John Beaumont, Kt., C.J.
1. This is an appeal from an order made by the learned Chamber Judge on a summons taken out by the defendants in a summary suit for leave to defend, in which the learned Judge directed that the defendants on depositing in Court a sumof Rs. 5,000 by a date named therein should have leave to defend and that the suit should thereupon be transferred to the list of commercial causes, and in default of the defendants depositing the said sum of Rs. 5,000 within the time aforesaid the chamber summons should be dismissed, and in that event the defendants should pay the costs of the chamber summons.
2. The first point taken on appeal is a preliminary point that no appeal lies under Clause 15 of the Letters Patent. We have recently considered that clause, and putting it shortly, the view which has always prevailed in this Court since the decision in Miya Mahomed v. Zorabi (1909) 11 Bom. L.R. 241 is that any order affecting the merits of the question between the parties by determining some right or liability is a judgment within Clause 15 of the Letters Patent, but an order which merely regulates the procedure in a suit is not such a judgment. If one looks only to the form of the order under appeal, I think it may be said only to regulate the procedure in the suit; but Mr. Coltman, who appears for the appellants, says that we must read that order in connection with Order XXXVII, Rule 2, of the Civil Procedure Code, and see what the actual effect of the order is. Order XXXVII, Rule 2,Sub-rule (1), before it was amended, provided in effect that all suits upon bills of exchange, hundis or promissory notes might be instituted as summary suits, ThatSub-rule has been amended by this Court under Section 122 of the Code by increasing the number of suits to which it applies, and for the present purpose it is enough to say that all suits in which the plaintiff seeks to recover a debtor a liquidated demand under a contract express or implied are included in Order XXXVII, Rule 2, ThenSub-rule (2) of Rule 2 of Order XXXVII provides that in any case in which the plaint and summons are in the forms referred to inSub-rule (1), the defendant shall not appear and defend the suit unless he obtains leave for defending the suit, and in default of his obtaining such leave or of his appearance and defence in pursuance thereof, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree. Then follows the form of the decree to which the plaintiff is to be entitled. Mr. Desai on behalf of the respondents in support of the preliminary objection points out thatSub-rule (2) of Rule 2 of Order XXXVII has not been amended to fit in with the amendment in Sub-rule (1). That is so, but on the other hand, we must clearly read Sub-rule (2) in the light of the amendment inSub-rule (1), and I think the provision in Sub-rule (2) which provides that all the allegations in the plaint shall be deemed to be admitted by the defendant applies to all actions coming within the amendedSub-rule (1). Whether the latter part of Sub-rule (2) dealing with the decree to which the plaintiff' is to be entitled applies to any action except one founded on a bill of exchange, hundi or promissory note may be doubtful. But, however that may be, it seems to me to be clear that the effect of Order XXXVII, Rule 2, is that if the Judge refuses leave to defend, or gives leave to defend on terms which the defendant is not able to comply with, the result is that the plaint is taken to be admitted, and the plaintiff is entitled to an order on that basis. Rule 208 of the rules of this High Court provides how the plaintiff is to obtain his order. He is to set the case down for hearing before the Chamber Judge, but having done that it seems to me that the making of the order will automatically follow in view of the provision of Rule 2 of Order XXXVII, that all the allegations in the plaint are to be taken as admitted.
3. Mr. Desai, however, says that we must look at this matter as one of form and that the order refusing leave to defend is a mere interlocutory order regulating procedure, and that it is not the final order giving judgment for the plaintiff, and therefore no appeal lies. The point came before this Court in the case of Madanlal v. Kedarnath : AIR1930Bom364 where two appeals were presented, one from an interlocutory order giving leave to defend on the terms of the defendant making a deposit of Rs. 30,000 in Court, and the other from the final order passed in the suit, and this Court held that the appeal lay against the final order, and that on that appeal it was open to the defendant; to challenge the interlocutory order; and in that view the Court heldthat it was not necessary to consider whether an appeal would lie from the interlocutory order. Now the result which must follow from the procedure adopted in that case seems to me to be somewhat unfortunate. If in a summary suit in which leave to defend is refused and in consequence decree follows as a matter of course in favour of the plaintiff and there is an appeal against the decree, it is obvious that the Court of Appeal cannot go into the merits of the suit, because the merits have not been tried, and all that the defendant can do in such a case is to challenge the interlocutory order. But in the meantime the plaintiff, having got his final decree, may have levied execution, and it may be too late for practical purposes for the defendant to challenge the interlocutory order. If in substance an appeal lies from an interlocutory order refusing- leave to defend by the process of challenging the order on an appeal from the final order, it is obviously more convenient that there should be a right of appeal direct from the interlocutory order. I think we must look at the substance of this matter and consider what the real effect of the order is, having regard to the provisions of Order XXXVII, Rule 2, and I think we ought to hold that the effect of the order is to determine the rights between the parties, since in substance it entitles the plaintiff to the order claimed in the plaint, That being so, I think such an order is technically a judgment within the meaning of Clause 15 of the Letters Patent.
4. I have not dealt with the Calcutta cases cited. For one reason I doubt if the Court of Appeal in Chattu Lal Misser v. The Marwari Commercial Bank Ltd. (1925) 30 C.W.N. 298 really agreed with the view taken by the Court of Appeal in Sukhhlal Chundermull v. Eastern Bank, Ld. I.L.R. (1915) Cal. 735 and for another reason that these cases turn apparently on the rules of the Calcutta High Court which are not before us. I think, therefore, as far as this Court is concerned, the appeal does lie, and we, therefore, overrule the preliminary objection.
