M/S. SIFY LTD. versus M/S. FIRST FLIGHT COURIERS LTD.

Citation: [2008] 1 S.C.R. 339 · Decided: 08-01-2008 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Case Partly allowed

Judgment (excerpt)

'Y 
I 
[2008] 1 S.C.R. 339 
M/S. SIFY LTD. 
V. 
M/S. FIRST FLIGHT COURIERS LTD. 
(C.A. No. 90 of 2008) 
JANUARY 8, 2008 
[TARUN CHATTERJEE & DALVEER BHANDARI, JJ.] 
A 
B 
Code of Civil Procedure, 1908 - 0.37 - Summary suit 
under - Conditional leave to defend - Grant of - Default in 
payment of outstanding dues despite various demands - c 
Recovery suit against respondent - Single Judge of High 
Court observed that there was no evidence of deficiency of 
service and granted leave to defend on condition of deposit of 
Rs. 15 lacs - On appeal, Division Bench held that respondent 
was entitled to defend the suit without any condition - Held: D 
Division Bench erred in interfering with order of Single Judge 
- The order of Single judge was discretionary order - Also the 
amount of Rs. 15 lacs was already deposited by respondent -
Claim regarding deficiency of services was not raised when 
demand was made for services rendered - Once liability is 
admitted, it is not open to take stand that services provided E 
were deficient. 
The respondent hired the services of the appellant 
. engaged in the business of providing service in setting 
up of networks and other value added services in the field 
F 
of information and technology. As the respondent 
committed defaults in making payments in respect of 
services provided, the appellant filed a summary suit under 
0.37 r.2 CPC for recovery of the outstanding dues. The 
appellant filed the summons for judgment. The G 
respondent filed reply to the summary suit and to the 
summons for judgment seeking unconditional leave to 
defend the suit. The Single Judge of High court granted 
leave to defend on a condition of deposit of Rs.15 lacs. 
On appeal, Division Bench of High Court held the H 
339 
340 
SUPREME COURT REPORTS 
[2008] 1 S.C.R. 
A respondent entitled to defend the suit without any 
condition. Hence the instant appeal. 
~ 
Partly allowing the appeal, the Court 
HELD: 1. A bare reading of Sub-rule (5) of Rule 3 of 
B 0.37 CPC would clearly indicate that leave to defend may 
be granted to a defendant unconditionally or upon such 
terms as may appear to the Court or Judge to be just, that 
is to say, the discretion is left to the Court to put the 
>-
defendant on terms, in the facts and circumstances of a 
" 
c particular case, on compliance whereof the defendant 
shall be entitled to defend the suit. Proviso to Sub-rule (5) 
lays down that leave to defend shall not be refused unless 
the Court is satisfied that the facts disclosed by the 
defendant do not indicate that he has a substantial 
D defence to raise or that the defence intended to be put 
up by the defendant is frivolous or vexatious. [Para 6] 
[344-A, B, C] 
2.1 The order of the Single Judge imposing the 
,, 
'f. 
condition for deposit of Rs. 15 lacs on the respondent to 
E defend the suit cannot be, said to be an arbitrary or 
unreasonable order. The Division Bench of the High Court 
ought not have interfered with the order passed by the 
Single Judge as (i) the order of the Single Judge was a 
discretionary order and (ii) the amount of Rs. 15 lacs was 
F already deposited by the respondent. [Para 9] [347-C, D] 
Mis. Meche/ec Engineers and Manufacturers v. Mis. 
~ 
Basic Equipment Corporation (1976) 4 SCC 687; Sunil r 
Enterprises and Anr v, SB/ Commercial and International Bank 
Ltd. (1998) 5 sec 354 - relied on. 
G 
2.2. It is also an admitted finding that the respondent 
used the services of the appellant and failed to pay the 
outstanding dues despite various demands. The Single 
r 
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Judge observed that there was no material evidence to 
show that there was any such deficiency ·of service of the 
H appellant in not providing services to the respondent. The 
MIS. SIFY LTD. v. M/S. FIRST FLIGHT COURIERS LTD. 
341 
letter dated 26th of June, 2002 produced by the respondent A 
claiming for the first time after 2000 that there was 
deficiency of service must be, prima facie, found to be an 
afterthought exercise on the part of the respondent The 
materials, as admitted by the respondent, would clearly 
show that the respondent was making payments towards s 
various invoices raised by the appellant. It is also evident 
from the record that the respondent did not raise any such 
claim regarding deficiency of service when the appellant 
was demanding its past balance/dues for the services 
rendered. Once the respondent admitted its liability to pay c 
for the services rendered by the appellant, it was not open 
t

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