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

CASE NO.: Appeal (civil)  573 of 2008

PETITIONER: Neebha Kapoor

RESPONDENT: Jayantilal Khandwala & Ors.

DATE OF JUDGMENT: 22/01/2008

BENCH: S.B. Sinha & V.S. Sirpurkar

JUDGMENT: J U D G M E N T  [Arising out of  SLP (Civil) No. 5629 of 2007] S.B. SINHA, J :          1.      Leave granted.

2.      Appellant herein questions a judgment and order dated 13.02.2007  passed by a learned Single Judge of the Bombay High Court granting  unconditional leave to defend in a summary suit wherein summons for  judgment had been taken out.

3.      Appellant filed the aforementioned suit for recovery of a sum of Rs.  25,00,000/- with interest, which amount he is said to have advanced to the  respondents by a cheque.  Respondents allegedly executed a promissory note  for the said amount.  An amount of Rs. 5,27,293/- was said to have been  repaid by way of interest.  A certificate of deduction of tax at source under  Section 203 of the Income Tax Act, 1961 for the amount of tax deducted is  said to have been issued to the appellant.  A post dated cheque for Rs.  25,00,000/- was also given.  Respondents also allegedly issued the following  cheques towards payment of interest accrued, the details whereof are as  under:

Cheque No.              Date            Amount 948921          2-1-2003        67,903/- 948928          31-1-2003       12,500/- 948929          3-2-2003        12,500

4.      All the four cheques having not been honoured, complaint petitions  were filed.  Allegedly all original documents, viz., promissory note and four  cheques, which were filed in the criminal court were misplaced.   

       The writ of summons in the summary suit was served upon the  respondents.  They appeared on 14.08.2006.  An application for a judgment  in the said suit was applied for by way of Summons for Judgment on  07.12.2006, which by reason of the impugned judgment has been disposed  of.

5.      Mr. Shekhar Naphede, learned senior counsel appearing on behalf of  the appellant, would submit that a suit having been filed on the basis of bill  of exchange within the meaning of Order 37, Rule 1 of the Code of Civil  Procedure (for short \023the Code\024) read with Section 6 of the Negotiable  Instruments Act, 1881 (for short \023the Act\024), the High Court committed a  manifest error in passing the impugned order.   

       In any event, the learned counsel would contend that the court ought  to have, keeping in view the facts and circumstances of the case, imposed  conditions.

6.      Mr. Jatin Zaveri, learned counsel appearing on behalf of the

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

respondents, on the other hand, would submit that the promissory note,  having not been properly stamped, was not admissible in evidence and as  such even a summary suit is not maintainable.   

8.      A summary suit, as provided for in Order 37, Rule 1 of the Code is  maintainable if it is filed on bills of exchange, hundis and promissory notes.   A cheque is a bill of exchange within the meaning of Section 6 of the Act.   Order 37, Rule 2 of the Code provides as to what should a \021Plaint\022 contain.   Rule 3 thereof provides for the procedure to be adopted in such a suit.  Sub- Rule (1) of Rule 3 provides for entrance of appearance by the defendant  within ten days from the date of service of summons.  Sub-rule (4) of Rule 3  provides for service of a summons for judgment in Form No. 4A upon the  defendant.  Defendant within ten days from the service of such summons by  affidavit or otherwise may disclose facts which would be deemed sufficient  to entitle him to defend, apply for leave to defend such suit.  Leave to  defend, however, may be granted unconditionally upon such terms as may  appear to the court to be just.  Sub-Rule (6) of Rule 3 of Order 37 of the  Code provides for hearing of such summons for judgment stating:

\0236. Recovery of cost of noting non-acceptance of  dishonoured bill or note .\027The holder of every  dishonoured bill of exchange or promissory note  shall have the same remedies for the recovery of  the expenses incurred in noting the same for non- acceptance or non-payment, or otherwise, by  reason of such dishonour, as he has under this  Order for the recovery of the amount of such bill  or note.\024

9.      A decree in a summary suit is to be granted provided it fulfills all the  criteria laid down therein.  What is mandatory is the entering of appearance  by the defendant in the suit.  Appellant took out summons for judgment  under Order 37, Rule 3 on 5.01.2007.  It was served on the respondents on  8.01.2007.  It was listed for hearing on 13.02.2007.  Time was sought for by  the respondents to file their affidavit in reply.  However, an unconditional  leave to defend was granted by the learned Judge having regard to the  admitted position that the appellant was not in a position to produce the  original documents.

