2023 Supreme(MP) 843

IN THE HIGH COURT OF MADHYA PRADESH
SUBODH ABHYANKAR, J.
Kamal Maithil – Appellant
vs.
Ajay Sharma – Respondent
Misc. Petition No. 6328 of 2022
Decided on : 15-03-2023

Headnote:

Article 227 - Summary Suit - Order 37, Rules 1 and 2 of CPC, Order 38, Rules 1 and 2 of CPC, Order 9, Rule 7 of CPC, Section 151 of CPC - 15.1. In Defiance Knitting Industries (P) Ltd. vs. Jay Arts, (2006) 8 SCC 25, this Court, after setting out the amended Order 37 and after referring to Mechelec case, laid down the following principles : (Jay Arts case, SCC p.31, para 13) “13. While giving leave to defend the suit the Court shall observe the following principles : (a) If the Court is of the opinion that the case raises a triable issue then leave to defend should ordinarily be granted unconditionally. See Milkhiram (India) (P) Ltd. vs. Chamanlal Bros., AIR 1965 SC 1698 : 68 Bom LR 36. The question whether the defence raises a triable issue or not has to be ascertained by the Court from the pleadings before it and the affidavits of parties. (b) If the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious it may refuse leave to defend altogether. Kiranmoyee Dassi vs. Dr. J. Chatterjee, AIR 1949 Cal 479 : 49 CWN 246 (noted and approved in Mechelec case. (c) In cases where the Court entertains a genuine doubt on the question as to whether the defence is genuine or sham or whether it raises a triable issue or not, the Court may impose conditions in granting leave to defend. 15.2. xxxxxxxxxxxxxxxxxxx 16. xxxxxxxxxxxxxxxxxxx 17. xxxxxxxxxxxxxxxxxxx 17.1 If the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit; 17.2 If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend; xxxxxxxxxxxxxxxxxxx 17.6. xxxxxxxxxxxxxxx.” (emphasis supplied) Similarly in the case of State Bank of Hyderabad (supra) the Supreme Court has held as under :— “15. As regards the entitlement of a defendant to the grant of leave to defend, the law is well settled long back in the year 1949 in Kiranmoyee Dassi vs. Dr. J. Chatterjee, in the form of the following propositions : (SCC OnLine Cal para 42) “(1) If the defendant satisfies the Court that he has a good defence to the claim on its merits, the plaintiff is not entitled to leave to sign the judgment and the defendant is entitled to unconditional leave to defend. (2) If the defendant raised a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. (3) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately made it clear that he has a defence, yet, shows such a stage of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s claim, the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security. (4) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. (5) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defence. xxxxxxxxxxxxxxxxxxxxx 20. We are in total agreement with the view taken by this Court in Raj Duggal vs. Ramesh Kumar Bansal, 1991 Suppl.(1) SCC 191 that leave to defend the Summons for Judgment shall always be granted to the defendant when there is a triable issue as to the meaning or correctness of the documents on which the claim is based or the alleged facts are of such nature which entitle the defendant to interrogate or cross-examine the plaintiff or his witnesses. 21. xxxxxxxxxxxxxxxxxxx 22. Apart from these, the substantial revelations of the defendant (appellant) in the affidavit coupled with the views expressed by the Division Bench of the High Court makes it clear that there are certain triable issues for adjudication and the defendant/appellant is entitled to defend the Suit. The appellate side of the High Court ought to have taken into consideration the factual matrix of the case before recording its finding. Taking into consideration the totality of the facts and circumstances of the case, we are of the opinion that the defendant/appellant has made out a prima facie case of triable issues in the Suit which needs to be adjudicated. Therefore, the defendant is entitled to grant of unconditional leave to defend the Suit. 23. xxxxxxxxxxxxxxxxxxxx 24. Accordingly, we allow the appeal by setting aside the judgment and decree passed by the Courts below. The appellant/defendant is granted unconditional leave to defend the Summons for Judgment in Summary Suit No. 1586 of 2001. The learned Single Judge of the High Court has to deal all the issues raised by the parties afresh and any observation made by this Court while dealing with this appeal should not be construed as an expression of this Court. There shall, however, be no order as to costs.” (emphasis supplied)

Fact of the Case:

The respondent/plaintiff filed a summary suit under Order 37, Rules 1 and 2 of CPC for recovery of Rs. 1,80,20,000/- from the petitioner/defendant. The defendant became ex-parte, filed an application under Order 9, Rule 7 of CPC for setting aside the ex-parte order and an application under section 151 of CPC for leave to defend. The trial Court allowed the application under Order 9, Rule 7 of CPC and the application for leave to defend, imposing a security of Rs. 2 crores.

Finding of the Court:

The trial Court held that the defendant is entitled to contest the matter and raised a triable issue. However, the imposition of the security of Rs. 2 crores was deemed uncalled for by the higher court.

Issues: Imposition of security for leave to defend under CPC, entitlement of defendant to grant of leave to defend, and principles of natural justice.

Ratio Decidendi: The defendant is entitled to unconditional leave to defend the suit if a triable issue is raised, and the defense is likely to succeed or fair and reasonable. The court may impose conditions in granting leave to defend if there is a genuine doubt on the genuineness of the defense.

Final Decision: The impugned orders imposing the security for leave to defend were set aside, and the defendant was allowed to defend the suit without furnishing any security.