TABLE OF CONTENTS

A1. Setting aside of Ex parte Decree ....................................................................................... 2

A2. Transfer of Suit ................................................................................................................. 5

2A. Arbitration – Section 89 ................................................................................................... 8

3A. Necessary Party ............................................................................................................... 10

3B. Summons to Defendant ................................................................................................... 12

A1. Setting aside of Ex parte Decree
An ex parte decree is a decree passed in the absence of the defendant. Order 9, Rule 13 of the
Civil Procedure Code, 1908, prescribes two grounds for setting aside an ex-parte decree:

i. That the summons was not duly served, or

ii. That the defendant was prevented by sufficient cause from appearing when the case
was called on for hearing.
Application:

The defendant against whom the ex parte decree has been made may make an application under
Order 9 Rule 13 to set aside the same, within 30 days of passing of the decree. The application
is made to the court which passed the decree. However, as held in Official Receiver v. Sellamma
(1973), where such an application was confirmed, modified or revised by a higher court, the
application must be made to the superior court.

The expression “defendant” includes a person who is adversely affected by the decree. In
Santosh Chopra v. Teja Singh (1977), the purchaser of mortgaged property was allowed to
make an application to set aside an ex parte decree. When an application for setting aside an
ex parte decree is dismissed on merits, no fresh application is entertained and the rule of res
judicata would apply. However, successive applications are maintainable if the circumstances
have changed.

Summons was not duly served:

Rule 6 allows a suit to proceed ex parte when it is proved by the plaintiff that the defendant did
not appear even though summons was duly served. Thus, if the defendant satisfies the court
that the summons was not duly served upon him, then the ex parte decree may be set aside. In
Dhirendra Nath v. Sudhir Chandra (1964), it was held that the court may not set aside an ex
parte decree merely on the ground of irregularity in service of summons where the defendant
had adequate notice of the date of hearing.

Sufficient Cause:

Sufficient cause has not been defined in the Code, but in UCO Bank v. Iyengar Consultancy
Services (P)Ltd., the Supreme Court held that the question of sufficient cause should be
determined on the facts and circumstances of the case. The case also laid down the test which
should be applied, which is the question as to whether the defendant honestly and sincerely
intended to remain present when the suit was called for hearing and did his best to do so.
In Vijay Kumar v. Kamlabai (1955), it was held that necessary materials should be placed on
record to show that the applicant was diligent and vigilant. If there are delaying tactics and
non-cooperation from the party, he cannot seek the aid of the court. In G.P. Srivastava v. R.K.
Raizada, the Supreme Court held that the material date for which the sufficient cause needs to
be proved is the date on which the ex parte decree was passed.

Powers of the Court:

The court has a wide discretion in imposing such terms on the defendant as it thinks fit before
setting aside the ex parte decree. In Kumud Lata v. Indu Prasad (1996), the Supreme Court
held that the court may order the payment of costs or for the defendant to deposit a decretal
amount in the court. This discretion must be exercised reasonably, and the court may dismiss
the application if the conditions are not met within the stipulated time period.

In Arjun Singh v. Mohindra Kumar (1964), it was held that since the Code makes a specific
provision for setting aside an ex parte decree, no other inherent power of the court may be
exercised to set aside such decree.

Effect of execution of a decree:

The fact that the ex parte decree has been executed does not prevent the defendant from making
an application under Order 9 Rule 13 to set aside the decree. Zendoolal v. Kishorilal established
that restitution can be ordered if the decree is subsequently set aside.

Extent of setting aside ex parte decree:

In the event of multiple defendants to a suit, the court will set aside the decree only against
such defendants who made the application. This is evident through the illustration of the Rule
and established in cases such as Rupchand Gupta v. Raghuvanshi (P) Ltd. (1964). However,
where the decree is of such a nature that it cannot be set aside against particular defendants, the
court may set aside the whole decree. In the following cases, the court must set aside the decree
as a whole:

1. Where the decree is joint and indivisible;

2. Where the suit would result in two inconsistent decrees;
3. Where the relief to which the applicant is entitled cannot be given otherwise;
4. Where the decree proceeds on grounds common to the defendants.
Effect of setting aside ex parte decree:
Once the ex parte decree is set aside, the suit is restored and the court should proceed with the
trial as it stood before the decree was passed. It was held in Aziz Ahmed v. L.A. Patel (1974),
that the evidence that was recorded in ex parte proceedings should not be taken into
consideration.

