LexMECHELEC ENGINEERS AND MANUFACTURCRS versus M/S. BASIC EQUIPMENT CORPORATION
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1060
MECHELEC ENGINEERS AND MANUFACTURcRS
v.
M/S. BASIC EQUIPMENT CORPORATION
November 1, 1976
[A. N. RAY, C.J., M. H. BEG AND JASWANT SINGH, JJ.]
Civil Procedure Code, S. 115-Jurisdiction of High Court to interfere with
the Trial Court's discretionary order, when exercisable.
••
The appellant issued the respondent a cheque which was dishonoured.
The
respondent alleged•that the cheque• was the consideration for goods supplied. The
appellant admitted issuing the cheque but denied by privity of
contra~. The
respondent filed a suit under order 37 C.P.C., and the appellant applied for the
required leave to defend, which was granted by the trial Court unconditionally.
On revision under section 115 C.P.C., the High Court held that triable· issues
arose for adjudication,, but, it considered the defence to be dishonest. If allowed
the revision petition and gave conditional leave to defend on the ground that the
defences were not bona fide.
Allowing the appeal, the Court
HELD : It is only in cases where the defence is patently dishonest or so
unreasonable that it could not reasonably be expected to s<ucceed that the exer-
cise of discretion by the Trial Court to grant leave
unconditionally
may
be
questioned.
Jn other cases, it is not fair to pronounce a categorical opinion on
such a matter before the evidence of the partie~ is taken so that its effects could
be examined.
High Court's interference under sec. 115 C.P.C. with the correct
exercise of its discretion by the trial Court was patently erroneous. [I 062 E-H J
Santo.1·h Kumar v. Bhai Moo/ Singh [1958] S.C.R. 1211 at 1215, Jacobs v.
Booth's Distillery Co. [1901] 85 LT. 262 followed.
Smt. Kira11moyee Dassi and another v. Dr. J. Clwttcrjn• (49 C.W.N. 246 at
253) distinguished.
M. L. Sethi v. R. P. Kapur [1973]. (!) S.C.R. 697; The Mana;:ing
Director
(MIG) Hindustan Aeronautics Ltd. Balanagar, Hyderabad & A nr. v. Ajit Prasad
Tarway, J\1a11ager (Purchase and Stores). Hindustan A erona11tics Ltd. Bala-
nagar, Hyderabad (AIR 1973 SC 76); D.L.F. Housing & Co11str11c1io11 Co. Pvt.
Ltd., New Delhi v. Sarup Sin{!/1 & Ors. [1970] 2 S.C.R.
368; and
Milkhiram
;F
(India) (Pl Ltd. and Ors. v. Chamanlal Bros. (AIR 1965 SC 1998) referred
G
H
to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 508 of 1976.
(Appeal by Special Leave from the Jud~ment and
Order dated
27-10-1975 of the Delhi High Court in Civil Revision No. 115/75).
S. N. A ndley, Uma Dutta and T. C. Sharma, fof the appellant.
K. C. Agarwala and M. M. L. Srivastava, for the respondent.
The Judgment of the Court was delivered by
BEG. J. The plaintiff-respondent alleged to be a registered
part-
nership firm filed a suit on 25th April, 1974, through Smt.
Pushpa
Mittal, shown as one of its partners, for the recovery of Rs. 21 ,265.28
as principal and Rs. 7655/-, as interest at 12% per annum, according
to law and Mercantile usage, on the strength of a cheque drawn by the
defendant on 12th May, 1971, on the State Bank of India, which, on
presentation, was dishonoured. ·The plaintiff alleged that the cheque
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MECHELEC ENG. V. BASIC EQ. CORP. (Beg, J.)
1061
was give!! as price of goods supplied.
The defendant-appellant firm
admitted the issue of the cheque by its Managing partner, but, it denied
any privity of contract with the plaintiff firm. The defendant-appellant
had its own version as to the reasons and purposes for
which the
cheque was drawn.
The suit was instituted under the provisions of Order 3 7 Civil Pro-
cedure Code so that the defendant-appellant had to apply for
leave
under Order 37, Rule 2, of the Code to defend. This leave was granted
unconditionally by the Tria~ Court after a perusal of the cases of the
t~ sides.
Order 37, Rule 3, Civil Procedure Code Jays down :
"(1) The Court shall, upon application by the defendant,
~ive leave to appear and to defend the suit,. upon affidavits
which disclose such facts as would make it incumbent on the
holder to prove consideration, or such other facts
as
the
Court may deem sufficient to support the application.
(2) Leave to defend may be given
unconditionally or
subject to such terms as to payment into Court, giving
security, framing and recording issues or otherwise as
the
Court thinks fit".
A learned Judge of the High Court of Delhi had on a revision
application under Section 11 5 Civil Procedure Code interfered with
the order of the Additional DistrExcerpt shown. Read the full judgment & AI analysis in Lexace.