High Court quashed the trial court's order requiring the petitioner to furnish security equivalent to the entire suit amount to defend a summary suit, directing instead that only 50% of the suit amount be paid as security.
Petitioner directed to furnish security equivalent to 50% of the suit amount within six weeks from receipt of the order.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
[3340 ]
HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
WEDNESDAY, THE TWENTY FIRST DAY OF JUNE TWO THOUSAND AND TWENTY THREE
PRESENT
THE HONOURABLE SRI JUSTICE P. NAVEEN RAO
AND
THE HONOURABLE SRI JUSTICE NAGESH BHEEMAPAKA
CIVIL REVISION PETITION NO: 1680 OF 2023
Petition under Article 227 ot lhe Constitution of lndia, aggrieved by the order and decree dated 2010312023 in lA. No. 363 ot 2022 in C.OS. No. 34 of 2o2o on the file of the court of the Principal special court in the cadre of District Judger.for Trial and Disposal of Commercial Disputes at Hyderabad -)
Between:
Neha lnternational Ltd., At 6-3-1090/4/ 12 and 13 No.501, Manbhum Jade Towers, Rajbhavan Road, Somajiguda, Hyderabad. Rep. by its Managing Director / Authorized signatory [Vr. Gaddam Vinod Reddy S/o_ Sri. G. Ram Reddy
...PETITIONERYPETITIONER/DEFENDANT
AND
DBS Bank Ltd., at 12, Marina Bouleward Level 44, DBS Asia Central @MarinaBay FinancialCentre, Tower-3, Singapore-01892 Rep. by its authorized signatory Mr. Somit Bhandari office address at 19th floor Express Towers, Behind Nariman Point, Mumbai-400021, Maharashtra, lndia
...RESPONDENT/RESPONDENT/PLAINTIFF
lA NO: 1 OF 2023
Petition under Section 151 CPC praying tl-tat in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend operation of order and decree dated 20.03.2023 in lA. No. 363 of 2022 in C.OS. No. 34 of 2020 passed by the court of Principal Special Court in the
Cadre of District Jucge for Trial andDisposal ofCommercial Disputes at Hyderabad in so far as it directs thepetitionerherein (defendanttherein) to furnish the security equivalent to thesuit amount and that in defaultthe court will adjudicate the suit consideringit as summary suit is concerned, pending disposal of CRP No. /2023
Counsel for the Petitioner:SRl. C.B. SIDDARTH
Counsel for the Respondent:FOX MANDAL AND ASSOCIATES
(T VIJAYAKUMAR REDDY)
The Court madethe following:ORDER
l
I i F ir
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THE HON'BLE SRI JUSTICE P.NAVEENRAO & THE HONOURABLE SRI JUSTICE NAGESHBHEEMAPAKA
C.R.P.NO. 1680 0F 2023
ORAL ORDER:
Hcard Sri B. Ram Mohan Reddy, Iearned Senior Counsel lbr the petitioner and Ms. Poortiima Singh Kambli, Iearned counsel for the respondent.
). Rcspondent Bank filed summary suit i.e., O.S.No.34 of 2020 under Order XXXVI I of the Code ol Civil Proccdure, i908, in the Court of the Hon'ble Chief Judgc, City Civil Court, llycicrabad praying to grantjudgmr,'nt and decrce against tlt:lerrcjanL for a surn oI t]SD I,'206,174.16(US I)ollrrrs One lr'liilion Trvo I lundred and Six Thousand Onc Ilundrcd and Seventy l,'our Dollars Forty Six Cents Only). After servrce of sumrnons, the petitioner herein filcd 1.A.No.363 of 2022 in COS.No.34 cf 2O2O under Order XXXVII Rule 5 R,i rv. Section 1 51 of CPC, praying to grant unconditional leave to def end the suit. The trial Court elaborately considered rcspecLive subrnissions and b'y ordr:r dat:d 20.O3.2023 granLcd leave to the pci.itioner to delend thc surit sut-;jecr Lo tlrnishing thc; security cquivalent to the suit amounL i.e., Rs.i1,56,50,448.60 paise
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\.ithin 60 <lzLys frorn lltc (lirLe of lhe order. Aggrievcd therebl.', this Civil Revisron Petition is filed
J
the security for the fullamountc;laimed by the plaintiff This Court cannot interfcrewith the serid discretion exercisedbv the trial Court.
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grallted leavc 1o Lhe c1e,ft'ndant, to defend thc suit on thc condition o[ lurnishing s€,( r Lritv equivalent to the suit amount.
