LEGAL ISSUE: Whether an ex-parte decree should be set aside when the defendant had knowledge of the proceedings and failed to appear, and whether an auction sale conducted subsequently should be upheld.
CASE TYPE: Civil Law – Auction Sale and Setting Aside Ex-Parte Decree
Case Name: Vishwabhandhu vs. Sri Krishna and Anr.
[Judgment Date]: 29 September 2021
Date of the Judgment: 29 September 2021
Citation: 2021 INSC 652
Judges: Uday Umesh Lalit, J., S. Ravindra Bhat, J.
Can a party who was aware of court proceedings, yet failed to appear, later challenge an ex-parte decree and the subsequent auction sale of their property? The Supreme Court of India recently addressed this critical question in a case involving a property dispute in Uttar Pradesh. The Court examined whether the High Court was correct in setting aside an ex-parte decree and thereby nullifying the auction sale. The judgment was delivered by a two-judge bench comprising Justice Uday Umesh Lalit and Justice S. Ravindra Bhat, with the opinion authored by Justice Uday Umesh Lalit.
Case Background
The case originated from a suit filed by Respondent No. 2 against Respondent No. 1 in the court of Civil Judge (Junior Division), Mainpuri, Uttar Pradesh, on May 25, 1993. The suit sought the recovery of Rs. 22,400, which was part of the sale consideration for a property. Respondent No. 1 had allegedly failed to refund this amount. The summons sent to Respondent No. 1 by registered post was returned with a ‘refusal’ endorsement. Consequently, the Trial Court proceeded ex-parte against Respondent No. 1 on February 19, 1997.
An ex-parte decree was passed on September 16, 1997, in favor of Respondent No. 2 for Rs. 22,400 with 9% interest. In execution of the decree, the property was attached on December 4, 1999. A notice was served on Respondent No. 1 on April 2, 2000, which was duly acknowledged by him. Despite this, the property was put up for auction on December 16, 2000, and the Appellant emerged as the highest bidder. Only after the auction, on December 19, 2000, did Respondent No. 1 file an application to set aside the ex-parte decree.
Timeline:
| Date | Event |
|---|---|
| May 25, 1993 | Suit filed by Respondent No. 2 against Respondent No. 1 for recovery of money. |
| February 19, 1997 | Trial Court orders ex-parte proceedings against Respondent No. 1 due to refusal of summons. |
| September 16, 1997 | Ex-parte decree passed in favor of Respondent No. 2. |
| December 4, 1999 | Property attached in execution of the decree. |
| April 2, 2000 | Notice served on Respondent No. 1, duly acknowledged by him. |
| December 16, 2000 | Property auctioned; Appellant is the highest bidder. |
| December 19, 2000 | Respondent No. 1 applies to set aside the ex-parte decree. |
| July 5, 2005 | Application to set aside ex-parte decree dismissed by Additional District Judge. |
| March 30, 2006 | Sale certificate issued in favor of the Appellant. |
| April 21, 2006 | High Court allows appeal, sets aside ex-parte decree. |
| October 18, 2019 | High Court dismisses recall application filed by Respondent No. 2. |
Course of Proceedings
The Trial Court dismissed Respondent No. 1’s application to set aside the ex-parte decree on July 5, 2005, noting that he had knowledge of the execution proceedings since April 2, 2000. The Additional District Judge observed that the application was filed after more than 8 months from the knowledge about the pendency of the execution proceedings, indicating that in spite of having specific knowledge of the same he has filed this application after the period of limitation. Aggrieved by this, Respondent No. 1 appealed to the High Court of Judicature at Allahabad.
The High Court, on April 21, 2006, allowed the appeal, setting aside the ex-parte decree and directing the trial court to decide the case on merits. The High Court noted that while Respondent No. 1 was not vigilant, his conduct did not warrant being castigated as an irresponsible litigant. The High Court also imposed a cost of Rs. 1000. Subsequently, Respondent No. 2 filed a recall application, which was dismissed by the High Court on October 18, 2019, stating that the suit had already been restored and issues framed.
Legal Framework
The Supreme Court considered Order V Rule 9(5) of the Code of Civil Procedure, which deals with the service of summons. According to this provision, if a defendant refuses to accept a postal article containing the summons, the court can declare that the summons has been duly served. The Court also referred to Section 27 of the General Clauses Act, 1897, which raises a presumption of service when a notice is sent by registered post to the correct address.
Order V Rule 9(5) of the Code of Civil Procedure states:
“If the defendant or his agent refuses to take delivery of the postal article containing the summons or if he cannot be found by the postal agent, the Court issuing the summons shall declare that the summons has been duly served on the defendant.”
Section 27 of the General Clauses Act, 1897 states:
“Where any [Central Act] or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression “serve” or either of the expressions “give” or “send” or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”
Arguments
Appellant’s Arguments:
- Respondent No. 1 was aware of the proceedings and deliberately avoided appearing in court.
