M/S UMA SHANKER KAMAL NARAIN AND ANR. versus M/S. M.D. OVERSEAS LTD.

Citation: [2007] 3 S.C.R. 1034 · Decided: 14-03-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off
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Judgment (excerpt)

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M/S. UMA SHANKAR KAMAL NARAIN AND ANR. 
v. 
M/S. M.D. OVERSEAS LTD. 
MARCH 14, 2007 
[DR. ARIJITPASAYAT AND S.H. KAPADIA, JJ.] 
Code of Civil Procedure, I 908; O.XXXVJJ R. I: 
Dishonor of Cheques-Summmy suit-Leave to defend-Grant of-
Held: Single Judge of the High Court decreed the suit/or recovery of amount-
However, Division Bench of the High Court granting conditional leave to 
defend subject to deposit of the decretal amount-Keeping into consideration 
the principles of law laid down by the Supreme C our/ on the subject in 
question, it would be appropriate to direct the appellants to deposit the 
decretal amount in the Regisfly of the High Court failing which the order 
of Single Judge would become operative. 
Respondent-plaintiff had filed a suit in terms of Order XXXVII Rule I 
on the ground that four cheques allegedly issued by defendant No. 2-appellant 
No.2, in favour of plaintiffs/respondents were dishonored. The appellants filed 
an application for leave to defend. Single Judge of the High Court found that 
the grounds taken in the application for leave to defend were raised only for 
the purpose of delaying payment for the amount which was due for payment 
and, therefore, refused to grant leave to defend. The plaintifT/respondent was 
held to be entitled for decree for recovering the amount along with interest at 
the rate of 12% p.a. from the date of suit till realization. The order was 
challenged by the defendant/respondent The Division Bench of the High Court 
directed the appellants to deposit the amount in question in the Registry of 
the High Court. Conditional leave to defend was granted to appellants by the 
High Court holding that if there is a default in deposit of the amount as 
indicated by the appellant, the order and decree passed by the Single Judge 
was to become operative. Hence the present appeal. 
The appellants contended that the High Court was not justified in 
directing the entire decretal amount to be deposited after having held that 
leave to defend was to be granted. 
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UMA SHANKAR KAMAL NARAIN v. M.D. OVERSEAS LTD. 
1035 
Respondent submitted that the High Court's order is not only fair but 
it is equitable since the amount which appears to be prima facie undisputed is 
much more than the amount which the High Court has directed to deposit. 
Disposing of the appeal, the Court 
HELD: 1.1. The position in law in regard to leave to defend has been 
explained by this Court as follows: 
(a) If the defendant satisfied the Court that he has a good defence to the 
claim on merits, the defendant is entitled to unconditional leave to defend. 
(b) If the defendant raises a triable issue indicating that he has a fair 
or bona fide or reasonable defence, although not a possibly good defence, the 
defendant is entitled to unconditional leave to defend. 
(c) If the defendant discloses such facts as may be deemed sufficient to 
entitle him to defend, that is, if the affidavit discloses that at the trial he may 
be able to establish a defence to the plaintifrs claim, the Court may impose 
conditions at the time of granting leave to defend the conditions being as to 
time of trial or mode of trial but not as to payment into Court or furnishing 
security. 
(d) If the defendant has no defence, or ifthe defence is sham or illusory 
or practically moonshine, the defendant is not entitled to leave to defend. 
(e) If the defendant has no defence or the defence is illusory or sham or 
practically moonshine, the Court may show mercy to the defendant by enabling 
him to try to prove a defence but at the same time protect the plaintiff imposing 
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the condition that the amount claimed should be paid into Court or otherwise F 
secured. [Para 8[ [1037-F-G-H; 1038-A-CI 
Milkhiram (India) Private Ltd. & Ors. v. Chamanlal Bros., AIR (1965) 
SC 1698; Mechelec Engineers & Manufacturers v. Basic Equipment 
Corporation, [1976] 4 SCC 687; Suni/ Enterprises and Anr. v. SB/ Commercial 
& International Bank Ltd., It 998[ 5 sec 354 and Defiance Knitting lndusiries G 
(P) Ltd. v. Jay Arts, [2006] 8 SCC 25, relied on. 
1.2. Keeping in mind the principles laid down by this court, it would be 
appropriate to direct the appellants to deposit a sum of Rs.20,00,000/- within 
a period of three months in the Registry of the High Court. If the amount is 
not deposited within the time stipulated, the order shall not be operative and H 
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SUPREME COUR
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