Javaid Ahmad Wani vs Gh. Mohd. Chat

Ali Mohd. Magrey, J.—Petitioners have filed this writ petition u/s 104 of the Constitution of Jammu and Kashmir, invoking the power of

Superintendence of this Court to quash the conditions laid down in order dated 23.02.2012 passed by the learned Principal District Judge,

Pulwama, in the suit filed against the petitioners by the respondent herein under the provisions of Order XXXVII of the CPC [Refer JK Laws 2nd

Ed. 2013 Vol. 5 P-803]. The facts narrated in writ petition are that the petitioners are stated to have borrowed an amount of Rs. 11,90,000.00

from the respondent herein on 11.06.2010 in lieu whereof a promissory note/hundi was executed by them in favour of the respondent. For

recovery of the said amount of Rs. 11,90,000.00 along with interest thereon with effect from 11.06.2010 till its final payment, the respondent filed

a suit under Order XXXVII of the CPC against the petitioners before the learned Principal District Judge, Pulwama. It is averred in the petition

that the respondent-plaintiff manipulated a report on the summons issued by the trial court to the petitioners-defendants, requiring them to cause

appearance within 10 days from the date of service thereof etc., and that the petitioners-defendants were kept in dark about the actual period of

time within which they were required to enter their appearance. The petitioners had, therefore, to seek extension of time to enter their appearance

and condonation of the delay. The trial court, after obtaining objections from the respondent-plaintiff and hearing arguments, condoned the delay

by order dated 18.08.2011. Consequently, it is stated that, the petitioners-defendants entered their appearance on the same date. The respondent-

plaintiff, thereafter, filed an application for serving on the petitioners-defendants summons for judgment in Form 4-A, returnable within 10 days. In

response thereto, the petitioners made an application under the provisions of Rule 4 of Order XXXVII CPC for grant of leave to defend the suit.

The learned trial court, it is averred, passed a detailed order dated 23.02.2012 and allowed the application recording that the defendants have a

good defence to the claim on its merits and allowed them to defend the suit subject to deposition of Rs. 2.60 lacs by the petitioners-defendants in

the court as the admitted outstanding liability, and further tendering a solvent/non-bank guarantee of two reputed persons in respect of an amount

of Rs. 10.00 lacs for assuring the payment of the suit amount, if decreed along with interests and costs. The petitioners-defendants are aggrieved of

the aforesaid two conditions laid in the order in question dated 23.02.2012.

Respondent-plaintiff has filed his objections/reply to the writ petition wherein the he has objected to the maintainability of the writ petition. It is

stated that since the petitioners-defendants, while contesting the suit before the trial court, have admitted their liability to the extent of Rs. 2.60 lacs,

the trial court was within its powers to require them to deposit the said amount before the court towards recovery of the claimed amount and that

the order passed by the learned trial court is legally valid and justified under law.

I have heard learned counsel for the parties, perused the records and considered the matter.

At the hearing the learned counsel for the parties made a fair deal of arguments for and against the maintainability of this petition. However,

before dealing with the issue of maintainability of the writ petition, I deem it appropriate to advert to the contentions raised by the petitioners in this

petition.

The case of the petitioners is that the learned trial court ought not to have laid the impugned conditions in its order dated 23.02.2012 when it

had come to the definite conclusion that the facts alleged by the petitioners-defendants in their application for leave to defend give rise to triable

issues and justify trial of the case. The learned counsel for the petitioners submitted that in a suit instituted under Order XXXVII CPC, if the

defendant satisfies the court that he has a good defence to the claim on its merits, the plaintiff is not entitled to sign the judgment and the defendant

is entitled to unconditional leave to defend. To buttress his argument, the learned counsel for the petitioners relied upon the judgment of the

Supreme Court in Mechelec Engineers and Manufacturers Vs. Basic Equipment Corporation, . The learned counsel further argued that since the

plaint was not filed in duplicate, the same was liable to be rejected in terms of provision contained in Order VII, Rule 11(e) CPC. It was also

argued that the respondent-plaintiff having not filed an affidavit verifying the pleadings in terms of the provision of Order VI, Rule 15(4), no

proceedings could have been commenced thereon in terms of the mandate of Order IV, Rule 1(2) CPC and that the plaint was invalid.

