Holding

If a decree is indivisible, the court may, under the proviso to Order 9 Rule 13 CPC, set aside the entire decree – including against other defendants – even when the application is made only by the defendant against whom an ex‑parte decree was passed.

Summary

The Bank of India sued Mehta Brothers (defendants 1‑5) and Deutsche Bank (defendant 6) for breach of an irrevocable Letter of Credit. The trial court passed an ex‑parte decree against defendant 6 and dismissed the suit against defendants 1‑5. Defendant 6 filed an application under Order 9 Rule 13 of the Code of Civil Procedure, 1908, to set aside the ex‑parte decree. The single judge of the Delhi High Court set aside the decree in its entirety, reviving the suit against all defendants, on the ground that the decree was indivisible. The Division Bench reversed that part of the order, holding the decree divisible. The Supreme Court allowed the appeal, held that the decree was indivisible and that, under the proviso to Order 9 Rule 13, a court may set aside the whole decree – including against defendants who had contested the suit – when the decree cannot be set aside only against the applying defendant. Consequently, the Division Bench’s order was set aside and the single judge’s order restored.

Issues considered

Whether, under the proviso to Order 9 Rule 13 CPC, a decree passed in favour of contesting defendants can be set aside as against them on an application by a defendant for setting aside an ex‑parte decree against him.
Whether the decree in the present suit is indivisible or divisible.
Whether the term “decree” in the proviso to Order 9 Rule 13 means an ex‑parte decree only or a decree in general.
Whether the court may set aside a decree against defendants who obtained a dismissal on contest.

Legislation cited

Code of Civil Procedure, 1908s. Order 9 Rule 13, s. Proviso to Order 9 Rule 13
Limitation Acts. Section 5

Subjects

ex‑parte decreeOrder 9 Rule 13decree indivisiblesetting aside decreeCivil ProcedureLetter of CreditBank of IndiaMehta Brothers

Judgment

[2008] 13 S.C.R. 900

A BANK OF INDIA
\/.
M/S MEHTA BROTHERS & ORS.
(Civil Appeal No. 2982 oF 2001)
SEPTEMBER 23, 2008.
B
[TARUN CHATTERJEE AND DALVEER BHANDARI JJ.]

Code of Civil Procedure, 1908 - 0. 9 r. 13 and its pro-
viso - Scope of - In an application for setting aside the ex-
c parte decree whether decree passed in favour of some of the
contesting defendants can be set aside - Held: If the decree
is indivisible, it can be set aside not only against the defen-
dant who applied for setting aside the ex-parte decree, but also
against all or any of the other defendants, regardless of the
fact whether they appeared, contested or not - The term "de-
D
cree" in the first proviso actually meant a decree in general
and not ex-parte decree.
A suit filed by appellant-Bank was decreed ex-parte
against respondent-Bank, and the same was dismissed
E qua respondent Nos. 1 to 5 (the contesting defendants).
Respondent-Bank filed application under Order 9 Rule 13
CPC, for setting aside the ex-parte decree. Single Judge
of High Court set aside the decree in toto i.e. even qua
respondent Nos. 1 to 5, relying on proviso to Order 9 Rule
F 13. Division Bench held that Single Judge could have set ) -

aside only the ex-parte decree against the respondent-
Bank and could not have set aside the decree in favour
of respondent Nos. 1 to 5. 1-lence the present appeal.
Allowing the appeal, the Court
G
HELD: 1.1 A reading of Order 9 Rule 13 CPC would
show that an ex-parte decree was ordinarily to be set aside
only against the defendant against whom the decree was ·- i
ex-parte and the suit was to be revived only qua the said
H 900
BANK OF INDIA v. M/S MEHTA BROTHERS 901
& ORS.

defendant applying for setting aside the ex-parte decree. A
It is true that the heading of Order 9 Rule 13 starts with
the expression "setting aside of an ex-parte decree". But,
if the entire provision is read, it would be clear that the
.. said provision provides that the decree must be ex-parte
against ona defendant or ex-parte against all th~ defen- B
dants. The proviso also does not provide that the decree
can be set aside against the defendants, other than the
applying defei1dant, only if it is ex-parte against them also.
The proviso confers powers on the Court to set aside the
entire decree where the said decree was of such a nature
that it IS expedient in the interest of justice to set aside c
the decree as against any or all of the other defendants
also. The only requirement for the applicability of this Or-
der is that the decree should be ex-parte against the de-
fendant applying to have it set aside. Thus, the language
., of the Order does not suggest that for the Order to apply, D
the decree must be entirely ex-parte. [Paras 13 and 14) (914-
0-E 913 B-C 914-AB]
1.2 If the proviso was to apply only if the decree was
ex-parte against the other defendants also, that would have
rendered the proviso practically infructuous, as in such a E
situation, the other defendants would have an indepen-
dent right to have the decree set aside against them. The

- . idea behind the proviso is that if the decree is being set
aside as against some defendants, and the decree as
against the other defendants is connected, interlinked or F
dependent on that part of the decree which is being set
aside, the decree may have to be set aside as against the
other defendants also. [Para 14) (914 0-F]
1.3 The term "decree" in the first proviso actually
meant a decree in general. The proviso to Order 9 Rule 13 G
does not use the expression "ex- parte decree" but it had
used the term "decree". If the words used subsequent to
' ... the word 'decree' in the proviso were to mean ex-parte
decree, the Legislature would have expressly provided
so. Therefore, from the intention of the Legislature it can- H
902 SUPREME COURT REPORTS [2008] 13 S.C.R.

