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A division bench of Supreme Court consisting of Justice Ashok Bhushan and Justice Navin Sinha held that existence of commercial relations between the parties in a summary suit is per se not a ground to impose condition to grant leave to defend. It is rule in accordance with order XXXVII of CPC that if the defendant discloses some facts in summary suitwhich may give fair and reasonable defence to him then court has a power to grant him unconditional leave to defend.
In the present case, the plaintiff instituted a summary suit against the defendant for the recovery of outstanding amount which was due to him regarding the goods delivered by him. Before instituting the summary suit the plaintiff had served a notice to the defendant in accordance with Section 138(b) of the Negotiable and Instruments Act, ___ and failing which the plaintiff instituted prosecution under Section 138 of the Negotiable and Instruments Act. Subsequently, it was withdrawn by the plaintiff unconditionally.
The defendant in its defence relied on this unconditional withdrawn of prosecution by the plaintiff and contended that there was no dues left. The trail court granted conditional leave to defend on the basis of existence of commercial relations between the parties. No reason was given for the same. The High Court also upheld the judgement of the trail court.
Subsequently, an appeal was filed by the defendant in the Hon’ble Supreme Court. The court quashed the above orders and held that existence of commercial relations between the parties in a summary suit is not a ground for imposing condition to grant leave to defend. The court explained the order XXXVII, Rule 3 which deals with the summary suits. It says that if defendant satisfies that he has substantial defence then he is entitled to get unconditional leave to defend. And therefore, the court granted unconditional leave to defend to the appellant.
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