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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4472  /2015 (Arising out of S.L.P.(C) No. 21762 of 2013)

M/S GMG ENGINEERING INDUSTRIES & ORS.            ..Appellants

Versus

M/S ISSA GREEN POWER SOLUTION & ORS.                  ..Respondents

WITH

CIVIL APPEAL NO.  4473  /2015 (Arising out of S.L.P.(C) No. 22156 of 2013)

A.C. GOVINDARAJ AND ORS.                  ..Appellants

Versus

M. KRISHNAMOORTHY & ORS.                       ..Respondents

J U D G M E N T

R. BANUMATHI, J  .

Leave granted.

2. These  appeals  arise  out  of  common  order  dated

16.04.2013,  passed  by  the  High Court  of  Madras,  Madurai

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Bench in C.R.P. (NPD) (MD) No.4/2013 and C.R.P. (NPD) (MD)

No.5/2013 respectively, confirming the order dated 4.12.2012

passed by the Principal District Judge, Thanjavur, imposing

conditions to deposit Rs.1,50,00,000/- and Rs.10,00,000/-, as

a condition to condone the delay in filing the applications to

set aside the ex-parte decrees passed in O.S.No.3 of 2011 and

O.S. No.6 of 2011.

3. Appellants and respondents entered into an agreement

of sale on 1.08.2008, under which the respondents agreed to

purchase  the  property  of  the  appellants  being  the  factory

premise for a sum of Rs.5,00,00,000/- and the respondents

paid Rs.1,50,00,000/- towards part of sale consideration. The

sale  transaction  could  not  be  completed.  The  respondents

issued  legal  notice  dated  24.11.2010  calling  upon  the

appellants  either  to  execute  the  sale  deed  or  refund  the

advance amount of Rs.1,50,00,000/- with interest at the rate

of 12% p.a.  The appellants received the said notice and sent

the  reply  offering  to  return  the  said  amount  but  without

interest.  The respondents filed the suit being O.S.No.3/2011

for recovery of the sum of Rs. 1,50,00,000/- with interest.  The

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case was adjourned from time to time on various dates.  On

16.06.2011, the appellants-defendants were set ex-parte in the

suit.   After  recording  evidence  adduced  by  the

respondents-plaintiffs on 5.07.2011, the said suit was decreed

ex-parte by the Principal District Judge, Thanjavur.

4. Respondents have also filed another suit O.S. No.6 of

2011 for  recovery  of  a  sum of  Rs.10,00,000/- said to  have

been paid by them to the appellants by way of an advance

towards the purchase of another property.  The said suit was

decreed ex-parte on 16.06.2011.  The appellants have filed I.A.

No.78  of  2012  to  set  aside  the  ex-parte  decree  alongwith

application  to  condone  the  delay  of  382  days  under

Section  5  of  the  Limitation  Act.   The  said  application  was

allowed by the Principal  District  Judge,  Thanjavur by order

dated  4.12.2012  imposing  condition  to  deposit  a  sum  of

Rs.10,00,000/-.

5. The appellants filed I.A.No.77 of 2012 and I.A. No.78 of

2012 in  both  the  suits  praying  for  condonation  of  delay  of

355 days and 382 days respectively in filing the applications

under Order IX Rule 13 CPC, for  setting aside the ex-parte

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decrees.  The appellants averred that they came to know about

the  ex-parte  decrees  only  on 13.07.2012,  when they  saw a

public notice in the daily newspaper regarding the attachment

of the suit property.  The Principal District Judge, Thanjavur

vide separate order dated 4.12.12 condoned the delay of 355

days and 382 days in filing the applications under Order IX

Rule 13 CPC for setting aside the ex-parte decree and allowed

the applications in IA No.77 of 2012 and I.A. No.78 of 2012

but  subject  to  condition  that  the  appellants  should  deposit

Rs.1,50,00,000/- and Rs.10,00,000/- respectively in the court

on  or  before  3.01.2013, failing  which  the  applications  will

automatically  stand  dismissed.  Being  aggrieved  by  the

stringent  condition,  the  appellants  filed  revision  petitions

before the High Court.  The High Court vide impugned order

dated 16.04.13 upheld the order imposing condition to deposit

Rs.1,50,00,000/- and Rs.10,00,000/- as a condition precedent

to  condone  the  delay  in  filing  application  to  set  aside  the

ex-parte  decrees and thereby dismissed the revisions which

are under challenge in these appeals.  

