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2002 DIGILAW 472 (AP)

M. v. Proud VS Durga Engineers, Hyderabad

2002-03-26

body2002
DUBAGUNTA SUBRAHMANYAM, J. ( 1 ) THIS revision petition is filed against the order dated 20-10-2001 in I. A. No. 915 of 2001 in O. S. No. 837 of 2001 on the file of v Senior Civil Judge, City Civil Court, hyderabad. ( 2 ) NECESSARY facts for the disposal of this revision petition are as follows: the respondent-plaintiff filed a summary suit under Order XXXVII C. P. C. , against the revision petitioner for recovery of Rs. 5,40,000-00. According to the plaintiff on 15-12-2000 the defendant borrowed rs. 5,00,000-00 as a hand loan from the plaintiff. The revision petitioner filed a petition under Order XXXVII Rule 3 (5) c. P. C, in I. A. No. 915 of 2001 seeking the leave of the Court to defend the suit. He denied having borrowed Rs. 5,00,000-00 or any other sum as a hand loan from the plaintiff. The petition was resisted by the plaintiff. The trial Court passed the impugned order on 20-10-2001 dismissing the petition filed by the revision petitioner. Aggrieved by that order, this revision petition is filed. ( 3 ) THE Supreme Court of India in Mechalec Engineers and Manufacturers v, Basic equipment Corporation, approved the principles applicable to the cases covered by order XXXVII C. P. C. , in the form of following propositions stated by the calcutta High Court in Smt. Kiranmoyee dassi v. Dr. }. Chatterjee (1945) 49 Cal WN. 246 ). " (a) 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 judgment and the defendant is entitled to unconditional leave to defend. (b) If the defendant raises 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. (b) If the defendant raises 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. (c) 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 make it clear that he had a defence, yet, shows such a state 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. (d) 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. (e) 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. " ( 4 ) IN a later decision in M/s. Sunil Enterprises v. SBI Commercial and international Bank Ltd. , the Supreme Court reiterated the above principles of law to be followed in a suit filed under Order XXXVII c. P. C. ( 5 ) THERE is no dispute regarding the propositions of law stated supra. The learned counsel for the respondent-plaintiff relied upon a judgment of this Court and the said decision will be considered at a later stage. ( 6 ) KEEPING in view the principles of law laid down by the Supreme Court, this Court has to decide whether the impugned order is to be affirmed or set aside. The learned counsel for the respondent-plaintiff relied upon a judgment of this Court and the said decision will be considered at a later stage. ( 6 ) KEEPING in view the principles of law laid down by the Supreme Court, this Court has to decide whether the impugned order is to be affirmed or set aside. A reading of the proviso to Order XXXVII Rule 3 (5) c. P. C, makes it clear that leave to defend cannot be refused unless 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. In the impugned order, the trial Court did not say that the defence put forward by the revision petitioner is frivolous or vexatious. However, the trial Court stated that the defendant failed to prove that he has substantial defence to raise in the suit. It is not for the defendant to prove that the defence raised by him is a substantial defence. On the other hand, if the Court finds that the defence raised is not substantial defence, then only the trial Court is empowered under the said proviso to refuse the leave to the defendant to defend the suit. If the plaintiff wants the Court to refuse leave to defend, it is for the plaintiff to satisfy this Court that the defence raised by the defendant is not a substantial defence. ( 7 ) AS already noticed, the suit is filed on the plea that defendant borrowed as a hand loan a sum of Rs. 5,00,000-00 and then failed to repay the said amount. The defence is that the defendant has not borrowed any amount. Under no stretch of imagination it cannot be said that the said plea is not a substantial defence in the suit filed by the plaintiff. ( 8 ) ACCORDING to the averments in the plaint, immediately after borrowing the amount, the defendant issued a cheque in favour of the plaintiff, who presented that cheque later before the Bank for collection and the cheque was dishonoured by the bank on the ground that there are no funds in the bank account of the defendant. ( 8 ) ACCORDING to the averments in the plaint, immediately after borrowing the amount, the defendant issued a cheque in favour of the plaintiff, who presented that cheque later before the Bank for collection and the cheque was dishonoured by the bank on the ground that there are no funds in the bank account of the defendant. It appears that