Case: Allahabad Bank Vs. M/S. Divya International L.I.C. &amp; Others

defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith.17.6 If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.14. The Apex Court in, State Bank of Hyderabad Vs. Rabo Bank (2015) 10 SCC 521 )in paragraph 17 and 18 has recorded as under, while granting unconditional leave to defend:17. An analysis of the above principles makes it clear that in cases where the defendant has raised a triable issue or a reasonable defence, the defendant is entitled to unconditional leave to defend. Leave is granted to defend even in cases where the defendant upon disclosing a fact, though lacks the defence but makes a positive impression that at the trial the defence would be established to the plaintiffs claim. Only in the cases where the defence set up is illusory or sham or practically moonshine, is the plaintiff entitled to leave to sign judgment.18. Insofar as the question of maintainability of the suit in question under Order 37 CPC is concerned, this Court has in Neebha Kapoori v. Jayantilal Khandwala (2008) 3 SCC 770 : (2008) 1 SCC (Civ) 929)observed that where the applicability of Order 37 itself is in question, grant of leave to defend may be permissible. The court before passing a decree is entitled to take into consideration the consequences therefor. The courts dealing with summary trials should act very carefully taking note of the interests of both the parties. Merely on the ground that the defendant may resort to prolonged litigation by putting forth untenable and frivolous defences, grant of leave to defend cannot be declined. At the same time, the court must ensure that the defendant raises a real issue and not a sham one. The court cannot reject the defence on the ground of implausibility or inconsistency. Before recording a finding of granting leave to defend, the Court should assess the facts and come to the conclusion that if the facts alleged by the defendant in the affidavit are established, there would be a good or even a plausible defence on those facts.15. In the case in hand, we are inclined to interfere with the order passed by the learned single Judge dated 13 January 2003, by accepting the case and submissions of the Appellant and the grounds so raised, which are undisputed on the findings and the facts so referred in the respective documents, which are part of the record.16. This undisputed position on record itself makes the defence plausible and raises various issues, which required due trial. The learned Single Judge failed even to decide the issue of jurisdiction by giving specific reason to the defence so raised in the background of the disputes and differences between the parties and its partners.17. The law of guarantee though cleared, but it is also necessary for the concerned Bank to verify and confirm the beneficiary and the amount to be paid in whose account and in whose instance, specifically in the background of disputes between the partners of the firm/company in question. The Banks are under obligation to verify the terms and conditions of the Bank Guarantee, if everything is same or not as per the terms. The issue and/or conflict, if any, based upon the correspondences entered into and/or referred and/or addressed by the parties to the Bank showing the reasons for not invoking the bank guarantee and/or same be cancelled and specifically when the concerned objector (Defendant No.3) was partner of the original Plaintiffs. The doubts, therefore, so raised by the Bank and asked for the clarification, in no way can be stated to be intentional and/or in breach of terms and conditions. It is clear that both the parties are under obligation to fulfill and complied with the formalities as per the terms. Any change and/or circumstances other than the terms and conditions, if cropped up, as happened in the matter, the Banks action of not invoking the bank guarantee in case in hand and raising the defence, in no way, should be stated to be sham and bogus and/or intentional to deny the claim flowing from the bank guarantee. The undertaking given by Defendant No.1, Appellant to make the payment to Plaintiff No.1 in the facts and circumstances for the reasons so recorded above and specifically, reference to communication dated 12 January 2000, 25 December 1999, 21 December 1999, 23 December 1999 and Bank Guarantee dated 4 March 1999, including the Dubai Court of first instance order dissolving the company, goes to the root therefore, impugned order dated 13 January 2003 required to be interfered with. We are doing accordingly. The defence and issues so raised by the Appellant-original Defendant No.1, are not sham and bogus and/or intent to delay the payment. The substantial defence and triable issues are raised, which cannot be decided in such fashion, except in due trial.18. Resultantly, the Appellant is entitled to an unconditional leave to defend the Suit. The Appellant-original Defendant to file written statement within thirty days from the date of receipt of copy of this order. The Summons for Judgment is disposed of accordingly.19. Pursuant to the order passed by this Court on furnishing the Bank Guarantee, Respondent Nos. 1 to 3 decree-holders, permitted to withdraw the amount by order dated 26 September 2006. However, in view of the above observations and the reasons so given, we are inclined to interfere with the impugned judgment and decree. The amount, therefore, so withdrawn by Respondent Nos. 1 to 3, required to be re-deposited in the Court within six weeks with interest at the bank rate as of today. The liberty is granted to the Appellant to apply for appropriate order on this issue, including withdrawal of the amount from the Court account, if deposited.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]15. In the case in hand, we are inclined to interfere with the order passed by the learned single Judge dated 13 January 2003, by accepting the case and submissions of the Appellant and the grounds so raised, which are undisputed on the findings and the facts so referred in the respective documents, which are part of the record.16. This undisputed position on record itself makes the defence plausible and raises various issues, which required due trial. The learned Single Judge failed even to decide the issue of jurisdiction by giving specific reason to the defence so raised in the background of the disputes and differences between the parties and its partners.17. The law of guarantee though cleared, but it is also necessary for the concerned Bank to verify and confirm the beneficiary and the amount to be paid in whose account and in whose instance, specifically in the background of disputes between the partners of the firm/company in question. The Banks are under obligation to verify the terms and conditions of the Bank Guarantee, if everything is same or not as per the terms. The issue and/or conflict, if any, based upon the correspondences entered into and/or referred and/or addressed by the parties to the Bank showing the reasons for not invoking the bank guarantee and/or same be cancelled and specifically when the concerned objector (Defendant No.3) was partner of the original Plaintiffs. The doubts, therefore, so raised by the Bank and asked for the clarification, in no way can be stated to be intentional and/or in breach of terms and conditions. It is clear that both the parties are under obligation to fulfill and complied with the formalities as per the terms. Any change and/or circumstances other than the terms and conditions, if cropped up, as happened in the matter, the Banks action of not invoking the bank guarantee in case in hand and raising the defence, in no way, should be stated to be sham and bogus and/or intentional to deny the claim flowing from the bank guarantee. The undertaking given by Defendant No.1, Appellant to make the payment to Plaintiff No.1 in the facts and circumstances for the reasons so recorded above and specifically, reference to communication dated 12 January 2000, 25 December 1999, 21 December 1999, 23 December 1999 and Bank Guarantee dated 4 March 1999, including the Dubai Court of first instance order dissolving the company, goes to the root therefore, impugned order dated 13 January 2003 required to be interfered with. We are doing accordingly. The defence and issues so raised by theDefendant No.1, are not sham and bogus and/or intent to delay the payment. The substantial defence and triable issues are raised, which cannot be decided in such fashion, except in due trial.18. Resultantly, the Appellant is entitled to an unconditional leave to defend the Suit. TheDefendant to file written statement within thirty days from the date of receipt of copy of this order. The Summons for Judgment is disposed of accordingly.19. Pursuant to the order passed by this Court on furnishing the Bank Guarantee, Respondent Nos. 1 to 3permitted to withdraw the amount by order dated 26 September 2006. However, in view of the above observations and the reasons so given, we are inclined to interfere with the impugned judgment and decree. The amount, therefore, so withdrawn by Respondent Nos. 1 to 3, required to bein the Court within six weeks with interest at the bank rate as of today. The liberty is granted to the Appellant to apply for appropriate order on this issue, including withdrawal of the amount from the Court account, if deposited.