Supreme Court settles the mandatory deposit for setting aside ex-parte decrees in Small Cause Court Cases: Subodh Kumar vs. Shamim Ahmed (2021) INSC 123 (03 March 2021)

Date of the Judgment: 03 March 2021
Citation: (2021) INSC 123
Judges: Ashok Bhushan, J., R. Subhash Reddy, J.
Can a tenant’s application to set aside an ex-parte decree be rejected if they fail to deposit the full decretal amount at the time of filing the application? The Supreme Court of India addressed this critical question in a recent case concerning the Provincial Small Cause Courts Act, 1887. The Court clarified the mandatory nature of the deposit requirement under Section 17 of the Act, emphasizing its importance for maintaining the integrity of the judicial process. The judgment was delivered by a two-judge bench comprising Justice Ashok Bhushan and Justice R. Subhash Reddy.

Case Background

The dispute revolves around shop No. 39(29) in Roorkee, Haridwar. The appellant, Subodh Kumar (referred to as the ‘landlord’), purchased the property on 30 January 1991. The respondent, Shamim Ahmed (referred to as the ‘tenant’), was inducted as a tenant by the previous owner at a monthly rent of Rs. 150. On 18 March 1994, the landlord filed S.C.C Case No. 4 of 1994, seeking possession, rent, and mesne profits, claiming that the tenant was in default, and a notice was given on 24 December 1993.

The tenant was served a summons on 14 July 1994. He sought time to file a written statement, but failed to do so despite multiple opportunities. Consequently, the court proceeded ex-parte against the tenant on 24 February 1997. The landlord was permitted to give ex-parte evidence on 18 March 1997. The tenant’s application to recall the ex-parte orders was rejected on 16 May 1997.

On 23 May 1997, the tenant applied under Section 30(2) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, to deposit the rent, which was allowed with the condition that the plaintiff may deposit the amount at his own risk. The tenant deposited Rs. 16,800 on 7 July 1997, covering rent from 1 March 1988 to 30 June 1997. A revision against the order dated 16 May 1997 was rejected on 22 August 1997. The tenant made a further deposit of Rs. 750 on 18 October 1997.

The S.C.C. case was decided ex-parte on 31 March 1998. The landlord filed for execution of the decree on 27 July 1998, claiming Rs. 21,660. On 25 August 1998, the tenant filed an application under Order 9 Rule 13 of the Code of Civil Procedure (CPC) to recall the ex-parte decree, without depositing the decretal amount as required by Section 17 of the Provincial Small Cause Courts Act, 1887. The tenant later deposited Rs. 1,950 on 25 November 1998. On 27 July 2002, the tenant requested that the deposits made under Section 30(2) of the U.P. Act be considered as deposits under Section 17 of the 1887 Act. The trial court rejected the tenant’s application on 19 April 2007, which was upheld by the District Judge on 23 February 2008.

Timeline

Course of Proceedings

The tenant initially filed an application under Section 10 of CPC to stay the suit and an application under Order VII Rule 11 CPC, both of which were rejected. After the trial court proceeded ex-parte, the tenant’s application to recall the ex-parte orders was also rejected. The trial court rejected the tenant’s application under Order 9 Rule 13 and Section 5 of the Limitation Act on 19 April 2007. The District Judge rejected the tenant’s revision on 23 February 2008. Aggrieved, the tenant filed a Writ Petition No. 418 of 2008 in the High Court.

The High Court allowed the writ petition on 13 December 2018, setting aside the orders of the trial court and the Revisional Court, and remanded the matter back to the trial court for reconsideration. The landlord’s special leave petition in the Supreme Court was dismissed with liberty to file a review petition before the High Court. The review application was also rejected on 24 May 2019. The landlord then appealed to the Supreme Court against the High Court’s judgments. Following the High Court’s remand order, the trial court allowed the tenant’s application under Order 9 Rule 13 CPC and Section 5 of the Limitation Act on 24 May 2019.

