Gujarat High Court
Jayantbhai Hasukhlal Kothari vs Hemant Champaklal Shah on 5 June, 2023
C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7614 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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JAYANTBHAI HASUKHLAL KOTHARI
Versus
HEMANT CHAMPAKLAL SHAH
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Appearance:
DHRUVIL G MERCHANT(9004) for the Petitioner(s) No. 1
NILESH P UDERNANI(9050) for the Petitioner(s) No. 1
MR NV GANDHI(1693) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 05/06/2023
CAV JUDGMENT
1. At the request of learned advocates for the parties, this petition is heard and disposed of finally at admission stage. Rule. Learned advocate Mr.N.V.Gandhi Page 1 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 waives service of notice of rule for the respondent.
2. This petition is filed under Article 227 of the Constitution of India with the following prayers:
"26(A) The Hon'ble Court be pleased to allow the present petition.
(B) The Hon'ble Court be pleased to call for the records and proceedings of the Special Summary Suit No.569 of 2017, pending before the Ld.City Civil Court at Ahmedabad.
(C) The Hon'ble Court be pleased to issue a writ of certiorari or any other appropriate writ, order or direction for quashing and setting Order passed below Exh.14 and 15, in Special Summary Suit No.569 of 2017, on 26.09.2022 (Annexure `G') by the Ld.City Civil Judge at Ahmedabad and the same is required to be allowed as prayed for.
(D) Pending admission, hearing and final disposal of this Special Civil Application, the Hon'ble Court be pleased to stay operation, implementation and execution of the order passed below Exh.14 and 15, in Special Summary Suit No.569 of 2017, on 26.09.2022 (Annexure `G') by the Ld.City Civil Judge at Ahmedabad.
(E) Pending admission, hearing and final disposal of this Page 2 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 Petition, the Hon'ble Court be pleased to stay the further proceedings in Special Summary Suit No.569 of 2017, before the Ld.City Civil Judge at Ahmedabad.
(F) Ad-interim reliefs in terms of para `D' & `E' above be granted in favour of the Petitioner.
(G) This Hon'ble Court may kindly be pleased to grant any other relief that this Hon'ble Court may deem fit in the larger interest of substantial justice.
(H) Costs of the present Petition be awarded in favour of the Petitioner."
3. The brief facts leading to filing of this petition are such that:
3.1 In the year, the petitioner asked for a loan for his business purposes from the respondent and the respondent provided Rs.18,00,000/- in parts to the petitioner herein in the month of February, 2014 at the office of one Mr.Pratik Majmudar. On raising the demand to return the said amount by the respondent in the month of April, 2014, the petitioner furnished a cheque for the said amount, which cheque was returned Page 3 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 by the bank by the respondent with an endorsement of funds insufficient. The demand notices dated 15.5.2014 and 27.3.2017 were sent by the respondent for demand of Rs.18,00,000/- with interest of 18%. The respondent herein being the power of attorney holder of the original plaintiff, filed suit being Summary Suit under Order 37 of the Code of Civil Procedure, 1908 (`CPC' for short) along with interest and other ancillary charges being a cumulative amount of Rs.27,69,010/-.
3.2 In the said suit, the summons were issued to the petitioner, who appeared before the City Civil Court.
The application filed by the petitioner on 8.11.2017 for condoning the delay in filing appearance before the learned City Civil Court was allowed with cost of Rs.1000/-, which was deposited. Thereafter, the respondent filed application for summons for judgment along with the supporting affidavit. The petitioner herein filed application for leave to defend the said suit on 19.4.2018, to which the respondent filed his rejoinder affidavit. Thereafter, the petitioner also filed application on 8.8.2019 under Order 7 Rule 11 of CPC, which application was contested by the respondent by filing Page 4 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 reply on 4.10.2019. However, as and when the application was taken up for hearing, the respondent passed an oral statement before the Ld.City Civil Court that he shall not argue and plead in his case as an advocate and based on the same, the petitioner herein did not press the said application and the endorsement to the said effect is made on the front page on the application which is not refuted by the respondent till date.
3.3 Thereafter, the application for summons for judgment as well as the leave to defend application was finally heard by the learned City Court in September, 2022 and vide impugned order dated 26.9.2022 passed at Exhs.14 and 15, the summons for judgment of the respondent (original plaintiff) was rejected and the conditional leave to defend the suit in favour of the petitioner (original defendant) was granted by depositing Rs.9,00,000/- before the Registry of the learned City Civil Court.
