1985 Supreme(MP) 614

IN THE HIGH COURT OF MADHYA PRADESH
R. K. VIJAYWARGIYA, J.
Food Corporation of India - Appellant
Versus
Bank of Rajasthan - Respondent
C. R. No.40 of 1981 (I)
Decided on : 31-07-1985

Headnote:(1) Civil Procedure Code, 1908 – O. 37, R. 3 (5) – grant of unconditional leave to defend – when not justified – absolute guarantee given by bank against cash deposit – unconditional leave to defend not justified.

       (2) Civil PC, 1908 – O. 37, R. 3 (5) – unconditional leave to defend cannot be granted only on the ground that defendant is scheduled Bank.

        Short Note

       1. The contention of the learned counsel for the plaintiff, that the trial Court committed an error in granting unconditional leave to defend the suit is well founded.

       2. Held : The defendant furnished absolute guarantees undertaking to pay the amount of guarantees to the plaintiff Corporation on demand. The guarantees furnished by the Bank are in lieu of cash which means that the contractor are required to deposit the amount in cash but in lieu of cash the Corporation accepted the guarantees furnished by the Bank. The defendant is, therefore, liable to pay the amount of the guarantees furnished by it to the plaintiff. As the defendant failed to pay the amount, the plaintiff is required to file the present suit.

       3. The trial Court was, therefore, not justified in granting unconditional leave to defend the suit on the ground that the defendant is a scheduled Bank and is not an ordinary debtor. This ground is not germane to the grant of unconditional leave to defend the suit. Taking into consideration the defences raised by the defendant and the terms guarantees furnished by it I am of the opinion that leave to defend the suit should be granted on condition that the defendant deposits in the trial Court a sum of rupees five lacs. The defendant has furnished guarantees in the bum of Rs.6,76,500/ – The claim in the suit is valued at Rs. 8,42,442.50 p. which includes interest amounting to Rs. 1,65,942.50p. One of the issues on which leave bas been granted is whether the plaintiff has realised a sum of Rs 1,50,000/ – from the Bank of Baroda towards contracts involved in the wit and whether the liability of the defendant is reduced to that extent. After deducting the aforesaid amount of Rs. 1,50,000/ – the defendant is being required to deposit a sum of rupees five lacs in the trial Court as a condition for the grant of leave to defend the suit. The learned counsel for the defendant prayed for three months time to deposit the said amount in the trial Court. The prayer is allowed.

       Revision allowed.