Legal Framework

The core legal issue revolves around Section 17 of the Provincial Small Cause Courts Act, 1887, which outlines the procedure for setting aside ex-parte decrees. Section 17(1) states that the procedure prescribed in the Code of Civil Procedure, 1908, shall be followed in a Court of Small Causes, except as otherwise provided. The proviso to Section 17(1) is crucial and states:

“Provided that an applicant for an order to set aside a decree passed ex parte or for a review of judgment shall, at the time of presenting his application, either deposit in the Court the amount due from him under the decree or in pursuance of the judgment, or give such security for the performance of the decree or compliance with the judgment as the Court may, on a previous application made by him in this behalf, have directed.”

This proviso mandates that an applicant seeking to set aside an ex-parte decree must either deposit the decretal amount or provide security as directed by the court on a previous application.

The Court also considered Section 2 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, which provides exemptions from the operation of the Act for certain buildings.

Section 2 of the U.P. Act No. 13 of 1972 provides:
“2. Exemptions from operation of Act . (1)….. ….. (2) Except as provided in sub-section (5) of Section 12, sub-section (1-A) of Section 21, sub-section (2) of Section 24, Sections 24-A, 24-B, 24-C or sub-section (3) of Section 29, nothing in this Act shall apply to a building during a period of ten years from the date on which its construction is completed”

Arguments

Landlord’s Arguments:

• The tenant’s application under Order 9 Rule 13 CPC was not maintainable due to non-compliance with the mandatory requirements of Section 17 of the Provincial Small Cause Courts Act, 1887.
• The proviso to Section 17 requires the tenant to deposit the entire decretal amount due on the date of filing the application, which was not done.
• The application to adjust the amount deposited under Section 30(2) of the U.P. Act No. 13 of 1972 was filed after four years and cannot be considered.
• The deposit under Section 30(2) was in the joint name of the appellant and respondent No. 5, and therefore, cannot be used for the benefit of the tenant.
• The deposit made under Section 30(2) was not the entire decretal amount due on the date of filing the application under Order 9 Rule 13.
• The execution application was filed on 27 July 1998, claiming Rs. 21,660, while the tenant had only deposited Rs. 17,550.
• There was no valid ground to allow the application under Order 9 Rule 13, as the order to proceed ex-parte was unsuccessfully challenged by the tenant.

Tenant’s Arguments:

• The amount deposited under Section 30(2) of the U.P. Act No. 13 of 1972 should be credited for the purposes of the proviso to Section 17 of the Act, 1887.
• The High Court correctly held that the amount deposited up to 31 December 1998, under Section 30(2), meant that the application under Order 9 Rule 13 could not be rejected for non-compliance with Section 17.
• The lower courts adopted a hyper-technical and pedantic approach while considering the application under Order 9 Rule 13 and Section 5 of the Limitation Act.
• The tenant had deposited the entire decretal amount due at the time of filing the application under Order 9 Rule 13.

The innovativeness of the argument by the tenant was to claim that the deposit made under Section 30(2) of the U.P. Act No. 13 of 1972 should be considered as compliance with Section 17 of the Provincial Small Cause Courts Act, 1887, an argument that was ultimately rejected by the Supreme Court.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the requirements of the proviso to Section 17 of the Provincial Small Cause Courts Act, 1887, were complied with in the tenant’s application under Order 9 Rule 13 CPC filed on 25 August 1998?
2. Whether the tenant had deposited the entire amount due on 25 August 1998, under Section 30(2) of the U.P. Act No. 13 of 1972?
3. Whether the deposit of rent under Section 30(2) of the U.P. Act No. 13 of 1972 can be treated as a deposit under the proviso to Section 17 of the Act, 1887?
4. Whether the tenant made sufficient grounds to allow the application filed under Order 9 Rule 13 CPC dated 25 August 1998?
5. Whether the High Court was correct in its view that the trial court and the Revisional Court had taken a hyper-technical and pedantic approach while considering the application under Order 9 Rule 13 CPC and Section 5 of the Limitation Act?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• The Supreme Court followed Kedarnath vs. Mohan Lal Kesarwari and others, (2002) 2 SCC 16*, reiterating that compliance with the proviso to Section 17 is mandatory.
• The High Court’s judgment in Prem Chandra Mishra versus IInd Additional District Judge, Etah, (2008) 9 ADJ 13* was distinguished, as the applicability of the U.P. Act No. 13 of 1972 was not in question in that case.
• The Supreme Court distinguished Kailash versus Nanku and others, (2005) 4 SCC 480*, stating that it did not apply to the present case as it involved non-compliance with a condition precedent.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the mandatory nature of the proviso to Section 17 of the Provincial Small Cause Courts Act, 1887. The Court emphasized that the deposit of the decretal amount at the time of filing an application under Order 9 Rule 13 CPC is a condition precedent for the maintainability of such an application. The Court also considered the fact that the tenant had been given multiple opportunities to file a written statement and had failed to do so, indicating a lack of diligence. The Court also noted that the landlord had been unable to reap the benefits of the decree passed in his favor for a long time.

