When the defendant filed appeal under Section 96(2) CPC against an ex-parte decree and if the said appeal has been dismissed, thereafter, the defendant cannot file an application under Order IX Rule 13 CPC.
This is because after the appeal filed under Section 96(2) of the Code has been dismissed, the original decree passed in the suit merges with the decree of the appellate court.
Hence, after dismissal of the appeal filed under Section 96(2) CPC, the appellant cannot fall back upon the remedy under Order IX Rule 13 CPC.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8898 OF 2019
[Arising out of SLP(C) No.20686 of 2018]
N. MOHAN ...Appellant
VERSUS
R. MADHU …Respondent
J U D G M E N T
R. BANUMATHI, J.
Leave granted.
2. This appeal arises out of the impugned order dated
24.04.2018 passed by the High Court of Madras at Madurai Bench
in CMP(MD) No.6566 of 2017 in AS(MD) SR No. 27805 of 2017 in
and by which the High Court has refused to condone the delay of
546 days in filing the first appeal against the judgment and decree
passed in OS No.76 of 2015 dated 09.10.2015.
3. Brief facts which led to filing of this appeal are as follows:-
The appellant-defendant is a businessman doing business of
tea and real estate. Case of the respondent-plaintiff is that on
10.01.2015, the appellant approached the respondent-plaintiff for
financial assistance for a sum of Rs.45,00,000/- for the purpose of
1
his business needs. The respondent lent him the sum of
Rs.45,00,000/- and there was no documentation for the same.
According to the respondent, it was agreed that the said amount will
be returned to the respondent with an interest of 18% per annum.
The appellant agreed to return the said amount within two months;
but the appellant has not paid the amount. On the other hand, the
appellant is said to have issued two post-dated cheques to the
respondent, one for an amount of Rs.25,00,000/- and another for an
amount of Rs.20,00,000/-. When the said cheques were presented
for collection on 10.03.2015, the same were returned with the
endorsement that “payments stopped by the drawer”. The
respondent-plaintiff filed a civil suit being OS No.76 of 2015 before
the Additional District Judge, Tiruchirappalli. The said suit was
decreed ex-parte on 09.10.2015.
4. Order IX Rule 13 CPC Proceedings:- The appellantdefendant filed IA No.327 of 2016 in OS No.76 of 2015 under
Section 5 of the Limitation Act to condone the delay of 276 days in
filing the petition under Order IX Rule 13 CPC to set aside the exparte decree. In the said application, the appellant has stated that
summons was sent to the appellant’s old address at Trichy and the
same was returned unserved and the ex-parte decree was passed
2
on 09.10.2015. It was averred in the said application that the
appellant is residing in Chennai since January, 2014. The appellant
has alleged that when he went to attend a case in CC No.240/2016
at Karur Court on 29.07.2016, he came to know about the passing
of the ex-parte decree in OS No.76 of 2015. Thereafter, the
appellant has taken steps to set aside the ex-parte decree and filed
application under Section 5 of the Limitation Act - IA No.327 of 2016
to condone the delay of 276 days in filing the petition under Order
IX Rule 13 CPC to set aside the ex-parte decree. The said petition
was dismissed by the Additional District Judge by order dated
04.01.2017. The appellant has challenged the said order by filing
revision being CRP (MD) No.257 of 2017 (NPD) before the High
Court. Rejecting the contention of the appellant that he has been
residing in Chennai, the learned Single Judge dismissed the said
revision being CRP (MD) No.257 of 2017 (NPD) by order dated
08.02.2017. The SLP(C) No.9829 of 2017 preferred against the
said order also came to be dismissed by the Supreme Court by
order dated 07.04.2017.
5. First appeal filed by the appellant in AS(MD) SR No. 27805
of 2017:- After the dismissal of the SLP by the Supreme Court, the
appellant-defendant has filed the first appeal being AS(MD) SR No.
3
27805 of 2017 challenging the decree passed in OS No.76 of 2015
dated 09.10.2015 along with application being CMP(MD) No.6566
of 2017 praying to condone the delay of 546 days in filing the
appeal. In the said application, the appellant raised the very same
grounds that he is having residence at Chennai and that the
summons was not served on him and that summons was taken to
Trichy’s address and thereafter, ex-parte decree was passed
against him on 09.10.2015 and hence, prayed for condonation of
delay. The High Court dismissed the application for condonation of
delay on the ground that in the earlier proceedings under Order IX
Rule 13 CPC, the appellant has stated the same reasons to set
aside the ex-parte decree and that the reasons so stated by the
appellant was not accepted by the trial court, High Court and the
Supreme Court. Pointing out that the appellant has chosen
belatedly to file the first appeal in time, the High Court has
dismissed the application for condonation of delay of 546 days in
filing the first appeal. Being aggrieved, the appellant has filed this
appeal.
