Facts-
A cheque for Rs 6000 given by the appellant to plaintiff was dishonoured by the Bank. A summary suit under Order XXXVII filed by the plaintiff. Defendant applied for leave to defend. Trial Judge permitted to defend but with condition of giving security. Defendant applied for review but failed. Under Article 227 of the Constitution he applied to Punjab HC to review but also failed. Then under Article 136 of the Constitution, special leave petition granted by the Supreme Court to review.
Contention of Defendant
- Discretion conferred by Rule 3(2) is unfettered and no appeal can lie against it unless there is a grave miscarriage of justice or violation of law.
- The cheque was given only as a collateral security and the goods were to be paid by cash and other cheques.
Issue
- Whether the discretion placed by Rule 3(2) of Order XXXVII, CPC is unfettered?
- Whether the decision of earlier Court of granting leave on condition was right or not?
Ratio Decidendi
- Law of Procedure should be exercised along judicial lines in consonance with the principle of natural justice.
- Jacob v. Booth- If the issue is triable, leave may be granted unconditionally otherwise it may be illusory.
- Object behind discretion is to prevent delay.
- A clear defence does not become vague merely by not bringing the evidence on file at the time of putting the defence.
- Stage of proof can come only after the defendant has been allowed to enter an appearance and defend the Suit.
- HC was in error in thinking that even on a valid defence, conditions can be imposed.
- Conditions can be imposed by the Court when it is of opinion that the defence is not bonafide but it can't refuse leave to defend.
- Conditions are only to ensure speedy trial.
Decision
- Allowed appeal
- set aside the orders of the earlier Court.
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