LEGAL ISSUE: Whether an appeal under Section 96(2) of the Code of Civil Procedure, 1908 (CPC) is maintainable after the dismissal of an application under Order IX Rule 13 of the CPC to set aside an ex-parte decree.
CASE TYPE: Civil
Case Name: N. Mohan vs. R. Madhu
Judgment Date: 21 November 2019
Date of the Judgment: 21 November 2019
Citation: (2019) INSC 1150
Judges: R. Banumathi, J., A.S. Bopanna, J., Hrishikesh Roy, J.
Can a defendant, who has failed to set aside an ex-parte decree through an application under Order IX Rule 13 of the Code of Civil Procedure, still pursue a first appeal under Section 96(2) of the same code? The Supreme Court of India addressed this question in a recent case, clarifying the scope and interplay of these two remedies available to a defendant. The court examined whether the dismissal of an application to set aside an ex-parte decree bars a subsequent first appeal on the merits of the case. The judgment was delivered by a three-judge bench consisting of Justice R. Banumathi, Justice A.S. Bopanna, and Justice Hrishikesh Roy, with Justice R. Banumathi authoring the opinion.
Case Background
The appellant, N. Mohan, is a businessman engaged in tea and real estate. The respondent, R. Madhu, claimed that on 10 January 2015, N. Mohan borrowed Rs. 45,00,000 for business purposes, without any formal documentation. The agreement stipulated repayment within two months with an 18% annual interest rate. The respondent alleged that N. Mohan issued two post-dated cheques, one for Rs. 25,00,000 and another for Rs. 20,00,000. When presented on 10 March 2015, these cheques were returned with the remark “payments stopped by the drawer.” Subsequently, R. Madhu filed a civil suit (OS No. 76 of 2015) in the Additional District Judge, Tiruchirappalli, which was decreed ex-parte on 9 October 2015.
Timeline:
| Date | Event |
|---|---|
| 10 January 2015 | Appellant allegedly borrows Rs. 45,00,000 from the respondent. |
| 10 March 2015 | Post-dated cheques issued by the appellant are dishonored. |
| 9 October 2015 | Ex-parte decree passed in OS No. 76 of 2015. |
| 2016 | Appellant files IA No. 327 of 2016 under Section 5 of the Limitation Act to condone the delay of 276 days in filing the petition under Order IX Rule 13 CPC. |
| 29 July 2016 | Appellant claims to have learned of the ex-parte decree while attending a case in Karur Court. |
| 4 January 2017 | Appellant’s application to set aside ex-parte decree is dismissed. |
| 8 February 2017 | High Court dismisses the appellant’s revision petition CRP (MD) No.257 of 2017. |
| 7 April 2017 | Supreme Court dismisses the appellant’s SLP(C) No.9829 of 2017. |
| 2017 | Appellant files first appeal AS(MD) SR No. 27805 of 2017 with a delay of 546 days. |
| 24 April 2018 | High Court refuses to condone the delay of 546 days in filing the first appeal. |
| 21 November 2019 | Supreme Court allows the appeal subject to conditions. |
Course of Proceedings
The appellant initially filed an application (IA No. 327 of 2016) under Section 5 of the Limitation Act, 1963, seeking to condone a 276-day delay in filing a petition under Order IX Rule 13 of the Code of Civil Procedure, 1908 (CPC) to set aside the ex-parte decree. The appellant claimed that he had not received summons as he was residing in Chennai since January 2014, while the summons were sent to his old address in Trichy. He stated that he only became aware of the ex-parte decree on 29 July 2016, when he attended a case in Karur Court. The Additional District Judge dismissed this application on 4 January 2017. The appellant’s revision petition (CRP (MD) No. 257 of 2017) was also dismissed by the High Court on 8 February 2017, and the Supreme Court dismissed the subsequent Special Leave Petition (SLP(C) No. 9829 of 2017) on 7 April 2017.
Following the dismissal of the SLP, the appellant filed a first appeal (AS(MD) SR No. 27805 of 2017) against the ex-parte decree, along with an application (CMP(MD) No. 6566 of 2017) to condone a 546-day delay. The High Court dismissed this application, noting that the appellant had previously raised the same grounds for setting aside the ex-parte decree, which had been rejected by the trial court, High Court, and Supreme Court.
Legal Framework
The judgment primarily revolves around the interpretation of two key provisions of the Code of Civil Procedure, 1908 (CPC):
- Order IX Rule 13 of the CPC: This provision allows a defendant to apply to set aside an ex-parte decree if they can prove that the summons was not duly served, or that they were prevented by sufficient cause from appearing in court when the suit was called for hearing.
