Trial courts given guidelines on granting leave to defend

The Supreme Court of India, in its recent judgment in IDBI Trusteeship Services Ltd v Hubtown Ltd, has reviewed the principles governing the grant of “leave to defend” in a summary suit as per the amended order XXXVII rule 3 of the Code of Civil Procedure, 1908.The case involved a summary suit filed by IDBI against Hubtown for a guarantee issued in favour of IDBI.

The judgment sets aside the finding of Bombay High Court, which allowed unconditional leave to defend to Hubtown in view of “triable issues which require adjudication on further evidence”.

While scrutinizing the defence raised by Hubtown, the Supreme Court considered whether the guidelines set out in Mechelec Engineers & Manufacturers v M/s Basic Equipment Corporation (1976) stood superseded in view of the amendment to order XXXVII in 1976, and considered the provisions of the order as it stood prior to the amendment and as it now stands.

Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Aishwarya Singh is an associate.