Y. P. LELEversusMAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LTD. & ORS.

                  [2023] 11 S.C.R. 141 : 2023 INSC 732



                             CASE DETAILS

                                 Y. P. LELE
                                       v.
    MAHARASHTRA STATE ELECTRICITY DISTRIBUTION
              COMPANY LTD. & ORS.
                      (Civil Appeal No.5155 of 2023)
                             AUGUST 16, 2023
  [VIKRAM NATH AND AHSANUDDIN AMANULLAH, JJ.]

                               HEADNOTES

       Issue for consideration: Whether the High Court committed an error
in applying the explanation to Or. XVII, r.2 CPC and based upon it held
that an application u/Or. IX Rule 13 CPC would not be maintainable as the
presence of the defendant would be deemed to be recorded at the time of
disposal of the suit.
      Code of Civil Procedure, 1908 – Explanation to Or. XVII, r.2 and
Or. IX, r.13:
        Held : At the stage when plaintiff’s evidence was being led, counsel
for defendants withdrew his vakalatnama – Trial Court directed to proceed
u/Or. XVII, r.2 CPC against defendants and decreed suit ex parte – Trial
Court allowed application of defendants u/Or. IX, r.13 – However, High
Court held application u/Or. IX Rule 13 CPC would not be maintainable
and applied explanation u/Or.XVII, r.2 CPC – The explanation to Or. XVII,
r.2 in the instant case could have been invoked only if the plaintiff, after
adducing his evidence or substantial evidence, failed to appear, the Court
could have recorded his presence while disposing of the suit – But, once
the defendant had not led any evidence at all, the explanation could not be
invoked as against the defendant/appellant – The High Court committed an
error in applying the explanation to Or. XVII, r. 2 CPC and based upon it
holding that an application u/Or. IX, r.13 CPC would not be maintainable as
the presence of the defendant would be deemed to be recorded at the time
of disposal of the suit – Thus, the impugned order of the High Court is set
aside – Trial Court to proceed and decide the Special Civil Suit on its own
merits, after giving due opportunities to the parties. [Paras 4, 5, 6, 7 and 20]
                                     141
142          SUPREME COURT REPORTS                         [2023] 11 S.C.R.


      Code of Civil Procedure, 1908 – Or. XVII, r.2 – At the stage when
plaintiff’s evidence was being led,counsel for defendants withdrew his
vakalatnama – Trial Court directed to proceed u/Or. XVII, r.2 CPC
against defendants and decreed suit ex parte – Propriety of:
       Held : As a matter of fact, once the counsel had withdrawn his
Vakalatnama, in normal course, the Trial Court ought to have issued notice to
the defendants to engage another counsel, which it did not do and proceeded
ex parte – The Trial Court committed an error in doing so. [Para 21]
      Code of Civil Procedure, 1908 – Or. XVII, r.2 – Discernible under:
       Held : What is discernible is that u/Or. XVII, r.2, the Court would
proceed to pass orders with respect to any of the parties being absent or both
the parties being absent – Whereas the explanation is confined to record
the presence of that party and that party alone, which has led evidence or
substantial evidence and has thereafter failed to appear. [Para 19]

       LIST OF CITATIONS AND OTHER REFERENCES

      Maharashtra State Electricity Board vs. Miraj Electric Supply Co.
Ltd. Ors. Civil Writ Petition No. 1488 of 2015 – referred to.

       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

      CIVIL APPELLATE JURISDICTION : Civil Appeal No.5155 of 2023
      From the Judgment and Order dated 27.06.2018 of the High Court
of Judicature at Bombay in WP No.1488 of 2015.
      Appearances:
      Vinay Navare, Sr. Adv., Samrat Krishnarao Shinde, Adv. for the
Appellant.
      Ajit Bhasme, Sr. Adv., Mukesh Kumar Pandey, Rajnish Kumar Singh,
A. Bhasme, Sanjay Kumar Visen, Anand Landge, Chander Shekhar Ashri,
Advs. for the Respondents.
       Y. P. LELE v. MAHARASHTRA STATE ELECTRICITY                            143
                     DISTRIBUTION CO. LTD.


