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  • provisions of Order 37 of the CPC
  • Rule 4 of Order 37 of the Code
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Acts
  • provisions of Order 37 of the CPC
  • Rule 4 of Order 37 of the Code
Smart Summary

Structured Summary of the Opinion (A.N. Sen, J.)

Factual and Procedural Background

The plaintiff, Salil Kumar Paul, instituted a suit under the provisions of Order 37 of the Code of Civil Procedure (CPC) against defendants Hiralal Deb Gupta (the appellant before the Division Bench) and Ajit Kumar Ganguli based on a dated document (dated 24-7-1968) claiming Rs. 50,000 with interest. The defendant Hiralal Deb Gupta applied for leave to defend the suit, seeking unconditional leave to appear and for directions to file a written statement.

On 4th March 1970 Ghose, J. granted leave to the defendant to enter appearance and file a written statement but made the leave conditional on the defendant furnishing security of Rs. 20,000 within eight weeks; failure to furnish the security would result in the application standing dismissed with costs. The defendant appealed that order (Appeal No. 90 of 1970) and sought a stay; the appellate court made a conditional stay subject to the appellant furnishing security. The appellant failed to furnish the security and the conditional stay did not take effect.

The suit appeared on the undefended list. The trial Judge (on different appearances of the file) expressed doubts about whether the suit had been properly instituted under Order 37 and adjourned; later, the suit appeared before Hazra, J., on 12-5-1972 and a decree for the amount claimed was passed against the defendant. The defendant then preferred an appeal against that decree (Appeal No. 126 of 1972). Both appeals (No. 90 of 1970 and No. 126 of 1972) were heard together by the Division Bench whose judgment is summarized here.

Legal Issues Presented

  1. Whether an appeal lies from an order granting conditional leave to defend under Order 37 CPC (i.e., the competence and maintainability of Appeal No. 90 of 1970).
  2. Whether an appeal lies from a decree passed under Order 37 CPC (i.e., competence of Appeal No. 126 of 1972).
  3. Whether the document on which the suit was founded is a hundi, promissory note or bill of exchange / negotiable instrument (a question of law).
  4. Whether the trial judge should have granted unconditional leave to the defendant to defend, given the existence of triable issues of law and fact (principles governing grant of leave under Order 37).
  5. Whether there exist triable issues of fact (notably denial of receipt of consideration except Rs. 1155/-) that require the suit to proceed as a defended suit rather than by decree on the undefended list.

Arguments of the Parties

Appellant's Arguments (Hiralal Deb Gupta)

  • The trial Judge erred in granting conditional leave rather than unconditional leave; triable issues clearly arise, so unconditional leave should have been granted.
  • The document on which the Order 37 suit was based is neither a hundi nor a promissory note nor a bill of exchange; therefore a suit under Order 37 is not maintainable on that document.
  • Consideration was denied (except part sum), and denial of consideration meant leave should not have been made conditional.

P laintiff-Respondent's Arguments (Salil Kumar Paul, via Mr. Arya Mitter)

