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  • cause.12. Rule discharged.
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Smart Summary

Structured Summary of the Opinion (Chagla, C.J.)

Factual and Procedural Background

This is an application in revision (under Section 115 of the Civil Procedure Code) against an order of the learned Judge of the City Civil Court granting conditional leave to the defendants in a summary suit. The City Civil Court's order required the petitioners (defendants in the summary suit) to deposit Rs. 5,000 within a specified time as a condition to their right to appear in and defend the suit.

Facts (as stated in the opinion): plaintiffs are producers of a film titled "Musafir"; Defendants No. 1 were distributors who contracted to distribute the film in Delhi and U.P. for Rs. 1,35,000 (Rs. 65,000 during production and Rs. 70,000 against delivery of prints). Defendants paid Rs. 48,000 against the Rs. 65,000 instalment. Defendants entered into sub-agreements with exhibitors (including Nishat Talkies, Kanpur) by which Nishat Talkies agreed to pay a minimum guarantee of Rs. 25,000, of which Rs. 11,000 was paid on May 17.

The film was released in Bombay on May 17; despite a strong cast, it performed poorly ("a flop"). Because of poor commercial prospects, the original agreement between plaintiffs and defendants was modified on July 3, 1957: payment terms were altered so that Rs. 52,000 was to be paid against delivery of 11 prints (three of which were to be loan prints to be returned), Rs. 15,000 by hundis payable on August 31, 1957, and the balance Rs. 20,000 out of defendants' realisations.

Defendants assert that only five out of the 11 promised prints reached Delhi on July 16; they paid Rs. 52,000 believing they were taking delivery of 11 prints, later protested by telegram; three other prints were taken later and dispute remained about the three loan prints. On November 4, 1957, defendants filed a suit in the Delhi Court claiming damages of Rs. 30,000 for failure to deliver 11 prints on July 17, 1957. A summary suit by plaintiffs (the subject of this revision) was filed a few days later, based on hundis (negotiable instruments) drawn by defendants and payable on August 31, 1957.

Legal Issues Presented

  1. Whether the learned Judge of the City Civil Court contravened the principle (ascribed to the Supreme Court in Santosh Kumar v. Bhai Mool Singh) that leave to defend in a summary suit must be unconditional where the defendant's affidavits disclose a triable issue.
  2. What is the proper meaning of a "triable issue" in the context of summary suits decided on affidavits.
  3. Whether the High Court, in revision under Section 115 CPC, has jurisdiction to interfere with the City Civil Court's exercise of discretion in granting conditional leave (i.e., whether the City Civil Court acted illegally or with material irregularity).
  4. Whether the conditional leave (with a deposit of Rs. 5,000) improperly stifles the defendant's right to defend, given the factual matrix (dispute about delivery of prints, contractual modification and negotiable instrument claim).

Arguments of the Parties

Appellant's Arguments (as advanced by Mr. Malhotra)

  • The Supreme Court decision in Santosh Kumar v. Bhai Mool Singh has laid down that if affidavits filed by a defendant disclose a triable issue, leave to defend must be given unconditionally; otherwise conditional leave is illusory and contrary to natural justice.
  • The learned Judge of the City Civil Court contravened that principle by imposing a condition (deposit of Rs. 5,000) and thereby preventing the defendants from defending the summary suit.
  • Defendants contend that there was a clear breach by plaintiffs in sending only five prints instead of 11 and that defendants suffered damages (loss of minimum guarantee), entitling them to equitable set-off or a counterclaim against the plaintiffs' claim on the hundis.

Respondent's Arguments (as advanced by Mr. Bhagwati)