6. Mr. V. Singan along with Mr. S. Mahendran, learned counsel
appearing for the appellant has submitted that the appellant has
shown sufficient cause for the delay in filing the first appeal and that
4
the appellant has to be given an opportunity to contest the decree
on merits. It was submitted that the appellant has adduced
documentary evidence to show that he was not residing at the
Trichy address where the substituted service was affected and while
so, the High Court erred in dismissing the application for
condonation of delay filed along with the first appeal. Contending
that despite the fact that an application under Order IX Rule 13 CPC
was dismissed, the first appeal under Section 96(2) CPC being a
statutory right is still available, the learned counsel for the appellant
placed reliance upon Bhivchandra Shankar More v. Balu Gangaram
More and others (2019) 6 SCC 387.
7. Per contra, Mr. Jayanth Muthraj, learned Senior counsel for
the respondent submitted that the appeal filed by the appellant was
beyond the period of limitation and the delay was not satisfactorily
explained. It was submitted that the earlier application for
condonation of delay in filing the application for setting aside the exparte decree under Order IX Rule 13 CPC was not accepted by the
trial court, High Court and the Supreme Court and the same has
attained finality. It was submitted that the appellant cannot reagitate
the very same question which has attained finality in the earlier
proceedings.
5
8. We have carefully considered the submissions and perused
the impugned judgment and materials on record. The following
points arise for consideration in this appeal:-
(i) After dismissal of the application filed under Order IX
Rule 13 CPC for condonation of delay in filing the
appeal, whether the appeal filed under Section 96(2)
CPC against the ex-parte decree dated 09.10.2015 is
maintainable?
(ii) Whether the time spent in the proceedings to set aside
the ex-parte decree be taken as “sufficient cause” within
the meaning of Section 5 of the Limitation Act, 1908 so
as to condone the delay in preferring the first appeal?
9. When an ex-parte decree is passed, the defendant has two
remedies – (a) Either to file an application under Order IX Rule 13
CPC to set aside the ex-parte decree by satisfying the court that the
summons was not served or if served, the defendant was prevented
by “sufficient cause” from appearing in the court when the suit was
called for hearing; (b) to file a regular appeal from the original
decree to the first appellate court in terms of Section 96(2) CPC and
challenge the ex-parte decree on merits.
10. Right to file an appeal under Section 96(2) CPC is a statutory
remedy. The right to appeal is not a mere matter of procedure; but
is a substantive right. Right to appeal under Section 96(2) CPC
6
challenging the original decree passed ex-parte, being a statutory
right, the defendant cannot be deprived of the statutory right merely
on the ground that the application filed under Order IX Rule 13 CPC
was earlier dismissed.
11. In Bhanu Kumar Jain v. Archana Kumar and another (2005) 1
SCC 787, the Supreme Court considered the question whether the
first appeal filed under Section 96(2) of the Code was maintainable
despite the fact that an application under Order IX Rule 13 CPC
was dismissed. Observing that the right to appeal is a statutory
right and that the litigant cannot be deprived of such a right, the
Supreme Court held as under:-
“36. … A right to question the correctness of the decree in a first appeal
is a statutory right. Such a right shall not be curtailed nor shall any
embargo be fixed thereupon unless the statute expressly or by
necessary implication says so. (See Deepal Girishbhai Soni v. United
India Insurance Co. Ltd. (2004) 5 SCC 385 and Chandravathi P.K. v.
C.K. Saji (2004) 3 SCC 734.)
…….
38. The dichotomy, in our opinion, can be resolved by holding that
whereas the defendant would not be permitted to raise a contention as
regards the correctness or otherwise of the order posting the suit for ex
parte hearing by the trial court and/or existence of a sufficient case for
non-appearance of the defendant before it, it would be open to him to
argue in the first appeal filed by him under Section 96(2) of the Code on
the merits of the suit so as to enable him to contend that the materials
brought on record by the plaintiffs were not sufficient for passing a
decree in his favour or the suit was otherwise not maintainable. Lack of
7
jurisdiction of the court can also be a possible plea in such an appeal.
We, however, agree with Mr Chaudhari that the “Explanation” appended
to Order 9 Rule 13 of the Code shall receive a strict construction as was
held by this Court in Rani Choudhury (1982) 2 SCC 596, P. Kiran Kumar
(2002) 5 SCC 161 and Shyam Sundar Sarma v. Pannalal Jaiswal (2005)