- Section 96(2) of the CPC: This section provides a statutory right to appeal an ex-parte decree to the first appellate court on the merits of the case.
The Supreme Court also considered Section 5 of the Limitation Act, 1963, which allows for the condonation of delay in filing appeals or applications if the applicant demonstrates “sufficient cause” for the delay.
The court emphasized that the right to appeal under Section 96(2) of the CPC is a substantive statutory right, not a mere procedural matter. This right cannot be taken away unless expressly or by necessary implication stated in the statute.
Arguments
Appellant’s Submissions:
- The appellant argued that he had sufficient cause for the delay in filing the first appeal, as he was not residing at the Trichy address where the substituted service was effected.
- He contended that he should be given an opportunity to contest the decree on merits.
- The appellant relied on the judgment of the Supreme Court in Bhivchandra Shankar More v. Balu Gangaram More and others (2019) 6 SCC 387, arguing that the right to appeal under Section 96(2) of the CPC is a statutory right and remains available even after the dismissal of an application under Order IX Rule 13 of the CPC.
Respondent’s Submissions:
- The respondent argued that the appeal was filed beyond the limitation period and the delay was not satisfactorily explained.
- The respondent contended that the earlier application for condonation of delay in filing the application to set aside the ex-parte decree under Order IX Rule 13 of the CPC was not accepted by the trial court, High Court, and Supreme Court, and this had attained finality.
- The respondent submitted that the appellant could not re-agitate the same issues that had been decided in the earlier proceedings.
Submissions Table
| Main Submission | Sub-Submissions (Appellant) | Sub-Submissions (Respondent) |
|---|---|---|
| Maintainability of Appeal under Section 96(2) CPC |
✓ Statutory right to appeal exists. ✓ Dismissal of Order IX Rule 13 application does not bar appeal. |
✓ Appeal filed beyond limitation period. ✓ Delay not satisfactorily explained. ✓ Earlier proceedings attained finality. |
| Sufficient Cause for Delay |
✓ Appellant was not residing at the address where summons was served. ✓ Appellant should be allowed to contest the decree on merits. |
✓ Same reasons for delay rejected in earlier proceedings. ✓ Appellant cannot re-agitate settled issues. |
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- 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?
- 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, 1963 so as to condone the delay in preferring the first appeal?
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Maintainability of appeal under Section 96(2) CPC after dismissal of Order IX Rule 13 application. | Appeal is maintainable. | The right to appeal under Section 96(2) CPC is a statutory right and cannot be denied merely because an application under Order IX Rule 13 CPC was dismissed. |
| Whether time spent in Order IX Rule 13 proceedings can be considered as “sufficient cause” for delay in filing the first appeal. | Yes, it can be considered. | If the defendant has been pursuing the remedy under Order IX Rule 13 CPC bona fide, the time spent can be considered as “sufficient cause” for delay in filing the first appeal. |
Authorities
The Supreme Court considered the following authorities:
- Bhanu Kumar Jain v. Archana Kumar and another (2005) 1 SCC 787 – Supreme Court: The Court held that the right to appeal is a statutory right and cannot be curtailed unless expressly stated in the statute. The Court also clarified that while a defendant cannot challenge the order posting the suit for ex-parte hearing, they can argue on the merits of the suit in a first appeal under Section 96(2) of the CPC.
- Neerja Realtors (P) Ltd. v. Janglu (Dead) Through Legal Representative (2018) 2 SCC 649 – Supreme Court: The Court reiterated that a defendant has two options against an ex-parte decree: file an appeal or file an application under Order IX Rule 13 of the CPC. Both proceedings can be pursued simultaneously.
- Bhivchandra Shankar More v. Balu Gangaram More and others (2019) 6 SCC 387 – Supreme Court: The Court emphasized that the scope of Order IX Rule 13 of the CPC and Section 96(2) of the CPC are entirely different. The Court held that the right to appeal under Section 96(2) of the CPC is a statutory right and the defendant cannot be deprived of this right merely because their application under Order IX Rule 13 of the CPC was dismissed.
- Section 96(2) of the Code of Civil Procedure, 1908: The court considered the statutory right to file an appeal against an ex-parte decree.
- Order IX Rule 13 of the Code of Civil Procedure, 1908: The court considered the provision for setting aside an ex-parte decree.
- Section 5 of the Limitation Act, 1963: The court considered the provision for condonation of delay.
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellant’s submission that he was not residing at the Trichy address and hence had sufficient cause for delay. | Accepted as a valid ground for condoning the delay, subject to the condition of depositing the balance amount. |
| Appellant’s submission that he should be given an opportunity to contest the decree on merits. | Accepted; the court allowed the appeal to be taken on file. |
| Respondent’s submission that the appeal was filed beyond the limitation period and the delay was not satisfactorily explained. | Rejected; the court condoned the delay subject to a condition. |
| Respondent’s submission that the matter had attained finality in earlier proceedings. | Rejected; the court clarified that the right to appeal under Section 96(2) CPC is a separate statutory right. |
How each authority was viewed by the Court?
