Judgment

MUDHOLKAR, J. : The question which we have to consider in this appeal by special leave is whether the trial Judge was right in granting leave to the appellants to defend the suit based upon promissory notes executed by the appellant No. 1, which was instituted on the original side of the High Court at Bombay on condition that the appellants deposited security to the extent of Rs. 70,000. The other appellants are sought to be made liable upon an indenture of guarantee dated 20-11-62 with respect to the amounts advanced to the appellant No. 1. The procedure followed in the case was that set out in Order 37, Civil Procedure Code. Rules 2 and 3 of this Order have been amended by the Bombay High Court. Sub-rule (1) of R. 2 provides that suits of certain kinds specified therein may be instituted by presenting a plaint in the form prescribed but the summons shall be in Form 4 in Appendix III or in such other Form as may from time to time be prescribed. Suits upon bills of exchange, hundis or promissory notes or for liquidated amounts are some of the kinds of suits which can be instituted under this provision. Sub-r. 2 provides that in suits of this kind the defendant shall not defend the suit unless he enters an appearance and obtains leave from the judge as provided in O. 37 so to defend. It further provides that in default of entering an appearance and of his obtaining such leave to defend the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree as prayed for in the plaint. Sub-rr. 2 and 3 of R. 3 of O. 37 as amended by the High Court run thus :

"(2) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment returnable not less than ten clear 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.

(3) 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 the suit. Leave to defend may be granted to him unconditionally or upon such terms as to the Judge appear just."

The appellants filed an affidavit as required by sub-r. 3 purporting to disclose facts sufficient to entitle them to defend the suit. Upon a perusal of the plaint and the affidavits of parties and documents filed along with the plaint the learned Judge thought it fit to grant only conditional leave to the appellants to defend the suit. The amount for which the plaintiff-respondents have claimed relief in the suit is Rs. 4,05,434.38. As against this claim the Court has ordered the appellants to deposit security for Rs. 70,000 only. The appellants considering themselves aggrieved by the order preferred an appeal under Letters Patent which was summarily dismissed by the appeal Court. They have now come up by special leave to this Court. In support of the appeal Mr. Yogeshwar Prasad has raised two points. The first is that the defence disclosed by the appellants in their affidavit raises a triable issue and that, therefore, it was incumbent upon the learned trial Judge to grant unconditional leave to defend. The second ground is that the promissory notes upon which the suit is based is only a collateral security for the performance of the agreement between the parties relating to the export of pulses and, therefore, the suit was not of a nature which fell within the ambit of O. 37, R. 2 of the Code.

2. It will be convenient to deal with the second point first. The respondents in their plaint have alleged that from time to time they advanced monies to the appellants and obtained promissory notes from them. They are four in number and the total amount advanced under them was Rs. 3,45,000. The execution and consideration for these promissory notes is admitted by the appell