Hiroo Hotchand Advani vs Integrated Finance Company Limited
- Court
- Supreme Court
IN THE SUPREME COURT OF INDIA
2026 INSC 1182
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2026
(@ SLP (C) NO.20884 OF 2024)
HIROO HOTCHAND ADVANI APPELLANT
VERSUS
INTEGRATED FINANCE COMPANY RESPONDENTS
LIMITED AND OTHERS
WITH
CIVIL APPEAL NO. OF 2026
(@ SLP (C) NO.27307 OF 2024)
INTEGRATED FINANCE COMPANY APPELLANT
LIMITED
VERSUS
HIROO HOTCHAND ADVANI AND RESPONDENTS
OTHERS
J U D G M E N T
ATUL S. CHANDURKAR, J.
1. Leave granted.
2. Since the judgment dated 14.08.2024 passed by the Division
Signature Not Verified
Digitally signed by
ABHINAV KUMAR
Date: 2026.11.02
16:48:52 IST
Reason:
Civil Appeals arising out of SLP(C) No.20884 of 2024 and SLP(C) No.27307 of 2024
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1
Bench of the Madras High Court in OSA No.112 of 2023 has been
assailed in both these appeals, they are being decided together by
this common judgment.
3.
SLP(C) No.20884 of 2024 has been preferred by the fourth
defendant since he is aggrieved principally by the condition
imposed under the impugned judgment to pay a sum of
₹ 75,00,000/- to the first respondent-plaintiff as a condition for
condoning delay of 423 days in filing an application under Order
IX Rule 13 of the Code of Civil Procedure, 1908 for setting aside
the ex parte decree passed by the trial Court on 15.11.2021. SLP(C)
No.27307 of 2024 has been preferred by the plaintiff since it is
aggrieved by the impugned judgment condoning delay of 423 days
in making an application for setting aside the aforesaid ex parte
decree. For sake of convenience, the parties are being referred to
as per their original status in the civil suit.
4. The plaintiff, a company incorporated under the provisions of
the Companies Act, 1956, claims to have entered into various Hire
Purchase agreements and an agreement of Lease with the
defendant No.1-Business India, a partnership firm represented by
1
For short, ‘the High Court’
Civil Appeals arising out of SLP(C) No.20884 of 2024 and SLP(C) No.27307 of 2024
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defendant Nos.2 to 4. According to the plaintiff, under the said
agreements entered into with the first defendant, it had to recover
an amount of ₹ 21,88,11,451.96/- from it as on 18.03.2010. It,
therefore, filed CS No.530 of 2011 for recovery of the aforesaid
amount along with future interest @ 36% thereon. The aforesaid
suit was filed on 19.03.2010.
5. It appears that despite service, the defendants failed to
appear before the trial Court, namely the learned Single Judge of
the High Court. Hence, on 27.08.2021, defendant Nos.1, 2 and 4
were set ex parte . Defendant No.3 had in the meanwhile expired.
6. The plaintiff, thereafter, led evidence in support of its claim.
The learned Single Judge by his judgment dated 15.11.2021
decreed the suit as prayed for.
7. The fourth defendant, on getting knowledge of passing of the
ex parte decree, filed an application dated 15.02.2023 for setting
aside the ex parte decree. He also filed an application for condoning
the delay for 423 days in making the aforesaid application.
According to the fourth defendant, the suit summons was not
served on him. On making a search, he got information on
10.02.2023 that the suit summons had been received by Mr. Ravi
Agrawal on 10.12.2011 but this fact had not been intimated to
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him. On this and various other grounds, the first defendant prayed
that the delay be condoned. This prayer was opposed by the
plaintiff by filing a counter affidavit of its authorised signatory. All
the grounds raised were denied and it was stated that the prayer
made by the fourth defendant was lacking bona fides .
8. The learned Single Judge heard the application for
condonation of delay. He found that the fourth defendant had
appeared in the suit through his counsel and had also filed a
common affidavit along with other defendants. He further observed
that in all probability, the fourth defendant had knowledge of
pendency of the suit prior to the ex parte decree being passed. He,
therefore, held that the prayer made by the fourth defendant for
condoning the delay lacked bona fides . Thus, by the order dated
17.03.2023, the said application was dismissed.
