Appeal No 96 of 1957
Appeal by special leave from the judgment and order dated December 17 1956 of the Punjab High Court Circuit Bench at Delhi in Civil Misc
No 896 D of 1956 arising out of the judgment and order dated November 1 1956 of the Court of Commercial Subordinate Judge Delhi in Suit No 264 of 1956 under Order XXXVII CPC A V Vishwanatha Sastri and Naunit Lal for the appellant
Bakhshi Gurcharan Singh and Sardar Singh for the respondent
February 5
The following Judgment of the Court was delivered by BOSE J The defendants Santosh Kumar and the Northern General Agencies were granted special leave to appeal
The plaintiff filed the suit out of which the 1213 appeal arises on the basis of a cheque for Rs 60000 drawn by the defendants in favour of the plaintiff and which on presentation to the Bank was dishonoured
The suit was filed in the Court of the Commercial Subordinate Judge Delhi under 0
XXXVII of the Code of Civil Procedure
The defendants applied for leave to defend the suit under r 3 of that Order
The learned trial Judge held that  the defence raised by the defendants raises a triable issue but he went on to hold that the defendants  have not placed anything on the file to show that the defence was a bona fide one Accordingly he permitted the defendants to appear and defend the suit on the condition of their giving security to the extent of the suit amount and the costs of the suit
 The defendants applied for a review but failed
They then applied under article 227 of the Constitution to the Delhi Circuit Bench of the Punjab High Court and failed again
As a result they applied here under article 136 and were granted special leave
At first blush 0
XXXVII r 22 appears drastically to curtail a litigant s normal rights in a Court of justice namely to appear and defend himself as of right if and when sued because it says that when a suit is instituted on a bill of exchange hundi or a promissory note under the provisions of sub rule 1   the defendant shall not appear or defend the suit unless he obtains leave from a judge as hereinafter provided so to appear and defend But the rigour of that is softened by r 31 which makes it obligatory on the Court to grant leave when the conditions set out there are fulfilled
Clause 1 runs  The Court shall upon application by the defendant give leave to appear and to defend the suit upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration or such other facts as the Court may deem sufficient to support the application
 1214 But no sooner is the wide discretion given to the Court in r 22 narrowed down by r 31 than it is again enlarged in another direction by r 32 which says that  Leave to defend may be given unconditionally or subject to such terms as to payment into Court giving security framing and recording issues or otherwise as the Court thinks fit
 The learned counsel for the plaintiff argues that the discretion so conferred by r 32 is unfettered and that as the discretion has been exercised by the learned trial Judge no appeal can lie against it unless there is a  grave miscarriage of justice or flagrant violation of law and he quotes D N Banerji vs PR Mukherjee 1 and Waryam Singh vs Amarnath 2
Now what we are examining here are laws of procedure
The spirit in which questions about procedure are to be approached and the manner in which rules relating to them are to be interpreted are laid down in Sangrayn Singh vs Election Tribunal Kotah Bhurey Lal Baya 1
 Now a code of procedure must be regarded as such
It is procedure something designed to facilitate justice and further its ends not a penal enactment for punishment and penalties not a thing designed to trip people up
Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against provided always that justice is done to both sides lest the very means designed for the furtherance of justice be used to frustrate it
Next there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard that decisions should not be reached behind their backs that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them
Of course there must be exceptions and where they are clearly defined 1   305
2  31955 2 SCR 1 8 9 1215 they must be given effect to
But taken by and large and subject to that proviso our laws of procedure should be construed wherever that is reasonably possible in the light of that principle
 Applied to the present case these observations mean that though the Court is given a discretion it must be exercised along judicial lines and that in turn means in consonance with the principles of natural justice that form the foundations of our laws
Those principles so far as they touch the present matter are well known and have been laid down and followed in numerous cases
The decision most frequently referred to is a decision of the House of Lords in England where a similar rule prevails
It is Jacobs vs Booth s Distillery Company 1
Judgment was delivered in 1901
Their Lordships said that whenever the deferce raises a  triable issue leave must be given and later cases say that when that is the case it must be given unconditionally otherwise the leave may be illusory
See for example Powszechny Bank Zwiazkowy W Polsce vs Paros 2 in England and Sundaram Chettiar vs Valli Ammal 3 in India
Among other cases that adopt the  triable issue  test are Kiranmoyee Dassi vs J Chatterjee and Gopala Rao vs Subba Rao 5
