DETAILED NOTE ON SUMMARY SUITS UNDER CODE OF CIVIL PROCEDURE

Introduction

Summary suit or summary procedure is provided under order XXXVII of the Code of Civil Procedure, 1908. The summary suit is a unique legal procedure used for enforcing a right in an efficacious manner as the courts pass judgment without hearing the defence.

While this prima facie would appear to be violative of the cardinal principle of natural justice, Audi Alteram Partem, nobody should be condemned unheard, this procedure is only used in cases where the defendant has no defence and is applicable to only limited subject matters.

Its object is to summaries the procedure of suits in case the defendant is not having any defence.

A summary suit can be instituted in High Courts, City Civil Courts, Courts of Small Causes and any other court notified by the High Court. High Courts can restrict, enlarge or vary the categories of suits to be brought under this order.Rule 1(1), Order XXXVII, Code of Civil Procedure, 1908

This article also analyzes and highlights the Salient features of summary suits by juxtaposing and comparing summary suits with ordinary suits. This would help one appreciate the unique position summary suits hold in the civil justice system and the problems summary suits intend to redress.

WHAT IS ORDER 37 SUIT?

Civil Procedure Code Order 37 provides for the summary procedure. The provision has been made keeping in view certain suits, in order to prevent the unreasonable obstruction laid down by the defendant, who has no defence. Unlike other civil suits, the trial in summary suits begins after the court grants leave to the defendant to contest the suit. The court dealing with summary suits can pass the judgment in the favour of the plaintiff if (1) the defendant has not applied for leave to defend or if such application has been made but refused, or (2) the defendant who is permitted to defend fails to comply with the conditions on which the leave to defend was granted.

NATURE OF ORDER 37 CPC, 1908

A summary suit under order 37 of the Code of Civil Procedure is a legal procedure used for enforcing a right that takes effect faster than ordinary suits as unlike in ordinary suits the courts do not hear the defence. However it does not violate the principles of Audi Alteram Partem, nobody should be condemned unheard as it is used only in certain limited cases (elaborated below under scope) where the defendant has no tenable defence, which is a complex question of law and fact and has been elaborately analyzed subsequently.

 

THE OBJECT OF ORDER 37 CPC,1908

The object underlying the summary procedure is to ensure an expeditious hearing and disposal of the suit and to prevent unreasonable obstruction by the defendant who has no defence or a frivolous and vexatious defence Kocharabhai ishwarbhai Patel v. Gopal Bhai C Patel AIR 1973 Gujrat 29 (31) and to assist expeditious disposal of cases.Bankyag B G Agarawal v. Bhagwanti Mehji 2001 (1) Bom LR 823 (DB)

The Gujarat High Court in outlining the object of summary suits opined that the sheer purpose of enacting Summary Suits is to give impetus to commerce and industry by inspiring confidence in the commercial population that their causes in respect of money claims of liquidating amounts (ascertained amount) would be expeditiously decided and their claims will not hang on for years blocking their money for a long period.

IN ORDER 37, CPC ( SUMMARY SUITS)

Civil litigation, especially recovery suits generally termed to be a long-drawn battle and regarded as something best avoided, is not so. The general belief that by filing a recovery Suit against a Debtor will go on for years at large, is not so if one knows the real scope of Order 37 of the Civil Procedure Code, 1908.

Order 37 CPC is one of the best provisions in the hands of a proposed Plaintiff, wanting to institute a Civil Suit. Broadly it states as under:
Rule 1, Sub-Rule 2 makes it applicable to all suits upon bills of exchange, hundies and promissory notes or the ones in which a Plaintiff seeks only to recover a debt or liquidated demand in money payable on a written contract, an enactment, where the sum to be recovered is a fixed sum of money or in nature of any debt except penalty, a guarantee – in respect of a debt or liquidated demand.

Rule 2 requires an Order 37 Suit to contain among others, a specific averment that the Suit is filed under this Order and no relief which does not fall within the ambit of this Rule is claimed.

