{"id":186870,"date":"1976-11-01T00:00:00","date_gmt":"1976-10-31T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/mechelec-engineers-and-vs-ms-basic-equipment-corporation-on-1-november-1976"},"modified":"2017-01-12T15:07:52","modified_gmt":"2017-01-12T09:37:52","slug":"mechelec-engineers-and-vs-ms-basic-equipment-corporation-on-1-november-1976","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/mechelec-engineers-and-vs-ms-basic-equipment-corporation-on-1-november-1976","title":{"rendered":"Mechelec Engineers And &#8230; vs M\/S. Basic Equipment Corporation on 1 November, 1976"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Mechelec Engineers And &#8230; vs M\/S. Basic Equipment Corporation on 1 November, 1976<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1977 AIR  577, \t\t  1977 SCR  (1)1060<\/div>\n<div class=\"doc_author\">Author: M H Beg<\/div>\n<div class=\"doc_bench\">Bench: Beg, M. Hameedullah<\/div>\n<pre>           PETITIONER:\nMECHELEC ENGINEERS AND MANUFACTURERS\n\n\tVs.\n\nRESPONDENT:\nM\/S. BASIC EQUIPMENT CORPORATION\n\nDATE OF JUDGMENT01\/11\/1976\n\nBENCH:\nBEG, M. HAMEEDULLAH\nBENCH:\nBEG, M. HAMEEDULLAH\nRAY, A.N. (CJ)\nSINGH, JASWANT\n\nCITATION:\n 1977 AIR  577\t\t  1977 SCR  (1)1060\n 1976 SCC  (4) 687\n\n\nACT:\n\t    Civil Procedure Code, S. 115--Jurisdiction of High Court\n\tto  interfere  with the Trial Court's  discretionary  order,\n\twhen exercisable.\n\n\n\nHEADNOTE:\n\t    The\t appellant issued the respondent a cheque which\t was\n\tdishonoured.  The respondent alleged that the cheque was the\n\tconsideration  for  goods supplied. The\t appellant  admitted\n\tissuing the cheque but denied by privity  of  contract.\t The\n\trespondent  filed  a  suit under order 37  C.P.C.,  and\t the\n\tappellant  applied for the required leave to  defend,  which\n\twas granted by the trial Court unconditionally. On  revision\n\tunder  section 115 C.P.C., the High Court held that  triable\n\tissues\tarose  for  adjudication., but,\t it  considered\t the\n\tdefence\t to be dishonest.  If allowed the revision  petition\n\tand gave conditional leave to defend on the ground that\t the\n\tdefences were not bona fide.\n\tAllowing the appeal, the Court\n\t    HELD: It is only in cases where the defence is  patently\n\tdishonest  or  so unreasonable that it could not  reasonably\n\tbe  expected to succeed that the exercise of  discretion  by\n\tthe  Trial  Court to grant leave  unconditionally   may\t  be\n\tquestioned.   In other cases, it is not fair to pronounce  a\n\tcategorical opinion on such a matter before the evidence  of\n\tthe parties is taken so that its effects could be  examined.\n\tHigh  Court's  interference under sec. 115 C.P.C.  with\t the\n\tcorrect\t exercise of its discretion by the trial  Court\t was\n\tpatently erroneous. 11062\n\t    <a href=\"\/doc\/664739\/\">Santosh  Kumar v. Bhai Mool Singh<\/a> [1958] S.C.R. 1211  at\n\t1215,  Jacobs v. Booth's Distillery Co. [1901] 85  L.T.\t 262\n\tfollowed.\n\t    Smt.  Kiranmoyee Dassi and another v. Dr. J.  Chatterjee\n\t(49 C.W.N. 246 ,at 253) distinguished.\n\t    M.L.  Sethi\t v.R.P.\t Kapur [1973] (1)  S.C.R.  697:\t The\n\tManaging   Director (MIG) Hindustan Aeronautics Ltd. Bulana-\n\tgar,  Hyderabad\t &amp; A nr. v. A Ajit  Prasad  Tarway,  Manager\n\t(Purchase and Stores). Hindustan Aeronautics Ltd. Balanagar,\n\tHyderabad  (AIR 1973 SC 76); <a href=\"\/doc\/623720\/\">D.L.F. Housing  &amp;\tConstruction\n\tCo.  