1. This Rule was obtained by an application under Section 115, Civil P. C., made on behalf of the two petitioners who are defendants Nos. 2 and 3 in a Commercial Suit No. 287 of 1970 in the 2nd Bench of the City Civil Court at Calcutta and arises out of order No, 12 made by the trial Court in that suit on 11th January, 1971. The plaintiff, who is opposite party No. 1 in this Court, has instituted the suit praying for a decree for Rs. 20,000/- on the basis of the Hundies said to have been executed by the present petitioners on their own behalf and as partners of the firm Provat Cinema which firm was impleaded in the suit as defendant No. 1'. There was also a 4th defendant, Nanda Kishore Bagaria, who is opposite party No. 3 in this Court. Defendant No. 1 the firm filed an application praying leave of the Court to defend the suit, the contention sought to be raised by that defendant being that defendants Nos. 2 and 3 were not competent to take any loan on behalf of the firm and as such the firm is not liable to pay the dues on the Hundies even if those are true and genuine.
2. The defendants Nos. 2 and 3 also filed a joint application praying for leave, to contest the suit. Their contention was that their father the defendant No. 4 obtained their signatures on certain blank Hundi papers at a time when a dispute had arisen between the sons on the one hand and the father on the other relating to the business. It is contention of the defendants Nos. 2 and 3 that no consideration passed oh account of the said blank Hundies and those were made to be used by the defendant No. 4 for the purpose of bringing a settlement of the dispute and for no other purpose. They alleged that the defendant No. 4 has set up the plaintiff with a false claim against defendants. Nos. 2 and 3.
3. The learned Judge in the trial Court in his order dated 11th January, 1971 held that so far as defendant No, 1 is concerned the case raises a triable issue. Regarding the question whether the defendants Nos. 2, and 3 were not competent to take any loan by the Hundies alleged to have been executed by them leave, has been granted to defendant No. 1 to defend the suit without any condition.
4. With regard to the application made on behalf of the defendants Nos. 2 and 3 the learned Judge also held that those two defendants have also raised a triable issue.
But the learned Judge has thought that those two defendants stand on a different footing because they do not dispute the fact that the two disputed Hundies bear their signaturesalthough they claimed to have given such signatures on blank Hundies which are alleged to be without consideration. In that view, the learned Judge has granted leave to defendants Nos. 2 and 3 to defend the suit but subject to the term that they would furnish security to the extent of the claim of the suit. Against that part of the order by which defendants Nos. 2 and 3 have been permitted to file written statement on their furnishing security to the extent of the whole claim of the suit within two weeks from the date ofthe order, those two defendants have come up to this Court and obtained the presentRule in the revisional jurisdiction.
5. On behalf of the petitioners their learned. Advocate Mr. Ghose has contendedthat imposition of the condition of furnishing security to the extent of the whole of the claim is not only an erroneous exercise of the jurisdiction given to Court under Sub-rule (2) of Rule 3 of Order 37 but also according to Mr. Ghose it is beyond jurisdiction because 41 transgresses the mandatory provisions inSub-rule (1) of that Rule.
6. On behalf of the opposite party No. 1 the plaintiff it has been contended that the trial Court has properly exercised the discretion that it has under Sub-rule (2) of Rule 3 of Order 37 and the order should not be revised or modified.
7. The respective contention raised on behalf of the contending parties raises an important question regarding interpretation of the relevant provisions in Order 37 particularly in Rule 3 thereof. That Order in the Civil P. C. provides for summary procedure in suits on negotiable instrument like Bills of Exchange, Hundies and Promissory Notes. By the provision in Rule 2 of that Order it is applicable only in case the plaintiff desiring to proceed under that Order institutes the suit by presenting a claim in the form prescribed and in that event the summons shall be in Form No. 4 in Appendix B. In that Form it is provided in the last paragraph:--
'Leave to appear may be obtained on an application to the Court supported by affidavit or declaration showing that there is a defence to the suit on the merits, or that it is reasonable that you should be allowed to appear in the suit.'
8. Sub-rule (2) of Rule 2 provides:
'In any case in which the plaint and summons are in such forms, respectively, the defendant shall not appear or defend the suit unless he obtains leave from a Judge as Hereinafter provided so to appear and defend; and, in default of his obtains such leave or of his appearance and defence inpursuance thereof, the allegations in the plaint shall be deemed to be -admitted, and the plaintiff shall be entitled to a decree.........'
9. Then Rule 3 provides :--
'(1) 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.
(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.'
10. The words 'upon the defendant paying into Court the sum mentioned in the summons or' which occurred after the words 'to defend the suit' have been omitted. As a rule leave should be granted unconditionally if a prima facie case is shown or a triable issue is raised, but where bona fides are doubted leave should be conditional.