Under Order 37, there are two stages of getting the Suit decreed. One is at the stage of Rule 2(3) and the other is at the stage of Rule 2(6).

Rule 2(3) states the procedure for appearance of Defendant which is within 10 days from the service of the summons on him. After entering appearance, the Plaintiff serves on Defendant summons for judgment within ten days from the date of service supported by an Affidavit; verifying the cause of action, amount claimed, and that in his belief there is no defence to the suit.

Rule 2(5) further states that the Defendant may within 10 days from service of such summons for judgment by Affidavit or otherwise disclose such facts as may be deemed sufficient to entitle him to defend, apply for leave to defend and it may be granted to him unconditionally or upon such terms, as may appear to the Court to be just. Further, the proviso indicates that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed do not indicate a substantial defence or that the defence is frivolous or vexatious.

Rule 2(6) states that in case the Defendant does not apply for a leave to defend, (a) the Plaintiff shall be entitled to judgment immediately or (b) the Court may direct the Defendant to give such security as it may deem fit. Sub-clause 7 states that in case sufficient cause is shown, the delay in entering an appearance or in applying for leave to defend the Suit may also be excused.

As explained above that the object of Summary suits is to aid commercial transactions by a swift redressal mechanism these suits can be instituted only in case of certain specified documents.

The summary suit has a faster remedy than the ordinary suit. In Neebha Kapoor‘s case, AIR 2008 SC 1117 court observed that justice hurried is justice buried. If the leave to defend is granted then the summary suit also follows the same procedure as the suit is instituted in an ordinary manner. Ordinary suit proceedings have a wider scope for setting aside the ex parte decree, but in the summary suit, it has a very narrow scope for setting aside the ex parte decree.

APPLICABILITY AND EXTENT

The Provisions of Order XXXVII of CPC applies to the following class of courts:

• High Courts,
• City Civil Courts,
•  Courts of Small Causes
• Other Courts.

Suits where the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising-

i) On a written contract, or

ii) On an enactment, where the sum sought to be recovered is a fixed sum of money or like a debt other than a penalty; or

iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.

CLASSES OF SUITS WHERE THE SUMMARY PROCEDURE IS APPLIED

Summary suits can be instituted in case of certain specified documents such as a bill of exchange, hundies, and promissory notes. Summary procedure is applicable to recover a debt or liquidated demand in money arising on a written contract, an enactment or on a guarantee.

WHAT IS A BILL OF EXCHANGE ?

A bill of exchange is a written unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum either immediately or on a fixed date for payment of goods and/or services received. [4] If the sum is to be paid immediately it is called a sight bill. Term bill is the bill of exchange where the sum is to be paid on a fixed date.

Hundies

A Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order. It is a financial instrument that evolved in the Indian sub-continent and is used for trade and credit purposes.

Promissory notes

A promissory note contains an unconditional promise to pay a certain sum to the order of a specifically named person or to bearer—that is, to any individual presenting the note. A promissory note can be either payable on demand or at a specific time.

Liquidated demand in money

Liquidated demand is a demand for a fixed sum e.g. a debt of Rs. 50. It is distinguished from a claim of unliquidated damages, which is a subject of the discretionary assessment by the court.

Jurisdiction of Summary suits

Suits can be proposed at the following places

a) Where the Defendant lives

b) Where the defendant works for personal gain

c) The place where cause of action arises wholly or partly

Based on the pecuniary jurisdiction, the suit can be proposed in the High Court or District Court.

Time Limitation to initiate a Summary Suit

The suit can be proposed within 3 years from the date of cause of action. The period of limitation cannot be neglected.

Types of interpretations to be applied

As the purpose of summary suits is to act as a welfare mechanism to achieve justice in an expedient manner, the language under Or.37 is to be interpreted liberally, which has been reflected in numerous judgments.

