J.R.CHOPRA, J. - (1.) IT is a defendants' revision against the order of the learned District Judge, Sirohi dated 30 -10 -1986 whereby the learned lower court has granted permission to the defendants No. 1 and 2 to defend the suit Under Order 37, CPC on furnishing a Bank guarantee of Rs. 1,00,000/ -.
(2.) THE facts necessary to be noticed for the disposal of this revision briefly stated are: that defendant No. 1 Smt. Renuka obtained a loan from the Bank of Baroda, Mount Abu Branch amounting to Rs. 1,22,171. 25P. for the purchase of F.C. Mahendra Mini Bus and executed a pro note in favour of the Bank for repayment of this amount @18.5% interest per year. The amount was made payable in monthly instalment of Rs. 3400/ - each. The first instalment became due on 1 -10 -1982. It is alleged that defendant No. 1 Smt. Renuka Parihar has paid a sum of Rs. 65,900/ - towards the loan. The Bank has, therefore, claimed now a sum of Rs. 1,19,886.50p. It is alleged by the plaintiff that on the application of defendant No. 1 Smt. Renuka Parihar and defendant No. 4 Sumanbhai, proceedings took place for the transfer of this Mini Bus in favour of defendant No. 4 Sumabhai. Taking advantage of those proceedings, which did not become final, defendant No. 1 Smt. Renuka Parihar wants to avoid her liability under the promissory note and therefore, the plaintiffs have filed this suit. Defendant No. 1 Smt. Renuka Parihar filed on application Under Order 37, Rule 4 CPC to defend the suit on the grounds that firstly the suit is alleged to have been brought on the basis of a pronote where as it is not a pronote but actually it is an hypothecation agreement or a mortgage deed and secondly, the vehicle -has been transferred to defendant No. 4 Suman Bhai with the permission of the plaintiff and actually, defendant No. 4 Sumanbhai is plying this bus She has contended that the plaintiff has obtained the Transfer of Ownership Form, duly signed from her and, therefore, the formality of transfer was complete so far as she is concerned and now she owes no liability to the Bank and the Bank has wrongly claimed the remainder of the debt from her. Actually, the Bank has started accepting the instalments from defendant No. 4. This application of defendant No. 1 was decided by the the impugned order by the impugned order by the learned lower court where in the learned lower court has observed that whether the document is a pro note or a hypothecation agreement or a mortgage deed is a triable issue and at the same time, it can be characterised as an important issue. It was further observed by the learned lower court that whether the loan has been transferred or not, this is definitely a triable issue, according to the admission of both the parties. The learned lower court's observations are quote ad verbetim: .........[vernacular ommited text]........... What is a triable issue, this question came up for consideration before a learned Single Judge of the Gujarat High Court in Kochrabhai Ishwarbhai Patel v. Gopalbhai C. Patel : AIR1973Guj29 wherein on the basis of the decision in Santosh Kumar v. Bhai Moolsingh : [1958]1SCR1211 and Milkhiram (India) Pvt. Ltd v. Chamanlal Brothers AIR 1965 SC 1986, it was observed by the learned Single Judge as follows: The test of a 'triable issue' is to find out whether the defendant would be able to resist the suit successfully if he proves the case. If the answer to this question is in the affirmative, the plea does involve a 'triable issue'. The contention of the defendants is that firstly the document is not a pro note but it is a hypothecation agreement or a mortgage deed and secondly, the loan has been transferred in the name of defendant No. 4 Sumanbhai which is clear from the letter of the Bank filed by defendant No. 1. On the other hand, Mr. P.K. Bhansali learned Counsel for the non -petitioners has contended that the Bank has not yet accepted the transfer, which will be clear from the document contained in the file which was placed before the Court for its perusal. From the perusal of this file, it is clear that the Bank has not yet accepted the transaction.
(3.) THE contention of Mr. Parihar is that they applied to the Bank for the transfer of the vehicle because defendent No. 1 Smt. Renuka Parihar was permanently shifting from Mt. Abu to Panchgani, District Satara in Maharashtra and the plaintiff Bank has accepted their application and moved the higher authorities for the transfer of the loan and in order to effect that transfer, they sent the a letter along with T.O. Form and defendant No. 1 Smt. Renuka Parihar was asked to put her signatures along with that of her husband on that T.O. Form. She has done that and therefore, so far as she is concerned, she has done whatever she was required to do and, therefore, the transfer was complete. Both the parties have conceded before the learned lower court that this is a triable issue. It was contended by Mr. Parihar that the security could not have been demanded from the defendants No. 1 and 2. In this respect, he has placed reliance on a decision of their Lordships of the Supreme Court in Machalec Eng. and Mfg. v. Basic Eq. Corpn. 0043/1976 : [1977]1SCR1060 , wherein their Lordships of the Supreme Court propounded following five principles for considering the question of granting leave to defend: (a) 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 judgment and the defendant is entitled to un -conditional leave to defend; (b) If the defendant raises a triable issue indicating that he has a fair or bonafide or reasonable defence although not a positively good defence, the plaintiff is not entitled to given judgment and the defendant is entitled to unconditional leave to defend; (c) 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 make it clear that he has a defence yet, shows such a state 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 conditions as to the time or mode of trial but not as to payment into court or furnishing security; (d) 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 defendant is not entitled to leave to defend; (e) 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, 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. In cases governed by clauses (a), (b) and (c), the leave to defend is to be granted and only in cases governed by clauses (d) and (e), if the defence is illusory or sham or practically moonshine then leave to defend may be granted after obtaining a security. The learned lower court while relying on Milkhiram (India) Pvt. Ltd's case (supra) has taken the view that the Court is not precluded from imposing any condition while granting leave to defend. This view of the learned lower court is against the law and against the decision of this court as the decision of their Lordships of the Supreme Court. Relying on Milkhi Ram's case (supra), it has been held by this Court in Fatehlal v. Sunderlal as follows: Even while applying the principles laid down by the Supreme Court in M/s Mechalec Engineers and Manufacturers v. Basic Equipment Corporation 0043/1976 : [1977]1SCR1060 the District Judge has committed an error in as much as according to said principles condition with regard to the payment of the amount claimed could be imposed while granting leave to defend only in cases falling under Clause (e), viz., where the defendant has no defence or the defence is illusory or sham or practically moonshine. The District Judge has no where stated in his order that according to him, the defence which is sought to be raised by the petitioner in his application for leave to defend is illusory or sham or practically moonshine. The learned District Judge has no where stated in the order under revision that the defence which is sought to be raised by the petitioner in his application for leave to defend is illusory or sham or practically moonshine, and therefore, he has erred in asking the defendant -petitioner to furnish a Bank guarantee of Rs. 1,00,000/ -. It has been mentioned in Clause (d) of the principles propounded by their Lordships of the Supreme Court in Mechalec Eng. and Mfg.'s case (supra) that 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 defendant is not entitled to leae to defend. If the case falls Under clause or (b) or (e), the secuirty can not be demanded by the court before granting leave. It has b:en mentioned in Clause (b) of the aforesaid principle said down by their Lordships that if the defendant raises a triable issue indicating that he has a fair or bonafide 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. When both the parties have agreed that it is an important triable issue then leave to defend has to be granted unconditionally.;