IMPORTANT POINT
It defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence, plaintiff is not entitled to sign judgment and defendant is entitled to unconditional leave to defend.

Headnote:Civil Procedure Code, 1908—Order 37 Rule 2—Summary suit—Claim for a sum of Rs. 98,81,426/- —Application for leave to defend—Trial Court rejected the application—High Court in civil revision set aside the order and in terms of consent order defendant appellant was to deposit Rs. 20,00,000/- with trial Court to show bona fides and leave to defend to be heard on merits—Trial Court allowed application on condition of defendant to deposit additional amount of Rs. 50 lakhs—High Court upheld order in writ petition—Appeal—Principles to be followed in granting leave to defend—If defendant raised a triable issue indicating that he had a fair or bona fide or reasonable defence although not a positive good defence, plaintiff was not entitled to judgment—High Court on earlier occasion took a view on consent of parties that on deposit of Rs. 20 lakhs, certain follow up action was to be taken—Appellant’s stand that maximum deposit that could have been directed was at Rs. 20 lakhs was on a sound footing—Impugned order was liable to be set aside and appellant to deposit Rs. 20 lakhs.
Held : This Court in Mechalec Engineers and Manufactures v. Basic Equipment Corporation, (AIR 1977 SC 577) has laid down the principles to be followed in granting leave to defend the suit under Order XXXVII, rule 3 of the Code. One of the aforesaid principles is, that if the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. It has also been laid down therein that 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. (Para 12)
A bare reading of the order shows that the High Court in the earlier occasion took the view, on the consent of parties, that Rs.20,00,000/- was to be deposited and on deposit being made certain follow up action were to be taken. The fact that the High Court wanted the quantum to be pinned at Rs.20,00,000/- and not more than that is clear from the fact that the High Court directed refund in case the trial court on consideration of merits came to conclusion that the amount to be deposited was less than Rs.20,00,000/-. There is no indication that in case the amount was to be more, then the appellant would pay the differential amount. The stand of the appellant that the maximum deposit that could have been directed was fixed at Rs.20,00,000/- is on a sound footing. The order of the trial court as well as that of the High Court cannot be maintained.(Paras 16 and 17)

JUDGMENT

Arijit Pasayat, J.—Leave granted.

2. Challenge in this appeal is to the judgment rendered by a learned Single Judge of the Bombay High Court dismissing the writ petition No. 2521 of 2005 filed by the appellant. By the impugned judgment the High Court upheld the view of the trial court in Summary Suit No.10 of 2001 that the appellant has not made out a case for unconditional leave to defend in terms of Order XXXVII Rule 2 of the Code of Civil Procedure, 1908, (in short the CPC).

3. The factual background in a nutshell are as follows:

Summary Suit No.10 of 2001 has been filed by the respondent before the learned Civil Judge (Senior Division) at Kalyan for recovery of an amount of Rs.98,81,426.63. In addition, the plaintiff has claimed interest from the date of filing of the suit till the realisation of the amount. The suit was filed on 05.07.2001. After issuing notice, the writ petitioner-defendant filed an application under Order XXXVII Rule 3(5) of C.P.C. for leave to defend unconditionally and the said application was rejected by the trial Court. The writ Petitioner, therefore, approached the High Court in Civil Revision Application No. 659 of 2002 and in terms of the consent orders, it was disposed of on 02.05.2002. The said order was to the effect that the writ petitioner was to deposit an amount of Rs. 20,00,000/- with the trial Court within four months to show his bonafides and was entitled to take out an application for leave to defend which was required to be heard on merits. If he succeeded in his application for leave to defend, he was allowed to withdraw the amount deposited. The trial Court heard the parties afresh and by order dated 11.03.2005 allowed the application (Ex. 34) on the condition that the writ petitioner was to deposit an additional amount of Rs.50,00,000/- in two instalments. The said order was challenged before the High Court.

4. Before the High Court, by referring to the numerous correspondence between the parties right from 05.11.1997 onwards, writ petitioner submitted that the summary suit raised several disputed questions which needed trial and at no point of time, the writ petitioner had accepted the claim made by the plaintiff. It was also pointed out that the writ petitioner had taken up the issue with its Architect and all the bills submitted by the plaintiff were returned to the Architect. Thus, the writ petitioner had not accepted the payments as claimed by the plaintiff. It was further submitted that the trial court failed to give proper reasonings and a cryptic order has been passed rejecting the application for leave to defend unconditionally.

5. The High Court noted that after issuing notice in the trial court, the defendant has not filed its written statement. In the application, the defendant has disputed the contents and in fact denied the claim made by the plaintiff. However, the plaintiff has set out its case to point out that the work as per the tender was completed some times in March, 1999, the final bills submitted by it were certified by the Architect of the defendant and certificate to that effect was issued on 19.04.1999. The Architect had forwarded the bills to the defendant for clearance and the final bill amount was Rs. 2,07,11,475/-, out of which, an amount of Rs.1,08,29,989/- was received. The correspondences brought on record show that the meeting was held between the parties and the issue regarding incomplete work, payments and final settlement were discussed by them in the meeting as is clear from the letter addressed by the writ Petitioner dated 20.11.1998 to its Architect Mr. Qutub Mandviwala. Reference was made to possible dates for final discussion and settlement of the dues. During this period, the contractor and the Architect should discuss and settle all the payments etc. after completing the jobs as agreed.

6. According to the High Court, the correspondence thereafter, between the writ petitioner and its Architect goes to show that there were some def

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2006 Supreme(SC) 799

IMPORTANT POINTIt defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence, plaintiff is not entitled to sign judgment and defendant is entitled to unconditional leave to defend.

Cases Referred (2)

IMPORTANT POINT
It defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence, plaintiff is not entitled to sign judgment and defendant is entitled to unconditional leave to defend.