http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

CASE NO.: Appeal (civil)  230 of 2007

PETITIONER: Ajay Bansal

RESPONDENT: Anup Mehta & Ors

DATE OF JUDGMENT: 16/01/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T (Arising out of SLP(C) No. 10166/2006)

S.B. Sinha, J.          

       Leave granted.

       This appeal is directed against a judgment and order dated 30.01.2006  passed by a learned Single Judge of the High Court of Delhi whereby and  whereunder an application filed under Article 227 of the Constitution of  India filed by the respondents herein against a judgment and order dated  27.05.2005 passed by a learned Civil Judge, Karkardooma, Delhi was  allowed.

       Appellant herein filed a suit which was marked as Suit No. 303 of  2004 for recovery of a sum of Rs. 2,93,987/- with interest on account of  dishonoured cheques.  The said suit was filed in terms of Order XXXVII of  the Code of Civil Procedure (Code).  The respondents filed an application  purported to be under Order XXXVII, Rule 3 (5) of the Code praying for  grant of leave to defend the said suit.  The learned Civil Judge refused to do  so by an order dated 27.05.2005 opining:

"I am convinced with the plaintiff’s contention that  the defence as disclosed by defendant in their  application is sham and illusory and in my  considered opinion, the defendants are not entitled  for leave to defend the present suit and the plaintiff  is entitled to have the judgment signed.   Accordingly, the application under Order 37, Rule  3(5) CPC of the defendants is devoid of any  merits.  The same is hereby dismissed.   Application is disposed of accordingly."

       On the said date itself, a final judgment and decree was passed for a  sum of Rs. 2,83,987/- with interest at the rate of 12% thereon holding:  

"4. It is contemplated under Order 37, Rule 3(5)  CPC that if any application for leave to defend the  suit has been made by the defendant and is refused,  the plaintiff shall be entitled to judgment  everywhere.  Since the application under Order 37,  Rule 3(5) CPC of the defendants has been  dismissed as the defendants failed to raise any  triable issue or disclose any defence in their

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

application, in my considered opinion, the plaintiff  has become entitled to have the judgment signed.   Accordingly, suit of the plaintiff is hereby decreed  with cost plaintiff is entitled for a decree to recover  a sum of Rs. 2,83,987/- from the defendants.  However, since the plaintiff has failed to establish  his claim of interest @ 18% per annum which he  has claimed is the market rate for commercial  transaction, I am inclined to award the interst at the  prevailing rate only which is @ 12% per annum on  the decretal amount from the date of institution of  the present suit till realization.  Decree sheet be  prepared\005"

       An application filed thereagainst by the respondents has been allowed  by the impugned judgment.  The appellant is, thus, before us.

       The short contention raised by Mr. Jitender Sharma, learned senior  counsel appearing on behalf of the appellant, is that keeping in view of the  fact that an appeal was maintainable under Section 96 of the Code against  the judgment and decree passed by the learned Civil Judge, the application  under Article 227 of the Constitution of India was not maintainable.   

       The contention of Mr. V.L. Madan, learned counsel appearing on  behalf of the respondents, on the other hand, is that the writ petition was  maintainable as the respondents could not have been put to undue hardship  of depositing the entire decretal amount in terms of Order XLI Rule 1 of the  Code of Civil Procedure although it had made out a good case for obtaining  leave to defend the suit.

       Order XXXVII, Rule 3(5) of the Code reads, thus:

"(5) The defendant may, at any time within ten  days from the service of such summons for  judgment, by affidavit or otherwise disclosing such  facts as may be deemed sufficient to entitle him to  defend, apply on such summons for leave to  defend such suit, and leave to defend may be  granted to him unconditionally or upon such terms  as may appear to the Court or Judge to be just :   Provided that leave to defend shall not be refused  unless the Court is satisfied that the facts disclosed  by the defendant do not indicate that he has a  substantial defence to raise or that the defence  intended to be put up by the defendant is frivolous  or vexatious :   Provided further that, where a part of the amount  claimed by the plaintiff is admitted by the  defendant to be due from him, leave to defend the  suit shall not be granted unless the amount so  admitted to be due is deposited by the defendant in  Court."

