In a recent judgment, the Delhi High Court, reiterated the principals of leave to defend in a suit filed under Order XXXVII of Civil Procedure Code, 1908 as crystallized by Hon’ble Supreme Court in IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568.
The said ruling was delivered in the matter of Mange Ram vs. Raj Kumar Yadav, RFA No. 623 of 2018, decided on 03.04.2018.
The Respondent/Plaintiff had extended a loan of Rs. 20 lakhs to Appellant/Defendant who had promised to repay the same within one year. However, in part payment, two cheques issued by the Appellant totaling Rs. 4,50,000/- drawn on Union Bank of India, Paschim Vihar, Delhi, were dishonored with remark “funds insufficient”. Therefore, Plaintiff filed the present suit under Order XXXVII. In his application for leave to defend, the Appellant/Defendant stated that the dishonored cheques were the ones which were stolen from him along with other belongings in a robbery on 16.04.2015. The Ld. Trial Court, in the impugned order dated 07.06.2018, dismissed the leave to defend of the Appellant being completely frivolous and vexatious and decreed the suit for Rs. 4,50,000/- with interest in favor of Plaintiff.
The High Court held that since the FIR of the Appellant dated 16.04.2015 in Police Station, Kharkhoda, Haryana mentions no details of any cheques. The Hon’ble Court reiterated the principles of grant or denial of leave to defend as crystallized by Hon’ble Supreme Court in IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568, i.e. it is only when defendant satisfied the Court that he has a substantial defence or a defence that is likely to succeed, the Plaintiff is not entitled to leave to sign judgment, resulting in the defendant being entitled to unconditional leave to defend the suit. If the defendant raises triable issues, indicating that he has a fair or reasonable defence, although not a positively good defence, the Plaintiff is not entitled to sign judgment. However, if a doubt is left with the trial judge about the Defendant’s good faith, or the genuineness of the triable issues, the judge may impose conditions with respect to both time and mode of trial and ensure furnishing of security, i.e. payment into court. Such condition with respect to furnishing security can extend to the entire principal sum together with interest or as the Court may deem just.