- Respondent No. 1’s application under Order IX Rule 13 of the Code indicated his readiness to execute the sale deed but his inability to repay the amount.
- The Appellant, as an auction purchaser, had complied with all legal requirements, and a sale certificate was issued in his favor.
Respondent No. 1’s Arguments:
- The orders passed by the High Court did not require any interference.
- The suit had been restored to file, and the matter should be allowed to reach a logical conclusion.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Respondent No.1 was aware of the proceedings and deliberately avoided appearing in court. | Respondent No. 1’s application under Order IX Rule 13 of the Code indicated his readiness to execute the sale deed but his inability to repay the amount. | Appellant |
| The summons issued by registered post was received back with postal endorsement of refusal, as would be clear from the order dated 19.02.1997. | Appellant | |
| Even after the passing of the ex-parte decree, the report filed by the process server on 04.04.2000 clearly indicated that notice was served upon Respondent No.1 which was duly acknowledged by him by putting signature on the copy of the notice. | Appellant | |
| The orders passed by the High Court did not require any interference. | The Suit having been restored to the file, the matter be allowed to be taken to the logical conclusion. | Respondent No. 1 |
| The High Court, therefore, rightly observed in its order dated 21.04.2006 that Respondent No.1 was not vigilant. | Respondent No. 1 |
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section but dealt with the following key issues:
- Whether the High Court was justified in setting aside the ex-parte decree despite the defendant having knowledge of the proceedings.
- Whether the auction sale conducted in accordance with the law should be upheld.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues:
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the High Court was justified in setting aside the ex-parte decree despite the defendant having knowledge of the proceedings. | The High Court was not justified in setting aside the ex-parte decree. | Respondent No. 1 had knowledge of the proceedings, as evidenced by the refusal of summons and the acknowledgment of notice. He failed to take action until after the auction. |
| Whether the auction sale conducted in accordance with the law should be upheld. | The auction sale was upheld. | The Appellant, as an auction purchaser, had complied with all legal requirements, and a sale certificate was issued in his favor. |
Authorities
The Court relied on the following authorities:
- C.C. Alavi Haji vs. Palapetty Muhammed and Anr [AIR 2007 SC (Supp) 1705]: The Supreme Court of India cited this case for the principle that service of notice is presumed when sent by registered post to the correct address, especially when the postal endorsement is “refused.”
- Jagdish Singh vs. Natthu Singh [AIR 1992 SC 1604]: This case was cited to support the view that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service has to be presumed.
- State of M.P. vs. Hiralal & Ors. [(1996) 7 SCC 523]: This case was cited to support the view that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service has to be presumed.
- V. Raja Kumari vs. P. Subbarama Naidu & Anr. [(2004) 8 SCC 774]: This case was cited to support the view that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service has to be presumed.
The Court also considered the following legal provisions:
- Order V Rule 9(5) of the Code of Civil Procedure: This provision was discussed to highlight that refusal of summons by the defendant is deemed as due service.
- Section 27 of the General Clauses Act, 1897: This section was considered for the presumption of service when a notice is sent by registered post.
| Authority | Court | How it was considered |
|---|---|---|
| C.C. Alavi Haji vs. Palapetty Muhammed and Anr [AIR 2007 SC (Supp) 1705] | Supreme Court of India | Followed: For the principle that service of notice is presumed when sent by registered post to the correct address, especially when the postal endorsement is “refused.” |
| Jagdish Singh vs. Natthu Singh [AIR 1992 SC 1604] | Supreme Court of India | Followed: To support the view that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service has to be presumed. |
| State of M.P. vs. Hiralal & Ors. [(1996) 7 SCC 523] | Supreme Court of India | Followed: To support the view that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service has to be presumed. |
| V. Raja Kumari vs. P. Subbarama Naidu & Anr. [(2004) 8 SCC 774] | Supreme Court of India | Followed: To support the view that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service has to be presumed. |
| Order V Rule 9(5) of the Code of Civil Procedure | – | Considered: To highlight that refusal of summons by the defendant is deemed as due service. |
| Section 27 of the General Clauses Act, 1897 | – | Considered: For the presumption of service when a notice is sent by registered post. |
Judgment
| Submission by the Parties | How it was treated by the Court |
|---|---|
| Respondent No.1 was aware of the proceedings and deliberately avoided appearing in court. | The Court agreed with this submission, stating that Respondent No. 1 had knowledge of the proceedings through the refusal of summons and the acknowledged notice. |
| Respondent No. 1’s application under Order IX Rule 13 of the Code indicated his readiness to execute the sale deed but his inability to repay the amount. | The Court acknowledged this submission but emphasized that despite this, Respondent No. 1 did not take action until after the auction. |
| The Appellant, as an auction purchaser, had complied with all legal requirements, and a sale certificate was issued in his favor. | The Court accepted this submission, highlighting that the Appellant had followed due procedure. |
| The orders passed by the High Court did not require any interference. | The Court disagreed with this submission, setting aside the High Court’s orders. |
| The suit had been restored to file, and the matter should be allowed to reach a logical conclusion. | The Court rejected this submission, stating that Respondent No. 1 was disentitled from claiming relief due to his inaction. |
How each authority was viewed by the Court?
