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Summary of Opinion (Order)

Factual and Procedural Background

The petitioner challenged an order of the lower court that required him to deposit Rs. 2,000/- as a condition precedent to the grant of leave to defend in O.S. No. 584 of 1966. The trial court found that a triable issue arose from the petitioner's affidavit and that the defence was bona fide and not a ruse to protract proceedings, but nonetheless directed the petitioner to deposit Rs. 2,000/- on or before 29-4-1970 as a condition for leave to defend. The petitioner filed a civil revision petition contesting the correctness of that conditional deposit requirement.

Legal Issues Presented

  1. Whether, having found that a triable issue exists and that the defence is bona fide, the lower court was justified in imposing a condition that the petitioner deposit Rs. 2,000/- as a prerequisite to grant leave to defend.
  2. Whether the revisional court should (at the revision stage) go behind the trial court's finding of a triable issue based on letters relied upon by the respondent that allegedly showed the petitioner undertook to settle the claim.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner contended that because the lower court itself found that a triable issue arose from his affidavit, the direction to deposit Rs. 2,000/- as a condition precedent for leave to defend was erroneous in law.

Respondent's Arguments

  • The respondent's counsel contended that the trial court's finding of a triable issue was not supported by the record and relied on certain letters said to have been written by the petitioner in which he purportedly undertook to settle the claim.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Milkhiram Ltd. v. Chamanlal Bros. The principle that if the judge is of the opinion that the case raises a triable issue, leave to defend should ordinarily be granted unconditionally; if the defence is frivolous, false or sham, leave should be refused; and where it is not possible to determine genuineness, the judge may grant leave on conditions. The court applied this principle to conclude that because the trial court had found a triable issue and that the defence was bona fide (not a ruse), leave should have been granted without conditions. Consequently the conditional deposit of Rs. 2,000/- ordered by the lower court was deleted.

Court's Reasoning and Analysis

The revisional court first observed that it was not in a position at the revision stage to act directly upon the letters relied upon by the respondent and therefore would not go behind the trial court's factual finding that a triable issue arose on the pleadings.

The court then addressed the core question whether, having found a triable issue and that the defence was bona fide and not a mere ruse, the trial court could validly impose a monetary deposit as a condition for granting leave to defend. The court relied on the Supreme Court's guidance in Milkhiram Ltd. v. Chamanlal Bros. which distinguishes three scenarios:

  • If the judge concludes a triable issue exists, leave should ordinarily be granted unconditionally.
  • If the defence is frivolous, false or sham, leave should be refused entirely.
  • If it is impossible to determine genuineness at that stage, the judge may exercise discretion to grant leave subject to conditions.

Applying that framework and the factual finding of the trial court that a triable issue arose and that the defence was bona fide, the revisional court concluded that leave should have been granted without conditions. On that basis the revisional court held that it could not uphold the lower court's direction to deposit Rs. 2,000/- as a condition precedent to granting leave to defend.

Holding and Implications

HOLDING: The revisional court allowed the civil revision petition and deleted the portion of the lower court's order directing the petitioner to deposit Rs. 2,000/- as a condition precedent to grant of leave to defend. The revision was allowed and there was no order as to costs.

Implications:

  • The immediate effect is that the petitioner is not required to deposit Rs. 2,000/- as a precondition for leave to defend in O.S. No. 584 of 1966.
  • The revisional court directed the lower court to dispose of the suit expeditiously, preferably within six weeks from the date of the order, noting the suit dates back to 1966.
  • The opinion applied existing precedent (Milkhiram Ltd. v. Chamanlal Bros.) to the facts; the order does not purport to lay down a new precedent beyond that application.

Disposition recorded in the opinion: "Revision allowed."

    A.K Velan v. Messrs Narayanan And Co. (P) Ltd. By Director, M.P Sarathy.

    ORDER

    1. In this petition, the petitioner canvasses the correctness of the of the lower court directing him to deposit a sum of Rs. 2,000/- as a condition precedent for the grant of leave to defend the suit O. S. No. 584 of 1966. It is contended by the petitioner that the lower court has found that there is a triable issue in the face of the contentions raised by the petitioner its direction to deposit the sum of Rs. 2,000/- is erroneous in law. A perusal of the order of the lower court shows that it specifically finds that having regard to the contentions raised by the petitioner in his affidavit, a triable issue certainly arises in this case, and that it was just and necessary to grant leave to the petitioner to defend the suit. The trial court also says that the plea raised by the defendant is not a mere ruse to protract the proceedings. After finding that there arises a triable issue and that the plea raised by the petitioner is not a mere ruse but a bona fide one the trial court has chosen to give a direction to deposit a sum of Rs. 2,000/- on or before 29-4-1970 as a condition precedent for the grant of leave.

    2. The learned counsel for the respondent however contends that the finding of the trial court that there arises a triable issue on the plea raised by the petitioner is not borne by the records, and reliance is placed on some letters said to have been written by the petitioner wherein he has undertaken to settle the claim of the petitioner. I am not in a position to straightway act upon the letters pointed out by the respondent at the stage of revision and therefore I am not going behind the finding given by the lower court that a triable issues arises on the pleadings raised by the petitioner. The question is, whether after giving such a finding, the lower court is justified in imposing a condition for the payment of Rs. 2,000/- for the grant of leave to defend.

    3. It is well established that in matters of this kind the discretion to grant leave to defend has to be exercised by the trial court in a judicial manner. In this case, the court below has found that a triable issue in fact arises on the plea raised by the petitioner. As pointed out by the Supreme Court in Milkhiram Ltd. v. Chamanlal Bros., , if the Judge is of the opinion that the case raises a triable issue then leave should ordinarily be granted unconditionally. On the other hand, if he is of opinion that the defence raised is frivolous, or false, or sham, he should refuse leave to defend altogether. But, where it is not possible to say whether the defence is a genuine one or not, then the discretion is left to the trial Judge to grant leave to defend on certain conditions. In this case, having regard to the fact that the trial court has held that there arises a triable issue on the plea raised by the petitioner, leave should have been granted automatically without imposing any condition. The trial court itself says that the defence raised is not a ruse to prolong the defence and that it is bona fide one. In the face of that finding, it is not possible to uphold the condition imposed by the lower court for payment of a sum of Rs. 2,000/- as a condition precedent for the grant of leave. The result is that part of the order of the lower court directing the petitioner to deposit a sum of Rs. 2,000/- will stand deleted. The civil revision petition is allowed, and in the circumstances, there will be no order as to costs.

    4. Having regard to the fact that the suit is of the year 1966 I direct the lower court to dispose of the suit as expeditiously as possible preferably within six weeks from this date.

    5. Revision allowed.

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    A.K Velan v. Messrs Narayanan And Co. (P) Ltd. By Director, M.P Sarathy.
    (Feb 16, 1971)