  • No appeal lies from the order by which conditional leave to defend was granted; that appeal (Appeal No. 90 of 1970) is not competent or maintainable.
  • No appeal lies from a decree passed in a suit under Order 37 CPC; Rule 4 of Order 37 creates a self-contained regime and provides for setting aside a decree, excluding appeals (argued by respondent).
  • Section 96 CPC does not apply and Clause 15 of the Letters Patent is not helpful because, argued respondent, a decree under Order 37 is not a "judgment" within Clause 15.
  • On the merits, the defence was not bona fide or genuine; the trial Judge correctly imposed conditions. The plaintiff also argued that the document should be regarded as a hundi and cited various decisions in support.
  • Specifically, the plaintiff relied on certain precedents and argued that the defendant had not raised before the trial Judge the plea that the document was not a negotiable instrument, so it should not be open to the defendant to raise that point on appeal.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bonwari Lal Roy v. Sohan Lal Daga, ILR (1955) 1 Cal 299 (Division Bench) Holds that no appeal lies from the order granting conditional leave is not the correct route; appeal from decree under Order 37 lies (i.e., appeal from decree is competent). The Court accepted this decision as establishing that an appeal lies from a decree under Order 37; accordingly, the appeal against the conditional-leave order was held incompetent, and its grounds were treated as grounds in the appeal from the decree.
Ramkarandas Radhavallabh v. Bhagwandas Dwarkadas, AIR 1965 SC 1144 (Supreme Court) Relied on by the plaintiff to argue appeals do not lie from decrees under Order 37. The Court stated this decision has no bearing on the question and is not authority for the proposition that an appeal will not lie from a decree passed under Order 37; it was not followed for that purpose.
Santosh Kumar v. Bhai Moon Singh, AIR 1958 SC 321 (Supreme Court) Sets out principles for granting leave to defend under Order 37 (how leave should be considered and tests for conditional vs unconditional leave). The Court applied the principles enunciated in this Supreme Court decision and concluded that, on the facts (existence of important questions of law and fact), unconditional leave should have been granted by the trial Judge.
C.C. Sinha v. Bidhu Bhushan De, AIR 1955 Cal 562 (G.K. Mitter, J.) Addressed the nature of the document (whether it was a hundi, promissory note or bill of exchange). The plaintiff contended G.K. Mitter, J.'s conclusion in that case was wrong; the Court noted the plaintiff's submissions but did not adopt or decisively rule on G.K. Mitter, J.'s conclusion in this judgment (the point remains for trial or further adjudication).
AIR 1930 Cal 697 (Division Bench) — referenced in relation to C.C. Sinha Referenced by G.K. Mitter in the C.C. Sinha decision regarding characterization of the document. The Court recorded that G.K. Mitter, J. had referred to that Division Bench decision; the present Court did not accept plaintiff's submissions as foreclosing the legal question and left the legal characterisation open for adjudication in the suit.

Court's Reasoning and Analysis

The Division Bench proceeded in a step-wise fashion:

  1. Competence of Appeal Against Conditional Leave: The Court held that, following the Division Bench decision in Bonwari Lal Roy v. Sohan Lal Daga, an appeal against an order granting conditional leave to defend (i.e., Appeal No. 90 of 1970) is incompetent and not maintainable. Accordingly, the appeal against the conditional-leave order was dismissed as not maintainable.
  2. Treatment of Grounds from the Dismissed Appeal: Although Appeal No. 90 was dismissed as incompetent, the Court stated it would treat the grounds raised in that appeal as grounds in the appeal from the decree (Appeal No. 126 of 1972) because both appeals were heard together. The Court therefore considered the substantive points in the appeal from the decree.
  3. Whether an Appeal Lies from a Decree under Order 37: The Court rejected the plaintiff's broader contention that no appeal lies from a decree under Order 37. It observed that there was no authority for the proposition that an appeal will not lie from such a decree, and that the mere existence of Rule 4 of Order 37 (providing for setting aside a decree) cannot be read as depriving a party of the right to appeal. It further noted that adjudication by decree is a final adjudication and falls within the meaning of "judgment" for purposes of the Letters Patent.
  4. Existence of Triable Issues of Law and Fact: The Court found that important issues of law arose (chiefly whether the document was a hundi/promissory note/negotiable instrument) and that an important question of fact also arose (denial of receipt of consideration except Rs. 1155/-). Given that both serious questions of law and fact required determination, the Court concluded that the matter should not have been decided on the undefended list.
  5. Application of Principles Governing Grant of Leave: The Court referred to the Supreme Court decision in Santosh Kumar v. Bhai Moon Singh setting out the principles governing the grant of leave to defend. Applying those principles, the Court concluded that unconditional leave should have been granted by the learned trial Judge.
  6. Relief Ordered: In consequence, the Court allowed the appeal from the decree, set aside the decree dated 12th May 1972, granted unconditional leave to the appellant to defend the suit, ordered the appellant to enter appearance within one week and to file a written statement within a fortnight after reopening; it also vacated any interim order made by the Appeal Court and directed that costs of both appeals be costs in the suit.
  7. No Merits Decided: The Court expressly emphasized that it was not necessary to and did not adjudicate the substantive issues themselves; it merely held that triable issues existed and left the adjudication of those issues to the trial Judge upon hearing the defended suit.

