IMPORTANT POINTS
Delay should be condoned if there is no negligence, inaction or lack of bona fide on the part of the applicant. True test is due diligence on the part of the applicant.
Powers u/s 5 of Limitation Act and Order IX Rule 13, CPC is discretionary. Court has power to direct payment of part of decreetal amount or the cost.
While exercising power u/s 5 of Limitation Act and Order IX Rule 13, CPC court should not impose onerous conditions.

Headnote:(a) Limitation Act, 1963 – Section 5 – Condonation of delay – Sufficient cause – Should be construed liberally – Delay should be condoned if there is no negligence, inaction or lack of bona fide on part of applicant – True test – Due diligence on part of applicant – Power of court is discretionary – Should be exercised with vigilance and circumspection. (Para 8)
       (b) Limitation Act, 1963 – Section 5 and Order IX Rule 13, Code of Civil Procedure, 1908 – Powers are discretionary – Court has power to direct payment of part of decreetal amount or the cost. (Para 9)
       (2002) 3 SCC 159; (2006) 12 SCC 104: (2006) 9 SCALE 223; (2002) 5 SCC 30 – Relied upon
       (c) Limitation Act, 1963 – Section 5 and Order IX Rule 13, Code of Civil Procedure, 1908 –Application for condonation of delay and setting aside ex parte decree – Appellant explaining the delay satisfactorily – Trial court directing depositing entire decreetal amount – Not proper when the issues are yet to be decided on merits – Appellant already complying with orders of Supreme Court passed in SLPs – Impugned orders liable to be set aside. (Para 11)
       Facts of the case:
       Appellants and respondents entered into an agreement of sale on 1.08.2008, under which the respondents agreed to purchase the property of the appellants being the factory premise for a sum of Rs.5,00,00,000/-and the respondents paid Rs.1,50,00,000/-towards part of sale consideration.
       The sale transaction could not be completed.
       The respondents issued legal notice dated 24.11.2010 calling upon the appellants either to execute the sale deed or refund the advance amount of Rs.1,50,00,000/-with interest at the rate of 12% p.a.
       The appellants offered to return the said amount but without interest.
       The respondents filed suit for recovery of the sum of Rs. 1,50,00,000/- with interest.
       On 16.06.2011, the appellants-defendants were set ex-parte in the suit which was decreed ex-parte by the Principal District Judge, Thanjavur.
       Respondents have also filed another suit for recovery of a sum of Rs.10,00,000/-said to have been paid by them to the appellants by way of an advance towards the purchase of another property.
       The said suit was decreed ex-parte.
       The appellants have filed I.A. to set aside the ex-parte decree alongwith application to condone the delay of 382 days. The said application was allowed by the Principal District Judge, Thanjavur by order dated 4.12.2012 imposing condition to deposit a sum of Rs.10,00,000/-.
       The appellants filed I.A. in both the suits praying for condonation of delay of 355 days and 382 days respectively in filing the applications under Order IX Rule 13 CPC, for setting aside the ex-parte decrees.
       The Principal District Judge, Thanjavur vide separate order condoned the delay of 355 days and 382 days in filing the applications under Order IX Rule 13 CPC for setting aside the ex-parte decree and allowed the applications in IA but subject to condition that the appellants should deposit Rs.1,50,00,000/-and Rs.10,00,000/-respectively in the court on or before 3.01.2013, failing which the applications will automatically stand dismissed.
       The appellants filed revision petitions before the High Court. The High Court upheld the order imposing condition to deposit Rs.1,50,00,000/- and Rs.10,00,000/- as a condition precedent to condone the delay in filing application to set aside the ex-parte decrees and thereby dismissed the revisions.
       Finding of the Court:
       Impugned orders are onerous.
       Result: Appeal allowed.

Judgement Key Points

Conclusion of the Case

The Supreme Court allowed both Civil Appeals Nos. 4472/2015 and 4473/2015. (!) [1000566240012]

Key Holdings: - The condition imposed by the trial court requiring deposit of the entire decretal amounts (Rs. 1,50,00,000/- and Rs. 10,00,000/-) as a precondition for setting aside the ex-parte decrees was held unreasonable and onerous, considering the disputed nature of the claims and the sufficient cause shown for delay in filing applications under Order IX Rule 13 CPC. (!) (!) [1000566240011] - The Madras High Court erred in upholding the trial court's order without interfering with the disproportionate deposit condition, which defeated the purpose of equitable relief under Order IX Rule 13 CPC. (!) [1000566240012] - While setting aside the deposit conditions, the Supreme Court directed the appellants to keep the Rs. 50,00,000/- already deposited pursuant to the interim order dated 01.08.2013 with the Registry, adjustable against any final decree, and to furnish bank guarantee for the balance decretal amount within 8 weeks to secure the respondents' interests during trial. (!) (!) [1000566240013] - The trial court was directed to expeditiously dispose of I.A. Nos. 77/2012 and 78/2012 on merits, affording opportunity to both parties, preferably within 6 months from the date of the judgment. (!) [1000566240014] - No costs awarded in the appeals. (!)