3.4 The petitioner filed application Exh.54 along with a list of documents at Exh.55 and requested the Page 5 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 City Civil Court to stay the operation, execution and implementation of the impugned order for a period of eight weeks, which was rejected vide order dated 20.10.2022. The application Exh.56 was also filed by the petitioner to withdraw the not press endorsement on its Order 37 Rule 11 of CPC application, which is pending till date. Thereafter, application under Order 32 of CPC was filed by the petitioner for appointment of a guardian to the original defendant, to which reply was filed by the respondent. When the said application was taken up for hearing on 29.12.2023, the petitioner herein filed an application for additional pleadings as well as production of list of documents produced along with the application dated 23.12.2022. The respondent sought time to file reply and the matter was posted on 27.1.2023. On that day, the learned City Civil Court at Ahmedabad passed an order below Exh.1 that the parties to the suit are to remain present before the learned City Civil Court on the next date of hearing and the original defendant shall obey the order passed at Exh.15 in true spirit. On 4.3.2023, the son of the original defendant remained present before the learned City Civil Court at Ahmedabad and the Court granted time till 24.3.2023 to Page 6 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 avail appropriate remedies under law and/or comply with the impugned order. Hence, this petition is filed for the prayers as narrated hereinabove.
4. Heard learned advocate Mr.Aditya Gupta for Mr.Dhruvil Merchant for the petitioner and learned advocate Mr.N.V.Gandhi for the respondents. 4.1 Learned advocate Mr.Gupta appearing for the petitioner has submitted that the impugned judgment and order passed by the learned City Civil Court, Ahmedabad, while granting leave to defend by directing the present petitioner to deposit 50% of the amount as condition is bad in eye of law; that from the averments made in the plaint in the summary suit itself does not attract the provisions of Order 37 of CPC; that the petitioner claiming amount of Rs.18,00,000/- towards the principal amount and total amount with interest and other ancillary charges which amount comes to about Rs.27,69,010/- as on 6.4.2017 itself shows that the plaintiff is claiming interest on the principal amount. He has further submitted that the suit is filed on the basis of the cheque issued by the present petitioner to the Page 7 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 respondent of Rs.18 lacs which cheque is bounced and in absence of any written contract, 18% interest is claimed on the said amount which is erroneous. He has submitted that considering the totality of facts and circumstances of the case, the Court below has not properly considered the case of the present petitioner as the petitioner has raised various prima facie triable issues by establishing legal and valid grounds for seeking unconditional leave to defend in the suit. But the same has not been properly considered by the learned trial Court.
4.2 He has further submitted that the present petitioner has pointed out that the respondent has not produced any affidavit to one Mr.Pratik Majmudar or Mr.Bharat Kakariya to show that the same are bonafide charges; that the impugned cheque has been fraudulently and maliciously acquired by the respondent with the sole intention to extort the money from the petitioner; that there is no written or oral agreement between the parties and from the pleadings in the plaint or summons for judgment, there is no whisper about the fact that how monies were given by the respondent to the Page 8 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 petitioner, whether by cash transfer or bank transfer or any other mode that is not borne out from the plaint. It is further submitted that the contention of the respondent that he has also issued demand notice under Section 138 of the NI Act is also contradicting his stand in the plaint as well as legal notice sent in the year 2017. He has further submitted that no cause of action as per the case of the respondent has arisen within the territorial jurisdiction of City Civil Court as no single document to substantiate the existence of one Mr.Pratik Majmudar at whose office the alleged transaction has taken place, is produced. He has further submitted that when the interest is claimed in absence of any written contract on the alleged principal amount, it becomes triable issue which fact is not properly considered by the learned trial Court. He has further submitted that the petitioner has already filed application under Order 7 Rule 11 of CPC on the ground that the respondent is the original plaintiff in the said suit and arguing and conducting the same matter as an advocate of the plaintiff and therefore the application is filed under the provisions of Order 7 Rule 11 of CPC which is yet not heard by the learned City Civil Court and therefore he Page 9 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 has submitted that considering the totality of the facts and circumstances of the present case, the impugned order passed below Exh.14 and 15 by the learned City Civil Court dated 26.9.2022 by rejecting the summons for judgment of the original plaintiff-respondent herein and granting conditional leave to defend the said suit in favour of the petitioner by depositing the amount of Rs.9 lacs before the Registry of the learned Civil Civil Court is highly erroneous. He has further submitted that considering the various facts and ground pleaded in the petition, the present petition is required to be allowed. 4.3 In support of his submissions, learned advocate for the petitioner has relied on the judgment in case of Vatech Global Co.Ltd. V/s Unicorn Denmart Ltd. reported in 2017 SCC Online Del.8729, more particularly paragraphs 37 and 38 and submitted that order granting conditional leave to defend or refusing leave to defend can be challenged under Article 226/227 of the Constitution of India or under Section 115 of CPC even if decree has been passed.
