What is Summary suit, grounds of defence and refusal of leave?

 In a summary suit under Order  CPC, the defendant has no right to defend as of course; he must first obtain leave to defend, and leave is refused only when the defence is sham, illusory, frivolous, or vexatious.student.

For a Judicial service interview, remember this formula: substantial defence or triable issue = leave granted; moonshine defence = leave refused.

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Bombay HC: summary suit as originally filed, prior to the commencement of the and as now transferred, being commercial dispute matter, the original procedure as provided under Order XXXVII shall be applicable to such summary suits

“Summary Suit” and “Summary Judgment”-

34. The conceptual position of “summary suit” as contemplated under Order XXXVII of CPC and its specific provisions are governed as per the original provisions of CPC. The amended CPC, in view of Section 16 of the Commercial Courts Act inserted the provision for a “summary judgment”, through Order XIII-A which is made applicable to the classes of Suits (commercial suits) which required to be decided by the Commercial Division/Court. It prescribes the procedure and stages for application for summary judgment. This also includes and provides the powers of a Commercial Judge to pass conditional order including for evidence for hearing of summary judgment. We are concerned with Order XIII-A, Rule 1(3) of CPC, whereby it is specifically provided “notwithstanding anything to the contrary, “an application” for summary judgment under this Order shall not be made in a Suit in respect of any commercial disputes that is originally filed as a summary suit under Order XXXVII.”. Therefore, once the summary suit as originally filed, prior to the commencement of the and as now transferred, being commercial dispute matter, the original procedure as provided under Order XXXVII shall be applicable to such summary suits. The parties are not entitled to prayer for summary judgment under XIII-A in view of the specific provision so referred above. This also means that the judgments and the issues so decided in summary suit shall for all purposes be governed by the CPC, even after such suits are transferred as commercial suits. The Commercial Division Judge is required to follow the original C.P.C. and is required to keep in mind the position in law revolving around all the facets of summary suits. The provisions of Section 13, therefore, is required to be interpreted and/or considered accordingly, when any decision is given by the Commercial Division/Court in such summary suit. 

 In the High Court of Bombay

(Before Anoop V. Mohta and G.S. Kulkarni, JJ.)

Hubtown Limited Vs IDBI Trusteeship Service Limited, 

Commercial Appeal No. 7 of 2016

Decided on October 24, 2016

     

Citation: 2016 SCC OnLine Bom 9019.

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Whether the court can infer that there was contract on the basis of exchange of Emails?

 I agree with the Plaintiff's Counsel submission relying on the case of Jyotsna Valia (supra) that a written contract need not always be a contract signed by both parties and may consist of correspondence exchanged between the parties without signature. In the present case the authenticity or veracity or truth of its contents of the emails exchanged between the parties are not in dispute. Thus the contentions of the Defendant with regard to no agreement between the parties to extend time upto 31st March 2020 is repelled as misconceived.{Para 30}

 IN THE HIGH COURT OF BOMBAY

Interim Application No. 655 of 2023 in Commercial Summary Suit No. 75 of 2021 and Summons for Judgment No. 65 of 2021 in Commercial Summary Suit No. 75 of 2021

Decided On: 20.09.2023

Play Games 24X7 Pvt. Ltd. Vs. Loran Leasing And Infotech Pvt. Ltd.

Hon'ble Judges/Coram:

Kamal Khata, J.

Citation: MANU/MH/3838/2023.

Read full Judgment here: Click here.

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Whether the court should grant unconditional leave to defend in Summary suit on the ground that defendant has raised a counter claim?

 I am in respectful agreement with the judgement of this Court in the case of First Rand Services Pvt. Ltd vs. Pantheon Infrastructure Ltd.2 which held that

"I find substance in the submission of Mr. Engineer. If the contention on behalf of the defendant that the defendant is entitled to an unconditional leave to defend the suit since the defendant has raised a counterclaim is accepted, the very object of providing summary procedure under Order XXXVII of the Code would be rendered otiose. It is one thing to contend that while seeking leave to defend the suit, the Defendant has raised a counterclaim which raises a substantive defence or at any rate triable issues. It is a completely different thing to assert that since the Defendant has raised a counter claim, irrespective of the nature and quality of the defence and/or counterclaim the Defendant is entitled to an unconditional leave to defend the suit. It all turns upon the quality of defence raised by the Defendant. The tests enunciated by a catena of decisions and reformulated in the case of Hubtown (supra) are required to be applied even in a case where the Defendant raises a counterclaim. An unconditional leave cannot be granted on the sole premise that the Defendant has raised a counterclaim."{Para 36}

 IN THE HIGH COURT OF BOMBAY

Interim Application No. 655 of 2023 in Commercial Summary Suit No. 75 of 2021 and Summons for Judgment No. 65 of 2021 in Commercial Summary Suit No. 75 of 2021

Decided On: 20.09.2023

Play Games 24X7 Pvt. Ltd. Vs. Loran Leasing And Infotech Pvt. Ltd.