An illustrative example would be the phrase written contracts that have been given the widest possible interpretation as even Invoices/Bills are written contracts within the contemplation of Order 37 KIG Systel Ltd v.  Fujitsu ICIM Ltd.

Institution of summary suits

In order to institute a suit under summary procedure, the nature of suit must be among the following classes:-Suits upon a bill of exchange, hundies, and promissory notes

Suits for recovering a debt or liquidated demand in money, with or without interest, arising:–

1. On a written contract, or
2. On an enactment (the recoverable sum should be fixed in money or it should be in the nature of a debt other than a penalty), Or
3. On a guarantee (here the claim should be in respect of a debt or liquidated demand only)

A summary suit is instituted by presenting a plaint in an appropriate civil court.

Institution of Suits and Essentials of Plaint:

Order 37 is a summary procedure relying on the fact that there is an unambiguous written admission of debt. The Order applies to the following class of suits:

• Suits upon bills of exchange, hundies, and promissory notes
• Suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest arising
  • on a written contract, or
  • on an enactment wherein the amount to be recovered is a fixed sum of money, or a debt other than a penalty, or
  • guarantee, where the claim against the principal is in respect of a debtor for liquidated demand only.
  • suit for recovery of receivables instituted by any assignee of a receivable

A suit is instituted by way of a plaint. Plaint is the description of facts of the case and the exact amount being claimed along with any interest. In the case of a summary suit, it should be specifically averred that the suit has been filed under Order 37, that no other claim has been made other than what lies within the ambit of order 37.

Documents:
A plaint is accompanied by the supporting documents viz,

• written contract.
• particulars of claim; and
• correspondences, if any

This plaint is required to be proved by way of an accompanying affidavit and an appropriate verification of the facts.

Court fee: 
Court fee as per the schedule is required to be paid by plaintiff. A suit shall be returned in case the same is not filed along with the court fee.
Once the said plaint is filed in court, the same shall be numbered by the  court.

 

Contents of plaint for summary procedure

Apart from facts about the cause of action, the plaint must contain a specific affirmation that the suit is filed under this order. It should also contain that no such relief has been claimed which does not fall under the ambit of rule XXXVII of the CPC. In the title of the suit, following inscription must be there under the number of the suit:-

“(Under Order XXXVII of the Code of Civil Procedure, 1908)”  (Rule 2(1), Order XXXVII, Code of Civil Procedure, 1908)

Procedures after institution of Summary suit

Under summary procedures, the defendant has to get the leave to defend from the court. A burden is placed upon the defendant to disclose the facts sufficient to entitle him to defend in the application for leave to defend.

Detailed procedures

• After the institution of a summary suit, the defendant is required to be served with a copy of the plaint and summons in the prescribed form.  
• Within 10 days of service of summons, the defendant has to enter an appearance.
• If the defendant enters an appearance, the plaintiff shall serve on the defendant a summons for judgment.
• Within 10 days of service of such summons, the defendant has to apply for leave to defend the suit.
• Leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just.
• If the defendant has not applied for leave to defend, or if such an application has been made and refused, the plaintiff becomes entitled to the judgment forthwith.
• If the conditions on which leave was granted are not complied with by the defendant then also the plaintiff becomes entitled to judgment forthwith.
• Sub-rule (7) of Order 37 provides that save as provided by that order the procedure in summary suits shall be the same as the procedure in suits instituted in an ordinary manner. Rule 3 & Rule 7, Order XXXVII, Code of Civil Procedure, 1908

Can a summary suit be tried after the institution of an ordinary suit on the same cause of action?

According to section 10 of the CPC, a court cannot proceed with the trial of a suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties. It is called the principle of res sub-judice. The provision contained in the section is mandatory and no discretion is left to the court.Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal AIR 1962 SC 527

However, the word trial, in this case, has not been used in its widest sense. The concept of res sub-judice is not applicable to subsequently instituted summary suits.

