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2005 DIGILAW 1152 (AP)

Scion Infotech v. Sannihita Chit Funds Pvt. Ltd.

2005-12-06

T.CH.SURYA RAO

body2005
O R D E R The instant revision petition is directed against the docket order dated 19.08.2005 passed by the learned Senior Civil Judge, Karimnagar in I.A.No.822 of 2005 in O.S.No.224 of 2004. 2. The revision petitioner is the first defendant in the suit. The first respond herein is the plaintiff who filed a suit against the revision petitioner and the respondents 2 to 4 for recovery of the chit fund amount in a sum of Rs.3,73,959/-. The suit was instituted invoking the provisions of Order 37 of the Code of Civil Procedure (for brevity ‘the Code’), namely, the summary procedure. After having come to know about the institution of the suit, the first defendant i.e. the revision petitioner appeared through his counsel before the Court below and filed I.A.No.822 of 2005 seeking leave of the Court to defend itself by filing a written statement. On that application, after having heard either side, under the impugned docket order, the Court below granted leave to the first defendant but on the condition of depositing an amount of Rs.30,000/- to the credit of the suit and also to file the written statement on or before 15.09.2005. Insofar as the second condition is concerned, the revision petitioner has no grievance. It is now assailing the first condition whereunder it was directed to deposit a sum of Rs.30,000/- to the credit of the suit. 3. The learned counsel appearing for the revision petitioner represents that it is a matte where leave shall not be refused. More so, it shall not be a conditional order. It is his further representation that here is a case where, according to the first defendant, the claim of the plaintiff is time barred having been filed beyond the period of three years after the last payment by making false entries in the statement of accounts by the plaintiff company which are self-serving. 4. In view of the said contentions, the short question that falls for determination in this revision petition is as to whether the Court can grant leave upon a condition of depositing a part of the suit claim and whether that condition is onerous? 5. Rule 3 of Order 37 of the Code is the provision appropriate to be considered by this Court. 5. Rule 3 of Order 37 of the Code is the provision appropriate to be considered by this Court. Sub-rule (5) thereof is germane in the context and it reads as under: “(5) The defendant may, at any time within ten days from the service of suit summons for Judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit. and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just: Provided that leave to defend shall not 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: Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.” 6. It is obvious from a mere glance at the said provision which is further qualified by two provisos incorporated thereunder that leave to defend shall not 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 is frivolous and vexatious. While sub-rule (5) obligates the defendant to seek the leave of the Court to defend by filing an affidavit disclosing such facts as may be deemed sufficient to entitle him to defend upon which the Court may grant leave unconditionally or upon such terms as may appear to the Court to be just. As discussed hereinabove, the provisos incorporated thereunder control the leave which make the position quite obvious that leave shall not be refused except where the Court finds that the facts disclosed or emanating from the record do not indicate that the defendant has a substantial defence or where the defence put up by him is frivolous or vexatious. The first proviso is, therefore, couched in a negative language thereby putting more emphasis on the two conditions set forth inter alia therein. The first proviso is, therefore, couched in a negative language thereby putting more emphasis on the two conditions set forth inter alia therein. The Court must, therefore, find that there is no substantial defence to be set up by the defendant as disclosed in the affidavit or otherwise or that the defence sought to be set up is frivolous or vexatious. If for any reason, the Court is not able to reach either of those two conclusions, it cannot impose the terms as may appear to the Court to be just. In all other cases, the Court, therefore, shall have to grant leave unconditionally. That appears to be the essence from a combined reading of sub-rule (5) of Rule 3 of Order 37 together with the provisos incorporated thereunder. Ignoring this legal position, the Court below passed the impugned order directing the first defendant to deposit an amount of Rs.30,000/- to the credit of the suit without reaching the necessary conclusion that the facts do not disclose any substantial defence to be offered by the first defendant or that the defence sought to be set up is frivolous or vexatious. In that view of the matter, the impugned docket order is not correct, legal and proper. 7. Sri P.V.Sanjay Kumar, learned counsel appearing for the- revision petitioner, seeks to place reliance upon the Judgment of the Apex Court in MECHALEC ENGINEERS & MANUFACTURERS v. M/S.BASIC EQUIPMET CORPORATION(1). Interpreting the provisions of Order 37, Rule 3 of the Code, the Apex Court laid down certain indicia to be followed while granting or refusing to grant leave to the defendant to defend the suit. It may be mentioned here that the provisions of Order 37, Rule 3 of the Code, which were unamended by then, had fallen for consideration before the Apex Court. The amended provisions, after 1976 amendment, seemed to be more liberal than in existence prior to the amendment. One of the indicia laid down therein is that the defendant when raises a triable issue indicating that he has a fair or bona fide or reasonable defence although such defence is not a positively good defence, the plaintiff is not entitled to sign Judgment and the defendant is entitled to unconditional leave to defend. 8. One of the indicia laid down therein is that the defendant when raises a triable issue indicating that he has a fair or bona fide or reasonable defence although such defence is not a positively good defence, the plaintiff is not entitled to sign Judgment and the defendant is entitled to unconditional leave to defend. 8. Now, as discussed hereinabove, in view of the first proviso incorporated under sub-rule (5) of Rule 3 of Order 37 of the Code unless the Court finds one or the other of the two conditions incorporated therein, the Court shall not refuse to grant leave. In view of this clear legal position, I am of the considered view that the impugned docket order to the extent now being assailed is liable to be set aside. 9. For the above reasons, the Civil Revision Petition is allowed at the threshold and the impugned docket order to the extent of imposing the first condition that the first defendant/revision petitioner shall to deposit a sum of Rs.30.000/- to the credit of the suit is hereby set aside. The first defendant shall file his written statement on or before 30.12.2005 having due regard to the second condition set forth inter alia in the impugned docket order has expired during the pendency of the instant revision petition. The Court below, after the first defendant files its written statement on or before the time now set forth, shall make every endeavour to dispose of the suit as expeditiously as possible, preferably within a period of three months from the date of receipt of a copy of this order. --X—