A not be said that the ex-parte decree can only be set aside
and not a decree passed in toto. Frorn the second pro-
viso and also from the explanation, it is evident that the
word "decree" is preceded by the word "ex-parte''. This
would effectively mean that the Legislature while drafting
s the proviso Nc.1, intentionally omitted "Px-parte" befor~ the
word "decree" because they intended to mean decree in
general. Therefore, a decree can be set aside as against
all or any of the other defendants, regardless of the fact
whether they appeared, contested or not. [Paras 14 and
C 15] [917-A-B, 914-G 916-A-B, D-E; E-F]
1.4 The question whether a contested decree by
some of the defendants can be set aside while consider-
ing the application for setting aside the ex-parte decree
against one of the defendants, would depend on the na-
D ture of reliefs claimed by the plaintiff in his plaint and the
nature of the decree in question. If the decree is indivis-
ible, the court would be at liberty to set aside the decree
not only against the defendant who applied for setting
aside the ex-parte decree passed against him, but also as
E against all or any of the other defendants. In the instant
case considering the issues framed in the present suit
and the reliefs claimed by the appellant-Bank and the find-
ings arrived at on such issues, the Single Judge was fully
justified in restoring the suit in toto and was correct in
) -
F setting aside the entire decree and restore the suit in its
entirety on an application under Order 9 Rule 13 and was
also correct in the approach of Order 9 Rule 13. The ex
parte decree was indivisible and rightly set aside not only
against respondent No.6 but also against respondent
G Nos.1 to 5. [Paras 16, 21 and 22] [917-C-D 922 D-E 923-D]
1.5 In view of the conclusion that the decree was in-
divisible and was dependent on the decision of the is-
sues, and hence was not possible for the court to set aside
the ex parte decree only against respondent No.6. There-
H fore, it cannot be said that it was not open to the appel-
BANK OF INDIA v. M/S MEHTA BROTHERS 903
& ORS.

lant-Bank to restore the suit in toto on the application A
under Order 9 Rule 13 filed by respondent No.6, because
the appellant-Bank did not choose to prefer any appeal
against the order of dismissal of the suit passed in favour
of respondent Nos. 1 to 5. That apart, the Single Judge
having set aside the decree in toto and restored thi: suit in B
its entirety, it was not necessary for the appellant-Bank to
file any appeal against the dismissal of the suit as against
respondent Nos. 1 to 5. [Para 23] [923-G-H; 924-A-B]

Khargesh Chandra Vs. Chandra Kanta Barua AIR 1954,
Assam 183 - disapproved C

Case Law Reference

AIR 1954, Assam 183 Disapproved Para 20

., CIVILAPPELLATE JURISDICTION: Civil Appeal No. 2982 D
of 2001

From the final Judgment/Order dated 9/11/2000 of the High
Court of Delhi at New Delhi in F.A.O. (O.S) No. 78of1991

K.N. Bhatt, Deepak Khurana and KumKum Sen for the E
Appellant.

Rajiv Sawhney, Jayant Bhusan, Sanjeev Anand, Dibya
Nishant, Pravin Balhadur, Kanika Gomber, Mallika Joshi and
Rajan Narain for the Respondents.

The Judgment of the Court was delivered by F

TARUN CHATTERJEE, J. 1. The appellant - Bank of In~
dia, a body corporate constituted under the Banking Compa-
nies [Acquisition and Transfer of Undertakings] Act, 1970 filed
a suit for recovery of Rs.91,58,480.09 against the defendants- G
respondents on 301h of August, 1982, inter alia, alleging that on
the request of defendant nos. 1 to 5, namely, M/s Mehta Broth-
ers and Ors. on 261h of June, 1979, the appellant Bank issued
an irrevocable Letter of Credit for US $ 6, 10,900, equivalent to
Indian currency about Rs.50,00,000/-, in favour of M/s Bentrex H
904 SUPREME COURT REPORTS [2008] 13 S.C.R.

A and Co., Singapore. The said Letter of Credit was expressly
made subject to the terms and conditions of Uniform Customs.
and Practice for Documentary Credits [1974] Revision, Inter-
national Chamber of Commerce Publication No.290. On 1st of
September, 1979, the beneficiary drew a site draft for an amount
B of US$ 6, 10, 740 and presented the same along with other docu-
ments to Deutsche Bank Asia [formerly known as European
Asian Bank], a body corporate incorporated in West Germany
being a foreign company under the Companies Act, 1956 -
defendant No.6 - respondent no. 6 (in short 'the respondent
C No.6') for negotiations. On 4th of September, 1979, respondent
no.6 after negotiating the documents dispatched the original
and duplicate set of the documents from Singapore directly to
the Chandni Chowk Branch of the appellant Bank and called
upon the New York Branch of the appellant Bank for reimburse-
D ment under the Letter of Credit. The appellant Bank further al-
leged that this was done without furnishing the necessary cer-
tificate of compliance which was required under the terms of
letters of credit. On 5th of September, 1979, the New York Branch
of the appellant Bank on receipt of the aforesaid claim, in good
faith, paid on account, without prejudice, the said amount of US
E $ 6,10,"740. On 13th of September, 1979 the appellant Bank
received the documents from respondent no.6 and found that
there were many discrepancies in the documents and they were
not as per the Uniform Customs and Practice of Documentary
Credits [1974 Revision]. On 14th of September, 1979, by a telex
F the appellant Bank pointed out to respondent no.6 some of the '-
discrepancies in the documents and stated that the documents
were being held at its risk and responsibility. Respondent no.6
was requested to reverse the reimbursement already claimed
by it from the New York Branch of the appellant Bank. On the
G same day respondent no.6 by its telex to the appellant Bank
rejected the claim of the appellant Bank alleging that these dis-
crepancies were of minor nature and all the terms and condi-
tions of the Letter of Credit were complied with. On 14th of Sep-
tember, 1979, Mehta Brothers- defendant nos. 1 to 5 - respon-
H dent nos.1 to 5 (in short 'respondent nos. 1 to 5') also did not
BANK OF INDIA v. M/S MEHTA BROTHERS 905
& ORS. [TARUN CHATIERJEE, J.]

