Holding

An order refusing leave to defend is a judgment, and ordinarily a writ under Article 227 is not maintainable when an appeal under Section 96 CPC lies, but the writ may be converted into an appeal.

Summary

The appellant Ajay Bansal filed a summary suit under Order XXXVII of the CPC for recovery of Rs 2,93,987. The respondents applied for leave to defend under Order XXXVII Rule 3(5); the Civil Judge rejected the application, calling the defence sham, and immediately passed a final decree for Rs 2,83,987 with interest. The respondents filed a writ petition under Article 227 of the Constitution challenging the order refusing leave, which the High Court allowed. The appellant contended that because an appeal under Section 96 CPC lay against the decree, the writ petition was not maintainable. The Supreme Court held that an order refusing leave to defend is a judgment, and ordinarily a writ under Article 227 is not maintainable when an appeal lies, but converted the writ into a first appeal and set aside the impugned judgment. The Court directed the parties to file the appeal and allowed the appeal.

Issues considered

Whether a writ petition under Article 227 is maintainable when an appeal under Section 96 CPC lies against the decree.
Whether an order refusing leave to defend is a judgment within the meaning of the Letters Patent.
Whether the theory of a dependent order applies to a decree passed after refusal of leave to defend.
Whether the decree can be set aside without first challenging the order refusing leave to defend.

Legislation cited

Code of Civil Procedure, 1908s. Order XLI Rule 1, s. Order XXXVII Rule 3(5), s. Order XXXVII Rule 4, s. Section 105, s. Section 2(2), s. Section 2(9), s. Section 96
Constitution of Indias. Article 227

Subjects

Leave to defendSummary suitArticle 227Section 96 CPCSection 105 CPCDependent orderCivil ProcedureDecreeJudgmentAppealWrit petition

Judgment

)
AJAY BANSAL A
v.
ANUP MEHTA & ORS.

JANUARY 16, 2007

[S.B. SINHA AND MARKANDEY KATJU, JJ.] B

... ·-y Code of Civil Procedure, 1908; O.XXXVII rr. 3, 4, 5 and 6 and O.XLI
r. 1; ss. 2(2), 2(9), 96 and 105/Constitution of India, 1950; Article 227:

Suit for recovery of certain amount with interest-Decreed by Civil c
Court-Challenge to-Allowed by High Court-On appeal, Held: An
order refusing to grant leave is a judgment-Passing decree after refusing
to grant leave to defend almost instantaneous-Application under Article
227 not maintainable when appeal lies against an order/judgment-
Theory of depen.dent order not applicable in such a case-Even if this
Court were to set aside order refusing leave to defend, decree passed may
D
• not fall by itself-It is not proper to interfere with the decree in the facts
and situation of the case-Defendant, however, could file an appeal
against the decree and then could challenge the order refusing leave to
defend in terms of Section 105 C.P.C.-Writ petition directed to be
converted into an appeal-All contention of the parties shall remain E
open-Directions issued-Practice and procedure.

Words and Phrases:

'Decree~'order' and Judgment'-Meaning of in the context of Civil
F
- Procedure Code, 1908.

Appellant filed a suit in terms of order 37 of the Code of Civil
Procedure, 1908 for recovery of a sum of Rs. 2,93,987 with interest on
account of dishonored cheques. Respondents filed an application purported
to be under Order XXXVII, Rule 3(5) of the Code praying for grant of leave G
to defend the said suit, which was dismissed by the Civil Court and a final
judgment and decree was passed for a sum of Rs. 2,83,987 with interest
at the rate of 12% thereon. An application under Article 227 of the
Constitution filed thereagainst was allowed by the High Court. Hence the
present appeal. H
953
--.,.,_
954 SUPREME COURT REPORTS [2007] 1 S.C.R.
-<
A Appellant contended that keeping in view the fact that an appeal was
maintainable under Section 96 of the Code against the judgment and decree
passed by the Civil Court, the application under Article 227 of the
Constitution of India was not maintainable.

Respondents submitted that the writ petition was maintainable as they
B could not have been put to undue hardship of depositing the entire decretal
amount in terms of Order XLI Rule 1 of the Code of Civil Procedure
'1'
although they had made out a good case for obtaining leave to defend the
suit.

c Allowing the appeal, the Court

HELD: 1.1. An order refusing to grant leave is a judgment within the
meaning of Letters Patent of the Chartered High Courts. [Para 8] [958-B]

Shah Babula! Khimji v. Jayaben D. Kania and Another, [1981] 4 SCC
D 8, relied on.
....
1.2. A decree passed in a summary suit where leave to defend the suit
has been refused is almost automatic. The consequence of passing a decree
cannot be avoided. Ordinarily, an application under Article 227 of the
E Constitution of India would not be maintainable where an appeal lies. An
appeal lies from the decree under Section 96 of the Code.
[Paras 9 & 10) [958-C-D]

