Prayer for leave to defend is to be denied where defendant has practically no defence and is unable to give out even semblance of triable issues before Court: SC

Read Judgment: B.L. Kashyap and Sons Ltd. V. M/S Jms Steels and Power Corporation & Anr.

Monika Rahar

New Delhi, January 19,  2022: While dealing with an appeal against the concurrent findings recorded by the lower courts denying the defendant the leave to defend, the Supreme Court has held that the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court. 

The Bench of Justice Vineet Saran and Justice Dinesh Maheshwari has also stated that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. 

In case of doubts governing the defendant’s intent or genuineness of the triable issues, the leave could yet be granted while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave,added the Court.

In this case, a money recovery summary suit was filed by the plaintiff (first respondent) against the defendants. The first defendant is a real estate and construction firm while the second defendant is a contractor working for the first defendant. The plaintiff availed their services for a construction project and for the same, the second defendant raised two purchase orders. The plaintiff, in response, supplied steel at the site address of the first defendant who was to pay. However, the payment was not made and hence, the suit under Order XXXVII of the CPC was filed while asserting joint and several liability. 

The Trial Court decreed the suit in favour of the plaintiff with a finding that no triable issues were raised by the defendants and hence they were not entitled to the leave to defend. Thereafter, an appeal before the High Court of Delhi was filed against this decree. The High Court however dismissed the same qua the second defendant (appellant herein). Hence the second defendant-appellant filed the instant appeal before the Supreme Court impleading the plaintiff and the first defendant as the first and second respondents respectively.

At the outset, the Court identified that it was to decide on whether the plaintiff was entitled to maintain a summary suit under Order XXXVII CPC for the claim in question; and secondly, whether the appellant- the second defendant had rightly been declined the leave to defend.

So far as the first issue was concerned, the Court observed that the matter was based on a written contract arising out of the appellant’s written purchase orders issued on the first defendant’s instructions and behalf. Further, the Court stated that question as to whether the appellant was acting only as an agent of the first defendant regarding the supplies in question and had no monetary liability, could be a matter of defence for the appellant, and such a proposition of defence by the appellant cannot take away the entitlement of the plaintiff to maintain the summary suit in terms of Order XXXVII CPC. The Court did not, therefore, find any substance in the plea against the maintainability of the summary suit and thus High Court’s decision qua this issue was not interfered with. 

For responding to the the second issue, the Court identified four eventualities governing the plea of defence. The first being that if the defendant satisfies the Court that he has a substantial defence, i.e., a defence which is likely to succeed, he is entitled to unconditional leave to defend.In the second eventuality, if triable issues indicating a fair or bonafide or reasonable defence, albeit not a positively good defence is raised, the defendant is ordinarily entitled to unconditional leave to defend. Thirdly, the Court said that where the defendant raises triable issues, but bona fide intention of the defendant or the genuineness of the issues is in doubt, then the Trial Court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the other. And lastly, where the proposed defence appears to be plausible but improbable, heightened conditions may be imposed as to the time or trial mode as also of payment into the Court or furnishing security or both. 

“It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the Court’s view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith… Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one”, opined the Bench. 

Therefore, in view of this legal position and in the totality of the circumstances of the case, the Court opined that the appellant indeed raised triable issues.

Thus, the appeal was allowed in the manner that impugned judgments of the High Court and the Trial Court qua the appellant were set aside, the appellant was granted leave to defend, and the amount deposited by the appellant was ordered to be treated to be a deposit towards the condition for leave to defend.