Existence Of Commercial Relations Between Parties In Summary Suit By Itself Not A Ground For Imposing Condition To Grant Leave To Defend: SC [Read Judgment]

The Supreme Court has held that existence of commercial relations between the parties in a summary suit by itself is not a ground for imposing condition to grant leave to defend. In this case (Sudin Dilip Talaulikar vs. Polycap Wires Pvt. Ltd.), a summary suit was instituted by the plaintiff for recovery of outstanding dues with regard to goods supplied to the defendant. The defendant in its defence to the summons for judgment relied upon the institution of the prosecution under the Negotiable Instruments Act prior to the suit and its unconditional withdrawal to contend that there were in fact no dues payable. The Trial Court recorded the satisfaction of a triable defence but granted conditional leave to defend with an unreasoned finding based on the existence of a commercial relationship between the parties. The High Court affirmed this order, observing that the defendant had not disputed a commercial relationship and purchase of goods from the respondent, and in absence of any material to show sufficient payment, the order for conditional leave to defend required no interference. In the appeal filed by defendant, the bench comprising Justice Ashok Bhushan and Justice Navin Sinha explained the Order XXXVII, Rule 3 of the Code dealing with the procedure for summary suit. It said: "In a summary suit, if the defendant discloses such facts of a prima facie fair and reasonable defence, the court may grant unconditional leave to defend. This naturally concerns the subjective satisfaction of the court on basis of the materials that may be placed before it. However, in an appropriate case, if the court is satisfied of a plausible or probable defence and which defence is not considered a sham or moonshine, but yet leaving certain doubts in the mind of the court, it may grant conditional leave to defend. In contradistinction to the earlier subjective satisfaction of the court, in the latter case there is an element of discretion vested in the court. Such discretion is not absolute but has to be judiciously exercised tempered with what is just and proper in the facts of a particular case. The ultimate object of a summary suit is expeditious disposal of a commercial dispute. The discretion vested in the court therefore requires it to maintain the delicate balance between the respective rights and contentions by not passing an order which may ultimately end up impeding the speedy resolution of the dispute." The Court then reiterated the principles laid down in IDBI Trusteeship Services Limited vs. Hubtown Limited, in this regard "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. 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. 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. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith. If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court." Taking note of the factual aspects and defence taken in the summary suit, the bench said: "The defence raised by the appellant in the aforesaid background was certainly not a...

Existence Of Commercial Relations Between Parties In Summary Suit By Itself Not A Ground For Imposing Condition To Grant Leave To Defend: SC [Read Judgment]

Ashok Kini

"In a summary suit, if the defendant discloses such facts of a prima facie fair and reasonable defence, the court may grant unconditional leave to defend."

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