honour and return the documents as they were not at all in ac- A
cordance with the terms of Letter of Credit. The appellant Bank
- further alleged that respondent no.6 had failed and neglected
to reply and reimburse to the appellant Bank the amount re-
·1 ceived by it from the New York Branch. Respondent no.6 had
failed to furnish to the New York Branch of the appellant Bank B
the certificates of compliance in terms of the said Letter of Credit,
for that reason also respondent no.6 acted in breach of its obli-
gation under the Letter of Credit to do so and, therefore, was
not entitled to claim and return the payment received thereun-
der. Despite repeated requests and reminders, respondent nos. c
1 to 5 did not honour and return the said documents and went
on contending that there were discrepancies in the documents.
Respondent nos. 1 to 5 also stated that their claim with the in-
surance company was likely to be finalized soon and the amount
., payable thereunder shall be received by the appellant Bank di-
D
rectly from the insurance company for the adjustment of the
amount due and payable by them under the Letter of Credit.
Respondent nos. 1 to 5 as also respondent no.6 had denied
their respective liability to repay to the appellant Bank the
amounts claimed by it and the appellant Bank was in doubt as
to the persons from whom it was entitled to redress, accord- E
ingly, the appellant Bank joined respondent nos.1 to 5 and re-
spondent no.6 as parties to the suit in order to determine the
question as to which of the defendants was liable to the appel-
-·--. lant Bank and to what extent. If separate suits were brought
against respondent nos. 1 to 5 and respondent no.6, common F
question of law and fact would arise, therefore, the appellant
Bank had a right to relief against respondent nos. 1 to 5 or re-
~• spondent no. 6.
2. Upon the aforesaid allegations, the appellant Bank had
G
filed the aforesaid suit for recovery of Rs.91,58,480.08, being
t~e amount of Letter of Credit and interest. Decree was claimed
"'t " primarily against respondent no.6 and alternatively, against re-
spondent nos. 1 to 5 in case, the court would come to the con-
clusion that respondent no.6 was not liable to pay any amount
H
906 SUPREME COURT REPORTS [2008] 13 S.C.R.

A to the appellant Bank. It would be appropriate at this stage to
reproduce the reliefs claimed in the suit itself which read as
under:

"[a] This Hon'ble Court will be pleased to decree and
order defendant no.6 to pay to the plaintiff the
B
equivalent in rupees at the time of payment, the sum
of US $11,46,492.99 together with interest thereon
at 21% per annem with quarterly rests from the said
30th day of August, 1982 until! payment and costs of
the suit and such further and other reliefs as this
c Hon'ble Court may deem fit.

[b] That in the event of this Hon'ble Court holding that
defendant no.6 is not liable to pay any amount to the
plaintiff, this Hon'ble Court will in the alternative be
pleased to decree and order defendant Nos. 1 to 5
D
jointly and each severally to pay to the plaintiff bank
the said sum of Rs.91,58,480.00 with further interest
at the 21 '% per annum with quarterly rests from the
30th day of August, 1982 until payment.

E [<:] Costs of the suit and

[d] Such other and other reliefs which this Hon'ble Court
may deem fit.(.

3. On 24th of July, 1984 a written statement on behalf of
F respondent no.6 was filed. Although, respondent no.6 filed the
written statement but finally no body appeared on its behalf and
accordingly the suit had proceeded against it ex parte. The suit
was decreed on 10th of March, 1987 ex parte against respon-
dent no.6 with costs. However, the suit against respondent nos.
G 1 to 5 was dismissed on contest and they were left to bear their
own costs. However, the appellant Bank did not file any appeal
in so far as that part of the decree by which the suit against
respondent nos. 1 to 5 had been dismissed. Accepting this
position, on 4:" of April, 1988, two applications were filed by
H respondent no.6 under Order 9 Rule 13 of the Code of Civ!I
BANK OF INDIA v. M/S MEHTA BROTHERS 907
& ORS. [TARUN CHATTERJEE, J.]

Procedure (in short the 'Code') for setting aside the ex parte A
decree and under Section 5 of the Limitation Act for condona-
tion of delay in filing the application under Order 9 Rule 13 of
the Code. By an order dated 28th of February, 1991, the learned
single judge of the High Court allowed both the applications
) filed by respondent no.6. Accordingly, the ex parte decree B
passed against respondent no.6 was set aside subject to pay-
ment of Rs.25,000/·· as costs out of which Rs.15,000/-was pay-
able to the appellant Bank and Rs.10,000/- to respondent nos.
1 to 5. While setting aside the ex parte decree against respon-
dent no.6, by the same order, the learned Single Judge also set c
aside that portion of the decree whereby the suit against re-
spondent nos. 1 to 5 was dismissed. To set aside that part of
the decree, the learned single judge had relied on the proviso
to Order 9 Rule 13 of the Code. Feeling aggrieved by the said
judgment of the learned single judge, respondent nos. 1 to 5 D
filed first appeal being FAO [OS] No.78of1991 before the High
Court of Delhi. The appellant Bank also filed FAO [OS] No.100
of 1991.
4. By the judgment and final order dated 9th of November,
2000 passed by a Division Bench of the High Court of Delhi in E
FAO (OS) No. 78 of 1991, the Division Bench had set aside the
order dated 28 1h of February, 1991 of the learned single judge
to the extent that the said order had set aside an ex parte de-
cree dated 101h of March, 1987 dismissing the suit of the appel-
-- f
lant Bank against respondent nos. 1 to 5. In so far as the re- F
spondent no.6 was concerned, the Division Bench of the High
Court affirmed the order dated 28th of February, 1991 setting
aside the ex pa rte decree dated 101h of March, 1987 passed
against the respondent no. 6. It is against this judgment of the
Division Bench of the High Court, the appellant Bank filed this . G
special leave petition which, on grant of leave, was heard in
presence of the learned counsel for the parties.
5. We have heard the learned counsel for the parties and
examined the judgments of the High Court inch.1ding the Divi-
sion Bench as well as the Single Judge. We have also consid- H
908 SUPREME COURT REPORTS [2008] 13 S. C.R.

A ered the materials available on record including the plaint of the
suit of the appellant Bank in respect of which the reliefs claimed
by it which has been noted herein earlier and the application
under Order 9 Rule 13 of the Code and the objections thereto.

6. Having heard the learned counsel appearing for the par-
s ties and after going through the materials on record, the moot
question that needs to be decided in this appeal is as follows:

"Whether, under the proviso to Order 9 Rule 13 of the
Code of Civil Procedure, a decree passed in favour of the
c contesting defendants can be set aside as against a
defendant also being part of the same suit, on an
application made by him, for setting aside an ex-parte
decree against him."