1 SCC 436.”
12. After referring to Bhanu Kumar Jain and other judgments and
observing that the defendant can take recourse to both proceedings
– Order IX Rule 13 CPC as well as the appeal under Section 96(2)
CPC, in Neerja Realtors (P) Ltd. v. Janglu (Dead) Through Legal
Representative (2018) 2 SCC 649, the Supreme Court held as
under:-
“17. A defendant against whom an ex parte decree is passed has two
options: the first is to file an appeal. The second is to file an application
under Order 9 Rule 13. The defendant can take recourse to both the
proceedings simultaneously. The right of appeal is not taken away by
filing an application under Order 9 Rule 13. But if the appeal is dismissed
as a result of which the ex parte decree merges with the order of the
appellate court, a petition under Order 9 Rule 13 would not be
maintainable. When an application under Order 9 Rule 13 is dismissed,
the remedy of the defendant is under Order 43 Rule 1. However, once
such an appeal is dismissed, the same contention cannot be raised in a
first appeal under Section 96. The three-Judge Bench decision in Bhanu
Kumar Jain (2005) 1 SCC 787 has been followed by another Bench of
three Judges in Rabindra Singh v. Financial Commr., Cooperation (2008)
7 SCC 663, and by a two-Judge Bench in Mahesh Yadav v. Rajeshwar
Singh (2009) 2 SCC 205. ……..” [Underlining added]
8
13. Considering the scope of Order IX Rule 13 CPC and the
statutory right to appeal under Section 96(2) CPC, after referring to
Bhanu Kumar Jain, in Bhivchandra Shankar More, this Court held
as under:-
“11. It is to be pointed out that the scope of Order 9 Rule 13 CPC and
Section 96(2) CPC are entirely different. In an application filed under
Order 9 Rule 13 CPC, the Court has to see whether the summons were
duly served or not or whether the defendant was prevented by any
“sufficient cause” from appearing when the suit was called for hearing. If
the Court is satisfied that the defendant was not duly served or that he
was prevented for “sufficient cause”, the court may set aside the ex parte
decree and restore the suit to its original position. In terms of Section
96(2) CPC, the appeal lies from an original decree passed ex parte. In
the regular appeal filed under Section 96(2) CPC, the appellate court
has wide jurisdiction to go into the merits of the decree. The scope of
enquiry under two provisions is entirely different. Merely because the
defendant pursued the remedy under Order 9 Rule 13 CPC, it does not
prohibit the defendant from filing the appeal if his application under
Order 9 Rule 13 CPC is dismissed.”
12. The right of appeal under Section 96(2) CPC is a statutory right and
the defendant cannot be deprived of the statutory right of appeal merely
on the ground that the application filed by him under Order IX Rule 13
CPC has been dismissed. In Bhanu Kumar Jain v. Archana Kumar and
Another (2005) 1 SCC 787, the Supreme Court considered the question
whether the first appeal was maintainable despite the fact that an
application under Order IX Rule 13 CPC was filed and dismissed.
Observing that the right of appeal is a statutory right and that the litigant
cannot be deprived of such right, in paras (36) and (38), it was held as
under:-
36. … A right to question the correctness of the decree in a first
appeal is a statutory right. Such a right shall not be curtailed nor
9
shall any embargo be fixed thereupon unless the statute
expressly or by necessary implication says so. (See Deepal
Girishbhai Soni v. United India Insurance Co. Ltd. (2004) 5 SCC
385 and Chandravathi P.K. v. C.K. Saji (2004) 3 SCC 734.)
…………..”
14. The defendant against whom an ex-parte decree is passed,
has two options. First option is to file an application under Order IX
Rule 13 CPC and second option is to file an appeal under Section
96(2) CPC. The question to be considered is whether the two
options are to be exercised simultaneously or can also be exercised
consecutively. An unscrupulous litigant may, of course, firstly file an
application under Order IX Rule 13 CPC and carry the matter up to
the highest forum; thereafter may opt to file appeal under Section
96(2) CPC challenging the ex-parte decree. In that event,
considerable time would be lost for the plaintiff. The question falling
for consideration is that whether the remedies provided as
simultaneous can be converted into consecutive remedies.
15. An appeal under Section 96(2) CPC is a statutory right, the
defendant cannot be deprived of the statutory right merely on the
ground that earlier, the application filed under Order IX Rule 13 CPC
was dismissed. Whether the defendant has adopted dilatory tactics
or where there is a lack of bona fide in pursuing the remedy of
appeal under Section 96(2) of the Code, has to be considered
10
depending upon the facts and circumstances of each case. In case
the court is satisfied that the defendant has adopted dilatory tactics
or where there is lack of bona fide, the court may decline to
condone the delay in filing the first appeal under Section 96(2) CPC.
But where the defendant has been pursuing the remedy bona fide
under Order IX Rule 13 CPC, if the court refuses to condone the
delay in the time spent in pursuing the remedy under Order IX Rule
13 CPC, the defendant would be deprived of the statutory right of
appeal. Whether the defendant has adopted dilatory tactics or
where there is lack of bona fide in pursuing the remedy of appeal
under Section 96(2) of the code after the dismissal of the application
under Order IX Rule 13 CPC, is a question of fact and the same has
to be considered depending upon the facts and circumstances of
each case.