        JUDGMENT/ORDER OF THE SUPREME COURT

                                 JUDGMENT
       VIKRAM NATH, J.
       Leave granted.
       2. The appellant is the original defendant no.5, as described in the plaint
of the Special Civil Suit No. 125 of 1988.
      3. The present appeal assails the correctness of judgment and order dated
27.06.2018 passed by the learned Single Judge of the Bombay High Court in
Civil Writ Petition No. 1488 of 2015titled “Maharashtra State Electricity
Board vs. Miraj Electric Supply Co. Ltd. Ors.”, whereby the petition was
allowed, the order dated 30.09.2014 passed by the Trial Court allowing the
application under order IX Rule 13 of the Code of Civil Procedure, 19081
was set aside and the exparte decree was maintained.
       4. Shorn of unnecessary facts,Maharashtra State Electricity Board2 filed
Special Civil Suit No. 125 of 1988 in the Court of Civil Judge, Senior Division
at Sangli impleading Miraj Electric Supply Co. Ltd.3 as defendant no. 1 and
its five Directors as defendant nos. 2 to 6 for recovery of Rs. 1,42,85,177.47/-
with costs of suit and further praying for interest at the rate of 18% per annum
from the date of presentation of the suit till realisation of the aforesaid amount.
The defendants appeared and filed their written statements. The plaintiff’s
evidence was being led and at that stage the counsel for the defendants Shri.
M.B. Karmarkar withdrew his Vakalatnama vide Ex. 112. He had also not
cross-examined the witnesses. The Trial Court, on 04.12.2004, directed for
suit to proceed under Order XVII Rule 2 of CPC against the defendants.
Thereafter the Trial Court proceeded to record the evidence of the plaintiff
and, vide judgement and order dated 29.01.2005, decreed the suit exparte
with costs. The operative portion of the judgment is reproduced hereunder:
       “Suit is decreed exparte with cost, as under:
      1. The defendants No. 1 to 6 jointly and severally to pay Rs.
      1,42,85,177.47 Ps. (Rs. One crore,forty two lakhs, eighty five thousands,
1   In short, “CPC”
2   In short, “MSEB”
3   In short, “MESC”
144           SUPREME COURT REPORTS                          [2023] 11 S.C.R.


      one hundred seventy seven and forty seven paise only) to the plaintiff
      board M.S.E.B.). They shall pay interest at the rate of Rs.18% p.a. on
      the arrears amount of Rs. 1,0490032.36 Ps. (Rs. One crores four lakhs
      nineteen thousands thirty two and thirty six paise only) from the date
      of the suit till its realization.
      2. Decree be drawn up accordingly.”
       5. The defendants,on coming to know of the exparte decree,belatedly
filed an application under Order IX Rule 13 CPC accompanied by an
application for condonation of delay under Section 5 of the Limitation Act,
1963 on 21.09.2006. The Trial Court, vide order dated 20.09.2010, allowed
the application under Section 5 of the Limitation Act finding the explanation to
be satisfactory for the delay caused with costs of Rs. 3,000/- on the defendants
to be deposited within ten days.
      6. Thereafter, the Trial Court vide order dated 30.09.2014, allowed the
application under Order IX Rule 13 CPC, set aside the exparte decree dated
29.01.2005 while imposing fine of Rs. 1,000/- and restored the Special Civil
Suit No. 125 of 1988 to its original number.
      7. The plaintiff-MSEB preferred a Writ Petition before the High Court
under Articles 226 and 227 of the Constitution. The High Court, by the
impugned order dated 12.01.2015, allowed the Writ Petition, set aside the
order dated 30.09.2014.As a result, the suit of the respondent-MSEB stood
decreed exparte. The petition was allowed on the ground that the application
under Order IX Rule 13 CPC would not be maintainable inasmuch as the High
Court had applied the explanation under Order XVII Rule 2 CPC.
       8. Aggrieved by the same, the present appeal has been preferred by
impleading MSEB as respondent no.1, the contesting respondent,and also
impleading the other four Directors as respondent nos. 3 to 6. It also impleaded
MESC as respondent no. 2. At some stage during the pendency before this
Court, the respondent nos. 2 to 6 were directed to be deleted from the array
of parties vide order dated 21.10.2019.However later on, vide order dated
15.09.2021, Respondent Nos. 2 and 6 were restored as party respondents.
       9. It would be worthwhile to mention that the appeal has been preferred
by one of the Directors, as noted in the beginning, being defendant no.5 before
the Trial Court.
       Y. P. LELE v. MAHARASHTRA STATE ELECTRICITY                        145
            DISTRIBUTION CO. LTD. [VIKRAM NATH, J.]

