Punjab & Haryana HC: Order Granting Leave to Defend Under Order 37 CPC Set Aside, Trial Court Directed to Reconsider Condonation of Delay

Case Name: Gurcharan Singh v. Sokhal Minerals Pvt. Ltd. & Ors.
Date of Judgment: January 13, 2020
Citation: CR No. 8318 of 2019
Bench: Hon’ble Mr. Justice Amol Rattan Singh

Held: The High Court set aside the trial court’s order granting unconditional leave to defend in a summary suit under Order 37 CPC without properly considering the issue of delay. It held that even if a separate application under Section 5 of the Limitation Act was not filed, the trial court was required to examine the reasons for delay mentioned in the leave to defend application itself, apply its mind, and pass a reasoned order. Since the trial court failed to determine whether the delay was justified, its order was unsustainable. The matter was remitted for fresh consideration on whether the delay in seeking leave to defend deserved to be condoned.

Summary: The petitioner had filed a summary suit under Order 37 CPC for recovery of Rs. 2,22,000. Summons were served on the defendant company on 24.04.2019, directing it to enter appearance and seek leave to defend within 10 days. However, the defendants filed their leave to defend application only on 17.07.2019. The petitioner argued that the application was hopelessly time-barred and that without a separate application under Section 5 of the Limitation Act, the trial court could not condone the delay. He relied on Delhi High Court precedent holding that leave to defend filed beyond limitation without an application for condonation must be dismissed. The defendants countered that the notice was received by a peon/manager, they were occupied in High Court proceedings, and were informed late about the summons, after which they applied within 10 days of knowledge. The trial court granted leave to defend without considering these reasons. The High Court held that limitation is a substantive right, and the trial court was bound to consider the grounds of delay, whether sufficient cause was shown, and then decide if condonation was warranted. Since it failed to do so, the order was set aside.

Decision: The High Court remitted the matter back to the trial court with directions to re-examine the reasons stated by the defendants for delay in filing leave to defend, determine whether the delay could be condoned, and thereafter decide the application afresh. It clarified that no opinion was expressed on merits of the suit.