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M/s GMG Engineering Industries & Ors. v. M/s ISSA Green Power Solution & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 4472 of 2015)Decided 15 May 2015
Civil Appeal No. 4472 of 2015
Justice T.S. Thakur · Justice R. Banumathi

Background

After a failed property sale agreement, the respondents sued the appellants for recovery of advance amounts paid (Rs.1,50,00,000 and Rs.10,00,000 in two separate suits). The appellants were set ex-parte and the suits were decreed ex-parte; the appellants applied over a year later to condone the delay and set aside the ex-parte decrees. The trial court condoned the delay but imposed a condition that the appellants deposit the entire decreed amounts as a precondition, which the Madras High Court upheld on revision, prompting this appeal.

Decision Breakdown

The Supreme Court held that requiring the appellants to deposit the entire disputed decree amounts as a precondition for merely getting a chance to contest the suits on merits was unreasonable and onerous, especially since the suits themselves were yet to be tried. It found that the appellants had satisfactorily explained the delay and that courts, while entitled to impose reasonable terms when condoning delay, cannot impose conditions so harsh as to effectively pre-judge or decide the suit itself. The Court set aside the High Court's order, condoned the delay, set aside both ex-parte decrees, restored the suits for trial, and directed the appellants to file written statements within six weeks: expressly noting it had not expressed any opinion on the merits of the underlying suits, which the trial court was directed to dispose of expeditiously given the respondents' advanced age.

Lesson Learnt

Courts can require a defendant to deposit money or meet conditions before setting aside an ex-parte decree, but those conditions must be reasonable: a condition requiring payment of the entire disputed amount upfront, before the case has even been tried on its merits, crosses the line into effectively deciding the case without a trial.

Official source (sci.gov.in)View Judgment (PDF)

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