Per contra, Mr. M.A. Qayoom, learned counsel for the respondent, submitted that the law laid down in M/s. Mechalee Engineers and

Manufacturers v. Basic Equipment Corpn., (supra) is not applicable to the case at hand, since the procedural law on the subject has undergone a

change after the aforesaid judgment was rendered on the subject. He submitted that the law which holds field now has been laid down by the

Supreme Court in a judgment in Southern Sales and Services and Others Vs. Sauermilch Design and Handels GMBH, . Further, citing and relying

on a judgment of the Supreme Court in Salem Advocate Bar Association Vs. Union of India (UOI), , the learned counsel submitted that if there is

any defect as contemplated by Rule 11(e) of Order VII, the same is rectifiable and that the plaint cannot be rejected unless the plaintiff is given an

opportunity for rectifying the defect, if any. He further submitted that since Order XXXVII CPC contains a self contained summary procedure,

there is no requirement of filing an affidavit verifying the pleadings in terms of the provision of Order VI, Rule 15(4) CPC.

The Supreme Court, in its judgment in M/s. Mechalee Engineers and Manufacturers v. Basic Equipment Corpn. (supra), cited and relied upon

by the learned counsel for the petitioners, quoted with approval the principles applicable to cases covered by Order XXXVII C.P.C., as had

earlier been summarized and stated by the Calcutta High Court in Kiranmoyee Dassi and another Vs. Dr. J. Chatterjee . The principles so stated

are reproduced hereunder:

(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and

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 positively good defence the

plaintiff is not entitled to sign judgment and 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 to say, although the affidavit does not

positively and immediately make it clear that he has a defence, yet, shows such a state of facts as leads to the inference that at the trial of the action

he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend

but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing

security.

(d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave

to sign judgment and the Defendant is not entitled to leave to defend.

(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to

leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or

otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a

defence.

The trial court has also quoted the aforesaid principles in its order, ostensibly, taking the same as holding the field. However, it needs to be

observed here that these principles were relevant in context of the provision of Rule 3 as it existed then. Rule 3, as it exists now on the statute

book, was introduced in the Central CPC by way of amendment with effect from 01.02.1977. Similarly, in the State of Jammu and Kashmir, Rule

3 of Order XXXVII was substituted by Act XI of 1983. Prior to its substitution, it read as under:

(1) The Court shall, upon an application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts

as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application.

(2) Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues

or otherwise as the Court thinks fit.

(3) The provisions of Section 5 of the limitation act Svt., 1995 shall apply to applications under sub-rule (1).

By virtue of the Amendment Act XI of 1983, Rule 3 of Order XXXVII was substituted by Rule 3 as it now exists and various changes of which

one of the more significant changes was introduction of sub-rules (4), (5) and (6) under Rule 3 thereof. It would be profitable to quote sub-rules

(4), (5) and (6) of Rule 3 of Order XXXVII C.P.C. hereunder:

(4) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment in Form No. 4-A, in

Appendix B or such other Form as may be prescribed from time to time, returnable not less than ten days from the date of service supported by an

affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit.

(5) The defendant may, at any time Within ten days from the service of such summons for judgment, affidavit or otherwise disclosing such facts as

may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him

unconditionally or upon such terms as may appear to the Court or Judge to be just;

Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a

substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious;

Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit

shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.

(6) At the hearing of such summons for judgment:-

a. if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment

forthwith; or

b. if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and

within such time as may be fixed by the Court or Judge and that, on failure to give such security within the time specified by the Court or Judge or

to carry out such other directions as may have-been given by the Court or Judge, the plaintiff shall be entitled to judgment forthwith.

It is thus seen that after substitution of Rule 3 of Order XXXVII and introduction of sub-rules (4), (5) and (6) in Rule 3, the law has drastically

changed. The principles enunciated by the Supreme Court in M/s. Mechalec Engineers and Manufacturers v. Basic Equipment Corpn. (supra), are

no more applicable.

