writing made under oath before a notary public or other officer authorized to administer oaths, about facts which the affiant either knows of his own personal knowledge or is aware of to the best of his knowledge. in opposition was issued upon the plaintiff’s application. Allegedly the said order was communicated to the respondent No.1 by Registered Post. The matter was again listed on 15th July, 2002. On that date nobody appeared on behalf of defendant No.1. A judgment and decree, upon admission for a sum of Rs.37,26,428/- along with interest, was passed against defendant No.1.
4. Defendant No.2 was a tea broker of defendant No.1. It was impleaded as the guarantor of defendant No.1. No decree, however, was passed against it. An appeal was preferred by the plaintiff-appellant thereagainst as no decree had been passed against defendant No.2. The said appeal was dismissed. The defendant-respondent No.1, thereafter, filed an application for recalling the said ex-parte decree, inter alia, contending that they came to know about the institution of the said suit only when a memorandum of appeal together with a copy of the stay petition was served upon them in August, 2002.
5. In terms of an order dated 7th December, 2004, a learned Single Judge found the said application to be thoroughly mischievous and devoid of any merit but still a direction for recalling the decree was passed on condition that respondent furnishes a security of Rs.37 lakhs either in the form of bank guarantee or in cash within a period of three months therefrom.
6. An appeal preferred thereagainst has been allowed by the Division Bench by reason of the impugned judgment. The Division Bench of the High Court while passing the impugned judgment, proceeded on the basis that the learned Single Judge having exercised his discretionary jurisdictionJurisdiction Authority by which courts receive and decide cases. Limited Jurisdiction: the authority over only particular types of cases, or cases under a prescribed amount in controversy, or seeking only certain types of relief, the District Court is a court of limited jurisdiction. Original Jurisdiction: Jurisdiction of the first court to hear a case. under Order IX, Rule 13 of CPC, could not have imposed such a harsh condition, stating :
“It is also stated before us that the appellant/petitioner was advised by the Lawyers not to appear before this Court without service of writ of summonsSummons It means an application to the Court in relation to an action or appeal which has to be served on other parties or non‑parties.. Admittedly, no writ of summons even today has been served upon the appellant/petitioner excepting that under the Original Side Rules of this Court Notice of Motion was taken out in respect of Order 12, Rule 6 of the Code and that notice has been served upon the appellant/petitioner. Therefore, there may be misunderstanding by the said litigant on the basis of the advice given by his learned Advocate and thereby prevented by a sufficient cause to appear before the Court when the matter was called on for passing the decree under Order 12, Rule 6 of the Code. When we look into the matter from that angle we feel that the order so passed by the Hon’ble First Court directing to secure claimA Claim A claim is “factually unsustainable” where it could be said with confidence before trial that the factual basis for the claim is entirely without substance, which can be the case if it were clear beyond question that the facts pleaded are contradicted by all the documents or other material on which it is based. of the respondent for the same amount, being the order so passed by Court, being a sum of Rs.37 lacs, we feel that order cannot be sustained in law.”
7. Mr. Bhaskar P. Gupta, learned Senior Counsel appearing on behalf of the appellant would submit that the Division Bench committed a manifest error of law in so far as it failed to take into consideration that the Court had the power to direct furnishing of security as a pre-condition for recalling a money decree passed ex-parte.
8. Mr. B. Raghunath, learned counsel appearing on behalf of the respondents, on the other hand, submitted that the condition imposed by the learned Single Judge being too harsh, the Division Bench rightly set aside the same.
9. The appellant filed an application for passing a decree on admission. The decree passed, however, was ex parte in nature. Applicability of the provisions of Order IX of Rule 13 of CPC is not in dispute. It reads as under:
“13. Setting aside decree ex parte against defendant.- In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costsCosts Subject to any written law, costs are at the discretion of the Court, and the Court has the power to determine all issues relating to the costs of or incidental to all proceedings, including by whom and to what extent the costs are to be paid, at any stage of the proceedings or after the conclusion of the proceedings. Generally “Costs” includes charges, disbursements, expenses, fees, and remuneration. Costs in any matter are payable from the date of the order of the Court unless the parties otherwise agree. The costs of a third-party funding contract are not recoverable as part of the costs of, or costs., payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit;
Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also:
Provided further that no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient timeTime Where any expression of it occurs in any Rules, or any judgment, order or direction, and whenever the doing or not doing of anything at a certain time of the day or night or during a certain part of the day or night has an effect in law, that time is, unless it is otherwise specifically stated, held to be standard time as used in a particular country or state. (In Physics, time and Space never exist actually-“quantum entanglement”) to appear and answer the plaintiff’s claim.