16. When the defendant filed appeal under Section 96(2) CPC
against an ex-parte decree and if the said appeal has been
dismissed, thereafter, the defendant cannot file an application under
Order IX Rule 13 CPC. This is because after the appeal filed under
Section 96(2) of the Code has been dismissed, the original decree
passed in the suit merges with the decree of the appellate court.
Hence, after dismissal of the appeal filed under Section 96(2) CPC,
11
the appellant cannot fall back upon the remedy under Order IX Rule
13 CPC.
17. In the present case, the respondent has filed the Money Suit
being OS No.76 of 2015 for recovery of Rs.46,98,500/- together
with interest and the said suit was decreed ex-parte on 09.10.2015.
Execution petition being EP No.95 of 2016 was also filed for
execution of the decree. As pointed out earlier, the appellant has
filed application being IA No.327 of 2016 to condone the delay of
276 days in filing the application to set aside the ex-parte decree. In
the said application, the appellant has stated that he has been
residing at Chennai; whereas the notice was served at Trichy and
therefore, he did not have knowledge about the filing of the said suit
in OS No.76 of 2015 before the ADJ Court at Tiruchirappalli and the
ex-parte decree was passed on 09.10.2015. The appellant has
further averred that he came to know about the ex-parte decree and
the execution petition only at the time when he appeared in CC
No.240 of 2016 at Karur on 29.07.2016. As discussed earlier, the
said application filed by the appellant seeking condonation of delay
of 276 days in filing the application to set aside the ex-parte decree
was dismissed by the order dated 04.01.2017. The revision and the
SLP preferred by the appellant also came to be dismissed.
12
18. Thereafter, the appellant has preferred the first appeal with the
application to condone the delay of 546 days in filing the first
appeal. As pointed out earlier, there was a delay of 276 days in
filing the application to set aside the ex-parte decree. Pursuing the
proceedings in the application filed under Order IX Rule 13 CPC
has caused further delay of 270 days. Thus, there has been a total
delay of about 546 days in filing the first appeal. In the application
for condonation of delay, of course, the appellant has raised the
very same ground which was taken in the application filed under
Section 5 of the Limitation Act to set aside the ex-parte decree
which was not accepted in the earlier proceedings.
19. The learned counsel for the appellant-defendant has
submitted that a huge amount of Rs.45,00,000/- is said to have
been paid by cash which according to the learned counsel raises
serious doubts about the genuineness of such transaction. Per
contra, the learned Senior counsel for the respondent-plaintiff has
submitted that lending of Rs.45,00,000/- as hand loan is
substantiated by issuance of two post-dated cheques in favour of
the respondent by the appellant – one for the sum of Rs.25,00,000/-
and another for the sum of Rs.20,00,000/-. We are not inclined to
go into the merits of the contention of the parties. All that is to be
13
pointed out is that the appellant would have been well advised that if
he had filed the first appeal simultaneously along with the
application under Order IX Rule 13 CPC. The appellant has
however shown his bona fide by depositing Rs.25,00,000/- in
compliance with the orders of this Court dated 13.08.2018. The
said amount of Rs.25,00,000/- was permitted to be withdrawn by the
respondent-plaintiff. Considering the facts and circumstances of the
case and in the interest of justice, in our view, the appellant
deserves an opportunity to put forth his defence in the suit for
recovery of money. But to avail this opportunity, he must deposit the
balance amount of Rs.20,00,000/- as a condition precedent for
condonation of delay. In these terms, the impugned judgment is
accordingly liable to be set aside.
20. The delay of 546 days in filing the first appeal shall therefore
be condoned with condition that the appellant should deposit
Rs.20,00,000/- before the trial court-Principal District Judge,
Tiruchirappalli, to the credit of OS No.76 of 2015 on or before
28.02.2020, failing which, the application for condonation of delay
shall stand dismissed. On such deposit of Rs.20,00,000/- the same
shall be invested in a nationalised bank for a period of six months
with the provision of auto-renewal. The deposit of Rs.20,00,000/-
14
and also the earlier deposit of Rs.25,00,000/- would be subject to
the outcome of the appeal. On deposit of Rs.20,00,000/-, the
impugned judgment passed by the Madurai Bench of Madras High
Court in CMP(MD) No.6566 of 2017 in AS(MD) SR No. 27805 of
2017 is set aside and this appeal is allowed. The delay in filing the
appeal is condoned. The appeal shall be taken on file and the High
Court shall proceed with the same in accordance with law. We make
it clear that we have not expressed any opinion on the merits of the
matter. It is also made clear that the criminal complaints filed under
Section 138 of NI Act be proceeded on its own merits without being
influenced by any of the views expressed by this Court or by the
High Court.
………………………..J.
[R. BANUMATHI]
………………………..J.
[A.S. BOPANNA]
….………………………..J.