Applications against ex parte orders pending appeal:

Filing of an appeal in an appellate court against an ex parte decree does not take away the
jurisdiction of the trial court to decide an application under Order 9 Rule 13. The two
proceedings are different, distinct and independent. However, in Rani Choudhury v. Suraj Jit
Choudhury (1982), it was held that where an appeal against an ex parte decree has been decided
on any ground other than the withdrawal of such appeal, an application to set aside such ex
parte decree cannot be entertained.
A2. Transfer of Suit
The plaintiff to a suit, being arbiter litis, has the right to pick the adjudicating authority where
a suit can be instituted. In Indian Overseas Bank v. Chemical Construction (1979), it was held
that this right of the plaintiff can’t be reduced, controlled or meddled with. However, this right
is constrained by the power entrusted in superior courts with transferring a case pending in one
lower court to another or to itself to review the case and pass a decree.

Sections 22-25 of the Civil Procedure Code, 1908, lay down the provisions as to transfer and
withdrawal of suits, appeals and different procedures.

Section 22 enables the litigant to transfer a suit by the filing of an application before the
appropriate authority. Section 23 establishes the court to which such an application can be
made. Section 24 covers general capacity to transfer of any suit, at any stage either through an
application by any order or by request of adjudicating court. Section 25 confers wide powers
on Supreme Court to transfer any suit, appeal or other proceedings, from one High Court to
another High Court, or any civil court in a state to that of a different state.

Section 22:

Under Section 22, the plaintiff has a right to institute the suit in any competent court and after
this the defendant gets the right to apply for the transfer of the suit at the earliest of the time
after notifying about the purpose of the application to the plaintiff. The court may also consider
the objection, if there any, of the plaintiff in matter of transfer of the suit from the court where
the suit has been instituted to another court. And after clearance of the objection the suit will
be transferred to that court only which has jurisdiction to proceed with the case.

Before the transfer is initiated two conditions must be satisfied under section 22 -

1. The application for transfer of suit shall be filed before any settlement of the issues
between the parties;
2. The opposite parties are to be served with a notice, once the application is filed.
It was held in Shobhnaben D/O Pyarelal Kanojia v. Devendra Omprakashbhai Oberoi (2004),
that Section 22 applies before the issues are framed or before the settlement of the issue. If the
issues have already been determined, the applicant cannot apply for transfer of case.

In Mst. Basanti Devi v. Mst. Sahodra (1935), it was held that in an application for transfer
under Section 22 of the CPC, the convenience of the parties alone should not be considered,
but the totality of circumstances should indicate that a suit should proceed in a Court different
from the Court chosen by the plaintiff.

Section 23:

Section 23 of the code specifies the court to which an application for transfer can be made:

1. Where the several courts having the jurisdiction subordinate to the same appellate court
then an application shall be made to the appellate court.
2. Where such courts are subordinate to different appellate courts but to the same High
Court then the application shall be made to the High Court.
3. Where such courts are subordinate to different High Courts, the application shall be
made to the High Court within the local limits of whose jurisdiction the court in which
the suit is brought is situated.
In State Bank of India v. M/s. Sakow Industries Faridabad (Pvt) Ltd., New Delhi (1976), it was
held that the High Court could examine the powers of transfer under Section23(3) to meet the
ends of justice and to prevent abuse of the process of the Court.

In Durgesh Sharma v. Jayshree (2008), it was held that the High Court is not conferred with
the power of transferring any suit from one subordinate court of that High Court to a court not
subordinate to that High Court.

Section 24:

Section 24, without specifying any grounds in provisions, empowers the High Court and
District court to transfer at any stage any pending suit, appeal or any proceeding from any sub-
ordinate court upon the aggrieved party.

