Case Note & Summary
The appeal arose from a summary suit filed under Order 37 of the Code of Civil Procedure, 1908 (CPC) by the respondent bank against the appellants for a sum of Rs. 37,51,519.43 based on Bills of Exchange. The appellants contended that the Bills were executed without consideration, alleging fraud and collusion between the bank and the drawee, M/s. Khanna Sales Corporation. The Trial Judge denied the appellants leave to defend, leading to an appeal where the Division Bench affirmed the Trial Judge's decision, stating that the appellants had no valid defence. The Supreme Court examined the legal principles surrounding leave to defend in summary suits, referencing previous judgments that established criteria for granting such leave. The Court noted that if a defendant raises a triable issue or shows a bona fide defence, they are entitled to leave to defend. The Court found that the appellants' defence was not entirely without merit and that the High Court's conclusion of no prima facie case was incorrect. Consequently, the Supreme Court allowed the appeals, set aside the previous orders, and granted unconditional leave to the appellants to defend the suit.
Headnote
A) Negotiable Instruments - Bills of Exchange - Consideration - Appellants contended that Bills of Exchange were executed without consideration - Court held that the appellants are entitled to defend as the defence raised was not sham or illusory - Unconditional leave to defend granted (Paras 1-3).
Issue of Consideration
Whether the appellants were entitled to unconditional leave to defend the summary suit based on the alleged lack of consideration for the Bills of Exchange.
Final Decision
The Supreme Court allowed the appeals, set aside the orders of the High Court and the Trial Judge, and granted unconditional leave to the appellants to defend the suit.
Law Points
- Leave to defend
- Bills of Exchange
- Summary suit
- Negotiable Instruments Act
- Good defence
- Triable issue
