Bombay High Court
Jade Traders Private Ltd vs Credence Analytics Pvt Ltd on 23 April, 2025
Author: N. J. Jamadar
Bench: N. J. Jamadar
2025:BHC-AS:19617
29-WP-18893-2024.DOC
Arun Sankpal
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 18893 OF 2024
Jade Traders Private Ltd
A Company incorporated
under the provisions of companies
Act 1956, having its registered office
address at Unit No. 6, Ground floor,
Kamath Industrial Estate, Opp. Siddhi
Vinayak Temple, Mumbai 400 025
and also having office at
Ginger House, Raghuvanshi Mills
Compound, Senapati Bapat Marg,
Lower Parel, Mumbai 400 013. ..Petitioner
Versus
Credence Analytics (India) Pvt Ltd
A company incorporated under
the provisions of companies
Act 1956, having its registered office
address at 604, 6th floor, B Wing,
Eureka Tower, Mindscape, Off Link Road, ...Respondent
Malad West, Mumbai 400 064.
Mr. Dinesh Jain, with Anurag Katarki, for the Petitioner.
Mr. Shreyas Lele, with Dhiraj Mhetre and Ms. Vaidehi, i/b Khaitan
Legal Associates, for the Respondent.
CORAM: N. J. JAMADAR, J.
DATED : 23rd APRIL 2025
ARUN
RAMCHANDRA
SANKPAL
Digitally signed by
ORAL JUDGMENT:
ARUN
RAMCHANDRA
SANKPAL
Date: 2025.04.30
14:15:40 +0530 1. Rule. Rule made returnable forthwith and, with the consent of
the learned Counsel for the parties, heard finally.
29-WP-18893-2024.DOC
2. The challenge in this Petition is to an order dated 19 th October
2024 passed by the learned Judge, City Civil Court, Mazgaon, Greater
Mumbai, whereby the Petitioner has been granted leave to defend the
Suit subject to deposit of a sum of Rs. 60,90,000/- within a period of 60
days from the date of said order.
3. The Respondent instituted a Summary Suit for recovery of the
amount of security deposit paid under the Leave and Licence Agreement
executed on 23rd May 2017, asserting that the Defendant committed
default in repayment of the amount of security deposit after the expiry
of the term of licence and delivery of possession of the licenced
premises, despite repeated demands.
4. The Defendant sought leave to defend the Suit unconditionally
contending, inter alia, that the Plaintiff was liable to pay an amount of
Rs. 31,60,955/- to the Defendant as during the currency of the Leave
and Licence Agreement, the Plaintiff had paid licence fee at a
discounted rate on the condition that the Plaintiff would continue to
occupy the licenced premises beyond the initial term of the licence.
Secondly, though the Leave and Licence Agreement records that a sum
of Rs. 60,90,000/- was deposited by way of security deposit, yet, in fact,
only a sum of Rs. 52,50,000/- was deposited. The Plaintiff had
acknowledged the said fact in the communications exchanged between
29-WP-18893-2024.DOC
the parties. However, those communications were suppressed while
instituting the Suit.
5. By the impugned order, the learned Judge, City Civil Court was
persuaded to grant conditional leave to defend the Suit observing, inter
alia, that it was incontestable that the Defendant had received a sum of
Rs.52,50,000/- and the Defendant had not refunded the amount of
security deposit. Thus the leave to defend was required to be granted on
the condition of deposit of an amount of Rs.60,90,000/- as the Leave
and Licence Agreement recorded that the said amount was paid by way
of security deposit.
6. Mr. Jain, the learned Counsel for the Petitioner, submitted that
the Plaintiff has instituted the Suit by suppressing material facts.
Attention of the Court was invited to the communication addressed on
behalf of the Plaintiff on 29th October 2022, wherein the Plaintiff had
claimed refund of Rs. 30,80,973/- only, after accounting for the
discounted amount of the licence fee to the tune of Rs. 35,13,358/-.
Attention of the Court was also invited to the reply thereto, which was
addressed on behalf of the Defendant, claiming a sum of Rs.
84,10,955/- to be due and payable by the Plaintiff. It was further
submitted that even before the institution of the Suit the Defendant had
addressed a letter demanding the said amount from the Plaintiff.
