Supreme Court Allows Uttar Pradesh to Rejoin Tehri Hydro Dispute: State of Uttarakhand vs. Union of India (6 December 2019)

Introduction

Date of the Judgment: 6 December 2019
Citation: Not Available
Judges: Justice R.F. Nariman and Justice S. Ravindra Bhat

Can a state be allowed to participate in a legal battle after initially failing to appear in court? The Supreme Court of India recently addressed this question in a suit between the State of Uttarakhand and the Union of India, where the State of Uttar Pradesh was also a party. The core issue was whether the State of Uttar Pradesh (U.P.) should be allowed to rejoin the case after being declared ex parte (absent). The Supreme Court bench, comprising Justice R.F. Nariman and Justice S. Ravindra Bhat, allowed the State of U.P. to rejoin the suit, subject to payment of costs.

Case Background

The State of Uttarakhand filed a suit against the Union of India and the State of Uttar Pradesh, seeking a declaration that the allocation of 25% shareholding in the Tehri Hydro Development Corporation (THDC) to the State of U.P. was void. Uttarakhand claimed to be the rightful owner of these shares, along with the dividends from November 9, 2000. The suit was filed under Article 131 of the Constitution of India.

Timeline

Course of Proceedings

Initially, the Supreme Court entertained the suit on December 6, 2012, and dismissed an application for interim relief on December 12, 2012. After the filing of chamber summons, the court directed notice to be served upon the Chief Secretary and the Standing Counsel for the State of U.P. on October 7, 2013. These notices were served, as evidenced by the order dated November 10, 2013. However, the State of U.P. did not appear, and on December 16, 2013, the court set them down ex parte.

Legal Framework

This case is primarily governed by Article 131 of the Constitution of India, which grants the Supreme Court original jurisdiction in disputes between the Government of India and one or more States, or between two or more States. Additionally, the Code of Civil Procedure, 1908, particularly Order VIII Rule 1, is relevant, which deals with the filing of written statements by defendants.

Arguments

The State of U.P. argued that although they received notice of the suit on 23.10.2013, the matter was referred to the concerned department. Upon receiving information about the ex parte order, they took steps including a joint meeting of various departments on 03.02.2014, the appointment of counsel on 11.03.2014, and instructions to file an application to recall the ex parte order. The State of U.P. contended that the delay was not intentional and that they had taken prompt steps once they became aware of the order.

The State of Uttarakhand opposed the application, arguing that the State of U.P. was negligent in not appearing despite receiving notice. Uttarakhand also sought a decree in terms of Order VIII Rule 1 of the Code of Civil Procedure, 1908, indicating that the State of U.P. should not be allowed to file its written statement due to the delay. Uttarakhand also claimed to have incurred significant legal costs due to the multiple hearings.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the application (I.A. No. 3/2014) filed by the State of U.P. to recall the order dated 16.12.2013, setting it down ex parte, should be allowed.

Treatment of the Issue by the Court

Authorities

No authorities were mentioned in the judgment.

Judgment

The Court observed that though the State of U.P. was initially tardy, they took prompt steps once the concerned officials were made aware of the pendency of the suit and the ex parte order. The Court also noted that the State of Uttarakhand had sought adjournments on multiple occasions. The Court allowed the application to recall the ex parte order, subject to the State of U.P. paying costs of Rs. 30,00,000/- to the State of Uttarakhand.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that while the State of Uttar Pradesh was initially delayed in appearing before the court, it took prompt steps to rectify the situation once it became aware of the ex-parte order. The court also considered that the State of Uttarakhand, the plaintiff, had also sought adjournments, indicating that the delay was not entirely attributable to the State of Uttar Pradesh. This suggests a balanced approach, ensuring that both parties were given a fair opportunity to present their case.

Logical Reasoning

Key Takeaways

• A state can be allowed to rejoin a suit even after being set down ex parte, if the court is satisfied with the explanation for the delay and the prompt steps taken to rectify it.
• Courts consider the conduct of all parties involved while deciding on such applications, and not just the defaulting party.
• The payment of costs can be imposed as a condition to allow a party to rejoin a suit after being set down ex parte.

Directions

The State of U.P. was directed to pay costs of Rs. 30,00,000/- (Rupees Thirty Lacs only) to the plaintiff/State of Uttarakhand within four weeks. The State of U.P. was also permitted to file its written statement within four weeks, and the plaintiff’s replication, if any, was to be filed within eight weeks. The parties were also directed to file their documents, and the suit was listed after twelve weeks for framing the issues.

Development of Law

The ratio decidendi of this case is that a party, even if initially defaulted and set down ex parte, can be allowed to rejoin a suit if they demonstrate reasonable cause for the delay and take prompt action upon becoming aware of the situation. This case does not change any previous position of law but reinforces the principle of giving a fair opportunity to all parties.

Conclusion

The Supreme Court allowed the State of Uttar Pradesh to rejoin the suit filed by the State of Uttarakhand, setting aside the ex parte order, subject to the payment of costs. This decision underscores the court’s approach to ensuring fair participation in legal proceedings, even when there are initial procedural lapses.