Once Defendant Demonstrates Triable Issue, No Overly Burdensome Deposit Can Be Imposed For Granting Leave To Defend: Bombay High Court
The Bombay High Court has held that once a defendant establishes a triable issue in a summary suit, he is entitled to unconditional leave to defend, and the Court cannot impose an onerous or excessive condition such as directing the deposit of a substantial part of the claim amount.Justice Prafulla S. Khubalkar was hearing a petition filed challenging the order of the Civil Judge, which...
The Bombay High Court has held that once a defendant establishes a triable issue in a summary suit, he is entitled to unconditional leave to defend, and the Court cannot impose an onerous or excessive condition such as directing the deposit of a substantial part of the claim amount.
Justice Prafulla S. Khubalkar was hearing a petition filed challenging the order of the Civil Judge, which had granted conditional leave to defend a summary suit filed by HDFC Ltd., on the condition that the petitioners deposit 50% of the claim amount. The petitioners contended that since the trial court had already found that triable issues existed, imposing a condition to deposit half of the claim was arbitrary and contrary to law.
The Court noted that the petitioners had availed a home loan from HDFC Ltd. for purchasing a house in a project developed by Sahara Prime City. The loan was sanctioned based on an indemnity bond executed by Sahara Prime City, and the amount was directly disbursed to the builder. However, the housing project collapsed, and the petitioners were deprived of possession of the property despite paying several EMIs.
The Court observed that Sahara Prime City was not joined as a party to the recovery suit, even though it executed the agreement of sale, which raised a legitimate and bona fide defence.
“… the agreement of sale was executed by the defendant with Sahara Prime City, which is not arrayed as a party defendant to the suit. In the instant case, in the absence of any sale deed being executed, this crucial issue needs adjudication. Therefore, it appears that this is an issue which is triable and raised by the defendant as a bona fide defence,” the Court observed.
The Court highlighted that the trial court has recorded a finding that the defendants in the summary suit have raised a triable issue. Thus, the only area of further consideration is the necessity of imposing any condition for granting leave to defend.
The Court observed that where the defendant raises a fair triable issue, unconditional leave to defend must ordinarily be granted. The Court emphasised that even when the defence raised by the defendant is not a positively good defence, he is ordinarily entitled to an unconditional leave to defend. It observed:
“An opportunity to leave to defend in a summary suit is a valuable right of the defendant. Once the defendant raises a triable issue of fact or of law, it becomes entitled to defend. As such, the Courts trying the summary suit are duty-bound to meticulously consider the genuineness of the defence and to ensure that a defendant raising a bona fide defence be granted the leave to defend.”
The Court remarked that even after granting leave to defend to the defendants, the plaintiff will be entitled to demonstrate the falsity of the defence, whereas the denial of leave to defend will result in very serious consequences for the defendant. Hence, the Court held that imposition of a condition while granting leave to defend should be based on rational criteria and the trial Court should tilt towards leniency instead of harshness by adopting a pragmatic approach.
Accordingly, the High Court set aside the impugned order to the extent it imposed the deposit condition and granted unconditional leave to defend the summary suit.
Case Title: Sanjay Mahadeoprasad Trivedi & Anr. v. Housing Development Finance Corporation Bank Ltd. [Writ Petition No. 4264 of 2021]