  • The July 3, 1957 modification did not, on its face, impose an obligation on plaintiffs to deliver 11 prints in one lot; there was likewise no absolute obligation on defendants to pay Rs. 52,000 unless all 11 prints were delivered.
  • If defendants chose to pay Rs. 52,000 before complete delivery, that was their voluntary act, motivated by their desire to secure prints for release; their complaints about short delivery may be an attempt to escape contractual obligations after learning the film flopped.
  • The summary suit is confined to hundis drawn by the defendants (a claim on negotiable instruments), and defendants may not have a defence to the negotiable instruments claim even if they have a separate cause of action for damages or set-off.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Santosh Kumar v. Bhai Mool Singh, [1958] A.I.R. S.C. 321 Asserted principle: where affidavits filed by the defendant disclose a "triable issue", leave to defend in a summary suit should be given unconditionally; courts should not impose conditions that effectively shut the defendant out from defending. The High Court examined and interpreted this decision: it accepted the quoted test from the Supreme Court that the defence must raise a "real" as opposed to a "sham" issue, but held that the Supreme Court had not defined "triable issue" narrowly enough and had not introduced a new principle that would tie the hands of summary-suit judges. The High Court applied the precedent by treating it as endorsing the "real issue" test and concluded the City Civil Court had not contravened that test in granting conditional leave here.

Court's Reasoning and Analysis

The court undertook a multi-step analysis, closely following the text of the opinion:

  1. Initial framing: The matter before the High Court was a revision (s. 115 CPC) against an order granting conditional leave to defend in a summary suit; the City Civil Court required a deposit of Rs. 5,000.
  2. Examination of the factual matrix: The court set out the contractual history (original agreement, July 3 modification), the alleged short delivery of prints, and the distinct procedural posture that the plaintiffs' summary suit was a claim on hundis (negotiable instruments) payable on August 31, 1957. The court emphasized that the character of the plaintiffs' claim (on negotiable instruments) conditions the scope of possible defences.
  3. Consideration of Santosh Kumar v. Bhai Mool Singh: The court identified the central proposition relied on by Mr. Malhotra — that a defendant should be given unconditional leave to defend if his affidavits disclose a triable issue. The High Court analysed what "triable issue" must mean in the context of summary suits decided on affidavits: not every arguable point on pleadings, but a defence disclosed in affidavit form that cannot be summarily disposed of on those affidavits and which, if established at trial, would entitle the defendant to succeed.
  4. Clarifying the "triable issue" standard: The court stressed that a triable issue must be a real (not sham, frivolous, untenable or mala fide) defence, both in law and fact, and one that requires a full trial for resolution. The court noted that the Supreme Court's quoted test itself uses this "real issue" formulation.
  5. On the power to impose conditions: The High Court recognised that the Supreme Court permitted conditions where the defence appeared not bona fide. Thus, the City Civil Court judge may examine affidavits to determine whether the issue is real or sham and whether the defence is bona fide, and may impose conditions accordingly.
  6. Limitation of revision jurisdiction (s. 115 CPC): The court considered the limited scope of the High Court's powers on revision. It emphasised that s. 115 is essentially concerned with jurisdictional or procedural illegality or material irregularity. Mere error of law by the lower court does not, by itself, justify interference in revision unless it amounts to a clear, conscious violation of law.
  7. Application to the present exercise of discretion: The court acknowledged two plausible views of the contractual facts — (a) defendants had a real breach-based claim entitling them to set-off/counterclaim, and (b) the July 3 agreement did not strictly require 11 prints in one lot and defendants voluntarily paid Rs. 52,000. The City Civil Court had exercised its discretion in the face of these competing views and ordered a modest deposit of Rs. 5,000. The High Court held that an erroneous exercise of discretion is not, by itself, ground for revision; interference is warranted only where discretion is exercised so palpably contrary to law that it indicates ignorance or conscious violation.
  8. Practical considerations: The court observed established practice in summary suits and the experience of City Civil Court judges in dealing with many such suits. It noted that the defendants were distributors (not impecunious parties) and that the deposit ordered was not so large as to stifle defence.
  9. Conclusion of reasoning: On these bases — interpretation of the triable-issue test, the limited scope of s. 115, and the proper respect for trial-court discretion — the High Court concluded there was no procedural illegality or material irregularity warranting interference. The revision therefore failed, save for an extension of the time to make the deposit.

Holding and Implications

Holding: The revision application is dismissed; the High Court refused to interfere with the City Civil Court's order granting conditional leave subject to a deposit. The Court discharged the Rule and ordered that the time to make the deposit be extended until August 11, 1958. Except for this extension of time, the order made by the learned Judge of the City Civil Court will stand. Costs of the revision are to be in the cause.

