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2006(7) Supreme 279
SUPREME COURT OF INDIA
(From Calcutta High Court)
S.B. Sinha and D.K. Jain, JJ.
Tea Auction Ltd.—Appellant
versus
Grace Hill Tea Industry & Anr.—Respondents
Civil Appeal No. 4100 of 2006
Decided on 13-9-2006
Counsel for the Parties :
For the Appellant : Bhaskar P. Gupta, Sr. Advocate, K. Datta, K.V. Mohan, Nitin Jain, Advocates.
For the Respondents : B. Reghunath, Gireesh Kamal, R. Neduraman, Advocates.
Held : Order IX Rule 13 of CPC did not undergo any amendment in the year 1976. The High Courts, for a long time, had been interpreting the said provision as conferring power upon 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, indisputably, however, is not denuded of its power to put the defendants to terms. It is, however, trite that such terms should not be unreasonable or harshly excessive. Once unreasonable or harsh conditions are imposed, the appellate court would have power to interfere therewith. But, it would not be correct to hold that no error has been committed by the Division Bench in holding that the learned Single Judge did not possess such power. The learned Single Judge exercised its discretionary jurisdiction 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 Rs.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 of each case.(Para 16)
While setting aside a decree, conditions can be imposed but such conditions should not be unreasonable or harshly excessive. Keeping in view the peculiar facts and circumstances, we are of the opinion that interest of justice would be sub-served if respondent No.1 herein is directed to furnish security to the extent of Rs. 5 lakhs. Such security should be furnished to the satisfaction of the learned Single Judge. The security, other than the deposit of the amount in cash, should be furnished within 12 weeks from the date. Plaintiff-Appellant would be entitled to press his application for passing a decree on admission. Defendant-Respondent No.1 would also be entitled to file his objection as to why a decree under Order XII Rule 6 shall not be passed. Such a cause, if not already filed, must be filed within 8 weeks from date.(Paras 24 and 25)
JUDGMENT
S.B. Sinha, J.—Leave granted.
2. 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 modifying an order passed by a learned Single Judge of the said court.
3. The plaintiff is the appellant before us. It filed a suit on the original side of the Calcutta High Court claiming a decree for a sum of Rs. 37,26,498/- with interest against the respondents. Leave under Clause 12 of the Letters Patent of the said court was also obtained. An application was filed for recording a decree under Order XII Rule 6 of Code of Civil Procedure on 23rd May, 2002. On the said application, notice of motion 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 plaintiffs 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 for a sum of Rs.37,26,428/- along with interest, was passed against defendant No.1.
4. Defendant No.2 was a tea broker of defendant No.1. It was impleaded as the guarantor of defendant No.1. No decree, however, was passed against it. An appeal was preferred by the plaintiff-appellant thereagainst as no decree had been passed against defendant No.2. The said appeal was dismissed. The defendant-respondent No.1, thereafter, filed an application for recalling the said ex-parte decree, inter alia, contending 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.
5. 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 Rs.37 lakhs either in the form of bank guarantee or in cash within a period of three months therefrom.
6. An appeal preferred thereagainst has been allowed by the Division Bench by reason of the impugned judgment. The Division Bench of the High Court while passing the impugned judgment, proceeded on the basis that the learned Single Judge having exercised his discretionary jurisdiction under Order IX Rule 13 of CPC, could not have imposed such a harsh condition, stating :
"It is also stated before us that the appellant/petitioner was advised 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 misunderstanding by the said litigant on the basis of the advice given by his learned Advocate and thereby prevented by a sufficient cause to appear before the Court when the matter was called on for passing the decree under Order 12 Rule 6 of the Code. When we look into the matter from that angle we feel that the order so passed by the Honble First Court directing to secure claim of the respondent for the same amount, being the order so passed by Court, being a sum of Rs.37 lacs, we feel that order cannot be sustained in law."
7. Mr. Bhaskar P. Gupta, learned Senior Counsel appearing on 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 C
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