Y.P. Lele vs Maharashtra State Electricity Distribution Company Ltd.

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. OF 2023 Arising out of SLP (C) NO. 3543 OF 2019

Y.P. LELE …APPELLANT(S)

VERSUS

MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LTD. & Ors. …RESPONDENT(S)

JUDGMENT

VIKRAM NATH, J.

Leave granted.

2. The appellant is the original defendant no. 5, as

described in the plaint of the Special Civil Suit No.

125 of 1988.

3. The present appeal assails the correctness of

judgment and order dated 27.06.2018 passed by the Signature Not Verified Digitally signed by Neetu Khajuria Date: 2023.08.16 17:37:20 IST Reason: 1 learned Single Judge of the Bombay High Court in

Civil Writ Petition No. 1488 of 2015 titled

“Maharashtra State Electricity Board vs. Miraj

Electric Supply Co. Ltd. Ors.”, whereby the petition

was allowed, the order dated 30.09.2014 passed by

the Trial Court allowing the application under order

IX Rule 13 of the Code of Civil Procedure, 19081 was

set aside and the ex parte decree was maintained.

4. Shorn of unnecessary facts, Maharashtra State

Electricity Board2 filed Special Civil Suit No. 125 of

1988 in the Court of Civil Judge, Senior Division at

Sangli impleading Miraj Electric Supply Co. Ltd.3 as

defendant no. 1 and its five Directors as defendant

nos. 2 to 6 for recovery of Rs. 1,42,85,177.47/- with

costs of suit and further praying for interest at the

rate of 18% per annum from the date of presentation

1 In short, “CPC” 2 In short, “MSEB” 3 In short, “MESC”

2 of the suit till realisation of the aforesaid amount. The

defendants appeared and filed their written

statements. The plaintiff’s evidence was being led and

at that stage the counsel for the defendants Shri.

M.B. Karmarkar withdrew his Vakalatnama vide Ex.

112. He had also not cross-examined the witnesses.

The Trial Court, on 04.12.2004, directed for suit to

proceed under Order XVII Rule 2 of CPC against the

defendants. Thereafter the Trial Court proceeded to

record the evidence of the plaintiff and, vide

judgement and order dated 29.01.2005, decreed the

suit ex parte with costs. The operative portion of the

judgment is reproduced hereunder:

“Suit is decreed ex parte with cost, as under:

1. The defendants No. 1 to 6 jointly and severally to pay Rs. 1,42,85,177.47 Ps. (Rs.

One crore, forty two lakhs, eighty five thousands, one hundred seventy seven and forty seven paise only) to the plaintiff board M.S.E.B.). They shall pay interest at the rate

3 of Rs. 18% p.a. on the arrears amount of Rs.

1,0490032.36 Ps. (Rs. One crores four lakhs nineteen thousands thirty two and thirty six paise only) from the date of the suit till its realization.

2. Decree be drawn up accordingly.”

5. The defendants, on coming to know of the ex

parte decree, belatedly filed an application under

Order IX Rule 13 CPC accompanied by an application

for condonation of delay under Section 5 of the

Limitation Act, 1963 on 21.09.2006. The Trial Court,

vide order dated 20.09.2010, allowed the application

under Section 5 of the Limitation Act finding the

explanation to be satisfactory for the delay caused

with costs of Rs. 3,000/- on the defendants to be

deposited within ten days.

6. Thereafter, the Trial Court vide order dated

30.09.2014, allowed the application under Order IX

Rule 13 CPC, set aside the ex parte decree dated

29.01.2005 while imposing fine of Rs. 1,000/- and

4 restored the Special Civil Suit No. 125 of 1988 to its

original number.

7. The plaintiff-MSEB preferred a Writ Petition

before the High Court under Articles 226 and 227 of

the Constitution. The High Court, by the impugned

order dated 12.01.2015, allowed the Writ Petition, set

aside the order dated 30.09.2014. As a result, the

suit of the respondent-MSEB stood decreed ex parte.

The petition was allowed on the ground that the

application under Order IX Rule 13 CPC would not be

maintainable in as much as the High Court had

applied the explanation under Order XVII Rule 2

CPC.

