IDBI TRUSTEESHIP SERVICES LTD. versus HUBTOWN LTD.

IDBI TRUSTEESHIP SERVICES LTD. versus HUBTOWN LTD.

Given the 1976 amendment to Order XXXVII, Rule 3 and binding authority of Milkhiram's case, leave to defend is to be granted only conditionally if the trial judge doubts good faith or genuineness of triable issues. In this case, the defendant raised a defence in the realm of 'plausible but improbable,' so leave to defend is conditional upon deposit or security of the principal sum invested.

Parties
Appellant Plaintiff: IDBI Trusteeship Services Ltd.; Respondent Defendant: Hubtown Ltd.
Jurisdiction
India
Judgment Date
15 November 2016
Procedural Posture
Civil Appeal / Appeal From Summary Suit Judgment, Bombay High Court
Outcome
Appeal allowed; High Court judgment set aside.
Legal Topics
Summary Suit, Leave to Defend, Corporate Guarantee, Foreign Investment, FEMA Regulations
Civil Procedure Commercial Law Summary Suit Leave to Defend Corporate Guarantee Foreign Investment FEMA Regulations

Case Brief

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Parties

IDBI Trusteeship Services Ltd.

Appellant Plaintiff

Hubtown Ltd.

Respondent Defendant

Procedural Posture

Civil Appeal / Appeal From Summary Suit Judgment, Bombay High Court

Legal Issues

  1. 1 Whether unconditional leave to defend can be granted under Order XXXVII, Rule 3 (post-1976 amendment)
  2. 2 Effect of 1976 amendment to Order XXXVII, Rule 3 on Mechelec's precedent
  3. 3 Application of FEMA Regulations to the investment and guarantee

Ratio Decidendi

Given the 1976 amendment to Order XXXVII, Rule 3 and binding authority of Milkhiram's case, leave to defend is to be granted only conditionally if the trial judge doubts good faith or genuineness of triable issues. In this case, the defendant raised a defence in the realm of 'plausible but improbable,' so leave to defend is conditional upon deposit or security of the principal sum invested.

Court Disposition

Appeal allowed; High Court judgment set aside.

Orders

  • Leave to defend granted only if defendant deposits INR 418 crores (principal sum invested by FMO) or gives security to the satisfaction of the Prothonotary and Senior Master, Bombay High Court within three months.
  • Suit to be tried expeditiously, preferably within one year, uninfluenced by Supreme Court's observations.