1.3. Theory of "dependant order" may not apply in a case of this
nature because even if this Court were to set aside the order refusing leave
F to defend, the decree subsequently passed may not fall by itself. It has still
to be set aside either by resort to Order XXXVII Rule 4 or by way of an
appeal, or by some other mode known to law. In a given case like the present
-
one as it may not be proper to interfere with the decree merely because in
an appeal against an order refusing leave to defend, this Court is inclined
to take a different view. The defendant in such a case can also be left to
G
appeal against the decree and therein challenge the order refusing leave
to defend in terms of Section 105(1) of the Code.
[Paras 12 & 13) [958-G-H, 959-A-B) '
,>'

"
V.S. Saini & Anr. v. D.C.M Ltd., AIR (2004) Delhi 219, relied on.
H
I
AJAYBANSALv.ANUPMEHTA [SINHA,J.] 955

2.1. A contentious issue, viz., maintainability of writ petition without A
challenging the decree has been raised. This Court, in this case, does not
intend to go into the said issue, inter alia, for the reason that the High
Court has not assigned any reason in support of the impugned judgment.
(Para 14) [959-C]

2.2. In the facts and circumstances of the case, interest of justice B
would be met by directing the writ petition to be converted into a first
appeal. It would be open to the appellant to raise the contention that it was
a fit case where the Civil Court could have granted leave to defend the suit.
All the contentions of the parties shall, however, remain open.
[Para 15) (959-D-E] C

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 230 of2007.

From the final Judgment/Order dated 8.3.2006 of the High Court of
Delhi at New Delhi in CM (M) Nos. 1446, 1447, 1448 and 1449/2005 and CM
(Application)No.14196/2005. D
Jitender Sharma Ashu Bhatia, Reepak Kansai and Ajay Choudhary for
the Appellant.

V .L. Madan, K.K. Madan and lndeevar Goodwill for the Respondents.
E
The Judgment of the Court was delivered by

S.B. SINHA, J. : Leave granted.

l. This appeal is directed against a judgment and order dated 30.01.2006
passed by a learned Single· Judge of the High Court of Delhi whereby and F
whereunder an application filed under Article 227 of the Constitution of
India filed by the respondents herein against a judgment and order dated ·
27.05.2005 passed by a learned Civil Judge, Karkardooma, Delhi was allowed.

,. 2. Appellant herein filed a suit which was marked as Suit No. 303 of
2004 for recovery of a sum of Rs. 2,93,987 with interest on account of G
dishonoured cheques. The said suit was filed in terms of Order XXXVII of
the Code of Civil Procedure (Code). The respondents filed an application
purported to be under Order XXXVII, Rule 3(5) of the Code praying for grant
·of leave to defend the said suit. The learned Civil Judge refused to do so
by an order dated 27.05.2005 opining: H
\. ~

956 SUPREME COURT REPORTS [2007] 1 S.C.R
--:
A "I am convinced with the plaintiff's contention that the defence as
-l.
disclosed by defendant in their application is sham and illusory and
in my considered opinion, the defendants are not entitled for leave
to defend the present suit and the plaintiff is entitled to have the
judgment signed. Accordingly, the application under Order 37, Rule
3(5) CPC of the defendants is devoid of any merits. The same is
B hereby dismissed. Application is disposed of accordingly."
'f
3. On the said date itself, a final judgment and decree was passed for
a sum of Rs. 2,83,987 with interest at the rate of 12% thereon holding:

c "4. It is contemplated under Order 37, Rule 3(5) CPC that if any ....
application for leave to defend the suit has been made by the
defendant and is refused, the plaintiff shall be entitled to
judgment everywhere. Since the application under Order 37, Rule
3(5) CPC of the defendants has been dismissed as the defendants
failed to raise any triable issue or disclose any defence in their
D
application, in my considered opinion, the plaintiff has become ~
entitled to have the judgment signed. Accordingly, suit of the
plaintiff is hereby decreed with cost plaintiff is entitled for a decree
to recover a sum of Rs. 2,83,987 from the defendants. However,
since the plaintiff has failed to establish his claim of interest@ 18%
E per annum which he has claimed is the market rate for commercial
transaction, I am inclined to award the interst at the prevailing rate
only which is@ 12% per annum on the decretal amount from the
date of institution of the present suit till realization. Decree sheet
be prepared ... "
F
4. An application filed thereagainst by the respondents has been
allowed by the impugned judgment. The appellant is, thus, before us.

5. The short contention raised by Mr. Jitender Sharma, learned senior .,
counsel appearing on behalf of the appellant, is that keeping in view of the
G fact that an appeal was maintainable under Section 96 of the Code against
the judgment and decree passed by the learned Civil Judge, the application
under Article 227 of the Constitution of India was not maintainable.
'-

6. The contention of Mr. V.L. Madan, learned counsel appearing on
H behalf of the respondents, on the other hand, is that the writ petition was
'
/
~
l
(
AJAYBANSALv. ANUPMEHTA [SINHA,J.] 957

maintainable as the respondents could not have been put to undue hardship A
of depositing the entire decretal amount in terms of Order XLI Rule I of the
Code of Civil Procedure although it had made out a good case for obtaining
leave to defend the suit.

