Knitting Industries Pvt. Ltd Vs. Jay Arts  Insc 549 (30 August 2006)
Pasayat & Lokeshwar Singh Panta
out of SLP (C) No. 20393 of 2005) ARIJIT PASAYAT, J.
in this appeal is to the judgment rendered by a learned Single Judge of the
Bombay High Court dismissing the writ petition No. 2521 of 2005 filed by the
appellant. By the impugned judgment the High Court upheld the view of the trial
court in Summary Suit No.10 of 2001 that the appellant has not made out a case
for unconditional leave to defend in terms of Order XXXVII Rule 2 of the Code
of Civil Procedure, 1908, ( in short the 'CPC').
factual background in a nutshell are as follows:
Suit No.10 of 2001 has been filed by the respondent before the learned Civil
Judge (Senior Division) at Kalyan for recovery of an amount of Rs.98,81,426.63.
In addition, the plaintiff has claimed interest from the date of filing of the
suit till the realisation of the amount. The suit was filed on 05.07.2001.
After issuing notice, the writ petitioner- defendant filed an application under
Order XXXVII Rule 3(5) of C.P.C. for leave to defend unconditionally and the
said application was rejected by the trial Court. The writ Petitioner,
therefore, approached the High Court in Civil Revision Application No. 659 of
2002 and in terms of the consent orders, it was disposed of on 02.05.2002. The
said order was to the effect that the writ petitioner was to deposit an amount
of Rs. 20,00,000/- with the trial Court within four months to show his bonafides
and was entitled to take out an application for leave to defend which was
required to be heard on merits.
succeeded in his application for leave to defend, he was allowed to withdraw
the amount deposited. The trial Court heard the parties afresh and by order
dated 11.03.2005 allowed the application (Ex. 34) on the condition that the
writ petitioner was to deposit an additional amount of Rs.50,00,000/- in two instalments.
The said order was challenged before the High Court.
the High Court, by referring to the numerous correspondence between the parties
right from 05.11.1997 onwards, writ petitioner submitted that the summary suit
raised several disputed questions which needed trial and at no point of time,
the writ petitioner had accepted the claim made by the plaintiff. It was also
pointed out that the writ petitioner had taken up the issue with its Architect
and all the bills submitted by the plaintiff were returned to the Architect.
the writ petitioner had not accepted the payments as claimed by the plaintiff.
It was further submitted that the trial court failed to give proper reasonings
and a cryptic order has been passed rejecting the application for leave to
High Court noted that after issuing notice in the trial court, the defendant
has not filed its written statement. In the application, the defendant has
disputed the contents and in fact denied the claim made by the plaintiff.
However, the plaintiff has set out its case to point out that the work as per
the tender was completed some times in March, 1999, the final bills submitted
by it were certified by the Architect of the defendant and certificate to that
effect was issued on 19.04.1999. The Architect had forwarded the bills to the
defendant for clearance and the final bill amount was Rs. 2,07,11,475/-, out of
which, an amount of Rs.1,08,29,989/- was received. The correspondences brought
on record show that the meeting was held between the parties and the issue
regarding incomplete work, payments and final settlement were discussed by them
in the meeting as is clear from the letter addressed by the writ Petitioner
dated 20.11.1998 to its Architect Mr. Qutub Mandviwala. Reference was made to
possible dates for final discussion and settlement of the dues.
this period, the contractor and the Architect should discuss and settle all the
payments etc. after completing the jobs as agreed.
to the High Court, the correspondence thereafter, between the writ petitioner
and its Architect goes to show that there were some defective jobs which were
to be completed. The final bills submitted by the plaintiff were certified on
19.04.1999 by the Architect of the defendant and thereafter, vide letter dated
27.04.1999, the defendant took up the issue with its Architect. All this
correspondence goes to show that the claim made by the plaintiff is not totally
denied and there may be some subtractions in terms of the interest or defective
work but there is nothing on record to show that the Architect of the writ
petitioner has finally worked out the figure, quantified the payment to be made
to the plaintiff and in any case less than the amount certified by the said
Architect on 19.04.1999.
trial court passed the following order:
hearing arguments of the parties, I am of the opinion that defendant has no defence,
but it is moon shine defence. Therefore, a permission can be granted to leave defence
to the deserves to be allowed on condition, I pass the following order:
Exh.34 is allowed for leave to defence to the defendant on following
shall deposit an amount of entire Rs.50 Lacs in the Court in a two instalments
on or before next date, in addition to earlier deposited amount of Rs 20 Lacs.
