Gujarat High Court

Mohan Ishardas Shamnani vs Shani Alias Kumar Ghanshyam Harjani on 10 September, 2025

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                                   IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                     R/SPECIAL CIVIL APPLICATION NO. 9701 of 2013

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                                          MOHAN ISHARDAS SHAMNANI & ANR.
                                                       Versus
                                    SHANI ALIAS KUMAR GHANSHYAM HARJANI & ANR.
                      ==========================================================
                      Appearance:
                      MR MEHUL S SHAH(772) for the Petitioner(s) No. 1,2
                      MR. ASHOK R RATHOD(7155) for the Respondent(s) No. 1
                      RULE SERVED for the Respondent(s) No. 2
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                         CORAM:HONOURABLE MR. JUSTICE MAULIK J.SHELAT

                                                      Date : 10/09/2025

                                                       ORAL ORDER

1. Heard learned advocate Mr.Jenil M. Shah for learned

Senior Advocate Mr.Mehul S. Shah for the petitioners. Though

served, none appears for the respondent no.2. The matter was

called out twice, none remained present for the respondent

no.1.

2. The present writ application is filed under Article 227 of

the Constitution of India seeking following relief:-

"a) A writ of certiorari or any other appropriate writ, order or direction may kindly be issued quashing and setting aside the order at Annexure 'B' herein passed by the Trial Court, and to allow the application, Exh. 12, before the Trial Court as prayed for.

(b) Pending hearing and final disposal of this Special Civil Application, further proceedings of and implementation of the order at Annexure 'B' passed by the Trial Court may kindly be ordered to

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be stayed.

(c) Any other and/or further order that may be deemed necessary in the interest of justice may kindly be passed."

3. THE SHORT FACTS OF THE CASE

3.1. The petitioners herein are original defendants of

Special Summary Suit No.451 of 2005 filed by respondents

herein. The defendants appeared in the suit and sought for

leave to defend against summon for judgment filed by plaintiff.

3.2. It is specific case of defendants in their leave to

defend that in absence of any contract in regard to the interest

to be paid by the defendants, which is claimed while claiming

principal amount and so also, some of the amount sought to

be claimed in the suit are not even matured for payment, so,

defendants have prayed for unconditional leave to defend.

3.3. According to the case of the defendants, they are

triable issues and as such, the suit cannot be instituted under

Order 37 of the Civil Procedure Code, 1908 (hereinafter

referred to as "CPC") when interest claimed on the principal

amount.

3.4. After hearing the parties, the Trial Court vide its order

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dated 23.01.2007 rejected the leave to defend application filed

by the defendants below Exh.12 in the aforesaid suit. In that

eventuality, the decree could have been passed by the Trial

Court. Hence, the present application.

4. SUBMISSION OF THE PETITIONERS - DEFENDANTS

4.1. Learned advocate Mr.Shah would submit that Trial

Court has committed a gross error of law and so also,

jurisdictional error while rejecting the impugned application

filed below Exh.12 inasmuch as suit in question could not have

been instituted and be treated as a summary suit when

plaintiff sought for interest on the principal amount.

4.2. Learned advocate Mr.Shah would submit that as per

settled legal position of law when interest is not agreed

between the parties on the sum payable to the plaintiffs,

asking for interests on such sum would not fall within criteria

set out in Order 37 of CPC.

4.3. It is submitted that as per plain reading of plaint,

interest of Rs.25,420/- claimed along with the principal

amount, thereby, prayed for the decree of Rs.1,52,410/- along

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with interest at the rate of 18% from the date of suit till

payment.

4.4. Learned advocate Mr.Shah would further submit that

some of the payments, which are claimed in the suit are yet to

be matured for payment, thereby, suit qua those amount

would be prematured and no cause of action to file summary

suit for recovery of such amount.

4.5. It is submitted that Trial Court while rejecting leave to

defend application of defendants would erroneously observed

that such plea of premature suit can be considered while

passing final decree.

4.6. It is respectfully submitted that when leave to defend

application is rejected by the Trial Court, there is nothing

remained to be decided by the Trial Court as prayed in the

suit requires to be passed as per the provisions of Order 37

Rule 3(6) of CPC.

4.7. Learned advocate Mr.Shah would submit that there are

triable issues germane in the matter, as per the settled legal

position of law, the defendants are entitled for unconditional

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leave.

