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TMI Blog1998 (9) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... followed two earlier decisions on the point namely, Hiralal Deb Gupta v. Salil Kumar Paul: and Bonwarilal Roy v. Sohanlal Daga: ILR(1955) 1 Cal 299. The ratio of those two earlier decisions was that the order was not appelable because by refusing leave to defend or by granting conditional leave to defend under Order 37, it did not necessarily mean that the plaintiff would succeed in the suit. Order 37 as it stood then envisaged a decree being passed subsequently. 4. Since those two decisions were rendered, in 1976, Order 37 has been amended. In our opinion the ratio in Hiralal Dev Gupta v. Salil Kumar Pal (supra) and Bonwarilal Roy v. Sohanlal Daga (supra) can no longer be said to be applicable to Order 37 as it stands after the amendment. 5. We say so far the following reasons : The procedure now prescribed for passing summary Judgments is materially similar to the procedure which is prescribed under Chapter XIIIA of the Original Side Rules of this court. This envisages a decree being passed immediately upon the defendants failure to obtain leave to defend or failing to comply with the condition subject to which the leave may be granted. As far as this court is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order 37 of the Code of Civil Procedure refuses the defendant leave to defend the suit, the order directly affects the defendant because he loses a valuable right to defend the suit and his remedy is confined only to contest the plaintiffs case on his own evidence without being given a chance to rebut that evidence. As such an order vitally affects a valuable right of the defendant it will undoubtedly be treated as a judgment within the meaning of the Letters Patent so as to be appealable to the larger Bench. 9. The observations appear to relate to Order 37 as it stood prior to its amendment when even after denial of leave to defend, the decree did not automatically follow and the defendant could still contest the plaintiffs case on its own evidence. The principle would a fortiori be applicable now after the 1976 amendment to Order 37 when with the dismissal of the application for leave to defend, the decree follows immediately. 10. Had the decision in Merchant Traders Co. not been there we would have had no hesitation in holding that given the present form or Order 37, an order refusing leave to defend or granting such leave conditionally is appelable under Clause 15 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant for grant of conditional leave to enter appearance and file written statement subject to furnishing a Bank Guarantee for ₹ 5,00,000/- or furnishing a security by way of immovable property for the like amount and in case of default on furnishing such security a decree for ₹ 5,00,000/ against the appellants would be passed and for balance amount claimed in the suit it was directed to be tried at the final hearing of the case. 15. The skeletal picture of the case which has emerged from the pleading are as follows : The defendants/appellants had transacted certain business in purchase of goods from the plaintiffs on various dates and allegedly issued A/C Payee Cheques in favour of the plaintiff against those purchases for valuable condsideration . Those cheques, on being presented by the plaintiff/respondent to his bank, i.e.. Bank of Baroda, on various dates, were dishonoured by the banker-on account of Refer to drawer , Insufficient of Fund . Payment stopped by the drawer . The principal amount claimed by the plaintiff under those dishonoured cheques is ₹ 11,872.80 and the interst accrued thereon at the rate of ₹ 19/- P. A. till the date of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erim stay to furnish security. However, the court in this appeal passed an interim order. The learned advocate appearing for the plaintiff/respondent has, at the outset, taken a formidable ground about the appealability of the order which is being assailed before us. It has been strongly submitted that the order in question not being a Judgment or a decree, therefore, it could neither be appealed aginst under the provisions of Order 43 of the Code of Civil Procedure nor under Clause 15 of the Letters Patent Rule. 17. Strong reliance has been placed on ILR 1955(1) Calcutta page 299 in the case of Bonwari Lal v. Sohan Lal Daga. In the aforementioned judgment it has been held as follows : An order under order XXXVII, Rule 3 - order refusing leave to defend or giving leave on terms if a judgment within Clause 15 of Letters Patent Appeal against such order, whether maintainable -order, whether may be challenged in appeal against decree passed in suit. An order under O.XXXVH Rule 3 of the Code of Civil Procedure refusing leave to defend or giving leave en terms, is not a judgement within the meaning of cl. 15 of the Letters Patent and no appeal is maintainable under the claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee or by real property. The appellant/defendant contended that the order to grant leave to defend the suit should have been unconditional. The respondent/plaintiff contended that appeals were not maintainable. No appeal maintainable from an order granting conditional leave to defend a suit because such order is not a judgment within the meaning of clause 15 of the Letters Patent. 24. The defendant/appellant while assailing the stand of the plaintiffs/ respondent has strongly contended that the order granting conditional leave to file written statement is as good as refusal and therefore, it is appealable. Strong reliance has been placed upon the judgment reported in AIR 1963 Calcutta page 9 in the case of Mitra Mukherjee and Co. and another v. Ajit Kumar Sarkar. In the aforementioned case a Division Bench of this Court has observed as follows : An appeal being preferred against the said order it was contented by counter for the plaintiffs that no appeal lay therefrom. Considering the provisions of 0.37 and 0.43 of the Code of Civil Procedure Sanderson C.J. said that, in his judgment taking the said provisions as a guide it might reasonably be held that the order in so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope, meaning and purport of the word judgment used in Clause 15 of the Letters Patent. Numerous authorities on both sides were cited before us in the course of the veryable arguments advanced by counsel for the parties and it appears that there are three leading Judgments which have spelt out certain tests to determine as to