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Judgment
Y.P. Nargotra, J.—The plaintiff Ghulam Mohd Wani who is respondent hero filed a suit for recovery of Rupees three lac and thirty-six
thousand plus interest thereon under order 37 CPC against the defendants who are petitioner herein in the court of Additional District Judge,
Srinagar. In the suit plaintiff urged that he is a business man and deals in Kashmiri arts and runs his business at Shorgari Mohalla Nawab Bazar,
Srinagar. The defendant No. 2 who is respondent No. 2 herein is the proprietor of the firm respondent No. 1. As per the case of the plaintiff the
defendant No. 2 approached the plaintiff for supply of Chain Stick on the promise that he would make a payment after a month or two from the
time he would lift the goods. The plaintiff supplied the goods and in turn the defendants issued two cheques dated 19th of April 1996 and 20th of
May 1996. After the lift of goods from Srinagar both the cheques could not be encashed due to shortage of funds. The plaintiff therefore
approached the defendants who in turn assured him that payment would be made in near future, But the promise was not kept. The plaintiff then
issued a notice to the defendants. When the payment was not made despite notice, the defendants instituted the suit under the provisions contained
in order 37. After the filing of the suit the summons were issued to the defendants in the prescribed form. The defendants entered their appearance
and applied for leave to defend the suit inter alia on the ground that the cheques were without consideration and therefore it is on their instructions
the payment thereon was stopped. The plaintiff contested the application of the defendants mainly on two grounds.
Firstly, that defendants had not entered their appearance in accordance with law as no notice of appearance was issued to the plaintiffs pleader
or the plaintiffs, therefore there being no legal appearance, leave to defend could not be granted to the defendants to defend the suit. Secondly, that
the defence put up was not substantial. Ld. trial court has declined by its order dated 20th of August 2001 impugned in this appeal by holding as
follows:
That the issuance of cheques has not been disputed but what has been disputed is that the cheques have been issued without consideration as the
goods were to be supplied by the plaintiff but the same were not supplied to the defendants. However, this defence although raised vehemently by
the defendants does not seem to be based on facts as there is nothing on record to show that the goods were not supplied by the plaintiffs. It is a
matter of common knowledge that in such transactions the suppliers are made to supply the goods first and then payment is made either through
cheques or otherwise. Merely saying that the cheques were issued without consideration does not suffice because then fraud on the part of the
plaintiff should have been pleaded which is not the case. It has been said that the cheques were issued but the goods were not supplied. The
defence raised by the defendants is not tenable one. In absence of any credible evidence to the effect that the cheques were issued without
consideration or fraud has been played with the defendants, thus making them to issue the cheques and the goods were not later on supplied. The
objection of the plaintiff to the petition for leave to defend that appearance is not strictly in accordance with Order 37 Rule 3(3) is born out from
the record as the petitioner for leave to defend also mentions that the appearance has been effected as envisaged under Order 37, Rule 2(3) of
CPC. The law laid down in AIR 1998 SC 2313 by the Apex Court is not applicable to the facts of the present case because as in that case fraud
had been alleged in the entire transaction. But in the present case the element of fraud has not been even pleaded by the defendants. I was inclined
to grant the petition even if there would have been moon-shine defence, but in absence of even that ends of justice would be defeated if the leave
to defend is granted.
Thus according to the Ld. trial Court the defence pleaded for obtaining leave of the court to defend the suit was not a valid defence and as such
was not tenable and since the defendants had not entered to appearance in the manner envisaged under Order 37 Rule 2(3) of CPC, the
defendants were not entitled to leave to defend.
In these circumstances the question arising for consideration is whether defendant who has not entered his appearance in accordance with the
provision contained in Order 37 Rule 2(3), is not entitled to leave to defend. The objection to the appearance of the defendant has been taken on
the ground that notice of such appearance was not given by defendants to the plaintiff pleader or to the plaintiff either by notice delivered or sent by
a pre-paid latter directed to the address of plaintiffs pleader or to the plaintiff. Such requirement of issuance of notice emanates from the provisions
contained in Sub-rule (3) of Rule 3 of Order 37 CPC which reads as follows:
On the day entering the appearance notice of such appearance shall be given by the defendants to the plaintiff's pleader or if the plaintiffs sues in
person, to the plaintiff himself either by notice delivered at or sent by a pre-paid letter directed to the address of plaintiffs pleader or of the plaintiff
as the case may be.