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6. Learned counsel for the appellants contended that the

direction  to  deposit  the  entire  decreetal  amount  of

Rs.1,50,00,000/-  in  O.S.  No.3  of  2011  and  the  decreetal

amount of Rs.10,00,000/- in O.S. No.6 of 2011 as  a condition

precedent  to  set  aside  the  ex-parte  decrees  is  onerous  and

unreasonable and prayed to set aside the impugned order.   In

support  of  his  contention,  learned  Senior  Counsel

Mr. Brijender Chahar for the appellants placed reliance upon

the judgment of this Court in V.K. Industries and Ors. vs. M.P.

Electricity Board,  Rampur,  Jabalpur, (2002) 3 SCC 159.

7. Learned Senior Counsel for the respondents Ms. Nalini

Chidambaram submitted that the trial court was constrained

to  impose  the  said  condition  in  view of  the  dilatory  tactics

adopted by the appellants deliberately not being present for

hearing in the trial court on several occasions when the suits

were  posted  for  trial.  Learned  Senior  Counsel  further

submitted that  even after  ex-parte  decrees  dated 5.07.2011

were brought  to  the  notice  of  the  appellants  by  a  series  of

telegrams (Annexures-R5/R1), the appellants did not file the

applications to set aside the ex-parte decree within the period

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of  limitation  and  waited  for  more  than  a  year.   It  was

submitted that the respondents are more than seventy years

old  and  had  borrowed  sum  of  Rs.1,50,00,000/-  and

Rs.10,00,000/- from the bank and paid the said amount to

the  appellants  under  the  agreements  for  sale  and  the

appellants are paying interest on that amount to the bank.  It

was  contended  that  even  though  the  appellants  sold  away

their  property,  they did not  choose to refund the sum paid

towards part of sale consideration and if the suits are decreed,

the appellants have no assets to execute the decrees and the

rights of both the parties should be balanced and therefore the

impugned order does not warrant interference by this Court

under Article 136 of the Constitution.   

8. It is well settled that the expression ‘sufficient cause’ is

to  receive  liberal  construction  so  as  to  advance substantial

justice.   When  there  is  no  negligence,  inaction  or  want  of

bonafide is imputable to the appellants, the delay has to be

condoned.   The discretion is  to  be exercised like any other

judicial  discretion  with  vigilance  and  circumspection.   The

discretion is  not  to  be  exercised in  any arbitrary,  vague or

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fanciful manner.  The true test is to see whether the applicant

has acted with due diligence.   

9. While  exercising  the  discretion  for  setting  aside  the

ex-parte  decrees  or  condoning  the  delay  in  filing  the

application  to  set  aside  the  ex-parte  decrees,  the  court  is

competent  to  direct  the  defendants  to  pay  a  portion  of  the

decreetal  amount  or  the  cost.   In  Tea  Auction  Limited  vs.

Grace Hill Tea Industry And Anr., (2006) 12 SCC 104: (2006)

9 SCALE 223, this Court has held as under:

“15. ….A discretionary jurisdiction has been conferred upon the  court  passing  an  order  for  setting  aside  an  ex  parte decree not only on the basis that the defendant had been able to prove sufficient cause for his non-appearance even on the  date  when  the  decree  was  passed,  but  also  on  other attending facts and circumstances. It may also consider the question  as  to  whether  the  defendant  should  be  put  on terms. The court, indisputably, however, is not denuded of its power to put the defendants to terms. It is, however, trite that  such  terms  should  not  be  unreasonable  or  harshly excessive.  Once  unreasonable  or  harsh  conditions  are imposed, the appellate court would have power to interfere therewith…..”  

