Full Judgment Text
2023INSC732
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2023
Arising out of SLP (C) NO. 3543 OF 2019
Y.P. LELE …APPELLANT(S)
VERSUS
MAHARASHTRA STATE
ELECTRICITY DISTRIBUTION
COMPANY LTD. & Ors. …RESPONDENT(S)
J U D G M E N T
VIKRAM NATH, J.
Leave granted.
2. The appellant is the original defendant no. 5, as
described in the plaint of the Special Civil Suit No.
125 of 1988.
3. The present appeal assails the correctness of
Signature Not Verified
Digitally signed by judgment and order dated 27.06.2018 passed by the
Neetu Khajuria
Date: 2023.08.16
17:37:20 IST
Reason:
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learned Single Judge of the Bombay High Court in
Civil Writ Petition No. 1488 of 2015 titled
“ Maharashtra State Electricity Board vs. Miraj
Electric Supply Co. Ltd. Ors.”, whereby the petition
was allowed, the order dated 30.09.2014 passed by
the Trial Court allowing the application under order
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IX Rule 13 of the Code of Civil Procedure, 1908 was
set aside and the ex parte decree was maintained.
4. Shorn of unnecessary facts, Maharashtra State
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Electricity Board filed Special Civil Suit No. 125 of
1988 in the Court of Civil Judge, Senior Division at
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Sangli impleading Miraj Electric Supply Co. Ltd. as
defendant no. 1 and its five Directors as defendant
nos. 2 to 6 for recovery of Rs. 1,42,85,177.47/- with
costs of suit and further praying for interest at the
rate of 18% per annum from the date of presentation
1
In short, “CPC”
2
In short, “MSEB”
3
In short, “MESC”
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of the suit till realisation of the aforesaid amount. The
defendants appeared and filed their written
statements. The plaintiff’s evidence was being led and
at that stage the counsel for the defendants Shri.
M.B. Karmarkar withdrew his Vakalatnama vide Ex.
112. He had also not cross-examined the witnesses.
The Trial Court, on 04.12.2004, directed for suit to
proceed under Order XVII Rule 2 of CPC against the
defendants. Thereafter the Trial Court proceeded to
record the evidence of the plaintiff and, vide
judgement and order dated 29.01.2005, decreed the
suit ex parte with costs. The operative portion of the
judgment is reproduced hereunder:
“Suit is decreed ex parte with cost, as under:
1. The defendants No. 1 to 6 jointly and
severally to pay Rs. 1,42,85,177.47 Ps. (Rs.
One crore, forty two lakhs, eighty five
thousands, one hundred seventy seven and
forty seven paise only) to the plaintiff board
M.S.E.B.). They shall pay interest at the rate
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of Rs. 18% p.a. on the arrears amount of Rs.
1,0490032.36 Ps. (Rs. One crores four lakhs
nineteen thousands thirty two and thirty six
paise only) from the date of the suit till its
realization.
2. Decree be drawn up accordingly.”
5. The defendants, on coming to know of the ex
parte decree, belatedly filed an application under
Order IX Rule 13 CPC accompanied by an application
for condonation of delay under Section 5 of the
Limitation Act, 1963 on 21.09.2006. The Trial Court,
vide order dated 20.09.2010, allowed the application
under Section 5 of the Limitation Act finding the
explanation to be satisfactory for the delay caused
with costs of Rs. 3,000/- on the defendants to be
deposited within ten days.
6. Thereafter, the Trial Court vide order dated
30.09.2014, allowed the application under Order IX
Rule 13 CPC, set aside the ex parte decree dated
29.01.2005 while imposing fine of Rs. 1,000/- and
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restored the Special Civil Suit No. 125 of 1988 to its
original number.
7. The plaintiff-MSEB preferred a Writ Petition
before the High Court under Articles 226 and 227 of
the Constitution. The High Court, by the impugned
order dated 12.01.2015, allowed the Writ Petition, set
aside the order dated 30.09.2014. As a result, the
suit of the respondent-MSEB stood decreed ex parte.
The petition was allowed on the ground that the
application under Order IX Rule 13 CPC would not be
maintainable in as much as the High Court had
applied the explanation under Order XVII Rule 2
CPC.