8. Aggrieved by the same, the present appeal has

been preferred by impleading MSEB as respondent

no.1, the contesting respondent, and also impleading

the other four Directors as respondent nos. 3 to 6. It

also impleaded MESC as respondent no. 2. At some

5 stage during the pendency before this Court, the

respondent nos. 2 to 6 were directed to be deleted

from the array of parties vide order dated 21.10.2019.

However later on, vide order dated 15.09.2021,

Respondent Nos. 2 and 6 were restored as party

respondents.

9. It would be worthwhile to mention that the

appeal has been preferred by one of the Directors, as

noted in the beginning, being defendant no.5 before

the Trial Court.

10. We have heard learned counsel for the parties

and perused the record.

11. The submission of learned counsel for the

appellant is that the High Court committed a grave

error in applying the explanation to Order XVII Rule

2 CPC. According to him, the order passed by the

Trial Court decreeing the suit ex parte and the earlier

order dated 04.12.2004 was only an order under

6 Order XVII Rule 2 CPC and not under the explanation

as the explanation would not be applicable. It was

also submitted that the Trial Court itself, while

decreeing the suit, had recorded that it was an ex

parte decree and under Order IX Rule 13 CPC an ex

parte decree could be applied for being recalled.

12. On the other hand, the submission of learned

counsel for the respondent MSEB is to the effect that

out of the five Directors only one of them had

approached this Court, whereas the defendant no.1-

company as also the other four Directors defendant

nos. 2 to 4 and 6 are not before this Court challenging

the said order. It is further submitted that the High

Court was right in allowing the writ petition by

invoking the explanation to Order XVII Rule 2 CPC

and the appeal deserves to be dismissed.

13. It would be worthwhile to mention that this

Court, vide order dated 10.12.2018, had directed the

7 appellant to deposit 50% of the suit claim i.e. half of

Rs. 1,42,85,177/- within a period of six weeks and

the matter was directed to be listed after six weeks.

On 25.01.2019, this Court being satisfied that 50%

of the suit claim had been deposited before the Trial

Court, directed that the Trial Court would invest the

said amount in a Fixed Deposit initially for a period

of six months in a Nationalized Bank with automatic

renewal. This Court, further, condoned the delay,

issued notices to the respondents and further stayed

the impugned judgment.

14. Before proceeding to consider the submissions,

it would be appropriate to reproduce Order XVII Rule

2 CPC, which reads as follows:

“2. Procedure if parties fail to appear on day fixed. - Where, on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by

8 Order IX or make such other order as it thinks fit.

Explanation.-Where the evidence or a substantial portion of the evidence of any party has already been recorded and such party fails to appear on any day to which the hearing of the suit is adjourned, the Court may, in its discretion, proceed with the case as if such party were present.”

15. It would also be relevant to reproduce Order IX

Rule 13 which reads as follows:

“Setting aside decree ex parte against defendant-In any case in which a decree is passed ex-parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, 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

9 against such defendant only it may be set aside as against all or any of the other defendants also:

Provided further that no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiffs claim.

Explanation- Where there has been an appeal against a decree passed ex parte under this rule, and the appeal has been disposal of on any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under this rule of setting aside the ex parte decree.”

16. A plain reading of Order IX Rule 13 makes it

apparent that where in a case, a decree is passed ex

parte against defendant, a party may apply to the

Court for setting aside the same for reasons satisfying

the Court regarding non-appearance.

10 17. Coming to Order XVII Rule 2 CPC, it would be

apparent that if the parties or any one of them failed

to appear on a day to which the hearing of the suit is

adjourned, the Court may proceed to dispose of the

suit in one of the modes directed in that behalf by

Order IX or make such other order as it deems fit.

18. In the present case, the defendants did not

appear on 04.12.2004, nor their counsel appeared as

he had already withdrawn his Vakalatnama by a

written request. The Trial Court directed for the suit

to proceed under Order XVII Rule 2 CPC against the

defendants. The effect of the order dated 04.12.2004

was that the Trial Court could have proceeded to

dispose of the suit in one of the modes directed in

that behalf by Order IX CPC. Coming back to Order

IX CPC, it is to be noticed that under Rule 6 thereof

where summons are duly served and the defendant

does not appear when the suit is called on for

11 hearing, then the Court may make an order that the

suit be heard ex parte. This is in fact the procedure

adopted by the Trial Court in the present case.