7. The learned counsel appearing on behalf of the appel-
D lant Bank vehemently argued before us that on account of the
ex-parte decree against the respondent no. 6, the alternative
claim against respondent nos. 1 to 5 was dismissed without
trial, therefore, the Division Bench of the High Court was in er-
ror in setting aside the decree of dismissal passed in favour of
E respondent nos. 1 to 5. Thus, according to Mr. K. N. Bhatt, learned
senior counsel for the appellant Bank, on respondent no. 6's
default being condoned, the suit filed by the appellant Bank was
rightly restored in toto by the learned single judge which, how-
ever, was set aside in appeal. Learned senior counsel for the
F appe!llant Bank further contended that in the present case, the ' -
ex-pa rte decree passed by the learned single judge was of such
a nature that it could not be set aside only against respondent
no. Ei and hence the order of the learned single judge setting
aside the decree in its entirety was fully justified. On the inter-
G pretation/construction of the provisions of Order 9 Rule 13 of
the Code, in particular, its proviso, the learned counsel appear-
ing for respondent nos. 1 to 5 strongly urged that on a plain
reading of this provision under Order 9 Rule t3 of the Code -r •
and the proviso therein, there should not be any difficulty to come
to the conclusion that the language of Order 9 Rule 13 is very
H
,, ~sANK OF INDIA v. MIS MEHTA BROTHERS
& ORS. [TARUN CHATIERJEE, J.]
909

clear and that the said provision yvill apply only to a decree which A
has been passed ex-parte and to the defendants against whom,
ex-parte decree has been passed and not against the defen-
dants who have been successful in the suit and the suit has
)
been dismissed in their favour. A~cording to the learned coun-
sel for the respondeni nos. 1 to 5, the proviso to Order 9 Rule B
13 of the Code also contemplates setting aside of an ex..:parte
decree only against the defendants who were proceeded ex-
parte but had not made an application for its setting aside. Re-
lying on paragraph 8 of a Full Bench decision of the Assam
High Court reported in Khargesh Chandra Vs. Chandra Kanta c
Barua, AIR 1954 Assam 183, learned counsel for respondent
nos. 1 to 5 contended that two significant changes in the provi-
sions under the Code of 1908 namely, the words, 'as against
him' have been added after the words 'shall make an order set-
ting aside the decree and the proviso' to the rule. According to ·~.

0
the learned counsel for respondent nos. 1 to 5, these changes
left no room for doubt that as a general rule, the decree was to
be set aside as against the defendant making the appli<?ation
under Order 9 Rule 13 of the Code but in exceptional cases,
contemplated by the proviso., it could be set aside against all or
any of the other defendants. Further, relying on paragraph 8 of E
.· the aforesaid decision, the learned counsel for the respondent
nos. 1 to 5 argued that the decree set aside must be a decree
"against the defendant and not a decree in their favofrr". Ac-
- ~
cordingly, the learned counsel for the respondent Nos. 1 to 5
contended that proviso to Order 9 Rule 13 of the Code cannot F
have any application as the decree dated 10th of March, 1987
was in favour of respondent nos. 1 to 5 and not against them. It.
was next contended on behalf of learned counsel.for the respon-
dent nos. 1 to 5 that the learned single judge was not correct in
reviving the suit in its entirety on the ground that the decree was G
one and indivisible. According to the learned counsel for the
II> .... respondent nos. 1 to 5, in view of the liability of ~he respondent
Nos. 1 to 5 and in view of the alternative reliefs claimed in ti1e
suit itself, the decree was separate and, therefore, it could be
split up. Therefore, the learned cou"nsel for the respondent nos. H
910 SUPREME COURT REPORTS [2008] 13 S.C.R.

A 1 to 5 contended that the Division Bench of the High Court was
fully justified in setting aside that portion of the decree by which
the suit against respondent nos. 1 to 5 was dismissed.
8. Mr. Jayant Bhushan, learned senior counsel appearing
for respondent no.6 supported the contention of the learned
B senior counsel appearing for the appellant Bank and contended
that since the decree was indivisible and in view of the nature of
the order of the trial court deciding the issues which were
interlinked, the learned single judge was fully justified in setting
side a decree in toto and restored the suit against all the defen-
C dants.

9. Having heard the learned counsel for the parties and
after noting the arguments advanced by them, we are of the
view that the judgment of the Division Bench of the High Court
which is impugned in this appeal so far as that part of the order
0
of the Division Bench setting aside the order of the learned
single judge restoring the suit in its entirety cannot be sustained
in law. Now, let us interpret the provisions under Order 9 Rule
13 of the Code and particularly examine the scope of the Pro-
E viso to Order 9 Rule 13 of the Code. In the light of the issue
framed by us, as noted herein earlier, we need to ascertain
whether under Order 9 Rule 13 of the Code, it is permissible for
the court, on an application of a defendant against whom a de-
. cree has been passed ex-parte, to set aside the decree also
against the other defendants appearing in the same suit and
F dismissed on contest.
10. At the risk of repetition, we may also examine whether
the Division Bench of the High Court was justified in setting aside
the judgment of the learned single judge to the extent that the
G decri~e of dismissal passed in favour of respondent nos. 1 to 5
could also be set aside along with the ex parte decree being
set aside against respondent no. 6 or, whether under Order 9
Rule 13 of the Code, the court on an application by a defendant
against whom the decree has been passed exparte can set
H aside the decree not only against the defendant applying for
,, BANK OF INDIA v. MIS MEHTA BROTHERS 911
& ORS. [TARUN CHATIERJEE, J.]

setting aside the ex parte decree but also the decree passed in A
favour of the other defendants who appeared and contested
the suit.
11. Before we examine the scope and impact of Order 9
Rule 13 of the Code and the proviso to it and the definition of
i§decreej"· made in the Code and other relevant provisions, we 8
may look into earlier provisions made in the Code of Civil Pro-
cedure, 1882. Section 108 of the 1882 Code dealt with appli-
cations for setting aside an exparte decree which read as un-
der:
c
"In any case in which a decree is passed ex parte against
,.. a defendant, he may apply to the Court by which the decree
was made for an order to set it aside, and if he satisfies
the Court that the summons were not duly served, the
Court shall pass an order to set aside such decree upon
D
such terms as to costs, payment into Court or otherwise
as it thinks fit and shall appoint a date for proceeding with
the suit"
From a plain reading of the provisions made under Sec-
tion 108 of the Code of Civil Procedure, 1882, it is evident that E
on the Court being satisfied with the merits of an application for
setting aside of an ex-parte decree, it was required to set aside
the decree and proceed with the suit. The words used in this
section, namely, "the decree" "set aside the decree" and i§pro-
·:-"i
ceeding with the suitj"" would clearly show that in Section-108 F
there was no provision to set aside an ex parte decree only
against the defendant against whom the ex parte decree was
._passed and who had, accordingly, made an application for set-
ting it aside. Therefore, it is clear from this provision that if an ex
parte decree was to be set aside by the court, the same had to
G
be set aside in toto i.e. as against all the defendants in the suit.
In our opinion, the expression "proceeding with the suit" would
- 'f
also clearly show that the intentions of the Legislature that the
court was required to proceed with the suit, i.e. between all the
plaintiffs and the defendants. However, in the interpretation of
H
912 SUPREME COURT REPORTS [2008] 13 S.C.R.

