1976 (11) TMI 194 - SC - Indian Laws

defence against recovery of amount on dishonour of a cheque drawn by partner. - leave under Order 37, Rule 2, of the Code to defend.

Summary

Issues:
1. Interpretation of Order 37, Rule 3 of the Civil Procedure Code.
2. High Court's interference with the Trial Court's discretion in granting unconditional leave to defend.
3. Application of legal principles in granting leave to defend in cases of dishonored cheques.

The Supreme Court judgment involved a case where a registered partnership firm filed a suit for the recovery of a dishonored cheque. The defendant admitted issuing the cheque but denied a contract with the plaintiff firm. The suit was filed under Order 37 Civil Procedure Code, requiring the defendant to apply for leave to defend. The Trial Court granted unconditional leave after reviewing both parties' cases. However, the High Court interfered with this order, setting conditions for the defendant to pay the claimed amount into Court. The main issue was whether the High Court could interfere with the Trial Court's discretion under Section 115 of the Civil Procedure Code. The Supreme Court referred to legal precedents, emphasizing that leave to defend must be given unconditionally where the defense is not dishonest. The Court highlighted the importance of not prejudging the honesty of a defense before evidence is presented. The judgment also referenced the principles set out in Santosh Kumar v. Bhai Mool Singh and Smt. Kiranmoyee Dassi v. Dr. J. Chatterjee to support its decision. Ultimately, the Supreme Court set aside the High Court's order and restored that of the Trial Court, stating that the case did not warrant imposing conditions for the defendant to deposit an amount in Court. The parties were directed to bear their own costs.