Pvt.  Ltd., New Delhi v. Sarup Singh &amp; Ors.<\/a>  [1970]  2.\n\tS.C.R.\t 368;  and  <a href=\"\/doc\/130177\/\">Milkhiram (India) (P) Ltd. and  Ors.  v.\n\tChamanlal Bros. (AIR<\/a> 1965 SC 1998) referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n<p>\tCIVIL APPELLATE JURISDICTION: Civil Appeal No. 508 of 1976.\n<\/p>\n<p>\t     (Appeal  by Special Leave from the Judgment and   Order<br \/>\n\tdated  27-10-1975 of the Delhi High Court in Civil  Revision<br \/>\n\tNo. 115\/75).\n<\/p>\n<p>\t      S.N.  Andley,  Urea  Dutta and T.C.  Sharma,  for\t the<br \/>\n\tappellant.\n<\/p>\n<p>\t    K.C. Agarwala and M.M.L. Srivastava, for the respondent.<br \/>\n\tThe  Judgment of the Court was delivered by<br \/>\n\t    BEG. J. The plaintiff-respondent ,alleged to be a regis-<br \/>\n\ttered\tpartnership firm filed a suit on 25th  April,  1974,<br \/>\n\tthrough\t Smt.  Pushpa Mittal, shown as one of its  partners,<br \/>\n\tfor  the  recovery  of Rs. 21,265.28 as\t principal  and\t Rs.<br \/>\n\t7655\/-,\t as interest at 12% per annum. according to law\t and<br \/>\n\tMercantile  usage, on the strength of a cheque drawn by\t the<br \/>\n\tdefendant  on  12th May, 1971, on the State Bank  of  India,<br \/>\n\twhich,\ton  presentation, was  dishonoured.   The  plaintiff<br \/>\n\talleged that the cheque<br \/>\n<span class=\"hidden_text\">\t1061<\/span><br \/>\n\twas given as price of goods supplied.  The  defendant-appel-<br \/>\n\tlant  firm admitted the issue of the cheque by its  Managing<br \/>\n\tpartner,  but,\tit denied any privity of contract  with\t the<br \/>\n\tplaintiff firm. The defendant-appellant had its own  version<br \/>\n\tas  to the reasons and purposes\t for  which the\t cheque\t was<br \/>\n\tdrawn.\n<\/p>\n<p>\t      The suit was instituted under the provisions of  Order<br \/>\n\t37 Civil Procedure Code so that the defendant-appellant\t had<br \/>\n\tto  apply for  leave under Order 37, Rule 2, of the Code  to<br \/>\n\tdefend. This leave was granted unconditionally by the  Trial<br \/>\n\tCourt after a perusal of the cases of the two sides.   Order<br \/>\n\t37, Rule 3, Civil Procedure Code lays down:\n<\/p>\n<blockquote><p>\t\t\t   &#8220;( 1 ) The Court shall, upon\t application<br \/>\n\t\t      by  the defendant give leave to appear and  to<br \/>\n\t\t      defend  the suit, upon affidavits\t which\tdis-<br \/>\n\t\t      close such facts as would make it incumbent on<br \/>\n\t\t      the    holder to prove consideration, or\tsuch<br \/>\n\t\t      other  facts as the Court may deem  sufficient<br \/>\n\t\t      to support the application.\n<\/p><\/blockquote>\n<blockquote><p>\t\t\t (2) Leave to defend may be given   uncondi-<br \/>\n\t\t      tionally\tor   subject  to such  terms  as  to<br \/>\n\t\t      payment\t into\tCourt,\t giving\t   security,<br \/>\n\t\t      framing and recording issues or  otherwise  as<br \/>\n\t\t      the     Court thinks fit&#8221;.<\/p><\/blockquote>\n<p>\t    A  learned\tJudge of the High Court of  Delhi had  on  a<br \/>\n\trevision application under Section 115 Civil Procedure\tCode<br \/>\n\tinterfered  with the order of the Additional District  Judge<br \/>\n\tof Delhi granting unconditional leave, after setting out not<br \/>\n\tless  than  seven  questions on which the  parties  were  at<br \/>\n\tissue.