Implications:

  • Direct effect on the parties: The defendants (petitioners in revision) remain subject to the City Civil Court's condition to deposit Rs. 5,000 in order to defend the summary suit; the time for that deposit was extended to August 11, 1958. The revision application failed, and costs were ordered in the cause.
  • Broader legal effect: The High Court clarified the meaning of a "triable issue" in the summary-suit context — it must be a real (not sham) defence that cannot be disposed of on affidavits and that, if established at trial, would entitle the defendant to succeed. The court held that the Supreme Court decision in Santosh Kumar should be read in that light and did not, in this opinion, lay down a new, inflexible rule preventing conditional leave where appropriate. The High Court emphasised the limited scope of its revision jurisdiction under s. 115 CPC and declined to set aside the exercise of discretion by the City Civil Court. The opinion did not purport to create a new precedent beyond these interpretive clarifications.

Note: This summary is strictly based on the information contained in the provided opinion and does not add or infer facts beyond that text.

    Rawalpindi Theatres Private Ltd. v. Messrs Film Group, Bombay

    Chagla, C.J:— This is an application in revision against an order of the learned Judge of the City Civil Court granting conditional leave to the defendants in a summary suit. The order directed that the petitioners should deposit a sum of Rs. 5,000 within a specified time as a condition to the right of the defendants to appear in and defend the suit.

    2. The facts are that the plaintiffs are producers of a film and they produced a film by the name of “Musafir”. Defendants No. 1 are distributors and they entered into an agreement with the plaintiffs to take up the distribution of this film for Delhi and U.P, and under this agreement the defendants were to pay Rs. 1,35,000 to the plaintiffs. Rs. 65,000 were to be paid during production and Rs. 70,000 against the delivery of prints. It is common ground that Rs. 48,000 were paid by the defendants as against the sum of Rs. 65,000 which was to be paid. It is the case of the defendants that on May 3, 1957, they entered into various agreements with exhibitors in U.P and Delhi and one of these agreements was with Nishat Talkies of Kanpur by which Nishat Talkies agreed to pay the petitioners Rs. 25,000 as minimum guarantee on condition that they pave the Talkies two prints simultaneously with the release of the film at Dolhi, and according to the defendants the Nishat Talkies paid on May 17, Rs. 11,000 as against this minimum guarantee of Rs. 25,000. This film was released in Bombay on May 17, and it is again common ground that notwithstanding the brilliant caste the film was a flop. In view of this, and the parties having realised that not much profit was to be made out of this after the exploitation of this film, the original agreement entered into between the plaintiffs and the defendants was modified on July 3, 1957, and the main modification with which we are concerned is that the mode of payment of Rs. 1,35,000 was altered and the mode of payment settled by this agreement was that the defendants were to pay Rs. 52,000 against delivery of 11 prints, three of which were to be looked upon as a loan which were to be returned within two or three weeks, Rs. 15,000 were to be paid by hundis drawn by the defendants in favour of the plaintiffs payable on August 31, 1957, and the balance of Rs. 20,000 were payable out of the realisations made by the defendants. It is the case of the defendants that only five out of the II promised prints reached Delhi on July 16, and on intimation being given by the bank the defendants took delivery of these five prints against payment of Rs. 52,000, and it is the case of the defendants that they paid Rs. 52,000 and took delivery of these prints in the supposition that they were 11 prints as agreed to under the contract. Having paid Rs. 52,000 and having found that only five prints instead of 11 prints had been delivered to them, they sent a telegram to the plaintiffs protesting against having been made to pay Rs. 52,000 only against delivery of five prints. The three other prints were taken delivery of by the defendants at a later date and there is some dispute with regard to the three loan prints into which we need not enter at this stage. On November 4, 1957, the defendants filed a suit in the Delhi Court contending that they had suffered damage to the extent of Rs. 30,000 by reason of the failure on the part of the plaintiffs to deliver 11 prints on July 17, 1957, and the summary suit out of which this revision application arises was filed a few days later.

