Case Note & Summary
The plaintiffs, Agarwal Associates & Agencies and Smt. Manju Agarwal, filed a Commercial Summary Suit No. 15 of 2022 before the Bombay High Court against Vinay Fabrics Pvt. Ltd. for recovery of money. The plaintiffs claimed that the defendant had failed to pay amounts due under certain transactions. The defendant filed an Interim Application (L) No. 32073 of 2022 seeking leave to defend the suit. The court, presided over by Justice Kamal Khata, heard the application. The plaintiffs argued that the defendant's defence was not bona fide and did not raise any triable issues, and therefore, leave to defend should be granted only on condition of depositing the suit amount or furnishing security. The defendant contended that it had a valid defence and was entitled to unconditional leave to defend. The court, after considering the pleadings and submissions, held that the defence raised by the defendant did not appear to be bona fide and that there were no triable issues. Accordingly, the court allowed the interim application and granted leave to defend to the defendant on condition that the defendant furnishes a bank guarantee for 75% of the suit claim within four weeks. The court further directed that if the defendant fails to furnish the bank guarantee, the plaintiffs would be entitled to a decree in terms of the suit claim. The judgment was pronounced on 26th September 2023.
Headnote
A) Civil Procedure - Summary Suit - Leave to Defend - Order XXXVII Rule 3 of Code of Civil Procedure, 1908 - The court considered the principles for grant of leave to defend in a summary suit under Order XXXVII CPC. The defendant sought unconditional leave to defend the suit for recovery of money. The court held that where the defence is not bona fide or does not raise a triable issue, the court may impose conditions for grant of leave to defend. (Paras 1-10) B) Commercial Law - Recovery of Money - Bank Guarantee - Order XXXVIII Rule 5 of Code of Civil Procedure, 1908 - The court directed the defendant to furnish a bank guarantee for 75% of the suit claim within four weeks as a condition for leave to defend. The court reasoned that the defendant's defence lacked bona fides and that the plaintiff had made out a prima facie case for recovery. (Paras 11-15)
Issue of Consideration
Whether the defendant should be granted unconditional leave to defend the summary suit or whether conditions should be imposed for grant of leave to defend.
Final Decision
The court allowed the interim application and granted leave to defend to the defendant on condition that the defendant furnishes a bank guarantee for 75% of the suit claim within four weeks. If the defendant fails to furnish the bank guarantee, the plaintiffs would be entitled to a decree in terms of the suit claim.
Law Points
- Order XXXVII Rule 3 CPC
- Order XXXVIII Rule 5 CPC
- conditional leave to defend
- triable issues
- bank guarantee
- commercial suit
- summary suit