"15. lloq,evr:r. therc ,rre l\,o judgments of this Court rrhiclr directir deitl ..r1li th.t amendment made to Ordcr XXXYII ancl thc effcct tlrcrt:of on the ratio contained in Mechr:lec's case. In(l('lrancc Knitting Industries (P) Ltd. v. Ja,Arts, (20061 E SCC 25, this Court, after setting out trre amendcd O tl|r XXXVII and after referring to Meec relec's casc, Iarrl down the following princJples "Whil,r giving leave '.r delend the suit the court shall observe thc folJou'ing 1rr rnciples:
(a) I lhc courl is ol lre o1>inion that the case raises a triaill r issue thcn l€rir'(' to defend should ordinarily be gl'ant )d uncon(lilionallr. Se Milkhiram (lndia) (P) Ltd v. Chananlal Bros. [AIJI 1965 SC 1698 : 68 Bom LR 36]. The qr-restion whcther lhe delence raises a triable issue or nct has to be as((rtained by the court from the pl.-acl rrgs bclorc it arrrl thc affidavlts of parties.
{blIl thc courtrs s;rrrslir:d that the facts drsclosedbv the d( Iendant(lo notrll(licate that he has a substantial defcn( e to raisc or tlr;Lr thc defence intended to be put up bl thc delendan rs frivolous or vexatious it may refus( Ieave to defen,l altogerther. Kiranmoyee Dassi v. Dr. J Chatterjec [A1li 1949 Cal 479:49 CWN 246] (notcc and approved r:r Mcchelec case [(1976) 4 SCC 687: \lR 1977 SC 5771
(cl Ir, cascs rvherc lte court entertains a genuinc doul)l on thc qucsti )ll as to whethcr the defince is genltine or sharr or !llcther it raises a triable issue or
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not, the court may impose conditions in granting leave to defend".
"17. But Justice, like Equality, another cardinal constltutional value, on the one hand, and arbitrariness on the other, are sworn enemies. The discretion that a Judge exercises under Order XXXVII to refuse leave to defend or to grant conditional or unconditional leave to defend is a discretion akin to Joseph's multi-coloured coat-a large number of baffling alternatives present themselves Thc lite ol the law not being logic bu t the cxperience of the trlal Judge, is what comes to the rescue in thcse cases; but at the same time rnformed bv gurdelines or princip)es that we propose to lay down ro obviate exercise of judicial discretion in an arbitrary manner. At one end of the spectrum is unconditional leave to defend, granted in all cases which present a substartial defence. At the other end of the spectrum are frivolous or vexatious defences, leading to refusal of Icavc Lo clefend. In bct\r,een these two extremes are various kinds of defenccs raised which yield condrtiona! leave to defend in most cases. tt is these defences that have to be guided by broad principles which are Lrltimately applied by the trial Judge so that justice is done on the facts of each given case".
- 1 In substance, the Hon'ble Supreme Court held that between two extremes i.e., ro grant leave unconditionally or to grant leave conditionally, various kinds of defences raised which yield conditional Ieave to defend in nost cases. The Court is rcquired to iloticc that thc asscssmcnL of delences have to be guidecl bl,broad principles whictr are to be ultimarely appticd by
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the trial ,Juclgc so that .jusricc is done on the lacts of each given
CASC
8.2. In paragraph No.I E the said judgment, the Hon,ble Supremc Co lrt also hcld as under :
" I 8._r\ccordingll, llte pr.inciltlcs stated in paragraph g ot
Mechclec's case rrill no\ stand superseded, given the amcndmenl of Orcl,. r L\XVII R.3, and the binding dccis on of lbur Juclg(,s rr.r Milkhiram,s case, as follows: If the ,lclendant satLsfi( s the Court that he has a substilntial defencc. rhat is, a defence that is likelv to Sllc'.r d. Il). nlarl I \ ltol entilled to lcau,. l, s,gn Judgnrcnt, anci rlr,, dcfcndant is cntitled ln uncoudjtional lcayc :,, rlclend the suit:
lf the defendant rais(,s triable issues indicating that he has ir fair or- reasonable defence, although not a positi.ely good dcfer],-c. thc plaintiff is not entitled to sign.i idgmcnt, ancl llrl clefcndant is ordinarilv entitled to unr onditional lt,ar r, lo dcfcnd;
even il the rlefcndant ririses triable issues, rf a doubt is left wirh tho rrialjrrdlr. ,rJoLrt the defcndant,s good farth, or thc genuirlellcss o. llte rriable issucs, the trial iudge rnar ir tposc r orrrirtio 'o'h as to time or mode of trial, as u'c I as pa\lncn[ ir]to court or furnishtng security. Calc nusl lre r;.:ker '., snl. thal the object of Ihc Provisons lo assistc.:Dcditious disposal of commcrcral causes is not dcfeale(i. Carc must also be taken to see that such triablt: rssLr, s arc not shut out bv undlrlY sever-c rtrdcrs as 1o dc|osrL or security;,'
8.3. The Hotr'blc Supremc Court further observed that even if
the defendanr raiscs lriabl( rssucs, if the trial Judge entertains a doubt abollt the defendant s good faith, or the genuineness of the triablc lssues, the trial , ttrdge should impose conditions both as to time or mocle of trial. as rr,,ell as payment into Court or furnishing secLlritv. Thc Corrrt must take care to see that the
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8
object of thc provisions to assist expeditious disposal of commercial causes is not defeated and the Court must alsotake care to see that such triable issues are not shut out by unduly severe orders as to deposit or sccurity.