A Section 108 particularly "decree'', "ex parte decree" and i§pro-
ceeding with the suit(. there was a difference of opinion ex-
pressed by different High Courts in India, that is to say, as to
whether the ex parte decree had to be set aside in toto, or
whether the same was required to be set aside only as against
B the party against whom the ex parte decree was passed. This
difference of opinion of different High Courts was, however, re-
moved by t~e introduction of Order 9 Rule 13 of the Code.
12. At this stage, it would be relevant to mention and re-
produce the provisions of Order 9 Rule 13 of the Code which
C reads as under:
"13. Setting aside decree ex-parte against defendant- In
any case in which a decree is passed ex-parte against
a defendant, he may apply to the Court by which the
decree was passed for an order to set it aside; and if he
D
satisfies the Court that the summons were not duly served,
or that he was prevented by any sufficient cause from
appearing when the suit was called on for hearing, the
Court shall make an order setting aside the decree as
against him upon such terms as to costs, payment into
E Court or otherwise as it thinks fit, and shall appoint a day
for proceeding with the suit:
Provided that here the decree is of such a nature that it
cannot be set aside as against such defendant only it
F may be set aside as against all or any of the other
clefendants also:
Provided further that no Court shall set aside a decree
passed ex-parte merely on the ground that there has
been an irregularity in the service of summons, if it is
G satisfied that the defendant had notice of the date of
hearing and had sufficient time to appear and answer
the plaintiff's claim.
Explanation- Where there has been an appeal against
a decree passed ex-parte under this rule, and the appeal
H
,. BANK OF INDIA v. M/S MEHTA BROTHERS 913
-· & ORS. [TARUN CHATTERJEE, J.]

has been disposed of on any ground other than the A
ground that the appellant Bank has withdrawn t/Je appeal, .
no application shall lie under this rule for setting aside
that ex-parte decree.".
1-3. We have carefully examined the provisions under Or".
der 9 Rule 13 of the Code as well as its proviso and other rel- B
evant provisions under Order 9 of the Code. A reading of Order
9 Rule 13 of the Code Would i::learly show that under this provi-
sion it was clarified that an ex pa rte decree was ordinarily to be
set aside only against the defendant against whom the decree
was ex parte and the suit was to be revived only qua the said c
defendant applying for setting aside the ex parte decree. It is
true that the heading of Order 9 Rule 13 of the Code starts with
the expression "setting aside of an ex parte decree". But if we
examine this provision under Order 9 Rule 13 of the Code,as
well as its proviso in depth and in detail, it would not be difficult D
for us to come to a conclusion that under Order 9 Rule 13, it has
been clarified that an ex pa rte decree is .ordinarily to be set
aside only as against the defendants against whom the decree
has been ex parte and the suit is to be revived only qua the
defendant who applied for setting aside the ex parte decree. E
Keeping this in mind, let us now examine whether the proviso to
Order 9 Rule 13 of the Code gives ample power to the court to
set aside the decree passed .in favour of the contesting defen~
dants at the time of setting aside the ex parte decree against
~-.
other defendants. Therefore, let us now deal with the proviso to F
Order 9Rule13 of the Code. It provides that in cases where the
decree is of such a nature that the same cannot be set aside
only as against the defendant applying for setting it aside, the
. decree could also be set aside as against any or all of the other
defendants. Therefore, in our view, this proviso confers power
G
on the court to set aside the entire decree if the court is of the

- .,. view that the decree passed was of such a nature that the same
could not be set aside only as against the defendant applying
for setting aside the decree, the decree could also be set aside
as against any or all of the other defendants. Therefore, this
H
914 SUPREME COURT REPORTS [2008] 13 S.C.R. ,.. ~

A proviso clearly confers powers on the Court to set aside the
entire decree where the said decree was of such a nature that it
is expedient in the interest of justice to set aside the decree as
against any or all of the other defendants also. After carefully
examining the provision under Order 9 Rule 13 of the Code
B along with its proviso, the following, therefore, emerges:-
14. As noted herein earlier, the heading of Order 9 Rule
13 of the Code starts with "setting aside decrees ex parte" But,
if we read the entire provision under Order 9 Rule 13 of the
Code, it would be clear that the said provision provides that the
c decree must be ex part~ against one defendant or ex parte
against all the defendants. The proviso also does not provide
that the decree can be set aside against the defendants, other
than the applying defendant, only if it is ex parte against them
also. The only requirement for the applicability of this order is
D that the decree should be ex parte against the defendant apply-
ing to have it set aside. Thus, the language of the order does
not suggest that for the order to apply the decree must be en-
tirely ex parte. Secondly, if the proviso was to apply onlyfHhe
decree. was ex pa rte against the other defendants also·; that
E would have rendered the proviso practically infructuous, as in
such a situation, the other defendants would have an indepen-
dent right to have the decree set aside against them. In our view,

F
the idea behind the proviso is that if the decree is being set
aside as, against some defendants, and the decree as against
the other defendants is connected, interlinked or dependent on
that part of the decree which is being set aside, the decree may
. ~

have to be set aside as against the other defendants also. There
is another aspect to be considered by us relating to the provi-
sion under Order 9 Rule 13 of the Code The proviso to Order 9
Rule 13 does not use the expression "ex parte decree" but it
G
had used the term "decree". Therefore, the question would be
whether the proviso to Order 9 Rule 13 says that the decree
would mean an ex parte decree. This can be looked at from two .,. .{

angles. We shall consider both of t:iem and then determine
which of the two is the most appropriate. One of the ways to
H
BANK OF INDIA v. MIS MEHTA BROTHERS 915
& ORS. [TARUN CHATTERJEE, J.]