4.4 He has also relied on the judgment of this Page 10 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 Court in the case of Centurion Bank Limited V/s Larsen & Toubro Limited reported in 2004(3) GLH 773, more particularly, paragraphs 4,5 and 6 and submitted that this Court has jurisdiction under Article 227 of the Constitution of India in the case of leave to defend is refused in summary suit.
4.5 He has relied on the judgment in the case of New Ashapuri Cooperative Housing Society V/s Arvindkumar Manilal Patel reported in AIR 1975 Guj.76, more particularly, paragraph 13 and submitted that in view of the City Civil Courts Rules also, such suit is required to be considered and therefore in that case the Court has held that revision under Section 115 of CPC is maintainable. Now, it should be petition under Article 227 of the Constitution of India.
4.6 He has submitted by relying on the judgment in the case of Shivsu Canadian Clear International Limited V/s Frieghtcan Global Logistics Private Limited reported in 2013(3) CTC 305 paragraphs 20 and 21, Vithalbhai T Patel V/s Shyamlal Durgadas Khanna reported in AIR 1970 Bom. 101 paragraphs 6,9,10,11 and Page 11 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 lastly in the case of Wada Arun Asbestos Private Limited V/s Gujarat Water Supply and Sewerage Board reported in 2009(2) SCC 432 and submitted that the petition under Article 227 of the Constitution of India is maintainable in eye of law, by referring to the subject matter of the petition and conditional leave to defend by directing deposit of 50% of the amount.
4.7 He has relied on the judgment of this Court Zonal Manager V/s Akhilbhai B Mehta reported in 2001 SCC Online Guj 562 paragraphs 21 to 23, in case of Merchem Limited V/s New India Acid Baroda Private Limited passed in SCA 6350 of 2017, Chlochem Limited V/s Lifeline Industries Ltd., passed in SCA 13041 of 2021 paragraphs 21, 22 and 23, P.M.Textiles V/s Naman Texturized Private Limited passed in SCA 3743 of 2011 paragraphs 2 and 3, Hitesh Wire Fencing V/s SMP Construction Private Limited passed in SCA 7156 of 2015 paragraph 5.1, Surendra Sukhnandan Yadav V/s Antoney Kandenkariyil Mathew passed in SCA 17257 of 2013, Torque Automotive Private Limited V/s Automative Resources Private Limited passed in SCA 8529 of 2019 and Jubilee Motor Stores V/s Apollo Tyres Limited Page 12 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 passed in SCA 11436 of 2012 and submitted that in view of these orders, the petition deserves to be allowed as the learned trial Court has committed gross error in eye of law by passing the impugned order.
