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Sarbjeet Vs. Sahu JaIn Trust - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 81 of 1971
Judge
Reported inILR1973Delhi123
ActsCode of Civil Procedure (CPC), 1908 - Order 37, Rule 3
AppellantSarbjeet
RespondentSahu JaIn Trust
Advocates: M.M. Madan,; K.K. Jain and; Bishambar Lal, Advs
Cases Referred and Palamiappa Chettiar v. S. A. Chidambaram Chettiar
Excerpt:
civil p.c. - order 37, rule 3--application for leave to defend suit based on bills of exchange-- principle governing grant of such leave.;while dealing with the application for grant of leave to defend under order 37, rule 3 c.p.c., the court must find whether the proposed defense raises triable issues or not. in case where triable issue arise, leave should ordinarily be given unconditionally to defentd the suit. such a triable issue should be an issue which raises a bona-fide defense, which is not sham, is plausible and not improbable.;in the instant case, the plaintiffs have come to court on the basis of three promissory notes and in his affidavit filed along with the application to obtain leave to defend, the appellant has not denied the receipt of consideration or the liability to..........by which a learned single judge of this court while granting leave to the appellant to defend the suit filed against him by the respondents under order 37, rule 2 of the civil procedure code, required that the appellant may appear, file his written statement and defend the suit on furnishing adequate security for the amount in suit to the satisfaction of the registrar of this court. it is urged that leave to defend should have been given unconditionally. (2) the respondents filed a suit for the recovery of rs. 2,50,000.00 as the principal amount and rs. 74,257.54 p. as interest against the appellant on the 6th of march, 1971. the claim was based on three pro-notes executed on the 7th of march, 1968, 11th of march, 1968 and 29th of april, 1968, by the appellant in favor of the.....
Judgment:

Pritam Singh Safeer, J.

(1) This appeal is directed against the order dated the 15th of October, 1971, by which a learned Single Judge of this Court while granting leave to the appellant to defend the suit filed against him by the respondents under Order 37, rule 2 of the Civil Procedure Code, required that the appellant may appear, file his written statement and defend the suit on furnishing adequate security for the amount in suit to the satisfaction of the Registrar of this Court. It is urged that leave to defend should have been given unconditionally.

(2) The respondents filed a suit for the recovery of Rs. 2,50,000.00 as the principal amount and Rs. 74,257.54 P. as interest against the appellant on the 6th of March, 1971. The claim was based on three pro-notes executed on the 7th of March, 1968, 11th of March, 1968 and 29th of April, 1968, by the appellant in favor of the respondents for Rs. 1,00,000.00, Rs. 1,10,000.00 and Rs. 40,000.00 respectively. By his letter dated the 7th of March, 1968, the appellant had promised to pay the amount by the 31st of December, 1968. In the heading of the plaint it was mentioned that the suit was being filed under order 37, rule 2 of the Civil Procedure Code (hereinafter called 'the Code'). At the time of the admission of the suit it was directed that the process be issued to the defendant-appellant under order 37 of the Code. After receiving notice the appellant moved LA. No. 716 of 1971 under order 37, rule 3 read with section 151 of the Civil Procedure Code praying that he should be granted leave to defend the suit. The application was contested by the plaintiffs. Both the parties filed several documents. After hearing the parties, leave to defend the suit was granted subject to the furnishing of security by the appellant.

(3) Three contentions have been raised before us by the learned counsel for the appellant for urging that leave should have been granted unconditionally and to the extent that it imposes the obligation of furnishing security, the order under appeal be set aside. The first contention is that the plaint was not in conformity with order 37, rule 2 of the Code and as such the suit could not be held to have been filed under that provision. The second is that the plaintiffs-respondents had not come to court with clean hands inasmuch as they had not disclosed the true circumstances which provided the background to the litigation. The third submission is that there being triable issues between the parties, leave to defend should have been granted unconditionally. The provisions contained in order 37 of the Code appear in the First Schedule and could be altered in accordance with the provisions contained in Part X thereof. Sections 121 and 122 in Part X of the Code are:-

'121.The rules in the First Schedule shall have effect as if enacted in the body of this Code until annulled or altered in accordance with the provisions of this Part. 122. High Courts, not being the Court of a Judicial Commissioner, may, from time to time after previous publication, make rules regulating their own procedure and the procedure of the Civil Courts subject to their superintendence, and may by such rules annul, alter or add to all or any of the rules in the First Schedule.'

Exercising the powers conferred by sections 122 and 129 of the Code, and section 7 of the Delhi High Court Act, 1966 (Act 26 of 1966), this Court framed the High Court (Original Side,) Rules, 1967. Chapter Xv in the said Rules deals with Summary Suits. The first four rules in that Chapter, which are relevant to the contentions raised before us, are:-

