SUDIN DILIP TALAULIKAR versus POLYCAP WIRES PVT. LTD. AND OTHERS

Citation: [2019] 9 S.C.R. 279 · Decided: 15-07-2019 · Supreme Court of India · Bench: ASHOK BHUSHAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUDIN DILIP TALAULIKAR
v.
POLYCAP WIRES PVT. LTD. AND OTHERS
(Civil Appeal No.5528 of  2019)
JULY 15, 2019
[ASHOK BHUSHAN AND NAVIN SINHA, JJ.]
Code of Civil Procedure, 1908: Or. XXXVII,  r.3(5) – Summary
suit filed against appellant for recovery of Rs.64.18 lacs – Prior to
filing of summary suit, the respondent had filed criminal case under
s.138 of N.I. Act for the same dues which case he had unconditionally
withdrawn – However, while the prosecution under the N.I. Act was
pending, the respondent instituted the instant summary suit for
Rs.36.13 lacs being total sum of two dishonoured instruments with
an additional claim for Rs.28.05 lacs as interest – Conditional leave
to defend was granted to appellant-defendant with a finding based
on existence of a commercial relationship – Grievance of appellant
was that under the second proviso to sub-rule 5 of r.3 of Or. XXXVII,
the condition for deposit of Rs.30 lacs could not have been ordered
in absence of any admissible dues and he denied any dealings with
respondents after 2011 and stated that there was no occasion for
him to issue a cheque in the year 2014 for any alleged dues of the
year 2011 – Held: According to the plaint of the respondent,
commercial dealings between the parties ended on 03.06.2011 –
The respondent did not state any reason as to why outstanding
payment in respect of the same was made by cheque as late as
01.03.2014 – Although respondent had option to institute a summary
suit at the very inception of the dispute, but it consciously opted for
a prosecution under the N.I. Act which undoubtedly was a more
efficacious remedy for recovery of any specified amount of a
dishonoured instrument raising a presumption against the drawer,
as in a summary suit the possibility of leave to defend could not be
completely ruled out, in which case the recovery gets delayed and
protracted – The court, on 29.10.2015, in the prosecution instituted
by the respondent under the Act, required the respondent to file
certain additional documents because the appellant had denied the
existence of legal liability for any sum due – It was only thereafter
[2019]  9 S.C.R. 279
           279
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SUPREME COURT REPORTS
[2019] 9 S.C.R.
that the summary suit was instituted on 24.11.2015 – The prosecution
under the Act was subsequently unconditionally withdrawn on
14.12.2015 – This coupled with the specific contention of the
appellant, not denied by the respondent, that it had returned defective
goods and paid the balance dues of Rs.5 lacs, the conclusion to
grant leave to defend was perfectly justified – But the defence raised
by  appellant in background was certainly not a sham much less
frivolous and neither could it be called improbable – Appellant had
raised a substantial defence and genuine triable issues – The fact
that there may have been commercial relations between the parties
was the ground for the institution of the summary suit but could not
per se be the justification for grant of conditional leave sans proper
consideration of the defence from the materials on record – The
impugned orders granting conditional leave to defend were
unsustainable and liable to be set aside – Appellant is granted
unconditional leave to defend – Negotiable Instruments Act,
1881 – s.138.
Code of Civil Procedure, 1908: Or. XXXVII – Object of
summary suit – Grant of unconditional leave to defend –
Discretionary power of the court – In a summary suit, if the
defendant discloses such facts of a prima facie fair and reasonable
defence, the court may grant unconditional leave to defend – This
naturally concerns the subjective satisfaction of the court on the
basis of the materials that may be placed before it – However, in an
appropriate case, if the court is satisfied of a plausible or probable
defence and which defence is not considered a sham or moonshine,
but yet leaving certain doubts in the mind of the court, it may grant
conditional leave to defend – In contradistinction to the earlier
subjective satisfaction of the court, in the latter case there is an
element of discretion vested in the court – Such discretion is not
absolute but has to be judiciously exercised tempered with what is
just and proper in the facts of a particular case – The ultimate
object of a summary suit is expeditious disposal of a commercial
dispute – The discretion vested in the court, therefore, requires it to
maintain the delicate balance between the respective rights and
contentions by 

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