Rationale Summary: - Ex-parte decrees should be set aside if sufficient cause for non-appearance is established, balancing equities without imposing punitive preconditions that prejudice the defendant. (!) (!) - Respondents' interests protected through modified security, given their age and financial hardship, but not at the cost of denying appellants a fair trial opportunity. (!) (!) [1000566240006][1000566240010]

JUDGMENT

R. BANUMATHI, J.

Leave granted.

2. These appeals arise out of common order dated 16.04.2013, passed by the High Court of Madras, Madurai Bench in C.R.P. (NPD) (MD) No.4/2013 and C.R.P. (NPD) (MD) No.5/2013 respectively, confirming the order dated 4.12.2012 passed by the Principal District Judge, Thanjavur, imposing conditions to deposit Rs.1,50,00,000/-and Rs.10,00,000/-, as a condition to condone the delay in filing the applications to set aside the ex-parte decrees passed in O.S.No.3 of 2011 and O.S. No.6 of 2011.

3. Appellants and respondents entered into an agreement of sale on 1.08.2008, under which the respondents agreed to purchase the property of the appellants being the factory premise for a sum of Rs.5,00,00,000/-and the respondents paid Rs.1,50,00,000/-towards part of sale consideration. The sale transaction could not be completed. The respondents issued legal notice dated 24.11.2010 calling upon the appellants either to execute the sale deed or refund the advance amount of Rs.1,50,00,000/-with interest at the rate of 12% p.a. The appellants received the said notice and sent the reply offering to return the said amount but without interest. The respondents filed the suit being O.S.No.3/2011 for recovery of the sum of Rs. 1,50,00,000/- with interest. The case was adjourned from time to time on various dates. On 16.06.2011, the appellants-defendants were set ex-parte in the suit. After recording evidence adduced by the respondents-plaintiffs on 5.07.2011, the said suit was decreed ex-parte by the Principal District Judge, Thanjavur.

4. Respondents have also filed another suit O.S. No.6 of 2011 for recovery of a sum of Rs.10,00,000/-said to have been paid by them to the appellants by way of an advance towards the purchase of another property. The said suit was decreed ex-parte on 16.06.2011. The appellants have filed I.A. No.78 of 2012 to set aside the ex-parte decree alongwith application to condone the delay of 382 days under Section 5 of the Limitation Act. The said application was allowed by the Principal District Judge, Thanjavur by order dated 4.12.2012 imposing condition to deposit a sum of Rs.10,00,000/-.

5. The appellants filed I.A.No.77 of 2012 and I.A. No.78 of 2012 in both the suits praying for condonation of delay of 355 days and 382 days respectively in filing the applications under Order IX Rule 13 CPC, for setting aside the ex-parte decrees. The appellants averred that they came to know about the ex-parte decrees only on 13.07.2012, when they saw a public notice in the daily newspaper regarding the attachment of the suit property. The Principal District Judge, Thanjavur vide separate order dated 4.12.12 condoned the delay of 355 days and 382 days in filing the applications under Order IX Rule 13 CPC for setting aside the ex-parte decree and allowed the applications in IA No.77 of 2012 and I.A. No.78 of 2012 but subject to condition that the appellants should deposit Rs.1,50,00,000/-and Rs.10,00,000/-respectively in the court on or before 3.01.2013, failing which the applications will automatically stand dismissed. Being aggrieved by the stringent condition, the appellants filed revision petitions before the High Court. The High Court vide impugned order dated 16.04.13 upheld the order imposing condition to deposit Rs.1,50,00,000/- and Rs.10,00,000/- as a condition precedent to condone the delay in filing application to set aside the ex-parte decrees and thereby dismissed the revisions which are under challenge in these appeals.

6. Learned counsel for the appellants contended that the direction to deposit the entire decreetal amount of Rs.1,50,00,000/-in O.S. No.3 of 2011 and the decreetal amount of Rs.10,00,000/-in O.S. No.6 of 2011 as a condition precedent to set aside the ex-parte decrees is onerous and unreasonable and prayed to set aside the impugned order. In support of his contention, learned Senior Counsel Mr. Brijender Chahar for the appellants placed reliance upon the judgment of this

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2015 Supreme(SC) 424

Conclusion of the Case

Cases Referred (3)