10.     For the purpose of obtaining a summary judgment in terms of Order  37 of the Code, ordinarily the original documents must be produced.   Original documents are not available.  Appellant, therefore, is obligated to  prove the loss of documents.  Only because a suit has been entertained as a  summary suit, the same by itself may not be a ground for passing of a  judgment on mere asking.  We have noticed the fact situation obtaining  herein.  The High Court was of the opinion that it is a case where  unconditional leave should be granted.  The question as to whether the  defence of the respondents is \021moonshine\022 or not was not a matter which  required consideration of the High Court at that stage.  A decree could not  have been granted on the basis of even photostat copies of the documents.   [See Food Corporation of India v. Dena Bank, Indore and another AIR 2004  MP 158]  Presumption in regard to a negotiable instrument or a bill of  exchange in terms of Section 118 of the Act is also an evidence.  It is true  that a presumption can be raised that a bill of exchange was correctly  stamped as provided for under Clause (f) of Sub-section (2) of Section 128  of the Code but a decree is to be passed by a court of law upon application of  mind.   

       Order 37 of the Code has been prescribed in terms of the provisions  contained in Clause (f) of Sub-section (2) of Section 128 of the Code so as to  expedite trial of suits specified therein.  We have no doubt in our mind that  the underlying public policy behind Order 37 is expeditious disposal of suits  of commercial nature.  It provides for such disposal as expeditiously as  possible by prescribing time frame therefor.  Where, however, applicability  of Order 37 of the Code itself is in question which appears to be the

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

principal reason behind the impugned judgment, in our opinion, grant of  leave may be permissible.  The court before passing a decree was entitled to  take into consideration the consequences therefor.   

11.     Reliance has been placed by Mr. Naphede on a decision of this Court  in M/s. Mechelec Engineers & Manufacturers v. M/s. Basic Equipment  Corporation [(1976) 4 SCC 687] wherein this Court quoted with approval a  decision of the Calcutta High Court in Sm. Kiranmoyee Dassi v. Dr. J.  Chatterjee [49 CWN 246 : AIR 1949 Cal 479] in the following terms:

\023(a) If the defendant satisfies the court that he has  a good defence to the claim on its merits the  plaintiff is not entitled to leave to sign judgment  and the defendant is entitled to unconditional leave  to defend. (b) If the defendant raises a triable issue indicating  that he has a fair or bona fide or reasonable  defence although not a positively good defence the  plaintiff is not entitled to sign judgment and the  defendant is entitled to unconditional leave to  defend. (c) If the defendant discloses such facts as may be  deemed sufficient to entitle him to defend, that is  to say, although the affidavit does not positively  and immediately make it clear that he has a  defence, yet, shews such a state of facts as leads to  the inference that at the trial of the action be may  be able to establish a defence to the plaintiff\022s  claim the plaintiff is not entitled to judgment and  the defendant is entitled to leave to defend but in  such a case the court may in its discretion impose  conditions as to the time or mode of trial but not as  to payment into court or furnishing security.   (d) If the defendant has no defence or the defence  set-up is illusory or sham or practically moonshine  then ordinarily the plaintiff is entitled to leave to  sign judgment and the defendant is not entitled to  leave to defend. (e) If the defendant has no defence or the defence  is illusory or sham or practically moonshine then  although ordinarily the plaintiff is entitled to leave  to sign judgment, the court may protect the  plaintiff by only allowing the defence to proceed if  the amount claimed is paid into court or otherwise  secured and give leave to the defendant on such  condition, and thereby show mercy to the  defendant by enabling him to try to prove a  defence.\024  

12.     Admissibility of secondary evidence would be subject matter to  evidence.  Only if a court is to go into the evidence, presumptive evidence  could also be taken into consideration.  Although the burden may be on the  defendant, he may discharge the same only when it is raised.  The Code does  not put any embargo on the courts exercising a suo motu power of granting  leave in a case of this nature.  If a court does so even when an application  was not filed, keeping in view the admitted position of the case, we do not  see any illegality therein.  As a decree in summary suit may not be automatic  and the court can always refuse to exercise its discretionary as the original  documents were not produced and, thus, the plaintiff is called upon to prove  that the documents are lost in the criminal proceedings.   

13.     In view of the fact that no application for leave was filed, it is not  possible for us to consider submission of Mr. Naphede in regard to the  presumptions arising under Clause (f) of Sub-section (2) of Section 128 of  the Code or purported acknowledgement contained in the balance sheet of

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

the respondents.   

       We, however, are of the opinion that the question as to whether the  respondents should be put to any terms or not should be determined afresh  by the High Court as the High Court did not address itself on the  aforementioned question.  We, however, express no opinion thereupon.

14.     For the reasons aforementioned, we are of the opinion that the  impugned judgment warrants no interference at this stage.  The appeal is  dismissed accordingly, subject, however, to the aforementioned  observations.  No costs.