4.8. To buttress his argument, learned advocate Mr.Shah

would rely upon the following decisions:-

(i) Posco poggenamp electrical Steel Pvt Ltd Versus

Tbea Energy (INDIA) Pvt Ltd reported in 2023 GUJHC

22965; 2023 (0) AIJEL -HC 245805;

(ii)IDBI Trusteeship Services Ltd. v. Hubtown Ltd.,

(2017) 1 SCC 568.

4.9. Making the above submission, learned advocate

Mr.Shah would request this Court to allow the present writ

application.

5. No other and further submissions were made.

6. POINT FOR DETERMINATION

6.1. The short question that arises for my consideration is

as to whether, in the facts and circumstances of the case, the

leave to defend applications filed by the defendants could have

been rejected by the Trial Court. If not, was any gross

irregularity, illegality, or jurisdictional error committed by the

Trial Court while adjudicating leave to defend application filed

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below Exhibit 12 in Special Summary Suit No.451 of 2005?

7. ANALYSIS

8. The facts, which are narrated hereinabove, are not in

dispute. It is remained undisputed on record that while

instituting the summary suit, the plaintiff also sought for

interest over the principal amount that too at the rate of 24%,

amounting to Rs.25,410/-, which was included in the principal

sum. There is nothing on record to suggest or show that such

a rate of interest was a contractual rate of interest agreed

between the parties.

9. When such is the fact, in light of what has been held by

the Division Bench of this Court in the case of Posco (supra),

the summary suit in question could not have been instituted or

treated as having been filed under Order 37 of the CPC.

10. The relevant observations of the Division Bench of this

Court in the case Posco (supra), pertaining to this issue, read

as under:-

"[10] Summary suit provided under Order 37 of the Civil Procedure Code, 1908 is a special remedy for recovery of the amount due from the defendant. Sub Rule 2 of Order 37 has categorized classes of the suit, which can be defined as a suit under the

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summary procedure. The suit either must be upon bill of exchange, hundis and promissory notes or the plaintiff seeks only to recover the debt or liquidated demand in money payable by the defendant with or without interest arising on a written contract or on an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty or on a guarantee where claim against the principal is in respect of a debt or liquidated demand only or the suit for recovery of receivables instituted by any assignee of a receivable. Baring the above classes of the suit, no other suit or recovery is maintainable under Order 37 of the Civil Procedure Code, 1908. Principally, only suit for liquidated demand is maintainable under summary procedure.

10.1 In Merchem Limited (supra), the Division Bench of this Court have referred the earlier judgment in case of Chlochem Limited (supra) as well as Akhilbhai B. Mehta (supra), it expound that if relief of interest is asked in absence of written contract, claim would not fall in category of liquidated demand, the suit would not come under purview of Order 37 of the Civil Procedure Code, 1908, in para 5.2 to 5.5 held following:-

"5.02. It an admitted position that as such there is no written contract between the parties more particularly with respect to interest on delayed payment on invoice bills. Though the plaintiff and even the learned Judge have considered the tri- parte agreement dated 17/7/2012 as contract between the parties, and more particularly with respect to interest on delayed payment, however it is required to be noted that as such the plaintiff has not claimed any relief on the basis of the tri-parte agreement dated 17/7/2012. On the contrary in para 8 of the Affidavit-in-reply of the application to leave to defend submitted by the defendants, the plaintiff has specifically stated that the said agreement is not binding and applicable here in this matter. It is further stated that the said agreement is tri-parte agreement and restricted only to supply of material / substance to the required persons / defendants as well as defendants and GNFC but not terms and conditions of the payment. It is further states that the said agreement was effective and continued only upto 13/4/2013. It is further averred that the defendant cannot raise plea of terms and

