Code of Civil Procedure, 1908: Or. XXXVII, r.3(5) – Summary suit filed against appellant for recovery of Rs.64.18 lacs – Prior to filing of summary suit, the respondent had filed criminal case under s.138 of N.I. Act for the same dues which case he had unconditionally withdrawn – However, while the prosecution under the N.I. Act was pending, the respondent instituted the instant summary suit for Rs.36.13 lacs being total sum of two dishonoured instruments with an additional claim for Rs.28.05 lacs as interest – Conditional leave to defend was granted to appellant-defendant with a finding based on existence of a commercial relationship – Grievance of appellant was that under the second proviso to sub-rule 5 of r.3 of Or. XXXVII, the condition for deposit of Rs.30 lacs could not have been ordered in absence of any admissible dues and he denied any dealings with respondents after 2011 and stated that there was no occasion for him to issue a cheque in the year 2014 for any alleged dues of the year 2011 – Held: According to the plaint of the respondent, commercial dealings between the parties ended on 03.06.2011 – The respondent did not state any reason as to why outstanding payment in respect of the same was made by cheque as late as 01.03.2014 – Although respondent had option to institute a summary suit at the very inception of the dispute, but it consciously opted for a prosecution under the N.I. Act which undoubtedly was a more efficacious remedy for recovery of any specified amount of a dishonoured instrument raising a presumption against the drawer, as in a summary suit the possibility of leave to defend could not be completely ruled out, in which case the recovery gets delayed and protracted – The court, on 29.10.2015, in the prosecution instituted by the respondent under the Act, required the respondent to file certain additional documents because the appellant had denied the existence of legal liability for any sum due – It was only thereafter that the summary suit was instituted on 24.11.2015 – The prosecution under the Act was subsequently unconditionally withdrawn on 14.12.2015 – This coupled with the specific contention of the appellant, not denied by the respondent, that it had returned defective goods and paid the balance dues of Rs.5 lacs, the conclusion to grant leave to defend was perfectly justified – But the defence raised by appellant in background was certainly not a sham much less frivolous and neither could it be called improbable – Appellant had raised a substantial defence and genuine triable issues – The fact that there may have been commercial relations between the parties was the ground for the institution of the summary suit but could not per se be the justification for grant of conditional leave sans proper consideration of the defence from the materials on record – The impugned orders granting conditional leave to defend were unsustainable and liable to be set aside – Appellant is granted unconditional leave to defend – Negotiable Instruments Act, 1881 – s.138.
Code of Civil Procedure, 1908: Or. XXXVII – Object of summary suit – Grant of unconditional leave to defend – Discretionary power of the court – In a summary suit, if the defendant discloses such facts of a prima facie fair and reasonable defence, the court may grant unconditional leave to defend – This naturally concerns the subjective satisfaction of the court on the basis of the materials that may be placed before it – However, in an appropriate case, if the court is satisfied of a plausible or probable defence and which defence is not considered a sham or moonshine, but yet leaving certain doubts in the mind of the court, it may grant conditional leave to defend – In contradistinction to the earlier subjective satisfaction of the court, in the latter case there is an element of discretion vested in the court – Such discretion is not absolute but has to be judiciously exercised tempered with what is just and proper in the facts of a particular case – The ultimate object of a summary suit is expeditious disposal of a commercial dispute – The discretion vested in the court, therefore, requires it to maintain the delicate balance between the respective rights and contentions by not passing an order which may ultimately end up impeding the speedy resolution of the dispute.
Allowing the appeal, the Court
HELD: Both the Civil Judge and the High Court posed unto themselves the wrong question and therefore misdirected themselves in application of the principles for discretion laid down in Hubtown Limited by granting conditional leave to defend without properly adverting and referring to the facts of the case and the materials on record. According to the plaint of the respondent, commercial dealings between the parties ended on 03.06.2011. At this stage, it was necessary to notice the contention of the appellant that the signatures and the contents of the cheques were in different writings. The respondent had the option to institute a summary suit at the very inception of the dispute. But it consciously opted for a prosecution under the Act which undoubtedly was a more efficacious remedy for recovery of any specified amount of a dishonoured instrument raising a presumption against the drawer, as in a summary suit the possibility of leave to defend could not be completely ruled out, in which case the recovery gets delayed and protracted. The appellant had raised a substantial defence and genuine triable issues. The failure both by the Trial Judge and the High Court to notice and consider the said issues did not justify grant of conditional leave to defend. The fact that there may have been commercial relations between the parties was the ground for the institution of the summary suit but could not per se be the justification for grant of conditional leave sans proper consideration of the defence from the materials on record. The impugned orders granting conditional leave to defend are held to be unsustainable. The appellant is granted unconditional leave to defend. [Paras 14, 16 and 17] [287-A-D, G-H; 288-A-B]
IDBI Trusteeship Services Limited v. Hubtown Limited (2017) 1 SCC 568 : [2016] 11 SCR 660 – 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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