Defendants are entitled to leave to defend if they raise a substantial defence, and the court must consider the principles outlined in AIR SC 577 when granting leave to defend.

1. The plaintiff Ghulam Mohd Wani who is respondent here filed a suit for recovery of Rupees three lac and thirty-six thousand plus interest thereon under order 37 CPC against the defendants who are petitioner herein in the court of Additional District Judge, Srinagar. In the suit plaintiff urged that he is a business man and deals in Kashmiri arts and runs his business at Shorgari Mohalla Nawab Bazar, Srinagar. The defendant No. 2 who is respondent No. 2 herein is the proprietor of the firm respondent No. 1. As per the case of the plaintiff the defendant No. 2 approached the plaintiff for supply of Chain Stick on the promise that he would make a payment after a month or two from the time he would lift the goods. The plaintiff supplied the goods and in turn the defendants issued two cheques dated 19th of April 1996 and 20th of May 1996. After the lift of goods from Srinagar both the cheques could not be encashed due to shortage of funds. The plaintiff therefore approached the defendants who in turn assured him that payment would be made in near future. But the promise was not kept. The plaintiff then issued a notice to the defendants. When the payment was not made despite notice, the defendants instituted the suit under the provisions contained in order 37. After the filing of the suit the summons were issued to the defendants in the prescribed form. The defendants entered their appearance and applied for leave to defend the suit inter alia on the ground that the cheques were without consideration and therefore it is on their instructions the payment thereon was stopped. The plaintiff contested the application of the defendants mainly on two grounds.

2. Firstly, that defendants had not entered their appearance in accordance with law as no notice of appearance was issued to the plaintiffs pleader or the plaintiffs, therefore there being no legal appearance, leave to defend could not be granted to the defendants to defend the suit. Secondly, that the defence put up was not substantial. Ld. trial court has declined by its order dated 20th of August 2001 impugned in this appeal by holding as follows:

"That the issuance of cheques has not been disputed but what has been disputed is that the cheques have been issued without consideration as the goods were to be supplied by the plaintiff but the same were not supplied to the defendants. However, this defence although raised vehemently by the defendants does not seem to be based on facts as there is nothing on record to show that the goods were not supplied by the plaintiffs. It is a matter of common knowledge that in such transactions the suppliers are made to supply the goods first and then payment is made either through cheques or otherwise. Merely saying that the cheques were issued without consideration does not suffice because then fraud on the part of the plaintiff should have been pleaded which is not the case. It has been said that the cheques were issued but the goods were not supplied. The defence raised by the defendants is not tenable one. In absence of any credible evidence to the effect that the cheques were issued without consideration or fraud has been played with the defendants, thus making them to issue the cheques and the goods were not later on supplied. The objection of the plaintiff to the petition for leave to defend that appearance is not strictly in accordance with 0.37 R.3(3) is born out from the record as the petitioner for leave to defend also mentions that the appearance has been effected as envisaged under O. 37, R. 2(3) of CPC. The law laid down in AIR. 1998 SC 2313, by the Apex Court is not applicable to the facts of the present case because as in that case fraud had been alleged in the entire transaction. But in the present case the element of fraud has not been even pleaded by the defendants. I was inclined to grant the petition even if there would have been moon-shine defence, but in absence of even that ends of justice would be defeated if the leave

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