\tThe learned Judge had, after discussing the cases of<br \/>\n\tthe  two  sides and holding that triable  issues  arose\t for<br \/>\n\tadjudication, nevertheless, concluded that the defences were<br \/>\n\tnot bona fide. He, therefore, ordered:\n<\/p>\n<blockquote><p>\t\t\t     &#8220;For  these reasons I would  allow\t the<br \/>\n\t\t      revision\tpetition and set aside the order  of<br \/>\n\t\t      the  trial  Court.   Instead  I\twould  grant<br \/>\n\t\t      leave  to the defendant on their\tpaying\tinto<br \/>\n\t\t      Court  the  amount of Rs.\t 21,265.28  together<br \/>\n\t\t      with  interest at the rate of 6 per  cent\t per<br \/>\n\t\t      annum from the date of. suit till payment\t and<br \/>\n\t\t      costs  of the suit (Only court fee  amount  at<br \/>\n\t\t      this  stage  and not the lawyer&#8217;s\t fee).\t The<br \/>\n\t\t      amount  will be deposited within\ttwo  months.<br \/>\n\t\t      There  will  be no order as to costs  of\tthis<br \/>\n\t\t      revision&#8221;.<\/p><\/blockquote>\n<p>\t    The only question which arises before us in this  appeal<br \/>\n\tby  special  leave:   Could the High   Court  interfere,  in<br \/>\n\texercise  of its powers under section 115,  Civil  Procedure<br \/>\n\tCode, with the discretion of the Additional District  Judge,<br \/>\n\tin   granting\tunconditional  leave  to  defence   to\t the<br \/>\n\tdefendant-appellant  upon  grounds which even a\t perusal  of<br \/>\n\tthe order of the High Court shows to be reasonable ?\n<\/p>\n<p>\t    <a href=\"\/doc\/664739\/\">Santosh Kumar v. Bhai Mool Singh<\/a>(1), was a case where  a<br \/>\n\tcheque,\t the execution of which was admitted by the  defend-<br \/>\n\tant,  had  been dishonoured.  The defendant had set  up\t his<br \/>\n\tdefences for refusal to pay.\n<\/p>\n<p>\t(1)[1958] SCR 1211-1215.\n<\/p>\n<p><span class=\"hidden_text\">\t1062<\/span><\/p>\n<p>\tThis Court noticed the case of Jacobs  v.  Booth&#8217;s  Distill-<br \/>\n\tery  Company(1), where it was held that, whenever a  defence<br \/>\n\traises a  really triable issue, leave must be given.   Other<br \/>\n\tcases too were noticed there to show that this leave must be<br \/>\n\tgiven  unconditionally where the defence could not be  shown<br \/>\n\tto be dishonest in limine.  This Court observed there (at p.<br \/>\n\t1215):\n<\/p>\n<blockquote><p>\t\t\t  &#8220;The\tlearned Counsel for  the  plaintiff-<br \/>\n\t\t      respondent  relied on Gopala Rao v. Subba\t Rao<br \/>\n\t\t      (AIR  1936 Mad. 246, Manohar Lal v. Nanhe\t Mal<br \/>\n\t\t      (AIR  1938 Lah.  548),  and Shib Karan Das  v.<\/p><\/blockquote>\n<p>\t\t      Mohammed\tSadiq (AIR 1936 Lah. 584). All\tthat<br \/>\n\t\t      we  need say, about them is that if the  Court<br \/>\n\t\t      is  of  opinion that the defence is  not\tbona<br \/>\n\t\t      fide, then it can impose conditions and is not<br \/>\n\t\t      tied  down  to refusing leave to.\t defend.  We<br \/>\n\t\t      agree with Varadachariar J. in the Madras case<br \/>\n\t\t      that  the Court has this third course open  to<br \/>\n\t\t      it  in a suitable case. But, it  cannot  reach<br \/>\n\t\t      the  conclusion that the defence is  not\tbona<br \/>\n\t\t      fide  arbitrarily.   