11. An order refusing leave or granting leave on terms is not a judgment within Clause 15, Letters Patent and not appealable.
12. Mr. Ghose contends that provisions in Rules 2 and 3 make it clear that although a summary procedure in the particular type of suits is prescribed in Order 37 those apply only when the plaintiff has exercised his desire to proceed there under by presenting a plaint in the form prescribed. That option given to the plaintiff to bring a summary suit is governed by the special limitation of one year under Limitation Act, although suit for the same claim instituted in the ordinary manner will be governed by the limitation of three years under the relevant Article in the Limitation Act. Stringent provisions in Sub-rule (2) of Rule 2 is there fore by its nature a restriction against the ordinary rights of the defendant to defend the suit only in the special circumstances envisaged in Sub-rule (1) of Rule 2 because 'all that special character of the restriction to defend the suit immediately following provisions in Rule 3 has been made to meet the ends of justice. That being the nature of the provisions in Rule 3 the rights of the parties require that several parts in those provisions in Rule 3 should be carefully considered and strictly interpreted. Mr. Ghose has emphasised that Sub-rule (1) of Rule 3 directs that 'the Court shall, upon application by the defendant, give leave to appear and defend the suit in two circumstances, first being 'upon affidavits which disclose such facts as would make it incumbent on theholder to prove consideration' and the second being 'such other facts as the Court may deem sufficient to support the application.' Only after these mandatory provisions in the two parts of Sub-rule (1) are fulfilled, Sub-rule (2) provides the two alternatives. First that the leave to defend may begiven unconditionally and second, that leave may be subject to such terms as is provided in Sub-rule (2). It has to be noticed that in that second alternative security is not the only condition mentioned, but the other also like 'framing and recording issues or otherwise as the Court thinks fit.'
13. It is contended by Mr. Ghose that when a case comes under the first part of Sub-rule (1) of Rule 3 it is governed by the first part of Sub-rule (2) i.e., when such facts are disclosed as would make it incumbent on the holder to prove consideration leave to defend may be given unconditionally. The other part of Sub-rule (2) operates only on the second part of Sub-rule (1) i.e., the condition to the grant of leave may be imposed when the case does not come within the first part of Sub-rule (1) but is one within the second part of that sub-rule.
14. This contention of Mr. Ghose appears to us to be correct view upon the language of whole Rule 3 in all its sub-rules as it has remained applicable to this High Court and Courts Subordinate to it. It may safely be pointed out that the decision of the Supreme Court in the case of Santosh Kumar v. Bhai Mool Singh, reported in AIR 1958 SC 323 relied on by the learned Advocate for the opposite party was in a case from Bombay where Rule 3 of Order 37 has been amended by recasting the whole of it, so much so that the words 'The Court shall' in the Sub-rule (1) that applies in West Bengal has been omitted in Bombay by Notification No. 2737 dated 29-9-1936 and Notification No. 2182 dated 9-8-1940. In the language of the Rule as it appeals to West Bengal that mandatory 'shall' need be given effect when facts are disclosed that make it appear that nature of defence raises a triable issue and such facts would make it incumbent on the holder of the Hundi to prove consideration. In such cases leave to defend shall be given by Court unconditionally. Only in cases where facts disclosed are such that Court deems sufficient to support the application for leave to defend, condition may be imposed by Court while granting the leave. There also Court has to exercise judicial discretion if any condition should be imposed and if so, what should be the nature of it.
15. In the present case the Court has found that the defence raised by the petitioners raises a triable issue and nature of that is such that it would be incumbent upon the plaintiff to prove consideration. That being so, the petitioners are entitled to, as of right, leave to defend and Court 'shall' give leave to appear and defend.
16. Even if the Court had a discretion to impose condition, by the nature of the defence raised, it is a case where by judicial exercise of discretion should not have imposed any condition, particularly because the Court has granted leave to the other defendant unconditionally. The differentiationmade by the Court has been improper exercise of judicial discretion because in the defence raised by the petitioners allegations have been made against the defendant who has been granted unconditional leave to defend the suit.
17. While we are of the view that no condition could be imposed and by exercise of judicial discretion none should be imposed, we are also of the view that condition of furnishing security for the whole of the claim in the suit has been gross abuse of discretion, because by its nature it has so much as taken away the benefit of leave to defend granted by such condition being imposed.
18. The petitioner, therefore, succeeds and the Rule is made absolute with costs, hearing fee being assessed at five gold mohurs. The costs awarded will be payable by the plaintiff opposite party to the petitioners who are defendants Nos. 2 and 3, and petitioners in this Court. We direct that the condition imposed on the petitioner in the leave to defend granted be set aside and the petitioner be granted leave to defend unconditionally.