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conditions of the agreement executed on 17/7/2012 between the plaintiff, defendants and GNFC. It is further averred in para 12 of the reply that the plaintiff has claimed 15% interest per annum which is just and correct as per the commercial transaction between the plaintiff and the defendants. Therefore, the plaintiff has claimed interest not based on the tri-parte agreement dated 17/7/2012, but as per the commercial transaction. In para 15 also the same is reiterated and again it is reiterated that the plaintiff is not claiming any benefit of the said agreement. Considering the facts and circumstances of the case, the learned Judge has materially erred in observing that the plaintiff is entitled to the interest on the delayed payment as per tri-parte agreement dated 17/7/2012. Thus, as such, there is no written contract between the parties with respect to interest on delayed payment. The Debit Notes issued by the plaintiff and/or Invoices issued subsequently after the goods came to be supplied and/or anything mentioned in the Delivery Note whether can be said to be contract between the parties more particularly with respect to interest on delayed payment can be said to be triable issue. At what rate the plaintiff is entitled to interest on delayed payment also can be said to be a triable issue. In light of the aforesaid facts and circumstances of the case, the following few decisions of this Court are required to be referred to :

5.03. In the case of The National Textile Corporation, Ahmedabad (supra), the plaintiff filed the suit to recovery a particular amount comprising price of goods sold and delivered as well as interest. The plaintiff claimed interest relying on custom of the Trade to charge interest and the learned trial court granted conditional leave, which came to be set aside by the learned Single Judge of this Court, after following decision of the Bombay High Court in the case of Keshavjee Versus The Indian Mercantile Insurance Co. Ltd. in Civil Revision Application No. 259 of 1956 decided on 5/11/1954, by observing that in order to succeed in getting the amount of interest, the plaintiff will have to prove his case by evidence and this cannot be permitted in summary suit.

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5.04. In the case of Chlochem Limited (supra) while confirming the order passed by the learned trial court granting unconditional leave, in para 20 to 23, the learned Single Judge has observed and held as under :-

"20. If the prayer made in the plaint of the suit filed by the petitioner is perused, it is clear that the petitioner is claiming interest along with the amount due and further interest at the rate of 6% per annum over the total amount of Rs.75,73,512/-, which includes the principal claim, plus the interest.

21. In Zonal Manager v. Akhilbhai B.Mehta (supra), this Court has held as below:

"7. Having heard both the learned advocates and having gone through the facts of the case and record it will have to be decided whether the present dispute as has been raised by the plaintiff is falling within the ambit of Order-37 Rule-1 of the Civil Procedure Code. It was urged that the suit is filed for liquidated amount of 24 days Earned Leave and therefore it falls within the ambit of Order-37. Perusing Order-37 Rule-1 Sub sec. (2) it is clear that the dispute falls in none of the subclause of Sub-rule(2) of Rule-1 of Order-37. It is not the suit for recovery of liquidated amount but the amount of interest at the rate of 24% has also been sought to be recovered by the plaintiff respondent. The case is clearly covered by the unreported decision of this Court as reported in the matter of National Textile Corporation Ahmedabad vs. Shri Rajendra Sankalchand and Parikh,1982 GLH(UJ) 7 wherein the Court in unequivocal terms ruled that in order to succeed in getting the amount of interest the opponent- plaintiff will have to prove his case by evidence and this cannot be permitted in a Summary Suit and, therefore, in view of the claim of interest amount made by the plaintiff in the suit the suit cannot be said to be Summary Suit and consequently not triable as Summary Suit. Claiming of the amount in the present case at the rate of 24% takes out the dispute of the scope of Summary Suit and therefore the learned Judge committed a jurisdictional error to grant conditional leave. Not only that, neither the dispute can be termed as liquidated demand as envisaged by the Order-37 Rule 1(2) but the claim

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of interest is also a triable issue and takes the suit out of the ambit of the Summary Suit. On this ground alone this Revision Application is required to be allowed, irrespective of the fact that even if it is Summary Suit there were triable issues.

8. In this view of the matter, since the suit filed by the plaintiff is not falling within ambit of Summary Suit the order passed by the learned trial Judge to defend the suit on condition is without jurisdiction and erroneous and is required to be set aside. In this view of the matter, this Revision Application is allowed. The order impugned passed by the City Civil Court for issuing summons for judgment which is dated 17.12.1991 is set aside and consequently the order impugned which is dated 12.1.2000 granting conditional leave to defend is also set aside. Rule is made absolute. No order as to costs.

22. The principles of law enunciated in the abovequoted judgment would squarely apply to the facts of the present case. Learned advocate for the petitioner has not chosen to distinguish this judgment or to make any submissions regarding the aspect regarding charging of interest. There is no denying the fact that not only has the petitioner claimed interest in the suit but the statement of account prepared by the petitioner, a copy of which is annexed to the petition, also clearly shows that interest claimed for late payment of interest has been debited to the account of the respondent and interest of Rs.7,07,904/- has been added to the principal claim of Rs.68,65,618/-. There is no material on record to show that there is an agreement between the parties regarding the claim of interest. Moreover, the claim for interest cannot be said to be a liquidated demand."