8. Aggrieved by the same, the present appeal has
been preferred by impleading MSEB as respondent
no.1, the contesting respondent, and also impleading
the other four Directors as respondent nos. 3 to 6. It
also impleaded MESC as respondent no. 2. At some
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stage during the pendency before this Court, the
respondent nos. 2 to 6 were directed to be deleted
from the array of parties vide order dated 21.10.2019.
However later on, vide order dated 15.09.2021,
Respondent Nos. 2 and 6 were restored as party
respondents.
9. It would be worthwhile to mention that the
appeal has been preferred by one of the Directors, as
noted in the beginning, being defendant no.5 before
the Trial Court.
10. We have heard learned counsel for the parties
and perused the record.
11. The submission of learned counsel for the
appellant is that the High Court committed a grave
error in applying the explanation to Order XVII Rule
2 CPC. According to him, the order passed by the
Trial Court decreeing the suit ex parte and the earlier
order dated 04.12.2004 was only an order under
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Order XVII Rule 2 CPC and not under the explanation
as the explanation would not be applicable. It was
also submitted that the Trial Court itself, while
decreeing the suit, had recorded that it was an ex
parte decree and under Order IX Rule 13 CPC an ex
parte decree could be applied for being recalled.
12. On the other hand, the submission of learned
counsel for the respondent MSEB is to the effect that
out of the five Directors only one of them had
approached this Court, whereas the defendant no.1-
company as also the other four Directors defendant
nos. 2 to 4 and 6 are not before this Court challenging
the said order. It is further submitted that the High
Court was right in allowing the writ petition by
invoking the explanation to Order XVII Rule 2 CPC
and the appeal deserves to be dismissed.
13. It would be worthwhile to mention that this
Court, vide order dated 10.12.2018, had directed the
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appellant to deposit 50% of the suit claim i.e. half of
Rs. 1,42,85,177/- within a period of six weeks and
the matter was directed to be listed after six weeks.
On 25.01.2019, this Court being satisfied that 50%
of the suit claim had been deposited before the Trial
Court, directed that the Trial Court would invest the
said amount in a Fixed Deposit initially for a period
of six months in a Nationalized Bank with automatic
renewal. This Court, further, condoned the delay,
issued notices to the respondents and further stayed
the impugned judgment.
14. Before proceeding to consider the submissions,
it would be appropriate to reproduce Order XVII Rule
2 CPC, which reads as follows:
“ 2. Procedure if parties fail to appear on
day fixed. - Where, on any day to which
the hearing of the suit is adjourned, the
parties or any of them fail to appear, the
Court may proceed to dispose of the suit in
one of the modes directed in that behalf by
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Order IX or make such other order as it
thinks fit.
Explanation .- Where the evidence or a
substantial portion of the evidence of any
party has already been recorded and such
party fails to appear on any day to which
the hearing of the suit is adjourned, the
Court may, in its discretion, proceed with
the case as if such party were present.”
15. It would also be relevant to reproduce Order IX
Rule 13 which reads as follows:
“ Setting aside decree ex parte against
defendant -In any case in which a decree
is passed against a defendant, he
ex-parte
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 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
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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
time to appear and answer the plaintiffs
claim.
Explanation- Where there has been an
appeal against a decree passed ex parte
under this rule, and the appeal has been
disposal of on any ground other than the
ground that the appellant has withdrawn
the appeal, no application shall lie under
this rule of setting aside the ex parte
decree.”
16. A plain reading of Order IX Rule 13 makes it
apparent that where in a case, a decree is passed ex
parte against defendant, a party may apply to the
Court for setting aside the same for reasons satisfying
the Court regarding non-appearance.
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17. Coming to Order XVII Rule 2 CPC, it would be
apparent that if the parties or any one of them failed
to appear on a day to which the hearing of the suit is
adjourned, the Court may proceed to dispose of the
suit in one of the modes directed in that behalf by
Order IX or make such other order as it deems fit.
