Supreme Court: On the question relating to the power of the court to grant leave to defend in case of sham or moonshine defence in a commercial dispute, the bench of Ashok Bhushan and Navin Sinha, JJ said,
“if the court is satisfied of a plausible or probable defence and which defence is not considered a sham or moonshine, but yet leaving certain doubts in the mind of the court, it may grant conditional leave to defend.”
The Court also explained that in a summary suit, if the defendant discloses such facts of a prima facie fair and reasonable defence, the court may grant unconditional leave to defend. This naturally concerns the subjective satisfaction of the court on basis of the materials that may be placed before it.
Explaining the distinction between both the above mentioned subjective satisfactions of the court, the bench said,
“in the latter case there is an element of discretion vested in the court. Such discretion is not absolute but has to be judiciously exercised tempered with what is just and proper in the facts of a particular case.”
The court said that the ultimate object of a summary suit is expeditious disposal of a commercial dispute. The discretion vested in the court therefore requires it to maintain the delicate balance between the respective rights and contentions by not passing an order which may ultimately end up impeding the speedy resolution of the dispute.
The Court also relied upon the decision in IDBI Trusteeship Services Limited vs. Hubtown Limited, (2017) 1 SCC 568, wherein it was held,
“17.3 Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant’s good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.
17.4. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.”
[Sudin Dilip Talaulikar v. Polycap Wires Pvt. Ltd, 2019 SCC OnLine SC 857, decided on 15.07.2019]