The Court or the Judge dealing with the summary suit can proceed up to the stage of hearing the summons for judgment. Judgment can also be passed in favor of the plaintiff if:-

(a) The defendant has not applied for leave to defend or if such application has been made and refused, or,

(b) The defendant who is permitted to defend fails to comply with the conditions on which leave to defend is granted.Indian Bank v. Maharashtra State Co-operative

When a leave to defend is granted

The Hon’ble Court has discussed the circumstances under which a leave to defend is sanctioned in summary suits in the case of Kiranmoyee Dassi v. J. Chatterje.

The following principles are applicable in the matter of grant or refusal of leave to defend in summary suits:

• If the defendant satisfies the court that he has a substantial defence, the defendant is entitled to an unconditional leave of appeal.

(b) If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the defendant is ordinarily entitled to unconditional leave to defend.

(c) Even if the defendant raises triable issues, if a doubt is left with trial judge about the defendant’s good faith, conditional leave to defend is granted.

(d) If the defendant raises a defence which is plausible but improbable, the trial judge may grant conditional leave to defend with conditions as to time or mode of trial, as well as payment into court, or furnishing security.

(e) If the defendant has no substantial defence and raises no genuine triable issue, then no leave to defend is granted.

(f) Where part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.IDBI Trusteeship Services Ltd. Vs. Hubtown

Also in the case of Milkhiram (India) Private Ltd. vs. Chamanlal Bros ,it was analyzed that the discretion of the court to grant unconditional leave to defend might be questioned, when the defense is deceitful.

Decree in summary suits

The plaintiff is entitled to a decree of a sum not exceeding the sum mentioned in plaint, together with interest and cost in the following conditions:-

1. If the defendant does not enter an appearance (ex parte decree)
2. If the defendant has not applied for leave to defend
3. If the defendant has applied for leave to defend but it is refused
4. If the leave to defend is granted then the suit proceeds as an ordinary suit and decree is granted as per the CPC.Rule 3(6) & Rule 7, Order XXXVII, Code of Civil Procedure, 1908

Setting aside decree in summary suits

In the CPC, rule 13 of order IX deals with setting aside the ex parte decree. The defendant has to satisfy the court that the summons was not duly served or he was prevented by any sufficient cause from appearing in the hearing.

Rule 7 of Order 37 says that except as provided in the order, the procedure in suits under Order 37 shall be the same as the procedure in suits instituted in an ordinary manner. Rule 4 of Order 37 specifically provides for setting aside the decree, therefore, provisions of Rule 13 of Order 9 will not apply to a suit filed under Order 37.

Under rule 4 of order XXXVII, the court has the power to set aside the ex parte decree passed in summary suit. The court is empowered to stay the execution of such a decree. Under this rule, an application is made either because the defendant did not appear in response to summons and limitation expired, or having appeared, did not apply for leave to defend the suit in the prescribed period. To set aside ex parte decree, the defendant has not only to show special circumstances which prevented him from appearing but also facts which would entitle him to leave to defend.[14]

Difference between a summary suit and original suit

Ordinary suits as well as summary suits are initiated by the institution of plaint. While writing the cause title for ordinary suit, it is filed under section 26, Order VI Rule 1 of C.P.C, but for Summary suit, it is filed under Order XXXVII of C.P.C.

The major difference between ordinary suits and summary suits is that in the later the defendant will get a chance to defend himself only if leave to defend is granted.

Unlike ordinary suits, summary suits are restricted to matters related to bills of exchange, promissory notes and contracts, enactments, guarantees of specified nature. Interestingly Res Judicata is not applicable to summary suits, Pandurang Ramchandra Mandlik v. Shantibai Ramchandra Ghatge, 1989 Supp (2) SC 2240 i.e. summary suits can be filed on the matter directly and substantially in issue in a previous ordinary suit.