a criminal case is launched by the plaintiff under Section 138, Negotiable instruments Act and the said criminal case is said to be pending in the Criminal Court. In the present revision petition this Court is not concerned about the pendency of the criminal case under Section 138, Negotiable instruments Act. It is the contention of the learned Counsel for the respondent that as cheque had been issued by the defendant admittedly, it shows that the defence set up by the defendant is false and on the other hand it amounts that the defendant had admitted the loan transaction in question. In the decision of the Supreme Court in mechalec Engineers and Manufacturers case (1 supra), it is stated that in a petition seeking leave to defend the suit, the falsity of the defence put forward by the defendant cannot be taken into consideration. Further, in the present case, there is one important circumstance. Before the suit was filed, there was an exchange of notices between the parties concerned. In the notice issued by the plaintiff, it is stated that the defendant agreed to repay the same amount within a period of three months. If that is the case, the defendant would not have issued any cheque on the same day for repayment of the amount allegedly borrowed by him. Under those circumstances, if any cheque had been issued in all probability, it would have been a post-dated cheque and not a cheque on the date of borrowing the amount itself. The defendant had come forward with his own version under what circumstances he issued a cheque in favour of the plaintiff. Even according to the averments in the plaint, the plaintiff and defendant are close friends. At this stage, it is not necessary for this Court or for the trial court to consider under what circumstances the cheque in question was issued by the defendant. Even according to the averments in the plaint, the plaintiff and defendant are close friends. At this stage, it is not necessary for this Court or for the trial court to consider under what circumstances the cheque in question was issued by the defendant. It is made clear that the trial court has to dispose of the suit on merits unmindful of any of the observations made either in the impugned order or in this order. It has to render Judgment only on the basis of evidence adduced by both the parties in the course of trial. ( 9 ) THE learned Counsel for the respondent relied upon a judgment of this court in Ravi Traders v. M/s. Yours only, hyderabad. In this decision it is held that when a discretionary order is passed by the court on an application filed under sub- rule (5) of Rule 3 of Order 37 C. P. C. , such an order shall not be interfered with unless and until the circumstances warrant interference with the order on an application filed under section 115 C. P. C. , by the High Court, where in the opinion of the High Court, mat the order passed if allowed to be sustained, there will be miscarriage of justice. In the present case, I am satisfied that if the impugned order is confirmed by this Court, it will result in miscarriage of justice and it is a fit case in which in a revision under section 115 C. P. C. , this Court has to interfere and set aside the order in question. ( 10 ) THE learned Counsel for the respondent further contended that if this court is inclined to grant leave to the defendant to defend the suit, some conditions like furnishing bank guarantee by the defendant may be ordered. In the decision of the Supreme Court in Mechalec engineers and Manufacturers case (1 supra), the supreme Court held that if the Court feels that the defence set up is illusory or sham or practically moonshine, then only the Court may in its discretion impose conditions as to the time or mode of time but not as to payment into Court or furnishing security. I am, therefore, satisfied that no order regarding furnishing security be passed in the present circumstances of the case. I am, therefore, satisfied that no order regarding furnishing security be passed in the present circumstances of the case. ( 11 ) THE learned Counsel for the revision petitioner contended that the plaint filed is not in accordance with the provisions contained in Order XXXVII C. P. C. He also contended that there is no averment in the plaint to satisfy the condition laid down in order XXXVII Rule 2 (b) C. P. C. In my considered opinion these contentions are not germane for disposal of a petition filed by the defendant seeking leave of the Court to defend the suit. For all the reasons stated above, the impugned order is liable to be set aside. ( 12 ) IN the result, the revision petition is allowed. The order in I. A. No. 915 of 2001 is set aside. The said petition is allowed without costs. The defendant is granted unconditional leave to defend the suit. The defendant shall file the written statement in the trial Court within four weeks from the date of this order. No costs.