If any part of the amount claimed is admitted, leave to defend in the summary suit cannot be granted unless the admitted amount is deposited: J&K&L High Court | Tech US News

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The Jammu and Kashmir and Ladakh High Court has recently reiterated that where the defendant admits that he owes him any part of the amount claimed by the plaintiff, leave to defend in a summary action under Order 37 CPC cannot be granted unless it is so admitted the amount due is deposited by the defendant with the court.

He made comments Justice Sanjay Dhar while hearing an appeal in terms of which the petitioners invoked the jurisdiction of the Court under Article 227 of the Constitution of India to challenge the order passed by the Additional District Judge, Srinagar in a suit filed against them by the respondent. Pursuant to the impugned order, the petitioners were granted conditional leave to defend the suit filed by the respondent and were directed to deposit a sum of Rs.11,50,000/- in court. or submit a monetary guarantee in the form of a bank guarantee for the stated amount.

Petitioners raised the challenge on the grounds that the trial court overlooked the parameters established for granting leave to defend and that it used its jurisdiction illegally and with substantial irregularities causing a miscarriage of justice. The petitioners further contended that the conditional leave to defend granted by the trial court to the petitioners/respondents is causing grave injustice to them especially when the petitioner no. 1 clearly denied the execution of the hundi/promissory note.

A perusal of the record showed that the respondent/plaintiff filed a suit for recovery of 12.00 lacs from the petitioner/respondents in accordance with the provisions of Article 37 of the Code of Civil Procedure.

The plaintiff/defendant contested the suit stating that he has not produced any document to justify filing a suit under Section 37 CPC as he is not alleged to have executed any contract or promissory note nor is he alleged to have executed any written agreement etc. It was further claimed that defendant no. 2 neither issued any hundi nor executed the bill of exchange on the basis of which the suit was filed by the plaintiff.

The first-instance court, after hearing the parties and taking into account the defense, came to the conclusion that the complaint of the defendants, that they did not execute the hundi, is fabricated, fictitious and untrue. Accordingly, the trial court allowed the defendants to defend the suit on condition that they deposit Rs.11,50,000/- in court or on condition that they furnish a bank guarantee for the aforesaid amount. It was this order that was challenged before the court.

To decide the matter, Justice Dhar referred to the guidelines of the Supreme Court v IDBI Trusteeship Services Limited v. Hubtown Limited, (2017) in terms of which the Supreme Court held that if the defendant admits that the defendant owes him any part of the amount claimed by the plaintiff, leave to defend the suit cannot be granted under O 37 CPC unless the amount so admitted as due defendant deposits with the court.

Further discussing the issue, Justice Dhar observed that in the application for leave to defend filed by the plaintiff/defendants before the trial court, they did not deny the receipt of money from the plaintiff and the only contention raised by the plaintiff/defendants was , that the promissory note on which the suit was filed is for an amount of Rs.10.00 lacs whereas the defendant/plaintiff to the plaintiff/defendant no. 1 remitted only an amount of Rs.9.70 lacs.

Applying the applicable legal position to the case at issue, the court found that the defense raised by the defendants in the application for leave to defend the border guests was on peripheral issues and not on the main issue relating to the question of whether they owed the plaintiff money. In this regard, defendants were mysteriously silent in their motion for leave to defend, and the trial court is correct in observing that the defense raised by defendants in their motion for leave to defend appears illusory.

“In the case under consideration, the defendants did not specifically dispute the receipt of money from the plaintiff, nor did they claim that after receiving the money, they returned it to the plaintiff.” the court said, adding “Therefore, the trial court rightly refused to grant unconditional leave to defend the defendant/plaintiffs.”

For the above reasons, the court did not find that the court of first instance committed illegality when issuing the contested decision. Accordingly, the petition was dismissed.

Case Title: Abdul Rashid Dar & Anr Vs Reyaz Ahmad Kuchay

Citation: 2022 LiveLaw (JKL) 211

Click here to read/download the judgment

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