10. In  Vijay  Kumar  Madan  and  Ors.  vs.  R.N.  Gupta

Technical Education Society and Ors., (2002) 5 SCC 30, this

Court has held as under:

“8. Costs  should  be  so  assessed  as  would  reasonably compensate  the  plaintiff  for  the  loss  of  time  and inconvenience caused by relegating back the proceedings to an earlier stage. The terms which the court may direct may take care of the time or mode of proceedings required to be

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taken pursuant to the order under Rule 7. ….…the court cannot exercise its power to put the defendant-applicant on such  terms  as  may  have  the  effect  of  prejudging  the controversy involved in the suit and virtually decreeing the suit though ex parte order has been set aside or to put the parties  on such terms as may be  too onerous……… That condition in the order of  the trial  court having been set aside  by  the  High  Court,  we  are  inclined  to  sustain  the order of the High Court but subject to certain modification. In our opinion the High Court was justified in setting aside the condition imposed by the trial court in its order which was too onerous, also vague, uncertain and suffering from want of clarity.  The order of the High Court to the extent of setting aside the ex parte proceedings and directing the expeditious trial of the suit has to be sustained as it serves the ends of justice….”  

The same view was reiterated in V.K. Industries case (supra).

11. In the present case, while the trial court has exercised

the discretion to condone the delay in filing the applications to

set  aside  the  ex-parte  decrees,  in  our  view,  the  trial  court

should not have imposed such an unreasonable and onerous

condition  of  depositing  the  entire  suit  claim  of

Rs.1,50,00,000/- and Rs.10,00,000/- respectively in the suits

when  the  issues  are  yet  to  be  decided  on  merits.  While

considering the revision, the High Court should have kept in

view that the parties are yet to go for trial and the appellants

ought  to  have  been afforded the  opportunity  to  contest  the

suits on merits.  When the S.L.Ps came up for admission on

1.08.2013,  this  Court  passed  the  conditional  order  that

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subject  to  deposit  a  sum of  Rs.50,00,000/- before  the  trial

court,  notice  shall  be  issued  to  the   respondents.  In

compliance  with  the  order  dated  1.08.2013,  the  appellants

have deposited Rs.50,00,000/- before the trial  court.   Since

the appellants have satisfactorily explained the reasons for the

delay  and  with  a  view  to  provide  an  opportunity  to  the

appellants to contest the suit, the impugned order is liable to

be set aside.

12. The order dated 16.04.2013 of the High Court passed

in  C.R.P.  (NPD)  (MD)  No.4/2013  and  C.R.P.  (NPD)  (MD)

No.5/2013, is set aside and these appeals are allowed.  Delay

in filing the applications to set aside the ex-parte decrees is

condoned  and  the  ex-parte  decrees  passed  in  O.S.  No.3  of

2011 and O.S. No.6 of 2011 are set aside and the suits are

ordered to be restored to file.  The appellants shall file their

written statements within a period of six weeks if not already

filed.  Since the suits are of the year 2011 and the respondents

are stated to be senior citizens, the trial court is directed to

take up the suits at an early date and dispose of  the suits

expeditiously.  It is made clear that we have not expressed any

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opinion  on  the  merits  of  the  matter.  The  amount  of

Rs.50,00,000/-  deposited  by  the  appellants  before  the  trial

court  shall  be  invested  in  a  Nationalized  Bank so  that  the

accrued interest may enure to the benefit of either party.  In

the facts and circumstances of the case, we make no order as

to costs.

………………………J.   (T.S. Thakur)

………………………J.      (R. Banumathi)

New Delhi; May 15, 2015  

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