look at that the term "decree" over here means the ex parte A
decree, which was passed against the defendant who had af-
terwards applied for setting it aside. This interpretation can be
illustrated with the help of the following hypothetical situation.
Let us assume that there are many defendants and the decree
is passed ex-parte against all the defendants, defendant No.1 B
. subsequently applies for setting aside the said ex-parte decree,
according to the proviso to Order 9 Rule 13 of the Code, if the
decree is of such a nature that it cannot be set aside as against
the defendant No.1 only, then it would be open for the court to
set aside the decree as against all or any of the other defen- c
dants as well. Qf course, we are considering the decrees which
have been passed ex parte against all of them at the present
moment. Thus, according to this interpretation, for the court to
be able to exercise power under this proviso, the word "decree"
used in ,the proviso must be construed to mean ex-parte de-
0
cree only. The arguments which can be made in support of this
interpretation may be summarized as follows:
a) The heading to Order 9 Rule 13 says, "ex parte decree'',
b) The expression "ex-~arte" is used under Order 9 Rule E
13 only once and then it uses the word either
i§decreej"' or"it" in this context. Therefore, if we read
the proviso, it should mean ex parte decree only.
Therefore, according to the above-discussed interpreta-
tion, only that decree can be set aside under the proviso to Qr- F
der 9 Rule 13 of the Code, which was passed ex-parte. There- , _
fore, a decree which is not ex-parte, that is to say, a decree ·
against persons who appeared and contested, cannot be set
aside, much less persons who not only appeared but in whose
.favour the suit was dismissed. This is the one look on the inter- G
pretation of the proviso to Order 9 Rule 13 of the Code. l..et us
now take up the second way to look at this proviso by interpret-
ing that the worcj "decree" used in the proviso means a decree
in general and not necessarily an ex-parte decr~e. In support ot
this interpretation we may note the points emerged :
H
916 SUPREME COURT REPORTS (2008) 13 S.C.R.

A If the subsequent words used in the proviso were to mean
ex-pa rte decree. the Legislature would have expressly provided
so. Therefore, from the intention of the Legislature it cannot be
said that the ex parte decree can only be set aside and not a
decree passed in toto.
B At this juncture, we may look at the second proviso to Or-
der 9 Rule 13 of the Code 1Nhich runs as under:-
"Provided further that no Court shall set aside a decree
passed ex-parte merely on the ground that there has
c been an irregularity in the service of summons, if it is
satisfied that the defendant had notice of the date of
hearing and had sufficient time to appear and answer
the plaintiff's claim.
Therefore, looking at the second proviso to Order 9 Rule
D 13 of the Code and also the explanation, we see that the word
"decree" is preceded by the word "ex parte" This would, in our
view, effectively mean that the Legislature while drafting the pro-
viso No.1 to Order 9 Rule 13, intentionally omitted "ex parte"
before the word "decree" because they intended to mean de-
E cree in general.
~ 5. Therefore, if we go by the above mentioned interpre-
tation, a decree can be set aside as against all or any of the
other defendants, regardless of the fact whether they appeared,
contested or not. Keeping this interpretation of the first proviso to
F Order 9 Rule 13 of the Code in mind, let us now take up the other
...
question to be answered in this case, which is whether a decree
can be set aside against a defendant against whom the suit has
been dismissed on contest. At the first blush, we thought it fit to
think that a defendant who contested a suit and got the suit dis-
G missed on contest it would be unjust to call back the said defen-
dant who had already contested the matter and got the suit dis-
misse!d. This is because, it would amount to jeopardizing his in- y -
terest but it would also result in unending litigation for
him.Therefore, before expressing any opinion on the issue posed
H before us, we have to solve this aspect also. For this reason, we
BANK OF INDIA v. MIS MEHTA BROTHERS 917
& ORS. [TARUN CHATTERJEE, J.]

wish to ascertain that there cannot be a rigid answer to this prob- A
lem. As regards the question as to whether the term "decree" in
the first proviso connotes ex-pa rte decree or the decree in gen-
eral, we have already come to a firm opinion, as discussed herein
above, that it actually meant a decree in general. It may be kept
on record that, in our view, the intention of the Legislature to use· B
the word "decree" in the first proviso to mean decree in general
in view of the changes in the expression made in the Code of
Civil Procedure, 1882 and the Code of Civil Procedure, 1908.
. 16. Therefore, keeping this in mind, let us now consider
whether a contested decree by some of the defendants can be C·
set aside while considering the application for setting aside the
ex parte decree against one of the defendants. This would, in
our view, certainly depend on the nature of reliefs claimed by
the plaintiff in his plaint and the nature of the decree in question.
If the decree is indivisible, the court would be at liberty to set D
aside the decree not only against the defendant who applied
for setting aside the ex pa rte decree passed against him, but
also as against all or any ohhe other defendants. In the instant
case at our disposal, the Division Bench of the High Court had
set aside that part of the order of the learned single judge by E
which the learned single judge had set aside the order of dis-
missal 'of the suit as against the respondent Nos. 1 to 5 on the
application under Order 9 Rule 13 only by the respondent No. 6
for setting aside its ex-parte decree, on the ground that the de-
cree passed was divisible. Therefore, the question remain§ to F
be considered as to whether the decree passed in the suit filed
by the appellant Bank is indivisible or not. To answer this query,
it would be necessary for us to look into the issues framed in
the suit and the reliefs claimed in so far as it is relevant, but
before doing that we may note that the suit was filed by the ap- G
pellant Bank seeking a decree against respondent no. 6 and -in
the alternative, as against respondent nos. 1 to 5 if the respon-
dent no. 6 was found not to be liable. The issues which were
framed in the suit in so far as it is relevant for the disposal of this
appeal, may be set down below:
H
918 SUPREME COURT REPORTS [2008] 13 S.C.R.

