Chirag Madan, Ms. Ravleen Sabharwal, Mr. Rahul Agarwal and Mr. Ronit Bose, Advs v. M/S MINI POCKET OPC PVT. LTD

Judgment

1. This is an appeal assailing the order dated 12 February 2025 passed by the learned District Judge (Commercial Court) in CS DJ 1511/181.

2. Vide order dated 25 July 2023, the learned Commercial Court proceeded ex parte against the appellant, as the appellant had remained absent on four earlier dates of hearing. Thereafter, the suit itself was decreed ex parte against the appellant on 10 October 2023. 1 M/s Mini Pocket OPC Pvt Ltd v M/s Swikriti Travels Signature Not Verified FAO (COMM) 81/2025 Digitally Signed By:AJIT KUMAR Signing Date:22.04.2025 16:14:12

3. The appellant moved an application under Order IX Rule 13 of the Code of Civil Procedure, 19082, for setting aside the ex parte judgment and decree.

4. By the impugned order dated 12 February 2025, the learned Commercial Court has allowed the said application, subject, however, to deposit, by the appellant, of the entire decretal amount of ₹ 38 lakhs in the form of a fixed deposit receipt in favour of the Court within four weeks from the date of the order.

5. The only reasoning for this direction, as contained in the impugned order, if any, may be said to be contained in the following paragraphs:

“Equity demands that parties to litigation are given a fair opportunity to present their case. The principles of natural justice emphasize that no party should be condemned unheard. In the present matter, while the defendant was proceeded ex-parte, the defendant was unable to appear before the Court to cross-examine the witness due to miscommunication from the side of counsel for defendant. While the counsel for plaintiff argued against setting aside the decree, it is essential to balance the interests of both parties. Setting aside an ex-parte decree should not cause undue hardship to the plaintiff, and the defendant should not derive any undue advantage from the delay. In light of the above, the application under Order IX Rule 13 CPC is allowed, subject to the condition that the defendant deposits the decretal amount of Rs. 38,00,000/- (Rupees Thirty Eight Lakhs only) in the form of a Fixed Deposit Receipt (FDR) in favor of the Court within four weeks from the date of this order. 2 “CPC” hereinafter Signature Not Verified FAO (COMM) 81/2025 Digitally Signed By:AJIT KUMAR Signing Date:22.04.2025 16:14:12 This condition ensures that the plaintiff’s rights are safeguarded while allowing the defendant to contest the matter on merits.”

6. Before the learned Commercial Court, learned Counsel for the appellant had submitted that the previous counsel, who was appearing for the appellant had not brought, to his notice, the proceedings in the matter, which was what occasioned the four incidents of non- appearance. As such, it was sought to be contended that non- appearance was not deliberate or intentional.

7. From a reading of the extracted paragraphs from the impugned order in para 5 supra, it appears that the learned Commercial Court accepted the contention of the appellant that the appellant was unable to appear before the Court to cross-examine the witness owing to miscommunication by Counsel.

8. As such, the ground for non-appearance, as adduced by the appellant, appears to have found favour with the learned Commercial Court, at least prima facie.

9. The appellant has approached this Court, challenging the impugned order, to the extent it directs the appellant to deposit the entire decretal amount of ₹ 38 lakhs as a condition for allowing of the Order IX Rule 13 application filed by the appellant.

10. The impugned order has not been challenged by the respondent. In other words, it is not open to the respondent to contend before this Court that the appellant’s application under Order IX Rule 13 should FAO (COMM) 81/2025 Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:22.04.2025 16:14:12 not have been allowed.

11. The only issue that remains for consideration is, therefore, whether the direction for deposit of the entire decretal amount as imposed by the learned Commercial Court as a condition for allowing the Order IX Rule 13 application is or is not justified.

12. We have heard Mr. Chirag Madan, learned Counsel for the appellant and Mrs. Vasundhara Nagrath, learned Counsel for the respondent at some length.

13. Mr. Madan places reliance on the judgment of the Supreme Court in Tea Auction Ltd v Grace Hill Tea Industry3, to contend that the direction for deposit of the entire decretal amount, as a condition for allowing the appellant’s application under Order IX Rule 13 was excessive and unjustified. He has drawn our attention to the facts which were before the Supreme Court in Tea Auction which stand thus recorded in paras 3 to 5 of the said decision: “3. The plaintiff is the appellant before us. It filed a suit on the original side of the Calcutta High Court claiming a decree for a sum of Rs 37,26,498 with interest against the respondents. Leave under clause 12 of the Letters Patent of the said Court was also obtained. An application was filed for recording a decree under Order 12 Rule 6 of the Code of Civil Procedure on 23-5-2002. On the said application, notice of motion was to be served upon the defendant-respondents. The notice was returnable on 12-6-2002. On the said notice, nobody had appeared on behalf of Defendant 1. A direction for filing of affidavit in opposition was issued upon the plaintiff's application. Allegedly the said order was communicated to Respondent 1 by registered post. The matter was again listed on 3 (2006) 12 SCC 104 Signature Not Verified FAO (COMM) 81/2025 Digitally Signed By:AJIT KUMAR Signing Date:22.04.2025 16:14:12 15-7-2002. On that date nobody appeared on behalf of Defendant 1. A judgment and decree, upon admission for a sum of Rs 37,26,498 along with interest, was passed against Defendant 1.

4. Defendant 2 was a tea broker of Defendant 1. It was impleaded as the guarantor of Defendant 1. No decree, however, was passed against it. An appeal was preferred by the appellant- plaintiff thereagainst as no decree had been passed against Defendant 2. The said appeal was dismissed. Defendant- Respondent 1, thereafter, filed an application for recalling the said ex parte decree, inter alia, contending that they came to know about the institution of the said suit only when a memorandum of appeal together with a copy of the stay petition was served upon them in August 2002. In terms of an order dated 7-12-2004 a learned Single Judge 5. found the said application to be thoroughly mischievous and devoid of any merit but still a direction for recalling the decree was passed on condition that the respondent furnishes a security of Rs 37 lakhs either in the form of bank guarantee or in cash within a period of three months therefrom.”

14. Thereafter, the Supreme Court has examined the law relating to Order IX Rule 13 of the CPC and the power of courts to impose conditions for allowing applications filed under the said provision. We may reproduce, to advantage, paras 13 to 24 of the said decision thus: In Ramesh v Ratnakar Bank Ltd4. however, this Court, “13. while directing that the ex parte decree be set aside, also directed deposit of a further sum of Rs 5 lakhs over and above the amount of Rs 7 lakhs directed by the Court on an earlier occasion. No law has been, however, laid down therein. In Vijay Kumar Madan v R.N. Gupta Technical 14. Education Society5 this Court deprecated the practice of imposing an undue condition and putting the defendant on onerous terms, stating: