Madhya Pradesh High Court
Ajit vs Smt. Ayushi on 24 April, 2025
Author: Pranay Verma
Bench: Pranay Verma
NEUTRAL CITATION NO. 2025:MPHC-IND:10850
1 MP-2957-2024
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE PRANAY VERMA
ON THE 24 th OF APRIL, 2025
MISC. PETITION No. 2957 of 2024
AJIT
Versus
SMT. AYUSHI
Appearance:
Shri Ayush Gupta - Advocate for the petitioner.
Shri Jayesh Gurnani - Advocate for the respondent.
ORDER
By this petition preferred under Article 227 of the Constitution of India, the
defendant/petitioner has challenged the order dated 15.04.2024 passed by the trial
Court whereby while allowing an application under Order 37 Rule 3(5) of the CPC
condition has been imposed upon him to furnish bank guarantee in respect of the
disputed amount.
02. The plaintiff/respondent has instituted an action against the defendant
for recovery of a total sum of Rs.3,02,500/- along with interest. It is stated that an
amount of Rs.3,00,000/- was taken on loan by the defendant from him. For return
of the amount, the defendant had given a cheque to the plaintiff in the sum of
Rs.3,00,000/- which upon presentation has been returned dishonored for want of
funds. The defendant has not returned the amount despite notice to him in that
regard. The defence of the defendant is that no amount has been taken by him
from plaintiff on loan. No cheque was issued by him in favour of the plaintiff. A
blank cheque has been misused and that the defendant has substantial defence in
the matter.
NEUTRAL CITATION NO. 2025:MPHC-IND:10850
2 MP-2957-2024
03. By the impugned order dated 15.04.2024, the trial Court has observed
that the objection of the defendant as regards maintainability of the suit does not
appear to be reasonable. The defendant has not adduced any evidence to show that
blank cheque was issued by him and that he has raised substantial defence in the
case in view of which he deserves to be granted leave to defend. However,
condition of furnishing of bank guarantee has been imposed upon the defendant.
04. I have heard the learned counsel for the parties and have perused the
record.
05. In IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd., 2017 (1) SCC 568
the Apex Court has laid down the principles on which leave to defend is to be
granted under Order 37 Rule 3(5) of the CPC as under:-
"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now stand superseded, given the amendment of Order 37 Rule 3 and the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.
NEUTRAL CITATION NO. 2025:MPHC-IND:10850
3 MP-2957-2024
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."
06. The trial Court in the impugned order itself has held that the defendant
has raised substantial defence in the suit. Thus, as per the judgment of Apex Court
as aforesaid since the defendant has satisfied the Court that he has a substantial
defence i.e. a defence that is likely to succeed, he is entitled to unconditional leave
to defend the suit. It has not been observed by the trial Court that there is any
doubt about defendant's good faith or the genuineness of the triable issues hence
no condition of furnishing of bank guarantee as has been imposed could have been
imposed by it but in doing so, it has committed an error.
07. Consequently, the impugned order dated 15.04.2024 passed by the trial
Court in so far as it has imposed a condition upon the defendant of furnishing
bank guarantee is set aside while the remaining part of the order is maintained.
The petition is accordingly allowed and disposed off.
(PRANAY VERMA)
JUDGE
Shilpa