It is as  much  bound  by<br \/>\n\t\t      judicial\trules\tand  judicial  procedure  in<br \/>\n\t\t      reaching\ta conclusion of this kind as in\t any<br \/>\n\t\t      other matter&#8221;,<br \/>\n\t    On\tgeneral\t principles, relating to  the\texercise  of<br \/>\n\tjurisdiction  of High Courts under section 115, Civil Proce-<br \/>\n\tdure Code, several cases were cited before us by Mr. Andley:<br \/>\n\tM.L.  Sethi  v.R.P. Kapur(2); The  Managing  Director  (MIG)<br \/>\n\tHindustan Aeronautics Ltd.  Balanagar, Hyderabad &amp; lint.  v.<br \/>\n\tAjit Prasad Tarway, Manager, (Purchase &amp; Stores),  Hindustan<br \/>\n\tAeronautics Ltd.,  Balanagar,  Hyderabad(3); <a href=\"\/doc\/623720\/\">D.L.F.  Housing<br \/>\n\t&amp; Construction Co. Pvt. Ltd. New Delhi v. Sarup Singh &amp; Ors.<\/a><br \/>\n\t(4);  <a href=\"\/doc\/130177\/\">Milkhiram\t (India)  Pvt.\tLtd.  &amp;\t Ors.  v.  Chamanlal<br \/>\n\tBros.<\/a>(5)<br \/>\n\t    We\tneed not dilate on the well  established  principles<br \/>\n\trepeatedly laid down by this Court which govern jurisdiction<br \/>\n\tof  the High Courts under section 115 C.P.C.  We think\tthat<br \/>\n\tthese  principles were ignored by the learned Judge  of\t the<br \/>\n\tHigh Court in interfering with the discretionary order after<br \/>\n\ta  very detailed discussion of the facts of the case by\t the<br \/>\n\tlearned Judge of the High Court who had differred on a\tpure<br \/>\n\tquestion  of fact&#8211;whether the defences could be honest\t and<br \/>\n\tbona  fide.  Any decision on such a  question,\teven  before<br \/>\n\tevidence has been led by the two sides, is generally hazard-<br \/>\n\tous.   We do not think that it is fair to pronounce a  cate-<br \/>\n\tgorical opinion on such a matter before the evidence of\t the<br \/>\n\tparties\t is taken so that its effects could be examined.  In<br \/>\n\tthe  case before us, the defendant had denied,\tinter  alia,<br \/>\n\tliability  to pay anything to the plaintiff for\t an  alleged<br \/>\n\tsupply\tof goods.  It is only in cases where the defence  is<br \/>\n\tpatently  dishonest  or so unreasonable that  it  could\t not<br \/>\n\treasonably  be\texpected  to succeed that  the\texercise  of<br \/>\n\tdiscretion by the Trial Court to grant leave unconditionally<br \/>\n\tmay be,<br \/>\n\t(1) [1901] 85 L.T. 262.\t   (2) [1973] 1 S.C.R. 697.<br \/>\n\t(3) AIR 1973. SC 76.\t   (4) [1970] (2) SCR 368.<br \/>\n\t(5) AIR 1965 SC 1698.\n<\/p>\n<p><span class=\"hidden_text\">\t1063<\/span><\/p>\n<p>\tquestioned.  In the judgment of the High Court we are unable<br \/>\n\tto  find  aground  of interference covered  by\tSection\t 115<br \/>\n\tC.P.C.\n<\/p>\n<p>\t    In Smt. Kiranmoyee Dassi &amp; Anr. v. Dr. J. Chatterjee(1),<br \/>\n\tDas. J., after a comprehensive review of authorities on\t the<br \/>\n\tsubject,  stated the principles applicable to cases  covered<br \/>\n\tby order 17 C.P.C. in the form of the following propositions<br \/>\n\t(at p. 253):\n<\/p>\n<blockquote><p>\t\t\t  &#8220;(a) If the Defendant satisfies the  Court<br \/>\n\t\t      that he has a good defence to the claim on its<br \/>\n\t\t      merits the plaintiff is not entitled to  leave<br \/>\n\t\t      to sign judgment and the Defendant is entitled<br \/>\n\t\t      to unconditional leave to defend.\n<\/p><\/blockquote>\n<blockquote><p>\t\t\t  (b)  If  the Defendant  raises  a  triable<br \/>\n\t\t      issue  indicating that he has a fair  or\tbona<br \/>\n\t\t      fide  or\treasonable defence  although  not  a<br \/>\n\t\t      positively  good defence the plaintiff is\t not<br \/>\n\t\t      entitled to sign judgment and the Defendant is<br \/>\n\t\t      entitled\tto  unconditional leave to defend.