Introduction

This is an important case law on the concept of leave of court under Order XXXVII of Code of Civil Procedure, 1908 (CPC) to defend under summary suits.

Facts

• The plaintiff (the appellant herein) filed a summary suit on the basis of a cheque for Rs. 60,000 drawn by the defendants in favor of the plaintiff and which, on presentation to the Bank, was dishonored.
• The defendants filed the application to defend themselves under Rule 2 of Order XXXVII of CPC but they were refused leave (permission) to defend.
• It was held by the trial judge that the defence raised by the defendants raises a triable issue, but he went on to hold that the defendants have not placed anything on the file to show that the defence was a bona fide one.
• The appellants applied under Article 227 of the Constitution of India, 1959 to the Delhi Circuit Bench of the Punjab High Court, but the case was dismissed.
• The appellants herein approached the Supreme Court by way of a Special Leave Petition (SLP) under Article 136 of the Constitution of India, 1950.

Issue Involved

• Whether the defendant raised a real issue and not a sham one for asking the leave of the court?

Observation

• The Court noted that though the rigidness of Order XXXVII Rule 2 CPC restricts court to grant leave to the defendants to defend themselves but the rigor of that is softened by Rule 3(1) of Order XXXVII CPC which makes it obligatory on the Court to grant leave when the conditions set out there are fulfilled.
• And it further said that though the Court is given a discretion it must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice, that form the foundations of our laws.
• The court noted that it is undesirable and often not possible to set strict rules in matters involving discretion. However, it is important to know why a specific procedure is in place so that discretion can be used correctly.
• The only ground given for concluding that the defence is not bona fide is that the defendant did not prove his assertions before he was allowed to put in his defence; and there is an obvious failure of justice if judgment is entered against a man who, if he is allowed to prove his case, cannot but succeed.

Conclusion

• The SC granted permission to set aside the orders of the HC and the learned trial judge and remand the case to the first court for trial of the issues raised by the defendants.
• Hence, the appeal was allowed.

Note

Order XXXVII Rule 2 of CPC- Institution of summary suits

• 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 specific 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 plaint;
  • the following inscription, immediately below the number of the suit in the title of the suit, namely: -

Under Order 37 of the CPC:

• 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.
• 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 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.

Order XXXVIII, Rule 3 of CPC- Procedure 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.
• 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.
• 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 pre-said letter directed to the address of the plaintiff's pleader or of the plaintiff, as the case may be.
• 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 for 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 defense to the suit.
• The defendant may, at any time within ten days from 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:
• 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 defense intended to be put up by the defendant is frivolous or vexatious:
• Provided further that, where a part of the amount claimed by the 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.
• At the hearing of such summons for judgment,-
  • 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
  • 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 with 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.
• The Court or Judge may, for sufficient cause shown by the defendant, execute the delay of the defendant in entering an appearance or in applying for leave to defend the suit.