Code of Civil Procedure, 1908 – Or. XXXVII – Summary Suits – Leave to defend – Plaintiff-respondent no.1 is registered partnership firm, manufacturer and supplier of iron and steel products – It had supplied 200 tons of steel to defendant no.1 which was a real estate firm – Supply was made in terms of two purchase orders as raised by appellant-defendant No.2, who was contractor working with defendant no. 1 – On failure to make requisite payment, plaintiff filed summary suit by making the defendants jointly and severally liable – Trial Court declined to grant “leave to defend” to both the defendants – Appellantdefendant no.2 challenged the judgment of trial court – High Court observed that appellant- defendant no.2 was not entitled to “leave to defend” because the defenses raised were frivolous and vexatious and did not give rise to genuine triable issue – High Court further observed that there was no such requirement that the cheque ought to be dishonored for filing summary suit and held the suit to be maintainable – On appeal, Held: As per the plaint averment , the matter is based on written contract arising out of written purchase orders issued by the appellant on the instruction and on behalf of defendant No. 1 – Contention against maintainability of the summary suit in terms of Or. XXXVII cannot be accepted – There is no reason to consider any interference in the decision of the High Court – Grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception – 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 – On facts, no reason as to why and how the defence of the appellant (defendant No. 2) was treated as frivolous or vexatious – Appellant had indeed raised triable issues, particularly concerning its CORPORATION & ANR. [DINESH MAHESHWARI, J.]
liability and the defence of the appellant cannot be said to be frivolous or vexatious altogether – Appellant-defendant No. 2 ought to have been granted the leave to defend the claim made in the suit concerning its liability.
Allowing the appeal, the Court
HELD: 1. Two principal points call for determination in this appeal: one, as to whether the plaintiff was entitled to maintain a summary suit under Order XXXVII CPC for the claim in question; and second, as to whether the appellant-defendant No. 2 has rightly been declined the leave to defend? [Para 13][1036-C-D]
2. As per the plaint averment, the matter is based on written contract arising out of written purchase orders issued by the appellant on the instructions and on behalf of defendant No. 1; and the plaintiff had raised the invoices against such supplies under the purchase orders. In the overall facts and circumstances of the case, the contention against maintainability of the summary suit in terms of Order XXXVII CPC cannot be accepted and to that extent, there is no reason to consider any interference in the decision of the High Court. [Paras 14 and 14.2][1036-E; 1037-B]
3. Grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception. The prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court. In the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a fair 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 or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, 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 defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. 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. [Paras 17, 17.2 and 17.3][1039-H; 1040-A-B, E-G; 1041-A-B]
4. The Trial Court had observed that the defendants failed to raise any triable issues. It appears that while recording such conclusions, the Trial Court as also the High Court totally omitted to consider that the appellant-defendant No. 2 has been contesting its liability with the assertion that it had only been the contractor executing the work of defendant No. 1. Even as per the plaint averments and plaintiff’s assertions, the defendant No. 1 had made various payments from time to time against the supplies of the building material. The cheques, allegedly towards part payment against the supplies made by the plaintiff, had been issued by the defendant No. 1. In the given set of circumstances, the conclusion of the High Court that the defence raised by the appellant was frivolous or vexatious could only be treated as an assumptive one and lacking in requisite foundation. No reason has been assigned as to why and how the defence of the present appellant was treated as frivolous or vexatious. The effect and impact of an admitted position of the plaintiff, that payments were indeed made from time to time by the defendant No. 1, seems not to have gone into consideration of the Trial Court and the High Court while denying leave to the appellant. The appellant has indeed raised triable issues, particularly concerning its liability and the defence of the appellant cannot be said to be frivolous or vexatious altogether. [Paras 18,19.1 and 20][1041-D-F; 1042-C-D, E] CORPORATION & ANR. [DINESH MAHESHWARI, J.]
Mechelec Engineers and Manufacturers v. Basic Equipment Corporation AIR 1977 SC 577:[1977] 1 SCR 1060; IDBI Trusteeship 9 Services Ltd. v. Hubtown Ltd.(2017) 1 SCC 568:[2016] 11 SCR 660 ; Prem Nath Motors Limited v. Anurag Mittal (2009) 16 SCC 274:[2008] 16 SCR 45 ; V.K. Enterprises v. Shiva Steels (2010) 9 SCC 256: [2010] 9 SCR 647- referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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