Full Judgment Text
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PETITIONER:
M/S. SUNIL ENTERORISES & ANR.
Vs.
RESPONDENT:
SBI COMMERCIAL & INTERNATIONAL BANK LTD.
DATE OF JUDGMENT: 30/04/1998
BENCH:
S.C. AGRAWAL, S. RAJENDRA BABU
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
RAJENDRA BABU.J.
Leave granted.
This appeal arises out of an order made by the High
Court of Bombay affirming an order made by the Trial Judge
in a summary suit filed under Order 37 of C.P. C. whereby
the Trial Judge had issued summons for Judgment and made it
absolute against the appellants and consequently passed a
decree against them for a sum of Rs. 37,51,519.43 with
interest and certain other incidental charges. A suit was
brought by the respondents on the basis of bills of exchange
in respect of which the appellants are the acceptors. M/s.
Khanna Sales Corporation are the grawees of the bill who
have Local Bill Discounting facility with the respondents.
Under the said facility, M/s. Khanna Sales Corporation
discounted the bills of exchange. The respondent bank made
payments to M/s. Khanna Sales Corporation on the basis of
the bills of exchange. Since the amounts under the Bills of
Exchange were not paid and received by the respondent bank
when they were presented within the stipulated time and
since demand did not come for to despite notice of demand,
the respondent bank filed a summary suit as aforesaid. Nine
bills of exchange had been drawn by M/s. Khanna Sales
Corporation. The appellants before us sought leave to defend
themselves contending that the Bills of Exchange were
executed without consideration as neither the goods were
sold nor supplied in the transaction in question. The
appellant alleged fraud, collusion and connivance between
the officers of the respondent and M/s. Khanna Sales
Corporation. The learning Trial Judge refused the leave to
defend suit. On appeal, the Division Bench considered the
matter and held that the undisputed position is that the
appellants are the acceptors of the Bills of Exchange in
question and that no goods were supplied or actually sold by
M/s. Khanna Sales Corporation to the appellants and,
therefore, the Bills of Exchange were not supported by
consideration. Section 43 of the Negotiable Instruments Act
saves the right of the holder in due courses like the
respondent to claim the amount of Bill of Exchange. In
certain other instances the Bills of Exchange had been
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negotiated through the bank without any difficulty and,
therefore, Division Bench was of the view that there is no
logic in the submission made on behalf of the appellants. If
any fraud has been alleged that could be reflective on their
conduct and, therefore, it would be too much for the
respondent bank or their officers to be instrumental in
perpetration of such a fraud by the appellants and M/s.
Khanna Sales Corporation and, therefore, the appellants
cannot escape their liability and responsibility under the
Bills of Exchange in question. On that basis they took the
view that pleas raised by the appellants were frivolous and
have no substance and merits in their defence.
In this appeal it is contended that what should be
examined at the stage of grant of leave to defend is whether
there was a real or a snam defence and whether the facts
alleged by the appellants if established would be a good
defence and the trial court should go into the question
whether the facts alleged were true or not, as that
situation would arise only after leave was granted and at
the trial. That a condition as to security could be imposed
if the Court was of the opinion that the defence was out
forward with a view to prolong this suit.
The position in law has been explained by this Court in
Santosh Kumar vs. Mool Singh (1958) SCR 1211. Milkhiram
(India) Private Ltd. vs. Chaman Lal Bros. AIR 1965 SC. 1698
and Michalec Eng. & Mfg. vs. Bank Equipment Corporation AIR
1977 SC 577. The propositions laid down in these decisions
may be summed up as follows:-
(a) If the defendant satisfies 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 food 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 disclosed that at the trial he may be
able to establish a defence to the plaintiff 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 if the defence
is sham or illusory or practically moonshine, the
defendant is not entitled to leave 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 the condition that the amount claimed should
be paid into Court or otherwise secured.
In fact in identical matters on the file of the said
High Court in summary suit No. 2963 of 1990 Dena Bank
vs. M/s. Sunil Enterprises and summary suit No.1193 of
1989 Bank of India vs. Mahendra Sarabhai Choksi, leave
to defend had been granted to defendants.
In those cases the circumstances arising are that the
Bills of Exchange were accepted by the defendant even though
they had already discharged earlier. Bills of Exchange as
and when they were due and the bank had continued to pay out
such large amounts of Bills of Exchange accepted by the
party who is already a defaulter. It is also contended that
some of the Bills of Exchange were mere secondary documents
and, therefore, these matters require examination. It cannot
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be said that the defence raised by the appellants is totally
defenceless or moonshine or illusory as noticed earlier in
the course of this order. Therefore, the view taken by the
High Court that appellants have absolutely no prima facie
case, may not be correct. And in the circumstances, we allow
appeals, set aside the order made by the Division Bench and
the judge on the original side of the Bombay High Court and
dismiss the Summons for Judgment, grant leave and direct
unconditional leave to the defendant to defend the suit.
Appeals, therefore, stand allowed accordingly.