Res sub judice is applicable to Ordinary suits only. It is not applicable to Summary suit under order XXXVII. The word trial in section 10, in the context of summary suit, cannot be interpreted to mean the entire proceedings starting with institution of suit by loading a plaint. The concept of trial as contained in section 10 of C.P.C is applicable only to a regular/ordinary suit and not to a summary suit filed under order XXXVII of C.P.C. If section 10 is made applicable to summary suits, the very object of making a separate provision for summary suits will be frustrated Indian Bank v. Maharashtra State Cooperative Marketing Federation Ltd., (1998) 5 SCC 69

In summary suits in the case of non-appearance of the defendant, a decree in favour of the plaintiff is passed easily, whilst in ordinary suits usually, multiple summonses are served and only then an ex parte order is passed.

Therefore, in Summary, suits setting aside an ex parte decree is stricter and more stringent and special circumstances for non-appearance need to be set out, while in ordinary suits only sufficient cause needs to be shown. The difference between special circumstances and sufficient cause has been elucidated below.

In a summary suit, the defendant must prove his fact within 10 Days. In an ordinary suit time limit is 30 Days for filing a written statement.

Special circumstances v. sufficient cause

The two terms have been lucidly juxtaposed in Karumili Bharathi v. Prichikala Venkatchalam .. The reasons offered by the defendant to explain the special circumstances should be such that he had no possibility of appearing before the Court on a relevant day.

For instance, there was a strike and all the buses were withdrawn and there was no other mode of transport. This may constitute “special circumstances”. But if the defendant were to plead that he missed the bus he wanted to board and consequently he could not appear before the Court.

It may constitute a ‘sufficient cause’, but not a ‘special circumstance’. Thus a ‘special circumstance’ would take with it a ’cause’ or ‘reason’, which prevents a person in such a way that it is almost impossible for him to attend the Court or to perform certain acts which he is required to do.

Thus the ‘reason’ or ’cause’ found in “special circumstances” is stricter or more stringent than in “sufficient cause” and depends on the facts of each case.

HIGH COURT AMENDMENT

Order XXXVII-A

Interlocutory Applications:

(1) An interlocutory application means an application to the Court in any suit, appeal or proceeding already instituted in such Court other than an application for execution of decree or order or for review of judgment or for leave to appeal.

(2) Except where otherwise prescribed by rules or otherwise provided by any law for the time being in force, an interlocutory application shall state only the order prayed for and shall not contain any statement of facts or argumentative matter. Every application in contravention of this rule shall be returned for amendment or rejected.

(3) Every interlocutory application shall be supported by an affidavit. Where, however, the facts on which the application is based appear from the records in Court or relate to any act or conduct of the applicant’s pleader himself, the Court may permit a memorandum of facts signed by the applicant’s pleader to be filed instead of an affidavit.

(4) Any fact required to be proved upon an interlocutory proceeding shall, unless otherwise prescribed by rule, or ordered by Court be proved by affidavit, but the Judge may in any case direct evidence to be given orally, and thereupon the evidence shall be recorded and exhibits m ed in the same manner as in a suit.”

analyze the law laid down by the Supreme Court on the issue.

The crux of the various judgments on Order 37 has been summarized in Sunil Enterprises and Anr. v. SBI Commercial and International Bank Ltd.  

wherein the position was summarized as under:
(a) If the defendant satisfied the Court that he has a good defence to the claim on merits, the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence, although not a possibly good defence, the defendant is entitled to unconditional leave to defend.

c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is, if the affidavit discloses that at the trial he may be able to establish a defence to the plaintiff’s claim, the Court may impose conditions at the time of granting leave to defend the conditions being as to time of trial or made of trial but not as to payment into Court or furnishing security.
(d) If the defendant has no defence, or if the defence is sham or illusory or practically moonshine, the defendant is not entitled to leave defend.
(e) If the defendant has no defence or the defence is illusory or sham or practically moonshine, the Court may show mercy to the defendant by enabling him to try to prove a defence but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into Court or otherwise secured.

