2023 (11) TMI 1368 - HC - Indian Laws

Dismissal of application filed by the appellant / defendant to set aside the ex parte decree - delay in service of summons - after coming to know about the ex parte decree appellant preferred the application to set aside the ex parte decree - no delay in approaching the court - HELD THAT - In the suit the respondent / plaintiff has taken all efforts to serve summons on the appellant / defendant. It is settled law that if the notice is sent to the correct and last known address of the defendant the same has to be deemed to be served whether it is actually served or not. In the present case summons have been served to the correct and last known address of the appellant. It is not the case of the appellant that summons have been sent to a wrong address. Further the appellant has not informed about their change of business place. In such circumstances it can be inferred that summons have been duly served on the appellant but they failed to contest the suit. Therefore the application filed by the appellant in the year 2019 to set aside the ex parte decree dated 24.04.2009 after a decade was rightly dismissed by the learned Judge by the order impugned herein which need not be interfered with at the hands of this court. Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this appeal include:

(a) Whether the ex parte decree dated 24.04.2009 was rightly passed against the defendant/appellant, considering the issue of service of summons;

(b) Whether the defendant/appellant was duly served with summons in the suit as per the requirements of the Civil Procedure Code;

(c) Whether the defendant/appellant's application to set aside the ex parte decree, filed after a delay of more than a decade, was maintainable and within the prescribed limitation period;

(d) The legal effect of substituted service and service at the last known address of the defendant, and the presumption of service under the General Clauses Act and relevant Supreme Court precedents;

(e) Whether the defendant/appellant had sufficient cause for non-appearance and delay in filing the application to set aside the ex parte decree;

(f) Whether the defendant/appellant was obligated to inform the plaintiff/respondent about the change of business address;

(g) The applicability of the principles relating to limitation and knowledge of the suit or decree for reckoning the period for filing an application to set aside an ex parte decree;

(h) Whether the ex parte decree should be set aside in the interest of justice, considering the evidence and communications exchanged between the parties prior to the suit.

2. ISSUE-WISE DETAILED ANALYSIS

(a) Service of Summons and Validity of Ex Parte Decree

The legal framework governing service of summons includes Order V Rule 12 of the Civil Procedure Code, provisions under the General Clauses Act (Section 27), and principles established by the Supreme Court in various judgments. The Court also considered the law on substituted service and service at the last known address, including the presumption of service when summons are sent by registered post to the correct address.

The Court examined the defendant's contention that summons were never served due to their relocation of business premises in 2005, and the plaintiff's reliance on substituted service by affixing summons on the Court Notice Board, service at the last known address, and publication in newspapers.

The Court noted the plaintiff's efforts to serve summons through multiple modes and the bailiff's report indicating the defendant was temporarily away from the address. The plaintiff also served summons through substituted service and last known address, as per procedural requirements. The Court relied on precedents holding that service at the last known address, if properly addressed and dispatched, is presumed to be valid unless rebutted by cogent evidence.

The defendant failed to provide convincing evidence to rebut the presumption of valid service. The Court referred to authoritative rulings emphasizing that mere denial of receipt without credible proof is insufficient to negate service.

Consequently, the Court held that summons were duly served on the defendant, and the ex parte decree was rightly passed due to the defendant's non-appearance despite valid service.

(b) Limitation and Delay in Filing Application to Set Aside Ex Parte Decree

The limitation period for filing an application to set aside an ex parte decree is governed by Article 123 of the Limitation Act, which prescribes a 30-day period from the date of the decree. The defendant contended that the limitation period should be reckoned from the date of knowledge of the decree, i.e., when the attachment order in the execution petition was served in 2019.

The Court analyzed the distinction between reckoning limitation from the date of the decree and from subsequent knowledge, relying on the Full Bench decision cited by the appellant, which clarifies that the limitation period starts from the date of the decree, not from subsequent knowledge, except in cases where service was irregular and the residuary Article applies.