       A "decree" is defined under Section 2 (2) of the Code to mean:

""decree" means the formal expression of an  adjudication which, so far as regards the Court  expressing it, conclusively determines the rights of  the parties with regard to all or any of the matters  in controversy in the suit and may be either  preliminary or final. It shall be deemed to include

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

the rejection of a plaint and the determination of  any question within section 144, but shall not  include\027   (a)     any adjudication from which an appeal lies  as an appeal from an order, or   (b)     any order of dismissal for default."

       A "judgment" is defined under Section 2(9) of the Code to mean "the  statement given by the Judge on the grounds of a decree or order".

       An order refusing to grant leave is a judgment within the meaning of  Letters Patent of the Chartered High Courts. [See Shah Babulal Khimji v.  Jayaben D. Kania and Another, (1981) 4 SCC 8]

       A decree passed in a summary suit where leave to defend the suit has  been refused is almost automatic.  The consequence of passing a decree  cannot be avoided.           Ordinarily, an application under Article 227 of the Constitution of  India would not be maintainable where an appeal lies.  An appeal lay from  the decree under Section 96 of the Code.  When an appeal could be filed,  ordinarily, an application under Article 227 of the Constitution of India  would not be entertained.

       A decree passed subsequent to the refusal of leave to defend could  either be under Order XXXVII Rule 3(6) of the Code or it could be based on  the affidavit evidence on the side of the plaintiff and the documents  produced or even based on oral evidence formally proving, say, the  execution of a promissory note by the defendant.  It may not be proper or  necessary to apply the theory of "dependent order" in such circumstances.   For one, the theory may not apply.  Even if this Court were to set aside the  order of the court below and give the defendant leave to defend the suit, the  decree that is passed may not go automatically.  It may have to be set aside.   Secondly, the defendant can always go to the court which passed the decree  and move under Rule 4 of Order XXXVII of the Code to reopen the decree.           The theory of "dependant order" may not apply in a case of this nature  because even if this Court were to set aside the order refusing leave to  defend, the decree subsequently passed may not fall by itself.  It has still to  be set aside either by resort to Order XXXVII Rule 4 or by way of an appeal,  or by some other mode known to law.  In a given case like the present one as  it may not be proper to interfere with the decree merely because in an appeal  against an order refusing leave to defend, this Court is inclined to take a  different view.  [See V.S. Saini & Anr. v. D.C.M. Ltd., AIR 2004 Delhi  219.]

       The defendant in such a case can also be left to appeal against the  decree and therein challenge the order refusing leave to defend in terms of  Section 105(1) of the Code.

       A contentious issue, viz., maintainability of writ petition without  challenging the decree has been raised.  We, however, in this case, do not  intend to go into the said issue, inter alia, for the reason that the learned  Judge has not assigned any reason in support of the impugned judgment.  It  merely directed the respondents to deposit a sum of rupees two lakhs.  We  are informed at the bar that such deposit has been made.  What remains to be  deposited is, therefore, a sum of Rs. 83,987/-.  We are further informed that  certified copy of the impugned order has been filed.  The certified copy of  the judgment and decree may also be filed.   

       In the aforementioned situation, we are of the opinion that interest of  justice would be met if we direct the writ petition to be converted into a first  appeal.  The respondents may file certified copy of the judgment and decree.   Deficit court fee, if any, should also be paid by the respondents.  Filing of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

such certified copy and deposit of court fee, if any, must be completed  within eight weeks from date.  Indisputably, it would be open to the  appellant to raise the contention that it was a fit case where the learned Civil  Judge could have granted leave to defend the suit.  All the contentions of the  parties shall, however, remain open.   

       For the reasons aforementioned, the impugned judgment is set aside.   This appeal is allowed with the aforementioned directions.  No costs.