"Explanation" In Order XVII Rule 2 CPC Doesn't Apply To Parties Without Substantial Evidence: Supreme Court

A two-judge Bench of Justice Vikram Nath and Justice Ahsanuddin Amanullah observed:

“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 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.”

The appeal challenged a judgment by a Single Judge of the Bombay High Court which had allowed a petition filed by the Maharashtra State Electricity Board (MSEB) against Miraj Electric Supply Co. Ltd. (MESC) and others. MSEB filed a suit against MESC and its directors for a monetary claim. After various legal steps, including evidence presentation and an ex parte decree, the defendants filed an application under Order IX Rule 13 of the Code of Civil Procedure (CPC) to set aside the ex parte decree. The Trial Court initially allowed this application, but it was challenged by MSEB in the High Court.

The High Court set aside the Trial Court's decision and maintained the ex parte decree. The basis for the High Court's decision was that the application under Order IX Rule 13 CPC was not valid due to the application of Order XVII Rule 2 CPC.

Senior Advocate Vijay Navare appeared for the Petitioner and Senior Advocate Ajit Bhasme appeared for the Respondents.

The Court reproduced Order XVII Rule 2 CPC and Order IX Rule 13 CPC and summarized that Order IX Rule 13 allows a party to apply to the Court to set aside an ex parte decree by providing reasons for their non-appearance and Order XVII Rule 2 states that if parties or any of them fail to appear on an adjourned hearing date, the Court can proceed to dispose of the case based on specified modes or make other suitable orders.

The Court noted that in this case, the defendants and their counsel did not appear, leading the Trial Court to direct the case under Order XVII Rule 2 CPC and that the Trial Court proceeded to decree the suit ex parte based on the plaintiff's evidence after the defendant's absence.

The Court clarified that the "explanation" in Order XVII Rule 2 CPC applies when a party that has led substantial evidence fails to appear; it doesn't apply to parties who haven't presented evidence and that it would not apply to the appellant as they hadn't presented evidence yet.

The Supreme Court held that the Trial Court erred by not issuing notice to the defendants to appoint new counsel after their counsel withdrew, leading to an erroneous ex parte decision and the High Court also erred by applying the explanation and concluding that an application under Order IX Rule 13 CPC wasn't maintainable.

The Court decided that the appeal should be allowed, setting aside the High Court's decision. The Trial Court was directed to proceed to decide the case fairly and according to law. The Court addressed the amount the appellant deposited, suggesting that 20% should be retained in a Fixed Deposit and 30%, along with accrued interest, should be returned to the appellant.

Cause Title: Y.P. Lele v. Maharashtra State Electricity Distribution Company Ltd. & Ors.

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