\n<\/p><\/blockquote>\n<blockquote><p>\t\t\t  (c) If the Defendant discloses such  facts<br \/>\n\t\t      as  may be deemed sufficient to entitle him to<br \/>\n\t\t      defend, that is to say, although the affidavit<br \/>\n\t\t      does  not\t positively  and  immediately\tmake<br \/>\n\t\t      it  clear\t that he has a defence,\t yet,  shews<br \/>\n\t\t      such  a state of facts as leads to the  infer-<br \/>\n\t\t      ence that at the trial of the action he may be<br \/>\n\t\t      able to establish a defence to the plaintiff&#8217;s<br \/>\n\t\t      claim  the Plaintiff is not entitled to  judg-<br \/>\n\t\t      ment and the Defendant is entitled to leave to<br \/>\n\t\t      defend but in such a case the Court may in its<br \/>\n\t\t      discretion impose conditions as to the time or<br \/>\n\t\t      mode  of\ttrial  but not as  to  payment\tinto<br \/>\n\t\t      Court  or\t furnishing security.\n<\/p><\/blockquote>\n<blockquote><p>\t\t\t  (d) If the Defendant has no defence or the<br \/>\n\t\t      defence set up is illusory or sham or  practi-<br \/>\n\t\t      cally moonshine then ordinarily the  Plaintiff<br \/>\n\t\t      is entitled to leave to sign judgment and\t the<br \/>\n\t\t      Defendant is not entitled to leave to defend.\n<\/p><\/blockquote>\n<blockquote><p>\t\t\t  (e) If the Defendant has no defence or the<br \/>\n\t\t      defence  is  illusory or sham  or\t practically<br \/>\n\t\t      moonshine then although ordinarily the  Plain-<br \/>\n\t\t      tiff  is entitled to leave to  sign  judgment,<br \/>\n\t\t      the  Court may protect the Plaintiff  by\tonly<br \/>\n\t\t      allowing the defence to proceed if the  amount<br \/>\n\t\t      claimed  is paid into Court or  otherwise\t se-<br \/>\n\t\t      cured and give leave to the Defendant on\tsuch<br \/>\n\t\t      condition,  and  thereby\tshow  mercy  to\t the<br \/>\n\t\t      Defendant\t by enabling him to try to. prove  a<br \/>\n\t\t      defence&#8221;.<\/p><\/blockquote>\n<p>\t    The\t case before us certainly does not fall\t within\t the<br \/>\n\tclass  (e) set out above.  It is only in that class of\tcase<br \/>\n\tthat an imposition of  the condition to deposit an amount in<br \/>\n\tCourt before proceeding further is justifiable.<br \/>\n\t49 C.W.N. 246, 253.\n<\/p>\n<p><span class=\"hidden_text\">\t1064<\/span><\/p>\n<p>\t    Consequently, we set aside the judgment and order of the<br \/>\n\tHigh  Court  and  restore that of  the\tAdditional  District<br \/>\n\tJudge.\tThe parties will bear their own costs.\n<\/p>\n<pre>\tM.R .\t\t\t\t      Appeal allowed.\n<span class=\"hidden_text\">\t1065<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Mechelec Engineers And &#8230; vs M\/S. Basic Equipment Corporation on 1 November, 1976 Equivalent citations: 1977 AIR 577, 1977 SCR (1)1060 Author: M H Beg Bench: Beg, M. Hameedullah PETITIONER: MECHELEC ENGINEERS AND MANUFACTURERS Vs. RESPONDENT: M\/S. BASIC EQUIPMENT CORPORATION DATE OF JUDGMENT01\/11\/1976 BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-186870","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Mechelec Engineers And ... vs M\/S. 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