M/S Ken Engineers INDIA Through Anurag Karnawat vs. Jay Bhawani Consultants Through Its Partner Prateek Raje Mahadik

Held

The Court held that while Order XXXVII Rule 5 of the CPC empowers the trial court to impose a condition of furnishing surety, the amount of Rs. 1,00,000/- imposed in this case appeared to be on the higher side and the condition was harsh. The Court reasoned that the amount of surety should be proportionate to the suit valuation and the relief sought. Therefore, the condition imposed by the trial court required modification. The ratio decidendi is that the quantum of surety required for leave to defend in a summary suit should be reasonable and not unduly harsh, considering the overall facts and circumstances of the case. The Court directed the petitioner to deposit a surety amount of Rs. 50,000/- within 15 days, upholding the remaining part of the trial court's order.

Facts

The petitioner, M/s Ken Engineers India, filed a writ petition under Article 227 of the Constitution of India challenging an order dated 06/02/2024 passed by the I Civil Judge, Senior Division, Indore. The respondent, Jay Bhawani Consultants, had filed a suit for recovery of money against the petitioner, alleging non-payment for a Boring Machine purchased on 12/03/2020 for Rs. 4,36,600/-. This amount included Rs. 3,70,000/- for the machine and Rs. 66,000/- for GST. The petitioner had paid an advance of Rs. 1,00,000/-. The trial court allowed the petitioner's application for leave to defend but imposed a condition of furnishing surety for the entire due amount of Rs. 1,00,000/-.

Key Issues

1. Whether the condition imposed by the trial court to furnish surety of the entire amount of Rs. 1,00,000/- is unjust, arbitrary, and contrary to law and facts, causing serious prejudice to the petitioner? (Question of law and fact, turning on Order XXXVII Rule 5 of the CPC). Petitioner's arguments: The petitioner argued that no admission was made, and the imposition of such a harsh condition was unjust, arbitrary, contrary to law and facts, and would cause serious prejudice. They relied on the provision of Order XXXVII Rule 5 of the CPC, acknowledging the court's power to impose surety but contending that the amount was excessive given the suit valuation and relief sought. Revenue/State's arguments: No arguments were recorded for the respondent.