5.05. In the case of Akhilbhai B. Mehta (supra), in summary suit where the plaintiff claimed interest in absence of any contract between the parties with respect to interest, the learned Single Judge has observed and held that the interest on claim is triable issue and therefore, the defendant is entitled to unconditional leave."

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[11] Perusal of prayer clause made in suit, it indicates that plaintiff TBEA has also asked relief for interest beside principal amount. It is not the case of the TBEA that there is a written contract between the TBEA and the Posco regarding claim of interest. In fact, on perusal of the pleadings, it transpires that the TBEA on its own has calculated the interest of Rs.3,01,71,154/- on the principal amount. So, it never falls within the classes of liquidated demand. Whether plaintiff is entitled for such relief of interest or not is always a subject matter of regular recovery suit, but cannot be a subject matter of the suit being summary filed under Order 37 of the Civil Procedure Code, 1908. The plaintiff i.e. TBEA came out with two kind of assertion in the plaint; first it came out with the assertion that three cheques totalling to Rs.37,24,46,182/- are issued by the Posco in favour of the TBEA and therefore, the TBEA owes debt from the defendant. The second assertion made by the TBEA is that invoices are also generated for the outstanding amount and the interest is payable thereof. This assertion is clearly visible from para 26. The plaintiff asserted that this claim of interest was arising on the written contract. However, no such written contract has been pointed out during the argument and rather shelter of Interest Act has been taken for saving the claim of interest under head of liquidated demand. Since, it is clear that the claim of interest is not falling within the classes of the suit, which is based upon the liquidated demand, the suit, which was filed by the plaintiff TBEA falls out of category of Order 37 of the Civil Procedure Code, 1908. [17] In view of above, as the plaintiff has asked relief for interest without having written contract, the relief comes out from sweep of liquidated demand. Hence, Commercial Civil Suit No.3 of 2021 does not fall within the sweep of order 37 of the Civil Procedure Code, 1908. Axiomatically, this suit would become regular Commercial Civil Suit, whereupon, the defendant has indisputable right to enter into the defence. Learned Court below has failed to notice such aspect and as such has committed error much less serious but jurisdictional error in passing impugned order of granting conditional leave to Posco.

(emphasis supplied)

11. The Trial Court committed manifest error while

adjudicating the impugned leave to defend application,

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inasmuch as it did not consider the aforesaid aspect of the

matter and held contrary to established legal positions, thereby

committed a jurisdictional error, which requires to be corrected

by this Court while exercising its power of superintendence

under Article 227 of the Constitution of India.

12. Likewise, another limb of argument of learned advocate

Mr. Shah, that some of the payments, which were not ripe for

payment when the suit was instituted, require to be taken note

of by the Trial Court while adjudicating the leave to defend

application, and the same could not have been overlooked.

13. The Trial Court also manifestly erred in observing that

such aspect can be considered while passing a final decree in

the suit.

14. It appears that the Trial Court lost sight of the provisions

of Order 37 Rule 3(6) of the CPC, that once leave to defend is

not granted in favor of the defendants, there is nothing left to

be decided in the suit but to pass a decree in favor of the

plaintiffs as prayed in the suit.

15. Prima facie, the argument canvassed by learned advocate

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Mr. Shah would fall and can be considered as a triable issue,

which requires to be decided during the course of the trial.

16. At this stage, it would be apt to refer to and rely upon

the ratio of the decision of the Honorable Supreme Court in

the case Hubtown (Supra), wherein it held thus:-

"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 : (1966) 68 Bom LR 36] , 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 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.

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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 supplied)

17. In light of the aforesaid decision and its ratio, if applied

to the facts of the present case, the defendants would be

entitled to defend the suit unconditionally. In that view of the

matter, the leave to defend application requires to be granted,

and having not done so by the Trial Court, it has committed a

serious error of law.

18. CONCLUSION

19. In view of the foregoing reasons, the present writ

application requires to be allowed.

19.1. Consequently, the impugned order dated 23.01.2007,

passed by the 10th Additional Senior Civil Judge, Vadodara,