Accordingly, after the evidence of the plaintiff was

concluded and the defendant continued to remain

absent, the Trial Court decreed the suit ex parte, vide

judgment dated 29.01.2005. The operative portion

thereof clearly mentions that the suit is decreed ex

parte.

19. Now coming to the explanation, what is stated

therein is that where the evidence or a substantial

portion of the evidence of any party has already been

recorded and such party fails to appear on any day

to which the hearing of the suit is adjourned, the

Court would be at liberty to proceed with the case as

if such party were present. Two phrases are

important in the explanation “any party” and “such

party”. “Any party” refers to the party which has led

12 evidence or substantial evidence and “such party”

refers to that very party which has led evidence or

substantial evidence. What is discernible is that

under Order XVII Rule 2, the Court would proceed to

pass orders with respect to any of the parties being

absent or both the parties being absent. Whereas the

explanation is confined to record the presence of that

party and that party alone, which has led evidence or

substantial evidence and has thereafter failed to

appear. In the present case, admittedly the suit was

at the stage of plaintiff’s evidence as is apparent from

the order dated 04.12.2004. The evidence of the

defendants had not even started and the defendants’

counsel had not even cross-examined the plaintiff’s

evidence.

20. The explanation in the present case could have

been invoked only if the plaintiff, after adducing his

evidence or substantial evidence, failed to appear, the

13 Court could have recorded his presence while

disposing of the suit. But once the defendant had not

led any evidence at all, the explanation could not be

invoked as against the defendant/appellant. The

High Court committed an error in applying the

explanation to Order XVII Rule 2 CPC and based

upon it holding that an application under Order IX

Rule 13 CPC would not be maintainable as the

presence of the defendant would be deemed to be

recorded at the time of disposal of the suit.

21. As a matter of fact, once the counsel had

withdrawn his Vakalatnama, in normal course, the

Trial Court ought to have issued notice to the

defendants to engage another counsel, which it did

not do and proceeded ex parte. The Trial Court

committed an error in doing so. Further, the Trial

Court, in its wisdom and discretion having allowed

the application under Order IX Rule 13 CPC, the High

14 Court ought to have refrained itself from interfering

with an order which advanced the cause of justice by

affording opportunities to both the parties so that the

suit could be decided on merits.

22. For all the reasons recorded above, we are

unable to uphold the impugned order of the High

Court. The appeal is allowed. The impugned order of

the High Court is set aside. The Trial Court will

proceed to decide the Special Civil Suit on its own

merits, after giving due opportunities to the parties

and strictly proceed in accordance with law.

23. Once the ex parte decree has been set aside, the

amount of 50% deposited by the appellant needs to

be suitably accounted for. It is true that under Order

IX Rule 13 CPC, the Court, while allowing the

application, could impose such terms and conditions

as it deems fit and this being a money decree, the

Trial Court could have required the appellant to

15 deposit some amount. The appellant is one of the five

Directors of the defendant no.1. Although the relief

claimed was for joint and several liability of each of

the Directors, in our view the deposit of 50% at the

hands of appellant above would be too excessive. We

accordingly provide that the amount deposited by the

appellant under the order of this Court, which is lying

in the Trial Court, may be adjusted as follows:

(i). 20% of the suit claim, along with interest

accrued thereon, may be retained by the Trial

Court and may continue to deposit the same in

the Fixed Deposit initially for a period of six

months, renewable on an automatic basis, till

further orders are passed in that regard,

depending upon the outcome of the suit;

(ii). Whereas 30%, along with accrued interest

thereon, may be returned to the appellant

within four weeks of the date of filing of this

16 order before the Trial Court along with an

application for return of amount as directed

above.

24. No order as to costs.

25. Pending application, if any, stand disposed of.

……………………………………J. (VIKRAM NATH)

…………………………………..J. (AHSANUDDIN AMANULLAH) NEW DELHI AUGUST 16, 2023

17