Case Note & Summary
The case arises from a first appeal against a decree passed in Summary Suit No. 538 of 1983 by the Bombay City Civil Court. The respondent, M/s. Ilac Limited, filed the suit for recovery of Rs. 42,583.40 with interest. The trial court issued summons for judgment, which the appellant opposed. On 3 March 1984, the City Civil Court granted leave to defend on condition that the appellant deposit Rs. 18,000/- within eight weeks. The appellant failed to deposit the amount, and on 1 October 1984, the suit was decreed. The appellant challenged this order in the High Court. The respondent was served but remained absent. The appellant's counsel argued that the condition of deposit was unjust and illegal, relying on the Supreme Court's decision in M/s. Mechalec Engineers and Manufacturers v. M/s. Basic Equipment Corporation (AIR 1977 SC 577), which held that conditions for leave to defend must be reasonable and not arbitrary. The High Court agreed, finding that the trial court's condition was not justified. The court allowed the appeal, set aside the decree, and remanded the matter to the trial court for fresh consideration of the leave to defend application, without imposing any condition. The court directed the trial court to decide the leave to defend application afresh, considering the principles laid down in the Supreme Court judgment.
Headnote
A) Civil Procedure - Summary Suit - Conditional Leave to Defend - Order 37 Rule 3 CPC - The trial court granted leave to defend subject to deposit of Rs.18,000/-. The appellant failed to deposit and the suit was decreed. The High Court held that the condition was unjust and illegal, especially in light of the Supreme Court judgment in M/s. Mechalec Engineers and Manufacturers v. M/s. Basic Equipment Corporation (AIR 1977 SC 577), which requires that conditions for leave to defend must be reasonable and not arbitrary. The court set aside the decree and remanded the suit for fresh consideration of leave to defend. (Paras 1-3)
Issue of Consideration
Whether the condition imposed by the trial court for granting leave to defend in a summary suit, requiring deposit of Rs.18,000/-, was just and legal.
Final Decision
Appeal allowed. Decree set aside. Matter remanded to trial court for fresh consideration of leave to defend application without imposing any condition. Trial court to decide afresh in accordance with law.
Law Points
- Conditional leave to defend in summary suit must be based on the defendant's financial capacity and the nature of defence
- not arbitrary
- Order 37 Rule 3 CPC
- M/s. Mechalec Engineers and Manufacturers v. M/s. Basic Equipment Corporation (AIR 1977 SC 577) applied.