Explanation.- Where there has been an appeal against a decree passed ex parte under this rule, and the appeal has been disposed of on any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under this rule for setting aside the ex parte decree.”
10. We may at once notice that whereas Order IX, Rule 7 postulates setting aside of orders passed by the Court upon such terms of costs or otherwise; Order IX, Rule13, inter alia, postulates “payment into Court”.
11. What would be the meaning of “payment into Court” is the core question.
12. In G.P. Srivastava v. R.K. Raizada and Ors. [(2000) 3 SCC 54, a similar question came up for consideration. A Division Bench of this Court opined that the provision under Order IX, Rule 13 of the Code of Civil Procedure should receive a broad construction and no hard and fast guidelines can be prescribed. The courts have a wide discretion to set aside an ex parte decree on satisfying itself as regards existence of a “sufficient cause”, opining :
“The “sufficient cause” for non-appearance refers to the date on which the absence was made a ground for proceeding ex parte and cannot be stretched to rely upon other circumstances anterior in time. If “sufficient cause” is made out for non-appearance of the defendant on the date fixed for hearing when ex parte proceedings were initiated against him, he cannot be penalised for his previous negligence which had been overlooked and thereby condoned earlier. In a case where the defendant approaches the court immediately and within the statutory time specified, the discretion is normally exercised in his favour, provided the absence was not mala fide or intentional. For the absence of a party in the case the other side can be compensated by adequate costs and the lis decided on meritsMerits Strict legal rights of the parties; a decision “on the merits” is one that reaches the right(s) of a party as distinguished from a disposition of the case on a ground not reaching the rights raised in the action; for example, in a criminal case double jeopardy does not apply if charges are nolle prossed before trial commences, and in a civil action res judicata does not apply if a previous action was dismissed on a preliminary motion raising a technicality such as improper service of process..”
13. In Ramesh and Ors. vs. Ratnakar Bank Ltd. [JT 2000 (10) SC 325], however, this Court, while directing that the ex parte decree be set aside, also directed deposit of a further sum of Rs.5 lakhs over and above the amount of Rs.7 lakhs directed by the Court on an earlier occasion. No law has been, however, laid down therein.
14. In Vijay Kumar Madan and Ors. vs. R.N. Gupta Technical Education Society and Ors. [(2002) 5 SCC 30], this Court deprecated the practice of imposing an undue condition and putting the defendant on onerous terms, stating :
“Power in the court to impose costs and to put the defendant-applicant on terms is spelled out from the expression “upon such terms as the court directs as to costs or otherwise”. It is settled with the decision of this Court in Arjun Singh v. Mohindra Kumar that on an adjourned hearing, in spite of the court having proceeded ex parte earlier the defendant is entitled to appear and participate in the subsequent proceedings as of right. An application under Rule 7 is required to be made only if the defendant wishes the proceedings to be reflected back and reopen the proceedings from the date wherefrom they became ex parte so as to convert the ex parte hearings into bi-parte. While exercising power of putting the defendant on terms under Rule 7 the court cannot pass an order which would have the effect of placing the defendant in a situation more worse off than what he would have been in if he had not applied under Rule 7. So also the conditions for taking benefit of the order should not be such as would have the effect of decreeing the suit itself. Similarly, the court may not in the garb of exercising power of placing upon terms make an order which probably the court may not have made in the suit itself. As pointed out in the case of Arjun Singh the purpose of Rule 7 in its essence is to ensure the orderly conduct of the proceedings by penalizing improper dilatoriness calculated merely to prolong the litigation.”
15. However, the interpretation of the expression “payment into Court” did not directly fall for consideration in those cases.
