The main legal point established in the judgment is that an ex parte decree should not be recalled unless the defendant demonstrates a sufficient cause for non-appearance and approaches the court with clean hands, disclosing all material facts and presenting a meritorious defense.

1. The defendant has taken out this application for recalling of a decree dated 11 September, 2015 which was passed when the suit appeared under the heading ‘undefended suit’. The defendant contends that there was sufficient cause for it not to appear on the date when the decree was passed and hence, the decree should be recalled and the defendant should be given an opportunity to contest the suit.

2. The undisputed facts of the case are that the suit was filed on April 8, 2015. In the suit the plaintiff claimed a money decree for Rs. 2,60,00,000/- along with interest at the rate of 24 per cent per annum. The writ of summons and the copy of the plaint were served at the defendant’s office on 19 April, 2015. The defendant neither entered appearance nor filed written statement within the prescribed date. Accordingly, the plaintiff caused the suit to appear in the list as ‘undefended suit’ on 11 September, 2015. The plaintiff’s witness was examined. Upon being satisfied that the plaintiff had proved its case this court decreed the suit.

3. The case of the defendant/applicant is that in the month of April 2015 the defendant’s office was totally closed. The defendant did not have any employee by the name of Manab Basu, who accepted the service of the writ of summons on behalf of the defendant. If anything was received on behalf of the defendant on 29 April, 2015, the same could not reach the defendant and as a result the writ of summons cannot be treated to have been served upon the defendant company.

4. The applicant’s further case is that the defendant company was facing Central Bureau of Investigation (in short ‘CBI’) enquiry between February and October, 2015. First Information Report was registered against the directors of the defendant company on 15 May, 2015. On 16 May, 2015 one of the directors of the defendant company namely Mr. Azgar Ali Shaikh was arrested by the CBI. Mr. Asraf Ali Shaikh, another director of the defendant company was in China at that time. On his return to India he was also arrested on 28 May, 2015. Mr. Azgar Ali Shaikh was enlarged on bail on 15 July, 2015. Mr. Asraf Ali Shaikh was released on bail on 29 July, 215. The entire office of the defendant was in doldrums. The directors in control of the defendant company were mostly behind bars. For all those reasons the defendant could not engage an advocate to enter appearance on its behalf nor could take any step for contesting the suit. This is the sufficient cause for recalling the ex parte decree.

5. The defendant relied on a decision of the Hon’ble Apex Court in the case of M.K. Prasad vs. P. Arumugam, (2001) 6 SCC 176 and in particular reliance was placed on the following portion of paragraph 10 of the reported judgment which reads as follows:-

“10……….While deciding the application for setting aside the ex parte decree, the Court should have kept in mind the judgment impugned, the extent of the property involved and the stake of the parties. We are of the opinion that the inconvenience caused to the respondent for the delay on account of the appellant being absent from the court in this case can be compensated by awarding appropriate and exemplary costs. In the interest of justice and under the peculiar circumstances of the case we set aside the order impugned and condone the delay in filing the application for setting aside the ex parte decree. To avoid further delay, we have examined the merits of the main application and feel that sufficient grounds exist for setting aside the ex parte decree as well.”

(6) Learned Counsel also relied on a decision of the Apex Court in the case of Tea Auction Ltd. vs. Grace Hill Tea Industry & Anr., (2006) 12 SCC 104 and in particular he relied on the following portion of paragraph 15 of the reported judgment which reads as follows:-

“15………………….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 abl