Sometimes a transfer is looked for when two or more related suits, with similar parties and
subject matter are being considered separately so they are clubbed together and adjudicated by
one Court. In Alia Subbareddi v. Lanki Reddi Narayanaswatni Reddi (1949), the Court held
that when an application for transfer of a suit to the High Court is made under Section 24 and
notice is ordered, the case is in the nature of original proceedings within the meaning of Section
141 CPC.

Section 24 does not empower the High Court or District Court only upon the application of the
parties. The Courts may transfer cases suo motu as well. In Appukuttan v. Z. Thomas Zakaria
(2014), the Madras High Court held that a Session Judge has no right to transfer the trail to any
other court of another Session Judge once the trail has commenced but only before the start of
the trail.

The 1975 Amendment to the CPC included sub-section (5) to Section 24, which provides that
a suit might be transferred under this section from a court which has no ward to attempt it. In
Murarilal v. Ramanlal (1978), it was held that Section 24(5) will empower a court to pass
orders transferring suits notwithstanding pending procedures.

Section 25:

Section 25 of the CPC empowers the Supreme Court to transfer any case from High Court or
another civil court in one State to a High Court or other civil court in any other State. This
power is conferred the Supreme Court to order a transfer if the Court thinks it is required to
fulfil the ends of the justice.

In Dr. Subramaniam Swamy v. Ramakrishna Hegde (1990), it was held that the convenience
of the parties may not be sufficient consideration for the Supreme Court to exercise this power,
but it ought to be demonstrated that trial in the present forum can prompt denial of justice.

In Guda Vijayalakshmi v. Guda Ramchandra Sekhara Sastry, the petitioner recorded a suit
seeking for maintenance in a civil court of Andhra Pradesh. The respondent filed a divorce case
in a civil court of Rajasthan. Under a transfer petition filed under Section 25, it was held that it
is convenient for the ends of justice to exchange the respondent's suit to Andhra Pradesh where
both the suits could be attempted together. The Court commonly has a thoughtful perspective
towards the wife's request for transfer in marital disputes.

Transfer is commonly allowed on the following grounds:

• Where there is reasonable apprehension that the party might not get justice in the
current forum;
• Where the balance of convenience favors a transfer;
• To avoid multiplicity of proceedings and conflict of interests;
• Where common questions of fact and law arise between the party;
• Where the bench is prejudiced against one party.
2A. Arbitration – Section 89
Relevant Facts:

1. Mr. Jey is a tyre manufacturer entrusted with a deal to manufacture 18000 tyres by
CBW Automobiles.
2. Due to the Verona virus, Mr. Jey outsourced part of the deal through a sub-contract to
Ziee Tyres.
3. Ziee tyres filed a suit against Mr. Jey for the recovery of debt amounting to
Rs.4,20,80,881.75 and later filed an application to formulate the terms of settlement
through arbitration.
4. Mr. Jey filed a counter application submitting that he is not ready for out of court
settlement.
Applicable Law:

In the present matter, Section 89 of the Code of Civil Procedure, 1908, is applicable, which
deals with the settlement of disputes outside the court. Section 89 of the CPC provides for the
court to formulate terms of settlement in cases where elements of settlement exist and refer the
same for Arbitration, Conciliation, judicial settlement through Lok Adalat or Mediation.
Section 89(2)(a) states that the when the court refers a dispute to arbitration or conciliation, the
Arbitration and Conciliation Act, 1996 shall apply to settle such a dispute.

Order 10 Rule 1A: Direction of the Court to opt for any one mode of alternative dispute
resolution, is also applicable in the present matter. This states that after recording the
admissions and denials, the Court shall direct the parties to the suit to opt either mode of the
settlement outside the Court as specified under Section 89(1).

Issues:

Whether consent of all parties to the suit is necessary for the court to refer a suit to Arbitration
under Section 89 of the Code?

