Public Service Station And Ors. vs UCO Bank

The respondent Bank had filed an OA for recovery of Rs. 1,93,06,807.55. The appellant was proceeded against ex parte in this OA. Once the appellant did not put in appearance before the Tribunal below despite service, the OA was allowed on 27th February, 2013.

The appellant filed IA No. 693 of 2013 before the Tribunal below for stay of proceedings besides filing MA for recalling of the ex parte order passed by the Tribunal on 27th February, 2013. The plea by the appellant for recall of the order was that the Bank had entered into One Time Settlement with the appellant as can be made out from letter dated 28th September, 2012 which is now sought to be placed on record through IA No. 166 of 2015 filed in the present appeal.

I have perused the letter dated 28th September, 2012. The compromise proposal submitted by the appellant was accepted and condition imposed therein was that Rs. 45 lacs already deposited and lying in no lien account would be appropriated by the Bank. Thereafter, the appellant was to make a deposit Rs. 45 lacs before 30th September, 2012 and another sum of Rs. 45 lacs before 31st December, 2012. The appellant was to deposit the balance amount by 31st March, 2013.

The Counsel for the appellant submits that pursuant to this settlement, the appellant was assured by the Bank that he need not appear before the Tribunal below and relying on this assurance, he did not appear in the OA. Conceded position is that the OTS fell through as the appellant after making deposit of Rs. 45 lacs could not make any further deposit. After failure of the OTS, the appellant thereafter filed this MA for recall of the ex parte order passed by the Tribunal below. The Tribunal below has now dismissed the application for stay of the proceedings as well as MA for recall of the ex parte order.

The grievance by the appellant is that he did not appear before the Tribunal below since the Bank had entered into One Time Settlement with the appellant and he was given to understand that he need not appear and contest the OA in view of the settlement. The Counsel would submit that even if it is taken that the appellant was negligent still, ex parte order would deserve to be recalled by imposing certain conditions. In support of his plea, he has placed before me a judgment in the case of Tea Auction Ltd. v. Grace Hill Tea Industry, VI (2006) SLT 613=IV (2006) CLT 64 (SC)=AIR 2007 SC 67.

Hon'ble Supreme Court in this case has observed that while setting aside money ex parte decree, condition can be imposed by the Court and apart from payment of cost such condition should not be unreasonable or harshly excessive. In this case, money suit was for Rs. 37.26 lakh where the defendant had not appeared and money decree was passed. The decree was set aside subject to Bank guarantee of Rs. 37 lakh or in cash. The Court found this to be unreasonable and harsh. The defendant was also directed to furnish security of Rs. 5 lakh. This judgment does not support the submission as advanced that all ex parte decrees can be set aside by imposing condition. The case before the Hon'ble Supreme Court was where the ex parte judgment had been set aside by imposing conditions which were found harsh and unreasonable. Hence, the ratio emerging from this judgment would not in any manner stand in support of the submissions made by the Counsel for the appellant.

The Counsel has then made reference to the judgment in the case of G.P. Srivastava v. R.K. Raizada & Ors., II (2000) SLT 568=II (2000) CLT 116 (SC)= AIR 2000 SC 1221. In this case, it is observed that where sufficient cause for non-appearance could not be shown by a party and even if the party was found to be negligent, the other side could have been compensated by costs and ex parte decree set aside. After imposing costs of Rs. 5,000/- ex parte decree was set aside. The Court, by making reference to Order 9 Rule 13, CPC, has observed that if sufficient cause for non-appearance is shown, ex parte order can be set aside on such terms and conditions as were deemed proper.

It may need a notice here that the Hon'ble Supreme Court in this case was dealing with a case where the nephew of the Counsel died in a road accident on the date of hearing and the appellant himself was not present at station on account of his employment and illness. In the background of these facts, the Hon'ble Supreme Court has held that both the trial Court and the High Court had adopted a very narrow and technical approach. It is thus observed if the appellant was found negligent, the otherwise could be compensated by costs.

In this case, thus, the party was found to have shown sufficient cause for his absence.

The essential requirement for setting aside the order is to see 'sufficient cause'. The cause shown in the present case by the appellant is that he went by the understanding given by the Bank that he need not appear due to OTS having been accepted. No reasonable or prudent person would go by such an understanding to not to appear to defend the case. The cause shown thus is apparently not sufficient.

Under Order 9 Rule 13, C.P.C. an ex parte decree passed against a defendant can be set aside upon satisfaction of the Court that either the summons were not duly served upon the defendant or he was prevented by any 'sufficient cause' from appearing when the suit was called for hearing. Unless 'sufficient cause' is shown for non-appearance of the defendant in the case on the date of hearing, the Court has no power to set aside an ex parte decree.

It may be true that words "was prevented by any sufficient cause from appearing" must be liberally construed but if sufficient cause is not shown then the Court would not have any power to set aside ex parte order Thus, it is to be seen that if the appellants are able to show sufficient cause for their non-appearance. As already observed the appellant chose not to appear merely on the asking of the Bank. This can not be a 'sufficient cause' for non-appearance, it is rather unbelievable that a person would not appear on being told by his adverse party that he need not appear. The reason may be any but no prudent person would act or behave so. The plea that ex parte order can be set aside by imposing costs is not a sound or legally sustainable plea. Imposing of costs would arise only once the Court/Tribunal is satisfied that the cause set up by a party is sufficient.

Since I have found that there is no sufficient cause made out by the appellant for his non-appearance, I am not inclined to interfere in the impugned order on this ground.

Before resting the appeal, one aspect may call for notice, One of the grievances by the Counsel for the appellant is that the impugned order is a non-speaking order. There is a substance in this submission so advanced. The Tribunal below has not even taken note of any fact or the background in which this prayer was made in the MA for recall of the ex parte order. It can be expected from any Court or Tribunal to assign reasons in any order which is passed. Recording of reasons for the passing of an order is not only desirable, but also necessary as it imparts clarity and reduces the chances of arbitrariness in the passing of order. Reasons enables the Higher Forums while considering the appeals, etc. to find out whether the decision was arrived at justly and fairly and after due consideration of all facts bearing on the matter, uninfluenced by any extraneous consideration. A party is entitled to know the grounds on which the authority has passed the adverse order against him. Generally speaking, Courts insist on giving reasons so that the party aggrieved has the opportunity to demonstrate before proper Forum that the reasons on which the order is based are erroneous. Recording of reasons also operates as check against possible arbitrary action.

Ordinarily, the impugned order would have called for interference on this ground alone, but I am not doing so as I have permitted the appellants to raise all the grounds now before me and have considered all such pleas raised by the appellants. The Counsel for the appellant has now been heard. Because of this, no interference in the impugned order on this count is called for. The appeal is therefore dismissed in limine.