2019 (11) TMI 1067 - SC - Indian Laws

Condonation of delay of 546 days in filing the first appeal - dishonor of cheque - ex-parte decree - principles of natural justice - Section 96(2) CPC - time spent in the proceedings to set aside the ex-parte decree - sufficient cause within the meaning of Section 5 of the Limitation Act, 1908 or not - HELD THAT - Right to file an appeal under Section 96(2) CPC is a statutory remedy. The right to appeal is not a mere matter of procedure; but is a substantive right. Right to appeal under Section 96(2) CPC challenging the original decree passed ex-parte, being a statutory right, the defendant cannot be deprived of the statutory right merely on the ground that the application filed under Order IX Rule 13 CPC was earlier dismissed. In BHANU KUMAR JAIN VERSUS ARCHANA KUMAR ANR. 2004 (12) TMI 676 - SUPREME COURT , the Supreme Court considered the question whether the first appeal filed under Section 96(2) of the Code was maintainable despite the fact that an application under Order IX Rule 13 CPC was dismissed. Observing that the right to appeal is a statutory right and that the litigant cannot be deprived of such a right, the Supreme Court held that whereas the defendant would not be permitted to raise a contention as regards the correctness or otherwise of the order posting the suit for ex parte hearing by the trial court and/or existence of a sufficient case for non-appearance of the defendant before it, it would be open to him to argue in the first appeal filed by him under Section 96(2) of the Code on the merits of the suit so as to enable him to contend that the materials brought on record by the plaintiffs were not sufficient for passing a decree in his favour or the suit was otherwise not maintainable. Lack of jurisdiction of the court can also be a possible plea in such an appeal. 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. 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. 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. The delay of 546 days in filing the first appeal shall therefore be condoned with condition that the appellant should deposit ₹ 20,00,000/- before the trial court-Principal District Judge, Tiruchirappalli - delay condoned.

Summary

Issues Involved:

1. Maintainability of the appeal under Section 96(2) CPC after dismissal of the application under Order IX Rule 13 CPC.
2. Whether the time spent in proceedings to set aside the ex-parte decree constitutes "sufficient cause" under Section 5 of the Limitation Act, 1908 for condoning the delay in filing the first appeal.

Issue-wise Detailed Analysis:

1. Maintainability of the appeal under Section 96(2) CPC:

When an ex-parte decree is passed, the defendant has two remedies: (a) file an application under Order IX Rule 13 CPC to set aside the ex-parte decree by proving that the summons was not served or that there was "sufficient cause" for non-appearance, or (b) file a regular appeal from the original decree to the first appellate court under Section 96(2) CPC and challenge the ex-parte decree on merits. The right to file an appeal under Section 96(2) CPC is a statutory remedy and a substantive right. The Supreme Court in Bhanu Kumar Jain v. Archana Kumar and another (2005) 1 SCC 787 held that a litigant cannot be deprived of this statutory right merely because an application under Order IX Rule 13 CPC was dismissed. This principle was reaffirmed in Neerja Realtors (P) Ltd. v. Janglu (Dead) Through Legal Representative (2018) 2 SCC 649, which stated that the defendant can pursue both remedies simultaneously. However, if the appeal is dismissed, the original decree merges with the appellate court's decree, making a subsequent Order IX Rule 13 CPC application non-maintainable.

2. Sufficient Cause for Condonation of Delay:

The appellant filed an application under Order IX Rule 13 CPC to set aside the ex-parte decree, which was dismissed, leading to further delay. The Supreme Court in Bhivchandra Shankar More v. Balu Gangaram More and others (2019) 6 SCC 387 clarified that the scope of Order IX Rule 13 CPC and Section 96(2) CPC are different. The former focuses on whether the summons were served or if there was "sufficient cause" for non-appearance, while the latter allows the appellate court to examine the merits of the decree. The court must consider whether the defendant pursued the remedy bona fide. If the delay in filing the first appeal is due to bona fide pursuit of the Order IX Rule 13 CPC remedy, it may be condoned. In this case, the appellant showed bona fide by depositing ?25,00,000/- as per the Supreme Court's order. The court held that the appellant deserves an opportunity to contest the suit on merits but must deposit the balance amount of ?20,00,000/- as a condition for condonation of delay. This deposit should be made before the trial court by 28.02.2020, failing which the application for condonation of delay will be dismissed.

Conclusion:

The Supreme Court set aside the impugned judgment of the Madurai Bench of the Madras High Court, condoning the delay in filing the first appeal on the condition of depositing ?20,00,000/-. The appeal shall be taken on file, and the High Court will proceed with it in accordance with the law. The criminal complaints under Section 138 of the NI Act will proceed independently of this judgment.