Santosh Kumar v Bhai Mool Singh

Facts

The defendants issued a cheque for Rs. 60,000 in favour of the plaintiff, which was dishonoured on presentation. The plaintiff sued on the cheque under the summary procedure of Order XXXVII CPC. The defendants applied for leave to defend, claiming the cheque was given merely as collateral security and that the underlying liability had already been discharged through cash and other cheques. The trial court (Commercial Subordinate Judge, Delhi) accepted that a triable issue arose but, citing the absence of documentary proof, granted only conditional leave requiring security equal to the suit amount and costs.

Issues

• What is the correct test for granting leave to defend in a summary suit under Order XXXVII CPC?
• Whether the trial court could impose security as a condition of leave merely because the defendant had not produced documentary evidence at the leave stage.
• Whether the defendants were entitled to unconditional leave to defend.

Arguments

The defendants contended that their affidavit disclosed a genuine triable defence which, if established, would defeat the claim, entitling them to unconditional leave. The plaintiff contended that the discretion to grant leave is wide and that conditions could properly be imposed where the defence appeared vague and unsupported by documents.

Held

The Supreme Court allowed the appeal and granted the defendants unconditional leave to defend. The Court laid down that the test is whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts. Where such a triable issue exists, leave must ordinarily be granted unconditionally; the power to impose conditions such as security is meant to guard against an evasive or dishonest defendant who is merely trying to delay, not to make a defendant prove the defence at the threshold. The trial judge had erred in requiring documentary proof at the leave stage, since proof comes only at trial after leave is granted.

Ratio decidendi

In a summary suit under Order XXXVII CPC, if the defendant's affidavit discloses facts which, if proved, would constitute a good or even plausible defence, the defence raises a real triable issue and the court must grant leave to defend unconditionally; conditions such as security may be imposed only where the defence appears sham or the defendant seeks to delay, not merely because supporting documents have not yet been produced.

Significance

A leading authority on the principles governing leave to defend in summary suits under Order XXXVII CPC. It established the 'triable issue' test and confined the imposition of conditions to cases of sham or dilatory defences, and has been consistently followed, later being explained alongside the principles restated in M/s Mechelec Engineers v Basic Equipment Corpn (1976) and IDBI Trusteeship Services v Hubtown Ltd (2017).

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