'1.Suits to which the Chapter applies.-The provisions of this Chapter shall apply to all suits upon bills of exchange, hundis or promissory notes. 2. Notice to defendant.-On the filing of the suit, notice shall be issued to the defendant calling upon him to obtain leave from the Court to appear and defend the suit within 20 days of the service of the said notice. 3. Consequences of failure to obtain leave to defendant.-The defendant shall not appear or defend the suit unless he has obtained leave from the Court to appear and defend; in default of his obtaining leave or of his appearance and defense in pursuance thereof, the allegations in the plaint shall be deemed to be admitted, and the plaintiff shall be entitled to a decree; (a) for the principal sum due on the instrument, and for interest calculated in accordance with the provisions of section 79 or section 80, as the case may be, of the Negotiable Instruments Act, 1881, up to the date of the institution of the suit, or for the sum mentioned in the summons, whichever is less, and for interest up to the date of the decree at the same rate or at such other rate as the Court thinks fit; and (b) for such subsequent interest, if any, as the Court may order under section 34 of this Code; and (c) for such sum for costs as may be prescribed: Provided that, if the plaintiff claims more than such fixed sum for costs, the costs shall be ascertained in the ordinary way. 4. When leave to defend to be given- (a) The Court shall upon application by the defendant give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application. (b) 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 present suit being on the basis of three promissory notes and having been filed in this Court is covered by the rules, quoted above. According to rule 2 or Order 37 of the Code, the plaint was to be presented in the prescribed form. The rules, quoted above, did not require the suit to be filed in any particular form. We cannot, thereforee, accept the first contention that the suit had not been properly instituted as the plaint was not in the form prescribed by order 37, rule 2 of the Code. The second contention is also without merit. The suit is based on the three promissory notes, and the prayer is for a simple money decree for the principal amount and the interest due in respect thereof. The plaintiffs were to comply with the requirements of order 7, rule 1(e) of the Code and the plaint states the facts constituting the cause of action. The plaint contains all necessary averments and does not suffer from any ambiguity or concealment.

(5) The third contention is that leave to defend the suit should have been given unconditionally. While pressing their opposite points of view both sides have relied on the observations made by the Supreme Court in Santosh Kumar v. Bhai Mool Singh, : [1958]1SCR1211 , and Milkhiram (India) Private Ltd, and Others v. Chamanlal Bros., : AIR1965SC1698 . In the first case it was observed that wherever the defense raises a 'triable issue' leave must be given and when it is to be given, it should be unconditional otherwise it will be illusory. It was, however, added that in case the court was of opinion that the defense was not bona fide then it could impose conditions while granting leave. In the second case it was observed:-

'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 O.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 order 37, rule 2 is applicable to what may be compendiously described as commercial causes.'

The suits to be filed upon the bills of exchange, hundis or promissory notes were intended to be placed in a class by themselves and the transactions were to be taken as prima facie evidence of the defendants' liability. The summary procedure was devised to secure expeditious disposal of such suits and in order to secure the relief sought by the plaintiff the leave to defend could be given unconditionally or conditionally as merited by pleas disclosed by the application for leave to defend. In : AIR1965SC1698 , in paragraph it was observed:-

'Its indeed not easy to say in many cases whether the defense is a genuine one or not and, thereforee, it should be left to the discretion of the trial Judge who has experience of such matters both at the bar and the bench to form his own tentative conclusion about the quality or nature of the defense and determine the conditions upon which leave to defend may be granted. If the Judge is of opinion that the case raises a triable issue, then leave should ordinarily be granted unconditionally. On the other hand, if he is of opinion that the defense raised is frivolous, or false, or sham, he should refuse leave to defend altogether. Unfortunately, however, the majority of cases cannot be dealt with in a clear cut way like this and the Judge may entertain a genuine doubt on the question as to whether the defense is genuine or sham or in other words whether it raises a triable issue or not. The emphasis is obvious that the court must find whether the proposed defense raises triable issues or not. In case where triable issues arise, leave should ordinarily be given unconditionally to defend the suit. Such a triable issue should be an issue which raises a bona fide defense which is not sham, is plausible and not improbable.'

(6) In this case the counsel for the parties have taken us through the correspondence between them. It is urged on behalf of the appellant that the respondents were interested in the production of the picture 'Look Within' and later on in the introduction of the propagation of Jainism in the film, which the appellant was contemplating to complete on another theme, and that the three pro-notes pertained to the amounts which were payable only after the completion of the film. We have not been shown any writing emanating from the respondents by which they might have affirmed that the amounts due on the pro-notes would be recoverable only after the completion of any picture. The respondents' letter dated the 4th of December, 1970, runs to the contrary. These observations will, however, not be taken to be final in any manner. It will be for the court dealing with the suit to decide it after considering the evidence which may be led. Mr. Pombra has cited B. Kanjibhai and others v. Mohanraj Rajendrakumar, : AIR1970Guj32 ; Jetha Singh v.ChamanLal, : AIR1968Delhi122 ; Naresh Chandra Mital v. Bishamber Nath Chopra 1966 2 D.L.T 352 Fieldrank, Ltd. v. Stein, 1961 ELR 681 and Palamiappa Chettiar v. S. A. Chidambaram Chettiar, : AIR1965Mad218 ; to urge that in those cases the courts took the view that in cases of triable issues leave to defend should be given unconditionally. Those cases were decided on their own facts.

(7) We find that in this suit the plaintiffs have come to court on the basis of three promissory notes and in his affidavit filed along with the application to obtain leave to defend, the appellant has not denied the receipt of consideration or the liability to pay. What he has urged is that the amount due on the pronotes could not have been demanded before the completion of the picture. The defense disclosed by the affidavit does not make it incumbent on the holder of the pronotes to prove consideration and is not such which may persuade us to the view that unconditional leave to defend the suit should have been given. We do no want to record any interpretation of the correspondence between the parties which may injure either of them.

(8) As we are not persuaded to interfere with the impugned order, while extending the time for furnishing security till 15th April, 1972, the appeal is dismissed. There will be no order as to costs.


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