Sunday 16 October 2016

What are basic principles for setting aside exparte decree?

 In Vijay Kumar Madan and others v. R. N. Gupta

Technical Education Society and others, (2002 (5) SCC 30)

interpreting the provisions in Order IX Rule 7 of the CPC, the Apex Court

held that terms imposed by the court on the defendant assigning good



cause for previous non-appearance should not be too onerous or vague

nor should they have the effect of prejudging the controversy involved

and automatically decreeing the suit even though the ex parte order is set

aside. The Apex Court held further that, costs should be so assessed as

would reasonably compensate the plaintiff for the loss of time and

inconvenience caused by relegating back the proceedings to an earlier

stage. Paragraphs 7 and 8 of the judgment in Vijay Kumar Madan's

case (supra) read thus:

        "7. 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 vs. Mohinder Kumar and Ors., AIR

            1964 SC 993, 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 relegated back and re-open 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 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 (supra), 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.

         8. Costs should be so assessed as would reasonably

            compensate the plaintiff for the loss of time and

            inconvenience caused by relegating back the proceedings

            to an earlier stage. The terms which the Court may direct

            may take care of the time or mode of proceedings

            required to be taken pursuant to the order under Rule 7.

            For example, keeping in view the conduct of the

            defendant-applicant, the Court may direct that though the

            ex-parte proceedings are being set aside, the defendant

            must file the written statement within an appointed time

            or recall for cross-examination at his own cost and

            expenses the witnesses examined in his absence or that

            the defendant shall be allowed not more than one

            opportunity of adducing his evidence and so on. How the

            terms are to be devised and made a part of the order

            would depend on the facts and circumstances of a given

            case. In short, the Court cannot exercise its power to put

            the defendant/applicant on such terms as may have the

            effect of pre-judging the controversy involved in the suit

            and virtually decreeing the suit though ex-parte order has

            been set aside or to put the parties on such terms as may


            be too onerous. .......... ........"

      16. On an application filed under Order IX Rule 13 of the

Code, the court has to find out whether the erring party has made

out sufficient cause for setting aside the ex parte decree. When no

negligence or inaction is imputable to the erring party and the

absence was not malafide or intentional, the discretion has to be

exercised in his favour, especially when the application is within the

statutory time limit.    In appropriate cases, the plaintiff can be

compensated by adequate costs for the loss of time and the

inconvenience caused to him. But any such condition shall not be

too onerous.
IN THE HIGH COURT OF KERALAAT ERNAKULAM

                                                      PRESENT:

                          MR.JUSTICE P.N.RAVINDRAN
                                                            &
                        MR. JUSTICE ANIL K.NARENDRAN

                         20TH DAY OF MARCH 2015

                         FAO.No. 187 of 2014 ()
                                                 

         M/S. PEEVES ENTERPRISES, 
Vs

            MUHAMMED ASHRAF


       The appellants are the defendants in O.S.No.256 of 2008 on

the file of the Court of the Subordinate Judge of Kochi. The said suit

was filed by the respondent herein, initially seeking a decree for

specific performance of an agreement for sale dated 26.3.2007,

directing the appellants to execute a sale deed in favour of the

respondent in respect of the plaint schedule property, having an

extent of 53 cents, comprised in survey Nos.200/1 and 1511 of

Edakochi Village and to put the respondent in possession of the

same, with an alternate prayer for realisation of an amount of

1 Crore said to have been paid by the respondent to the appellants

towards advance sale consideration together with interest @ 18%

per annum and for a decree of permanent prohibitory injunction

restraining the appellants from alienating or encumbering the plaint

schedule property.

      2.    On   receipt    of   summons,      the    appellants entered


appearance and filed a written statement denying the allegations in

the plaint and contending that, they had never agreed to sell the

plaint schedule property to the respondent and that the respondent

had never agreed to purchase the same.           According to the

appellants, the agreement dated 26.3.2007 happened to be signed

as demanded by the respondent on the understanding that the

respondent will provide an amount of 1 Crore to the second

appellant for discharging his liability with the bank, but, the

respondent did not pay any such amount to the second appellant. It

was also contended that the respondent filed the suit in collusion

with the tenants of the building situate in the plaint schedule

property, against whom the second appellant had initiated eviction

proceedings as R.C.P.No.10 of 2009 before the Rent Control Court,

Kochi.

