Delay in Challenging Ex Parte Decree Condoned on Deposit, Not Payment to Plaintiff: Supreme Court Modifies Condition

Integrated Finance Company Limited sued a partnership firm, Business India, and the three defendants representing it for ₹21,88,11,451.96 with future interest at 36%, under hire-purchase and lease agreements (para 4). The defendants did not appear despite service; the High Court's Single Judge decreed the suit ex parte on 15.11.2021 (paras 5-6). On 15.02.2023 the fourth defendant, Hiroo Hotchand Advani, sought to set the decree aside and to condone 423 days' delay, saying the summons was never served on him (para 7). The Single Judge found no bona fides and refused (para 8). A Division Bench condoned the delay on 14.08.2024, on condition that he pay ₹75,00,000 to the plaintiff for disbursal to depositors (para 9).

The Court framed two questions: whether the Division Bench's discretion in condoning the 423-day delay should be disturbed, and whether it was justified in directing payment of ₹75,00,000 to the plaintiff as the condition (para 14). After considering the grounds raised in both courts, it held that the discretion could not be called so arbitrary or irrational as to require interference under Article 136; the opportunity to contest the suit on merits, once granted, did not deserve to be thwarted (para 14). On the condition, it held that a deposit of ₹75,00,000 for condoning the delay was reasonable, but the further direction to pay that sum to the plaintiff at this stage was unwarranted, especially when the fourth defendant seeks to have the ex parte decree set aside; the deposit could have abided the final outcome (para 15). It made absolute its interim direction of 10.09.2024, under which the sum had been deposited, albeit after some delay (paras 12-13, 15). It did not find the amount on the lower side, but reserved liberty to the plaintiff to seek appropriate conditions when stay of execution is considered (para 16).