The learned counsel for the plaintiff respondent relied on Gopala Rao vs Subba Rao 5 Manohar Lal vs Nanhe Mal 6 and Shib Karan Das vs Mohammed Sadiq 7
All that we need say about them is that if the Court is of opinion that the defence is not bona fide then it can impose conditions and is not tied down to refusing leave to defend
We agree with Varadachariar J in the Madras case that the Court has this third course open to it in a suitable case
But it cannot reach the conclusion that the defence is not bona fide arbitrarily
It is as much bound by judicial rules and judicial procedure in reaching a conclusion of this kind as in any other matter
It is unnecessary 1 2 3 1935 1 4 5 AIR 1936 Mad246
6 AIR 1938 Lah
7 AIR 1936 Lah
12l6 no examine the facts of those cases because they are not in appeal before us
We are only concerned with the principle
It is always undesirable and indeed impossible to lay down hard and fast rules in matters that affect discretion
But it is necessary to understand the reason for a special procedure of this kind in order that the discretion may be properly exercised
The object is explained in Kesavan vs South Indian Bank Ltd 1 and is examined in greater detail in Sundaram Chettiar vs Valli Ammal supra to which we have just referred
Taken by and large the object is to see that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interests of trade and commerce
In general therefore the test is to see whether the defence raises a real issue and not a sham one in the sense that if the facts alleged by the defendant are established there would be a good or even a plausible defence on those facts
Now what is the position here The defendants admitted execution of the cheque but pleaded that it was only given as collateral security for the price of goods which the plaintiff supplied to the defendants
They said that those goods were paid for by cash payments made from time to time and by other cheques and that therefore the cheque in suit had served its end and should now be returned
They set out the exact dates on which according to them the payments had been made and gave the numbers of the cheques
This at once raised an issue of fact the truth and good faith of which could only be tested by going into the evidence and as we have pointed out the learned trial Judge held that this defence did raise a triable issue
But he held that it was not enough for the defendants to back up their assertions with an affidavit they should also have produced writings and documents which they said were in their possession 1 ILR 1217 and which they asserted would prove that the cheques and payments referred to in their defence were given in payment of the cheque in suit and he said  In the absence of those documents the defence of the defendants seems to be vague consisting of indefinite assertions   
This is a surprising conclusion
The facts given in the affidavit are clear and precise the defence could hardly have been clearer
We find it difficult to see how a defence that on the face of it is clear becomes vague simply because the evidence by which it is to be proved is not brought on file at the time the defence is put in
The learned Judge has failed to see that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit and that the nature of the defence has to be determined at the time when the affidavit is put in
At that stage all that the Court has to determine is whether  if the facts alleged by the defendant are duly proved  they will afford a good or even a plausible answer to the plaintiff s claim
Once the Court is satisfied about that leave cannot be withheld and no question about imposing conditions can arise and once leave is granted the normal procedure of a suit so far as evidence and proof go obtains
The learned High Court Judge is also in error in thinking that even when the defence is a good and valid one conditions can be imposed
As we have explained the power to impose conditions is only there to ensure that there will be a speedy trial
If there is reason to believe that the defendant is trying to prolong the litigation and evade a speedy trial then conditions can be imposed
But that conclusion cannot be reached simply because the defendant does not adduce his evidence even before he is told that he may defend the action
We do not wish to throw doubt on those decisions which decide that ordinarily an appeal will not be entertained against an exercise of discretion that has been exercised along sound judicial lines
But if the 1218 discretion is exercised arbitrarily or is based on a mis understanding of the principles that govern its exercise then interference is called for if there has been a resultant failure of justice
As we have said the only ground given for concluding that the defence is not bona flde is that the defendant did not prove his assertions before he was allowed to put in his defence  and there is an obvious failure of justice if judgment is entered against a man who if he is allowed to prove his case cannot but succeed
Accordingly interference is called for here
The appeal is allowed
We set aside the orders of the High Court and the learned trial Judge and remand the case to the first Court for trial of the issues raised by the defendants
The costs of the appellants in this Court will be paid by the respondent who has failed here
Appeal allowed


Summary:
  Section 31a of the UP Temporary Control of Rent and Eviction Act 1947 permits eviction of the tenant who is