It may be mentioned here that sub-rule (3) of Rule 2 under Order XXXVII CPC provides that the defendant shall not defend the suit referred to

in sub-rule (1) thereof unless he enters an appearance and in default of his entering an appearance the allegation in the plaint shall be deemed to be

admitted and the plaintiff shall be entitled to a decree for any sum, not exceeding the sum mentioned in the summons, together with interest at the

rate specified, if any, up to the date of the decree and such sum for costs as may be determined by the High Court from time to time. Rule 3,

Order XXXVII CPC provides the procedure for the appearance of defendants. It is not in dispute that in terms of sub-rule (7) of Rule 3 under the

aforesaid Order the learned trial court has excused the delay of the petitioners-defendants in entering appearance and in applying for leave to

defend the suit. The procedure that is required to be followed by the court after the defendant enters appearance is provided in sub-rules (4), (5)

and (6) of Rule 3 of Order XXXVII CPC, as quoted hereinabove. The answer to the controversy raised by the petitioners in this petition, in fact,

lies in the aforesaid provisions of Rule 3 of Order XXXVII CPC.

As seen above, sub-rule (5) of Rule 3 provides that leave to defend may be granted to the defendant unconditionally or upon such terms as

may appear to the Court or Judge to be just. This provision of the law confers a clear discretion on the court or the Judge to grant leave to the

defendant to defend unconditionally or upon such terms as may appear to it or him to be just. However, such discretion has to be exercised

judiciously keeping in view the facts of the case.

The second proviso to sub-rule (5) provides that where a part of the amount claimed by the plaintiff is admitted by the defendant to be due

from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court. The second

proviso, as is axiomatic, uses the word ""shall"" and makes the deposit of any admitted amount a condition precedent for grant of leave to defend a

suit filed under Order XXXVII CPC. In other words, the second proviso to sub-rule (5) of Rule 3 makes it clear that leave to defend a suit shall

not be granted unless the amount as admitted to be due by the defendant is deposited in Court.

Further, clause (b) of sub-rule (6) of Rule 3 provides that if the defendant is permitted to defend as to the whole or any part of the claim, the

Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge. This provision of the law, again, is

a matter in the discretion of the trial Judge and, of course, in dealing with it, he has to exercise his discretion judiciously, keeping in view the facts of

the case.

In Southern Sales & Services v. Sauermilch Design & Handles Gmbh (supra), cited and relied upon by Mr. Qayoom, the Supreme Court has

had the occasion to consider the effect of amendments thus brought about in Rule 3 of Order XXXVII CPC. The respondent in that case had filed

a suit under Order XXXVII CPC for recovery of a sum of Euro 757,885.42 equivalent to Rs. 3,86,52,156.42 in Indian currency. On being

served with summons for judgment in terms of Rule 3, Sub-rule (4) of Order XXXVII CPC, the petitioner filed an affidavit providing various

details which made out triable issues in the suit. On the basis of the said affidavit, the learned Additional City Civil Judge, Bangalore, granted

unconditional leave to the petitioner to defend the suit. Being aggrieved by the said order, the respondent moved in revision before the High Court.

The High Court came to the conclusion that a triable issue had been raised in the suit which would have to be decided in a full-fledged trial.

However, the High Court also came to a finding that though the defendants had raised a triable issue, the defence taken did not exonerate them

from payment of the entire amount claimed by the plaintiff. The High Court held that despite the admission of the defendants regarding the amount

claimed by of the plaintiff in the suit, since the same had not been paid to the plaintiff it would be in the fitness of things to direct the defendants to

deposit a substantial portion of the amount which had been admitted to be due and payable even if the defence set up by the defendants was not

sham, moonshine or illusory. The High Court, accordingly, modified the unconditional leave granted to the defendants to defend the suit and

directed that leave to defend the suit in respect of the claim of the plaintiff would be subject to the condition that the defendants would deposit in

the trial court 55% of the said amount within eight weeks from the date of the orders of the High Court. The defendants in the suit challenged the

said order of the High Court before the Supreme Court.

On behalf of the respondent, it was submitted before the Supreme Court that the legal parameters in which the earlier decisions right upto M/s.

Mecltalec Engineers and Manufacturers v. Basic Equipment Corpn. (supra) were rendered, stood significantly altered after the amendment of the

Code in 1976 and that the decisions to a large extent were rendered ineffective in view of addition of sub-rules (4), (5) and (6) to Rule 3 of Order

XXXVII CPC. The Supreme Court in paragraph 14 of the judgment held as under:

Having considered the submissions made on behalf of the respective parties, and the decisions cited, there appears to be force in Mr. Sharma's

submissions regarding the object intended to be achieved by the introduction of Sub-rules (4), (5) and (6) in Rule 3 of Order 37 of the Code.

