Summary procedure and leave to defend: triable issues and bona fide defence required, with no reliance on third-party material.

In Chapter XIII-A summary proceedings, the Court must confine itself to the affidavits and material permitted by the rules and cannot enlarge the procedure by calling for third-party records or evidence. Leave to defend may be refused only where the defence is sham or illusory; where a defendant discloses a bona fide defence or triable issue, leave must be granted. On the materials, the defendant raised arguable issues concerning the Reserve Bank of India's refusal of permission, the bank's resulting conduct, and the purpose and lien over the deposit, all of which required trial. The refusal of leave was therefore set aside and the suit was directed to proceed in the ordinary course.

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Issues: (i) Whether, in proceedings under Chapter XIII-A of the Original Side Rules, the Court could go beyond the affidavits of the parties by calling for records from a third party and examining material outside the limited summary procedure; (ii) whether the defendant had disclosed a good defence or a triable issue so as to be entitled to leave to defend.

Issue (i): Whether, in proceedings under Chapter XIII-A of the Original Side Rules, the Court could go beyond the affidavits of the parties by calling for records from a third party and examining material outside the limited summary procedure.

Analysis: The procedure under Chapter XIII-A is exceptional and summary in nature. The Court's scrutiny is confined to the affidavits and materials permitted by the rules. The power to call for attendance or examination under Rule 5(c) is confined to the defendant, or where the defendant is a corporation, its officer. It does not extend to third parties, and the Court cannot enlarge the scope of the summary procedure by requiring third-party affidavits or records to test the defence. Reliance on material outside the permitted framework indicated that the matter could not be finally decided in the summary manner adopted below.

Conclusion: The Court held that the third-party material could not be used to sustain refusal of leave within Chapter XIII-A.

Issue (ii): Whether the defendant had disclosed a good defence or a triable issue so as to be entitled to leave to defend.

Analysis: Leave to defend may be refused only where the defendant has no defence or the defence is sham, illusory, or practically moonshine. Where the defendant raises a fair, bona fide, or reasonable defence, or discloses facts giving rise to a triable issue, leave must be granted. On the materials, the defendant had a plausible defence arising from the Reserve Bank of India's refusal of permission, the bank's obligation to act under that direction, and the disputed purpose of the deposit and lien. These matters required proof and could not be conclusively resolved on affidavits alone. Questions concerning the legality of the Reserve Bank's refusal and the effect of the foreign exchange restrictions also raised issues fit for trial.

Conclusion: The Court held that the defendant had raised triable issues and a bona fide defence and was entitled to leave to defend.

Final Conclusion: The summary decree was unsustainable, the refusal of leave to defend was set aside, and the suit was directed to proceed in the ordinary course with the defendant allowed to file a written statement.

Ratio Decidendi: In summary proceedings of this kind, leave to defend cannot be refused where the defendant discloses a bona fide or triable defence, and the Court must remain within the limits of the affidavits and the procedure expressly authorised by the rules, without relying on third-party examination to determine the merits.

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