Conditional leave to defend may require security where the defendant’s bona fides are doubtful.

The respondent-plaintiff brought a summary suit under Order XXXVII CPC, relying on a written acknowledgment dated 21 March 2009 in which the petitioner-defendant acknowledged receipt of a short-term loan of ₹97,73,400, repayable with interest at 16% per annum; the funds had been advanced by cheque.

The defendant sought unconditional leave to defend, contending that the payment was consideration for services relating to film production, not a loan.

The Trial Court found a substantial and bona fide defence but granted leave subject to the defendant furnishing security for the amount ultimately decreed.

The defendant challenged that condition under Article 227, also relying on observations in an earlier revision that the suit had substantially progressed.

Whether the Trial Court was justified in making leave to defend conditional on the defendant furnishing security for the amount that might ultimately be decreed.

Whether the earlier revision’s observations about the progress of the suit and the purpose of Order XXXVII proceedings required the security condition to be set aside.

Order XXXVII Rule 3(5) CPC governs leave to defend in summary suits.

Under the principles discussed in Mechalec Engineers & Manufacturers v. Basic Equipment Corporation, IDBI Trusteeship Services Ltd. v. Hubtown Ltd., and B.L. Kashyap & Sons Ltd. v. JMS Steels & Power Corporation, unconditional leave is generally appropriate where the defendant discloses a substantial or bona fide triable defence, while conditional leave—including a requirement to furnish security—may be imposed where the defence is doubtful or the court has reason to doubt the defendant’s good faith.

The Court also noted the proviso to Rule 3(5), under which an admitted amount must be deposited as a condition precedent to leave, and referred to Rule 3(6)(b) in connection with conditional leave.

The Court considered the defendant’s account—that the payment related to film-production services—alongside the written acknowledgment of debt and the cheque payment.

It held that the acknowledgment and proof of payment supported the Trial Court’s decision to require security where doubt remained about the genuineness or good faith of the defence.

The earlier revision concerned rejection of the plaint under Order VII Rule 11 CPC; its observations about the suit’s progress did not determine the distinct question of whether leave to defend should be conditional.

Nor did the procedural stage of the suit displace the court’s discretion under Order XXXVII Rule 3(5).

It found the earlier revision observations insufficient to invalidate that condition and dismissed the writ petition.