The Calcutta High Court on Wednesday ruled that it possesses the power to set aside ex parte decrees if they are proved to have been obtained on the basis of fraud or abuse of the process of the court (Emars Mining and Construction Pvt. Ltd. v. Manjunath Hebbar).
Ordinarily, under Order IX, Rule 13 of the Code of Civil Procedure (CPC), ex parte decress passed against defendants can be set aside only if
the defendant satisfies the Court that the summons were not duly served upon him, or
the defendant was prevented by any sufficient cause from appearing when the suit was called on for hearing.
However, Justice Shekhar B Saraf found that sufficient powers are conferred on a civil court to set aside an ex parte decree on the ground of fraud or abuse of court process under Section 151 of the CPC. This provision allows the Court to pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.
Referring to the Supreme Court's ruling in Ram Prakash Agarwal –v- Gopi Krishnan (Dead through LRS), the High Court said:
".. this Court does possess the power to invoke its inherent powers under Section 151 of the CPC to provide relief to the applicant/defendant in such a case where fraud and/or abuse of the process of the Court may have transpired."
All the same, in view of the Supreme Court's ruling in AC Ananthaswamy v. Boraiah (Dead) by LRS, Justice Saraf pointed out that the alleged fraud or abuse of court process must be sufficiently proved before an ex parte decree can be so set aside.
In AC Ananthaswamy's case, the Supreme Court had observed that fraud is to be pleaded and proved.
"To prove fraud, it must be proved that representation made was false to the knowledge of the party making such representation or that the party could have no reasonable belief that it was true. The level of proof required in such cases is extremely higher. An ambiguous statement cannot per se make the representor guilty of fraud. To prove a case of fraud, it must be proved that the representation made was false to the knowledge of the party making such representation," the Supreme Court had said.
Applying this ratio, the Calcutta High Court found that the alleged fraud had not been adequately proved in this case so as to prompt the Court to set aside its earlier ex parte decree on the ground of fraud or abuse of court process.
"... this ... does not appear to me to be a case of fraud and or/abuse of the process of the Court. The degree of proving fraud is much higher. An ambiguous question of fact, as in this case, cannot be categorized as a case of fraud," Justice Saraf opined.
The case before the Court concerned a civil dispute over an alleged failure of the defendant to deliver good commensurate with advance payments made by the plaintiff. The plaintiff had obtained an ex parte decree in their favour in March 2019. The defendant had then moved the Court for setting aside the 2019 order, on the ground that the ex parte decree had been obtained while misleading the Court about the payment of sums to the tune of Rs 3 crores.
As such, he dismissed the defendant's plea to set aside the ex parte decree for the fraud allegedly committed by the plaintiff, remarking that the defendant's arguments had failed to pass the test as laid down in AC Ananthaswamy's case.