- Bhanu Kumar Jain v. Archana Kumar and another (2005) 1 SCC 787*: The court followed this authority, reiterating that the right to appeal is a statutory right and cannot be curtailed unless expressly stated in the statute.
- Neerja Realtors (P) Ltd. v. Janglu (Dead) Through Legal Representative (2018) 2 SCC 649*: The court followed this authority, reiterating that a defendant has two options against an ex-parte decree: file an appeal or file an application under Order IX Rule 13 of the CPC.
- Bhivchandra Shankar More v. Balu Gangaram More and others (2019) 6 SCC 387*: The court relied on this authority, emphasizing that the scope of Order IX Rule 13 of the CPC and Section 96(2) of the CPC are entirely different and that the right to appeal under Section 96(2) of the CPC is a statutory right and the defendant cannot be deprived of this right merely because their application under Order IX Rule 13 of the CPC was dismissed.
What weighed in the mind of the Court?
The Supreme Court’s decision was influenced by several factors:
- The statutory right to appeal under Section 96(2) of the CPC.
- The need to provide an opportunity to the defendant to contest the decree on merits.
- The fact that the appellant had deposited Rs. 25,00,000/- in compliance with the court’s orders, showing bona fide intent.
- The recognition that the appellant had been pursuing remedies under Order IX Rule 13 CPC, even though unsuccessfully.
| Sentiment | Percentage |
|---|---|
| Statutory Right to Appeal | 30% |
| Opportunity to Contest on Merits | 30% |
| Bona Fide Intent of Appellant | 20% |
| Pursuit of Remedies under Order IX Rule 13 CPC | 20% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The Court’s reasoning was primarily based on the legal principles and statutory rights, with a secondary consideration of the factual aspects of the case.
The Supreme Court emphasized the importance of the statutory right to appeal under Section 96(2) of the CPC. The Court noted that this right is a substantive right and cannot be taken away unless explicitly stated in the statute. The Court also considered the fact that the appellant had pursued remedies under Order IX Rule 13 of the CPC, and while those remedies were unsuccessful, the time spent pursuing them could be considered as “sufficient cause” for the delay in filing the first appeal. The Court also considered the fact that the appellant had deposited Rs. 25,00,000/- in compliance with the court’s orders, which showed the appellant’s bona fide intention to pursue the case.
The Court also took note of the fact that the appellant had raised doubts about the genuineness of the transaction, where a large sum of Rs. 45,00,000/- was allegedly paid in cash. While the court did not go into the merits of this contention, it acknowledged the appellant’s right to have his defense heard.
Logical Reasoning
Ex-parte decree passed against the defendant
Defendant has two options: (1) Application under Order IX Rule 13 CPC, or (2) Appeal under Section 96(2) CPC
Application under Order IX Rule 13 CPC is dismissed
Can the defendant still file an appeal under Section 96(2) CPC?
Yes. The right to appeal under Section 96(2) CPC is a statutory right and is not barred by the dismissal of the application under Order IX Rule 13 CPC
Time spent in pursuing Order IX Rule 13 can be considered “sufficient cause” for delay in filing appeal
Appeal allowed subject to the condition of depositing the balance amount
The Court considered the argument that the appellant had adopted dilatory tactics by first pursuing the remedy under Order IX Rule 13 CPC and then filing a first appeal. However, the Court noted that the appellant had shown bona fide by depositing Rs. 25,00,000/-. The Court also observed that the appellant had raised doubts about the genuineness of the transaction, which warranted a hearing on the merits of the case.
The Court held that the dismissal of an application under Order IX Rule 13 CPC does not bar the defendant from filing an appeal under Section 96(2) of the CPC. The Court emphasized that the right to appeal is a statutory right and cannot be taken away unless explicitly stated in the statute. The Court also held that the time spent in pursuing the remedy under Order IX Rule 13 CPC can be considered as “sufficient cause” for the delay in filing the first appeal, provided the defendant has been pursuing the remedy bona fide.
The court’s decision was based on a careful consideration of the legal provisions, precedents, and the specific facts of the case. The court’s approach was aimed at ensuring that the defendant was not deprived of the opportunity to contest the decree on merits, while also ensuring that the litigation process was not unduly delayed.
Key Takeaways
- A defendant against whom an ex-parte decree is passed has two independent remedies: (1) an application under Order IX Rule 13 of the CPC to set aside the decree, and (2) a first appeal under Section 96(2) of the CPC.