A three judge bench said in Precision Steel & Engg. Works vs Prem Deva Niranjan Deva Tayal said that mere disclosure of facts, not a substantial defence is the sine qua non. What is a substantial defence depends upon facts and circumstances of each case.

In Southern Sales and Services and Ors. v. Sauermilch Design and Handels GMBH , it has been held that “Unconditional leave to defend a suit shall not be granted unless the amount as admitted to be due by the Defendant is deposited in Court.”

Generally, the Courts are usually reluctant to grant leave to defend especially an unconditional one. This is perhaps because in an Order 37 suit, balance of convenience is usually in favor of Plaintiff and the Courts are also aware of the delay caused in deciding a Civil Suit which takes about three to four years, to be finally decided with an option of Appeal to a higher fora still open.

In Neebha Kapoor v Jayantilal Khandwala, Supreme Court said the underlying public policy behind Order 37 is expeditious disposal of suits of commercial nature. It provides for such disposal as expeditiously as possible by prescribing time frame therefore. Where, however, applicability of Order 37 of the Code itself is in question which appears to be the principal reason behind the impugned judgment, in our opinion, grant of leave may be permissible. The court before passing a decree was entitled to take into consideration the consequences therefore.

Analyzing what constitutes no defence

As mentioned above, to proceed with summary suits the defendant must have no tenable defence.

What constitutes conditions when a leave to defend must be granted has been dealt with recently(2016) by the Supreme court in IDBI Trusteeship Services Ltd v. Hubtown Ltd SCC OnLine SC 1274 held that the position in law with respect to granting of leave to defend a summary suit is that the trial Judge is vested with a discretion which has to result in justice being done on the facts of each case.

The Court explained that at one end of the spectrum is unconditional leave to defend, granted in all cases which present a substantial defence. However, it must be borne in mind that on the other end of the spectrum are frivolous or vexatious defences, which should result in a refusal of leave to defend.

In between these two extremes are various kinds of defences raised which yield conditional leave to defend in most cases. The judgement lays out principles that have been summarized below.

• If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign the judgment, and the defendant is ordinarily entitled to unconditional leave to defend;

This reiterates the position laid out inPrecision Steel & Engg. Works vs Prem Deva Niranjan Deva Tayal 2016 1982 Air 1518  where it was held that mere disclosure of facts, not a substantial defence is the sine qua non. What is a substantial defence depends upon facts and circumstances of each case.

• Even if the defendant raises triable issues, if a doubt is left with the trial judge about the defendant’s good faith or the genuineness of the triable issues, or if they are plausible but not probable, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security.

Moreover, recently in Uma Shankar Kamal Narain v. MD overseas limited 2007 4 SCC 133, the Supreme court upheld previous judgements like Southern Sales and Sevices v. Sauermilch Design and Handles GMBH1982 AIR 1518 , and the Sunil Enterprise v. SBI(1998) 5 SCC 354, and reiterated the principles to be adhered to in the case of a leave to defend summary suit relating to the dishonoured cheques.

It has been held that “Unconditional leave to defend a suit shall not be granted unless the amount as admitted to be due by the Defendant is deposited in Court.”

Why summary suits

The summary procedure prevents unreasonable obstructions by the defendant who has no defence. It assists expeditious disposal of cases. Unless the defendant is able to demonstrate that he has a substantial defence in his case, the plaintiff is entitled to a judgment forthwith. In the event of ex parte decree in summary suit, the defendant is required to show more strict and stringent causes. This ensures that ex parte decree is not set aside in an ordinary manner.

The summary procedure is generally resorted to in a class of cases where speedy decisions are desirable in the interest of commercial transactions. Summary suits are easier to establish for the plaintiff and tougher for the defendant to defend than ordinary suits. By and large, the summary procedure ensures that the defendant does not prolong the litigation and prevents the plaintiff from obtaining a decree by raising untenable and frivolous defences.