5. Per Contra, learned advocate Mr.Gandhi for the respondents submitted that the learned trial Court has rightly considered the case of the parties and had come to the conclusion that the plaintiff has rightly instituted the suit under the provisions of Order 27 of CPC. He has further submitted that the learned trial Court has rightly relied on the judgment of the Hon'ble Apex Court in the case of IDBI Trusteeship Services Ltd. V/s Hubtown Ptd. reported in AIR 2016 SC 5321, more particularly, paragraph 18 and submitted that the learned trial Court has not committed any error in granting leave by asking the petitioner to deposit 50% of the amount. He has further submitted that the impugned order is passed on 26.9.2022 which is challenged by filing present petition on 13.3.2023 i.e. much after almost six months and circulated almost after seven months from the impugned order passed by the learned trial Court. He has further submitted that in view of the Page 13 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 judgment of the Hon'ble Apex Court in the case of Ajay Bansal V/s Anup Mehta and Ors, reported in AIR 2007 SC 909, now against the order of rejection of leave to defend application, the petition under Article 227 of the Constitution of India is not tenable and appeal under Section 96 of CPC is required to be filed. He has also relied on the judgment of Division Bench of this Court in the case of Gelco Electronics Private Limited V/s S.S.Corporation reported in 2019(1) GLR 224 and submitted that when the leave to defend application is rejected, the appeal is required to be filed. 5.1 He has further drawn my attention towards the impugned order passed by the learned trial Court whereby the trial Court has specifically found that it is the case of the present petitioner who is original defendant in the suit that he has not signed the cheque. It is also observed by the learned trial Court that the notice prior to institution of suit is served on the present petitioner not once but twice and even then the petitioner has not filed any reply to that notice. Considering this aspect as well as considering the fact that the respondent has already issued notice prior to Page 14 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 filing of the suit which is not replied by the present petitioner as well as the petitioner has not disputed about the execution of the cheque and has taken sham and bogus defence in the application for leave to defend, the Court has rightly considered that the case is made out for conditional leave to defend only and the Court has used its discretion by imposing condition to deposit 50% of the amount on the present petitioner which is otherwise just, proper and legal.
5.2 He therefore, submitted that the impugned order passed by the learned trial Court is just and proper and therefore there is no reason to interfere by exercising the powers under Article 227 of the Constitution of India, particularly, considering the latest judgment of the Garment Garment Craft V/s Prakash Chand Goel reported in (2022) 4 SCC 181, therefore, prayed to dismiss the petition with appropriate cost, considering the conduct of the present petitioner.
6. I have considered the rival submissions and the material available on the record. It is the case of the present petitioner that though he has disputed about Page 15 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 the propriety of execution of the cheque of Rs.18 lacs, he has not disputed about the cheque being issued from his account nor he has disputed the fact that the signature of the cheque is not his nor he has disputed the fact that the cheque is bounced on the deposit by the present respondent. Moreover, it also transpires from the record that the respondent has also issued notice under Section 138 of the NI Act in addition to notice issued prior to filing of the suit. It also transpires from the record that the present petitioner has not replied to any of the notices prior to the institution of the suit by raising any defence which is now raised by the petitioner. It is the case of the respondent in the suit that he has given the amount to the present petitioner towards hand loan at the premises of one Mr.Pratik Majmudar and pursuant to that, the present petitioner has issued cheque of Rs.18 lacs towards the security. The said transaction happened in the month of February, 2014 and when the amount was not repaid, on 9.4.2014, the present petitioner has issued the cheque no.179862 of New India Cooperative Bank, Ahmedabad Ghatlodia branch of Rs.18 lacs in favour of the present respondent and it was bounced and therefore the notice under Section 138 of the NI Act was Page 16 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 issued on 15.5.2014 by the present respondent to the present petitioner and lastly on 27.3.2017, another notice prior to institution of the suit was issued by the respondent to the present petitioner but none of the notices were replied.
7. It also transpires that the trial Court has considered all these aspects and has also considered the judgment of Hon'ble Apex Court in the case of IDBI Trusteeship Trustees Ltd. (supra), more particularly, paragraphs 17 and 18, which reads as under:
"17.It is thus clear that O.XXXVII has suffered a change in 1976, and that change has made a difference in the law laid down. First and foremost, it is important to remember that Milkhiram's (AIR 1965 SC 1698) case is a direct authority on the amended O.XXXVII provision, as the amended provision in O.XXXVII Rule 3 is the same as the Bombay amendment which this Court was considering in the aforesaid judgment. We must hasten to add that the two provisos to sub-rule (3) were not, however, there in the Bombay amendment. These are new, and the effect to be given to them is something that we will have to decide. The position in law now is that the trial Judge is vested with a discretion which has to result in justice being done on the Page 17 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 facts of each case. But Justice, like Equality, another cardinal constitutional value, on the one hand, and arbitrariness on the other, are sworn enemies. The discretion that a Judge exercises under Order XXXVII to refuse leave to defend or to grant conditional or unconditional leave to defend is a discretion akin to Joseph's multi-coloured coat - a large number of baffling alternatives present themselves. The life of the law not being logic but the experience of the trial Judge, is what comes to the rescue in these cases; but at the same time informed by guidelines or principles that we propose to lay down to obviate exercise of judicial discretion in an arbitrary manner. At one end of the spectrum is unconditional leave to defend, granted in all cases which present a substantial defence. At the other end of the spectrum are frivolous or vexatious defences, leading to refusal of leave to defend. In between these two extremes are various kinds of defences raised which yield conditional leave to defend in most cases. It is these defences that have to be guided by broad principles which are ultimately applied by the trial Judge so that justice is done on the facts of each given case.
