Conditional leave to defend is justified where the defendant fails to provide documentary evidence substantiating a plea of repayment.

The respondent filed a summary suit under Order XXXVII of the CPC for the recovery of ₹88,92,000/- advanced to the petitioner for business purposes

The respondent alleged that cheques issued by the petitioner were dishonored due to "insufficient funds"

The petitioner sought leave to defend, asserting that the cheques were issued merely as security and that the loan had already been repaid

On 24.04.2026, the Trial Court granted conditional leave to defend, subject to the petitioner depositing ₹10,00,000/- in a Fixed Deposit Receipt (FDR)

The petitioner challenged this condition before the High Court under Article 227 of the Constitution, arguing that the defense raised triable issues entitling him to unconditional leave

1. Whether the Trial Court exercised its jurisdiction illegally or with material irregularity by imposing a condition of deposit while granting leave to defend under Order XXXVII CPC

2. Whether the High Court should interfere with the discretionary order of the Trial Court under its supervisory jurisdiction under Article 227 of the Constitution

The court applied Order XXXVII Rule 3 of the CPC, which governs the procedure for summary suits and the granting of leave to defend

It relied on the principles established by the Supreme Court in IDBI Trusteeship Services Ltd. v. Hubtown Ltd. (2017) and B.L. Kashyap & Sons Ltd. v. JMS Steels and Power Corporation (2022), which categorize defenses into five types: (i) substantial defense (unconditional leave); (ii) triable issues with fair defense (ordinarily unconditional leave); (iii) triable issues with doubtful good faith (conditional leave); (iv) plausible but improbable defense (conditional leave/security for entire sum); and (v) frivolous/sham defense (leave refused)

For its supervisory scope, the court cited Waryam Singh v. Amarnath and Garment Craft v. Prakash Chand Goel, emphasizing that Article 227 is limited to ensuring subordinate courts stay within their authority and is not for re-appreciating evidence

The court found that while the petitioner claimed the loan was repaid, he failed to produce any documentary evidence such as bank statements or receipts to substantiate this "bald assertion"

Considering the admission of cheque issuance and subsequent dishonor, the Trial Court correctly determined that the defense, while not completely sham, remained unsubstantiated and required testing at trial

The High Court reasoned that the Trial Court balanced the equities by requiring a deposit of only ₹10,00,000/—a fraction of the ₹88,92,000/- claim—rather than the entire principal sum

The court noted that because the defense regarding repayment was "plausible but improbable" and lacked prima facie evidence, the Trial Court's exercise of discretion to impose a condition was judicious and consistent with the objective of Order XXXVII to expedite commercial claims

The petition was dismissed, and the Trial Court’s order dated 24.04.2026, granting conditional leave to defend upon the deposit of ₹10,00,000/-, was upheld