Supreme Court sets aside ex parte decree, modifies security condition, emphasizes reasonable terms

The Supreme Court modified the condition imposed by the Single Judge, directing the respondent to furnish security of Rs. 5 lakhs within 12 weeks. Emphasizing the need for reasonable conditions when setting aside an ex parte decree, the Court highlighted the discretionary power of the courts in such matters. It provided a timeline for filing objections and the trial court to consider the matter on merits. The appeal was allowed with no costs.

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Issues Involved:
1. Interpretation and application of Order IX Rule 13 of the Code of Civil Procedure, 1908 (CPC).
2. Conditions for setting aside an ex parte decree.
3. Discretionary power of the court in imposing terms for setting aside an ex parte decree.
4. Reasonableness and harshness of conditions imposed by the court.

Issue-wise Detailed Analysis:

1. Interpretation and application of Order IX Rule 13 of the Code of Civil Procedure, 1908 (CPC):
The core issue in this appeal revolves around the interpretation and application of Order IX Rule 13 CPC, which pertains to setting aside an ex parte decree against a defendant. The provision allows a court to set aside such a decree if the defendant can prove that the summons was not duly served or that they were prevented by sufficient cause from appearing in court. The provision also grants the court the discretion to impose terms, including costs or payment into court, when setting aside the decree.

2. Conditions for setting aside an ex parte decree:
The appellant contended that the Division Bench erred by not considering the court's power to direct the furnishing of security as a pre-condition for recalling a money decree passed ex parte. The Division Bench of the High Court had set aside the condition imposed by the learned Single Judge, which required the defendant to furnish security of Rs. 37 lakhs. The Division Bench opined that such a harsh condition could not be imposed, especially when the defendant was advised by their lawyer not to appear without the service of writ of summons.

3. Discretionary power of the court in imposing terms for setting aside an ex parte decree:
The Supreme Court acknowledged that the courts have wide discretion under Order IX Rule 13 CPC to set aside an ex parte decree upon satisfying itself of the existence of a "sufficient cause." The court noted that the discretionary power includes the imposition of terms such as costs or payment into court. However, these terms should be reasonable and not oppressive. The court referred to precedents where it was established that the imposition of conditions should be fair and not render the defendant unable to defend the suit.

4. Reasonableness and harshness of conditions imposed by the court:
The Supreme Court found that the learned Single Judge's direction to secure the entire sum of Rs. 37 lakhs was unreasonable and harsh. The court emphasized that while the power to impose conditions exists, such conditions should not be excessive or oppressive. The court cited various judgments to illustrate that the conditions imposed should be reasonable and should not prevent the defendant from defending the suit. The court concluded that the interest of justice would be served by directing the respondent to furnish security to the extent of Rs. 5 lakhs, rather than the entire amount.

Conclusion:
The Supreme Court allowed the appeal to the extent that the condition imposed by the learned Single Judge was modified. The respondent was directed to furnish security of Rs. 5 lakhs within 12 weeks. The court emphasized the need for reasonable conditions when setting aside an ex parte decree and highlighted the discretionary power of the courts in such matters. The court also provided a timeline for the respondent to file objections and for the trial court to consider the matter on merits. The appeal was allowed with no costs.

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