(1) This petition is directed against the order dated the 13th of March, 1972, by which the trial court while granting leave to defend a suit covered by order 37, rule 2 of the 'Civil Procedure Code imposed the condition that the defendant should furnish a bank guarantee in the sum of Rs. 3,000.00 by the 28th of March, 1972. The suit had been filed on the basis of a promissory note.
(2) The counsel appearing for the petitioner has read out to me the affidavit filed before the trial court. The principal defense raised was that the plaintiff was a money-lender who had not got himself registered as such and had not bean submitting six monthly statements of accounts, as required by the Punjab Regulation of Accounts Act. It was stated in the affidavit that the plaintiff should have filed the original pronote along with the plaint. At the same time in another paragraph it was stated that the promote was not sufficiently stamped. The trial court was to determine whether the grounds on which leave to defend was sought raised triable issues or not.
(3) The suits filed on the basis of bills of exchange hundis and promissory notes were placed in a separate category by the Legislature by providing that such suits will not be allowed to be defended in the ordinary manner and before defending them leave will have to be obtained from the court. The provisions in order 37 of the Civ I Procedure Code (hereinafter called 'the Code') indicate that the court trying the suits was firstly to determine whether leave was to be given at all or not. In case she court was to find that no leave was to be given to defend the suit it was to pass a decree in accordance with the claim put forward by the plaintiff. Where, however, the court was to find that the defense raised deserved consideration, then it had to decide as to whether, keeping in view the issues to be tried, leave was to be given unconditionally or on some terms. Sub-rule (2) in rule 3 of order 37 clarifies the Legislative intendment : Order 37 rule 3(2):-
(2)Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security framing and recording issues or otherwise as the Court thinks fit.'
(4) The Legislature gave the authority to the trial court to give unconditional leave to defend the suit. At the same time it gave the authority to the same court to impose terms where it found that terms should be imposed even when leave was to be given to defend the suit'
(5) The provision came in for consideration before the Supreme Court in Santosh Kumar v. Bhai Mool Singh. There the court took the view that where it was found that the defense raised triable issues leave should ordinarily be given to unconditionally defend the suit. It was observed that leave would otherwise remain illusory. Proceeding further the Supreme Court observed :-
'IF the court is of opinion that the defense is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend.'
(6) It was meant that even where triable issues were raised but the defense was not bona-fide, instead of refusing it, the leave to defend could be granted by subjecting it to conditions. In a latter decision after considering the law laid down earlier, the Supreme Court in paragraph 5 of (Milkhiram (India). Private Ltd. v. Chamanlal Bros) held:-
'IF upon consideration of material placed before it the court comes to the conclusion that the defense is a sham one or the fantastic or highly improbable it would be justified in putting the defendant upon terms before granting leave to defend. Even when a defense is plausible but is improbable the Court would be justified in coming to the conclusion that the issue is not a triable issue and put the defendant on terms while granting leave to defend. To hold otherwise would make it impossible to give effect to the provisions of 0.37 which have been enacted, as rightly pointed out by Bose, J., to ensure speedy decision in cases of certain types. It will be seen that 0.37, R.2 is applicable to what may be compendiously described as commercial causes. Trading and commercial operations are liable to be seriously impeded if, in particular, money disputes between the parties are not adjudicated upon expeditiously. It is these considerations which have to be borne in mind for the purpose of deciding whether leave to defend should be given or withheld and if given should be subjected to a condition.'
(7) If attention is paid to the provisions contained in order 37 of the Code then the intention of the legislature seems to be that on the filing of a suit on the basis of a bill of exchange, hundi or a promissory note, the defendant has first to convince the court that leave to defend the suit is deserved. Order 37, rule 3 (2) of the Code indicates that terms can be imposed in order to eliminate the possibility of the prolongation of the litigation. In order to secure expeditious disposal the court is given the power to allow leave to defend the suit subject to such terms as to payment into court or of giving security in respect of the amount sought to be recovered and it extends not only to the framing and recording of issues in a particular manner but is wide enough to allow imposition of conditions such as the court may otherwise think fit. Why was the court given the authority to impose terms as may be found necessary Such authority was given to the court in order to secure immediate recovery of the amount for which the suit may be decreed. According to the circumstances in the case the court may demand any kind of security. It may otherwise impose any conditions in order to secure expeditious trial and effective disposal of the suit. Chances of delay may be sought to be minimised by imposing conditions while giving the leave to defend the suit.
(8) The petitioner through his affidavit raised such pleas which can easily be raised in respect of any suit brought on the basis of a promissory note. In his affidavit no instances of money lending by the plaintiff-respondent were cited. It is open to a defendant in every suit brought on a promissory note to plead that the plaintiff is a money lender and has not been sub milting six monthly statements of account which a registered money lender is to submit. In suits covered by order 37, rule 2 of the Code every possible care should be taken by the trial courts in coming to the conclusion whether the issues raised are triable or not. There should be a further finding whether the defense raised is bona fide or not. The court is not to be impressed by mere assertions, whether of facts or of law. The court must examine the merits of all the contentions raised in order to obtain leave to defend the suit. Unless the trial courts act strictly in accordance with the requirements of order 37 of the Code the provisions contained there in may be rendered ineffective.
(9) In this case the trial court found that having admitted the execution of the pro-note the defendant had pleaded that he had paid of the dues without producing any documentary evidence and that the defense was of doubtful nature. I do not find any justification for interfering with the impugned order within the scope of section 115 of the Civil Procedure Code. There is no jurisdictional infirmity in the impugned order which allows the defendant to appear and defend the suit on furnishing a bank guarantee in the sum of Rs. 3,000.00. The bank guarantee may now be furnished on or before the 15th of July, 1972, on which date the parties will appear before the trial court. This date is being fixed on accepting the request made by the petitioners's counsel. In case the bank guarantee is not furnished by that date the trial court will act in accordance with law and Procedure to decide the suit. The petition is disposed of without there being any order as to costs.