5. This is an appeal from an order made by Mr. Justice Wadia on a chamber summons taken out by the defendants in a summary suit for leave to defend, by which the learned Judge granted leave to the defendants to appear and to defend the suit on their depositing Rs. 5,000 in Court.
6. Mr. Desai on behalf of the respondents has raised a preliminary point that the order made by Mr. Justice Wadia is not a judgment within the meaning of Clause 15 of the Letters Patent, and therefore no appeal lies from the order, We have recently considered the meaning of the word 'judgment' in Clause 15 of the Letters Patent, and we have held that every interlocutory order is not a 'judgment' and is not appealable, but that the Court has to look to the substance of the matter and consider the importance of the order in each case. Applying that test I have no doubt in my mind that in this case the order made by Mr. Justice Wadia is 'a judgment' within the meaning of the Letters Patent.
7. This is a summary suit, and the procedure laid down in Order XXXVII, Rule 2, would apply to such a suit. The effect ofSub-rule (2) of Rule 2 of Order XXXVII is that if the defendant is refused leave, then he cannot appear and defend the suit, and he will be deemed to have admitted the allegations contained in the plaint and the plaintiff would be entitled to a decree as a matter ofcourse. The result, therefore, of a refusal of an application for leave to defend is to deprive the defendant of the right to defend the suit, and as far as the defendant is concerned the order practically determines the whole cause. I think, therefore, an order made under Order XXXVII, Rule 2, satisfies the test laid down by the Calcutta High Court in The Justices of the Peace for Calcutta v. The Oriental Gas Company (1872) 8 Beng. L.R. 433 for determining whether an order or a decree is a 'judgment' within the meaning of Clause 15 of the Letters Patent, and followed by our High Court in Miya Mahomed v. Zorabi (1909) 11 Bom. L.R. 241 If this is the true effect of an order made refusing leave, then it is obvious that a conditional order would stand on the same footing.
8. Mr. Desai says that Order XXXVII, Rule 2, applies to summary suits upon bills of exchange, hundies, etc, or, speaking generally, negotiable instruments coming under the Negotiable Instruments Act, and that the present case does not come in terms within Order XXXVII, Rule 2, but is governed by the rules made by the High Court. Now the scope of Order XXXVII, Rule 2, has been extended by a rule made by the High Court which is printed at p. 1319 of the 9th Edition of Mulla's Civil Procedure Code. By this rule many suits which are not suits upon negotiable instruments can be filed on the Original Side of the High Court as summary suits under Order XXXVII of the Civil Procedure Code, The present suit is to recover price of goods sold and delivered, and Mr. Desai's point is that althoughSub-rule (1) of Rule 2 of Order XXXVII was altered by the High Court, Sub-rule (2) of Rule 2 remains unaffected, and therefore in a case coming under the extended definition of a summary suit the result is not the same, that is to say, on the refusal of leave to defend, the allegations in the plaint cannot be deemed to be admitted, and the plaintiff will not be entitled to a decree as a matter of course. Speaking for myself, the argument is not with- out force, and the fact remains that whenSub-rule (1) was ex- tended so as to include within Order XXXVII suits of other description, the effect of the alteration onSub-rule (2) seems to have been lost sight of. But having regard to the rules of the High Court on the Original Side, the distinction emphasised by Mr. Desai is without a difference. For, under the Original Side Rules the result of a refusal of leave to defend is practically the same as underSub-rule (2) of Rule 2 of Order XXXVII. I need only refer to Rule 205 (2) under which if leave to defend is re-fused, the plaintiff is at liberty to put the suit down for hearing forthwith before the sitting Judge in Chambers, So that whether the case is one under the extended definition of a summary suit under the High Court Rules or under the provisions of Order XXXVII, Rule 2, as it stands, the result, in my opinion, of a refusal of leave to defend is practically the same,namely,-the defendant cannot then appear and defend the suit. It seems to me, therefore, that a material right of the defendant affecting the merits of the case is adjudicated upon when his application for leave is refused.
9. Mr. Desai referred to the policy of the law underlying the special procedure in summary suits. I quite agree, but our duty is to construe the rules as they stand at present, and I can see no answer to the argument that the order refusing leave to defend determines a valuable right of a defendant in summary suits. In this view it is not necessary to refer to the Calcutta cases to which our attention has been drawn, and for this reason that I am not quite clear as regards the rules of procedure applicable to summary suits in that Court. It seems, however, the question came up before Sir Amberson Marten in Madanlal v. Kedarnath (1930) 32 Bom. L.R. 860 and although the Calcutta cases were referred to, the learned Chief Justice left the question as to whether an appeal lay from an order refusing leave to defend in a summary suit open. I, therefore, agree that the objection must be overruled and the appeal must be heard on the merits.
10. The appeal was then heard on the merits.
John Beaumont, Kt., C.J.
11. I do not think we can interfere with the discretion of the learned Judge in the order that he made directing the defendant to furnish security to the extent of Rs. 15,000 as a condition precedent to the granting of leave to defend the suit. The defendant's case was that he did not understand the indent which he signed, and on this the Judge was quite entitled to say that the defendant should be put on terms before leave was granted to him, I do not think Rs. 5,000 was an unreasonable amount. The appeal must, therefore, be dismissed with costs. Notice of motion for stay is also dismissed with costs. Time to bring in the deposit is extended by fourteen days from today.
12. I agree.