Madras High Court’s Delay Condemnation Reversed: Supreme Court Allows First Appeal

The case of N. Mohan vs. R. Madhu was a significant ruling where the Supreme Court examined the issue of delay in filing a first appeal under Section 96(2) of the Code of Civil Procedure (CPC). The core question before the Court was whether the delay of 546 days in filing the appeal should be condoned, given that the appellant had earlier pursued a remedy under Order IX Rule 13 CPC.

The ruling provides crucial insights into the right of an aggrieved party to appeal an ex-parte decree and under what circumstances courts should exercise discretion in condoning delays. The case also reaffirmed the principle that procedural technicalities should not override substantive justice.

Background of the Case

The appellant, N. Mohan, was a businessman engaged in the tea and real estate industry. The respondent, R. Madhu, claimed to have lent Rs. 45,00,000 to the appellant on January 10, 2015, without any formal documentation, based on mutual trust. The loan was supposed to be repaid within two months with an agreed interest rate of 18% per annum.

However, when the repayment was not made, the respondent-plaintiff presented two post-dated cheques issued by the appellant—one for Rs. 25,00,000 and another for Rs. 20,00,000. These cheques were dishonored on March 10, 2015, with the bank citing ‘payment stopped by the drawer’ as the reason.

Consequently, the respondent filed a civil suit (OS No. 76 of 2015) in the Additional District Judge, Tiruchirappalli. Since the appellant did not appear in court, the case was decided ex-parte on October 9, 2015.

Petitioner’s Arguments (N. Mohan)

The appellant contended:

• The summons was sent to an old address in Trichy, whereas he had been residing in Chennai since January 2014.
• Since he was unaware of the proceedings, an ex-parte decree was unfairly passed against him.
• He only came to know about the decree on July 29, 2016, when he appeared in another case (CC No. 240/2016) in Karur.
• He promptly filed an application under Order IX Rule 13 CPC for setting aside the ex-parte decree, along with an application to condone the delay of 276 days.
• The delay in filing the first appeal was due to the time spent in the earlier proceedings to set aside the ex-parte decree.

Respondent’s Arguments (R. Madhu)

The respondent countered:

• The appellant had multiple opportunities to challenge the decree but failed to do so in time.
• The trial court, High Court, and Supreme Court had already rejected his plea to set aside the ex-parte decree under Order IX Rule 13 CPC.
• The reasons provided for the delay in filing the first appeal were the same as those rejected in the earlier proceedings.
• The delay of 546 days was excessive and did not fall under ‘sufficient cause’ as per Section 5 of the Limitation Act.

Supreme Court’s Judgment

The Supreme Court, after analyzing the facts, ruled in favor of the appellant, allowing the first appeal to proceed. The key observations were:

• An appeal under Section 96(2) CPC is a statutory right and cannot be denied merely because an application under Order IX Rule 13 CPC was previously dismissed.
• The time spent in pursuing remedies under Order IX Rule 13 CPC should be considered when deciding whether to condone the delay in filing an appeal.
• The delay of 546 days should not be viewed in isolation, as 276 days were spent in seeking to set aside the ex-parte decree.
• The Court, in the interest of justice, condoned the delay, subject to the appellant depositing Rs. 20,00,000 in the trial court.

The Court stated:

“The right of appeal under Section 96(2) CPC is a statutory right, and the defendant cannot be deprived of this right merely on the ground that an application under Order IX Rule 13 CPC has been dismissed.”

Key Takeaways

• A defendant can pursue both an application under Order IX Rule 13 CPC and a first appeal under Section 96(2) CPC.
• The right to appeal should not be denied due to procedural delays, provided the party shows bona fide intent.
• The courts should adopt a liberal approach while interpreting ‘sufficient cause’ under the Limitation Act, particularly in cases involving substantive justice.
• Monetary security may be imposed as a condition for allowing delayed appeals, ensuring that the decree-holder’s rights are also protected.
• This judgment reinforces the principle that justice should not be sacrificed at the altar of procedural technicalities.

The Supreme Court’s decision ensures that an aggrieved party is not denied justice due to procedural barriers and highlights the balance courts must maintain between efficiency and fairness in the judicial process.

Petitioner Name: N. Mohan.
Respondent Name: R. Madhu.
Judgment By: Justice R. Banumathi, Justice A.S. Bopanna, Justice Hrishikesh Roy.
Place Of Incident: Tiruchirappalli, Tamil Nadu.
Judgment Date: 21-11-2019.

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