Summary suit on promissory notes and guarantee upheld; conditional leave to defend was valid because the defence was not bona fide.

A suit founded on promissory notes and a guarantee remained maintainable under Order 37 CPC because the immediate cause of action was the negotiable instrument liability, and a separate export-business arrangement did not displace that basis. The court also upheld conditional leave to defend, holding that where the defence does not show a clear bona fide triable issue and appears doubtful, sham, or implausible, the court may impose terms such as security, especially in commercial matters. The appeal therefore failed, and the order granting leave to defend on conditions was sustained.

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Issues: (i) Whether the suit on promissory notes and guarantee was maintainable under the summary procedure in Order 37 of the Code of Civil Procedure, 1908, or was excluded because the claim was really founded only on a collateral agreement for export business; (ii) Whether the trial court was justified in granting leave to defend only on condition of furnishing security instead of granting unconditional leave.

Issue (i): Whether the suit on promissory notes and guarantee was maintainable under the summary procedure in Order 37 of the Code of Civil Procedure, 1908, or was excluded because the claim was really founded only on a collateral agreement for export business.

Analysis: The pleadings showed that the immediate cause of action was the liability on the promissory notes and the guarantee, and that liability was prima facie independent of the separate commercial arrangement relating to export of pulses. The existence of another possible claim for damages did not displace the claim founded on negotiable instruments, especially when leave had already been obtained to reserve the additional claim in another suit.

Conclusion: The suit was maintainable under Order 37 and the objection to its maintainability failed.

Issue (ii): Whether the trial court was justified in granting leave to defend only on condition of furnishing security instead of granting unconditional leave.

Analysis: In summary suits the court must assess the affidavits and pleadings to see whether the defence raises a real triable issue, or whether it is frivolous, sham, implausible, or doubtful in good faith. If the defence appears doubtful though not wholly untenable, the court may, in its discretion, impose terms such as security, particularly in commercial causes where speedy adjudication is important. The requirement of reasons for conditional leave was not treated as inflexible, and the High Court was not bound by the rule applicable to subordinate courts in the same way.

Conclusion: The conditional leave order was valid and the appellants were not entitled to unconditional leave.

Final Conclusion: The appeal failed, and the order granting conditional leave to defend was upheld.

Ratio Decidendi: In a summary suit under Order 37 of the Code of Civil Procedure, 1908, where the defence does not disclose a clear and bona fide triable issue and appears doubtful or sham, the court may grant leave to defend on terms, and the existence of a separate contractual claim does not by itself defeat a suit founded on promissory notes and guarantee.

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