Aapka Consultant Judgment Series- In this series, we are providing case analysis of Landmark Judgments of Hon’ble Supreme Court of India.
Milkhiram (India) Private Ltd. and Ors v. Chamanlal Bros.
AIR 1965 SC 1698
JUDGES: P Gajendragadkar, K W Shah and J.R. Mudholkar
Date of Decision: 23-04-1965
The plaintiff-respondent filed an application for the recovery of damages from the defendant-appellants due to termination of agreement under XXXVII of the Code. Appellant filed the plaint along with affidavit purporting to the disclose sufficient evidences to defend the suit but the trial Judge granted only conditional leave to deposit an amount security. On appeal under the Letters Patent, High Court also affirmed the trial Judge’s order. Therefore, appellant claimed the relief before the Supreme Court.
Whether the trial court was correct by granting unconditional leave to defend the suit under Order XXXVII of the Code?
The procedure followed in the case was set out in the Order XXXVII of the Code. The learned counsel for the appellant alleged that the order of High Court in error on two points. The first is that the defence disclosed in their affidavit raises a triable issue and that, therefore, it was incumbent upon the trial court to grant unconditional leave to defend. The second ground is that the promissory note upon which the suit is based is only a collateral security for the performance of the agreement between the parties.
The Hon’ble Supreme Court placed reliance upon Jacobs v. Booth’s Distillery Co. [(1901) 85 LT 262], in which the House of Lords held that whenever a defence raises a triable issue leave must be given without any condition. However, in cases if the court considers a genuine doubt upon the validity of the defence, the court may even impose conditions while granting leave or even refuse to grant leave if found defence frivolous or false.
In order to discharge the issue with respect to the grant of leave, the court has propounded following rules as to the grant of leave: (i) Where triable issues arise, leave may be granted; (ii) If genuine doubt as to the validity of defence, the court may even impose conditions while granting leave; (iii) Court may even refuse to grant leave if found defence is frivolous or false.
Thus, this is a matter of discretion by the trial Judge to decide whether leave should be granted or not and while dealing with, court ought to exercise his discretion judiciously to meet the ends of justice.
For these reasons, appeal was dismissed upholding the order of the trial Judge.
Held, where triable issues arise, leave may be granted, but where the applicant does not have substantial defence to raise or raised frivolous or vexatious defence, leave may be refused altogether. In cases where the court entertains a genuine doubt on the question as to whether the defence is genuine or sham or whether it raises a triable issue or not, the court may even impose conditions while granting leave to defend.
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