A 1) Whether the defendant no. 6 did not comply with the
terms and conditions of the letter of credit and if it
acted in breach of its terms in claiming reimbursement
of the amount of $6 107401- from the appellant Bank
branch in New York.
B 2) Did the defendant nos. 1 to 5 wrongly fail to retire the
documents? If so, to what effect?
3)
4)
c
5)
6)
7) Whether the claim of the plaintiff lies in the alternative,
i.e., one against defendant no. 6 and in the alternative
D
against defendants no. 1 to 5?
8) In case it is held that defendants no. 1 to 5 are.liable
to any amount are they entitled to pay that amount in
installments?
E 17. We have already quoted the relevant reliefs claimed
by the appellant Bank in their plaint and the issues now quoted
herein above. As has been noted herein earlier, the suit was
decreed ex parte holding that respondent no. 6 only was liable
and in view of such issue being decided, the suit against re-
F spondent Nos. 1 to 5 was dismissed. Such dismissal of the
suit, as noted herein earlier, as against respondent Nos. 1 to 5
was held by the Court that since respondent No.6 alone was
liable to pay the decretal amount to the appellant Bank the suit
had to b~ dismissed against respondent Nos. 1 to 5 as the
G relief claimed in the suit was in the alternative, that is to say, if
the suit is decreed against respondent No.6 only or it is held by
the cour1 that respondent No. 6 only was liable to pay the decre-
tal amount, respondent Nos. 1 to 5 cannot be held to be liable
for the amount claimed. However, as an illustration, we may re-
H fer to Issue No.1 in which it was held that the documents nego-
,,. BANK OF INDIA v. M/S MEHTA BROTHERS 919
& ORS. [TARUN CHATTERJEE, J.]

tiated by respondent No.6 were deficient and thus there was ·A
non compliance/breach of the terms and conditions of the Let-
ter of Credit by respondent No.6. Having found this Issue No.1
in favour of the appellant Bank and against respondent No.6
and the remaining issues, namely, Issue Nos. 2, 7 and 8 which
were also decided may be referred to at this stage. B
Issue No. 2 - "In vie1N of my decision in Issue No.1, the
defendants 1 to 5 were justified in refusing to retire the
documents. Issue is decided accordingly.
'·
Issue No. 7 -"It was not shown to me how the suit in the c
alternative was not maintainable"
Issue No. 8 -"In view of my finding that defendants 1 to 5
were not liable to· pay any amount, this issue does not
arii;e.
-~ D
18. From the examination of the issues and the findings
arrived at by the learned single judge: it is pellucid that the suit
against respondent Nos. 1 to 5 was found to be maintainable in
law but they"were held not to be liable because respondent No.
6 alone was held to be liable. At this stage, it may be kept on
record that a suit being Suit No. 475of1980 has been filed by E
. respondent No.1 againsUhe Oriental Fire and General Insur-
ance Company, which has now been adjourned sine die at the
.. instance of respondent no. 1 in view of the judgment of the Divi-
II - ...
sion Bench of the High Court which affirmed the decree passed
J

in favour of respondent Nos. 1 to 5 by dismissing the suit against F
them. In the aforesaid pending suit, there has been an order
passed by the Court which may be relevant for us to reproduce
and we quote as under:-
"It has been submitted by the learned counsel for the
G
plaintiff that the proceedings in the suit may be adjourned
sine-die in view of the judgment in Suit No. 1182 of 1982
-.
" in Bank of India Vs. Mehta Brothers given on 1oth of
March, 1987. It is further submitted that it should be left
open to the plaintiff to get the proceedings revived as
H
920 SUPREME COURT REPORTS (2008) 13 S.C.R.

A and when necessary The request of the learned counsel
for the plaintiff is not being opposed on behalf of the
defendant. In view thereof further proceedings in this suit
are adjourned sine die. It should be open to the plaintiff
to apply for reviving the proceeding as and when
B necessary"

On a plain reading of this order and the stand taken by
respondent No.1 in the aforesa!d suit, it is clear to us that re-
spondent No.1 has reserved liberty to revive the pending suit, if
necessary.
c
19. As has been noted herein earlier, the ex-parte decree
passed by the learned single judge was set aside in toto on an
application made by respondent no. 6, that is to say, the suit
has also revived against respondent nos. 1 to 5 who contested
D
the suit and got the suit dismissed in the above manner. Ac- .
cording to the learned single judge, the decree passed in the
suit was a single indivisible decree and the ex parte decree
was accordingly set aside not only against respondent no. 6 but
also against respondent nos. 1 to 5 as well. It is against this deci-
sion of the learned single judge, as noted herein earlier, an ap-
E peal was preferred to the Division Bench of the High Court, which,
however, upheld the finding of the learned single judge on the
setting aside of ex parte decree passed against respondent No.6.
But at the same time the appellate court differed with the view of

F
the learned single judge holding that the decree passed was in- ....
divisible and held that the learned single judge was not justified
in setting aside the decree against respondent Nos.1 to 5 who
contested the suit and got the suit dismissed. According to the
Division Bench of the High Court, the said decree was actually
two distinct decrees, i.e., one against the respondent no. 6 and
G on.e in favour of the respondent nos. 1 to 5, and on that finding the
Division Bench had set aside the finding of the learned single
judge! on the question whether the decree was divisible or not
and accordingly, had set aside the order of the learned single "
judge to that extent and against which the present appeal has
H now been preferred by the appellant Bank.
j
BANK OF INDIA v. MIS... MEHTA BROTHERS 921
& ORS. [TARUN CHATTERJEE, J.)

