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Tea Auction Ltd. Versus Grace Hill Tea Industry and Anr.

2006 (9) TMI 573 - SUPREME COURT OF INDIA

Appeal (Civil) 4100 of 2006 (Arising out of SLP (C) No.18059/2005) - Dated:- 13-9-2006 - S. B. Sinha And D. K. Jain, JJ. JUDGMENT S. B. Sinha, J. Leave granted. Interpretation and application of the provisions of Order IX Rule 13 of the Code of Civil Procedure, 1908 (for short, 'CPC') is in question in this appeal which arises out of a judgment and order dated 2nd May, 2005 passed by a Division Bench of the Calcutta High Court in A.P.O.T.No.86 of 2005 arising out of C.S.No.234 of 2002 mo .....

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tion was to be served upon the defendants/respondents. The notice was returnable on 12th June, 2002. On the said notice, nobody had appeared on behalf of defendant No.1. A direction for filing of Affidavit in opposition was issued upon the plaintiff's application. Allegedly the said order was communicated to the respondent No.1 by Registered Post. The matter was again listed on 15th July, 2002. On that date nobody appeared on behalf of defendant No.1. A judgment and decree, upon admission fo .....

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ontending that they came to know about the institution of the said suit only when a memorandum of appeal together with a copy of the stay petition was served upon them in August, 2002. In terms of an order dated 7th December, 2004, a learned Single Judge found the said application to be thoroughly mischievous and devoid of any merit but still a direction for recalling the decree was passed on condition that respondent furnishes a security of ₹ 37 lakhs either in the form of bank guarantee .....

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d by the Lawyers not to appear before this Court without service of writ of summons. Admittedly, no writ of summons even today has been served upon the appellant/petitioner excepting that under the Original Side Rules of this Court Notice of Motion was taken out in respect of Order 12 Rule 6 of the Code and that notice has been served upon the appellant/petitioner. Therefore, there may be mis-under standing by the said litigant on the basis of the advice given by his learned Advocate and thereby .....

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behalf of the appellant would submit that the Division Bench committed a manifest error of law in so far as it failed to take into consideration that the Court had the power to direct furnishing of security as a pre-condition for recalling a money decree passed ex-parte. Mr. B. Raghunath, learned counsel appearing on behalf of the respondents, on the other hand, submitted that the condition imposed by the learned Single Judge being too harsh, the Division Bench rightly set aside the same. The a .....

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, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit; Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also: Provided .....

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l, no application shall lie under this rule for setting aside the ex parte decree." We may at once notice that whereas Order IX Rule 7 postulates setting aside of orders passed by the Court upon such terms of costs or otherwise; Order IX Rule 13, inter alia, postulates "payment into Court". What would be the meaning of "payment into Court" is the core question. In G.P. Srivastava v. R.K. Raizada & Ors. [(2000) 3 SCC 54], a similar question came up for consideration. .....

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t be stretched to rely upon other circumstances anterior in time. If "sufficient cause" is made out for non-appearance of the defendant on the date fixed for hearing when ex parte proceedings were initiated against him, he cannot be penalised for his previous negligence which had been overlooked and thereby condoned earlier. In a case where the defendant approaches the court immediately and within the statutory time specified, the discretion is normally exercised in his favour, provide .....

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own therein. In Vijay Kumar Madan & Ors. vs. R.N. Gupta Technical Education Society & Ors. [(2002) 5 SCC 30], this Court deprecated the practice of imposing an undue condition and putting the defendant on onerous terms, stating : "Power in the court to impose costs and to put the defendant-applicant on terms is spelled out from the expression "upon such terms as the court directs as to costs or otherwise". It is settled with the decision of this Court in Arjun Singh v. Moh .....

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ule 7 the court cannot pass an order which would have the effect of placing the defendant in a situation more worse off than what he would have been in if he had not applied under Rule 7. So also the conditions for taking benefit of the order should not be such as would have the effect of decreeing the suit itself. Similarly, the court may not in the garb of exercising power of placing upon terms make an order which probably the court may not have made in the suit itself. As pointed out in the c .....

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the courts to issue certain directions which need not be confined to costs or otherwise. 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 other attending facts and circumstances. It may also consider the question as to whether the defendant should be put on terms. The court .....

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risdiction keeping in view that the matter has been disposed of in fact finally at the interim stage at the back of defendant and it was in that view of the matter a chance was given to it to defend the suit, but, then the learned Single Judge was not correct to direct securing of the entire sum of ₹ 37 lakhs in the form of bank guarantee or deposit the sum in cash. The condition imposed should have been reasonable. What would be reasonable terms would depend upon facts and circumstances o .....

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e contention of the advocate for the petitioner. It looks to me that the Rule does not restrict the power of the Court to impose conditions for setting aside an ex parte decree to payment of costs only. The wording of the Rule is comprehensive enough to include conditions as to payment into Court of decretal amount or such other conditions as the Court thinks fit. Ordinarily the Court will not impose onerous conditions upon the defendant, such as the payment into Court of the whole or part of th .....

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r. ILR (1954) Bom. 371, it was held : "The next question is whether the condition which has been imposed by the Court below is a reasonable condition. The expression "such terms as to costs, payment into Court or otherwise as it thinks fit" suggests that the matter is one of discretion, but the discretion is to be exercised in a judicial manner. The condition to be imposed, therefore, upon a defendant should be reasonable and not oppressive. What condition should be imposed in a p .....

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principle seem to me to be that while the Court has got power to impose conditions upon a defendant including the condition of the payment of the entire amount of the decree, the conditions to be imposed should be reasonable and should not be oppressive or at least should not be conditions which will result in the defendant not being able to defend the suit." In B. Padmavathi Rai vs. Parvathiamma [AIR 1976 Karnataka 97], Shetty, J., as the learned Judge then was, opined : ".......The .....

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rt and, in my opinion, this covers the payment into Court of the decretal amount or some portion thereof or payment into Court of the costs. ....." I respectfully agree with the above view. The Court is competent to ask the defendant to pay a portion of the decretal amount or of the costs while setting aside the ex parte decree, but such conditions should not be unreasonable or illegal. In the instance case, I feel that the circumstances amply justify a direction to the defendant to deposit .....

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t the clause went on "or otherwise," and he thought that meant "in any other way," and that the clause did apply to the negligence of the butcher in allowing the dog to go loose and be lost." In Kavalappara Kottarathil Kochuni @ Moopil Nayar etc. vs. State of Madras & Kerala & Ors. [AIR 1960 SC 1080], this Court opined: "On the basis of this rule, it is contended, that the right or the custom mentioned in the clause is a distinct genus and the words "or .....

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