Substituted Service Without Judicial Satisfaction Renders Ex-Parte Decree Vitiated: Madhya Pradesh HC

The Madhya Pradesh High Court has set aside a massive recovery decree exceeding ₹5.8 Crore, ruling that substituted service via publication cannot be a mechanical ritual and must be preceded by a recorded judicial satisfaction that the defendant is intentionally evading process. This decision reinforces the principle that procedural shortcuts in serving summons cannot bypass the mandatory safeguards under the Code of Civil Procedure, 1908, especially when a party’s right to be heard is at stake.

In a balanced exercise of discretionary power, a single-judge bench of Justice Vinay Saraf adjudicated upon the appeal challenging the refusal of a Trial Court to set aside an ex-parte judgment. The Court emphasized that while speed is essential, it cannot come at the cost of the fundamental right to contest a high-value commercial claim.

Key Takeaways

Strict Compliance with Service Norms

Courts cannot permit substituted service by publication unless they explicitly record reasons to believe the defendant is keeping out of the way to avoid service.

Procedural Irregularity vs Illegality

Failure to attempt service through affixture under Order V Rule 17 before jumping to newspaper publication may be treated as a jurisdictional illegality rather than a mere technical irregularity.

Balancing Equity in Remand

While setting aside ex-parte decrees, the Court may impose conditions such as partial deposition of the decreetal amount to protect the plaintiff's interests in long-standing recovery suits.

Judicial Scrutiny of Substituted Service

The Court scrutinized the Trial Court's decision to proceed ex-parte based on a newspaper publication in 'Agnibaan'. The appellants contended that the Trial Court failed to follow the mandatory hierarchy of service modes prescribed under Order V of the Code of Civil Procedure, 1908. They relied heavily on the precedent in Nirja Realtors Private Limited v/s Janglu (Dead) through Legal Representative, which mandates that the court must apply its mind and ensure the serving officer followed the procedure stipulated in Rule 17 before resorting to Rule 20.

Further, the Court took note of Gajraj Singh v/s Hira Singh and M/s Indore Holding Private Limited and others v/s Chimanlal and others, which established that in the absence of affixture of notice, service of summons should be treated as non-service. The bench observed that the Trial Court had passed a somewhat mechanical order for publication without adequate satisfaction regarding the deliberate avoidance of service by the defendants.

The Court, in its reasoning, observed: "The trial Court, after recording the satisfaction, has issued the direction to serve the notice through publication... considering the aforesaid peculiar facts and circumstances of this case, this Court is of the view that the appellant should be granted an opportunity to submit their case on merits before the trial Court."

The Court has the following directions:

"A. The impugned order dated 25.08.2026 passed in MJC No. 439/2025 by Ninth Additional District Judge, Indore is set aside and consequently, the ex-parte judgment and decree passed by the Court in RCSA No. 1311/2023 on 05.08.2024 have also been set aside, subject to deposition of the part of the decreetal amount Rs. 1,00,00,000/-. The proceedings of RCSA No. 1311/2023 is restored before the trial Court from the stage of filing of written statement. Upon failure to deposit Rs. 1,00,00,000/- by the defendants with the trial court, this appeal shall be treated as dismissed and the ex-parte judgment and decree shall remain intact and will be executable and order dated 05.08.2024 shall also remain intact.

B. The plaintiff will be allowed to withdraw the aforesaid amount of Rs. 1,00,00,000/- upon furnishing the security to the satisfaction of the trial Court and filing undertaking to the effect that in case, the trial Court finally comes to the conclusion that plaintiff is not entitled to recover any amount from the defendants, the amount will be returned by the plaintiff without any objection."

Ratio

Substituted service under Order V Rule 20 of the CPC is an exception to the normal mode of service and is a last resort. A Court must record a specific finding/satisfaction that there is reason to believe the defendant is avoiding service or cannot be served in the ordinary way; failure to strictly adhere to the procedural requirements of Order V Rule 17 (affixture) before ordering publication renders the service improper and the resulting ex-parte decree liable to be set aside.

Background

The dispute arose from a suit filed by the respondent seeking recovery of ₹5,88,15,000/-. The plaintiff claimed to have supervised a hotel project for the defendants and invested substantial funds based on an assurance of receiving a 20% share in the hotel, which never materialized. The Trial Court had issued notices which returned unserved with remarks that the defendants were not available or that the company did not exist at the given address. Consequently, the Trial Court ordered substituted service via newspaper publication and eventually passed an ex-parte decree.

The defendants challenged this, asserting they had no knowledge of the proceedings until they saw a public notice about the decree. They argued that the daughters (defendants 4 and 5) were married and living separately from their father, yet notices were sent to the father’s address. The High Court, while finding procedural lapses in the service, noted the defendants' offer to deposit ₹1 Crore to show bona fides. Balancing the equities, the Court allowed the appeal, set aside the ex-parte decree, and remanded the matter for a fresh trial on the condition of the said deposit.

Case Details:
Case No.: MISC. APPEAL No. 7483 of 2026
Neutral Citation: 2026:MPHC-IND:31310
Case Title: M/S Talreja Hospitalities Pvt. Ltd. Through Its Director Satish Talreja And Others Versus Ramkumar Malu
Appearances:
For the Petitioner(s): Shri Vishal Baheti - Senior Advocate with Shri Abhishek Sharma and Shri Yash Sharma - Advocate
For the Respondent(s): Shri Sumeet Samvatsar - Advocate

Source: 2026 CaseBase(MP) 36553