9. Being aggrieved, the fourth defendant preferred an appeal
and challenged the aforesaid order. Various grounds in support of
the prayer for condonation of delay were re-agitated including a
ground that he was under a bona fide belief that the second
defendant was looking after the proceedings and that the claim
made in the suit was being settled. The plaintiff opposed the appeal
by filing a counter affidavit of its authorised signatory. The Division
Civil Appeals arising out of SLP(C) No.20884 of 2024 and SLP(C) No.27307 of 2024
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Bench by its judgment dated 14.08.2024 was of the view that the
bona fides of the fourth defendant in filing an application for
setting aside the ex parte decree belatedly could not be doubted. It
was, therefore, of the view that the delay could be condoned by
putting the fourth defendant on terms as he had failed to act with
due diligence. After noting that the entire claim made by the
plaintiff had been decreed ex parte with interest @ 36% per annum,
it proceeded to set aside the order passed by the learned Single
Judge refusing to condone the delay in filing the application for
setting aside the ex parte decree. It, however, imposed a condition
₹
on the fourth defendant that he should pay a sum of 75,00,000/-
to the plaintiff within a period of four weeks from the date of the
order to enable that amount to be disbursed to various depositors.
It, accordingly, permitted the fourth defendant to file his written
statement within a period of four weeks and also directed
expeditious disposal of the suit. As stated above, the fourth
defendant as well as the plaintiff are aggrieved by the aforesaid
judgment.
10. Mr. Siddharth Bhatnagar, learned Senior Advocate for the
fourth defendant submitted that the Division Bench erred in
imposing a condition of payment of ₹ 75,00,000/- to the plaintiff
Civil Appeals arising out of SLP(C) No.20884 of 2024 and SLP(C) No.27307 of 2024
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while condoning the delay in making the application for setting
aside the ex parte decree. According to him, on the Court being
satisfied that an opportunity ought to be granted to the fourth
defendant to contest the suit, the delay ought to have been
condoned unconditionally. Assuming that the direction to the
fourth defendant to pay a sum of ₹ 75,00,000/- as a condition for
condoning delay was justified, that amount could not have been
directed to be paid to the plaintiff for being, thereafter, disbursed
to various depositors. The claim made by the plaintiff was seriously
disputed and without considering the contentions of the fourth
defendant, a direction to pay that amount to the plaintiff could not
have been issued while condoning the delay. He, therefore,
submitted that the impugned judgment to the extent it directs the
fourth defendant to pay a sum of ₹ 75,00,000/- to the plaintiff for
being further disbursed to the depositors be set aside.
11. Per contra, Mr. V.P. Raman, learned counsel appearing for
the plaintiff would contend that the Division Bench committed an
error in condoning the delay of 423 days in applying for setting
aside the ex parte decree. Inviting attention to the grounds raised
by the fourth defendant in seeking condonation of delay, he
submitted that the application lacked bona fides. None of the
Civil Appeals arising out of SLP(C) No.20884 of 2024 and SLP(C) No.27307 of 2024
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grounds raised by the fourth defendant for seeking condonation of
delay warranted acceptance and the said application was rightly
dismissed by the learned Single Judge. According to him, the
fourth defendant sought to improve upon his case by raising
additional grounds in the appeal, which grounds had not been
raised before the learned Single Judge. Hence, the order passed by
the learned Single Judge did not call for any interference.
11.1. Without prejudice to the aforesaid, it was submitted that the
amount of ₹ 75,00,000/- as directed to be paid to the plaintiff was
in view of such submission made on behalf of the fourth defendant
before the Division Bench. It was, therefore, not permissible for the
fourth defendant to now wriggle out of the said position. He further
submitted that, in fact, a sum of ₹ 75,00,000/- as directed to be
paid to the plaintiff was on a lower side considering the nature of
the claim and the decree passed against the defendants. If at all
the Court was inclined to maintain the order condoning delay, the
fourth defendant could be directed to pay a higher amount to the
plaintiff as a condition thereof.
12. We have heard the learned counsel for the parties and with
their assistance, we have also perused the documents on record.
At the outset, we may refer to the order dated 10.09.2024 passed
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by this Court in the SLP(C) No.20884 of 2024 filed by the fourth
defendant. The said order reads as under:
“Application for exemption from filing a certified copy of the
impugned judgment is allowed.
From the point of view of the petitioner, the only fault which
we can find with the impugned order is that a sum of Rs.75,00,000/-
(Rupees seventy five lakhs) was directed to be paid directly to the first
respondent-original plaintiff. In our, prima facie view, the Court ought
to have directed the petitioner to deposit the said amount with the
Registry which could have been invested for the time being.