20. In our view, the Division Bench was not justified in set- A
ting aside the above part of the order of the learned Single Judge
on the ground that the decrees were two distinct decrees :-One
agairis.t respondent No.6 and one in favour of the responqent
Nos. 1 to 5. It is to be noted that the judgment of the learned
single judge as well as of the Division Bench had not proceeded B
on the basis that the decree was entirely ex parte against all the
defendants. Therefore, we have to see the nature of the decree
for the purpose of coming to a proper conclusion whether the
deGree could be indivisible or the decree that was passed were
two separate distinct decrees. In this connection, it would be c
important to refer to a minority decision of the Assam High Court
in the case of Khargesh Chandra Vs. Chandra Kanta Barua
[AIR 1954, Assam 183), which would be relevant for us to illus-
trate and answer this question. Accordingly, we quote the ob-
servations made by the Assam High Court with which we are in
D
full agreement which are as follows :
"(51 ) .. .... What is to be considered is not whether the
plaintiff is estopped from claiming relief against the
defendant without going to the appellate court, since there
has been an adjudication between him and the defendant E
who appeared at the earlier hearing, but whether the
defendant who was absent at the time (for sufficient
reasons) should not get a chance to reopen the entire
suit in his interest, if the justice of the case so demands.
• To my mind, the intention of the Legislature is to give F
him such relief and therefore the proviso to Order 9 Rule
13, Civil Procedural Code, admits of no narrower
interpretation, and when the decree is of such a nature
that proper· relief cannot be given to the applying
defendant without setting aside the decree against other
G
defendants (no matter in what shape it existed}, the decree
... may be set aside as against the other defendants also."
At this stage, paragraph 8 of the Full Bench decision of
the Assam High Court in Khargesh Chandra (supra) may also
be dealt with. The said paragraph noted two significant changes H
922 SUPREME COURT REPORTS [2008] 13 S.C.R.

A which were elfected in Order 9 Rule 13 of the Code namely, the
words "as against him" were added after the words "shall make
an order setting aside the decree" and the proviso to the Rule.
Accordingly, from this paragraph of the Full Bench decision, the
chan~ies left no room for doubt that as a general rule, the de-
cree was to be set aside against the person making the appli-
..
B
cation under Order 9 Rule 13 of the Code, but in exceptional
cases, contemplated by the proviso, it could be set aside
against all or any of the other defendants. Emphasis was made
in this paragraph that the decree to be set aside must ~e a
c decree "against the defendants and not a decree in their favour".
21. It is needless to say that the learned single judge of the
Delhi High Court had followed the minority decision of the Assam
High Court and held that the decree was indivisible which was
set aside by the Division Bench in the aforesaid manner. In our
D view, considering the issues framed in the present suit and the .
reliefs claimed by the appellant Bank and the findings arrived
at on such issues, as noted herein above, we are of the opinion
that the learned single judge was fully justified in restoring the
suit in toto and was correct in setting aside the entire decree
E and restore the suit in its entirety on an application under Order
9 Rule 13 of the Code which also, in view of our discussions
made herein earlier, was correct in the approach of Order 9
Rulei 13 of the Code.
22. Reliance on paragraph 8 of the Full Bench decision of
F the Assam High Court as relied on by the learned counsel for
.-
respondent Nos. 1 to 5 cannot be considered to be a good law
in view of the fact that it itself accepts the position that in excep-
tional cases contemplated by the proviso under Order 9 Rule
13 of the Code, the ex-parte decree could be set aside not only
G on the defendant who applied for setting aside the ex-parte
decree but also on or any other defendants. In view of the dis-
cussions made hereinabove, we are not in a position to agree ,,
with the submission of the learned counsel for respondent Nos.
1 to 5 who placed strong reliance on paragraph 8 of the afore-
H said decision to contend that the decree to be set aside must
BANK OF INDIA v. M/S MEHTA BROTHERS 923
& ORS. [TARUN CHATTERJEE, J.]

be a decree "against defendants and not a decree in their A
favour", irrespective of the fact whether the decree was passed
·in favour of the defendants on contest.
As noted herein earlier, we have already discussed that in
the judgment, it was held that respondent No. 6 against whom B
the ex-parte decree was passed, was only liable to pay the de-
cretal amount to the appellant Bank. The suit was dismissed as
against respondent Nos. 1 to 5 only on the ground that the claim
of the appellant Bank was satisfied against respondent No. 6
and in view of such relief already obtained by the appellant Bank
against respondent No. 6, Issue Nos. 2, 7 & 8 were held in favour C
of respondent Nos. 1 to 5 and as a result of that, the suit was
dismissed on contest as against respondent Nos. 1 to 5. Ac-
cordingly, we are of the firm opinion that the ex parte decree
.was indivisible and rightly set aside not only against respon-
dent No.6 but also against respondent Nos.1 to 5. Since no D
argument was advanced by the learned counsel for the appel-
lant Bank that the findings of the learned Single Judge as well
as the Division Bench on the question whether there was suffi-
cient cause for respondent No.6 to get the ex-parte decree set
aside, we do not intend to examine the correctness of the find- E
ings of the learned single judge as well as of the Division Bench
to the extent that responclent No. 6 had made out sufficient cause
for non-appearance on the date, the suit was decreed ex-pa rte
against it.
23. Before we conclude, we may mention one short sub- F
mission of the learned counsel for respondent Nos. 1 to 5. Ac-
cording to the learned coun::oel for respondent Nos. 1 to 5, it
was not open to the appellant Bank to restore the suit in toto on
the application under Order 9 Rule 13 of the Code filed by re-
spondent No.6, because the appellant Bank did not choose to G
prefer any appeal against the order of dismissal of the suit
passed in favour of respondent Nos. 1 to 5. In view of our dis-
cussions made herein above in which we have already come to
the conclusion that the decree was indivisible and was depen-
dent on the decision of the issues indicated herein earlier, it H
924 SUPREME COURT REPORTS [2008] 13 S.C.R.

A was not possible for the court to set aside the ex pa rte decree
only against respondent No.6. Therefore, we do not think that
this argument of the learned counsel for respondent Nos. 1 to 5
would be of any help. That apart, the learned single judge hav-
ing set aside the decree in toto and restored the suit in its en-
B tirety, it was not necessar1 for the appellant Bank to file any
appeal against the dismissal of the suit as against respondent
Nos. 1to5.
24. Accordingly, we set aside the judgment of the Division
Bench of the Delhi High Court so far as it had set aside the
C order of the learned Single Judge restoring the suit in its en-
tirety and therefore, the judgment of the learned single judge is
restored to its original file. Since, the suit of the appellant Bank ..._
was filed in the year 1982 without expressing any opinion on
the merits of the suit, we request the learned single judge to
D decide the suit at an early date preferably within six months from
the date of supply of a copy of this order to him.
25. For the reasons aforesaid, the appeal is allowed and
the impugned judgment of the Division Bench is set aside to
E the extent indicated above and the judgment of the learned Single
Judge is restored. There will be no order as to costs. ·
K.K.T. Appeal allowed.

-