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Judgment
Govinda Menon, J.—The suit out of which this appeal arises was for the recovery of a sum of Rs. 10,700, on foot of a promissory note
executed by the appellant in favour of the respondent-plaintiff on 30-12-1948. The consideration stated in the promissory note was that the
appellant purchased two motor cars from the respondent, one of them being a Ford V8 Of 1942 model (P.S. 781) for Rs. 6500 and the - other a
1936 model Terraplane for Rs. 3500. The total consideration therefore is Rs. 10000.
The suit was laid under the provisions of the summary chapter, Order 37, Rule 2 and an application was made by the defendant-appellant under
Order 37, Rule 3 for leave to defend the suit unconditionally. The plaintiff-respondent filed a counter-affidavit in answer to the allegations contained
In the affidavit in support of the petition and the learned Judge after going through the affidavits and certain account books which were produced
before him came to the conclusion that leave to defend should not be granted. Thereafter a decree was passed against the appellant for the plaint
claim with interest thereon. Aggrieved by that decision the above appeal has been filed in this Court.
Mr. R. Rangachari appearing for the defendant-appellant strenuously contends that the order of the learned Judge refusing leave to defend in I.
A. No. 1286 of 1949 has to be set aside and that at least the appellant should be allowed to defend the suit on conditions which this Court may
impose upon him. The question we have to decide is whether the learned Judge was right in dismissing the application for leave to defend. This
Court has on more than one occasion laid down that leave to defend should be granted If there is an arguable defence and a case can be put
forward which a Court will have to enquire into and come to a decision. But if the Court is satisfied that the alleged defence is a sham and a bogus
one, then leave to defend should be refused. See -- K.R. Kesavan Vs. The South Indian Bank Ltd., .
At the same tune there are decisions of this Court to the effect that In coming to a conclusion as to whether leave should be granted or not, it is
open to the Court not only to look at the pleadings and the affidavits but also to take into consideration all the circumstances of the case as
disclosed in the plaint and the affidavits and other material that is available. It is therefore clear that if the lower Court was satisfied on the pleadings
and the affidavits as well as the documents placed before it that there was no arguable case, then the lower Court''s decision ought to be upheld.
The plaintiff''s case as disclosed in the plaint was, as already stated, that the promissory note was executed for the price of the two motor cars
sold by him to the defendant. The defendant admits having purchased the two cars and executing the promissory note. It is also admitted that these
cars were taken by him and others to Pondicherry where the defendant as well as his entourage had a very gaytime and spent a lot of money. For
that purpose they were constrained to pledge the motor cars for a sum of Rs. 3000 and in discharge of that mortgage the cars had to be sold for a
sum of Rs. 3825. These facts being admitted,"" the question is whether the defendant had an arguable case to put forward.
One has to remember in this connection that a 1942 model Ford V8 in 1948 under the circumstances then prevailing could easily have fetched a
sum of Rs. 6500 and for a Terraplane of 1936 model the price of Rs. 3500 was not too much. The learned Judge also sent for the plaintiff''s
account books and was satisfied that he spent Rs. 5305-6-6 for the Ford Car and a sum of Bs. 5337-13-0 for the Terraplane, in all a sum of Es.
10647-13-6. As the learned Judge was Justified in looking into the accounts in coming to the conclusion we cannot say that the plaintiff did not
spend the above amounts with respect of these cars.
All that the defendants could allege in the affidavit in support of his leave application was that there was a conspiracy between one Dorairaj and
others, the object of which was to inveigle this inexperienced defendant by their wily tricks into various unwholesome activities so that they might
make money out of it. Though there are some allegations in para 14 of the affidavit in support Of the petition that the price of the motor cars was
inadequate, we are not Inclined to think that there is any arguable case on that point.
Moreover it is not very clear from the affidavit that the plaintiff was a party or privy to the so-called conspiracy. If the conspiracy took place after
the sale of the cars by the plaintiff to the defendant, then the further activities of Doralraj and others cannot be let in evidence in the case. Under
these circumstances we feel that most of the allegations contained in the affidavit are matters on which no evidence can be let in in the suit itself.
In addition the question whether the consideration for negotiable instrument is adequate or not cannot be the subject matter of controversy in the
suit when once it is admitted that the negotiable instrument had been executed by the defendant and there was some consideration for it. See the
commentary in Bashyam and Adtga''s Negotiable Instruments, at page 81 where the learned authors say that inadequacy of consideration Is
neither sufficient to invalidate a negotiable instrument nor is it a good defence to an action on it, though the adequacy or otherwise of it may be
taken into consideration in order to ascertain the bona fides of. the transaction. The case in --''Solomon v. Turner'', (1815) 1 Stark 61 (B) and
others have been cited in support of this proposition.
It is also clear that if the drawing, accepting or endorsing of a negotiable Instrument is supported by some consideration, then the Courts would not
be justified in enquiring into the adequacy of such consideration though, as we stated, inadequacy of consideration may be evidence of fraud or
bad faith -- ''Adibel Hinnawi v. Yacoub Fahmi Abuel Hudaei Faruqi AIR 1836 PC 139 (C). Such being the case even if the motor cars were not
worth Rs. 10000 it was not open to the defendant to adduce evidence regarding the alleged exaggerated price which was fixed for these motor
cars.
Having admitted the execution of the promissory notes and the receipt of the motor cars on faith of it and having also admitted that they were
pledged and later, on sold for Rs. 3825 we are of opinion that defendant has no case to put forward as defence to the suit. The order of the lower
Court holding that the alleged defence is a sham one is therefore correct and leave to defend had been rightly refused. The appeal fails and is
dismissed with costs.