in arrears of rent for more than three months and has failed to pay the same to the landlord within one month of the service upon him of a notice of demand
When a landlord refuses to accept any rent lawfully paid to him section 7Cl entitles the tenant to deposit such rent in the court
Section 7C4 requires the court to cause a notice of the deposit to be served on the landlord
Section 7C6 provides that where a deposit has been made as aforesaid it shall be deemed that the rent has been duly paid
The appellant tenant was in arrears of rent of the demised shop from December 1966 to February 1971
The amount remained unpaid despite notices dated March 22 1971 and April 12 1971
In the suit for his ejectment under section 31a the tenant took the defence that he had tendered the rent to the plaintiff landlord but the latter had refused to accept it that even the rent sent by money order was refused and thereupon he had made the deposit in the court under section 7C1 of the Act and there were no arrears of rent due from him
The trial court and the first appellate court held that statutory conditions requisite for a valid deposit were not fulfilled and therefore the default in payment of rent within the meaning of section 31a stood established and the tenant was liable to eviction
The High Court dismissed the appeal
In the appeal before this Court in addition to the defence taken before the courts below it was contended that though the landlord was aware that the rent was being deposited in the court ever since August 1967 he waited for a period of four years before issuing a notice of demand for arrears for rent
417 Dismissing the appeal A  HELD 1
Both in law and equity the appellant had no case
The ejectment suit was properly decreed by the Courts below
429H 430A 21 The mere fact of a deposit under section 7Cof the UP Temporary Control of Rent and Eviction Act 1947 in itself cannot be an answer to an action under section 31a for eviction of the tenant for default in payment of rent
Irrespective of the fact of such deposit the tenant has to show the existence of circumstances justifying the deposit
42tG 423A Brahmanand vs Kaushalya Devi   referred to
22 Reading section 7C the rules framed thereunder and the statutory forms together it cannot be said that a deposit under section 7C is necessarily a valid one preceded by an enquiry or satisfaction of the Court that the condition precedent set out in section 7C1 is fulfilled
Though the applicant is asked to indicate briefly the circumstances in which he wants to make a deposit there is no procedure contemplated for an enquiry into those circumstances
The statutory provisions do not contemplate transmission of the application to the landlord the fixing of a date of hearing on which both the tenant and the landlord could be heard or the passing of a considered order by the Court thereafter and being satisfied that there was in fact a tender of rent by the tenant and a refusal by the landlord to receive the rent or a dispute regarding the ownership of the property which rendered it difficult or impossible for the tenant to send money to the landlord straight
The notice which is sent to the landlord merely sets out that the landlord is at liberty to withdraw it if he so desires
424C F 23 In the instant case the trial court the first appellate court and the High Court have concurrently found that there was no valid tender of rent by the tenant or refusal thereof by the landlord
The application filed by the tenant under section 7C gave no details in the space against column 6 of the form prescribed in Appendix A  to the Rules framed under the Act setting out the circumstances in which it was alleged that the landlord had refused to receive the rent
The application barely asserted that the landlord had refused to accept the rent Where was no information as to the nature of notice served on the landlord
424H 425B C There was no enquiry of finding recorded in the proceedings 418 under section 7C which could at all operate as res judicata against the landlord in the suit under section 31a
Though the order of the Munsif under section 7C mentioned that the landlord was absent though served succinctly the order was only that the landlord may withdraw the amount deposited on proper application
It does not indicate any application of mind by the Munsif as to whether the conditions precedent for a valid deposit under section 7C were satisfied
There was certainly no finding at that stage on this vital requirement
The grant of permission to deposit under section 7C in the case cannot therefore be treated as conclusive of the fact that a valid deposit had been made under that section
427B 425D E Haji Abdul Karim vs Mohd Ismail 1978 UP Rent Cases 691 referred to
Fateh Chand vs Bal Saroop Goel  Kaloo and others vs Gauri Shankar and Kameshwar Singh Srivastava vs IVAddl
District Judge Lucknow and others AIR 1987 S 
138 distinguished
The contention of the appellant that though the landlord was aware that the rent was being deposited in the court ever since August 1967 he waited for a period of four years before issuing a notice of demand for arrears of rent was without substance
The delay was not due to any laches on the part of the respondent but was caused on account of the pendency of the litigation instituted by the tenant claiming refund of a sum of Rs275 paid towards rent
429C D