Holding and Implications

Core Rulings:

  • Appeal No. 90 of 1970 (against the conditional-leave order): Dismissed as incompetent and not maintainable.
  • Appeal No. 126 of 1972 (against the decree dated 12th May 1972): Allowed; the decree dated 12th May 1972 is set aside.
  • Leave to defend: The appellant is granted unconditional leave to defend the suit.

Consequential Directions and Immediate Effects:

  • The appellant must enter appearance within one week from the date of the judgment and file his written statement within a fortnight after reopening.
  • Any interim order made by the Appeal Court is vacated.
  • Costs of both appeals are made costs in the suit.
  • Certified for two counsel.

Implications: The Court confined itself to the direct effect on the parties — setting aside the decree and granting unconditional leave to defend because triable issues of fact and law exist. The Court did not decide the substantive issues (i.e., the legal character of the document or the factual dispute over consideration) and therefore did not lay down any new legal principle beyond applying and following existing authorities.

Note: The Court made clear that it had not adjudicated the issues involved in the suit; full adjudication of fact and law is to be carried out by the learned trial Judge in the defended proceedings.

    Hiralal Deb Gupta v. Salil Kumar Paul And Another

    A.N Sen, J.:— These are two appeals by the defendant in a suit filed under O. 37 of the CPC.

    2. Salil Kumar Paul, the first respondent in the appeals instituted a suit under the provisions of Order 37 of the CPC against Hiralal Deb Gupta who happens to be the appellant before us and one Ajit Kumar Ganguli. The document on which the plaintiff Salil Kumar Paul instituted the suit under the provisions of Order 37 of the CPC reads as follows:

    “Rs. 50,000/- dated 24-7-68 Rs. 10/- 90 (Ninety) days after date without grace please pay to Sri Salil Kumar Paul of 26, Beadon Row, Calcutta 6 or order at Calcutta or 24 Parganas or Howrah or Hooghly the sum of Rs. 50,000/- (Rupees fifty thousand) only, with interest @ 8% per annum in case of default of payment on the due date at 22-10-1968 for value received in cash presentation for payment and notice of dishonour waived.

    100 × 500 = Rs. 50,000/-

    Received Rupees fifty thousand in cash.

    Sd/- Hiralal Deb Gupta,

    United Bank of India Ltd.

    4, Clive Ghat Street,

    Calcutta—1.

    D/- 24-7-1968.

    Accepted by:

    Ajit Kumar Ganguly

    ADV/DP/CAL. Br.

    U.B.I 4, Clive Ghat Street,

    Calcutta-1 24-7-1968.

    10 Rs.

    Sd/- Hiralal Deb Gupta

    24-7-1968

    Sd/- Ajit Kumar Ganguly

    Sd/- Hiralal Deb Gupta

    24-7-1968

    Sd/- Ajit Kumar Ganguly”

    3. Hiralal Deb Gupta made an application for leave to defend the said suit. In his application he had asked for an unconditional leave to be granted to him to appear and defend the above suit and also for appropriate directions for filing the written statement. The said application came up for hearing before Ghose, J., and on the 4th March, 1970, the learned Judge made an order granting leave to Hiralal Deb Gupta to enter appearance and file written statement on condition that he would furnish security for the sum of Rs. 20,000/- to the satisfaction of the Registrar within 8 weeks from the date of the order. The learned Judge further directed that in default of the security being furnished within the time stipulated the said application would stand dismissed with costs. Against the said order of Ghose, J., granting conditional leave Hiralal Deb Gupta preferred an appeal which is Appeal No. 90 of 1970 before us. Hiralal Deb Gupta in his said Appeal No. 90 of 1970 made an application for stay a further proceedings of the suit and of the operation of the said order and the Court of appeal made a conditional order for stay on the appellant's furnishing security. The appellant Hiralal Deb Gupta failed to furnish the security in terms of the order of the Court of Appeal and the conditional order for stay by the Court of Appeal in the said Appeal No. 90 of 1970 was not effective. The suit appeared on the undefended list of Ghose, J., and the learned Judge, it is stated before us, adjourned the suit, as the learned Judge did not appear to be satisfied that the suit was properly instituted under Order 37 of the CPC. The suit appeared in the undefended list of Hazra, J., on 12-5-72 and the learned Judge passed a decree for the amount claimed in the suit against the said decree. Hiralal Deb Gupta has preferred another appeal which is Appeal No. 126 of 1972. Both these appeals have been heard together and are being disposed of by this judgment.