[HRISHIKESH ROY]
New Delhi;
November 21, 2019
15
This is because after the appeal filed under Section 96(2) of the Code has been dismissed, the original decree passed in the suit merges with the decree of the appellate court.
Hence, after dismissal of the appeal filed under Section 96(2) CPC, the appellant cannot fall back upon the remedy under Order IX Rule 13 CPC.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8898 OF 2019
[Arising out of SLP(C) No.20686 of 2018]
N. MOHAN ...Appellant
VERSUS
R. MADHU …Respondent
J U D G M E N T
R. BANUMATHI, J.
Leave granted.
2. This appeal arises out of the impugned order dated
24.04.2018 passed by the High Court of Madras at Madurai Bench
in CMP(MD) No.6566 of 2017 in AS(MD) SR No. 27805 of 2017 in
and by which the High Court has refused to condone the delay of
546 days in filing the first appeal against the judgment and decree
passed in OS No.76 of 2015 dated 09.10.2015.
3. Brief facts which led to filing of this appeal are as follows:-
The appellant-defendant is a businessman doing business of
tea and real estate. Case of the respondent-plaintiff is that on
10.01.2015, the appellant approached the respondent-plaintiff for
financial assistance for a sum of Rs.45,00,000/- for the purpose of
1
his business needs. The respondent lent him the sum of
Rs.45,00,000/- and there was no documentation for the same.
According to the respondent, it was agreed that the said amount will
be returned to the respondent with an interest of 18% per annum.
The appellant agreed to return the said amount within two months;
but the appellant has not paid the amount. On the other hand, the
appellant is said to have issued two post-dated cheques to the
respondent, one for an amount of Rs.25,00,000/- and another for an
amount of Rs.20,00,000/-. When the said cheques were presented
for collection on 10.03.2015, the same were returned with the
endorsement that “payments stopped by the drawer”. The
respondent-plaintiff filed a civil suit being OS No.76 of 2015 before
the Additional District Judge, Tiruchirappalli. The said suit was
decreed ex-parte on 09.10.2015.
4. Order IX Rule 13 CPC Proceedings:- The appellantdefendant filed IA No.327 of 2016 in OS No.76 of 2015 under
Section 5 of the Limitation Act to condone the delay of 276 days in
filing the petition under Order IX Rule 13 CPC to set aside the exparte decree. In the said application, the appellant has stated that
summons was sent to the appellant’s old address at Trichy and the
same was returned unserved and the ex-parte decree was passed
2
on 09.10.2015. It was averred in the said application that the
appellant is residing in Chennai since January, 2014. The appellant
has alleged that when he went to attend a case in CC No.240/2016
at Karur Court on 29.07.2016, he came to know about the passing
of the ex-parte decree in OS No.76 of 2015. Thereafter, the
appellant has taken steps to set aside the ex-parte decree and filed
application under Section 5 of the Limitation Act - IA No.327 of 2016
to condone the delay of 276 days in filing the petition under Order
IX Rule 13 CPC to set aside the ex-parte decree. The said petition
was dismissed by the Additional District Judge by order dated
04.01.2017. The appellant has challenged the said order by filing
revision being CRP (MD) No.257 of 2017 (NPD) before the High
Court. Rejecting the contention of the appellant that he has been
residing in Chennai, the learned Single Judge dismissed the said
revision being CRP (MD) No.257 of 2017 (NPD) by order dated
08.02.2017. The SLP(C) No.9829 of 2017 preferred against the
said order also came to be dismissed by the Supreme Court by
order dated 07.04.2017.
5. First appeal filed by the appellant in AS(MD) SR No. 27805
of 2017:- After the dismissal of the SLP by the Supreme Court, the
appellant-defendant has filed the first appeal being AS(MD) SR No.
3
27805 of 2017 challenging the decree passed in OS No.76 of 2015
dated 09.10.2015 along with application being CMP(MD) No.6566
of 2017 praying to condone the delay of 546 days in filing the
appeal. In the said application, the appellant raised the very same
grounds that he is having residence at Chennai and that the
summons was not served on him and that summons was taken to
Trichy’s address and thereafter, ex-parte decree was passed
against him on 09.10.2015 and hence, prayed for condonation of
delay. The High Court dismissed the application for condonation of
delay on the ground that in the earlier proceedings under Order IX
Rule 13 CPC, the appellant has stated the same reasons to set
aside the ex-parte decree and that the reasons so stated by the
appellant was not accepted by the trial court, High Court and the
Supreme Court. Pointing out that the appellant has chosen
belatedly to file the first appeal in time, the High Court has
dismissed the application for condonation of delay of 546 days in
filing the first appeal. Being aggrieved, the appellant has filed this
appeal.
