1. Parties disputed an ex parte decree and subsequent refusal to condone delay for setting aside said decree under the Code of Civil Procedure. (Para 3 , 4 , 5 , 6 , 7 )
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2026 Supreme(SC) 1319
SUPREME COURT OF INDIA
UJJAL BHUYAN, ATUL S. CHANDURKAR, JJ.
Hiroo Hotchand Advani – Appellant
Versus
Integrated Finance Company Limited And Others – Respondents
Civil Appeal No. 14059 of 2026 (@ SLP (C) No. 20884 of 2024)
With
Integrated Finance Company Limited – Appellant
Versus
Hiroo Hotchand Advani And Others – Respondents
Civil Appeal No. 14060 of 2026 (@ SLP (C) No. 27307 of 2024)
Decided On : 28-10-2026
Advocates appeared:
For the Petitioner(s): Mrs. Pragya Baghel- 1841, AOR Mr. Surjendu Sankar Das- 2455, AOR
For the Respondent(s): Mr. Siddharth Bhatnagar, Sr. Adv. Mr. Surjendu Sankar Das- 2455, AOR Ms. Annie Mittal, Adv. Mr. Vishwajeet Singh Shekhawat, Adv. Mr. Asif Lampwala, Adv. Mr. Chirag Sancheti, Adv. Mr. Aditya Sidhra, Adv. Mr. V. P. Raman, Adv. Mrs. Pragya Baghel- 1841, AOR Mr. K. Seshasayee, Adv. Mr. Yuvraj Kashyap, Adv.
For the Petitioner(s): Mrs. Pragya Baghel- 1841, AOR Mr. Surjendu Sankar Das- 2455, AOR
For the Respondent(s): Mr. Siddharth Bhatnagar, Sr. Adv. Mr. Surjendu Sankar Das- 2455, AOR Ms. Annie Mittal, Adv. Mr. Vishwajeet Singh Shekhawat, Adv. Mr. Asif Lampwala, Adv. Mr. Chirag Sancheti, Adv. Mr. Aditya Sidhra, Adv. Mr. V. P. Raman, Adv. Mrs. Pragya Baghel- 1841, AOR Mr. K. Seshasayee, Adv. Mr. Yuvraj Kashyap, Adv.
While courts may impose monetary conditions to condone delay in setting aside an ex parte decree, such sums should be deposited with the court registry rather than paid directly to the plaintiff, ensuring the amount remains subject to the final outcome of the proceedings.
Headnote:(A) Code of Civil Procedure, 1908 - Order IX Rule 13 - Condonation of delay in applying to set aside ex parte decree - Discretion of the court - Court's discretion to condone delay, if not arbitrary or irrational, does not warrant interference under Article 136 of the Constitution of India (Para 14).
(B) Condonation of delay - Imposition of conditions - While requiring a deposit as a condition for condoning delay is reasonable, directing the payment of such sum directly to the plaintiff at the stage of seeking to set aside an ex parte decree is unwarranted - Appropriate direction is to deposit the sum with the court to be subject to the final outcome of the proceedings (Para 15).
Facts of the case:
In a recovery suit filed by a company against a partnership firm, an ex parte decree was passed. A partner of the firm filed an application to set aside the decree with a delay of 423 days. The trial court dismissed the application for condonation of delay. The appellate court subsequently condoned the delay subject to the condition that the applicant pay a sum of Rs. 75 lakhs to the plaintiff for disbursement to depositors. Both the plaintiff and the defendant challenged the appellate court's decision.
Findings of Court:
The court held that the discretion exercised by the appellate court in condoning the delay was not arbitrary or irrational. However, the direction to pay the specified amount directly to the plaintiff was found to be unwarranted. The amount should instead be deposited with the court and invested in an interest-bearing deposit pending the final outcome of the proceedings. The quantum of the deposit was found to be reasonable.
Issues: Whether the discretion to condone the delay of 423 days in applying to set aside the ex parte decree was arbitrary, and whether the condition to pay a sum of Rs. 75 lakhs directly to the plaintiff was justified.
Ratio Decidendi: Appellate courts will not interfere with the discretionary condonation of delay unless the decision is perversely arbitrary. While conditional condonation is acceptable to ensure diligence, the funds must be secured with the registry rather than paid to the opposite party before the merits of the application to set aside the decree are determined.
Result: Direction to pay the plaintiff modified to requiring the amount be deposited with the High Court.