18.Accordingly, the principles stated in paragraph 8 of Mechelec's (AIR 1977 SC 577) case will now stand superseded, given the amendment of O.XXXVII R.3, and the binding decision of four Judges in Milkhiram's (AIR 1945 SC 1698) case, as follows:Page 18 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023
C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 a. If the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit;
b. if the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend;
c. even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant's good faith, or the genuineness of the triable issues, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security;
d. if the Defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security.
As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire Page 19 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 principal sum together with such interest as the court feels the justice of the case requires.
e. if the Defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith;
f. if any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court."
8. This judgment clearly has now modified the requirement which was laid down by the judgment of Mechelec Engineers and Manufacturers V/s Basic Equipment Corporation reported in AIR 1977 SC 577, which judgment laid down certain guidelines while considering the leave to defend application. These guidelines were prior to amendment carried out under Order 37 of CPC in the year 2002. Now, the Court has considered afresh the guidelines issued in the case of Mechelec Engineers (supra) in view of the amendment carried out under the provisions of Order 37 of CPC and Page 20 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 has laid down the principles as per paragraph 18 mentioned hereinabove.
9. Considering those principles and considering the material available on the record, the learned trial Court has rightly considered the case of the present respondent and has rightly come to the conclusion that 50% of the amount is required to be deposited while allowing the leave to defend application. There cannot be any dispute about the provisions of law which is cited at the bar on behalf of the present petitioner, more particularly, about the maintainability of the present petition under Article 227 of the Constitution of India and in view of the amendment carried out in the year 2002, now the revision application under Section 115 of the CPC is not required to be filed where the leave to defend application is rejected. However, in view of the judgments cited at the bar, I am of the opinion that the petition under Article 227 of the Constitution of India is maintainable.
10. However, the other judgments are also cited at the bar in support of the case of the petitioner about Page 21 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 the granting of leave to defend unconditionally, more particularly, by submitting that in absence of any written contract and when the interest is charged, unconditional leave should be granted.
11. At this stage, it is fruitful to refer to the judgment of the Hon'ble Apex Court in the case of wherein, by reconsidering the judgment of the Hon'ble Apex Court of the decision in case of Mechelec Engineers and Manufacturers (supra) , which is rendered in Defiance Knitting Industries Pvt. Ltd. v. Jay Arts. reported in 2006(8) SCC 25, paragraph 13, where the following principles are laid down :
"13. While giving leave to defend the suit the Court shall observe the following principles:
(a) If the Court is of opinion that the case raises a triable issue then leave to defend should ordinarily be granted unconditionally. See Milkhiram (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 of parties.
(b) If the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence Page 22 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 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).
(c) 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."
12. In another judgment, the Hon'ble Apex Court in the case of Southern Sales and Services and Others V/s Sauermilch Design and Handels reported in 2008(14) SCC 457, paragraph 15 reads as under:
"15. Having considered the submissions made on behalf of the respective parties and the decisions cited, there appears to be force in Mr Sharma's submissions regarding the object intended to be achieved by the introduction of sub-rules (4), (5) and (6) in Rule 3, Order 37 of the Code. Whereas in the unamended provisions of Rule 3, there was no compulsion for making any deposit as a condition precedent to grant of leave to defend a suit by virtue of the second proviso to sub-rule(5), the said provision was altered to the extent that the deposit of any admitted amount is now a condition precedent for grant of leave to defend a suit filed Page 23 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 under Order 37 of the code. A distinction has been made in respect of any part of the claim, which is admitted. The second proviso to sub-rule 5) of Rule 3 makes it very clear that leave to defend a suit shall not be granted unless the amount as admitted to be due by the defendant is deposited in court."
