The main legal point established in the judgment is the requirement for the defendant to disclose facts indicating a substantial defence to be entitled to leave to defend under Order 37, CPC.

Arun Madan, J.-This first Appeal arises out of Judgment and decree dated 9-10-1992 of the learned Additional District Judge No. 3, Kota who decreed plaintiff Bank’s suit for recovery of a sum of Rs. 1,45,743/-under Order 37, CPC, against the defendants appellants.

2. The facts relevant for deciding this appeal, briefly stated, are that the plaintiff Bank instituted a civil suit under Order 37, Rule 2, CPC on 08-03-1990 for recovery of Rs. 1,45,743/-averring therein inter-alia that M/s. Sapna Sari Centre (Defendant No. 1) being a partnership firm with its partners namely Nandlal Jain and Arvind Kumar Jain (defendants Nos. 2 and 3 respectively) having its registered office situated at 17/285, Sati Chabutra, Maqbara Bazar, Kota and dealing with business of clothes and sarees, presented an application on 7-1-1986 with the Bank of Rajasthan Rampura Bazar Branch, Kota (plaintiff seeking to avail of cash credit hypothecation loan facility (for short “credit facility”) for a sum of Rs. one lac only so as to expand its business of sarees and, thereby opened an account under the said credit facility with the plaintiff Bank on 20-1-1986 and upon acceptance of the credit facility, the defendants executed some documents such as D. P. note, letter of waiver, letter of continuity, hypothecation agreement in favour of the plaintiff Bank and pursuant thereto, proceeded to avail of the said credit facility. As a collateral security, the Defendant No. 2 in his individual and personal capacity in lieu of credit facility executed equitable mortgage of his own House No. 17/285 situated at Sati Chabutra, Kota. The credit facility was allowed at the interest of 17.5% per annum at quarterly interval period. The defendants continued to avail of the credit facility and a sum of Rs. 1,17,719.50 p. (one lac seventeen thousand seven hundred nineteen rupees and fifty paisa only) was outstanding as on 11-1-1989 against them for repayment of the loan under the credit facility, and in acknowledgement thereto the defendants Nos. 2 and 3 executed receipt on 11-1-1989, when a new pronote, letter of waiver and continuity and hypothecation agreement were also executed by them in favour of the plaintiff Bank.

3. In the plaint, it has been the case of the plaintiff Bank that violating the terms and conditions of the hypothecation agreement and other documents executed by the defendants, they closed the business of clothes and sarees, inasmuch as they did not operate their account of the said credit facility without finalising the outstanding amount by payment thereof , despite persistent reminders to settle the outstanding amount due to the Bank which ultimately led to further accumulating it to Rs. 1,45,743/-as on 7-3-1990 with interest, while Defendant No. 2 as partner of the defendant Firm admittedly had already acknowledged the outstanding amount of Rs. 1,23,300/-as on 6-4-1989. Hence it was not open to the defendant appellant to plead to the contrary. A legal notice was also sent by the plaintiff to the defendant Bank on 26-12-1989 and having failed to elicit any reply, the suit was filed.

4. After service of the summons on or about 20-2-1991, the defendants moved an application under Order 37, Rule 3, CPC on 30th November, 1991 for leave to defend the suit averring Inter alia that the suit, itself , was time barred because plaintiff is said to have given loan under credit facility on 20-1-1986 to the defendants while the suit was filed on 8-3-1990; that neither the defendant acknowledged receipt of the loan on 6-4-1989 nor pronote on 11-1-1989 in favour of the plaintiff bank, inasmuch as even if there is any document, the same is false, vague and baseless being forged. However, the learned trial Court by the impugned Judgment while rejecting defendants’ application for leave to defend, decreed the plaintiffs suit for recovery of the amount, with costs and interest thereon @ 18 per annum, as indicated above. Hence, this appeal.

5. ShriS.K. Jain, learned