Cost shall be
cause in the suit".
High Court felt that the trial court ought to have given proper reasons in
support of the impugned order. But it was observed that the correspondences
between the parties does show that the application submitted by the writ
petitioner could not be allowed and the discretion exercised by the trial court
granting leave to defend conditionally i.e. on total deposit of Rs.70,00,000/-
cannot be termed to be perverse or totally erroneous. Four years had passed
from the filing of the claim before the trial court and the original claim was
Rs.98,81,426.63/-. As noted above writ petition was dismissed.
counsel for the appellant submitted that both the trial court and the High
Court completely lost sight of the earlier order passed by the High Court which
in no uncertain terms laid down that the quantum of deposit to be directed
could not be more than Rs.20,00,000/-. Without noticing these relevant aspects,
the trial court directed deposit of Rs.70,00,000/- and High Court upheld it.
contra, learned counsel for the respondent submitted that even according to the
correspondences and the statements filed by the appellant the admitted amount
was more than Rs. 90,00,000/- and, therefore, after taking note of the deposit
of Rs.20,00,000/- made earlier, the trial court and the High Court had directed
deposit of Rs.50,00,000/- more.
essence, his submission was that in the earlier order in the Civil Revision the
amount to be fixed was let to be decided by the trial court.
XXXVII Rules 2 and 3 so far as relevant reads as follows:
of Summary Suits.
A suit, to which
this Order applies, may if the plaintiff desires to proceed thereunder, be
instituted by presenting a plaint which shall contain,
averment to the effect that the suit is filed under this Order;
that no relief,
which does not fall within the ambit of this rule, has been claimed in the
inscription, immediately below the number of the suit in the title of the suit,
The summons of
the suit shall be in Form No. 4 in Appendix B or in such other form as may,
from time to time, be prescribed.
shall not defend the suit referred to in sub rule (1) unless he enters an appearance
and in default of his entering an appearance the allegations in the plaint
shall be deemed to be admitted and the plaintiff shall be entitled to a decree
for any sum, not exceeding the sum mentioned in the summons, together with
interest at the rate specified, if any, up to the date of the decree and such
sum for costs as may be determined by the High Court from time to time by rules
made in that behalf and such decree may be executed forthwith.]
for the appearance of defendant.
In a suit to
which this Order applies, the plaintiff shall, together with the summons under
rule 2, serve on the defendant a copy of the plaint and annexures thereto and
the defendant may, at any time within ten days of such service, enter an
appearance either in person or by pleader and, in either case, he shall file in
Court an address for service of notices on him.
ordered, all summonses, notices and other judicial processes, required to be
served on the defendant, shall be deemed to have been duly served on him if
they are left at the address given by him, for such service.
On the day of
entering the appearance, notice of such appearance shall be given by the
defendant to the plaintiff's pleader, or, if the plaintiff sues in person, to
the plaintiff himself, either by notice delivered at or sent by a pre-paid
letter directed to the address of the plaintiff's pleader or of the plaintiff,
as the case may be.
may, at any time within ten days from the service of such summons for judgment,
by affidavit or otherwise disclosing such facts as may be deemed sufficient to
entitle him to defend, apply on such summons for leave to defend such suit, and
leave to defend may be granted to him unconditionally or upon such terms as may
appear to the Court or Judge to be just:
that leave to defend shall not be refused unless the Court is satisfied that
the facts disclosed by the defendant do not indicate that he has a substantial defence
to raise or that the defence intended to be put up by the defendant is
frivolous or vexatious:
further that, where a part of the amount claimed by the plaintiff is admitted
by the defendant to be due from him, leave to defend the suit shall not be
granted unless the amount so admitted to be due is deposited by the defendant
Court in Mechalec Engineers and Manufactures v. Basic Equipment Corporation,
(AIR 1977 SC 577) has laid down the principles to be followed in granting leave
to defend the suit under Order XXXVII, rule 3 of the Code. One of the aforesaid
principles is, that if the defendant raises a triable issue indicating that he
has a fair or bona fide or reasonable defence although not a positively good defence
the plaintiff is not entitled to sign judgment and the defendant is entitled to
unconditional leave to defend. It has also been laid down therein that if the
defendant has no defence or the defence set up is illusory or sham or
practically moonshine then ordinarily the plaintiff is entitled to leave to
sign judgment and the defendant is not entitled to leave to defend.
giving leave to defend the suit the Court shall observe the following
If the Court is
of opinion that the case raises a triable issue then leave to defend should
ordinarily be granted unconditionally.