16. Order IX, Rule 13 of CPC did not undergo any amendment in the year 1976. The High Courts, for a long time, had been interpreting the said provision as conferring power upon the courts to issue certain directions which need not be confined to costs or otherwise. A discretionary jurisdiction has been conferred upon the court passing an order for setting aside an ex parte decree not only on the basis that the defendant had been able to prove sufficient cause for his non-appearance even on the date when the decree was passed, but also other attending facts and circumstances. It may also consider the question as to whether the defendant should be put on terms. The court, indisputably, however, is not denuded of its power to put the defendants to terms. It is
however, trite that such terms should not be unreasonable or harshly excessive. Once unreasonable or harsh conditions are imposed, the appellate court would have power to interfere therewith. But, it would not be correct to hold that no error has been committed by the Division Bench in holding that the learned Single Judge did not possess such power. The learned Single Judge exercised its discretionary jurisdiction keeping in view that the matter has been disposed of in fact finally at the interim stage at the back of defendant and it was in that view of the matter a chance was given to it to defend the suit, but, then the learned Single Judge was not correct to direct securing of the entire sum of Rs.37 lakhs in the form of bank guarantee or deposit the sum in cash. The condition imposed should have been reasonable. What would be reasonable terms would depend upon facts and circumstances of each case.
17. In Karumuri Surayya vs. Thadepalli Pushpavalli Thayaramma and Ors. [AIR (37) 1950 Madras 618], a learned Single Judge of the Madras High Court stated the law in the following terms :
“It seems to me that the wording “upon such terms as to” in the Rule should be read as applying not only to costs but to “payment into Court or otherwise as it thinks fit” as well. I do not think that the punctuation referred to above in the rule in any way lends support to the contention of the advocate for the petitioner. It looks to me that the Rule does not restrict the power of the Court to impose conditions for setting aside an ex parte decree to payment of costs only. The wording of the Rule is comprehensive enough to include conditions as to payment into Court of decretal amount or such other conditions as the Court thinks fit. Ordinarily the Court will not impose onerous conditions upon the defendant, such as the payment into Court of the whole or part of the decretal amount or as to furnishing of security therefor etc. The conditions as to deposit of decretal amount or such similar terms are imposed only under special circumstances. It is one thing to say that it is either inequitable or unjust to put the defendant to such onerous terms, but it is quite a different thing to say that the Court has no jurisdiction at all to impose such terms under any circumstances.”
18. In Somalal Nathalal Mistri vs. The Vasant Investment CorporationCorporation A legally established entity that can enter into contracts, own assets and incur debt, as well as sue and be sued—all separately from its owner(s). The term covers both for-profit and nonprofit corporations and includes nonstock corporations, incorporated membership organizations, incorporated cooperatives, incorporated trade associations, professional corporations and, under certain circumstances, limited liability companies. Ltd. and Anr. ILR (1954) Bom. 371, it was held :
“The next question is whether the condition which has been imposed by the Court below is a reasonable condition. The expression “such terms as to costs, payment into Court or otherwise as it thinks fit” suggests that the matter is one of discretion, but the discretion is to be exercised in a judicial manner. The condition to be imposed, therefore, upon a defendant should be reasonable and not oppressive. What condition should be imposed in a particular case must depend upon the facts of each case. In a particular case the Court may come to the conclusion that the defendant should pay into Court the entire amount. In another case the Court may come to the conclusion that it will suffice if the defendant is ordered to pay a portion of the decretal amount, and in a third case it is conceivable that the Court may come to the conclusion that the ends of justice will be met if the defendant is made to pay the amount of costs only. The true principle seem to me to be that while the Court has got power to impose conditions upon a defendant including the condition of the payment of the entire amount of the decree, the conditions to be imposed should be reasonable and should not be oppressive or at least should not be conditions which will result in the defendant not being able to defend the suit.”