    3. With regard to damages, the defendants' case is that it was essential that “they should supply the Nishat Talkies the prints of the film on the same day as the film was released in Delhi. The film was released in Delhi on July 19, 1957, and as the defendants did not have sufficient prints they could not supply two prints to the Nishat Talkies with the result that the Nishat Talkies could not release the film on July 19, 1957. The film was released subsequently by the Nishat Talkies, but the defendants lost the minimum guarantee and they only became entitled to receive rental on percentage basis, and this is the main damage which according to the defendants they have suffered by reason of the breach of the agreement by the plaintiffs. It is to be noted that the summary suit is filed on the hundis drawn by the defendants in favour of the plaintiffs and payable on August 31, 1957. It is a suit on a negotiable instrument and any defence put forward by the defendants to this suit must be viewed in the light of the fact that what the plaintiffs are suing on is not any agreement or contract but a negotiable instrument. My attention was drawn by Mr. Malhotra, and drawn very pointedly and very emphatically, to the recent decision of the Supreme Court in Santosh Kumar v. Bhai Mool Singh . [1958] A.I.R S.C 321.. It is said that the Supreme Court has now laid down a new principle of law with regard to the granting of leave in summary suits, and according to Mr. Malhotra the learned City Civil Court Judge has contravened that principle of law, and if I am satisfied that principle of law is contravened it is my duty to interfere in revision. First let us turn to the Supreme Court decision and see what it has done. It is said that the Supreme Court has now laid down that if the affidavits filed by the defendant disclose a triable issue, then leave must be given unconditionally, otherwise the leave may be illusory, and this is based on the principle of natural justice that a defendant should be heard in his defence if he has a defence to put forward and his mouth must not be compulsorily shut if he is not in a position to comply with the condition imposed by the Court. Now, it is my experience both at the Bar and on the Bench that Judges on the Original Side and of the City Civil Court have been dealing with hundreds of summary suits and observing the identical principle which according to Mr. Malhotra the Supreme Court has enunciated for the first time. The practice in summary suits is well settled in the High Court for the last, I believe, 75 years and in the City Civil Court since the City Civil Court was established. The difficulty arises not in failing to realise that leave must be granted when there is a triable issue but in understanding and appreciating what a triable issue is. With respect, the Supreme Court has not defined a triable issue. A triable issue cannot possibly be any issue which may be raised at a trial on the pleadings. If that were so, however frivolous, however untenable, however dishonest the defence may be, it would give rise to an issue. A triable issue does not and cannot mean a raisable issue, an issue which can be raised on the affidavits or on the pleadings. In relation to a summary suit where matters are decided on affidavits, a triable issue can only mean that a defence is revealed or disclosed in the affidavit of the defendant which cannot be summarily disposed of on the affidavits and which requires a trial and a further investigation. It also means that if the trial and further investigation resulted in the defendant's contention being found to be correct, the defendant would be entitled to succeed. This is clear also from the judgment of the Supreme Court itself because at p. 324 the Supreme Court points out:

    “In general, therefore, the test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts.”

    4. Further, the Supreme Court also says that if the Court is of opinion that the defence is not bona fide, then it can impose conditions and it is not tied down to refusing leave to defend. Therefore, it is open to a learned Judge dealing with a summary suit to peruse the affidavits, to consider the defence and to decide whether the issue which the defendant seeks to raise is a real or a sham issue and also whether the defence is put forward bona fide or mala fide. It is, therefore, only a defence which is a real defence, real both in law and in fact, and a defence which is not put forward mala fide, that results in a triable issue as understood by the House of Lords and which the Supreme Court has accepted as the true test. Therefore, it is entirely erroneous to suppose that, with very great respect, the Supreme Court has laid down any new principle of law or has laid down any new test or that the Supreme Court has suggested that the hands of the Judges dealing with summary suits are completely tied down and as soon as they find a paragraph in the affidavit putting forward a defence they must immediately stop any further discussion and give unconditional leave to the defendant. That is not, and with respect cannot be, the effect of the decision of the Supreme Court.