Analysis:

In the present case, there is no pre-existing arbitration agreement between Mr. Jey and Ziee
Tyres. Thus, Section 89 is invoked in the present case as there is no pre-existing arbitration
agreement and an application was made by a party to the suit. The need for mutual consent of
all parties for the mode of ADR chosen under Section 89 has been previously considered by
the Courts.
In the case of Afcons infrastructure v. Cherian Verkay Construction (2010), the Supreme Court
held that Section 89 does not deal with arbitration alone but also four other modes of ADR.
Hence, the existence of an arbitration agreement is not a condition precedent for exercising
power under Section 89 of the Code, which may be invoked through filing an application/joint
memo before the court. While dealing with the procedure to be adopted by the court, it was
held that the parties need to consent to the form of ADR the suit would be settled under, and in
case they agree on arbitration as the mode, they must also agree upon the arbitrator.

In Salem Advocates Bar Association v. Union of India (2003), the Supreme Court held that the
objective of Section 89 is to bring about efforts made by the court to reach an amicable
settlement between the parties by referring them a mode of Alternate Dispute Resolution. If
the recommended mode is not preferred by the parties, an alternate mode may be referred by
the court. However, if all the parties do not agree to the settlement of dispute outside the court,
the case will ultimately go to trial.

In the case of Southern Structural Ltd. v. K.S.E Board (2008), the Kerala High Court held that
Section 89 cannot be resorted to refer a dispute for arbitration unless there is mutual consent
of all parties or arbitration agreement. This was also clarified by the Delhi High Court in the
case of Jagdish Chander v. Ramesh Chander (2007).

Conclusion:

In the present case, Mr. Jey has explicitly filed a counter-application to the court, refusing for
a settlement out of court. This means that there is no mutual consent of both parties, which has
been established to be an essential for the suit to be referred to arbitration under Section 89.
Because Mr. Jey has not given such consent, the dispute cannot be settled through arbitration
and may proceed to trial.
3A. Necessary Party
A necessary party is one whose presence is indispensable to the constitution of the suit, against
whom the relief is sought and without whom no effective order can be passed. A two-fold test
has been laid down for determining the question whether a particular party is a necessary party
to a proceeding:

i. There must be a right to some relief against such party in respect of the matter involved
in the proceeding in question; and
ii. It should not be possible to pass an effective decree in absence of such a party.
This two-fold test has been reaffirmed in numerous cases such as Kasturi v. Iyyamperumal
(2005), Benares Bank Ltd. v. Bhagwan Das (1947), and Bharawan Estate v. Rama Krishna
(1953).

A necessary party is different from a Proper party. Proper parties are those whose presence
may be necessary with a view to fully adjudicate upon the matters involved in the suit. They
do not need to be added as parties to the suit or be present when the suit is being decided.

For example, in a suit for partition, all sharers are necessary parties. Similarly, a purchaser of
property in a public auction is a necessary party to the suit for a declaration to set aside the said
public auction. Likewise, in an action against selection and appointment by an authority,
candidates who are selected and appointed are directly affected and are necessary parties.
Generally, if a suit is instituted against a particular identifiable group, all the members of such
a group have to be impleaded whether in personal or in representative capacity. A suit filed
against a partnership firm has to implead all the partners. Their absence may lead to dismissal
of suit.

The nature of relief claimed is important in deciding who is a necessary party. Necessary parties
are those parties from whom the plaintiff has claimed relief, not those parties from whom he
may claim relief. In Gujarat SRTC v. Saroj, the legal representatives of the deceased driver of
a car which collided with a SRTC bus, claimed compensation from the SRTC. It was held that
the owner of the car and its insurer were not necessary parties since no relief had been claimed
from them.

In General Manager, South Central Railway, Secunderabad v. AVR Siddhantti, the plaintiff
claimed relief against the Railways by impleading it through its representatives. The appellants
contended that the employees who were likely to be affected by the decision were necessary
parties and their non-joinder was fatal to the petition. The Supreme Court rejected the plea and
held that the relief was being claimed against the Railways only. Employees who were likely
to be affected by the decision were at best proper parties.

As per Order 1 Rule 10(2) of the Civil Procedure Code, 1908, the court has the power to strike
out or add parties to the suit, and if a “necessary party” is not impleaded, the suit itself is liable
to be dismissed. The defendant can plead non - joinder of parties by the plaintiff. However, he
shall have to specify who those parties are and what their interest is in the suit, in the written
statement. If he only gives a vague statement in this respect, it is not sufficient to dismiss the
suit on the ground of non-joinder of parties.