"11. ln a summary suit, if thc defendant discloses such facts of a prima facie fair and reasonable defence, the court may grant unconditional leave to defend. This naturalh concerns the subjective satisfaction of the c-ourt on basis of the materials that may be placed before tt. Horvever, in an appropriate case, if the Court is satrsfied of a plausible or probable defence and which defence is not considered a sham or moonshine, but yet leaving certain doubts in the mind of the court, it may grant conditional leave to defend. In contradistinction to the earlier subjective satisfaction of the court, in the latter case there is an element of discretion vested in the courl Such discretion is not absolute but has to be judiciousll' exercised tempered with what is just and proper in the facts of a particular case. The ultimate ob;ect of a summary suit is expeditious disposal o[ a commercial dispute. The discretion vested in the court therefolc requires it to malntain the delicate balance between the respective rights and contentions by not passing an order which may ultimatel-v end up impeding the speedl' resolution of the drspute".
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1 1. The Hcn'blc Supre;rL' Court held that the re is an element of discretion vcstcd in [h( (.oLlrt. Such discreti<>n is not absolute but has t.o t;c judiciouslr cxcrcised tempered ,,,ith what is just and proper in thc facrs o[ a particular case. The Hon,ble Supreme Court again hiehlighted that the objcct of a summary suit is cxpcditious disposal of a commercial dispute. 1'he discretion vested in thc t'or-rn thcrefore requires it to maintain the delicate balance lrcrrl'ccn the respective rights and contentior]s >y not passirrl ar) ordcr which may ultimately cnd up impeding the spccclv rt solution of the disputc.
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crmounr, rvithin six (6) r,,.ceks from [he date of receipt of a copy of
this order
Miscellaneous pe Litions, pending if any, shail srand closecl.
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HIGH COURT
DATED: 21t06t2023
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ORDER
CRP.No.1680 of 2023
DISPOSING OFF THE
CIVIL REVISION PETITION
'a
3 issues framed by the court
Whether the imposition of a security condition equivalent to the entire suit amount as a prerequisite for granting leave to defend the summary suit was errorneous in the circumstances of the case.
Whether the trial court's discretion in fixing the amount of security for leave to defend was properly exercised.
Whether the respondent should be directed to furnish a security equivalent to a percentage of the suit amount instead of the full amount.
Colour shows how this judgement treated each authority
Sudin Dilip Talaulikar Vs. Polycap Ures Put. Ltd.Explained¶33
Sudin Dilip Talaulikar Vs. Polycap Ures Put. Ltd.
IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd.Explained¶33
IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd.
Milkhiram (India) (P) Ltd v. Chananlal Bros.Referred¶44
Milkhiram (India) (P) Ltd v. Chananlal Bros.
Kiranmoyee Dassi v. Dr. J ChatterjeeReferred¶45
Kiranmoyee Dassi v. Dr. J Chatterjee
Mechelec caseExplained¶44
Mechelec's case [(1976) 4 SCC 687: 2 MR 1977 SC 577] · Who else cites this
Modern Knitting Industries (P) Ltd v. Jaivars.Explained¶43
In (Modern) Knitting Industries (P) Ltd v. Jaivars.
2 provisions across 2 enactments
Neha International Ltd.
DBS Bank Ltd.
P. NAVEEN RAO
NAGESH BHEEMAPAKA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