The Court observed that the defendant did not file any application for condonation of delay, and the application was filed more than ten years after the decree. The Court emphasized the need for finality in litigation and held that entertaining such belated applications would lead to interminable litigation.

Accordingly, the Court concluded that the application to set aside the ex parte decree was barred by limitation and rightly dismissed.

(c) Obligation to Inform Change of Address

The defendant argued that they were not obligated to inform the plaintiff of their changed business address. The plaintiff contended that the defendant's failure to communicate the change justified service at the last known address.

The Court held that while there is no absolute legal obligation on a party to inform the other of a change of address, in commercial transactions, it is reasonable to expect such communication to avoid prejudice. The defendant's failure to notify the plaintiff of their relocation contributed to the presumption of valid service at the last known address.

(d) Prima Facie Case and Liability of the Defendant

The defendant contended that the ex parte decree was not sustainable as the liability was not established, and the communications showed the order was placed by the trustee in his personal capacity, not on behalf of the Trust.

The Court examined the correspondence exchanged between the parties, which revealed a contractual relationship and admitted liability for payments due. The plaintiff's evidence, including letters and payment reminders, established a prima facie case for recovery.

The Court noted that the defendant did not contest the suit on merits and failed to challenge the evidence within the prescribed time. The ex parte decree was therefore valid and enforceable.

(e) Treatment of Competing Arguments Regarding Service and Delay

The Court carefully considered the defendant's argument that summons were never served and that the application was timely filed upon knowledge of the decree during execution proceedings. It juxtaposed this with the plaintiff's evidence of diligent service attempts and legal presumptions favoring service validity.

The Court relied on Supreme Court precedents emphasizing that mere non-receipt or denial of service without credible proof does not invalidate service. It also underscored that limitation cannot be extended based on subsequent knowledge unless irregular service is proved.

Given the defendant's failure to rebut the presumption of service and the inordinate delay in filing the application, the Court found no merit in the defendant's contentions.

3. SIGNIFICANT HOLDINGS

The Court's significant legal determinations include the following:

"It is settled law that if the notice is sent to the correct and last known address of the defendant, the same has to be deemed to be served, whether it is actually served or not."

"The ex parte decree is dated 24.04.2009 and instant application has been filed on 03.07.2019 more than a decade later. This Court is of the considered view that it cannot but agree with the submission of learned counsel for plaintiff that if the applications for setting aside ex parte decree filed in such a casual manner more than a decade later after launch of execution petition are entertained, there would be no end to litigations."

"The appellant has not filed an application seeking to condone the delay in filing the application to set aside the ex parte decree, but merely filed the application to set aside the ex parte decree dated 24.04.2009, after ten years."

"The appellant was fully aware of the demand for payment made by the respondent and the action likely to be taken by the respondent to approach the Court, but they maintained stoic silence without paying the admitted amount for the supply of materials by the respondent."

"The communications referred to above would stand testimony to the fact that without collecting payment as per the terms of the contract, the respondent started to supply materials and after some time, they demanded the payment on various dates."

"The defendant failed to provide convincing evidence to rebut the presumption of valid service."

"The application filed by the appellant in the year 2019 to set aside the ex parte decree dated 24.04.2009, after a decade, was rightly dismissed by the learned Judge."

Core principles established include the binding nature of the presumption of service when summons are sent to the last known address, the strict adherence to limitation periods for setting aside ex parte decrees, and the necessity for parties to act diligently to avoid protracted litigation.

Final determinations on each issue are:

(i) Summons were duly served on the defendant through proper modes including substituted service and service at last known address;

(ii) The ex parte decree passed on 24.04.2009 was valid and enforceable;

(iii) The application to set aside the ex parte decree filed in 2019 was barred by limitation and lacked sufficient cause;

(iv) The defendant's failure to communicate change of address and to contest the suit on merits justified the dismissal of the application;

(v) The defendant was given opportunity to contest execution proceedings, but the appeal against dismissal of the application to set aside the ex parte decree was rightly dismissed.