In considering an application for leave to defend under Order XXXVII of the Code of Civil Procedure, the court must determine whether the defendant has a good defense to the claim on its merits, a triable issue, or sufficient facts to entitle him to defend.

Dalveer Bhandari, J.

( 1 ) THE plaintiff M/s. Agnall Oil Traders Limited is incorporated under the Companies Act,. 1956. The plaintiff is an authorised dealer for the sale of Maruti vehicles and its spare parts. The defendant is also engaged in the business of trading and sale of automobile parts and allied products. The defendant had purchased goods from the plaintiff. Admittedly, all the purchases were made on credit by the defendant. It is alleged that as per the market usage and custom the defendant had agreed to pay interest at the rate of 22 per cent perannum on the unpaid purchase. The defendant issued cheques against the purchases but most of these cheques were dishonoured. The plaintiff has placed about 26 cheques on record which were given to him by the defendant and on presentation, all these cheques were dishonoured. The defendant had reconciled his account of purchases made and confirmed the debit balance. It is further alleged in the plaint that the defendant vide letter dated 8. 8. 1992 regretted for his failure to keep his commitment regarding the repayments on account of his financial condition.

( 2 ). The defendant had issued cheques to the plaintiff to clear entire outstanding amount. The defendant had also signed a promisory note on 8. 8. 1992. In the said promisory note, the defendant agreed to pay Rs. 17,10,471. 43 with interest at the rate of 22%.

( 3 ). It is alleged in the plaint that on 18. 8. 1992, the plaintiff and the defendant had arrived at an agreement by which the liability was admitted by the defendant and he gave post dated cheques to the plaintiff.

( 4 ). It is also mentioned in the agreement that in case the amount is not paid then the plaintiff would beat liberty to take appropriate legal action. When the payment was in fact not received despite a number of requests and reminders, then the plaintiff sent a notice on 2. 1. 1993. Even after receiving the legal notice, the amount was not paid by the defendant. Again on 10. 1. 1993, an agreement was arrived at between the plaintiff and the defendant in which the defendant had again confirmed the transaction with the plaintiff. It is further alleged in the plaint that a sum of Rs. 19,48,948. 19 with interest at the rate of 22% perannum from the due date of payment under the respective bill was payable to the plaintiff. The defendant offered to pay the amount in instalments by issuing fresh cheques. It is also alleged that by way of security for the sums acknowledged as payable the defendant offered to give a bank guarantee of Rs. 2 lakhs. A fresh agreement dated 3. 2. 1993 was executed and the defendant issued post dated cheques.

( 5 ). It is also alleged that when the plaintiff could not obtain the outstanding amount from the defendant, despite requests and reminders, the plaintiff was compelled to file a suit under Order XXXVII of the Code of Civil Procedure against the defendant.

( 6 ). The suit was registered on 15. 9. 1993 The defendant had filed a leave to defend application (I. A. No. 138/94 ). In the application, it was stated that the suit under Order XXXVI I, Civil Procedure Code is not maintainable. It is not denied that the goods were purchased on credit by the defendant from the plaintiff. It is also mentioned that it was agreed to pay interest at the rate of only 18 per cent on the terms and conditions agreed and not on unpaid purchase, as alleged, in the affidavit. The defendant bad agreed that the letter dated 8. 8. 1992 was drafted and got typed by the plaintiff and the defendant had signed it alongwith the promisory note dated 1. 1. 1992 and the agreement dated 18. 8. 1992. The defendant had mentioned in the leave to defend application that the defendant had withdrawn the amount by the cheque and paid cash amount to the plaintiff and he had paid Rs. 5 lakhs by 14. 8. 1992, but no receipt was given to the defendant. It is further mentioned that the last instalment of the amount was paid on 16. 11. 1992. It is further submitted

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