SUMMARY SUIT UNDER ORDER 37 OF THE CPC, 1908

SUMMARY SUIT UNDER ORDER 37 OF THE CPC, 1908

This article discusses the law and process behind filing of summary suits under Order XXXVII of the Civil Procedure Code of India.

Author - Jahnvi Shah

A Summary Suit is a unique fast track mechanism for effectively enforcing a legal right since in these suits the Courts render decisions without hearing from the defending party. On the first look, it appears that it goes against the principle of natural justice of Audi Alteram Partem (“let the other side be heard as well”) but this process is only used in specific situations where the defendant has no tenable defense. The Civil Procedure Code, 1908 (“the CPC”) contains a provision for summary judgments. The primary reason to incorporate the procedure for summary suits in the legal system is to help matters be resolved quickly and to eliminate unjustified obstruction by the defendant who has no defense.

 

In general, civil litigation is a prolonged conflict that lasts for years. As a result, Order XXXVII of the CPC (“Order 37”) is one of the most important provisions at hand. This provision prohibits the defendant from filing unjustifiable and frivolous defenses in a class of cases where prompt decisions are preferred in the interest of commercial transactions, so unduly prolonging the litigation and preventing the plaintiff from receiving a decree. To elaborate the process of instituting a summary suit, the following points are necessary:

A. Applicability and extent
The provisions of Order 37 are applicable to all High Courts, City Civil Courts, Courts of Small Causes and other Courts notified by the High Court. They apply Order 37 to suits based on:
  1. Negotiable Instruments such as promissory notes, bills of exchange, and hundies; or
  2. A debt or liquidated demand in money payable by the defendant, with or without interest, arising from
      a.  a written contract,
      b. an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty, or
      c. a guarantee, where the claim against the principal is in respect of a debtor liquidated demand.
B. Jurisdiction
When filing a suit in the courts, the following jurisdiction of the court must be kept in mind:
  • Pecuniary   
    The determination of  pecuniary jurisdiction is on the suit’s value. A suit can be brought in either the High Court or the District Court depending on the pecuniary jurisdiction as defined by each District Court or the High Court respectively.
  1. Territorial 
    Suits may be filed in any jurisdiction where the defendant resides, conducts business, or engages in gainful employment, or where the cause of action partially or wholly originates.
C. Limitation           

As per the Limitation Act, 1963, the time limit for initiating legal proceedings has been defined. In general, for a civil suit arising out of a bill/tax invoice or any agreement creating the debt liability can be brought within 3 (three) years of the date of the issue of the invoice or the date of agreement. The limitation period is not flexible and must be strictly adhered to.

 

D. Discretionary Power

The discretionary authority granted to the Court to try summary suits is expected to be used judiciously, minimally and in accordance with established principles of natural justice. Wherever the defending party brings forward a point of issue, a leave to present his case should be given without condition. If this process is not followed by the judiciary diligently, the leave could end up being illusory. It is important to ensure that the object of the Rule of Expeditious Disposal of commercial cases is not thwarted wherein the Courts are required to dispose of commercials disputes within a prescribed time period. But it must also be made sure that legitimate disputes with a chance of being resolved are not excluded by excessively strict deposit requirements.

E. Institution of Summary Suit

For initiating a summary suit under Order 37, a plaint must be filed in the Civil Court of appropriate jurisdiction as discussed above. The court shall then ensure that the defendant receives a copy of the plaint along with the summons. This is done in accordance with the rules and regulations of the specific court and in the format as specified in the CPC. Order 37 lays down the procedure for summary suit as follows:

  • According to Rule 2 of Order 37, the defendant may apply for leave of the court to give an appearance and present his defense. The defendant is given a time period of 10 (ten) days from the date of serving of the summons to apply for leave. Unless he enters an appearance, the defendant is not permitted to respond to a summary suit. Where the defendant has not applied for leave, the plaintiff will be entitled to a decree which will be executed forthwith.
  • Rule 3 of Order 37 outlines the method of serving of summons to the defending party. Within 10 (ten) days of receiving the summons, the defendant must seek for a leave to defend. This leave will only be granted if the affidavit submitted by the defendant contains information that may be regarded sufficient to provide him the right to defend. The defendant may be given such leave either unconditionally or under conditions that the Court or judge may deem just.

If the defendant does not request for a leave to defend himself at the hearing for the Summons for Judgment or if such leave to defend is denied, the plaintiff is entitled to a decree right away. If the defendant provides adequate justification, the court or judge may grant a “condonation of delay” in entering an appearance or in applying for leave to defend the case.

While discussing the discretionary power of the Court in granting a leave to defend, a three-judge bench in the matter of Precision Steel & Engg. Works v. Prem Deva Niranjan Deva Tayal, AIR 1982 SC 1518, laid down that the sine qua non is the mere disclosure of the facts, not a significant defence. The facts and circumstances of each case will determine what constitutes a meaningful defence. The court may, in exceptional cases, set aside the decree and stay the execution, to give the defendant permission to appear and defend the case. However, the inherent power of the CPC, found in section 151, cannot be used to overturn such rulings.

Hence, it is impossible to establish a hard and fast rule for when leave to defend may be given. Each case must be determined based on its unique facts and circumstances, and discretion must be used judiciously and in accordance with the principles of natural justice that form the foundations of our legal system.

F. Test

The test whether leave to defend should be granted or not is to see whether the defence raises a genuine, authentic and bona fide dispute and raises a triable issue or not. A leave to defend should not be denied if the Court is convinced that the defendant has introduced a litigable matter or that a legitimate disagreement has emerged. It would be almost hazardous to make a blanket rule on this subject before collection of evidence. The exercise of discretion to grant unconditional leave can only be refused in situations when the defence is blatantly dishonest or so irrational that it cannot reasonably be expected to succeed.

In Karumilli Bharathi v. Prichikala, 1999 (3) ALD 366, in the matter of setting aside of a decree by the Court or to grant the defendant leave to appear, the difference between special circumstance and sufficient cause was laid down. According to the Rule 4 of the Order 37, after decree has been passed by the Court, it may, under special circumstances, set aside the decree, or stay or set-aside execution. It may, also, give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit.

Hence, in a summary suit under Order 37, if the defendant successfully satisfies the Court that he was prevented by a ‘special circumstance’ to present his defenses, the Court may set aside the decree passed against him on such terms as to costs etc. In any other suit, the defendant must satisfy the Court that he was prevented by a ‘sufficient cause’ to present his defenses and the Court may set aside the decree passed against him on such terms as to costs etc. Thus, it is imperative to note that in summary suits setting aside an ex parte decree is stricter and more stringent than ordinary suits.

Order 37 proves to be a fuel that powers the mechanism of fast disposal of suits and helps in lowering the burden of the Courts having civil jurisdiction. It further acts as a catalyst in expeditious disposal of commercial disputes where time is an essential factor.

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