(1) This petition is filed by the defendant in the suit whose application for leave to defend the suit whose application for leave to defend the suit on a promissory note was disallowed. The respondent laid the suit on the basis of a promissory note for a sum of Rs. 4200 executed by the defendant-petitioner on 23-11-1962 in his favour. When notice was served on the defendant, he filed an application under O. XXXVII Rule 3 praying for leave to defend. He admitted that he executed the promissory note, but contended that the amount represented the loss that the had incurred in gambling and therefore the promissory note was not enforceable. The trial court holding that the plea put forward by the petitioner would not make it incumbent on the plaintiff-respondent to prove consideration for the promissory note held that the petitioner was not entitled for leave to defend. The trial court also held after a discussion of the available materials on record that the defendant had not made out prima facie that his case was bona fide. On the two grounds above stated, the trial court dismissed the application for leave to defend.
(2) The learned counsel for the petitioner submitted that the lower court acted illegally and with material irregularity in the exercise of its jurisdiction in refusing leave to defend the suit. He submitted that the lower court committed some mistakes in its judgement regarding the dates n contents of the affidavit, but it is unnecessary to go into the facts, as this petition can be disposed of on a pure question of law.
(3) It is contended by the learned counsel for the petitioner that if the affidavit filed on behalf of the petitioner-defendant in an application for leave to defend discloses a triable issue, then it is the duty of the trial court to grant leave to defend. Order XXXVII Rule 3 is as follows :
"3(1) The court shall, upon application by the defendant give leave to appear and to defend the would make it incumbent on the holder to prove consideration or such other facts as the court may deem sufficient to support he application.
(2) Leave to defend maybe 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."
The court shall give leave to appear and to defend a suit if (1) the affidavit discloses facts which would make it incumbent on the holder to prove consideration; (2) if the affidavit discloses such other facts as the court may deem sufficient to support the application.
(4) Construing this rule, the Supreme Court in Santosh Kumar v. Bhai Mool Singh, held as follows:
"Taken by and large, the object is to see that he defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining defences in a class of cases where speedy decisions are as are desirable in the interests of trade and commerce. In general, therefore, the test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a god, or even a plausible, defence on those facts.............The facts given in the affidavit are clear and precise and the defence could hardly have been clearer. We find it difficult to see how a defence simply because the evidence by which it is to be proved is not brought on file at the time the deference is put in.
The learned Judge has failed to see that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit, and that the suit, and that the nature of the defence has to be determined at the time when the affidavit is put in. At that stage all that the court has to determine is whether 'if the facts alleged by the defendants are duly proved' they will afford a good, or even a plausible, answer to the plaintiff's claim. Once the court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise."
(5) The question whether leave to defend should be granted or not has to be decided on the facts alleged in the affidavit. As emphasised by the supreme Court at that stage the only question the court has to determine is whether the facts alleged in the affidavit, if proved would afford a good and a plausible defence. But there is no provision for the trial court to go into the question whether the defence set up is true or not. In view of the decision of the Supreme Court, it is unnecessary to refer to the several Bench decisions of this court cited at the bar.
(6) In this case it is not denied that if the averments in the affidavit by the defendant are duly proved, there will be an effective defence to the suit. In the circumstances, leave to defend ought to have been granted by the trial court. the learned counsel for the petitioner submitted that while granting leave to defend under O. XXXVII Rule 3 the court has to exercise its discretion and determine whether leave should be granted unconditionally or subject to such terms as the court may deem fit. The rule itself provides that the court has a discretion to grant leave unconditionally or on terms. This discretion has, of course, got to be exercised judicially. Mr. Sundaram Iyer submitted that in the present case the trial court has gone into the various allegations and found that the defendant has no bona fide case and on that finding the defendant should be called upon to pay into court the amount claimed in the plaint. It cannot be denied that the court has a discretion to grant leave conditionally or not. it will be proper to impose conditions, if the trial court is of opinion that the defence is made merely for the purpose of prolonging the litigation and preventing the plaintiff will properly be exercised if the trial court considering the status of the defendant feels that the defendant should make payment into court. As already observed, if the defendant in this case succeeds in proving the allegations in the affidavit in support of his application for leave to defend he will have good defence. it was not alleged by the plaintiff in his counter affidavit that the petitioner-defendant is not a man of means and that he will not be in a position to execute the decree in case, it cannot be stated at this stage that the defence is frivolous or that it is made for the purpose of procrastinating a decision in the suit. In the circumstances, I do not think that the defendant should be put on terms. The revision petition is allowed and leave to defend is granted unconditionally. No costs.
(7) Petition allowed.