Case Note & Summary
The case involved a dispute arising from a dishonoured cheque of Rs. 60,000 drawn by the appellant in favour of the respondent. The respondent filed a suit under Order XXXVII of the Code of Civil Procedure, 1908, after the cheque was dishonoured. The appellant sought leave to defend the suit, claiming the cheque was merely collateral security for goods already paid for. The trial court found a triable issue but imposed a condition requiring the appellant to provide security for the suit amount and costs. The appellant's subsequent applications for review and under Article 227 of the Constitution were unsuccessful, leading to an appeal under Article 136. The Supreme Court analyzed the procedural rules under Order XXXVII, emphasizing that a defendant should not be denied the right to defend based on the absence of evidence at the leave stage. The court held that the defence raised a plausible issue and that the imposition of conditions was arbitrary and unjust. Consequently, the appeal was allowed, the lower court's orders were set aside, and the case was remanded for trial without conditions. The respondent was ordered to bear the costs of the appeal.
Headnote
A) Civil Procedure - Leave to Defend - Imposition of Conditions - Code of Civil Procedure, 1908, Order XXXVII, Rule 3 - The court held that the imposition of a condition for security was illegal as the defence raised a triable issue and should have been allowed unconditionally. The court emphasized that the discretion to impose conditions must be exercised judiciously and in accordance with principles of natural justice, failing which it results in a miscarriage of justice. (Paras 1-2).
Issue of Consideration
Whether the imposition of a condition for security to defend a suit under Order XXXVII of the Code of Civil Procedure was justified.
Final Decision
The Supreme Court allowed the appeal, set aside the orders of the lower courts, and remanded the case for trial without conditions. The respondent was ordered to pay the costs of the appeal.
Law Points
- Industrial dispute
- jurisdiction
- leave to defend
- triable issue
- bona fide defence
- discretion of court
- natural justice
- Code of Civil Procedure
- 1908