6. Mr. V. Singan along with Mr. S. Mahendran, learned counsel
appearing for the appellant has submitted that the appellant has
shown sufficient cause for the delay in filing the first appeal and that
4
the appellant has to be given an opportunity to contest the decree
on merits. It was submitted that the appellant has adduced
documentary evidence to show that he was not residing at the
Trichy address where the substituted service was affected and while
so, the High Court erred in dismissing the application for
condonation of delay filed along with the first appeal. Contending
that despite the fact that an application under Order IX Rule 13 CPC
was dismissed, the first appeal under Section 96(2) CPC being a
statutory right is still available, the learned counsel for the appellant
placed reliance upon Bhivchandra Shankar More v. Balu Gangaram
More and others (2019) 6 SCC 387.
7. Per contra, Mr. Jayanth Muthraj, learned Senior counsel for
the respondent submitted that the appeal filed by the appellant was
beyond the period of limitation and the delay was not satisfactorily
explained. It was submitted that the earlier application for
condonation of delay in filing the application for setting aside the exparte decree under Order IX Rule 13 CPC was not accepted by the
trial court, High Court and the Supreme Court and the same has
attained finality. It was submitted that the appellant cannot reagitate
the very same question which has attained finality in the earlier
proceedings.
5
8. We have carefully considered the submissions and perused
the impugned judgment and materials on record. The following
points arise for consideration in this appeal:-
(i) After dismissal of the application filed under Order IX
Rule 13 CPC for condonation of delay in filing the
appeal, whether the appeal filed under Section 96(2)
CPC against the ex-parte decree dated 09.10.2015 is
maintainable?
(ii) Whether the time spent in the proceedings to set aside
the ex-parte decree be taken as “sufficient cause” within
the meaning of Section 5 of the Limitation Act, 1908 so
as to condone the delay in preferring the first appeal?
9. When an ex-parte decree is passed, the defendant has two
remedies – (a) Either to file an application under Order IX Rule 13
CPC to set aside the ex-parte decree by satisfying the court that the
summons was not served or if served, the defendant was prevented
by “sufficient cause” from appearing in the court when the suit was
called for hearing; (b) to file a regular appeal from the original
decree to the first appellate court in terms of Section 96(2) CPC and
challenge the ex-parte decree on merits.
10. Right to file an appeal under Section 96(2) CPC is a statutory
remedy. The right to appeal is not a mere matter of procedure; but
is a substantive right. Right to appeal under Section 96(2) CPC
6
challenging the original decree passed ex-parte, being a statutory
right, the defendant cannot be deprived of the statutory right merely
on the ground that the application filed under Order IX Rule 13 CPC
was earlier dismissed.
11. In Bhanu Kumar Jain v. Archana Kumar and another (2005) 1
SCC 787, the Supreme Court considered the question whether the
first appeal filed under Section 96(2) of the Code was maintainable
despite the fact that an application under Order IX Rule 13 CPC
was dismissed. Observing that the right to appeal is a statutory
right and that the litigant cannot be deprived of such a right, the
Supreme Court held as under:-
“36. … A right to question the correctness of the decree in a first appeal
is a statutory right. Such a right shall not be curtailed nor shall any
embargo be fixed thereupon unless the statute expressly or by
necessary implication says so. (See Deepal Girishbhai Soni v. United
India Insurance Co. Ltd. (2004) 5 SCC 385 and Chandravathi P.K. v.
C.K. Saji (2004) 3 SCC 734.)
…….
38. The dichotomy, in our opinion, can be resolved by holding that
whereas the defendant would not be permitted to raise a contention as
regards the correctness or otherwise of the order posting the suit for ex
parte hearing by the trial court and/or existence of a sufficient case for
non-appearance of the defendant before it, it would be open to him to
argue in the first appeal filed by him under Section 96(2) of the Code on
the merits of the suit so as to enable him to contend that the materials
brought on record by the plaintiffs were not sufficient for passing a
decree in his favour or the suit was otherwise not maintainable. Lack of
7
jurisdiction of the court can also be a possible plea in such an appeal.
We, however, agree with Mr Chaudhari that the “Explanation” appended
to Order 9 Rule 13 of the Code shall receive a strict construction as was
held by this Court in Rani Choudhury (1982) 2 SCC 596, P. Kiran Kumar
(2002) 5 SCC 161 and Shyam Sundar Sarma v. Pannalal Jaiswal (2005)