From the perusal of the provisions of the Sub-rule (3) it is manifest that a defendant who enters the appearance within ten days from service of
summons, to required to give a notice of his appearance to the plaintiffs pleader or if the plaintiff sues in person to the plaintiff himself. It no such
notice is given, would such lapse make the 'appearance' invalid so as to entitled the plaintiff to a decree? The answer would be found from the
object of the provision. The object of service of notice upon the pleader of the plaintiff or the plaintiff himself appears to be simply that plaintiff is
informed of the fact that the defendant has entered the appearance so that he can immediately within the prescribed period serve upon the
defendant summons for judgment and thereby avoid unnecessary delay. Therefore while entering of appearance within prescribed period of ten
days from the service of summons is mandatory filing of address for service and giving of notice to plaintiff or his counsel for entering appearance is
not mandatory as not prejudice which can not be compensated with costs can be caused to the plaintiff. In Pal Jain and Another Vs. Mulakh Raj, it
has held as follows:
Ld. counsel for the defendant/petitioners brought to my notice a decision of T.P.S. Chawla, J. dated 20th July 1981 passed in C.H.No. 228 of
1981 and reported as Arjan Lal Verma and Another Vs. Rawel Kaur, . Chawla, J. While construing the provisions of Order 37, Rule 2 had held
that 'Sub-rules (1) and (3) of Rule 3 indicates that entering appearance is one thing; filing an address for service another and giving notice of
appearance to the plaintiff or his counsel a third.' The Ld. Judge further held 'that Sub-rule (3) of Rule 2 has nothing to say as to the effect of non-
compliance with the second and third requirements. In accordance with the principle of harmonious construction the words 'enters an appearance'
in that sub-rule must be read in the same sense as is derived from Sub-rules (1) and (3) of Rule 3. Those sub-rules lead irresistibly to the
conclusion that entering an appearance does not of itself involve or import the filing of an address for service in court or serving notice of such
appearance on the plaintiff or his counsel. For, otherwise those two requirements would not have been stated additionally and separately.' The Ld.
Judge took the view that it is only the entering of appearance which is mandatory part of Rule 3 of Order 37 and filing of address for service and
giving notice to the plaintiff or his counsel of entering appearance are not mandatory provisions and if there is a violation thereof the same can be
compensated by costs. In any case in violation thereof, the suit could not be decreed.
A defendant after entering appearance can depend the suit only after he obtains leave to defend from the court under Rule 5. If the defendant
applies for leave to defend it cannot be validly 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 is frivolous or vexatious. The test to determine whether the defence set
up is substantial in my view would be, are the facts disclosed if accepted to be true at their face value disentitle to the plaintiff to a decree or that
such facts raise trial to issue in the suit.
In AIR SC 577 their lordships have held as under:
The following principles are to be followed while considering the question of granting leave to defend:
(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 [Civil
Rev. No. 115 of 1975. DA 27.10.1975 (Delhi)], and the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a fair 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 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 than 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. 49 CWN 246, Rel. on.
In the present case the defendant sought leave on the plea that the goods in consideration of which cheques were issued were not supplied by
the plaintiff. The defence thus raised was that the cheques were without consideration. Denial of consideration is a substantial defence but the Ld.
trial court on its peculiar reasoning held the same to be false so as to refuse the leave to defend Ld. trial court erred in returning such finding on the
question of fact without putting the parties on trial. In my view the defendant has made out a prima facie case for being entitled to (sic) to defend.
Ld. trial court was not justified in refusing the leave to defend and to pass consequent decree. The defendant is found entitled to grant of leave to
defend the suit.
Therefore for the reasons stated above the judgment and decree of the trial court cannot be sustained in law and is set aside and the suit is
remanded for proceeding afresh from the stage of granting leave to defend the suit to the defendant. The parties are directed through their counsel
to appear on 14th of June 2003 before trial court. The record of court below with a copy of this judgment be returned.