(India) Pvt. Ltd v. Chaman Lal Bros. [AIR
1965 SC 1698]. The question whether the defence raises a triable issue or not
has to be ascertained by Court from the pleadings before it and the affidavits
If the Court is
satisfied that the facts disclosed by the defendant do not indicate that he has
a substantial defence to raise or that the defence intended to put by the
defendant is frivolous or vexatious is may refuse leave to defend altogether. Kiran
Mryace Dassi v. Dr. J. Challrjae [AIR 1949 Cal.
479]. (noted and approved in Mechalec's case (supra).
In cases where
the Court entertains a genuine doubt on the question as to whether the defence
is genuine or sham or whether it raises a triable issue or not, the Court may impose
conditions in granting leave to defend.
Mrs. Raj Duggal v. Ramesh Kumar Bansal (AIR 1990 SC 2218) it was held as
declined where the Court is of the opinion that the grant of leave would merely
enable the defendant to prolong the litigation by raising untenable and
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 good or even a plausible defence on those facts. If the Court is
satisfied about that leave must be given. If there is a triable issue in the
sense that there is a fair dispute to be tried as to the meaning of a document
on which the claim is based or uncertainty as to the amount actually due or
where the alleged facts are of such a nature as to entitle the defendant to
interrogate the plaintiff or to cross-examine his witnesses leave should not be
denied. Where also, the defendant shows that even on a fair probability he has
a bona fide defence, he ought to have leave. Summary judgments under Order 37
should not be granted where serious conflict as to matter of fact or where any
difficulty on issues as to law arises. The Court should not reject the defence
of the defendant merely because of its inherent implausibility or its
instant case much would depend upon the effect of the order passed by the High
Court in the earlier case i.e. Civil Revision no. 659 of 2002. The operative
portion reads as follows:
applicants in order to establish their bonafides agree and undertake that they
shall deposit before the Trial Court in amount of Rs. 20 lacs within a period
of four months from today.
deposit of the aforesaid amount of Rs.20 lacs by the Applicants, the impugned
order of the learned Civil Judge, Senior Division, Kalyan dated. 7th March, 2002 declining to grant unconditional
leave to defend. and the consequential decree passed No.8th March, 2002 shall
stand quashed and set aside.
learned Trial Judge shall dispose of the summons for Judgment after hearing the
parties, uninfluenced by the earlier order dated 7th March, 2002, which is with the consent of the parties quashed and set
learned Trial Judge will proceed to deal with the matter in accordance with the
directions as aforesaid and keeping in view the requirements of order 37, of
the Code of Civil procedure, 1908.
event that the deposit of an amount of Rs.20 lacs as aforesaid is made, it
shall be without prejudice to the right of the Applicants to contend that they
are entitled to the grant of unconditional leave to defend the suit. In the
event that the learned Trial Judge comes to the conclusion that the Applicants
are entitled to j unconditional leave to defend, the Applicants would be at
liberty to make an application before the Trial court for refund of the amount
which has been deposited by them of Rs.20 lacs, in pursuance of the statement
which has been made herein above, similarly, in the event of leave being
granted to defend the suit subject to deposit of an amount less than Rs.20 lacs,
the Applicants would be at liberty to move an application for the refund of the
balance amount of Rs.20 lacs. The Respondents would similarly be at liberty to
move an application for the withdrawal of the amounts deposited after the
application for leave to defend ahs been disposed of and subject to the outcome
of the application".
reading of the order shows that the High Court in the earlier occasion took the
view, on the consent of parties, that Rs.20,00,000/- was to be deposited and on
deposit being made certain follow up action were to be taken. The fact that the
High Court wanted the quantum to be pinned at Rs.20,00,000/- and not more than
that is clear from the fact that the High Court directed refund in case the
trial court on consideration of merits came to conclusion that the amount to be
deposited was less than Rs.20,00,000/-. There is no indication that in case the
amount was to be more, then the appellant would pay the differential amount.
stand of the appellant that the maximum deposit that could have been directed
was fixed at Rs.20,00,000/- is on a sound footing. The order of the trial court
as well as that of the High Court cannot be maintained. However as an interim
measure by order dated 26.9.2005 this Court has stayed the operation of the
High Court's order subject to deposit of Rs.20,00,000/-. It is stated that the
deposit has already been made. Though we have held the trial Court's order and
the High Court's order are not sustainable, the amount deposited pursuant to
this Court's order need not be refunded. The trial Court is directed to proceed
with the matter and make effort for its expeditious disposal.
is allowed but without any order as to costs.