Order XXXVII CPC- Defendant Entitled To Unconditional Leave To Defend Suit If Substantial Defence Or Triable Issues Shown: Delhi High Court

The Delhi High Court has observed that under Order XXXVII of the Code of Civil Procedure, a defendant is entitled to the leave to defend the suit if he satisfied the Court that he has a substantial defence or that there are triable issues by way of which the plaintiff is not entitled to leave to sign judgment.

Justice Suresh Kumar Kait made the following observations:

"Order XXXVII CPC was included in the Code of Civil Procedure with the intent to allow the plaintiff who has an undisputed liquidated claim against the defendant, who has no substantial defence and/or raises no genuine triable issues to obtain a quick and summary judgment without pointlessly being kept away from what is due, in respect of any monetary dues, to recover the dues swiftly by a summary procedure instead of taking the extensive route of a regular suit."

"But if the defendant satisfies the court that he has a substantial defence or satisfy the Court that there are triable issues by way of plea the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit."

The Court was dealing with an application filed by the defendant under Order XXXVII Rule 3(5) of the CPC seeking grant of leave to defend the suit. The plaintiff had filed the suit for recovery of Rs.4,96,00,000 along with interest @ 9% per annum from 20.08.2014. The suit was filed on the basis of two agreements dated 23.03.2013 and 20.08.2014.

It was argued in the application that the suit did not fall within the ambit of Order XXXVII CPC nor in any of the classes or category as envisaged in clause (2) of Rule (1) of Order XXXVII CPC.

It was argued on behalf of the defendant that in order to invoke the special summary procedure as provided under Order XXXVII CPC, a simple money transaction is not sufficient but something more is required within the four corners of CPC and all and every money transactions cannot become the basis of claim under the said provision.

It was argued that the defendant had substantial question on facts which can only be adjudicated after leading evidence and cannot be decided in summary manner.

On the other hand, it was argued by the plaintiff that the grounds taken by the defendant in the leave to defend application did not disclose any substantial defense and were frivolous and vexatious.

It was also submitted that the said grounds did not disclose any triable issue and that the application was liable to dismissed and plaintiff was entitled to judgment.

Referring to plethora of judgments delivered by the Supreme Court on the principles of law for grant or refusal of leave to defend, the Court was of the view that defendant was able to substantially raise multiple triable issues. It was also observed that the judgments relied upon by the plaintiff were of no help in the facts and circumstances of the case.

"This Court is of the view, in facts and circumstances of this case, defendant is entitled to conditional leave to defend the suit subject to deposit of Rs. 2 Cr or the bank guarantee of the equal amount within three weeks with Registrar General of this Court from today," the Court said.

Recently, the Supreme Court observed in a judgment in which it discussed the scope of Rule 3 of Order XXXVII of the Code of Civil Procedure 1908, that the grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception.

The bench comprising Justices Vineet Saran and Dinesh Maheshwari had observed that a prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court.

Title: SMT. NEELAM BATRA v. SHRI V. RAMCHANDRA RAO

Citation: 2022 LiveLaw (Del) 96

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