      3.   The respondent filed I.A.No.101 of 2011 seeking an

amendment of the plaint in O.S.No.256 of 2008 by deleting the

prayer for specific performance and to convert the suit into one for

realisation of the advance amount of 1 Crore with interest @ 18%

per annum. The said interlocutory application was allowed and the


plaint was amended accordingly.

      4.   A reading of the memorandum of appeal would show that

when the suit stood posted for payment of the balance court fee,

the respondent filed I.A.No.1065 of 2011 seeking extension of time

and the trial court granted extension upto 30.9.2011. On that day,

the respondent filed I.A.No.1136 of 2011 for further enlargement of

time for payment of the balance court fee and the same was also

allowed by the trial court with a direction to pay the same within

fifteen days. But, the respondent, instead of remitting the balance

court fee, filed O.P.(Indigent) No.10 of 2011 with a prayer to permit

him to continue the suit as an indigent person. The appellants filed

objection to the said petition and ultimately, the respondent

withdrew the same on 16.7.2013.          Later, the respondent filed

I.A.No.6 of 2013 with a prayer to permit him to continue the suit as

an indigent person.      The trial court by order dated 25.6.2013

allowed I.A.No.6 of 2013 and permitted the respondent to proceed

with the suit as an indigent person.

      5.   Thereafter, the suit stood posted to 16.7.2013 for taking

steps as a last chance. As there was no sitting on that day, the suit



was adjourned to 2.8.2013 and on that day, the suit was ordered to

be included in the list on 1.11.2013. On 1.11.2013, the suit was

posted to 7.11.2013 for trial. Since there was no representation for

the defendants, they were set ex parte on 7.11.2013 and a decree

was passed in favour of the respondent on 22.11.2013.

  6. On 21.12.2013 the appellants filed I.A.No.1886 of 2013 under

Order IX Rule 13 of the Code of Civil Procedure, 1908 read with

section 151 of the Code seeking an order to set aside the ex parte

decree passed on 22.11.2013.       The respondent opposed the said

petition by filing a counter affidavit. The trial court by order dated

28.2.2014 allowed the petition on condition that the appellants shall

deposit 25% of the decree amount within 30 days from the date of

order as a pre-condition to set aside the ex parte decree and

judgment. It was made clear in the said order that if the appellants

fail to deposit the amount within the period stipulated above,

I.A.No.1886 of 2013 will stand dismissed without any further orders.

      7.   Aggrieved by the order dated 28.2.2014 of the trial court

in I.A.No.1886 of 2013, in O.S.No.256 of 2008 to the extent of

imposing a condition that the appellants should deposit 25% of the


decree amount within 30 days from the date of order as a pre-

condition to set aside the ex parte decree and judgment, the

appellants are before this Court in this appeal.

      8.   We have heard the arguments of the learned counsel for

the appellants and also perused the records produced along with the

appeal.

      9.   The sole question that arises for consideration in this

appeal is as to whether the trial court was justified in directing the

appellants to deposit 25% of the decree amount as pre-condition for

setting aside the ex parte decree.

      10. The suit, as we have already noticed, was originally filed

as one for specific performance of an agreement for sale dated

26.3.2007 alleged to have been executed by the appellants in favour

of the respondents in respect of the plaint schedule property, with

consequential reliefs including a decree for permanent prohibitory

injunction. After the filing of written statement by appellants, the

respondent filed I.A.No.101 of 2011 for amending the plaint in

O.S.No.256 of 2008 in order to convert the suit into one for

realisation of the advance amount together with interest @ 18% p.a.


The said application was allowed and the plaint was amended

accordingly. But when the suit was posted for payment of balance

court fee, the respondent filed I.A.No.1065 of 2011 seeking

extension of time for payment of the balance court fee, which was

followed by I.A.No.1136 of 2011 seeking further enlargement of

time. Even within the extended time granted by the trial court, the

respondent did not remit the balance court fee. Instead, he filed

O.P.(Indigent) No.10 of 2011, seeking permission to continue the

suit as an indigent person, which petition was withdrawn on

16.7.2013.    Later, he filed I.A.No.6 of 2013 with a prayer to

continue the suit as an indigent person, which was allowed on

25.6.2013.     Immediately thereafter, the suit was posted to

16.7.2013 for taking steps as last chance and later, it was ordered

to be included in the list on 1.11.2013.     A reading of the order

passed by the trial court would show that the appellants/defendants

were absent on 1.11.2013 and 7.11.2013 and there was also no

representation on their behalf and in such circumstances, they were

set ex parte on 7.11.2013 and an ex parte decree was also passed in

favour of the respondent/plaintiff on 22.11.2013.


