2015 (5) TMI 1107 - SC - Indian Laws

Supreme Court Emphasizes Fairness in Setting Aside Default Judgments

GMG Engineering Industries & ors. Versus ISSA Green Power Solution & Ors., A.C. Govindaraj and Ors. Versus M. Krishnamoorthy & ors.

The Supreme Court set aside the High Court's order confirming conditions imposed by the trial court on appellants to deposit sums to condone delay in ... Condonation of delay in filing the applications to set aside the ex-parte decrees - pre-deposit - Held that:- The trial court should not have imposed such an unreasonable and onerous condition of depositing the entire suit claim of ₹ 1,50,00,000/- and ₹ 10,00,000/- respectively in the suits when the issues are yet to be decided on merits. While considering the revision, the High Court should have kept in view that the parties are yet to go for trial and the appellants ought to have been afforded the opportunity to contest the suits on merits. When the S.L.Ps came up for admission on 1.08.2013, this Court passed the conditional order that subject to deposit a sum of ₹ 50,00,000/- before the trial court, notice shall be issued to the respondents. In compliance with the order dated 1.08.2013, the appellants have deposited ₹ 50,00,000/- before the trial court. Since the appellants have satisfactorily explained the reasons for the delay and with a view to provide an opportunity to the appellants to contest the suit, the impugned order is liable to be set aside. Delay in filing the applications to set aside the ex- parte decrees is condoned and the ex-parte decrees passed are set aside and the suits are ordered to be restored to file Issues:- Imposition of conditions to deposit sums for delay in filing applications to set aside ex-parte decrees.- Justification for the conditions imposed by the trial court.- Arguments presented by both parties regarding the conditions.- Legal principles governing the discretion to condone delay in such cases.- Precedents cited by the counsels.- Analysis of the trial court's decision and the High Court's judgment.- Decision of the Supreme Court on the appeals.The judgment involves appeals arising from an order by the High Court of Madras confirming the Principal District Judge's order imposing conditions to deposit specified amounts to condone the delay in filing applications to set aside ex-parte decrees. The appellants and respondents were involved in a failed property transaction, leading to the filing of suits for recovery of amounts paid. The trial court imposed conditions requiring the appellants to deposit significant sums to set aside the ex-parte decrees. The High Court upheld these conditions, leading to the appeals before the Supreme Court.The appellants argued that the conditions were onerous and unreasonable, citing a previous judgment to support their contention. On the other hand, the respondents justified the conditions based on the appellants' dilatory tactics and failure to act promptly upon receiving notices. They highlighted the financial burden on the respondents and the need to balance the rights of both parties.The Supreme Court emphasized that the expression 'sufficient cause' should be liberally construed to advance substantial justice, requiring due diligence from the applicants. The Court referred to precedents emphasizing the need for reasonable terms when setting aside ex-parte decrees, ensuring fairness and not prejudging the suit's outcome. In this case, the trial court's imposition of full suit claims as conditions was deemed unreasonable as the merits were yet to be decided.Ultimately, the Supreme Court set aside the High Court's order, condoned the delay, and restored the suits for trial. The appellants were directed to file written statements promptly, and the trial court was instructed to expedite the proceedings due to the suits' age and the respondents' senior citizen status. The deposited amount was to be invested in a Nationalized Bank for the benefit of either party. No costs were awarded in the circumstances.In conclusion, the Supreme Court's decision overturned the conditions imposed by the lower courts, emphasizing the need for fairness, due diligence, and balanced consideration of the parties' rights in such cases.