18. In the present case, the defendants did not
appear on 04.12.2004, nor their counsel appeared as
he had already withdrawn his Vakalatnama by a
written request. The Trial Court directed for the suit
to proceed under Order XVII Rule 2 CPC against the
defendants. The effect of the order dated 04.12.2004
was that the Trial Court could have proceeded to
dispose of the suit in one of the modes directed in
that behalf by Order IX CPC. Coming back to Order
IX CPC, it is to be noticed that under Rule 6 thereof
where summons are duly served and the defendant
does not appear when the suit is called on for
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hearing, then the Court may make an order that the
suit be heard ex parte. This is in fact the procedure
adopted by the Trial Court in the present case.
Accordingly, after the evidence of the plaintiff was
concluded and the defendant continued to remain
absent, the Trial Court decreed the suit ex parte, vide
judgment dated 29.01.2005. The operative portion
thereof clearly mentions that the suit is decreed ex
parte.
19. Now coming to the explanation, what is stated
therein is that where the evidence or a substantial
portion of the evidence of any party has already been
recorded and such party fails to appear on any day
to which the hearing of the suit is adjourned, the
Court would be at liberty to proceed with the case as
if such party were present. Two phrases are
important in the explanation “any party” and “such
party”. “Any party” refers to the party which has led
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evidence or substantial evidence and “such party”
refers to that very party which has led evidence or
substantial evidence. What is discernible is that
under Order XVII Rule 2, the Court would proceed to
pass orders with respect to any of the parties being
absent or both the parties being absent. Whereas the
explanation is confined to record the presence of that
party and that party alone, which has led evidence or
substantial evidence and has thereafter failed to
appear. In the present case, admittedly the suit was
at the stage of plaintiff’s evidence as is apparent from
the order dated 04.12.2004. The evidence of the
defendants had not even started and the defendants’
counsel had not even cross-examined the plaintiff’s
evidence.
20. The explanation in the present case could have
been invoked only if the plaintiff, after adducing his
evidence or substantial evidence, failed to appear, the
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Court could have recorded his presence while
disposing of the suit. But once the defendant had not
led any evidence at all, the explanation could not be
invoked as against the defendant/appellant. The
High Court committed an error in applying the
explanation to Order XVII Rule 2 CPC and based
upon it holding that an application under Order IX
Rule 13 CPC would not be maintainable as the
presence of the defendant would be deemed to be
recorded at the time of disposal of the suit.
21. As a matter of fact, once the counsel had
withdrawn his Vakalatnama, in normal course, the
Trial Court ought to have issued notice to the
defendants to engage another counsel, which it did
not do and proceeded ex parte . The Trial Court
committed an error in doing so. Further, the Trial
Court, in its wisdom and discretion having allowed
the application under Order IX Rule 13 CPC, the High
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Court ought to have refrained itself from interfering
with an order which advanced the cause of justice by
affording opportunities to both the parties so that the
suit could be decided on merits.
22. For all the reasons recorded above, we are
unable to uphold the impugned order of the High
Court. The appeal is allowed. The impugned order of
the High Court is set aside. The Trial Court will
proceed to decide the Special Civil Suit on its own
merits, after giving due opportunities to the parties
and strictly proceed in accordance with law.
23. Once the ex parte decree has been set aside, the
amount of 50% deposited by the appellant needs to
be suitably accounted for. It is true that under Order
IX Rule 13 CPC, the Court, while allowing the
application, could impose such terms and conditions
as it deems fit and this being a money decree, the
Trial Court could have required the appellant to
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deposit some amount. The appellant is one of the five
Directors of the defendant no.1. Although the relief
claimed was for joint and several liability of each of
the Directors, in our view the deposit of 50% at the
hands of appellant above would be too excessive. We
accordingly provide that the amount deposited by the
appellant under the order of this Court, which is lying
in the Trial Court, may be adjusted as follows:
(i). 20% of the suit claim, along with interest
accrued thereon, may be retained by the Trial
Court and may continue to deposit the same in
the Fixed Deposit initially for a period of six
months, renewable on an automatic basis, till
further orders are passed in that regard,
depending upon the outcome of the suit;
(ii). Whereas 30%, along with accrued interest
thereon, may be returned to the appellant
within four weeks of the date of filing of this
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order before the Trial Court along with an
application for return of amount as directed
above.
24. No order as to costs.
25. Pending application, if any, stand disposed of.
……………………………………J.
(VIKRAM NATH)
…………………………………..J.
(AHSANUDDIN AMANULLAH)
NEW DELHI
AUGUST 16, 2023
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