29-WP-18893-2024.DOC
7. The Defendant is entitled to recover more amount from the
Plaintiff and, therefore, in the Affidavit seeking leave to defend, the
Defendant had sought leave to file a counter-claim as well. In these
circumstances, when triable issues were raised, the Trial Court ought to
have granted unconditional leave to defend the Suit.
8. In opposition to this, Mr. Lele the learned Counsel for the Plaintiff
submitted that it is indisputable that the security deposit had not been
refunded, despite repeated demands. In view of a clear and explicit
admission in the Leave and Licence Agreement that a sum of Rs.
60,90,000/- was paid by way of security deposit, the learned Judge,
City Civil Court was fully justified in directing the Defendant to deposit
the said amount.
9. The learned Counsel further submitted that the amount of Rs.
52,50,000/- was already with the Defendant when the parties entered
into the Leave and Licence Agreement. In addition, the Plaintiff had
incurred expenses for making the licenced premises habitable and
compatible with the requirements of the Plaintiff and, therefore, a sum
of Rs. 60,90,000/- was acknowledged to have been received by way of
security deposit in the Leave and Licence Agreement.
10. I have given careful consideration to the submissions canvassed
across the bar. It is well neigh settled, a suit for refund of the security
deposit is maintainable as a Summary Suit. There is no dispute over the
29-WP-18893-2024.DOC
fact that the licence came to an end and the Defendant has not
refunded the security deposit. The parties are at issue over the amount
which was actually paid by way of security deposit, and whether the
Defendant is entitled to deduct the amount out of the security deposit
towards the dues which the Defendant claims the Plaintiff owes to it.
11. In the backdrop of this nature of the dispute, the communications
exchanged between the parties throw light on the transaction between
the parties. It is not put in contest that the Plaintiff had paid the licence
fee at a discounted rate during the currency of the licence, particularly
during the Covid 19 pandemic. The communication dated 29 th October
2022, addressed on behalf of the Plaintiff records the fact that a sum of
Rs. 35,13,358/- was the aggregate amount of licence fees which was
not paid on account of the discounted rate at which the Plaintiff had
paid the licence fees. In the backdrop of this communication, whether
the Trial Court was justified in imposing the condition of deposit of the
entire amount of the security deposit, warrants consideration.
12. The legal position as regards the grant of leave to defend the Suit
is well-settled. If the Defendant raises a substantial defence, the
Defendant is entitled to an unconditional leave. Where the Defendant
raises a triable issue premised on a fair and reasonable defence,
ordinarily, the Defendant is entitled to an unconditional leave.
However, where the Court entertains doubt about the bona fide or
29-WP-18893-2024.DOC
genuineness of the defence and the defence appears improbable,
conditional leave to defend the Suit can be granted. Conditions may
pertain to time or mode of trial or deposit of the amount. Leave to
defend is to be denied only in such cases where the defendant has
practically no defence and is unable to come up with a semblance of
triable issue before the Court. Even if there remains a reasonable doubt
about the probability of defence, sterner conditions could be imposed
while granting leave but refusal to grant leave to defend would be
justified only in such cases where the defendant fails to show any
genuine triable issue and, conversely, the defence appears frivolous or
vexatious.
13. A useful reference can be made to the decision of the Supreme
Court in the case of B. L. Kashyap and Sons Ltd. vs. M/s. JMS Steels and
Power Corporation and Another1 , wherein the tests to grant the leave
to defend a summary suit, were reiterated as under:
"33. It is at once clear that even though in the case of
IDBI Trusteeship, this Court has observed that the
principles stated in paragraph 8 of Mechelec Engineers'
case shall stand superseded in the wake of amendment
of Rule 3 of Order XXXVII but, on the core theme, the
principles remain the same that grant of leave to defend
(with or without conditions) is the ordinary rule; and
denial of leave to defend is an exception. Putting it in
other words, generally, the prayer for leave to defend is
to be denied in such cases where the defendant has
practically no defence and is unable to give out even a
semblance of triable issues before the Court.
1 (2022) 3 SCC 294.
29-WP-18893-2024.DOC
33.1 As noticed, if the defendant satisfies the Court
that he has substantial defence, i.e., a defence which is
likely to succeed, he is entitled to unconditional leave to
defend. In the second eventuality, where the defendant
raises triable issues indicating a fair or bonafide or
reasonable defence, albeit not a positively good defence,
he would be ordinarily entitled to unconditional leave to
defend. In the third eventuality, where the defendant
raises triable issues, but it remains doubtful if the
defendant is raising the same in good faith or about
genuineness of the issues, the Trial Court is expected to
balance the requirements of expeditious disposal of
commercial causes on one hand and of not shutting out
triable issues by unduly severe orders on the other.
