Present: GARVIN A.C.J. and LYALL GRANT J.

RAMANATHAN v. FERNANDO et al.

72 and 73-D.C. (Inty.) Colombo, 35,505

Liquid claim-No valid defence disclosed-Right of defendant to appear and defend-Deposit of claim-Civil Procedure Code, Ch. L111.

In an action upon a liquid claim brought under Chapter LIII. of the Civil Procedure Code, the defendant has the right to appear and defend upon depositing in Court the amount in claim, even where the Court finds that no valid defence is disclosed.

Per LYALL GRANT J.-Where a Judge rejects the affidavit of the defendant, his order ought to fix a time within which the amount sued for should be deposited in Court and to state that, unless the money is deposited within the time so fixed, leave to appear is refused.

APPEAL from an order of the District Judge of Colombo. This was an application for leave to appear and defend in an action on a promissory note. At the time of the making and the endorsement of the promisory note sued upon, the defendants-appellants were partners. Their case was that the promissory note was endorsed and delivered to the plaintiff in pursuance of an agreement between the plaintiff and the Auto Carriers Company, whereby the former advanced money to them and received in exchange promissory notes granted to the firm by purchasers of motor cars on the instalment system. After some time it was agreed that the Company should liquidate the debt by monthly payments, the plaintiff undertaking to return the promissory notes to the value of the payments. In accordance with this agreement the amount payable on the note sued upon had been paid to the plaintiff, who in breach of the undertaking had failed to return the promissory note. The learned District Judge was not satisfied that the allegations were a defence to the action and refused leave to defend.

F. H. B. Koch, for second defendant, appellant.-The District Judge should have allowed us leave to defend.

Sections 704 and 706 of the Civil Procedure Code contain the provisions governing the granting of leave to defend, and the English law has no applicability. (Moncrieff J. in Annamaly Chetty v. Ali Marikar.[1 2 Browne 267.] ) The fact that the affidavit is held not to be bona fide and may subsequently be proved to be false might lead to a prosecution for perjury (Bonser C.J. in Meyappa Chetty v. Usoof [2 5 N. L. R. 265.] ), but a defendant is entitled to leave to defend on giving security, or, at the most, on depositing in Court the amount claimed. Section 706 invests no discretion in the Court to refuse leave if the money is brought into Court.

Leave was allowed in Silva v. Sudirs,[1 7 C. W. R. 186.] where the defendant did Ramanathan not attempt to excuse his delay. Our position is stronger here as our delay has been explained. The money has now been deposited  and no prejudice could be caused to the plaintiff by our being allowed to file answer.

H. H. Bartholomeusz, for third defendant, appellant.

F. A. Hayley, K.C. (with Nadarajah), for the plaintiff, respondent.-Sections 704 and 706 of our Civil Procedure Code are taken from sections 532 and 533 of the Indian Code of 1882, which in turn were adapted from the English Act (18 & 19 Vict. c. 67), which related solely to Bills of Exchange. The object of the Legislature is to prevent frivolous defences. In England under Order 14, leave is not allowed even where money is brought into Court, if the defence is held not to be a bona fide one. (Agra and Masterman's Bank v.
Leighton.[2 (1866) L. R. 2 Ex. 56.] ).

Section 704 deals with bad defences.

Section 706 deals primarily with good defences.

Under section 706, even where a good defence is disclosed the Court can demand security. So the Court has the right to refuse unconditionally where there is no defence.

Simon v. Sheriff [3 I. L. R. 10 Mad. 368.] was a case under sections 532 and 533 of the old Indian Code, where leave was refused outrig