Gujarat High Court
R. M. Enterprise vs Orient Trading Company on 19 June, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17428 of 2017
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R. M. ENTERPRISE
Versus
ORIENT TRADING COMPANY
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Appearance:
MR MA KHARADI(1032) for the Petitioner(s) No. 1
MR KISHAN N BRAHMBHATT(11382) for the Respondent(s) No. 1
MR SANTOSH D GOENKA(5326) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE MAULIK J.SHELAT
Date : 19/06/2025
ORAL ORDER
1. Rule returnable forthwith. Learned Advocate Mr. Santosh D.
Goenka waives service of notice of Rule on behalf of the
respondent. With the consent of learned Advocates for respective
parties, the present application is taken up for final hearing.
2. The present application is filed under Article 227 of the
Constitution of India, seeks the following relief:
"(A) Admit this petition;
(B) Allow this petition by quashing and setting aside the order passed by the
learned chamber judge, City Civil Court, Ahmedabad dated 30.06.2017 in
Summary Suit No.2307 of 2017, below the application for summons for
judgment and thereby unconditional leave to defend the suit may be granted.
(C) Grant the interim relief by staying execution, implementation and
operation of the order passed by the learned chamber judge, City Civil Court,
Ahmedabad in Summary Suit No.2307 of 2015 below the application of
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summons for judgment dated 30.06.2017, pending admission and till final
disposal of this petition.
(D) Award the cost throughout.
(E) Grant such other and further relief/s which may deem fit to the Hon'ble
Court in the interest of justice."
3. The parties will be referred to as per their original position
before the Trial Court.
4. The short facts of the case:
4.1 The petitioner herein is the original defendant, whereas the
respondent is the original Plaintiff. Summary Suit No. 2307/2015
was instituted against the petitioner, seeking a monetary relief of
Rs.14,72,220/-. The suit was filed under Order 37 of the Code of
Civil Procedure, 1908 (hereinafter "CPC"), wherein the Plaintiff
contended that the defendant was supplied with goods on credit
basis and even though it had received the same, the amount was
not credited in favour of the Plaintiff. Whereby, the Plaintiff had no
option left but to file a suit for the recovery of the said amount.
4.2 It is the further case of the Plaintiff that vide a letter dated
25.08.2014, issued by the defendant in favour of the Plaintiff,
whereby the defendant had admitted dues of Rs.17,50,321/-.
Wherein, a reference of advance cheques issued by the defendant
in favour of the Plaintiff was also mentioned. The ledger account of
the defendant would also certify that the amount claimed in the
suit is due and payable by the defendant in favour of the Plaintiff.
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4.3 With this set of facts, the Plaintiff having filed a summary
suit, wherein the defendant has appeared and thereafter, Summons
for Judgment came to be filed by the Plaintiff, against which an
application for leave to defend was filed by the defendant below
Exh.9 and 10, respectively.
4.4 After hearing the parties, the Trial Court vide its impugned
order dated 30th June 2017, directed the defendant to deposit
Rs.14,72,220/- as a condition to allow the leave to defend
application, albeit it rejected the Summons for Judgment.
4.5 Feeling aggrieved and dissatisfied with the aforesaid
impugned order, the defendant has preferred the present
application.
4.6 It appears that all throughout during the pendency of the
present application, this Court vide its order dated 22nd September
2017, while issuing notice, extended the time to deposit the
ordered amount till 4th October 2017, which appears to have been
further extended till 11th October 2017; but, thereafter, the record
shows that such extension was not further granted and/or
extended.
4.7 Be that as it may, it has been informed by the learned
advocates for the respective parties that, till date, the defendant
has neither deposited the ordered amount nor has any decree been
passed by the Trial Court, though defendant failed to deposit the
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amount in time.
4.8 Thus, the learned advocates appearing for the respective
parties have requested this Court to hear the matter on its merits.
5. Submissions on behalf of the petitioner-defendant.
5.1 Learned Advocate Mr. Kharadi would submit that the
impugned order suffers from a procedural irregularity, inasmuch as
when the Trial Court had rejected the Summons for Judgment, no
condition could have been imposed upon the defendant to deposit
the entire principal amount while granting leave to defend the suit.
5.2 Learned Advocate Mr. Kharadi would further submit that the
defendant has made out the case and the defence which was raised
in the leave to defend application raises triable issues which
requires to be tried during the course of the trial of the suit. So, in
such circumstances, as per the settled legal position of law,
unconditional leave to defend ought to have been granted to the
defendant.
5.3 Learned Advocate, Mr. Kharadi, would further submit that
when the defendant has made out triable issues and its defence is
neither moonshine defence nor implausible, as a matter of rule,
unconditional leave ought to have been granted in favour of the
defendant.
5.4 Lastly, Learned Advocate, Mr. Kharadi, would submit that
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even if this Court comes to the conclusion that the defendant can
be allowed to defend the suit on a certain condition, the direction
issued by the Trial Court, whereby it directed the defendant to
deposit the entire principal amount which is prayed for in the suit,
is an onerous condition. In that circumstance, this Court may
impose a reasonable condition upon the defendant, thereby
permitting it to defend the suit in accordance with law.