The Court’s reasoning was heavily based on the legal interpretation of Section 17 and its proviso, with a lesser emphasis on the factual aspects of the case.

The Court considered the argument that the deposit made by the tenant under Section 30(2) of the U.P. Act No. 13 of 1972 should be considered as compliance with Section 17 of the Provincial Small Cause Courts Act, 1887. However, the Court rejected this argument, holding that Section 30(2) was not applicable to the case as the landlord had claimed exemption from the operation of the U.P. Act No. 13 of 1972. The Court also considered the argument that the lower courts had adopted a hyper-technical approach, but held that the requirements under Section 17 were mandatory and not merely procedural.

The Supreme Court’s decision was based on a strict interpretation of the law and a finding that the tenant did not comply with the mandatory requirements of Section 17 of the Provincial Small Cause Courts Act, 1887. The Court held that the High Court had erred in setting aside the orders of the trial court and the Revisional Court.

The majority opinion was delivered by Justice Ashok Bhushan, with Justice R. Subhash Reddy concurring. There were no dissenting opinions.

The Court’s reasoning was based on the following points:

• The proviso to Section 17 is mandatory and requires either deposit of the decretal amount or provision of security as directed by the court on a previous application.
• The tenant failed to deposit the decretal amount at the time of filing the application under Order 9 Rule 13 CPC.
• The tenant did not make a prior application seeking permission to provide security in lieu of deposit.
• The deposit under Section 30(2) of the U.P. Act No. 13 of 1972 was not a valid deposit for the purposes of Section 17 of the Provincial Small Cause Courts Act, 1887.
• The tenant did not make sufficient grounds to set aside the ex-parte decree.

The Supreme Court’s decision implies that in cases before the Small Cause Courts, tenants must strictly comply with the requirements of Section 17 of the Provincial Small Cause Courts Act, 1887, when seeking to set aside ex-parte decrees. The judgment clarifies that deposits made under other statutes cannot automatically be considered as compliance with Section 17. This decision is likely to have a significant impact on future cases involving ex-parte decrees in Small Cause Courts, emphasizing the need for strict adherence to procedural requirements.

There were no new doctrines or legal principles introduced in this judgment. The Court primarily applied existing legal principles to the facts of the case.

Key Takeaways

• Tenants seeking to set aside ex-parte decrees in Small Cause Courts must strictly comply with the mandatory deposit requirements of Section 17 of the Provincial Small Cause Courts Act, 1887.
• Deposits made under other statutes, such as Section 30(2) of the U.P. Act No. 13 of 1972, cannot automatically be considered as compliance with Section 17.
• Failure to deposit the full decretal amount at the time of filing the application under Order 9 Rule 13 CPC will render the application incompetent.
• Tenants must make a separate application to seek permission to provide security in lieu of deposit.
• The courts will not adopt a lenient approach towards non-compliance with mandatory procedural requirements.

This judgment emphasizes the mandatory nature of procedural requirements in Small Cause Court cases and is likely to be followed strictly in future cases. It will also ensure that landlords are not unduly delayed in realizing the benefits of decrees passed in their favor.

Directions

The Supreme Court directed the Executing Court to execute the decree in favor of the landlord and put the landlord in possession along with the payment of the entire decretal amount up to date within a period of three months from the date the copy of the judgment is produced before the Executing Court.

Development of Law

The ratio decidendi of this case is that the proviso to Section 17 of the Provincial Small Cause Courts Act, 1887, is mandatory, requiring the deposit of the decretal amount or the provision of security at the time of filing an application to set aside an ex-parte decree. Thisratio has further clarified the existing law by emphasizing strict compliance with procedural requirements. The decision reinforces the principle that procedural laws are not mere formalities but are essential for the proper administration of justice.