Act Referred
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2. Petitioner contested conditions imposed for condoning delay, while the respondent contended that the delay application lacked bona fides and should have been dismissed entirely. (Para 10 , 11 )
3. The High Court's exercise of discretion to condone delay was neither arbitrary nor irrational; however, the requirement to pay funds directly to the claimant was deemed premature. (Para 14 , 15 , 16 )
4. Appellate courts may condone delays while imposing conditions, but such conditions should balance the interests of justice and maintain status quo pending the final outcome. (Para 14 , 15 , 17 )
5. The court directed the disputed funds to be deposited in the High Court in an interest-bearing account, pending the final adjudication of the suit. (Para 17 )
6. Can an appellate court impose financial conditions when condoning a long delay in filing an application to set aside an ex parte decree?
Yes, an appellate court may impose reasonable financial conditions upon condoning delay to ensure the party acts with due diligence, provided the conditions are not arbitrary and facilitate the eventual fair determination of the suit. (Para 9 , 14 , 15 )
7. Under what circumstances should funds ordered as a condition for condoning delay be directed toward the court rather than the opposing party?
When the underlying claim is still disputed and the ex parte decree is subject to challenge, it is more appropriate for funds to be deposited with the court or a registry to abide by the final outcome of the proceedings, preventing premature disbursement. (Para 12 , 15 , 17 )
JUDGMENT :
ATUL S. CHANDURKAR, J.
1. Leave granted.
2. Since the judgment dated 14.08.2024 passed by the Division Bench of the Madras High Court1[For short, ‘the High Court’] in OSA No.112 of 2023 has been assailed in both these appeals, they are being decided together by this common judgment.
3. SLP(C) No.20884 of 2024 has been preferred by the fourth defendant since he is aggrieved principally by the condition imposed under the impugned judgment to pay a sum of Rs.75,00,000/- to the first respondent-plaintiff as a condition for condoning delay of 423 days in filing an application under Order IX Rule 13 of the Code of Civil Procedure, 1908 for setting aside the ex parte decree passed by the trial Court on 15.11.2021. SLP(C) No.27307 of 2024 has been preferred by the plaintiff since it is aggrieved by the impugned judgment condoning delay of 423 days in making an application for setting aside the aforesaid ex parte decree. For sake of convenience, the parties are being referred to as per their original status in the civil suit.
4. The plaintiff, a company incorporated under the provisions of the Companies Act, 1956, claims to have entered into various Hire Purchase agreements and an agreement of Lease with the defendant No.1-Business India, a partnership firm represented by defendant Nos.2 to 4. According to the plaintiff, under the said agreements entered into with the first defendant, it had to recover an amount of Rs.21,88,11,451.96/- from it as on 18.03.2010. It, therefore, filed CS No.530 of 2011 for recovery of the aforesaid amount along with future interest @ 36% thereon. The aforesaid suit was filed on 19.03.2010.
5. It appears that despite service, the defendants failed to appear before the trial Court, namely the learned Single Judge of the High Court. Hence, on 27.08.2021, defendant Nos.1, 2 and 4 were set ex parte. Defendant No.3 had in the meanwhile expired.
6. The plaintiff, thereafter, led evidence in support of its claim. The learned Single Judge by his judgment dated 15.11.2021 decreed the suit as prayed for.
7. The fourth defendant, on getting knowledge of passing of the ex parte decree, filed an application dated 15.02.2023 for setting aside the ex parte decree. He also filed an application for condoning the delay for 423 days in making the aforesaid application. According to the fourth defendant, the suit summons was not served on him. On making a search, he got information on 10.02.2023 that the suit summons had been received by Mr. Ravi Agrawal on 10.12.2011 but this fact had not been intimated to him. On this and various other grounds, the first defendant prayed that the delay be condoned. This prayer was opposed by the plaintiff by filing a counter affidavit of its authorised signatory. All the grounds raised were denied and it was stated that the prayer made by the fourth defendant was lacking bona fides.
8. The learned Single Judge heard the application for condonation of delay. He found that the fourth defendant had appeared in the suit through his counsel and had also filed a common affidavit along with other defendants. He further observed that in all probability, the fourth defendant had knowledge of pendency of the suit prior to the ex parte decree being passed. He, therefore, held that the prayer made by the fourth defendant for condoning the delay lacked bona fides. Thus, by the order dated 17.03.2023, the said application was dismissed.
9. Being aggrieved, the fourth defendant preferred an appeal and challenged the aforesaid order. Various grounds in support of the prayer for condonation of delay were re-agitated including a ground that he was under a bona fide belief that the second defendant was looking after the proceedings and that the claim made in the suit was being settled. The plaintiff opposed the appeal by filing a counter affidavit of its authorised signatory. The Division Bench by its judgment dated 14.08.2024 was of the view that the bona fides of the fourth defendant in filing an applicati
