Ex parte order in company proceedings may be reopened under inherent powers where incorrect facts caused prejudice and rehearing is needed.

Article notes that Article 123 of the Limitation Act applies to applications to set aside ex parte decrees or ex parte appeals, and does not bar an application where the proceeding is not a decree. It further explains that, in company proceedings, if an ex parte order rests on an incorrect factual assumption and non-appearance is explained by sufficient cause, the court may set aside the order and direct rehearing. Where Order 9 Rule 13 CPC is not strictly applicable, Section 151 CPC may still be invoked to prevent injustice and restore the matter for decision on merits.

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Issues: (i) Whether the application to set aside the ex parte order was barred by limitation; (ii) Whether sufficient cause existed to set aside the ex parte order and direct rehearing under Order 9 Rule 13 of the Code of Civil Procedure or, in any event, under Section 151 of the Code of Civil Procedure.

Issue (i): Whether the application to set aside the ex parte order was barred by limitation.

Analysis: The applicable limitation provision was held to be Article 123 of the Limitation Act, which applies to applications to set aside ex parte decrees or to rehear appeals heard ex parte. The proceeding before the Court was not a decree and did not fall within that article. The residuary position, therefore, did not bar the application on the ground urged.

Conclusion: The application was not barred by limitation.

Issue (ii): Whether sufficient cause existed to set aside the ex parte order and direct rehearing under Order 9 Rule 13 of the Code of Civil Procedure or, in any event, under Section 151 of the Code of Civil Procedure.

Analysis: The respondents had knowledge of the proceedings, but their non-appearance was attributed to settlement negotiations. The Court found that the ex parte order had proceeded on a factual assumption that was not correct, namely the alleged non-appointment of a director, and that justice required correction of the resulting prejudice. Even if Order 9 Rule 13 was not strictly attracted to the company proceeding, the Court held that its inherent power under Section 151 could be invoked to prevent injustice and secure rehearing.

Conclusion: Sufficient cause was made out and the ex parte order was set aside with a direction for rehearing.

Final Conclusion: The ex parte order was reopened, and the matter was restored for fresh hearing on merits.

Ratio Decidendi: Where an ex parte order in company proceedings has been made on an incorrect factual assumption, and the circumstances disclose sufficient cause or an overriding need to prevent injustice, the Court may set aside the order and order rehearing by invoking its inherent powers even if Order 9 Rule 13 is not strictly applicable.

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