Order XXXVII, Rule 3(5) of the Code reads, thus:
B
"(5) The defendant may, at any time within ten days from the
service of such summons for judgment, by affidavit or otherwise
disclosing such facts as may be deemed sufficient to entitle him to
defend, apply on such summons for leave to defend such suit, and
leave to defend may be granted to him unconditionally or upon C
such terms as may appear to the Court or Judge to be just :

Provided that leave to defend shall not be refused unless the Court
is satisfied that the facts disclosed by the defendant do not
indicate that he has a substantial defence to raise or that the D
,,· defence intended to be put up by the defendant is frivolous or
vexatious :

Provided further that, where a part of the amount claimed by the
plaintiff is admitted by the defendant to be due from him, leave to
defend the suit shall not be granted unless the amount so admitted
E
to be due is deposited by the defendant in Court."

A "decree" is defined under Section 2(2) of the Code to mean:

.. " "decree" means the formal expression of an adjudication which,
so far as regards the Court expressing it, conclusively determines
F

the rights of the parties with regard to all or any of the matters in
controversy in the suit and may be either preliminary or final. It
shall be deemed to include the rejection of a plaint and the
determination of any question within section 144, but shall not G
include-

(a) any adjudication from which an appeal lies as an appeal from
an order, or
H
-\ ~

958 SUPREME COURT REPORTS [2007] l S.C.R.
..( "
A (b) any order of dismissal for default."
-'
7. A "judgment" is defined under Section 2(9) of the Code to mean "the
statement given by the Judge on the grounds of a decree or order".

8. An order refusing to grant leave is a judgment within the meaning
B of Letters Patent of the Chartered High Courts. [See Shah Babula/ Khimji
v. Jayaben D. Kania and Another, [1981] 4 SCC 8] "'(
y

9. A decree passed in a summary suit where leave to defend the suit
has been refused is almost automatic. The consequence of passing a decree
c cannot be avoided.

I 0. Ordinarily, an application under Article 227 of the Constitution of
India would not be maintainable where an appeal lies. An appeal lay from
the decree under Section 96 of the Code. When an appeal could be filed,
ordinarily, an application under Article 227 of the Constitution of India
D would not be entertained. <.,_

11. A decree passed subsequent to the refusal ofleave to defend could
either be under Order XXXVII Rule 3(6) of the Code or it could be based
on the affidavit evidence on the side of the plaintiff and the documents
E produced or even based on oral evidence formally proving, say, the
execution of a promissory note by the defendant. It may not be proper or
necessary to apply the theory of "dependent order" in such circumstances.
For one, the theory may not apply. Even if this Court were to set aside the
order of the court below and give the defendant leave to defend the suit,
the decree that is passed may not go automatically. It may have to be set
F .,_._ •
aside. Secondly, the defendant can always go to the court which passed the
decree and move under Rule 4 of Order X:XXVII of the Code to reopen the
decree.

12. The theory of "dependant order" may not apply in a case of this
G nature because even if this Court were to set aside the order refusing leave
to defend, the decree subsequently passed may not fall by itself. It has still
to be set aside either by resort to Order XXXVII Rule 4 or by way of an
\,- '°:<
appeal, or by some other mode known to law. In a given case like the present
one as it may not be proper to interfere with the decree merely because in
H an appeal against an order refusing leave to defend, this Court is inclined
I
AJAYBANSALv. ANUPMEHTA [SINHA,J.] 959

to take a _different view. [See V.S. Saini & Anr. v. D.C.M Ltd., AIR (2004) A
Delhi 219.]

13. The defendant in such a case can also be left to appeal against the
decree and therein challenge the order refusing leave to defend in terms of
Section 105(1) of the Code.
B
(
14. A contentious issue, viz., maintainability of writ petition without
challenging the decree has been raised. We, however, in this case, do not
intend to go into the said issue, inter alia, for the reason that the learned
Judge has not assigned any reason in support of the impugned judgment.
It merely directed the respendents to deposit a sum of rupees two lakhs. We C
are informed at the bar that such deposit has been made. What remains to
be deposited is, therefore, a sum of Rs. 83,987. We are further informed that
certified copy of the impugned order has been filed. The certified copy of
the judgment and decree may also be filed.

15. In the aforementioned situation, we are of the opinion that interest
of justice would be met if we direct the writ petition to be converted into
a first appeal. The respondents may file certified copy of the judgment and
decree. Deficit court fee, if any, should also be paid by the respondents.
Filing of such certified copy and deposit of court fee, if any, must be
completed within eight weeks from date. Indisputably, it would be open to E
the appellant to raise the contention that it was a fit case where the learned
Civil Judge could have granted leave to defend the suit. All the contentions
of the parties shall, however, remain open.

16. For the reasons aforementioned, the impugned judgment is set F
aside. This appeal is allowed with the aforementioned directions. No costs.

S.K.S. Appeal allowed.