IMPORTANT POINT
Leave to defend in summary suits should be granted unless the defense is clearly frivolous or lacks substance, ensuring fair opportunity for defendants.

ORDER :

1. This Civil Revision Petition is filed aggrieved by the order dated 12.09.2023 in I.A. No. 70 of 2022 in O.S. No. 2033 of 2022 passed by the I Additional Senior Civil Judge, Medchal-Malkajgiri District, at Malkajgiri.

2. Heard Sri. V.V.S. Satyanarayana, learned Counsel for the petitioner, Sri. C. Haripreeth, learned Counsel for the respondent and perused the record.

3. The petitioner herein is the defendant in the said suit filed by the respondent as plaintiff for recovering of money of Rs.25,20,000/-. The respondent herein had filed the underlying suit as a summary suit under Order 38 Rule 5 of CPC.

4. On receiving the summons in the suit, the petitioner herein had filed the underlying application under Order XXXVII Rule 3 (5) of the Code of Civil Procedure, 1908 (for short ‘the Code’) seeking leave to defend herself in the main suit. The Court below on hearing the parties had dismissed the application. Aggrieved by the same the present revision is filed.

5. Learned Counsel for the petitioner herein contends that the Trial Court had erroneously held that no substantial issues were raised, when the respondent herein had denied the existence of a legally enforceable debt.

6. Per contra, learned Counsel for the respondent herein contends that the underlying application was rightly dismissed as the petitioner herein had raised vexatious and baseless allegations as her defence. It is further contended that if this Court were to grant the petitioner an unconditional leave to defend, the respondent would suffer irreparable loss, as the petitioner herein not only intends to delay the proceedings in the underlying suit, but was also planning to alienate her house. It is contended that in the event of such sale taking place, it would be impossible for the respondent to recover the money owed to him.

7. I have taken note of their respective contentions.

8. Order XXXVII Rule 3 of the Code, provides the procedure to be followed for appearance of a defendant in a summary suit. Sub-Rule (5) therein provides that a defendant may apply for leave to defend within (10) days from the service of summons for judgment. The First Proviso to sub rule (5) of Rule 3 mandates that leave to defend cannot be refused except under two circumstances viz. (1) when no substantial defence is raised by the defendant and (2) when the defence raised is either frivolous or vexatious.

9. The Hon’ble Supreme Court in IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd. (2017) 1 SCC 568, by extensively discussing the law on rejecting leave to defend had laid out the following guiding principles:

“18. Accordingly, the principles stated in paragraph 8 of Mechelec's case will now stand superseded, given the amendment of Order XXXVII Rule 3, and the binding decision of four judges in Milkhiram's case, as follows:

(a) 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.

(b) 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.

(c) even if the Defendant raises triable issues, if a doubt is left with the trial judge about the Defendant's good faith, or the genuineness of the triable issues, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.

(d) if the Defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of tr