      11. As noticed by the trial court in the impugned order, the

main contention taken by the appellants in the affidavit filed in

support of the petition to set aside ex parte decree was that the

clerk attached to the office of their counsel had mistakenly noted the

posting date as 1.12.2013 instead of 1.11.2013 and it was in such

circumstances that they could not appear before the court on either

of those days and there was also no representation on their behalf.

It was further stated in the affidavit that, their counsel came to

know about the disposal of the suit only when he made enquiries on

1.12.2013 as the case was not called on that day and on coming to

know about the ex parte decree, the application was filed under

Order IX Rule 13 of the Code of Civil Procedure.

      12. Before the trial court, the prayer sought for in the

interlocutory   application    was     strongly   opposed    by    the

respondent/plaintiff by filing a counter affidavit and it was

contended that the appellants/defendants and their counsel were

fully aware of the listing of the case on 7.11.2013 and they

remained absent with an intention to delay the final disposal of the

case. The learned Sub Judge, after referring to the merits of the



contentions raised in the plaint as well as in the written statement

and also taking note of the fact that 1.12.2013 being a Sunday, the

averment in the affidavit accompanying the interlocutory application

that the counsel for the appellants was present on 1.12.2013 is

false, allowed the application on terms.

      13.    As we have already noticed, though the suit is of the

year 2008, the trial of the suit was delayed due to the filing of

various interlocutory applications by the respondent/plaintiff seeking

amendment of the plaint; for enlargement of time to remit the

balance court fee; for permission to sue as an indigent person; etc.

Ultimately, it was only on 25.6.2013, the respondent/plaintiff was

permitted to continue the suit as an indigent person. Therefore, we

are of the opinion that, the appellants/defendants alone cannot be

blamed for the delay in the disposal of the suit. We also notice that

the interlocutory application for setting aside the ex parte decree

was filed in time.

      14. In G.P. Srivastava v. R.K. Raizada and others (2000

(3) SCC 54), the Apex Court held that the word "was prevented by

any sufficient cause from appearing" occurring in Order IX Rule 13 of


the Code of Civil Procedure, 1908 (hereinafter referred to as 'the

Code') must be liberally construed to enable the court to do

complete justice between the parties, particularly when no

negligence or inaction is imputable to the erring party. Sufficient

cause for the purpose of Order IX Rule 13 of the Code has to be

construed    as an elastic expression for which no hard and fast

guidelines can be prescribed. The courts have wide discretion in

deciding the sufficient cause keeping in view the peculiar facts and

circumstances of each case. The Apex Court held further that where

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.

Para.7 of the judgment in G.P. Srivastava's case (supra) reads

thus:

       "7. Under Order 9, Rule 13, C.P.C. an ex parte decree passed

            against a defendant can be set aside upon satisfaction of

            the Court that either the summons were not duly served

            upon the defendant or he was prevented by any 'sufficient

            cause' from appearing when the suit was called on for

            hearing. Unless 'sufficient cause' is shown for non-

            appearance of the defendant in the case on the date of

            hearing, the Court has no power to set aside an ex parte



            decree. The words "was prevented by any sufficient cause

            from appearing" must be liberally construed to enable the

            Court to do complete justice between the parties

            particularly when no negligence or inaction is imputable to

            erring party. Sufficient cause for the purpose of Order 9

            Rule 13 has to be construed as elastic expression for

            which no hard and fast guidelines can be prescribed. The

            Courts have wide discretion in deciding the sufficient cause

            keeping in view the peculiar facts and circumstances of

            each case. 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 initiated

            against him, he cannot be penalised for his previous

            negligence which had been overlooked and thereby

            condoned earlier. In a case where 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

            merits."