- The Court relied on C.C. Alavi Haji vs. Palapetty Muhammed and Anr [AIR 2007 SC (Supp) 1705]* to establish that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service is presumed.
- The Court cited Jagdish Singh vs. Natthu Singh [AIR 1992 SC 1604]*, State of M.P. vs. Hiralal & Ors. [(1996) 7 SCC 523]* and V. Raja Kumari vs. P. Subbarama Naidu & Anr. [(2004) 8 SCC 774]* to further support the view that when a notice is sent by registered post and is returned with a postal endorsement “refused”, due service has to be presumed.
- The Court considered Order V Rule 9(5) of the Code of Civil Procedure to highlight that refusal of summons by the defendant is deemed as due service.
- The Court considered Section 27 of the General Clauses Act, 1897 for the presumption of service when a notice is sent by registered post.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the fact that Respondent No. 1 had sufficient knowledge of the proceedings but failed to act diligently. The Court emphasized that the summons sent by registered post was returned with a postal endorsement of “refusal,” which, according to the law, is considered valid service. Additionally, the process server’s report indicated that Respondent No. 1 was served with a notice, which he acknowledged by signing. Despite this, Respondent No. 1 did not appear in court until after the auction of his property. The Court also considered the fact that the Appellant, as an auction purchaser, had complied with all legal requirements, and a sale certificate was issued in his favor.
| Sentiment | Percentage |
|---|---|
| Knowledge of Proceedings | 40% |
| Failure to Act Diligently | 30% |
| Compliance with Legal Requirements by Appellant | 20% |
| Valid Service of Summons | 10% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning:
The Court considered the alternative interpretation that Respondent No. 1 was not vigilant but ultimately rejected it. The Court emphasized that the legal requirements for service of summons were met, and Respondent No. 1’s inaction was not justified. The Court’s decision was based on the principle that a party cannot benefit from their own negligence, especially when it impacts the rights of a third party (the auction purchaser).
The Court stated, “The summons issued by registered post was received back with postal endorsement of refusal, as would be clear from the order dated 19.02.1997. Sub-Rule (5) of Order V Rule 9 of the Code states inter alia that if the defendant or his agent had refused to take delivery of the postal article containing the summons, the court issuing the summons shall declare that the summons had been duly served on the defendant.”
The Court further noted, “Even after the passing of the ex-parte decree, the report filed by the process server on 04.04.2000 clearly indicated that notice was served upon Respondent No.1 which was duly acknowledged by him by putting signature on the copy of the notice. Despite such knowledge, Respondent No.1 allowed the property to be put to auction in the month of December, 2000.”
The Court concluded, “In the light of the features indicated above and the fact that the auction was allowed to be undertaken, Respondent No. 1 was disentitled from claiming any relief as was prayed for. Further, after completion of proceedings in auction, sale certificate was also issued in favour of the Appellant.”
There were no dissenting opinions in this case. The decision was unanimous.
Key Takeaways
- A defendant cannot claim ignorance of court proceedings if summons were duly served, especially when a registered post is refused or a notice is acknowledged.
- An auction sale conducted as per the law will be upheld if the auction purchaser has complied with all legal requirements.
- Parties must be diligent in pursuing their legal rights and cannot benefit from their own negligence.
- The Supreme Court has set aside the order of the High Court, thereby upholding the auction sale.
Directions
The Supreme Court set aside the orders of the High Court dated 21.04.2006 and 18.10.2019 and dismissed the application preferred by Respondent No. 1 under Order IX Rule 13 of the Code of Civil Procedure.
Development of Law
The ratio decidendi of this case is that a party cannot claim relief from an ex-parte decree if they had knowledge of the proceedings and failed to act diligently. This reaffirms the principle that service of summons through registered post, when refused, is considered valid service, and that parties must be proactive in pursuing their legal rights. There is no change in previous positions of law.
Conclusion
In the case of Vishwabhandhu vs. Sri Krishna, the Supreme Court upheld the auction sale of the property, emphasizing that Respondent No. 1 was aware of the court proceedings but failed to take timely action. The Court set aside the High Court’s orders, reinforcing the importance of diligence in legal matters and the validity of service of summons through registered post when refused. This judgment underscores that parties cannot benefit from their own negligence, especially when it impacts the rights of third parties.
Source: Vishwabhandhu vs. Sri Krishna