5.5 Making the above submissions, learned Advocate Mr. Kharadi
would request this Court to allow the present suit.
6. Submissions on behalf of the respondent - plaintiff.
6.1 Learned Advocate, Mr. Santosh D. Goenka, appearing for the
respondent, would submit that there is no error, much less any
gross error committed by the Trial Court while directing the
defendant to deposit the principal amount when it allowed the
defendant to defend the suit.
6.2 Learned Advocate Mr. Goenka would submit that no case is
made out by the defendant to defend the suit, as such defence set
up in leave to defend application is not only moonshine but an
excuse to avoid legitimate dues of the plaintiff, and in that
circumstance, no error can be found on the part of the Trial Court
when it has directed the defendant to deposit the principal amount.
6.3 Learned Advocate Mr. Goenka would further submit that the
documentary evidence on record would clearly shows that the
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defendant in terms has admitted its dues which are due and
payable to the Plaintiff and after considering such documentary
evidence, very reasonable condition was imposed upon the
defendant, which may not be interfered with by this Court.
6.4 Lastly, Learned Advocate Mr. Goenka would submit that
when the defendant has failed to deposit the amount within the
stipulated time, coupled with the fact that its own accounts suggest
that the Plaintiff is entitled to receive the amount as claimed in the
suit, the defendant may not be allowed to defend the suit
unconditionally, as prayed.
6.5 Making the above submissions, the learned Advocate Mr.
Goenka for the respondent prayed for the dismissal of the present
application.
ANALYSIS
7. Heard learned Advocates appearing for the respective parties
at length.
8. At the outset, I would like to deal with the argument which
was advanced by learned Advocate Mr. Kharadi to the effect that
when the Trial Court has rejected the Summons for Judgment, it
ought not to have imposed condition upon the defendant to deposit
any amount, and as such, unconditional leave could have been
granted in favour of defendant. At first blush, such argument looks
attractive, but on deeper scrutiny requires rejection. It is true that
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in the operative portion of the order, the Trial Court did observe
that the Summons for Judgment filed by the Plaintiff is "rejected."
9. Nonetheless, while reading entire impugned order, there is
no whisper at any point in time that the Trial Court has observed
that the Plaintiff is not entitled to get any relief as prayed for in the
Summons for Judgment. There may be poor expression on the part
of the Trial Court while passing the operative order, but in fact,
when this Court has thoroughly scrutinized and examined the
impugned order, nowhere it has been found that the Trial Court
intended to reject the Summons for Judgment filed by the Plaintiff
on any count. Thus, in view of above and to avoid any hyper
technical approach in procedural law, first limb of argument of
learned advocate Mr. Kharadi requires outright rejection.
10. Now, the facts which are narrated hereinabove are not in
dispute. It appears that there was commercial transaction between
the plaintiff and the defendant, whereby the defendant had
received goods from the plaintiff and it was required to pay the
amount towards the purchase of such goods. Some disputes appear
to exist between the parties, but the fact remains that the plaintiff
could not establish on record that the defendant was its dealer. So,
the Trial Court has observed that there are some triable issues
regarding the sending of goods to the defendant by the plaintiff as
per the respective invoices, which are to be tried in the suit.
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11. Nonetheless, the fact remains that vide a letter dated 25th
August 2014, which was issued by the defendant and addressed to
the Plaintiff, it is indicated that the defendant has admitted dues of
Rs.17,50,321/ for which several cheques were issued in favour of
the plaintiff by the defendant, albeit, such a letter is disputed by
the defendant. It also remains undisputed that such cheques were
never deposited by the plaintiff.
12. Further, the Plaintiff has not submitted its books of account,
but the defendant has submitted its accounts before the Trial
Court, wherein, prima facie, the amount claimed in the suit appears
to be found due and payable by the defendant. Although, a dispute
regarding the account and the purchase of goods are writ large
raised and to be decided during the course of trial.
13. Thus, after appreciating the submissions canvassed by the
learned advocates appearing for the respective parties and after
going through the impugned order, it appears that the defence
raised by the defendant is plausible but improbable, inasmuch as
the prima facie, its own letter and accounts on record would
indicate that the amount was in fact due and payable by the
defendant to the Plaintiff. In this eventuality, the defendant can be
allowed to defend the suit subject to condition, but it should not be
cumbersome otherwise by directing the defendant to deposit the
entire principal amount could nothing but to pass decree without
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adjudicating the dispute between the parties in the suit.
14. At this stage, it would be apposite to refer and rely upon the
ratio of the decision of the Hon'ble Apex Court in the case of B. L.
Kashyap and Sons Limited V/s. JMS Steels and Power
Corporation, reported in (2022) 3 SCC 294, which refers to the
principles enumerated in IDBI Trusteeship Services Ltd. v.