1 SCC 436.”
12. After referring to Bhanu Kumar Jain and other judgments and
observing that the defendant can take recourse to both proceedings
– Order IX Rule 13 CPC as well as the appeal under Section 96(2)
CPC, in Neerja Realtors (P) Ltd. v. Janglu (Dead) Through Legal
Representative (2018) 2 SCC 649, the Supreme Court held as
under:-
“17. A defendant against whom an ex parte decree is passed has two
options: the first is to file an appeal. The second is to file an application
under Order 9 Rule 13. The defendant can take recourse to both the
proceedings simultaneously. The right of appeal is not taken away by
filing an application under Order 9 Rule 13. But if the appeal is dismissed
as a result of which the ex parte decree merges with the order of the
appellate court, a petition under Order 9 Rule 13 would not be
maintainable. When an application under Order 9 Rule 13 is dismissed,
the remedy of the defendant is under Order 43 Rule 1. However, once
such an appeal is dismissed, the same contention cannot be raised in a
first appeal under Section 96. The three-Judge Bench decision in Bhanu
Kumar Jain (2005) 1 SCC 787 has been followed by another Bench of
three Judges in Rabindra Singh v. Financial Commr., Cooperation (2008)
7 SCC 663, and by a two-Judge Bench in Mahesh Yadav v. Rajeshwar
Singh (2009) 2 SCC 205. ……..” [Underlining added]
8
13. Considering the scope of Order IX Rule 13 CPC and the
statutory right to appeal under Section 96(2) CPC, after referring to
Bhanu Kumar Jain, in Bhivchandra Shankar More, this Court held
as under:-
“11. It is to be pointed out that the scope of Order 9 Rule 13 CPC and
Section 96(2) CPC are entirely different. In an application filed under
Order 9 Rule 13 CPC, the Court has to see whether the summons were
duly served or not or whether the defendant was prevented by any
“sufficient cause” from appearing when the suit was called for hearing. If
the Court is satisfied that the defendant was not duly served or that he
was prevented for “sufficient cause”, the court may set aside the ex parte
decree and restore the suit to its original position. In terms of Section
96(2) CPC, the appeal lies from an original decree passed ex parte. In
the regular appeal filed under Section 96(2) CPC, the appellate court
has wide jurisdiction to go into the merits of the decree. The scope of
enquiry under two provisions is entirely different. Merely because the
defendant pursued the remedy under Order 9 Rule 13 CPC, it does not
prohibit the defendant from filing the appeal if his application under
Order 9 Rule 13 CPC is dismissed.”
12. The right of appeal under Section 96(2) CPC is a statutory right and
the defendant cannot be deprived of the statutory right of appeal merely
on the ground that the application filed by him under Order IX Rule 13
CPC has been dismissed. In Bhanu Kumar Jain v. Archana Kumar and
Another (2005) 1 SCC 787, the Supreme Court considered the question
whether the first appeal was maintainable despite the fact that an
application under Order IX Rule 13 CPC was filed and dismissed.
Observing that the right of appeal is a statutory right and that the litigant
cannot be deprived of such right, in paras (36) and (38), it was held as
under:-
36. … A right to question the correctness of the decree in a first
appeal is a statutory right. Such a right shall not be curtailed nor
9
shall any embargo be fixed thereupon unless the statute
expressly or by necessary implication says so. (See Deepal
Girishbhai Soni v. United India Insurance Co. Ltd. (2004) 5 SCC
385 and Chandravathi P.K. v. C.K. Saji (2004) 3 SCC 734.)
…………..”
14. The defendant against whom an ex-parte decree is passed,
has two options. First option is to file an application under Order IX
Rule 13 CPC and second option is to file an appeal under Section
96(2) CPC. The question to be considered is whether the two
options are to be exercised simultaneously or can also be exercised
consecutively. An unscrupulous litigant may, of course, firstly file an
application under Order IX Rule 13 CPC and carry the matter up to
the highest forum; thereafter may opt to file appeal under Section
96(2) CPC challenging the ex-parte decree. In that event,
considerable time would be lost for the plaintiff. The question falling
for consideration is that whether the remedies provided as
simultaneous can be converted into consecutive remedies.
15. An appeal under Section 96(2) CPC is a statutory right, the
defendant cannot be deprived of the statutory right merely on the
ground that earlier, the application filed under Order IX Rule 13 CPC
was dismissed. Whether the defendant has adopted dilatory tactics
or where there is a lack of bona fide in pursuing the remedy of
appeal under Section 96(2) of the Code, has to be considered
10
depending upon the facts and circumstances of each case. In case
the court is satisfied that the defendant has adopted dilatory tactics
or where there is lack of bona fide, the court may decline to
condone the delay in filing the first appeal under Section 96(2) CPC.
But where the defendant has been pursuing the remedy bona fide
under Order IX Rule 13 CPC, if the court refuses to condone the
delay in the time spent in pursuing the remedy under Order IX Rule
13 CPC, the defendant would be deprived of the statutory right of
appeal. Whether the defendant has adopted dilatory tactics or
where there is lack of bona fide in pursuing the remedy of appeal
under Section 96(2) of the code after the dismissal of the application
under Order IX Rule 13 CPC, is a question of fact and the same has
to be considered depending upon the facts and circumstances of
each case.