Whereas in the unamended provisions of Rule 3, there was no compulsion for making any deposit as a condition precedent to grant of leave to

defend a suit by virtue of the second proviso to sub-rule (5), the said provision was altered to the extent that the deposit of any admitted amount is

now a condition precedent for grant of leave to defend a suit filed under Order 37 of the Code. A distinction has been made in respect of any part

of the claim, which is admitted. The second proviso to sub-rule (5) of Rule 3 makes it very clear that leave to defend a suit shall not be granted

unless the amount as admitted to be due by the defendant is deposited in Court.

In paragraph 17 of the judgment, the Supreme Court further held as under:

... The earlier concept of granting unconditional leave when a triable issue is raised on behalf of the defendant, has been supplemented by the

addition of a mandate, which has been imposed on the defendant, to deposit any amount as admitted before leave to defend the suit can be

granted. The question as to whether leave to defend a suit can be granted or not is within the discretionary powers of the High Court and it does

not appear to us that such discretion has been exercised erroneously or with any irregularity which warrants interference by this Court.

Thus, the law, as it exists now, is what has been enunciated by the Supreme Court in the aforesaid judgment in Southern Sales & Services v.

Sauermilch Design & Handles Gmbh (supra).

In the present case, the petitioners in their affidavit have admitted the execution of promissory note/hundi in favour of the plaintiff for an amount

of Rs. 11.9 lacs, It is, however, stated that the petitioners-defendants were carrying on their business with one Gh. Mohammad Shah. In the year

2009 when they and said Gh. Mohammad Shah settled their accounts of the business, they were found liable to pay Rs. 18.00 lacs towards said

Gh. Mohammad Shah. To clear this amount, they gave their proprietary land consisting two kanals to Gh. Mohammad Shah on the condition that

they would pay Rs. 18.00 lacs to him by 05.06.2010 and he would return the land to them. By 05.06.2010 they could pay only Rs. 5,91,00.00.

For the remaining amount of Rs. 11.9 lacs, Gh. Mohammad Shah demanded guarantee of a respectable person from them. The respondent-

plaintiff, being the maternal uncle of the petitioners-defendants, on their request, gave a hundi for Rs. 11.9 lacs to Gh. Mohammad Shall. In turn,

the petitioners-defendants executed a promissory note/hundi for the same sum in favour of the respondent-plaintiff. It is stated that out of the said

amount of Rs. 11.9 lacs, they have already paid Rs. 9.3 lacs to said Gh. Mohd. Shah through the respondent-plaintiff. In paragraph 3 of the

affidavit, it is unambiguously stated that now the defendants owe only Rs. 2.6 lacs. In that view of the matter, the petitioners-defendants have

admitted the liability of Rs. 2.6 lacs.

It is, therefore manifest, going by the law as it stands now, that the learned trial court could not have granted leave to defend unless the amount

as admitted to be due by the petitioners-defendants was directed to be deposited in Court. Further, the direction made by the learned trial court to

the defendants to furnish non-bank guarantee of two reputed persons in respect of an amount of Rs. 10,00, lacs for assuring the payment of the

suit amount, if decreed alongwith interest and costs, falls within the discretion of the learned trial court and it does not appear that the discretion has

been exercised erroneously or with any irregularity. The decision cited and relied upon by the learned counsel for the petitioners in that behalf is of

no help to him. Consequently, the contention raised by the learned counsel for the petitioners, that the learned trial court ought to have granted

unconditional leave to defend, is an argument antithetic to the law as it stands now.

Coming to the next argument of the learned counsel for the petitioners that the plaint is liable to be rejected in terms of provision of Rule 11(e)

of Order VII CPC, in Salem Advocate Bar Assocn., Tamil Nadu v. Union of India (supra), cited by Mr. Qayoom, the Supreme Court, in

paragraph 16 of the judgment, in this connection, has held as under:

Our attention has been drawn to Order 7, Rule 11 to which clauses (e) and (f) have been added which enable the Court to reject the plaint where

it is not filed in duplicate or where the plaintiff fails to comply with the provisions of Rule 9 of Order 7. It appears to us that the said clauses being

procedural would not require the automatic rejection of the plaint at the first instance. If there is any defect as contemplated by Rule 11(e) or non-

compliance as referred to in Rule 11(f), the Court should ordinarily give an opportunity for rectifying the defects and in the event of the same not

being done the Court will have the liberty or the right to reject the plaint.

