Bombay HC Sets Aside ₹40-Lakh Ex-Parte Decree, Restores Loan Suit After Lender Sent Summons To Under-Construction Address Despite Knowing Borrower’s Other Addresses

The Respondent sued to recover a loan of ₹25,00,000, alleging that the Appellant had acknowledged the advances, agreed to pay interest at 12% per annum, and later confirmed the account.

The City Civil Court decreed the suit ex parte after accepting the Respondent’s affidavit of service.

The Appellant challenged the decree, contending that summons had been sent only to an under-construction site, although the plaint and documents disclosed other addresses associated with him.

The Court applied Order V Rules 1, 9, 9A and 10 of the CPC, holding that their requirements governing service of suit summons must be complied with and that an affidavit of service alone does not establish valid service where it fails to show compliance with those requirements.

The Commercial Courts Act, 2015 does not dispense with those requirements.

Even in an ex parte proceeding, a plaintiff must establish prima facie the facts giving rise to the cause of action; the court must assess the factual and legal basis of the claim before granting a decree.

The Court also considered Best Industries Corporation thr. its Mr. Jowender Singh Sethi v. The Standard Products Manufacturing Co. and Indu Bhushan v. Munna Lal, finding the former applicable and the latter distinguishable on its facts.

The record showed that the plaint listed three addresses and that account confirmations, an advocate’s notice, and the loan documents referred to addresses other than the under-construction site.

The Respondent gave no explanation for failing to issue summons to the other addresses, and the service affidavit did not establish service at the Appellant’s registered address or otherwise demonstrate compliance with Order V.

The Trial Court’s reliance on that affidavit therefore did not justify proceeding ex parte.

Separately, the Trial Court had accepted the claim largely on the Respondent’s affidavit, without adequately assessing the evidence and the merits of the claim.

The resulting denial of an opportunity to defend caused prejudice to the Appellant.

It quashed and set aside the impugned judgment, order and decree, directed that the suit be restored and decided on its merits, and ordered the Appellant to file any written statement or counterclaim within four weeks of restoration, without further extension.

All parties’ contentions were kept open.