2015 Supreme(SC) 930

SUPREME COURT OF INDIA
RANJAN GOGOI, N.V. RAMANA, JJ.
STATE BANK OF HYDERABAD – APPELLANT
VERSUS
RABO BANK – RESPONDENT
CIVIL APPEAL NO. 8194 OF 2015 ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 33549 OF 2014
Decided On : 01-10-2015

IMPORTANT POINT
If the defendant has a good defence to the claim on its merits, or raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence, or 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 has a defence, yet, shows such a stage of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s claim, the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.
On the other hand, 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.

Headnote:Code of Civil Procedure, 1908 – Order XXXVII, Rule 3 – Leave to defend Summons for Judgment – Defendant showing that on the basis of facts mentioned in the affidavit he may be able to establish a defence to plaintiff’s claim – Court may impose conditions as to time or mode of trial but not as to payment into court or furnishing security – Letter of co-acceptance issued in mala fide manner by officers of appellant Bank not competent to do so – Defendant showing certain triable issues for adjudication – Held, defendant entitled to unconditional leave to defend Summons for Judgment. [Para 19, 22]

       1991 Suppl.(1) SCC 191 – Relied upon

       AIR 1949 Cal 479 – Cited with approval

       AIR 1958 SC 321; AIR 1965 SC 1698; (1976) 4 SCC 687; (1998) 5 SCC 354; 1998 (3) ALD 659 – Referred

       Facts of the case:

       The respondent/plaintiff is a banking institution located in Singapore and on behalf of its constituent namely M/S Gloland (Far East) Pte. Ltd., the respondent/plaintiff carried on business dealings with the appellant/defendant. The constituent of the respondent is engaged in the business of export of Chick Peas and it shipped a consignment to its Indian clients, namely, M/S Kothari Global Ltd. and M/S Marudhar Edible Oils Ltd., while handing over three sets of relevant documents dated 4.2.1998, 24.2.1998 and 13.7.1998 to the respondent/plaintiff for collecting the payment totaling US $ 8,19,199.35 from its Indian clients. The respondent/plaintiff in turn forwarded those documents to the appellant/defendant on the condition of releasing them to the Indian clients of its constituent against payment. The appellant/defendant did not receive payment from the clients of the respondent and hence did not release the documents to them.

       On the appellant Bank agreeing to accept Bills of Exchange (Drafts) payable after 170 days, the respondent sent four Bills of Exchange, all dated 9th September, 1998 in favour of the appellant Bank for an amount of US $ 8,19,198.75. Again on 21st September, 1998, the respondent sent another set of documents together with Bills of Exchange to the appellant Bank for the amount of US $ 11,12,428.54 for collection from the Indian clients of constituent of the respondent. The collection tenor was specified as 170 days after the date of Draft (Bill of Exchange). The respondent instructed the appellant Bank to deposit the payment against Bills of Exchange totaling US $ 19,31,627.89 into their New York Correspondent Bank viz., Bankers Trust Company on the due date of 27th February, 1999.

       The appellant Bank did not remit the amount even after the expiry of due date on the ground that the manner and mode in which the transactions took place was not in ordinary course of business and the acceptance given by its Kolkata Branch at Burra Bazar appears to be in total disregard to the prevailing procedure in Banks. It has also been informed to the respondent that the matter has been entrusted to the Central Bureau of Investigation (CBI).

       On 31st March, 2001 the respondent filed Summary Suit No. 1586 of 2001 before the High Court.

       The High Court fixed the liability on the appellant/defendant and made absolute the summons for judgment awarding interest @ 9.75% p.a. w.e.f. 27th February, 1999 i.e. the maturity date of Bills of Exchange, till realization of principal amount.

       Finding of the Court:

       Defendant is entitled to leave to defend Summons for Judgment.

       Result: Appeal allowed.