    4. Mr. Sen, learned Counsel appearing on behalf of the appellant has contended that the learned trial Judge was wrong in granting conditional leave and in imposing condition. According to him the learned trial Judge should have granted unconditional leave. Mr. Sen contends that triable issues clearly arise in the instant case and according to Mr. Sen the learned Judge should have granted unconditional leave because substantial issues were raised and were required to be tried in the suit. Mr. Sen has argued that the provisions of Order 37 of the CPC have no application to the document in question and a suit under Order 37 of the Code is not maintainable on the document as the said document is neither a hundi nor a promissory note nor a bill of exchange. Mr. Sen has further argued that consideration has been denied and Mr. Sen has therefore submitted that the learned trial Judge was wrong in imposing condition in the matter of granting leave to the defendant.

    5. Mr. Arya Mitter, learned counsel appearing on behalf of the plaintiff respondent has submitted that no appeal lies from the order passed by the learned Judge by which he granted conditional leave to the defendant. According to Mr. Mitter the said appeal is not competent and is not maintainable. Mr. Mitter has further submitted that no appeal also lies from the decree passed in a suit under the provisions of the Code of Civil Procedure. It is the argument of Mr. Mitter that Order 37 of the CPC is a self-contained Code and in view of the provisions contained in R. 4 of Order 37 an appeal from the decree does not lie. Mr. Mitter has argued that Section 96 of the CPC has no application to this Court and Clause 15 of the Letters Patent which governs the appeal is also of no assistance as a decree passed under Order 37 of the Code is not a judgment within the meaning of Clause 15 of the Letters Patent. On the merits Mr. Mitter has contended that the learned trial Judge was right in imposing condition in the matter of granting leave as the defence sought to be taken was not a genuine and bona fide defence. Mr. Mitter has pointed out that in the application for leave to defend no plea to the effect that the document in question is not a hundi or a promissory note or a bill of exchange was raised. It has been the contention of Mr. Mitter that in the appeal it is (not?) open to the appellant, therefore, to raise the question that the said document is not a hundi or a promissory note or a bill of exchange. Mr. Mitter has further submitted that the said document should be considered to be a hundi and Mr. Mitter has referred to various decisions in support of this submission. Mr. Mitter has contended that G.K Mitter, J., in the case of C.C Sinha v. Bidhu Bhushan De, reported in AIR 1955 Cal 562, was not right in his conclusion that the document in question in the said suit was not a hundi or a bill of exchange or a promissory note and the learned trial Judge did not correctly appreciate the decision of the Division Bench reported in AIR 1930 Cal 697 to which G.K Mitter, J., referred in his decision.

    6. In view of the decision of the Division Bench of this Court in the case of Bonwari Lal Roy v. Sohan Lal Daga reported in ILR (1955) 1 Cal 299, the appeal of the appellant against the order of the learned trial Judge granting conditional leave to him to defend must be held to be incompetent and not maintainable. It has been clearly held in that decision that no appeal lies from such an order and the course left open to the aggrieved party is to prefer an appeal from the decree and in the said appeal from the decree the said ground of not granting unconditional leave, may be taken.

    7. In the instant case as the said appeal from the order granting unconditional leave, must be held not to be maintainable, we have to dismiss the same but the grounds taken in the said appeal can be considered to be grounds in the appeal preferred against the decree. We therefore, propose to treat the grounds taken in the said appeal as grounds in the appeal from the decree. In view of the fact that we have heard both the appeals together we do not consider it necessary to direct any formal amendment of the grounds of appeal in the memorandum of appeal preferred against the decree.