    5. But there is a further aspect of the matter which must be considered and which was not considered by the Supreme Court. Mr. Malhotra has come in revision under s. 115 of the Civil Procedure Code and the jurisdiction of the High Court under s. 115, it need hardly be emphasised, is a very limited jurisdiction, I am conscious of the fact that this Court and other High Courts have liberally construed s. 115 and have interfered when they felt that injustice was being done or there was a miscarriage of justice, even though the matter did not strictly fall within the purview of s. 115. But if s. 115 was to be strictly construed, it is only in matters of jurisdiction that this Court can interfere with the order of the City Civil Court. Admittedly, the case does not fall under cl. (a) or (b) of s. 115, and Mr. Malhotra has urged that it falls under cl. (c), viz., the Court has acted in the exercise of its jurisdiction illegally or with material irregularity. I fail to see what illegality or material irregularity there is in the decision of the learned Judge below. The illegality or material irregularity contemplated by this clause is a procedural illegality or material irregularity. It is not an error of law committed by the lower Court which entitles the High Court to interfere under s. 115. Mr. Malhotra has failed to point out to me any procedural illegality or material irregularity committed by the City Civil Court Judge. The utmost he can say is that the lower Court has ignored the decision of the Supreme Court, and if it has ignored the decision of the Supreme Court it is my duty to correct the Judge and direct him to follow the law laid down by the Supreme Court. As I have pointed out, a mere error of law will not justify interference on the part of the High Court. It may be, and that view has been taken, that a clear and conscious violation of law may fall under cl. (c) of s. 115. But surely it cannot be said in this case that the decision is so patently wrong that it must be attributed to a conscious violation of the law on the part of the learned Judge.

    6. Now, clearly two views of the case are possible. One view so strenuously urged by Mr. Malhotra is that there was a clear breach of the agreement on the part of the plaintiffs in sending only five prints instead of 11 prints, and if there was a breach of the agreement, the defendants are entitled either equitably to set off the damages caused by this breach or to make a counterclaim against the claim of the plaintiffs based on the promissory notes. The other view for which Mr. Bhagwati has contended is that looking to the agreement of July 3, 1957, there does not appear any obligation on the part of the plaintiffs to send 11 prints in one lot. It is true that equally there was no obligation upon the defendants to pay Rs. 52,000 unless all the 11 prints have been delivered. But if they chose to pay Rs. 52,000 before the complete delivery was made, it was their own volition and there was good reason why they did so because they wanted the prints for being released in Delhi, and it is said that all this indignation about short delivery is the result of the lmowledge that the film was a flop and an attempt at getting out of their obligation under the agreement, and it is pointed out that the suit is confined to the hundis drawn by the defendants, which hundis were drawn under the agreement and on which they were clearly liable. It is also pointed out that even after the five prints were delivered the defendants have taken delivery of three more which leaves only three loan prints with regard to which there was some dispute. It is said that whatever may be the case with regard to damages which may be litigated in a counterclaim, there is no answer which the defendants can give to a claim on the negotiable instrument for Rs. 15,000. I do not wish to indicate which of the views is the correct view, nor is it my function to do so. The two views are pertinent because what the learned Judge has done is to have exercised his discretion which the law vests in him and in revision it is difficult to understand how the exercise of that discretion can be challenged. It is challenged on the ground that the discretion has been exercised erroneously, but surely that is not a ground for revision. Unless I am satisfied that the discretion is exercised not merely erroneously but has been exercised so patently and palpably contrary to law that the only inference that I can draw is that the learned Judge was ignorant of the law or has consciously, violated the law, I have no jurisdiction to interfere. It is not suggested that any injustice has been caused to the defendants. The learned Judge has only ordered a deposit of Rs. 5,000 and Mr. Malhotra's clients are distributors and not poor people whose defence would be stifled by having to pay the deposit.

    7. I have been at pains to discuss the law and to suggest what the right test is for interference by the High Court, because hundreds of summary suits are filed in the City Civil Court, and ultimately it must be left to those Judges who are men of experience as to whether they should grant unconditional leave or grant conditional leave, and if conditional leave is granted what should be the proper amount that should be ordered to be deposited. I have never heard it said that the learned Judges of the City Civil Court have on the whole not exercised their discretion fairly and judicially. If Mr. Malhotra's contention were to prevail, we would be doing nothing else in the High Court except scrutinizing the discretion exercised by the City Civil Court Judges and deciding for ourselves whether we should give conditional leave or unconditional leave and what the quantum of the deposit should be.

    8. The result is that the revision application fails.

    9. Rule discharged.

    10. Time to make the deposit extended till August 11, 1958. Except for this alteration, with regard to the extension of time, the order made by the learned Judge will stand.

    11. Costs of the revision application costs in the cause.

    12. Rule discharged.

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    Comments

    Rawalpindi Theatres Private Ltd. v. Messrs Film Group, Bombay
    (Jul 4, 1958)