Bank Gets Chance To Seek Setting Aside Ex-Parte Decree After Believing Loan Assignee Would Contest Suit, On ₹25,000 Deposit: Madras HC

In brief

The question

1. Whether the bank’s 70-day delay in applying to set aside the ex parte decree should be condoned in the circumstances of the case.

The court held

The revision was allowed conditionally.

It also directed

The bank was directed to deposit ₹25,000 to the credit of the suit within two weeks; respondents 1 and 2 were permitted to withdraw it.

If the deposit was not made within that period, the revision would stand dismissed automatically.

Upon deposit, the Trial Court was directed to take up and dispose of the bank’s Order IX Rule 13 application in accordance with law.

No order as to costs was made in the revision.

01Facts

Respondents 1 and 2 sued the petitioner bank and others for, among other reliefs, a declaration that their guarantee and equitable mortgage stood discharged and for return of the title deeds.

pp. 4–7

The suit was decreed ex parte on 28 April 2025. The bank applied to set aside the decree under Order IX Rule 13 CPC, together with an application to condone a 70-day delay.

pp. 4–7

It said that, after assignment of the loan account, it believed the assignee would conduct the litigation and that it acted after learning of the decree through a legal notice dated 10 July 2025. The Trial Court dismissed the applications, prompting this revision.

pp. 4–7

02Issues

i.1. Whether the bank’s 70-day delay in applying to set aside the ex parte decree should be condoned in the circumstances of the case.

pp. 4–7

ii.2. Whether the bank should be permitted to pursue its Order IX Rule 13 CPC application subject to terms.

pp. 7–8

03Law Applied

Section 115 CPC provides the revisional jurisdiction invoked to challenge the Trial Court’s order.

p. 4

Order IX Rule 13 CPC provides the procedural route for seeking to set aside an ex parte decree.

p. 8

The Court applied a liberal, fact-sensitive approach to the delay application, considering the explanation offered, the nature of the reliefs, the length of delay and the circumstances of the case; it cited no precedent or specific statutory provision governing condonation.

p. 7

Provisions in the judgment · 1 · Linked ones open on LawLens

Code of Civil Procedure, 1908 Section 115

04Reasoning

The Court accepted that the bank had appeared in the original proceedings and pursued an application to reject the plaint, but, following assignment of the loan account, had likely lost interest and believed the assignee would conduct the litigation.

pp. 5–7

Considering that explanation alongside the reliefs sought, the 70-day delay and the overall circumstances, the Court found it appropriate to give the bank an opportunity to contest the matter on the merits, subject to payment of costs.

pp. 5–7