Conditional grant of leave to defend under CPC is permissible where the court finds insufficient justification for disputing claims, recognizing that unconditional leave is typically granted when triable issues exist.

JUDGMENT

1. The impugned order dated 20th July 2022, passed by the learned District Judge (Commercial Court) (the learned Commercial Court), in CS (Comm) 173/2021 (Vivek Aggarwal v. Mamta Desaur), subjects the grant of leave to defend, to the petitioner, under Order XXXVII Rule 3(5) of the Code of Civil Procedure, 1908 (CPC) to a condition of deposit of Rs.9,69,548/- with the court.

2. The aforesaid requirement of deposit, by the petitioner, of Rs.9,69,548/-, as a condition for grant of leave to defend the suit instituted by the respondent against the petitioner has been assailed by the petitioner, under Article 227 of the Constitution of India. The petitioner, in another words, submits that he is entitled to unconditional leave to defend.

3. A brief recital of facts would be appropriate.

4. The respondent, as the plaintiff in CS (Comm) 173/2021, claimed to have been involved in a business relationship with the petitioner since 2012. The plaint asserts that, against purchase orders placed by the petitioner on the respondent, the petitioner was making timely payments. However, against goods worth Rs.10,78,575/-, stated to have been supplied by the respondent to the petitioner between 2013 and 2015, the plaint alleged that the petitioner had paid only Rs.1,09,027/-, and that several invoices, raised by the respondent, still remained outstanding. The total amount due from the petitioner as on 21st January 2015 was alleged to be Rs.9,69,548/-.

5. A cheque, dated 24th November 2017, for the aforesaid amount of Rs.9,69,548/-, provided by the petitioner, it was alleged, was dishonoured, with the comment "account blocked".

6. In these circumstances, the respondent, by the aforesaid suit under Order XXXVII of the CPC, sought recovery, from the petitioner, of Rs.9,69,548/- along with interest, totalling to Rs.17,65,530/-.

7. The petitioner, in his application under Order XXXVII Rule 3(5) for leave to defend the suit, submitted that the cheque was tendered by way of a security payment, and was handed over blank to the respondent. The respondent was alleged to have misused the cheque and filled in the amount of Rs.9,69,548/-. It was also alleged that the suit was barred by time.

8. Further, the application for leave to defend alleged that the ledger account of the respondent contained several missing cash entries, which reflected amounts paid by the petitioner to the respondent in cash.

9. The essential case that Mr. Rajinder Pal Singh, learned Counsel for the petitioner, advances is that (i) the amounts due from the petitioner to the respondent were in fact paid by the petitioner in cash, (ii) these cash entries had been removed from the ledger of the respondent and the discrepancy in that regard had been acknowledged by the respondent as reflected in the impugned order dated 20th July 2022, (iii) the cheque of Rs.9,69,548/- on which the respondent had premised his suit, was actually tendered as a blank cheque by the petitioner to the respondent against certain security payment and was misused by the respondent and (iv) as all payments due from the petitioner to the respondent having already been made in cash, there was no occasion for the petitioner to fill in the said amount in the cheque.

10. The learned Commercial Court has, in the impugned order, noted the fact that the respondent conceded that some of the cash receipts were not reflected in the ledger accounts. On this ground, the learned Commercial Court has granted leave, to the petitioner, to defend the suit, but has conditioned the grant of leave with the requirement of payment, by the petitioner, into court, of Rs.9,69,548/- by way