13. It is also relevant to consider the recent judgment in the case of B.L.Kashyap and Sons Limited V/s JMS Steels and Power Corporation and Another, reported in 2022(3) SCC 294, more particularly, paragraphs 33.1, 33.2, 33.3 which read as under:
"33.1 As noticed, if the defendant satisfies the Court that he has substantial defence i.e. a defence which is likely to succeed, he is entitled to unconditional leave to defend. In the second eventuality, where the defendant raises triable issues indicating a fair or bonafide or reasonable defence, albeit not a positively good defence, he would be ordinarily entitled to unconditional leave to defend. In the third eventuality, where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or about genuineness of the issues, the trial Court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the Page 24 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 other. Therefore, the trial may impose conditions both as to time or mode of trial as well as payment into the court or furnishing security. In the fourth eventuality, where the proposed defence appears to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of payment into the court or furnishing security or both, which may extend to the entire principal sum together with just and requisite interest.
33.2 Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a far and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time of mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations,l denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the court's view that the defendant is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted Page 25 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the court.
33.3 Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one. Even in the case of raising of triable issues, with the defendant indicating his having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the defendant fails to show any genuine triable issue and the court finds the defence to be frivolous and vexatious."
14. Therefore, the view which is taken by the learned trial Court is in accordance with law and also found just and proper in facts of case more particularly when the present petitioner has not replied or raised any grievance pursuant to the notice received under Section Page 26 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 138 of the NI Act in the year 2014 or subsequent notice received in the year 2017 prior to institution of the suit and therefore the defence which is now urged by way of leave to defend application in present proceeding is prima facie found not genuine and can be considered as an afterthought and also cannot be considered as plausible defence.
15. It is also relevant to note the judgment of the Hon'ble Apex Court in the case of S.Raju V/s C.Sathammai reported in 2008(2) SCC 583, where the Court has rejected unconditional leave to defend the suit to the petitioner on the ground of inherent inconsistency in the case of defendant where the defendant on the one hand is claiming signature on promissory note concerned were fraudulently obtained and on the other hand, the defendant is claiming that signature were in fact not his signatures. Therefore, the learned trial Court has permitted the defendant to defend the suit by way of conditional leave.
16. Another judgment of the Hon'ble Apex Court in the case of V.K.Enterprise V/s Shiva Steels, reported in Page 27 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 2010(9) SCC 256, whereby the Hon'ble Apex Court has held in paragraphs 10, 11 and 12 as under:
"10. Order 37 CPC has been included in the Code of Civil Procedure in order to allow a person, who has a clear and undisputed claim in respect of any monetary dues, to recover the dues quickly by a summary procedure instead of taking the long route of a regular suit. The courts have consistently held that if the affidavit filed by the defendant discloses a triable issue that is at least plausible, leave should be granted, but when the defence raised appears to be moonshine and sham, unconditional lave to defend cannot be granted.
11. What is required to be examined for grant of leave is whether the defence taken in the application under Order 37 Rule 3 CPC makes out a case, which is established, would be a plausible defence in a regular suit. In matters relating to dishonour of cheques, the aforesaid principle becomes more relevant as the cheques are issued normally for liquidation of dues which are admitted. In the instant case, the defence would have been plausible had it not been for the fact that the allegations relating to the interpolation of the cheque is without substance and the ledger accounts relating to the dues, clearly demonstrated that such dues had been settled between the parties. Moreover, the issuance of the cheque had never been disputed on behalf of the Page 28 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 petitioner whose case was that the same had been given on account of security and nor for presentation, but an attempt had been made to misuse the same by dishonest means.
12. Against such cogent evidence produced by the respondent-plaintiff, there is only an oral denial which is not supported by any corroborative evidence from the side of the petitioner. On the other hand, the ledger book maintained by the respondent and settled by the petitioner had been produced on behalf of the respondent in order to prove the transactions in respect of which the cheque in question had been issued by the petitioner."
17. The learned trial Court has rightly held that when the defendant has issued the cheque in favour of the plaintiff, then such cheque is deemed to have been issued towards liquidation of dues for the admitted liability of the defendant and considering these aspects also, the impugned order passed by the learned trial Court is just and proper and in accordance with law.
