063-NLR-NLR-V-62-ISSADEEN-COMPANY-LTD-Appellant-and-WIMALASURIYA-Respondent.pdf
WEERASOOBIYA, J.-—Issadeen <fc Company Ltd. v. "Wimalasuriya
299
Present: Weerasooriya, J., and T. S. Fernando, J.ISSADEEN & COMPANY LTD., Appellant, and WIMALASURIYA,
Respondent
S. C. 105—.D. G. Matara, 1355
Civil Procedure Code—Action by summary procedure on a liquid claim—Disclosure ofprima facie defence in regard to pari of claim—Defendant's right to defendunconditionally—Sections 704 (2), 706.
Plaintiff filed action by way of summary procedure under Chapter 53 of theCivil Procedure Code for the recovery of a sum of Rs. 20,000. The Court didnot consider as lacking in good faith the defence that only a sum of Rs. 7,600was due to the plaintiff.
Held, that the defendant was entitled to be allowed to appear and defend theaction without being called upon to furnish any sectirity at all. There is nothingin section 704(2) of the Civil Procedure Code which precludes its applicationto a case where a prima facie sustainable defence is disclosed in regard toonly a part of the claim while the rest of it- is admitted.
Appeal from a judgment of the District Court, Matara.
Ranganathan, with D. R. P. Goonetilleke, for the Defendant-Appellant.S. D. Jay asunder a, for the Plaintiff-Respondent.
Car. adv. vuli.
May 27, 19G0. Weerasooriya, J.—
The plaintiff-respondent filed this action by way of summary procedureunder Chapter Dill (Sections 703-711) of the Civil Procedure Code forthe recovery of a sum of Rs. 20,000/00 alleged to be due on two chequesdrawn by the defendant-appellant for Rs. 18,000/- and Rs. 2,000/- thepayment of which was subsequently stopped by the drawer.
In the affidavit filed in support of the defendant’s application for leaveto appear and defend the action, it was stated, inter alia, that the twocheques were given as security for a loan of Rs. 10,000/- from the plaintiff,that out of this loan a sum of Rs. 2,400/- was deducted in advance asinterest and a bke amount was subsequently paid by the defendant inreduction of the principal, leaving only Rs. 7,600/- owing to the plaintiffon the transaction. The defendant did not bring into Court the sumadmitted to be due on the ground that the plaintiff was not yet entitledto it as the period in respect of which interest was deducted in advancehad not elapsed. The affidavit is, however, silent as to what that period
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WEERASOORIYA, J.-—Iseadeen dr Company Ltd. v. Wimdlasuriya
is, or at what rate interest was deducted in advance, nor does it state thatthe defendant holds any receipt or other documentary evidence in support-of the deduction of interest or part payment of principal as alleged.
After inquiry, the District Judge made order allowing the defendantleave to appear and defend, subject to security being given in a sum ofRs. 7,000/- in cash or double that amount in land. It is against this■order that the defendant has filed the present appeal.
No reasons have been given by the District Judge for requiring security“to be given, nor has he stated how the amount of the same was arrivedat. Notwithstanding, however, the somewhat unsatisfactory nature ofthe affidavit filed by the defendant, the order of the learned Judge wouldappear to indicate that he did not consider as lacking in good faith the•defence that only a sum of Rs. 7,600/- is due to the plaintiff. The shortpoint that arises for decision on this appeal is, therefore, whether in thecircumstances the defendant should not have been allowed to appearand defend the action without being called upon to furnish any securityat all.
Mr. Ranganathan who appeared for the defendant-appellant, relied onSection 704(2) of the Civil Procedure Code which reads as follows :—
“ The defendant shall not be required, as a condition of his being .allowed to appear and defend, to pay into Court the sum mentionedin the summons, or to give security therefor, unless the Court thinkshis defence not to be prima facie sustainable, or feels reasonable doubtas to its good faith.”
Mr. Ranganathan submitted that there is nothing in Section 704(2)which precludes its application to a case where a prima facie sustainable■defence is disclosed in regard to only a part of the claim while the rest ofit is admitted. Assuming that the learned District Judge had no reaso-nable doubt about the good faith of the defence disclosed in the presentease, I think that Mr. Ranganathan’s submission is entitled to prevail.Under the corresponding provisions of the law in England (see OrderXIV, rule 4) judgment may be given in favour of the plaintiff for a partof his claim which is admitted, and the defendant allowed to defendus to the residue of it. We have no such provision in Chap. Dill. But,in my opinion, this does not mean that where as against a part of the-claim a prima facie sustainable defence is disclosed, the good faith ofwhich is not in doubt, the defendant should be ordered to deposit thesum which is admitted to be due, or give security in respect of it, as acondition precedent to his filing answer. As pointed out by Mr. Ran-ganathan, such an order would virtually prevent the defendant fromdefending himself unconditionally, as he is entitled to do undersection 704(2), against that part of the claim in respect of which he has a
WEEKASOORIYA, J.—Issadeen dr Company Ltd. v. Wimalastirzya
301
prim a facie sustainable defence. X am fortified in the view I have takenby the decision in Annamalay Chetty v. Ali Marikar1 where, of twopromissory notes sued on, the claim on one of them was admitted bythe defendant who, however, pleaded that the other had been dischargedby the grant of a fresh note which had then not matured. It was heldin appeal that the defendant was entitled to defend the action uncondi-tionally.
As regards the Indian case of Alla Venkata Kistnaya v. Allapati Jla-maswami 2 cited by Mr. Jayasundere who appeared' for the plaintiff-respondent, where the defendant was ordered to bring into court theamount admitted by him as due to the plaintiff although as againstthe rest of the claim he appeared to have a good defence, it is to be notedthat the relevant law in India (which is Order 37, rule 3) has nothing cor-responding to Section 704(2) of our Civil Procedure Code which expresslyprohibits a defendant from being put on terms unless his defence is notprima facie sustainable or unless the Court feels reasonable doubt as to itsgood faith. Order 37, rule 3 of the Indian Civil Procedure Code, on theother hand, appears to confer a wide discretion in the Court to imposeconditions oven where a valid defence is disclosed and is similar in itsterms to section 706 of our Code. Mr. Jayasundere contended thatsection 704(2) should be read subject to section 706, and that under thelatter section the Court has a discretion to impose conditions even in acase where there is a defence which is prima facie sustainable and as tothe good faith of which there is no reasonable doubt. But regarding thissame argument Hutchinson, C.J., stated nearly half a century ago inRengasamy v. Pakeer 3 that it was too late to urge it, in view of two pre-vious decisions to which he referred, one of them being Annamalay Chettyv. Ali Marikar {supra).
The order appealed from is set aside and the defendant is allowed tofile answer without giving security. The defendant will be entitled tohis costs of appeal and of the inquiry in the Court below.
T. S. FeEiYaxdo, J.—I agree.
Order set aside. 1
1 {1901) 2 Browne's Reports 267.
3 (W35) A. I. R. Madras 302.8 {1911) 14 N. L. R. 190.