In Laxmishankar Hairshankar Bhatt v. Yashram Vasta, the plaintiff claimed a recovery of

possession where the original owner passed away leaving four sons. One son passed away and
he was substituted by his son. The sale deed was executed the grandson and the appellant stated
that he intended to purchase the entire title in the suit property. The defendant contended that
in the absence of the owner, the plaintiff’s suit is not maintainable and should be dismissed.
The Supreme Court however refused to dismiss the suit on the grounds of non-joinder of parties
since his plea relating to non-joinder was found to be vague. The court also upheld that in a
property suit, all the other co-owners need to impleaded for the suit to be maintainable.

After filing the application of impleadment for a necessary party by an applicant, the court
usually issues a notice to the opposite side for objections for impleading the applicant as a
necessary party. However, the court may implead the applicant as a necessary party in first go
only if the facts and circumstances of the case warrant so. In doing so, the court has to record
its reasons in writing and issue a notice to the opposite side that an ex parte relief has been
provided to the applicant and that the other side may submit their objections in writing and
during the course of oral arguments.
3B. Summons to Defendant
A summon is a document issued by a court of law under its stamp and signature of the presiding
judge of that court requiring the attendance of a person involved in a legal proceeding. The
object of issuing summons is to give the defendant an opportunity to be heard under the natural
justice principle, audi alteram partem.

Section 27 and Order 5 of the Civil Procedure Code, 1908, deal with the provisions for issuing
summons to a defendant.

Section 27 provides that when the plaintiff files a suit, the defendant has to be informed that
the suit has been filed against him, and that he is required to appear in the court to answer the
claim of the plaintiff by filing a written statement within thirty days from the date of service of
summons.

In the case of Sir Wirode Borani v. Mohindra Narayana, it was held that a suit cannot be said
to have been duly instituted under Section 27 until after scrutinising the plaint, the Court
registers it as a suit.

The thirty-day prescribed limit added via the 1999 Amendment to the CPC does not mean that
the summons must be served within thirty days of the date of the institution of the suit. It merely
fixes the outer timeframe and steps must be taken within thirty days from the institution of the
suit, to issue summons. In Salem Advocate Bar Association, Tamil Nadu v. UOI (2003) it was
held that if all that is required to be done by a party has been performed within thirty days, then
no fault can be attributed to the party.

Order 5 Rule 1(1) states that a summons may be issued and establishes two conditions:

1. No summons shall be issued when the defendant has appeared at the presentation of the
plaint and admitted the plaintiff's claim.
2. When a summons has been issued, the Court may direct the defendant to file the written
statement of his defence on the date of his appearance.
Order 5 Rule 1(2) states how a defendant may appear upon being issued a summons:

1. in person, or
2. by a pleader duly instructed and able to answer all material questions relating to the
suit, or
3. by a pleader accompanied by some person able to answer all such questions.
Order 5 Rule 1(3) requires a summons to be signed by the judge and sealed with the seal of the
court. Order 5 Rule 2 requires every summons to be accompanied by a copy of the plaint. It
was held in Smt. Jaggi v. Bhagwan Das (1969), that the summons has to mention the date of
hearing and not date for filing the written statement. In Nanda Dayaram v. Rajaram (1964), it
was held that a summons mentioning a date for appearance which is a holiday is not proper
summons. It further held that no law or procedure requires the defendant to appear on the next
following day in such cases.

As per Order 5 Rule 5, the court must determine whether the summons are for the settlement
of issues or for the final disposal of the suit, and the summons must contain a direction
accordingly.

Under Section 27, the defendant who is served with summons has a right to answer the claim
by filing a written statement, to uphold the general principle that no man should be condemned
unheard. It was held in Keshav Lal Chokshi v. Manubhai (1968), that Order 37 Rules 1 and 2,
which provide for leave of the Court to be obtained before filing the written statement is not
inconsistent with this section.

Under Order 5, while Rules 1 to 8 specifically deal with the issue of summons, Rules 9 to 30
deal with the service of summons and various methods of service. These provisions explain
when the summon should be issued by the court and documents or information that should be
contained in the summons document. It also explains how it should be served and ensure that
the service is complete.

