N. Mohan Vs R. Madhu

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

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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 appellant-

defendant 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 ex-

parte 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

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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.

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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

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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 ex-

parte 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.

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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

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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

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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]

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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

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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

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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,

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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

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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/-

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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

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N. MOHAN Vs R. MADHU