Bench: M. Hameedullah Beg, A.N. Ray (CJ), and Jaswant Singh
FACTS
The appellant, M/s Mechalec Engineers and Manufacturers, issued a cheque to the respondent, Basic Equipment Corporation, which was dishonored. The respondent filed a summary suit under Order 37 of the CPC, claiming that the cheque was the consideration for goods supplied. The appellant admitted issuing the cheque but denied any privity of contract.
ISSUES
Whether the appellant had the right to unconditional leave to defend the summary suit?
What are the principles governing the grant of leave to defend in summary suits?
JUDGMENT
The Supreme Court held that the appellant did not have an unconditional right to defend the summary suit. The Court stated that the grant of leave to defend in summary suits is discretionary, and the trial court should consider the bona fides of the defence before granting leave.
The Court observed that the appellant's defence was not bona fide as they had admitted issuing the cheque but had denied any privity of contract. The Court held that the trial court had correctly granted conditional leave to defend, requiring the appellant to deposit the entire amount of the cheque into the court before proceeding with the defence.
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