STATE BANK OF HYDERABAD versus RABO BANK

Citation: [2015] 11 S.C.R. 471 · Decided: 01-10-2015 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Appeal(s) allowed

Judgment (excerpt)

(2015] 11$.C.R.471 
STATE BANK OF HYDERABAD 
v. 
RABO BANK 
(Civil Appeal No.8194 of2015) 
OCTOBER 01, 2015 
[RANJAN GOGOi AND N.V. RAMANA, JJ.] 
A 
B 
Code of Civil Procedure, 1908 -
Order 37 r.3 -
Summary procedure - Applicability of - Summary suit by c 
plaintiff-Bank-Against defendant-Bank - Claiming payment 
against Bills of Exchange - Denial of liability to make the 
payment by the defendant-Bank- Trial court made absolute 
the summons for judgment fixing the liability on the 
defendant-Bank, without granting leave to defend - Order of D 
trial court confirmed by appellate court - On appeal, held: 
Where the defendant raises a triable issue or a reasonable 
defence, the defendant is entitled to unconditional leave to 
defend, unless the defence set up is illusory or sham - In the 
present case, the materials on record show that there were E 
certain triable issues for adjudication, raised by the defendant 
and hence the defendant-Bank was entitled to grant of 
unconditional leave to defend the suit. 
Allowing the appeal, the Court 
F 
HELD: 1. Where the applicability of Order 37 CPC 
itself is in question, grant of leave to defend may be 
permissible. The Court before passing a decree is 
entitled to take into consideration the consequences G 
therefor. The Courts dealing with summary trials should 
act very carefully taking note of the interests of both the 
parties. Merely on the ground that the defendant may 
resort to prolonged litigation by putting forth untenable 
H 
471 
472 
SUPREME COURT REPORTS 
[2015] 11 S.C.R. 
A and frivolous defences, grant of leave to defend cannot 
be declined. At the same time, the Court must ensure 
that the defendant raises a real issue and not a sham 
one. The Court cannot reject the defence on the 
ground of implausibility or inconsistency. Before 
B . recording a finding of granting leave to defend, the Court 
should assess the facts and come to the conclusion that 
if the facts alleged by the defendant in the affidavit are 
established, there would be a good or even a plausible 
defence on those facts. [Para 18] [484-A-E] 
c 
Neebha Kapoori Vs. Jayanti/al Khandwa/a 2008 (3) 
sec 770: 2008(1) SCR 1012 - relied on. 
T. Sukhender Reddy Vs. M. Surender Reddy 1998 (3) 
o 
ALO 659 - referred to. 
2. In cases where the defendant has raised a triable 
issue or a reasonable defence, the defendant is entitled 
to unconditional leave to defend. Leave is granted to 
E defend even in cases where the defendant upon 
disclosing a fact, though lacks the defence but makes 
a positive impression that at the trial the defence would 
be established to the plaintiff's claim. Only in the cases 
where the defence set up is illusory or sham or 
F practically moonshine, the plaintiff is entitled to leave to 
G 
H 
sign judgment. [Para 17] [483-F-H] 
Santosh Kumar Vs. Bhai Moo/ Singh AIR 1958 SC 321: 
1958 SCR 1211; Milkhiram (India) (P) Ltd. Vs: 
Chaman/al Bros AIR 1965 SC 1698; Mechelec 
Engineers & Manufacturers Vs. Basic Equipment 
Corpn. (1976) 4 SCC 687: 1977 (1) SCR 1060; Suni/ 
E(}ferprises & Anr. Vs. SB/ Commercial & International 
Bank Ltd. (1998) 5 SCC 354; Raj Duggal Vs. Ramesh 
Kumar Bansal 1991 Suppl.(1) SCC 191 - relied on. 
STATE BANK OF HYDERABAD v. RABO BANK 
473 
Sm. Kiranmoyee Dassi Vs. Dr. J. Chatterjee AIR 1949 A 
Cal 479- referred to. 
3. In the present case, FIR was registered by the 
CBI at the instance of Chief Vigilance Officer, of the 
appellant-Bank and also the Charge-Sheet was filed by B 
the CBI. The charge-sheet indicated the involvement of 
the Chief Manager of the appellant-Bank. Acting at the 
requests of representatives from the Indian clients of the 
respondent's constituent, the Chief Manager had 
induced some officers of the appellant-Bank who were C 
In-charge of Foreign Exchange Department to issue 
tested telex messages of co-acceptance. The charge-
sheet further alleges that these officers were not 
authorized to issue such co-acceptances and the 
motive behind theirillegal and unauthorized action was D 
to enable the constituent of the respondent to get their 
bills discounted by jeopardizing the interests of the 
appellant-Bank. It is also on record that the trial of the 
said case was at the stage of evidence as on 13th 
November, 2014. [Para 21] [485-B-E] 
E 
4. The substantial revelations of the defendant/ 
appellant in the affidavit coupled with the views 
expressed by the Division Bench of the High Court also 
makes it clear that there are certain

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