19. In B. Padmavathi Rai vs. Parvathiamma [AIR 1976 Karnataka 97], Shetty, J., as the learned Judge then was, opined :
“…….The question herein is, whether the Court, while setting aside the ex parte decree under Order IX, Rule 13, is competent to impose such conditions apart from the direction to pay costs. The scope of Order IX, Rule 13, was considered in Shyam Lal Sahai v. Ram Narain Lal Seth, (1920) 57 Ind Cas 300 = (AIR 1920 Pat 660) in which Miller, Chief Justice, observed :
“The Court may, first of all, impose conditions as to the payment of costs, it may, secondly, impose conditions as to the payment into Court and, in my opinionOpinion A judge's written explanation of a decision of the court. In an appeal, multiple opinions may be written. The court’s ruling comes from a majority of judges and forms the majority opinion. A dissenting opinion disagrees with the majority because of the reasoning and/or the principles of law on which the decision is based. A concurring opinion agrees with the end result of the court but offers further comment possibly because they disagree with how the court reached its conclusion., this covers the payment into Court of the decretal amount or some portion thereof or payment into Court of the costs. …..”
I respectfully agree with the above view. The Court is competent to ask the defendant to pay a portion of the decretal amount or of the costs while setting aside the ex parte decree, but such conditions should not be unreasonable or illegal.
In the instance case, I feel that the circumstances amply justify a direction to the defendant to deposit the admitted portion of the suit claim. The defendant does not dispute her liability to pay the balance of unpaid purchase money with 5½ per cent interest from 3-6-1970. All that she prayed in the reply notice dated 15-5-1970 was that she might be given two years time for that payment.”
20. The expression “or otherwise” is also required to be construed widely.
21. In Packwood vs. Union-Castle Mail Steamship Company Limited [(1903) 20 Times LawLaw Positive command of sovereign or divine. One can be ruled either by a Statute, a Statue, or a Statement. Legislation is the rule-making process by a political or religious organisation. Physics governs natural law. Logical thinking is a sign of a healthy brain function. Dharma is eternal for Sanatanis. Reports 59], it was observed :
“…..But the clause went on “or otherwise,” and he thought that meant “in any other way,” and that the clause did apply to the negligence of the butcher in allowing the dog to go loose and be lost.”
22. In Kavalappara Kotta-rathil Kochuni @ Moopil Nayar etc. vs. State of Madras and Kerala and Ors. [AIR 1960 SC 1080], this Court opined:
“On the basis of this rule, it is contended, that the right or the custom mentioned in the clause is a distinct genus and the words “or otherwise” must be confined to things analogous to right or contractContract An agreement enforceable by law is a contract. All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Indian Contract Act. such as lost grant, immemorial user etc. It appears to us that the word “otherwise” in the context only means “whatever may be the origin of the receipt of maintenance”. One of the objects of the legislation is to by-pass the decrees of courts and the Privy Council observed that the receipt of maintenance might even be out of bounty. It is most likely that a word of the widest amplitude was used to cover even acts of charity and bounty. If that be so, under the impugned Act even a payment of maintenance out of charity would destroy the character of an admitted sthanam which ex facie is expropriatory and unreasonable.”
23. In The Union of India vs. Shri Om Prakash [(1976) 4 SCC 32], it is observed:
“The words “or is otherwise invalid” in clause (c) of Section 30 are wide enough to cover all forms of invalidity including invalidity of the reference.”
24. While setting aside a decree, conditions can be imposed but such conditions should not be unreasonable or harshly excessive.
25. Keeping in view the peculiar facts and circumstances, we are of the opinion that interest of justice would be subserved if respondent No.1 herein is directed to furnish security to the extent of Rs.5 lakhs. Such security should be furnished to the satisfaction of the learned Single Judge. The security, other than the deposit of the amount in cash, should be furnished within 12 weeks from the date. Plaintiff-Appellant would be entitled to press his application for passing a decree on admission. Defendant-Respondent No.1 would also be entitled to file his objection as to why a decree under Order XII, Rule 6 shall not be passed. Such a cause, if not already filed, must be filed within 8 weeks from date.
26. The Court shall consider the matter, upon hearing the counsel for the parties, on the expiry of said period of 12 weeks on merits, if the said defendant-respondent complies with this order, failing which the decree passed by the trial court shall stand.
27. This appeal is allowed to the extent aforementioned. No costs.