Chitukuri Gopala Rao Petitioner v. Parachuri Subba Rao

JUDGMENT

This is an application to revise an order of the District Munsif of Tenali whereby when granting leave to defend a suit under O. 37, Civil Procedure Code, he imposed upon the petitioner a condition that he should give security for the suit claim. In the face of Cl. (2) of O. 37 R. 3, it cannot be seriously disputed that in suits under O. 37, the Court has jurisdiction to impose conditions when granting leave to defend. But Mr. Satyanarayana Rao on behalf of the petitioner has strongly insisted that in view of several decisions of this Court, a Court ought not to impose a condition when granting leave to defend except under exceptional circumstances. In particular, he referred to a decision of Madhavan Nair, J., in Olayatt Kunhu v. Ussain Kasim Sait and a decision of Ramesam J., in Alla Venkata Kistnayya v. Alapati Ramaswami where the learned Judges have interfered even in revision with orders imposing a condition of security. He also drew my attention to a decision of Schwabe, C.J, and Ramesam, J., in Periya Miyana Marakayar v. Subramania Aiyar and a more recent decision of a division Bench in G. Sundaram Chettiar v. P.A. Valli Ammal where the decision in Periya Miyana Marakayar v. Subramania Ayyar is referred to with approval.

The judgment in Periya Miyana Marakayar v. Subramania Aiyar itself recognises that

“in exceptional cases where for instance there appears to be so grave a suspicion that the Court comes to the conclusion that the defence is put in only in order to obtain further time,”

the Court may impose a condition for giving of security. In the single Judge decisions above referred to, the learned Judges mainly proceeded on the footing that the lower Court had not bestowed attention upon the question whether any special circumstances existed justifying the imposition of an order for security before granting leave. I am unable to agree that the lower Court has made any such mistake in the present case.

It will certainly not be a reasonable interpretation of Cl. 2 of R. 3 of O. 37 of the Code to say that it contemplates only two courses; either a grant of leave unconditional or a refusal of leave. At the time when the question of granting leave comes up, the Court has not before it the full materials on which it can come to a satisfactory conclusion on the merits of the proposed defence; and if it thinks that there is something to be said in defence, what in the present case the lower Court describes as a “plausible defence”, it may be inclined to grant leave but only on condition of security. The learned Judge has in the present case referred to the conduct of the defendant some time before the institution of the suit which justifies the suspicion that he had denuded himself of all his property in view of possible suits against him. As it is said that insolvency proceedings are pending against the defendant, it will not be proper in the circumstances to say more about this aspect of the matter. The order of the District Munsif makes it clear that he did consider with some care the propriety of imposing a condition on the defendant before granting leave and he has rightly used his discretion in preferring to allow the defendant to give security for the suit amount instead of insisting upon the deposit of the amount in Court.

Under O. 14, R. 6, of the English Supreme Court Rules, it is stated by the annotators in the Annual Practice that

“since Jacobs v. Booth's Distillery Company the condition of payment into Court or giving security is seldom imposed and only in cases where the defendant consents or there is good ground in the evidence for believing that the defence set up is a sham defence.”

As a rule of practice this may be a safe enough rule to follow even in this country but it will not be right to crystallise into rules of law the circumstances under which in the exercise of the discretion vested in it by the second clause of O. 37, R. 3 the Court can demand security. If, in any particular case, this Court is satisfied that the discretion has been arbitrarily or perversely exercised, this Court may not hesitate to interfere; but I see no reason to think so in the present case.

The Revision Petition is accordingly dismissed with costs; but, in the circumstances, I extend the time for the giving of security to the 15th December.

Petition dismissed.

N.R.R