18. The provisions of Order 37 Rules 1,2, 3,4,5 and 6 of CPC read as under:
"3 [1. Courts and classes of suits to which the Order is to Page 29 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 apply.--(1) This Order shall apply to the following Courts, namely:--
(a) High Courts, City Civil Courts and Courts of Small Causes; and
(b) other Courts:
Provided that in respect of the Courts referred to in clause
(b), the High Court may, by notification in the Official Gazette, restrict the operation of this Order only to such categories of suits as it deems proper, and may also, from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette, further restrict, enlarge or vary, the categories of suits to be brought under the operation of this Order as it deems proper.
(2) Subject to the provisions of sub-rule (1), the Order applies to the following classes of suits, namely:--
(a) suits upon bills of exchange, hundies and promissory notes;
(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising,--
(i) on a written contract, or (ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or
(iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.] Page 30 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 [2. Institution of summary suits.--(1) A suit, to which this Order applies, may if the plaintiff desires to proceed hereunder, be instituted by presenting a plaint which shall contain,--
(a) a specific averment to the effect that the suit is filed under this Order;
(b) that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint; and
(c) the following inscription, immediately below the number of the suit in the title of the suit, namely :-- "(Under Order XXXVII of the Code of Civil Procedure, 1908)."
(2) 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.
(3) The defendant 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.] [3. Procedure for the appearance of defendant--(1) In a suit Page 31 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 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.
(2) Unless otherwise 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.
(3) 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.
(4) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment in Form No. 4A in Appendix B or such other Form as may be prescribed from time to time, returnable not less than ten days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit. (5) The defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or Page 32 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 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:
Provided 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:
Provided 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 in Court.
(6) At the hearing of such summons for judgment,--
(a) if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith; or
(b) if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security within the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or Judge, the plaintiff shall be entitled to judgment forthwith.Page 33 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023
C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 (7) The Court or Judge may, for sufficient cause shown by the defendant, excuse the delay of the defendant in entering an appearance or in applying for leave to defend the suit.]
4. Power to set aside decree.--After decree the Court may, under special circumstances set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit.
5. Power to order bill, etc., to be deposited with officer of Court.--In any proceeding under this Order the Court may order the bill, hundi or note on which the suit is founded to be forthwith deposited with an officer of the Court, and may further order that all proceedings shall be stayed until the plaintiff gives security for the costs thereof.
6. Recovery of cost of noting non-acceptance of dishonoured bill or note.--The holder of every dishonoured bill of exchange or promissory note shall have the same remedies for the recovery of the expenses incurred in noting the same for non-acceptance or non-payment, or otherwise, by reason of such dishonour, as he has under this Order for the recovery of the amount of such bill or note."
19. In view of the above discussion, this Court is Page 34 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023 the opinion that there is no illegality or perversity or impropriety committed by the learned trial Court while dealing with the application for leave to defend as well as summons for judgment as the learned Court and the learned trial Court has rightly used discretion by granting leave to defend by imposing condition of 50% amount to be deposited by the present petitioner.
20. Even otherwise, in view of the judgment in the case of Garment Shaft (supra), where it was held that High Courts while exercising powers under Article 227 does not act as appellate authority and cannot reappreciate evidence and the jurisdiction exercised under Article 227 is in nature of correctional jurisdiction to set aside grave dereliction of duty or flagrant abuse of process of law and High Court cannot substitute its own view on merits and when there is no infirmity or perversity or illegality found in any of the findings of the learned trial Court and the learned trial Court has used its discretion in judicious manner and there is no reason to interfere with the impugned order passed by the learned trial Court under Article 227 of the Constitution of India.
Page 35 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023 C/SCA/7614/2023 CAV JUDGMENT DATED: 05/06/2023
21. Hence, this petition is required to be dismissed and accordingly dismissed. Rule is discharged.
(SANDEEP N. BHATT,J) SRILATHA After pronouncement of the judgment, learned advocate for the petitioner prays for stay of this judgment. However, for the reasons stated in the judgment above and the fact that the proceedings are lingering since the year 2014, I am not inclined to grant stay as prayed for and hence, the request is rejected.
(SANDEEP N. BHATT,J) SRILATHA Page 36 of 36 Downloaded on : Mon Jun 05 20:41:41 IST 2023