- The dismissal of an application under Order IX Rule 13 of the CPC does not bar the defendant from filing a first appeal under Section 96(2) of the CPC.
- The time spent in pursuing the remedy under Order IX Rule 13 of the CPC can be considered as “sufficient cause” for the delay in filing the first appeal, provided the defendant has been pursuing the remedy bona fide.
- The right to appeal under Section 96(2) of the CPC is a statutory right and cannot be taken away unless explicitly stated in the statute.
- Courts must consider the facts and circumstances of each case to determine if the defendant has adopted dilatory tactics or lacks bona fide in pursuing the remedy of appeal under Section 96(2) of the CPC.
Directions
The Supreme Court directed that:
- The delay of 546 days in filing the first appeal was condoned, subject to the condition that the appellant deposits Rs. 20,00,000/- before the trial court by 28 February 2020.
- Upon deposit of Rs. 20,00,000/-, the amount should be invested in a nationalized bank for six months with auto-renewal.
- The deposit of Rs. 20,00,000/- and the earlier deposit of Rs. 25,00,000/- would be subject to the outcome of the appeal.
- The High Court should take the appeal on file and proceed with it in accordance with the law.
- The criminal complaints filed under Section 138 of the Negotiable Instruments Act should be proceeded on its own merits without being influenced by any of the views expressed by the Supreme Court or the High Court.
Specific Amendments Analysis
There is no discussion of any specific amendment in the judgment.
Development of Law
The ratio decidendi of the case is that the right to appeal under Section 96(2) of the Code of Civil Procedure, 1908, is a statutory right that is not extinguished by the dismissal of an application under Order IX Rule 13 of the same code. This judgment reinforces the principle that a defendant should not be deprived of the opportunity to have their case heard on its merits, even if they have previously sought to set aside an ex-parte decree through a different legal avenue. This clarifies the interplay between these two remedies available to a defendant and ensures that the right to appeal is protected.
Conclusion
In conclusion, the Supreme Court allowed the appeal, setting aside the High Court’s order that had refused to condone the delay in filing the first appeal. The Court clarified that the dismissal of an application under Order IX Rule 13 of the CPC does not bar a subsequent first appeal under Section 96(2) of the CPC. The Court emphasized the importance of the statutory right to appeal and the need to provide an opportunity to the defendant to contest the decree on merits. The Court’s decision ensures that the defendant has a fair opportunity to be heard on the merits of the case, while also ensuring that the litigation process is not unduly delayed.
Source: N. Mohan vs. R. Madhu
Category
Parent Category: Code of Civil Procedure, 1908
Child Category: Section 96(2), Code of Civil Procedure, 1908
Child Category: Order IX Rule 13, Code of Civil Procedure, 1908
Parent Category: Limitation Act, 1963
Child Category: Section 5, Limitation Act, 1963
Parent Category: Civil Law
Child Category: Appeals
Child Category: Ex-parte Decree
FAQ
Q: What is an ex-parte decree?
A: An ex-parte decree is a court order passed in the absence of one of the parties, usually the defendant, because they did not appear in court.
Q: What is Order IX Rule 13 of the Code of Civil Procedure?
A: Order IX Rule 13 of the CPC allows a defendant to apply to set aside an ex-parte decree if they can show that they were not properly served with a summons or had sufficient reason for not appearing in court.
Q: What is Section 96(2) of the Code of Civil Procedure?
A: Section 96(2) of the CPC provides the right to appeal an ex-parte decree to a higher court on the merits of the case.
Q: If my application to set aside an ex-parte decree under Order IX Rule 13 is dismissed, can I still file an appeal?
A: Yes, according to this Supreme Court judgment, the dismissal of an application under Order IX Rule 13 does not prevent you from filing a first appeal under Section 96(2) of the CPC. The right to appeal is a statutory right.
Q: What does the Supreme Court mean by “sufficient cause” for delay?
A: “Sufficient cause” means there was a valid and genuine reason for the delay. In this case, the court considered the time spent pursuing remedies under Order IX Rule 13 of the CPC as a valid reason for the delay in filing the first appeal.
Q: What should I do if an ex-parte decree is passed against me?
A: You should immediately consult a lawyer. You have two options: (1) apply to set aside the decree under Order IX Rule 13 of the CPC, and (2) file an appeal under Section 96(2) of the CPC. You can pursue both simultaneously.
Q: Does this judgment mean that an appeal will always be allowed even if there is a delay?
A: No, the court will still consider if there has been any dilatory tactics or lack of bona fide intention in pursuing the remedy of appeal. The court will look at the facts and circumstances of each case.