16. When the defendant filed appeal under Section 96(2) CPC
against an ex-parte decree and if the said appeal has been
dismissed, thereafter, the defendant cannot file an application under
Order IX Rule 13 CPC. This is because after the appeal filed under
Section 96(2) of the Code has been dismissed, the original decree
passed in the suit merges with the decree of the appellate court.
Hence, after dismissal of the appeal filed under Section 96(2) CPC,
11
the appellant cannot fall back upon the remedy under Order IX Rule
13 CPC.
17. In the present case, the respondent has filed the Money Suit
being OS No.76 of 2015 for recovery of Rs.46,98,500/- together
with interest and the said suit was decreed ex-parte on 09.10.2015.
Execution petition being EP No.95 of 2016 was also filed for
execution of the decree. As pointed out earlier, the appellant has
filed application being IA No.327 of 2016 to condone the delay of
276 days in filing the application to set aside the ex-parte decree. In
the said application, the appellant has stated that he has been
residing at Chennai; whereas the notice was served at Trichy and
therefore, he did not have knowledge about the filing of the said suit
in OS No.76 of 2015 before the ADJ Court at Tiruchirappalli and the
ex-parte decree was passed on 09.10.2015. The appellant has
further averred that he came to know about the ex-parte decree and
the execution petition only at the time when he appeared in CC
No.240 of 2016 at Karur on 29.07.2016. As discussed earlier, the
said application filed by the appellant seeking condonation of delay
of 276 days in filing the application to set aside the ex-parte decree
was dismissed by the order dated 04.01.2017. The revision and the
SLP preferred by the appellant also came to be dismissed.
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18. Thereafter, the appellant has preferred the first appeal with the
application to condone the delay of 546 days in filing the first
appeal. As pointed out earlier, there was a delay of 276 days in
filing the application to set aside the ex-parte decree. Pursuing the
proceedings in the application filed under Order IX Rule 13 CPC
has caused further delay of 270 days. Thus, there has been a total
delay of about 546 days in filing the first appeal. In the application
for condonation of delay, of course, the appellant has raised the
very same ground which was taken in the application filed under
Section 5 of the Limitation Act to set aside the ex-parte decree
which was not accepted in the earlier proceedings.
19. The learned counsel for the appellant-defendant has
submitted that a huge amount of Rs.45,00,000/- is said to have
been paid by cash which according to the learned counsel raises
serious doubts about the genuineness of such transaction. Per
contra, the learned Senior counsel for the respondent-plaintiff has
submitted that lending of Rs.45,00,000/- as hand loan is
substantiated by issuance of two post-dated cheques in favour of
the respondent by the appellant – one for the sum of Rs.25,00,000/-
and another for the sum of Rs.20,00,000/-. We are not inclined to
go into the merits of the contention of the parties. All that is to be
13
pointed out is that the appellant would have been well advised that if
he had filed the first appeal simultaneously along with the
application under Order IX Rule 13 CPC. The appellant has
however shown his bona fide by depositing Rs.25,00,000/- in
compliance with the orders of this Court dated 13.08.2018. The
said amount of Rs.25,00,000/- was permitted to be withdrawn by the
respondent-plaintiff. Considering the facts and circumstances of the
case and in the interest of justice, in our view, the appellant
deserves an opportunity to put forth his defence in the suit for
recovery of money. But to avail this opportunity, he must deposit the
balance amount of Rs.20,00,000/- as a condition precedent for
condonation of delay. In these terms, the impugned judgment is
accordingly liable to be set aside.
20. The delay of 546 days in filing the first appeal shall therefore
be condoned with condition that the appellant should deposit
Rs.20,00,000/- before the trial court-Principal District Judge,
Tiruchirappalli, to the credit of OS No.76 of 2015 on or before
28.02.2020, failing which, the application for condonation of delay
shall stand dismissed. On such deposit of Rs.20,00,000/- the same
shall be invested in a nationalised bank for a period of six months
with the provision of auto-renewal. The deposit of Rs.20,00,000/-
14
and also the earlier deposit of Rs.25,00,000/- would be subject to
the outcome of the appeal. On deposit of Rs.20,00,000/-, the
impugned judgment passed by the Madurai Bench of Madras High
Court in CMP(MD) No.6566 of 2017 in AS(MD) SR No. 27805 of
2017 is set aside and this appeal is allowed. The delay in filing the
appeal is condoned. The appeal shall be taken on file and the High
Court shall proceed with the same in accordance with law. We make
it clear that we have not expressed any opinion on the merits of the
matter. It is also made clear that the criminal complaints filed under
Section 138 of NI Act be proceeded on its own merits without being
influenced by any of the views expressed by this Court or by the
High Court.
………………………..J.
[R. BANUMATHI]
………………………..J.
[A.S. BOPANNA]
….………………………..J.
[HRISHIKESH ROY]
New Delhi;
November 21, 2019
15