    8. We are unable to accept the contention of Mr. Mitter that no appeal lies from a decree passed in a suit under O. 37 of the CPC. In our opinion, there is no merit in the contention. It is to be noted that there is no authority for such proposition as in our view there cannot be any authority for the proposition that an appeal will not lie from a decree passed under Order 37 of the CPC. The decision of the Supreme Court in the case of Ramkarandas Radhavallabh v. Bhagwandas Dwarkadas, reported in AIR 1965 SC 1144, on which Mr. Mitter has relied has really no bearing on this question and is not authority for the proposition that an appeal will not lie from a decree passed under the provisions of Order 37 of the CPC. The mere fact that provision has been made in Rule 4 of Order 37 of the Code to enable a defendant to apply for setting aside a decree does not and cannot deprive him of the right of appeal from the decree. It is not really necessary for us to decide whether Section 96 of the CPC has any application or not. There cannot be any doubt that adjudication of rights finally by the decree will undoubtedly be a judgment within the meaning of clause 15 of the Letters Patent. The decision of the Division Bench in Bonwari Lal Roy's case, ILR (1955) 1 Cal 299 to which we have earlier referred makes it clear that an appeal from a decree under Order 37 of the CPC lies.

    9. In the facts of the instant case the very nature of the arguments and the decisions on which Mr. Mitter seeks to rely leave no room for doubt that an important issue of law, viz., whether the document in question is a hundi or a promissory note or a negotiable instrument, arises. We do not consider it necessary at this stage to decide finally on this question as in our view an important question of fact also arises in the instant case. There is a denial of receipt of consideration excepting a sum of Rs. 1155/-. As in our view serious questions are to be tried in the suit and issues of fact and law both require determination in the suit, we think the proper order for us to make will be to set aside the decree which was passed and to give an opportunity to the defendant to contest the suit. The principles as to granting of leave are fairly well settled and the Supreme Court in the case of Santosh Kumar v. Bhai Moon Singh, reported in AIR 1958 SC 321 has clearly enunciated these principles. In our opinion, applying the principles laid down by the Supreme Court in the said case unconditional leave should have been granted by the learned trial Judge.

    10. We have only to note that the contention of Mr. Mitter that it is not open to the appellant to urge that the document in question is not a hundi or a bill of exchange or a promissory note as the said question was not raised before the learned trial Judge is not right. As a matter of fact, this aspect is disputed. We, however, do not propose to go into the merits of the factual controversy. In the grounds of appeal in the appeal preferred against the order this ground was specifically taken. In any event, this being a pure question of law it is open to the appellant to urge the said question even if the said question was not urged before the learned trial Court. The appeal from the order granting conditional leave being Appeal No. 90 of 1970 is, therefore, dismissed as the said appeal is not maintainable and is not competent. The appeal from the decree being Appeal No. 126 of 1972 succeeds and must be allowed. We, therefore, set aside the decree dated 12th May, 1972, passed by the learned trial Judge. We grant unconditional leave to the appellant to defend the suit and the appellant will enter appearance within a week from date and will file his written statement within a fortnight after the reopening. Interim order, if any, made by the Appeal Court will stand vacated. Costs of both the appeals will be costs in the suit. Certified for two counsel.

    11. We wish to make it clear that we have allowed the appeal and set aside the decree, as in our view triable issues of fact and law arise for determination in the suit and unconditional leave to defend should therefore, have been granted.

    12. It was not necessary for us to adjudicate upon the issues involved and we have not decided any of the issues involved in this suit. It will be, as it must necesarily be, for the learned trial Judge who will hear the suit to adjudicate upon the issues of fact and law involved in the suit.

    13. Deb, J.:— I agree.

    14. Order accordingly.

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    Comments

    Hiralal Deb Gupta v. Salil Kumar Paul And Another
    (Sep 20, 1972)