T. Sukender Reddy v. S M. Surender Reddy

V. RAJAGOPALA REDDY, J.

( 1 ) THIS Civil Revision Petition arises out of an order passed by the Court below on a petition filed under Order 37 Rule 3 (5) CPC granting leave to defend the summary suit (O. S. No, 1746 of 1996) on condition of the petitioner- defendant depositing half of the suit amount in the Court, which should not however be withdrawn by the respondent-plaintiff.

( 2 ) THE said suit was filed by the respondent-plaintiff under Order 37 Rule 2, C. P. C. on the basis of the promissory notes alleged to have been executed by the petitioner-defendant, for recovery of Rs. 1,36,000/-, in which the petitioner-defendant, filed an application seeking leave to defend the said suit. The petitioner-defendant admitted the execution of the suit promissory notes. According to him, he borrowed the amount five years back and at that time the respondent-plaintiff obtained his signatures on some blank stamped pronotes, receipts and a blank cheque and, subsequently, he repaid the said loan, but the respondent-plaintiff with a mala fide intention did not hand over the said papers and used them for filing the said suit.

( 3 ) THE trial Court after considering the entire material on record came to the conclusion that prima facie there is a triable issue in the suit and that the burden of proving the allegations lies on the petitioner. The trial Court held that having regard to the execution of the pronotes by the petitioner-defendant and in view of his burden to rebut the presumption under Section 118 of the negotiable Instruments Act, he shall deposit half of the suit amount, which shall not be withdrawn by the respondent-plaintiff.

( 4 ) THE learned Counsel for the petitioner-defendant contended that when once the trial Court found that there was a triable issue and that the defence was not a moon shine, the trial Court ought not to have directed the petitioner- defendant to deposit any amount and the leave to defend the said suit ought to have been granted without any condition. On the other hand, the learned counsel for the respondent-plaintiff contended that the trial Court even while granting leave to the petitioner-defendant to defend the suit is entitled to put the petitioner-defendant on terms, which may appear to be just and reasonable to the Court.

( 5 ) CLAUSE (sic sub-rule) (5) of Rule 3 of Order 37, CPC is the relevant provision to be considered, which reads as follows:- "the defendant 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: 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". It is clear from the above provision that the Court is liable to grant leave to the defendant to defend the suit unconditionally or on terms, if the facts of the suit disclose a triable issue and that the defence intended to be put up is not frivolous or vexatious. The Court is entitled to grant leave to the petitioner-defendant on condition of his depositing the amounts admitted by him. The Supreme Court in Mechalec Eng. and Manf. vs. Basic Eq. Corporation considering the scope of Order 37 Rule 2 reviewed the authorities on the subject and has enumerated the principles applicable to the cases covered by order 37 CPC in the form of propositions. The propositions under clauses (c) and (d) apply to the present case and they read as follows:- " (c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiffs claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security. (d) 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". Proposition (c) makes it abundantly clear that if the defendant discloses such facts which are sufficient to entitle him to defend though the Court was not satisfied that he had a positive defence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiffs claim, the plaintiff was not entitled to judgment and the defendant was entitled to leave to defend, but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to the payment into Court or furnishing security.

( 6 ) IN the instant case, the Court below considering the facts and circumstances of the case found that there was a triable issue in the said suit and since mere is no positive proof that the petitioner had repaid the amount under the promissory notes, having admitted the execution of the promissory notes, directed the petitioner-defendant to deposit half of the suit amount into court. The said direction in my view, is opposed to the proposition (c) laid down by the Supreme Court in the above cited case. The Supreme Court has clearly stated that the conditions should only extend to the fixation of time or mode of trial but not as to the payment into Court or furnishing security. In the circumstances, the order of the Court below directing the petitioner- defendant payment of the amounts is contrary to the proposition laid down by the Supreme Court.

( 7 ) THE Civil Revision Petition is, therefore, allowed and the impugned order is set aside in so far as the direction given by the trial Court directing the petitioner-defendant to deposit half of the suit amount. However, in view of the facts and circumstances of the case, I direct the trial Court to dispose of the said suit within a period of six months from the date of receipt of a copy of this order. Petitioner-defendant shall co-operate with the disposal of the suit. No costs.