The discretion to direct the defendants to furnish security should be exercised judiciously based on circumstances indicating that the claim may be defeated or the defendants may abscond to satisfy the decree.

1. Invoking the jurisdiction under Article 227 of the Constitution of India and challenging the order dated 1.12.2017 passed by the Eighth Additional District Judge, Indore in Civil Suit No. 10B/2016 directing the defendants/petitioners to furnish the security to the tune of Rs.1,16,00,000/- for satisfaction of the Court, this petition has been preferred.

2. The facts leading to file the present case are, plaintiff/respondent filed a suit under Order XXXVII Rule 1 & 2 of the Code of Civil Procedure (hereinafter referred to as the CPC) seeking recovery to the tune of Rs.1,16,00,000/- against the defendants/petitioners. The said suit was based upon business transactions showing sale and purchase of certain goods of the worth Rs.3,13,30,471/- to which payments of Rs.2,70,19,461/- have been made in the year 2011-12. In the year 2012-13, the purchase of goods worth Rs.6,65,92,473/- were made to which payments of Rs.6,63,27,755/- were made. For the year 2013-14, the purchase of goods worth Rs.33,13,250/- were made to which payments of Rs.31,04,999/- were made. It is not in dispute that the summons under Order XXXVII Rule 2 in Form No. 4 in Appendix B was served on the defendants.

3. On service of the summons to appear, the defendants tendered their appearance and applied to the Court for leave to defend. The trial Court vide order dated 28.8.2017 granted unconditional leave under Order XXXVII Rule 3(5) of the CPC. On grant of such leave, the defendants have filed the written statement on 6.10.2017.

4. In the meantime, the plaintiff filed an application under Order XXXVII Rule 3(6)(b) of the CPC asking security equivalent to the value of the suit. Reply to the said application was filed by the defendants denying all the averments contending that after granting unconditional leave in the facts of the case, there is no occasion to the Court to pass the order asking security, however, contested the application filed by the plaintiff. The trial Court by the order impugned directed to furnish the security relying upon a judgment of this Court in Devendra Kumar Jain Versus G.N. Goyal reported in 2006(1) MPWN 75, however, this petition is filed.

5. Learned counsel for the petitioners/defendants submits that looking to the scheme of Order XXXVII, after grant of unconditional leave, without any change of the situation, order directing to furnish security is not tenable and the suit ought to be decided as per Order XXXVII Rule 7 of the CPC. It is urged that the present suit is not based on bill of exchange, Hundies or Promissory Note or a suit filed by the plaintiff to recover a debt or liquidated demand of money payable by the defendants based on a written contract or a guarantee as specified under Order XXXVII Rule 1(2). In absence thereto the looking to the facts and nature of suit under the provision of Order XXXVII Rule 3(6) (b) direction to furnish security is not warranted. In support of the said contention reliance has been placed on the judgment of Delhi High Court in M/s A.R. Electronic Private Limited Versus M/s R.K. Graphics Private Limited reported in ILR 2002 (I) Delhi 659 to contend that invoice giving description of the goods on which no terms and conditions of the contract are printed over, would not constitute a contract, therefore, the suit based on such invoice, order directing security is not tenable in law. It is further contended that as per Order XXXVII Rule 3(6)(b) of the CPC after granting leave to defend, it is the discretion of the Court or Judge to direct to furnish the security. It does not postulate that as and when an application has been filed asking security, the Court ought to pass an order to furnish the security. In such circumstances, the discretion as exercised by the Court is arbitrary and non judicious merely relying upon the case of Devendra Kumar Jain (supra), though the facts of the said case are not applicable to the facts of the present case, however, the order impugned passed by the trial Court