Failure To Comply with A Court's Conditional Leave Order Justifies The Passing Of Decree Under Order 37 CPC: J&K High Court

High Court of Jammu & Kashmir and Ladakh at Srinagar, in UT of J&K & Others v. Mudasir Farooq Malik, upheld a trial court's decree that had been passed due to the appellants' failure to comply with a conditional leave order under Order 37, Rule 3(5) of the Code of Civil Procedure (CPC), 1908. The appellants had not deposited 10% of the claim amount as required by the trial court, leading to the judgment and decree in favor of the respondent.

The case arose from a civil suit filed by Mudasir Farooq Malik seeking recovery of ₹9,18,876 for the construction of a drug store at the Chief Animal Husbandry Office, Shopian. The appellants (UT of J&K and others) were granted conditional leave to defend by the trial court on December 28, 2022, provided they deposited 10% of the claimed amount. The appellants, however, failed to comply with this condition, prompting the trial court to pass a decree on April 25, 2023, in favor of the respondent.

The appellants subsequently challenged this judgment and decree, arguing that the court should not have passed the decree merely because they did not fulfill the condition of depositing the 10% amount.

Discretion of the Court in Granting Conditional Leave: The appellants contended that the trial court, after recognizing that there were triable issues, should not have imposed a condition for granting leave to defend. They argued that the failure to comply with the deposit condition should not have resulted in the passing of the decree.

However, the court emphasized that Order 37, Rule 3(5) of the CPC provides discretion to courts to grant leave to defend either unconditionally or on terms. In this case, the trial court exercised its discretion by imposing a condition that the appellants deposit 10% of the claimed amount. The appellants did not challenge the conditional leave order when it was issued, and hence it had attained finality.

Finality of Conditional Leave Order: The court noted that the appellants had failed to challenge the conditional leave order dated December 28, 2022, at any point, either in the trial court or in an appeal. Since this order had become final, the appellants were barred from disputing its validity in the appeal against the final judgment and decree. The court referenced the Mechelec Engineers & Manufacturers v. Basic Equipment Corporation [(1976) 4 SCC 687], which established the principles for granting leave to defend under Order 37, including conditional leave.

Consequences of Non-Compliance with Conditional Leave: Under Order 37, Rule 3(6), the court is empowered to pass a decree if a defendant fails to comply with the conditions imposed when granting leave to defend. In this case, the appellants’ failure to deposit the required amount justified the trial court’s decision to pass the decree.

"The trial court has passed the impugned judgment and decree upon failure of the defendants-appellants herein to fulfill the condition imposed by the trial court… a court trying a suit under Order 37 CPC is within its powers to pass a decree… on account of the failure of a defendant to comply with the conditions upon which the leave is granted."

The court dismissed the appeal, affirming that the trial court had acted in accordance with the law by passing the judgment and decree after the appellants failed to comply with the conditional leave order. The trial court's decree was upheld, and the appeal was found to be without merit.

Date of Decision: October 7, 2024

UT of J&K & Others v. Mudasir Farooq Malik