      10. We have heard learned counsel for the parties and perused the
record.
       11. The submission of learned counsel for the appellant is that the
High Court committed a grave error in applying the explanation to Order
XVII Rule 2 CPC. According to him, the order passed by the Trial Court
decreeing the suit exparte and the earlier order dated 04.12.2004 was only
an order under Order XVII Rule 2 CPC and not under the explanation as
the explanation would not be applicable. It was also submitted that the Trial
Court itself, while decreeing the suit, had recorded that it was an exparte
decree and under Order IX Rule 13 CPC an exparte decree could be applied
for being recalled.
       12. On the other hand, the submission of learned counsel for the
respondent MSEB is to the effect that out of the five Directors only one of
them had approached this Court, whereas the defendant no.1-company as
also the other four Directors defendant nos. 2 to 4 and 6 are not before this
Court challenging the said order. It is further submitted that the High Court
was right in allowing the writ petition by invoking the explanation to Order
XVII Rule 2 CPC and the appeal deserves to be dismissed.
       13. It would be worthwhile to mention that this Court, vide order dated
10.12.2018, had directed the appellant to deposit 50% of the suit claim i.e.
half of Rs. 1,42,85,177/- within a period of six weeks and the matter was
directed to be listed after six weeks. On 25.01.2019, this Court being satisfied
that 50% of the suit claim had been deposited before the Trial Court, directed
that the Trial Court would invest the said amount in a Fixed Deposit initially
for a period of six months in a Nationalized Bank with automatic renewal.
This Court,further, condoned the delay, issued notices to the respondents
and further stayed the impugned judgment.
      14. Before proceeding to consider the submissions, it would be
appropriate to reproduce Order XVII Rule 2 CPC, which reads as follows:
     “2. Procedure if parties fail to appear on day fixed. - Where, on
     any day to which the hearing of the suit is adjourned, the parties or
     any of them fail to appear, the Court may proceed to dispose of the
     suit in one of the modes directed in that behalf by Order IX or make
     such other order as it thinks fit.
146           SUPREME COURT REPORTS                           [2023] 11 S.C.R.


       Explanation.-Where the evidence or a substantial portion of the evidence
of any party has already been recorded and such party fails to appear on any day
to which the hearing of the suit is adjourned, the Court may, in its discretion,
proceed with the case as if such party were present.”
        15. It would also be relevant to reproduce Order IX Rule 13 which reads
as follows:
      “Setting aside decree exparte 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 satisfies
      the Court that the summons was 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 Court or otherwise as it
      thinks fit, and shall appoint a day for proceeding with the suit:
      Provided that where the decree is of such a nature that it cannot be set
      aside as against such defendant only it may be set aside as against all or
      any of the other defendants 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 satisfied that the defendant had notice of the date of
      hearing and had sufficient time to appear and answer the plaintiffs claim.
      Explanation- Where there has been an appeal against a decree passed
      ex parte under this rule, and the appeal has been disposal of on any
      ground other than the ground that the appellant has withdrawn the
      appeal, no application shall lie under this rule of setting aside the
      ex parte decree.”
       16. A plain reading of Order IX Rule 13 makes it apparent that where
in a case, a decree is passed ex parte against defendant, a party may apply to
the Court for setting aside the same for reasons satisfying the Court regarding
non-appearance.
       17. Coming to Order XVII Rule 2 CPC, it would be apparent that if
the parties or any one of them failed to appear on a day to which the hearing
of the suit is adjourned, the Court may proceed to dispose of the suit in one
       Y. P. LELE v. MAHARASHTRA STATE ELECTRICITY                         147
            DISTRIBUTION CO. LTD. [VIKRAM NATH, J.]

