Right of Appeal not extinguished merely on dismissal of application to set aside Ex-Parte decree, Supreme Court

The Supreme Court on Thursday reiterated that the statutory right of appeal will not be extinguished only on account of a dismissal of an application to set aside an ex parte decree under Order IX, Rule 13 of the Code of Civil Procedure (CPC)..Allowing an appeal filed against a Madras High Court judgment, the Bench of Justices R Banumathi, AS Bopanna and Hrishikesh Roy observed,.“An appeal under Section 96(2) CPC is a statutory right, the defendant cannot be deprived of the statutory right merely on the ground that earlier, the application filed under Order IX Rule 13 CPC was dismissed.”.However, the Bench added,.“When the defendant filed appeal under Section 96(2) CPC against an ex-parte decree and if the said appeal has been dismissed, thereafter, the defendant cannot file an application under Order IX Rule 13 CPC. This is because after the appeal filed under Section 96(2) of the Code has been dismissed, the original decree passed in the suit merges with the decree of the appellate court. Hence, after dismissal of the appeal filed under Section 96(2) CPC, the appellant cannot fall back upon the remedy under Order IX Rule 13 CPC.”.In the case before the Court, an adverse ex-parte ruling had been passed against the appellant in 2015 in a money suit. In the said suit, the appellant was the defendant. He claimed that he only became aware of the legal proceedings much after the suit was decreed ex-parte in favour of his opponent as the summons was sent to an outdated address at Trichy (whereas, the appellant had been residing in Chennai for over five years)..The appellant, therefore, filed an application under Order IX, Rule 13 of the CPC to set aside the ex parte decree, arguing that he had sufficient cause explaining his non-appearance in the matter. This application, filed with a delay of 276 days, was however dismissed by the trial court. The dismissal was upheld by the High Court and the Supreme Court..Thereafter, the appellant filed an appeal challenging the decree itself under Section 96(2) of the CPC. However, this appeal was also not entertained by the High Court, in view of the fact that the appellant made the same submissions regarding the reasons for belatedly approaching the Court. Further, with the addition of the delay in filing the Order IX Rule 13 application, the appellant had filed the appeal after a cumulative delay of 546 days. The High Court’s dismissal of this appeal led to further appeal before the Supreme Court..The Supreme Court, in turn, took note that generally, a litigant against who an adverse ex-parte decree is passed, has two legal options before him; first, to file an application under Order IX Rule 13 CPC, and second, to file an appeal under Section 96(2) CPC. The Court proceeded to observe that the question which arises then is whether the two options are to be exercised simultaneously or can also be exercised consecutively?.While it was understood that both options can be exercised simultaneously, the Court observed that whether they can be availed consecutively would depend on the bonafides of the litigant. As explained in the judgment,.“An unscrupulous litigant may, of course, firstly file an application under Order IX Rule 13 CPC and carry the matter up to the highest forum; thereafter may opt to file appeal under Section 96(2) CPC challenging the ex-parte decree. In that event, considerable time would be lost for the plaintiff. The question falling for consideration is that whether the remedies provided as simultaneous can be converted into consecutive remedies.“.The Court proceeded to hold that when the litigant has acted in a bonafide manner, and not in a way indicating that he is availing the two remedies consecutively only to prolong litigant to his opponent’s detriment, the two remedies may be invoked consecutively. Therefore, whether or not the two remedies can be availed consecutively would depend on the facts and circumstances of the case. As stated in the judgment,.“Whether the defendant has adopted dilatory tactics or where there is a lack of bona fide in pursuing the remedy of appeal under Section 96(2) of the Code, has to be considered depending upon the facts and circumstances of each case. In case the court is satisfied that the defendant has adopted dilatory tactics or where there is lack of bona fide, the court may decline to condone the delay in filing the first appeal under Section 96(2) CPC. But where the defendant has been pursuing the remedy bona fide under Order IX Rule 13 CPC, if the court refuses to condone the delay in the time spent in pursuing the remedy under Order IX Rule 13 CPC, the defendant would be deprived of the statutory right of appeal. .Whether the defendant has adopted dilatory tactics or where there is lack of bona fide in pursuing the remedy of appeal under Section 96(2) of the code after the dismissal of the application under Order IX Rule 13 CPC, is a question of fact and the same has to be considered depending upon the facts and circumstances of each case.“.Applying these principles, the Supreme Court found that in the present case, the appellant had acted in a bonafide manner..“Considering the facts and circumstances of the case and in the interest of justice, in our view, the appellant deserves an opportunity to put forth his defence in the suit for recovery of money.”.Therefore, it set aside the High Court judgment, condoned the delay and sent the case back to the High Court, on the condition that that the appellant make a deposit of Rs 20,00,000 apart from the Rs 25,00,000 he had already deposited..[Read the Judgment]