      15.   In Vijay Kumar Madan and others v. R. N. Gupta

Technical Education Society and others, (2002 (5) SCC 30)

interpreting the provisions in Order IX Rule 7 of the CPC, the Apex Court

held that terms imposed by the court on the defendant assigning good



cause for previous non-appearance should not be too onerous or vague

nor should they have the effect of prejudging the controversy involved

and automatically decreeing the suit even though the ex parte order is set

aside. The Apex Court held further that, costs should be so assessed as

would reasonably compensate the plaintiff for the loss of time and

inconvenience caused by relegating back the proceedings to an earlier

stage. Paragraphs 7 and 8 of the judgment in Vijay Kumar Madan's

case (supra) read thus:

        "7. 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 vs. Mohinder Kumar and Ors., AIR

            1964 SC 993, 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 relegated back and re-open 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 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 (supra), 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.

         8. Costs should be so assessed as would reasonably

            compensate the plaintiff for the loss of time and

            inconvenience caused by relegating back the proceedings

            to an earlier stage. The terms which the Court may direct

            may take care of the time or mode of proceedings

            required to be taken pursuant to the order under Rule 7.

            For example, keeping in view the conduct of the

            defendant-applicant, the Court may direct that though the

            ex-parte proceedings are being set aside, the defendant

            must file the written statement within an appointed time

            or recall for cross-examination at his own cost and

            expenses the witnesses examined in his absence or that

            the defendant shall be allowed not more than one

            opportunity of adducing his evidence and so on. How the

            terms are to be devised and made a part of the order

            would depend on the facts and circumstances of a given

            case. In short, the Court cannot exercise its power to put

            the defendant/applicant on such terms as may have the

            effect of pre-judging the controversy involved in the suit

            and virtually decreeing the suit though ex-parte order has

            been set aside or to put the parties on such terms as may


            be too onerous. .......... ........"

      16. On an application filed under Order IX Rule 13 of the

Code, the court has to find out whether the erring party has made

out sufficient cause for setting aside the ex parte decree. When no

negligence or inaction is imputable to the erring party and the

absence was not malafide or intentional, the discretion has to be

exercised in his favour, especially when the application is within the

statutory time limit.    In appropriate cases, the plaintiff can be

compensated by adequate costs for the loss of time and the

inconvenience caused to him. But any such condition shall not be

too onerous.

      17. In the case on hand, the suit was posted to 16.7.2013 for

taking steps as a last chance and thereafter it was ordered to be

included in the list for the first time on 1.11.2013. On 1.11.2013

and also on the subsequent posting date, i.e., 7.11.2013, there was

no representation on behalf of the appellants/defendants and

therefore they were set ex parte on 7.11.2013 and an ex parte

decree was also passed on 22.11.2013.             Immediately thereafter,

within the prescribed time limit, the appellants/defendants filed



I.A.No.1886 of 2013, under Order IX Rule 13 of the Code, to set

aside the ex parte decree passed in O.S.No.256 of 2008. The reason

stated in the affidavit accompanying the said interlocutory

application is the mistake committed by the clerk attached to the

office of the counsel for the appellants/defendants in correctly noting

down the posting date. The respondent/plaintiff contended that the

appellants/defendants and their counsel before the court below were

fully aware of the listing of the case to 7.11.2013 and that they

remained absent with an intention to delay the final disposal of the

case. But, we are unable to draw an inference from the pleadings on

record that the absence of the appellants/defendants on those days

was either malafide or intentional.     There is also no material to

indicate that the attempt of the appellants/defendants was intended

to protract the suit indefinitely. Considering the facts and

circumstances of the case on hand, we find that the condition

imposed by the trial court that the appellants should pay 25% of the

decree amount as a pre-condition to set aside the ex parte decree

for an amount of 1 Crore with 6% interest from the date of suit till

realisation is too onerous and the trial court ought not to have



imposed such a condition for setting aside the ex parte decree and

judgment.

      In the result, we allow this appeal and in modification of the

condition stipulated in the order dated 28.2.2014 in I.A.No.1886 of

2013 in O.S.No.256 of 2008 direct the appellants/defendants to

deposit the sum of 25,000/- within a period of two weeks from the

date of this judgment, instead of 25% of the decree amount, for

payment to the respondent/plaintiff. On the appellants/defendants

remitting the said amount within the time limit stipulated above, the

court below shall restore the suit to file and proceed with the trial.

Taking note of the fact that the suit is of the year 2008, we direct

the court below to try and dispose of the suit, as expeditiously as

possible and at any rate within a period of six months from the date

of production of a certified copy of this judgment.




                                                   P.N.RAVINDRAN,
                                                       JUDGE


                                                ANIL K.NARENDRAN,
                                                       JUDGE



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