of the modes directed in that behalf by Order IX or make such other order
as it deems fit.
        18. In the present case, the defendants did not appear on 04.12.2004,
nor their counsel appeared as he had already withdrawn hisVakalatnama
by a written request. The Trial Court directed for the suit to proceed under
Order XVII Rule 2 CPC against the defendants. The effect of the order dated
04.12.2004 was that the Trial Court could have proceeded to dispose of the
suit in one of the modes directed in that behalf by Order IX CPC. Coming
back to Order IX CPC, it is to be noticed that under Rule 6 thereof where
summons are duly served and the defendant does not appear when the suit
is called on for hearing, then the Court may make an order that the suit be
heard ex parte. This is in fact the procedure adopted by the Trial Court in the
present case. Accordingly, after the evidence of the plaintiff was concluded
and the defendant continued to remain absent, the Trial Court decreed the
suit ex parte, vide judgment dated 29.01.2005. The operative portion thereof
clearly mentions that the suit is decreed ex parte.
       19. Now coming to the explanation, what is stated therein is that
where the evidence or a substantial portion of the evidence of any party has
already been recorded and such party fails to appear on any day to which
the hearing of the suit is adjourned, the Court would be at liberty to proceed
with the case as if such party were present. Two phrases are important in
the explanation “any party” and “such party”. “Any party” refers to the
party which has led evidence or substantial evidence and “such party” refers
to that very party which has led evidence or substantial evidence. What is
discernible is that under Order XVII Rule 2, the Court would proceed to pass
orders with respect to any of the parties being absent or both the parties being
absent. Whereas the explanation is confined to record the presence of that
party and that party alone, which has led evidence or substantial evidence
and has thereafter failed to appear. In the present case, admittedly the suit
was at the stage of plaintiff’s evidence as is apparent from the order dated
04.12.2004. The evidence of the defendants had not even started and the
defendants’ counsel had not even cross-examined the plaintiff’s evidence.
       20. The explanation in the present case could have been invoked
only if the plaintiff, after adducing his evidence or substantial evidence,
failed to appear, the Court could have recorded his presence while
148          SUPREME COURT REPORTS                         [2023] 11 S.C.R.


disposing of the suit. But once the defendant had not led any evidence at all,
the explanation could not be invoked as against the defendant/appellant. The
High Court committed an error in applying the explanation to Order XVII
Rule 2 CPC and based upon it holding that an application under Order IX
Rule 13 CPC would not be maintainable as the presence of the defendant
would be deemed to be recorded at the time of disposal of the suit.
       21. As a matter of fact, once the counsel had withdrawn his
Vakalatnama, in normal course, the Trial Court ought to have issued
notice to the defendants to engage another counsel, which it did not do
and proceeded ex parte. The Trial Court committed an error in doing
so. Further, the Trial Court, in its wisdom and discretion having allowed
the application under Order IX Rule 13 CPC, the High Court ought to
have refrained itself from interfering with an order which advanced the
cause of justice by aff ording opportunities to both the parties so that the
suit could be decided on merits.
       22. For all the reasons recorded above, we are unable to uphold the
impugned order of the High Court. The appeal is allowed. The impugned
order of the High Court is set aside. The Trial Court will proceed to decide
the Special Civil Suit on its own merits, after giving due opportunities
to the parties and strictly proceed in accordance with law.
       23. Once the ex parte decree has been set aside, the amount of
50% deposited by the appellant needs to be suitably accounted for. It
is true that under Order IX Rule 13 CPC, the Court,while allowing
the application, could impose such terms and conditions as it deems
fit and this being a money decree, the Trial Court could have required
the appellant to deposit some amount. The appellant is one of the fi ve
Directors of the defendant no.1. Although the relief claimed was for joint
and several liability of each of the Directors, in our view the deposit
of 50% at the hands of appellant above would be too excessive. We
accordingly provide that the amount deposited by the appellant under
the order of this Court, which is lying in the Trial Court, may be adjusted
as follows:
      (i)    20% of the suit claim, along with interest accrued thereon, may
             be retained by the Trial Court and may continue to deposit the
             same in the Fixed Deposit initially for a period of six months,
       Y. P. LELE v. MAHARASHTRA STATE ELECTRICITY                         149
            DISTRIBUTION CO. LTD. [VIKRAM NATH, J.]

              renewable on an automatic basis, till further orders are passed
              in that regard, depending upon the outcome of the suit;
      (ii).   Whereas 30%, along with accrued interest thereon, may be
              returned to the appellant within four weeks of the date of filing
              of this order before the Trial Court along with an application
              for return of amount as directed above.
       24. No order as to costs.
       25. Pending application, if any, stand disposed of.

Headnotes prepared by:                                           Appeal allowed.
Ankit Gyan