Above being the settled position of law, the argument advanced by the learned counsel for the petitioners is untenable and, does not require any

further discussion.

The next contention raised on behalf of the petitioners is that since the plaint was not supported by an affidavit, as required in terms of the

provision of Rule 15(4), Order VI CPC, the suit was not entertainable. Learned counsel submitted that the provision contained in Rule 15(4) of

Order VI CPC is mandatory in nature and, in fact, no proceedings could have been commenced unless the suit was instituted in accordance with

the provisions contained in various Rules under Orders IV, VI and VII CPC. Learned counsel for the respondent, on the other hand submitted that

Order XXXVII provides for a summary trial and is a self contained procedure and that the provision of Rules under the aforesaid Orders are not

applicable to the suits filed under Order XXXVII CPC.

I have considered the rival submissions on this point. Order IV CPC deals with the institution of suits. Rule 1 thereunder provides, 'suit to be

commenced by plaint'. Sub-rule (2) of Rule 1 under Order IV provides that ""every plaint shall comply with the rules contained in Orders VI and

VII, so far as applicable"". Rule 15, Order VI deals with verification of pleadings. It is quoted hereunder:

Verification of pleadings

(1) Save as otherwise provided by any law for the time being in force, every pleading shall be verified at the foot by the party or by one of the

parties pleading or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case.

(2) The person verifying shall specify, by reference to the numbered paragraphs of the pleading, what he verifies of his own knowledge and what

he verifies upon information received and believed to be true.

(3) The verification shall be signed by the person making it and shall state the date on which and the place at which it was signed.

(4) The person verifying the pleading shall also furnish an affidavit in support of his Pleadings.

Sub-rule (4) of Rule 15 of Order VI, as seen above, provides that the person verifying the pleading shall also furnish an affidavit in support of

his pleadings. Though the provision uses the word 'shall' and appears to be mandatory, but the provisions of Rule 15 are only procedural in nature,

thus directory. Therefore, the contention raised could safely be held to be covered by the judgment of the Supreme Court in Salem Advocate Bar

Assocn., Tamil Nadu v. Union of India (supra), as quoted hereinabove. Even otherwise, this point has come up before the Supreme Court in

Vidyawati Gupta v. Bhakti Hari Nayak, (2006) 2 SCC 777 where, in paragraph of the judgment, it has been held as under:

...[T]he requirements of Order 6 and 7 of the Code, being procedural in nature, any omission in respect thereof will not render the plaint invalid

and that such defect or omission will not only be curable but will also date back to the presentation of the plaint...

In view of the above, even if it be the case that Order XXXVII CPC does not contain a complete procedure, non-filing of affidavit would not

render the plaint invalid and, consequently, it cannot be said that no proceedings could have commenced thereon. The defect or omission is curable

and removal of such defect will date back to the presentation of the plaint. Therefore, the proceedings drawn by the learned trial court in the shape

of the impugned order cannot be faulted on that count.

Now coming to the question as to the maintainability of this writ petition, it is settled now that the ambit of High Court's power of

superintendence under Article 227 of the Constitution of India, which is pari materia with Section 104 of the Constitution of Jammu and Kashmir,

is only to keep the Courts and Tribunals subordinate to the High Court within the bounds of their authority. Since I have come to the conclusion

that the impugned conditions laid down by the learned trial court in its order dated 23.02.2012 are within the bounds of authority and powers of

the learned Principal District Judge, Pulwama, no interference is warranted by this Court in exercise of its power of superintendence in terms of

Section 104 of the Constitution of Jammu and Kashmir. Reference in this connection may be made to the decision of the Supreme Court in Shalini

Shyam Shetty and Another Vs. Rajendra Shankar Patil, .

This petition is, accordingly, dismissed in limine together with the connected CMP, however, without any order as to Costs. Registry is

directed to send down the records to the trial court forthwith.