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Note: The Bank of India (Issuer) sued Mehta Brothers (Applicant) for reimbursement and in the alternative, sued Deutsche Bank Asia (Negotiating Bank) for failure to return a payment that it received from the New York Branch of the Bank of India (Reimbursing Bank). Negotiating Bank failed to appear and a judgment against it was issued ex parte. The actions against Applicant were dismissed and Issuer failed to appeal. Subsequently, Negotiating Bank filed a petition to set aside the ex parte decree which the High Court Judge granted. The Judge also set aside the dismissal of the action against Applicant. The Division Bench set aside the portion of the decree setting aside the dismissal but affirmed the portion setting aside the ex parte decree. On appeal, the Supreme Court of India in an opinion by Chatterjee, J., reversed that portion of the Division Bench judgment setting aside the dismissal of Applicant.

The Supreme Court ruled that the decree was indivisible and dependent on the decision of several issues regarding both Negotiating Bank and Applicant. Thus, the Supreme Court reasoned, it was impossible to set aside the ex parte decree against just one of the parties. According to the Indian Code, if a decree is being set aside as against some defendants, and the decree as against the other defendants is somehow connected, it may also have to be set aside.

[JEB/ael]

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