Issue notice returnable on 18th November, 2024.
The execution of ex parte decree will remain stayed subject to
condition of the petitioner depositing a sum of Rs.75,00,000/-
(Rupees seventy five lakhs) with the High Court within a period of two
months from today.
If the amount is deposited by the petitioner, the amount shall
be invested by the High Court with any Nationalized bank in an
interest bearing fixed deposit, to be renewed until further orders.
If the amount is not deposited by the petitioner within a period
of two months from today, the interim relief of stay shall stand
vacated without further reference to the Court.
A copy of this order shall accompany the notice.”
13. Pursuant to the aforesaid order, a sum of ₹ 75,00,000/- now
stands deposited, albeit after some delay.
14. The question to be, thus, considered is whether the discretion
exercised by the Division Bench in condoning the delay of 423 days
in applying for setting aside the ex parte decree deserves to be
interfered with. Yet another aspect that deserves consideration is
whether the Division Bench was thereafter justified in directing the
fourth defendant to pay a sum of ₹ 75,00,000/- to the plaintiff as a
condition for the delay being condoned. Having considered the
various grounds raised by the fourth defendant in his application
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for condonation of delay as moved before the learned Single Judge
as well as the supplemental grounds raised before the Division
Bench, we are of the considered view that the discretion exercised
by the Division Bench in condoning the delay cannot be said to be
so arbitrary or irrational requiring this Court to interfere in
exercise of its jurisdiction under Article 136 of the Constitution of
India. An opportunity to contest the proceedings on merits having
been granted to the fourth defendant by the impugned order, that
exercise does not deserve to be thwarted. We are, therefore, not
inclined to interfere with the discretion exercised by the Division
Bench in condoning the delay of 423 days in making an application
for setting aside the ex parte decree.
15. As regards the condition imposed by the Division Bench
requiring the fourth defendant to pay a sum of ₹ 75,00,000/- to the
plaintiff as a condition for the delay being condoned, we are of the
view that while the direction of requiring deposit of a sum of
₹ 75,00,000/- as a condition for condoning delay would be
reasonable, the further direction to pay that amount to the plaintiff
at this stage appears to be unwarranted, especially when the
fourth defendant seeks setting aside of the While
ex parte decree.
condoning delay of 423 days, the Division Bench could have
Civil Appeals arising out of SLP(C) No.20884 of 2024 and SLP(C) No.27307 of 2024
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directed deposit of the sum of ₹ 75,00,000/-, which deposit could
have abided by the final outcome of the proceedings. We are,
therefore, inclined to make the interim direction issued by this
Court on 10.09.2024 absolute by requiring the sum of
₹ 75,00,000/- to remain in deposit, subject to final outcome of the
proceedings.
16. Coming to the submission made by the learned counsel for
the plaintiff that the sum of ₹ 75,00,000/- as directed to be
deposited as a condition for condoning the delay of 423 days is on
a lower side, we do not find so. The discretion exercised in that
regard does not warrant any interference. Instead, the ends of
justice could be met by reserving liberty in favour of the plaintiff to
request the Court to impose appropriate conditions on the fourth
defendant while considering the prayer for stay of execution of the
ex parte decree. Needless to state that such request if made, can
always be opposed by the fourth defendant. We leave that aspect
open for consideration. We also clarify that the observations made
by the Division Bench in paragraph 7 of the impugned judgment
shall not weigh with the learned Single Judge while considering
the prayer for setting aside the decree. That prayer shall
ex parte
be considered on its own merits uninfluenced by any observations
Civil Appeals arising out of SLP(C) No.20884 of 2024 and SLP(C) No.27307 of 2024
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made in the impugned judgment as well as in the present
judgment. The contentions of the parties in that regard are left
open.
17.
Accordingly, the direction issued to the fourth defendant to
pay the plaintiff a sum of ₹ 75,00,000/- for being disbursed to the
depositors is modified by requiring the fourth defendant to deposit
the said amount with the High Court, subject to final outcome of
the proceedings. The said amount shall be invested in an interest
bearing deposit. Both the Civil Appeals are disposed of in aforesaid
terms with no order as to costs. Pending Interlocutory Applications
are also disposed of.
…...………………………..J.
[ UJJAL BHUYAN ]
.…..………………………..J.
[ATUL S. CHANDURKAR]
NEW DELHI,
OCTOBER 28, 2026.
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