Order 5 Rule 10 states that summons must be served by delivering a copy of the original
summoning document prepared by the judge to the defendant sealed with the court’s seal and
signature. There are many ways of service of summons under the CPC:

1. Service by hand
2. Service by post
3. Service by email
4. Service through WhatsApp has also been permitted by the court in rare cases where the
other methods of service are not possible.
4. Extra Notes
Legal set off - Order VIII, Rule 6, C.P.C.

Where legal proceedings have been commenced, it may be possible to set off mutual
undisputed debts arising from unrelated transactions.

Example: X commences proceedings against Y for payment due of £500,000 for the purchase
by Y of industrial machinery. However, three months ago, Y provided 8 boilers to X and X has
not yet paid the agreed price of £16,000. Y can exercise a legal right of set off, and in effect
only owes X £484,000.

Equitable set off (also sometimes known as transaction set off)

This only applies to closely connected claims, where it would be manifestly unjust for the claim
to be enforced without taking account of the cross-claim.

Example: Z has also bought industrial machinery from X and still owes X £50,000 of the
purchase price. Some of the machinery purchased is, however, damaged on arrival and Z has
to pay £3,000 for repair works; this amount of £3,000 can be set-off against the £50,000.

The distinction between legal and equitable set-off may now be noted

In a legal set-off, the amount claimed must be an ascertained sum of money,

but in an equitable set-off, the claim must be allowed even with respect to an unascertained
sum of money.

In a legal set-off, the Court is bound to entertain and adjudicate upon the plea when raised. In
the case of an equitable set-off, however, it is not obligatory on the Court to adjudicate upon it
and the defendant cannot claim it as a matter of right. The Court has the discretion to refuse to
take notice of the equitable set-off if the investigation into the equitable claim is likely to result
in delay.

In a legal set-off, it is not necessary that the cross-demands arise out of the same transaction,
but an equitable set-off is allowed only when the cross-demands arise out of the same
transaction as the plaintiff’s claim.

REASON FOR RES JUDICATA

It helps to administer how efficiently the Judiciary works and disposes of the case. The doctrine
of res judicata becomes applicable where there is more than one petition filed in the same or in
some other court of India with the same parties and same facts. The parties involved in a case
may file the same suit again just to harass the reputation of the opposite party and may do to
get compensation twice. So to prevent such overloads and extra cases, the doctrine of res
judicata plays a major role and importance in the Code of Civil Procedure.

RES JUDICATA

Res means “subject matter” and judicata means “adjudged” or decided and together it means
“a matter adjudged”.

In simpler words, the thing has been judged by the court, the issue before a court has already
been decided by another court and between the same parties. Hence, the court will dismiss the
case as it has been decided by another court. Res judicata applies to both civil and criminal
legal systems. No suit which has been directly or indirectly tried in a former suit can be tried
again.

The doctrine of res judicata says –

That no person should be disputed twice for the same reason.

It is the State that decides there should be an end to a litigation

A judicial decision must be accepted as the correct decision.

Daryao v. State of Uttar Pradesh

The court held that the rule of res judicata applies to a petition under Article 32 of the
Constitution. If a petition is filed by the petitioner in the High Court under Article 226 of the
Constitution and it is dismissed on the basis of merits, it would be operated as res judicata to
bar a similar petition in the Supreme Court under Article 32 of the Constitution.

Instalment Supply private limited vs. Union of India

In cases of income tax or sales tax, the doctrine of res judicata does not apply. It was discussed
in the case of Instalment Supply private limited vs. Union of India where the Supreme Court
held that assessment of each year is final for that year and it will not govern in the subsequent
years. As it determines the tax only for that particular period.

CONSTRUCTIVE RES JUDICATA

Rule of constructive res judicata is engrafted under Explanation IV of Section 11 of the Code.
It is artificial form of res judicata and provides that if a plea could have been or ought to have
been taken by a party in a proceeding between him and his opponent, he should not be permitted
to take that plea against the same party in a subsequent proceeding with reference to the same
subject-matter.