Therefore, the Trial Court may impose conditions both as
to time or mode of trial as well as payment into the
Court or furnishing security. In the fourth eventuality,
where the proposed defence appear to be plausible but
improbable, heightened conditions may be imposed as to
the time or mode of trial as also of payment into the
Court or furnishing security or both, which may extend
to the entire principal sum together with just and
requisite interest.
33.2 Thus, it could be seen that in the case of
substantial defence, the defendant is entitled to
unconditional leave; and even in the case of a triable
issue on a fair and reasonable defence, the defendant is
ordinarily entitled to unconditional leave to defend. In
case of doubts about the intent of the defendant or
genuineness of the triable issues as also the probability of
defence, the leave could yet be granted but while
imposing conditions as to the time or mode of trial or
payment or furnishing security. Thus, even in such cases
of doubts or reservations, denial of leave to defend is not
the rule; but appropriate conditions may be imposed
while granting the leave. It is only in the case where the
defendant is found to be having no substantial defence
and/or raising no genuine triable issues coupled with the
Court's view that the defence is frivolous or vexatious
that the leave to defend is to be refused and the plaintiff
is entitled to judgment forthwith. Of course, in the case
where any part of the amount claimed by the plaintiff is
admitted by the defendant, leave to defend is not to be
granted unless the amount so admitted is deposited by
29-WP-18893-2024.DOC
the defendant in the Court.
33.3 Therefore, while dealing with an application
seeking leave to defend, it would not be a correct
approach to proceed as if denying the leave is the rule or
that the leave to defend is to be granted only in
exceptional cases or only in cases where the defence
would appear to be a meritorious one. Even in the case
of raising of triable issues, with the defendant indicating
his having a fair or reasonable defence, he is ordinarily
entitled to unconditional leave to defend unless there be
any strong reason to deny the leave. It gets perforce
reiterated that even if there remains a reasonable doubt
about the probability of defence, sterner or higher
conditions as stated above could be imposed while
granting leave but, denying the leave would be ordinarily
countenanced only in such cases where the defendant
fails to show any genuine triable issue and the Court
finds the defence to be frivolous or vexatious."
14. Ordinarily, where triable issues are raised, the Defendant is
entitled to an unconditional leave. However, when the Defendant
acknowledges the liability, even if triable issues are raised, leave cannot
be granted unless the Defendant either deposits or secure the said
amount. A profitable reference in this context can be made to a decision
of the Supreme Court in the case of IDBI Trusteeship Services Limited
vs. Hubtown Limited,2. Especially the proposition no. 17.6, which reads
as under:
17.6 If any part of the amount claimed by the plaintiff is
admitted by the defendant to be due from him, leave to defend
the suit, (even if triable issues or a substantial defence is
raised), shall not be granted unless the amount so admitted to
be due is deposited by the defendant in court."
(emphasis supplied)
2 (2017) 1 SCC 568.
29-WP-18893-2024.DOC
15. Applying these principles to the facts of the case at hand, even if
the case of the Defendant is taken at par that the amount of difference
between the agreed licence fees and discounted rate at which the
licence fees was paid is to be recovered from the Plaintiff, since the
receipt of security deposit is acknowledged, the Defendant can be
granted conditional leave to defend the Suit. In view of the
communication dated 29th October 2022, it may be appropriate to direct
the Defendant to deposit a sum of Rs. 30,00,000/-.
16. I am, therefore, inclined to partly allow the Petition.
17. Hence the following order:
:ORDER:
(i) The Petition stands partly allowed.
(ii) The impugned order stands modified to the extent
that, instead of Rs. 60,90,000/-, the Defendant shall
deposit a sum of Rs. 30,00,000/- within a period of eight
weeks from today.
(iii) In the event of deposit of the said amount, the
Defendant shall file a Written Statement within a period of
30 days of deposit of the said amount.
(iv) It is hereby made clear that the Defendant is entitled
to take all the defences which are available in law.
29-WP-18893-2024.DOC
(v) Rule is made absolute to the aforesaid extent
(vi) Petition disposed.
(vii) No costs.
[N. J. JAMADAR, J.]
