GAJJALA CHALAPTI RAO Vs. RAMALAKSHMANA CLOTH STORES MACHILIPA

JUDGEMENT

(1.) This is a revision petition directed against an order of the District Munsif, Machilipatnam given on 20th September, 1965 whereby the learned District Musulf refused leave to defend the suit under Order 37, Civil Procedure Code. The relevant facts are that the respondent-plaintiff instituted the suit on the fool of a promissory note dated 19th August 1964, for the recovery of a sum of Rs 846-62 alleging inter alia that on 15th March 1965 a sum of Rs 291 It was sent by a bank draft after deducting which, the suit amount was claimed. This suit was instituted under Order 37, Civil Procedure Code. A summons as was required under that order wag also sent. The defendant appeared and filed an application seeking permission to defend the suit. The lower Cour, holding that the defence set up by the petitioner was unreal refused the permission. The suit afterwards was decreed on 2uth September, 1965. It is against the order refusing permission to defend the suit that the present revision petition is filed.

(2.) It is now firmly settled that Order 37, Civil Procedure Code, is applicable to what may compendiously be described as commercial causes. It is in continuance of the commercial transactions that normally negotiable instruments luch as promissory notes.bills of exchange ard hundis are issued. The intention in enacting Order 37, Civil Procedure Code, is to provide summary trial and disposal of disputes relatir.g to the commercial transactions based on negotiable documents, the intention being that the money involved in commercial transactions should not be allowed to be itaggered or Its payment delayed on frivolous grounds. Trading and commercial operations are liable to be leriouily impeded if the disputes relating to commercial causes when based on negotiable instruments are not adjudicated upon expeditiously. In order to achieve expeditious disposal provided by Order 37, Civil Piocedure Codef of suitt based on the foot of negotiable documents, Order 37, rule 2, Civil Procedure Code, vests discretion in the Court to grant or refuse to grant permission to defend such a suit. It is difficult to lay down any hard and fast rules as to when the discretion vested in the Court under Order 37, sub-rule 2, of rule I Civil Procedure Code, should be exercised in favour of the defendant. Broadly speaking, there would be three types of cases in which the exercise of discretion under that provision of law is called for. In cases where the defence oo the face of it is frivolous, sham or bogus, it would not present any difficulty to the Court in exercising the discretion against the grant of any such leave as any leave granted would go contrary to the very princip'e on the basis of which Order 37, Civil Procedure Code, is enacted. The other type of cases is where the defence on the face of it raises triable issues; in other words, the defeor dant has a prima facie case which needs to be gone into, and in such cases permission can readily be granted by exercising the discretion in his favour. Normally in such cases, the Court is not inclined to put restrictions upon the defence by imposing conditions envisaged in sub-rule (2) of rule 3, of Order 37, Civil Procedure Code. There are, however, a large number of eases where it is difficult for the Court to decide whether the defeace has a prima facie case or not, or even if opportunity is given to the defendant to prove the de. fence set up by him, he would really succeed in It or not. It is in such case that the discretion his to be cautiously exercised, and when according to the facts and circumstances of the case, the Court ge nuinely feels that the de fend ant should be given an opportunity to pursue bis defence, the Court would be justified in imposing conditions.

(3.) What conditions should be put is again a matter which rests in the discretion of the Court. There may be cases where it will be in the interestf of justice to direct the defendant to deposit the entire amount claimed by the plaintiff together with costs. There may however be cases where security also would meet the ends of justice. It cannot also be ruled out that there would be yet cases where imposition of another condition spoken to by sub-rule (2) of rule 3 that is to say, "fiaming and recording of issues or otherwise" would be justified. In such cases, the High Court would normally leave the matter to the discretion of the trial Court to decide all these questions. It must however be clearly understood that the discretion must be exercised judicially and on the well recognised principles in that behalf. The broad eon sideration for the exercise of such discretion would naturally be to see whether The negotiable document, on the foot of which the suit is based is in pursuance of a commercial transact:on or not, and whether the defence is such where premission should be given unconditionally or should be refused, or should be given on conditions. I am fortified in my view by the following two decisions of the Supreme Court; Santosh Kumar v. Mool Singh1, A. I R. 1958 S.C. 321 : 1958 (1) An.W.R. (S.C.) 159 and Milkhiram (India) P. Ltd. v. Chamanlal Bros.2, A. I. R. 1965 S.C. 1698. Apply these principles to the facu of the present case. I have no manner of doubt that the lower Court has not exercised the discretion in accordance with the principles laid down above. What the defendant has said in his notice referred to in the judgment is that he had to pay some amount on account of cloth dealings for which he had originally executed a promissory note which was renewed twice, the suit promissory note being the ultimate renewal of the said promissory note. While giving the date of the last promissory note, he said that it is dated 14th August, 1964. it is upon this mistake alone that the lower Court held that the defence set up by the defendant is sham and unreal; It is true that the defendant has admitted that in the notcie he has committed this mistake. A reading of his affidavit would leave no one in doubt that his reference was to the suit promissory note which is dated 19th August, 1964. It is nobody's case as the present record stands that there was another promissory note on 14th August, 1964, apart from the suit piomissory note dated 19th August, 1964. It is also true that the promissory note mentions cash advanced for the purpose of purchase of manure. It does not speak of any renewal of the previous promissory notes Hied by the defendant nor bear any endorsement in regard to their renewals. In spite of these weaknesses in the defence, it cannot legitimately be contended that the defendant has no defence at all. If he succeeds in proving that he is an agriculturist and the suit promissory note is a renewal of the earlier promissory note, it can hardly be doubted that ha would be entitled to scaling down of the debt in accordance with the provisions of Act IV of 1938. It woula be premature and not correct to speculate about the result or the trial. This is a fit case where the discretion could be exercised in favour of the defendant by imposing conditions under sub-rules (2) of rule 3 of Order 37, Civil Procedure Code.