when an order passed by a trial Judge can be said to be a 'Judgment' within the meaning of clause 15 of the Letters Patent. A very narrow view on this point was taken by a Division Bench of the Calcutta High Court in the case of Justice of the Peace for Calcutta (1872-8 Beng LR 433) (supra) where Sir Gouch, C.J. on an interpretation of clause 15 of the Letters Patent observed thus : We think that Judgment in clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability. It may be either final or preliminary, or interlocutory, the difference between them being that a final Judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined. 82. An analysis of the observations of the Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Judges strongly expressed themselves that the High Court should give up its fondness to stick to the principles laid down by the learned Chief Justice. It is not necessary for us to burden this judgment with later decisions of the Calcutta High Court in trying to comment on the correctness of the principles laid down by Sir Gouch C.J., but a few instances may be quite revealing. 84. In Chandi Charan Sana v. Jnanendra Nath Bhattacharjee 29 Cal LJ 225: (AIR 1919 Cal. 667) Sir Ashutosh Mookherjee in his leading judgment modified the strict rule of interpretation of 'judgment' laid down by Sir Gouch. C.J. and pointed out that the words 'merits of the question between the parties by determining a right of liability', were not to be confined or restricted to the controversy in a suit itself but could take within its fold any right involved in any application which puts an end to the suit or the proceeding. Sir Mookherjee, J. has widened the scope of the observations of Sir Gouch. C.J. and adopted some of the observations of Sir White, C.J. in Taljiram Row's case (1912 ILR 35 Mad 1 ) (supra) and in this connection observed thus :- It is plain that the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the Letters Patent. I think too, an order on an independent proceeding which is ancilliary to the suit (not instituted as a step towards judgment, but with a view to rendering the judgment effective if obtained) e.g. an order on an application for an interim injunction, or for the appointment of a receiver is a 'judgment' within the meaning of the clause. 91. Analysing the observations of the learned Chief Justice it would appear that he has laid down the following tests in order to assess the import and definition of the word 'Judgment' as used in clause 15 of the Letters Patent : (1) It is not form of adjudication which is to be seen but its actual effect on the suit or proceeding ; (2) If, irrespective of the form of the suit or proceeding the order impugned puts an end to the suit or proceeding it doubtless amounts to a judgment: (3) Similarly, the effect of the order, if not compiled with is to terminate the proceedings the said order would amount to a judgment; (4) Any order in an independent proceeding which is ancilliary to the suit (not being a step towards judgment) but is designed to render the judgment effective can also be terme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Judge would not amount to a judgment within the meaning of Clause 15 of the Letters Patent but will be purely an interlocutory order. 28. Reliance has, however, been placed in a reported Judgment : AIR 1926 Calcutta 668. The Division Bench has held in the following manner in the case of Chattu Lall Misser and Ors. v. Marwari Commercial Bank Ltd. and Others. Where defendant's attorney gave the plaintiff another opportunity by again entering appearances after defendant had already appeared in person the period of 10 days runs from the date of the later appearance. Where the order was that upon security for a ceratin amount being given within a certain time, the defendants should have leave to defend, but that in default of the defandants giving security within the time aforesaid, a decree was to be drawn up. 29. The Supreme Court, in the case of Milkhiram (India) Private Ltd. and Ors. v. Chaman Lal Bros. (AIR 1965 page 1698) held no doubt an appeal lay against the order under the Letters Patent but i.e., merely an internal appeal in High Court which cannot be likened to an appeal under section 96 or a revision under section 115 of the Code. The aforemention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appendix B or such other form as may be prescribed from time to time returnable not less than-ten clear days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence in the suit. (3) The defendant may at any time within ten days from the service of such summons for judgment by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend suit. Leave to defend may be granted to him unconditionally or upon such terms as to the Judge appear just. 32. After reviewing all the authorities, the court should lay down a definative ruling that if the evidence of the defendant is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence and judgment will be given to the plaintiff. Two tests are appropriate, namely. Is what the defendant says credible? and is there a fair or reasonable probability of the defendant having a real or bona fide defence? Where an issue of fact is raised, the first question must be answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Order 37 Rule 3 after 1976 amendment was seemingly not considered. 37. On combined reading of the pre-amendment Rule to Order 37 Rule 3 CPC, after 1976 amendment along with Bombay Amendent, it appears that the Bombay Amendment and also the 1976 Amendment of Rule 3. Order 37 of the Code, there could be no room for doubt that the view taken by the Bombay High Court could be quite pertinent and relevant and therefore, in agreement with the Bombay High Court's views, the Supreme Court, has, in Khemjt's case laid down broad outlines as to in which cases the appeal could lie against the interim orders passed by the court. In the aforesaid circumstances with great respect we are not able to ascribe our views to the Merchant Traders case reported in 1997(1) CHN 206. 38. The learned advocate appearing for the appellant has brought to our notice that the learned trial Judge without discussing merits of the defendant's contentions had, however, abruptly arrived at the conclusion directing the defendant to furnish security. It is the well settled position of law that the court would, whether or not grant leave to defend the suit filed under Order 37 of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X
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