Paragraph numbers below are the court’s original numbering, recovered from the source text.
13. We have further noticed in the affidavit that the defendant has levelled an allegation that drawer and drawee of the Bills h.ad perpetrated fraud on the defendant with the collusion of some officials of the plaintiff Bank and the CBI G inquiry on this issue is also pending. Pertinently, the Reserve Bank of India has also been informed on this matter reporting that a fraud had taken place. It is also important to note the strong allegation raised in the affidavit that besides the Suit being barred by limitation, the persons who signed the plaint H were not authorized or empowered to file the Suit.
14. Another glaring aspect in the case is thatthe Division Bench of the High Court in its order categorically mentioned that the appellanUdefendant has not actually endorsed its B acceptance on the Bills of Exchange. In spite of recording such a finding, the High Court held that the appellanUdefendant has agreed to pay the amount due even de hors the Bills of Exchange, which is sufficient to grant a decree in favour of the c respondenUplaintiff.
15. As regards the entitlement of a defendant to the grant of leave to defend, the law is well settled long back in the year 1949 in Sm. Kiranmoyee Dassi Vs. Dr. J. Chatterjee, AIR 1949 Cal 479, in the form of the following propositions: (1) 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 the judgment and the defendant is entitled to unconditional leave to defend. (2) If the defendant raised 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. (3) 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 made it clear that he has a defence, yet, shows such a stage of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's 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 STATE BANK OF HYDERABAD v. RASO BANK [N.V. RAMANA, J.] conditions as to the time .or mode of trial but not as to A payment into court or furnishing security. (4) 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 B defendant is not entitled to leave to defend. (5) 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, c 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.
16. It is also noticed that the law as enunciated above, has been followed by the Courts in several cases [See also : Santosh Kumar Vs. Bhai Moo/ Singh, AIR 1958 SC 321, Milkhiram Ondia) (P) Ltd. Vs. Chamanlal Bros, AIR 1965 E SC 1698, Mechelec Engineers & Manufacturers Vs. Basic Equipment Corpn., (1976) 4 SCC 687 and Sunil Enterprises & Anr. Vs. SB/ Commercial & International Bank Ltd. (1998) 5 sec 354).
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 G 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, the plaintiff is 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 Vs. Jayantilal Khandwala, 2008 (3) SCC 770 observed that where the applicability of Order 37 itself is in question, grant of leave to defend may be B 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.
19. Although th~ affidavit does not positively and immediately make it clear that he had a defence, yet, it shows such a state of facts leading to the inference that at the trial of the action, the defendant may be able to establish a defence to the plaintiff's 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 [See : T. Sukhender Reddy Vs. M. G Surender Reddy, 1998 (3) ALO 659].
20. We are in total agreement with the view taken by this Court in Raj Dugqal Vs. Ramesh Kumar Bansal, 1991 Suppl.(1) SCC 191_that leave to defend the Summons for H Judgment shall always be granted to the defendant when there STATE BANK OF HYDERABAD v. RABO BANK [N.V. RAMANA, J.] is a triable issue as to the meaning or correctness of the A documents on which the claim is based or the alleged facts are of such nature which entitle the defendant to interrogate or cross-examine the plaintiff or hjs witnesses.
21. In the case on hand, we have perused the material B on record including the FIR dated 91h August, 1999 registered by the CBI at the instance of Chief Vigilance Officer, SBH and also the Charge Sheet filed by the CBI. The charge sheet indicated the involvement of · Mr. Sudhir Behra, Chief Manager of the appellant Bank at Burra Bazar Branch, C Calcutta. Acting at the requests of representatives from the lnd_ian clients of the respondent's constituent, the Chief Manager had induced some officers of the appellant Bank who were In-charge of Foreign Exchange Department to issue tested telex messages of co-acceptance. The charge sheet D further alleges that these officers were not authorized to issue such co-acceptances and the motive behind their illegal and unauthorized action was to enable the constituent of the respondent to get their bills discounted by jeopardizing the interests of the appellant Bank. It is also on record that the trial of the said case was at the stage of evidence as on 131h November, 2014.
22. Apart from these, the substantial revelations of the defendant (appellant) in the affidavit coupled with the views expressed by the Division Bench of the High Court makes it clear that there are certain triable issues for adjudication and the defendanUappellant is entitled to defend the Suit. The appellate side of the High Court ought to have taken into consideration the factual matrix of the case before recording G its finding. Taking into consideration the totality of the facts and circumstances of the case, we are of the opinion that the defendant/appellant has made out a prima facie case of triable issues in the Suit which needs to be adjudicated. Therefore, the defendant is entitled to grant of unconditional leave to defend the Suit.
23. Although certain other issues are.raised by both the parties, in view of our finding that the defendanUappellant is B entitled to leave to defend the Suit, we do not find it necessary to go into other issues at this stage. As regards the contention advanced on behalf of the respondenUplaintiff that the mere denial of liability by the appellant Bank saying that the Officer in charge of the Fo~eign Exchange Department of the appellant C Bank was not authorized to give co-acceptance to the Bills and thereby alleging a fraud by the officials can net be sustained as those are the internal affairs of the defendant Bank for which the plaintiff/respondent cannot be penalized and the international trade practices and banking regulations have to D be respected, this Court need not to go in detail in respect of these issues when we have come to an irresistible conclusion that the appellanUdefendant is entitled to defend the Suit.· Hence, we are reluctant to give findings on any of these issues which may adversely affect the trial of the Suit.
24. Accordingly, we allow the appeal by setting aside the judgment and decree passed by the Courts below. The appellanUdefendant is granted unconditional leave to defend the Summons for Judgment in Summary Suit No. 1586 of 2001. F The learned Single Judge of the High Court has to deal all the issues raised by the parties afresh and any observation made by this Court while dealing with this appeal should not be construed as an expression of this Court. There shall, however, be no order as to costs: Kalpana K. Tripathy Appeal allowed.