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M.N. Clubwala v. Fida Hussain Saheb, 1964

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M.N. Clubwala v. Fida Hussain Saheb, (1964) 6 SCR 642, 651 This case interpretation/case summary is written by Ms. Swati Sharma a student at the Faculty of Law (Delhi University). If you also want to publish your articles or case interpretations/summaries, send your work to  niyamskanoon09@gmail.com . Case Details PETITIONER:  MRS. M. N. CLUBWALA AND ANR. Vs. RESPONDENT: FIDA HUSSAIN SAHEB AND ORS. DATE OF JUDGMENT: 03/02/1964 BENCH: MUDHOLKAR, J.R. SUBBARAO, K. CITATION: 1965 AIR 610 1964 SCR (6) 642 Introduction   The case of M.N. Clubwala v. Fida Hussain Saheb (1964) under the Delhi Rent Control Act is a landmark judgment that clarifies the distinction between a lease and a license and the jurisdiction of the Rent Controller. The primary issue in this case was whether the agreements between the landlord (M.N. Clubwala) and the shopkeepers (Fida Hussain Saheb) created a lease or a license.  Facts of the Case M.N. Clubwala (Landlord) used his building as market by
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M/s. Mechalec Engrs. & Manufacturers v. M/s. Basic Equipment Corn. AIR 1977 SC 577

Facts

  • The plaintiff-respondent instituted a summary suit under Order XXXVII of the CPC for recovery of an amount, given by the defendant-appellant in the form of a cheque which was dishonoured by the State Bank of India, with interest. 
  • The cheque was given by the appellant as the price for procuring equipment. 
  • The defendant-appellant applied for leave to defend under Rule 2, Order XXXVII of the Code which had been granted unconditionally by the Trial Court. 
  • On a revision application by the plaintiff-respondent under S.115 of the Code, the HC interfered and held that although a triable issue arose, the defences were not bonafide. Hence the defendant-appellant would be allowed to defend only after paying the said amount to the court as security within 2 months.
  • Against the order of HC, this appeal has been granted by special leave.

Issue 

  1. Whether the HC can interfere under S.115 of the Code, with the discretionary power of Additional District Judge in granting unconditional leave to defend.

Ratio Decidendi 

  1. Jacob v. Booth Distillery:- Whenever a defence raises a triable issue, leave must be given unconditionally.
  2. Santosh v. Mool Singh:- Conditions can be imposed by the Court when it is of the opinion that the defence is not bonafide but it can't refuse to leave to defend.
  3. The HC can interfere under S.115, CPC  only when the subordinate Court-
    1. exercised a jurisdiction not vested in it by law, or
    2. failed to exercise a jurisdiction so vested, or
    3. acted illegally or with material irregularity
  4. The HC under S.115, CPC can't vary or reverse any order except-
    1. where the order made by the HC finally disposes the suit or proceedings.
    2. where an appeal lies against the order.
  5. No opinion should be formed on a matter before the evidence is placed by the party.

Decision

  1. Allowed appeal.
  2. The judgement of HC was an error and unable to find a ground of interference covered by S.115, CPC.
  3. Set aside the order and judgement of the HC and restored that of the trial Court.

Other Observation-

Justice Das, in the case of Smt. K Dassi v. Dr. J Chatterjee stated the principles applicable to cases covered by Order 37, CPC:- 
  1. Unconditional leave to defend:- If the defendant- 
    1. has a good defence to the claim on its merits, or
    2. raises a triable issue with a fair or bonafide or reasonable defence but not a positively good defence.  
  2. Conditional defence except security to Court:-
    1. If the defendant discloses such facts that may be deemed sufficient to entitle him to defend although the affidavit doesn't make it clear positively that he had a defence.
  3. Defence on security to the Court:- 
    1. If the defendant has no defence or the defence is illusory or sham or practically moonshine.
  4. No leave to defend:-
    1. If no defence or illusory or sham or practically moonshine defence.

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