G SUNDARAM CHETTIAR Vs. PAVALLI AMMAL

JUDGEMENT

(1.) This is an application by the defendant in C.S. No. 150 of 1934 for an order staying further proceedings in the suit whether by way of execution or otherwise pending disposal of O.S.A. No. 36 of 1934 which appeal is before us for admission.

(2.) The following are the facts of the Case. O.S.A. No. 36 of 1934 is an appeal against an order of Mr. Justice Stone which itself was made on an appeal from an order of the Master. It is necessary to go back to the inception of this matter. The respondent here is a woman. She filed a suit on a promissory note against the appellant claiming Rs. 3,150, the face value of the promissory note being Rs. 4,000. She was unable to produce the promissory note and sued for the lesser amount upon the following ground, namely, that the defendant had made a part payment of Rs. 1,000. That accounts for the suit being for a lesser amount than the face value of the promissory note. As regards her inability to produce it with the plaint she stated in her plaint that she had parted with the promissory note under the following circumstances, namely, that when the defendant made the part-payment of Rs. 1,000 he got from her the promissory note in order to take it away with him and endorse thereon the part-payment and that he refused to return it to her or indeed endorse that part-payment upon it. In other words, she alleged that she had parted with the promissory note to the defendant who she stated occupied a position of confidence and trust, upon the fraudulent misrepresentation made by him that he would endorse the part-payment on the promissory note and return it. She accordingly filed her suit under the summary procedure. The defendant put in an application for leave to defend supported by an affidavit in which he denied the plaintiff's case and stated that the amount paid by him was not Rs. 1,000 but Rs. 950 and that payment had been made by him and accepted by the plaintiff in full satisfaction of the promissory note amount by reason of the fact that she together with a number of other creditors of the defendant had agreed to accept payment of four annas in the Rupee which was evidenced by a written composition. The Master was of the opinion that this defence was not bona fide or he had doubts as to the bona fide nature of it and he accordingly only gave conditional leave to defend, the condition being that the defendant should, within one week from the date of the order, pay the full amount claimed in the plaint into Court. The defendant appealed and Mr. Justice Stone upheld the learned Master's order granting only conditional leave to defend but varied the condition altering it to one, that security for the full amount claimed in the suit should be given within fourteen days from the date of his order. It would appear that at that hearing at some stage - we are told by Mr. K.S. Krishnaswami Aiyangar at the stage when it was recognised that a condition was going to be imposed upon the leave to defend - the defendant said that he would give security. That to my mind is not a matter of very much importance or one which should be allowed to influence us at all in the consideration of this question. He was unable to furnish security. Mr. Justice Stone's order was made on the 9th May last, i.e., two days before the closing of the Court for the summer vacation, and according to that order, upon failure of the defendant to furnish security within the period fixed, the application for leave to defend would stand dismissed with costs. No security was furnished although leave was given to furnish security to the Vacation Officer and at the expiration of the fourteen days the application stood dismissed. On the 24 July last a decree was passed in favour of the plaintiff for the amount claimed and no appeal has been presented against that decree. The only appeal before us is the appeal against Mr. Justice Stone's order granting conditional leave to defend. It was urged before us on behalf of the appellant that this was a case in which unconditional leave to defend should have been given. In support of that condition two English decisions were referred to. One of them was Jacobs V/s. Booth's Distillery Company (1901) 85 L.T. 262. The head-note of that case reads as follows: Judgment should only be Ordered under Order XIV where, assuming all the facts in favour of the defendant, they do not amount to a defence in law. Where there is a triable issue, though it may appear that the defence is not likely to succeed, the defendant should not be shut out from laying his defence before the Court either by having judgment entered against him, or by being put under terms to pay money into Court as a condition of obtaining leave to defend.

(3.) The other case was Powszechny Bank Zwiazkony W Place V/s. Paros (1932) 2 K.B. 353 a decision of the Court of appeal in England. The head-note is as follows: - In an action brought on a writ specially indorsed under Order 3, Rule 6 by indorsees against the maker of a promissory note, the plaintiffs in an affidavit in support of a summons for leave to sign final judgment under Order 14, Rule 1 stated that they were holders in due course of the note, having taken it in good faith for value from the payees without notice of any defect in their title. The defendant in his affidavit in answer stated facts which, if true, showed that the note had been negotiated in fraud of him. The Judge in Chambers made an order, under Order 14, Rule 6 that the defendant should have leave to defend the action if he brought a sum of money into Court within a certain time, but that if he failed to do this, the plaintiffs should have leave to sign judgment for the amount claimed. On appeal from this order it was held that a triable issue was raised between the parties, that the mere statement in the plaintiff's affidavit that they had given value without notice of any defect in their indorser's title was not sufficient to decide that issue in the plaintiff's favour, but that the Court must have an opportunity of deciding it, and that therefore the defendant was entitled to leave to defend the action without the condition that he should pay money into Court. It was further held that where a defendant is entitled to leave to defend, the Judge in Chambers cannot under Order 14, Rule 6 make an order for conditional leave to defend, the effect of which is to give the plaintiff conditional leave to sign judgment. There is also a decision of this High Court namely, Peria Miyana Marakayar V/s. Subramania Aiyar (1923) 46 M.L.J. 255 a decision of Sir Walter Schwabe, CJ. and Ramesam, J. The head-note reads as follows: The question to be considered on applications under Order 37, Rule 3, Civil Procedure Code, is whether or not a triable issue is disclosed on affidavit or otherwise by the defendant. By triable issue is meant a plea which is at least plausible. The defendant must state what his defence is, and must, as a rule, bring something more before the Court to show that it is a bona fide defence, and not a mere attempt to gain time by getting leave to defend. Once the Court comes to the conclusion that there is a triable issue in the case, it must grant leave to defend without requiring the defendant either to pay the amount claimed into Court or to furnish security therefor. Such a condition must be imposed only in exceptional cases, where, for instance, there appears to be so grave a suspicion that the Court comes to the conclusion that the defence is put in only in order to obtain further time.