Hubtown Ltd., (2017) 1 SCC 568, wherein held thus:-
"32.2. In IDBI Trusteeship [IDBI Trusteeship Services Ltd. v. Hubtown
Ltd., (2017) 1 SCC 568 : (2017) 1 SCC (Civ) 386] , this Court modulated
the aforementioned principles and laid down as follows : (SCC pp. 596-
97, para 17)
"17. Accordingly, the principles stated in para 8 of Mechelec case [Mechelec
Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687]
will now stand superseded, given the amendment of Order 37 Rule 3 and the
binding decision of four Judges in Milkhiram case [Milkhiram (India) (P)
Ltd. v. Chamanlal Bros., AIR 1965 SC 1698] , as follows:
17.1. If the defendant satisfies the court that he has a substantial defence, that
is, a defence that is likely to succeed, the plaintiff is not entitled to leave to
sign judgment, and the defendant is entitled to unconditional leave to defend
the suit.
17.2. If the defendant raises triable issues indicating that he has a fair or
reasonable defence, although not a positively good defence, the plaintiff is
not entitled to sign judgment, and the defendant is ordinarily entitled to
unconditional leave to defend.
17.3. Even if the defendant raises triable issues, if a doubt is left with the trial
Judge about the defendant's good faith, or the genuineness of the triable
issues, the trial Judge may impose conditions both as to time or mode of trial,
as well as payment into court or furnishing security. Care must be taken to
see that the object of the provisions to assist expeditious disposal of
commercial causes is not defeated. Care must also be taken to see that such
triable issues are not shut out by unduly severe orders as to deposit or
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security.
17.4. If the defendant raises a defence which is plausible but improbable,
the trial Judge may impose conditions as to time or mode of trial, as well
as payment into court, or furnishing security. As such a defence does not
raise triable issues, conditions as to deposit or security or both can extend to
the entire principal sum together with such interest as the court feels the
justice of the case requires.
17.5. If the defendant has no substantial defence and/or raises no genuine
triable issues, and the court finds such defence to be frivolous or vexatious,
then leave to defend the suit shall be refused, and the plaintiff is entitled to
judgment forthwith.
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 in original)
"33. It is at once clear that even though in IDBI Trusteeship [IDBI
Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568 : (2017) 1 SCC
(Civ) 386] , this Court has observed that the principles stated in para 8 of
Mechelec Engineers case [Mechelec Engineers & Manufacturers v. Basic
Equipment Corpn., (1976) 4 SCC 687] shall stand superseded in the wake of
amendment of Rule 3 of Order 37 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."
(emphasis supplied)
Thus, in view of the aforesaid facts and circumstances
of the case and keeping in mind the ratio of the aforesaid decision,
I am of the view that the defendant can be allowed to defend the
suit, albeit by granting conditional leave.
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15. Having so arrived at the aforesaid conclusion and after
appreciating the submissions canvassed by learned Advocate for
the respective parties and after going through the documents
which were made available to this Court during the course of
submissions, and so also keeping the factors which requires to be
kept in mind by Court as enumerated in the above-referred
decision of the Hon'ble Apex Court, I am of the view that the
conditions so imposed by the Trial Court is an onerous one and
requires interference by this Court, as the Plaintiff has not made
out strong case whereby it can be held that no defence available to
the defendant and same not required to be seen by the Court and
that it would pass decree as prayed.
CONCLUSION
16. In view of the aforesaid peculiar facts and circumstances of
the case, I am of the view that the defendant can be allowed to
defend the suit on the condition of depositing a sum of
Rs.7,50,000/- (Rupees Seven Lakhs Fifty Thousand Only) within a
period of forty five (45) days from today in the Trial Court.
17. In light of what is discussed hereinabove, the impugned order
dated 30th June 2017, passed by the City Civil and Sessions Court
No.28, Ahmedabad City below Exh.9 and 10 in Summary Suit No.
2307/2015, is hereby modified to the extent that the defendant is
hereby directed to deposit a sum of Rs.7,50,000/- within a period of
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forty five (45) days from today. Thereafter, the defendant will be
allowed to defend the suit in accordance with law.
18. Such amount so deposited shall be invested in a cumulative
FDR with a nationalized bank till the final disposal of the suit. If the
Plaintiff wants to withdraw such amount by furnishing appropriate
security/guarantee to the satisfaction of Trial Court be obtained
from plaintiff, and the Trial Court may pass an appropriate order
for the release of such amount in favour of the Plaintiff by imposing
said condition and or any other additional condition, as the case
may be.
19. If the defendant fails to comply with the aforesaid condition
imposed upon it by this Court whereby, not deposit Rs.7,50,000/-
within the stipulated time, it is open for the Plaintiff to request the
Trial Court to pass judgment forthwith, as provided under Order
37, Rule 6 (b) of the CPC.
20. Rule is made absolute to the aforesaid extent. No order as to
cost.
(MAULIK J.SHELAT,J)
Nilesh
