Case Note & Summary
The dispute arose from a summary suit filed by the respondent for recovery of Rs.89,76,162.80 against the appellant under Order 37 of the Code of Civil Procedure, 1908 (CPC). The trial court initially granted the appellant unconditional leave to defend, which was later set aside by the High Court on the grounds that the trial court failed to determine whether the plaintiff's claim was genuine and whether the defendant's defense raised a triable issue. Upon remand, the trial court allowed the application for leave to defend but conditioned it upon the appellant providing a bank guarantee of Rs.60 lacs. The High Court confirmed this order by dismissing the appellant's special civil application. The Supreme Court, upon reviewing the case, noted that the trial court had indeed found a triable issue in the case. The court referenced the precedent set in M/s. Mechalec Engineers & Manufacturers vs. M/s. Basic Equipment Corporation, which established that a defendant showing a triable issue is entitled to unconditional leave to defend. Consequently, the Supreme Court allowed the appeal, set aside the bank guarantee condition, and directed the trial court to dispose of the suit within one year of receiving the order.
Headnote
A) Civil Procedure - Leave to Defend - Conditional Leave Requirement - Code of Civil Procedure, 1908, Order 37 - The trial court's requirement for a bank guarantee as a condition for leave to defend was found unjustified as the appellant demonstrated the existence of a triable issue. The Supreme Court held that if a triable issue is established, unconditional leave to defend should be granted, thus setting aside the bank guarantee condition imposed by the trial court (Paras 1-2).
Issue of Consideration
Whether the trial court was justified in requiring the appellant to produce a bank guarantee as a condition for granting leave to defend the suit.
Final Decision
The Supreme Court allowed the appeal, set aside the condition of producing a bank guarantee of Rs.60 lacs, and directed the trial court to dispose of the suit within one year from the receipt of the order.
Law Points
- Leave to defend
- triable issue
- unconditional leave
- bank guarantee requirement