Hon'ble Judges/Coram:

Kamal Khata, J.

Citation: MANU/MH/3838/2023.

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Whether court should grant unconditional leave to defend in summary suit if original documents are not produced?

 For the purpose of obtaining a summary judgment in terms of Order 37 of the Code, ordinarily the original documents must be produced. Original documents are not available. Appellant, therefore, is obligated to prove the loss of documents. Only because a suit has been entertained as a summary suit, the same by itself may not be a ground for passing of a judgment on mere asking. We have noticed the fact situation obtaining herein. The High Court was of the opinion that it is a case where unconditional leave should be granted. The question as to whether the defence of the respondents is 'moonshine' or not was not a matter which required consideration of the High Court at that stage. A decree could not have been granted on the basis of even photostat copies of the documents. [See Food Corporation of India v. Dena Bank, Indore and Anr. MANU/MP/0477/2003 : AIR2004MP158 ] Presumption in regard to a negotiable instrument or a bill of exchange in terms of Section 118 of the Act is also an evidence. It is true that a presumption can be raised that a bill of exchange was correctly stamped as provided for under Clause (f) of Sub-section (2) of Section 128 of the Code but a decree is to be passed by a court of law upon application of mind.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 573 of 2008 (Arising out of SLP (Civil) No. 5629 of 2007)

Decided On: 22.01.2008

Neebha Kapoor

Vs.

 Jayantilal Khandwala and Ors.

Hon'ble Judges/Coram:

S.B. Sinha and V.S. Sirpurkar, JJ.

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When court should grant unconditional leave to defend in summary suit?

 Learned counsel for the petitioner submits that even if it is presumed that the petitioner has admitted else where that sum of Rs. 2,30,000/- is due that does not imply that learned trial Judge could ask the petitioner to deposit a sum of Rs. 2,50,000/- as a condition for granting leave to defend. He submits that question as to when defendant could be ordered to deposit amount in the Court has been considered by the Hon'ble Supreme Court in Sunil Enterprises And Another Vs. SBI Commercial & International Bank Ltd. Reported in (1998)5 Supreme Court Cases 354 and the law on the point has been summarized by the Supreme Court in para 4 of its judgment in the following words:

"The propositions laid down in these decisions may be summed up as follows:

[a] If the defendant satisfies 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 mode 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 to 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."

He submitted that after having held that the defendant has raised a triable issue and there is fair dispute to be tried, it was not open to the learned Judge to impose condition of depositing sum of Rs.

2,50,000/-. He submitted that Clause [b] of the aforesaid observation by the Supreme Court would show that if the defendant raises a triable issue indicating that he has fair, bona fide or reasonable defence, although not a possibly good defendant, the defendant is entitled to unconditional leave to defend.

6] Learned counsel for the respondent submitted that this judgment has been considered by the Apex Court subsequently in SIFY Ltd. Vs. First Flight Couriers Ltd. 2008(4) Maharashtra Law Journal 620. He submitted that the order passed by the learned trial Judge granting leave to defend is a discretionary order and therefore ordinarily higher forum should not interfere in exercise of said discretion. He submitted that in the face of observations of the Court that some of Rs. 2,30,000/- was due from the petitioner there is absolutely no warrant for interfering in the exercise of the discretion by the trial Court to direct the petitioner to deposit sum of Rs. 2,50,000/-.

7] I have carefully considered both the submissions. There can be no doubt that writ court need not interfer in an order passed by the trial Judge in exercise of its discretion. However, if the discretion is shown to have been exercised disregarding law laid down by the Supreme Court and would result in virtually shutting out the defence it would be necessary to interfere, and therefore, since learned trial judge could not have imposed a condition asking the petitioner to deposit a sum of Rs. 2,50,000/- in the light of the observations by the Supreme Court quoted above, the order cannot be sustained. 

Bombay High Court

Smita w/o Yashwant Lipte vs Suryakant Sadashiv Arade 

on 9 March, 2010

Bench: R. C. Chavan

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When defendant is entitled to get unconditional leave to defend in summary suit based on promissory note?

 After service of writ of summons, the defendant No. 1 filed appearance and on receipt of the summons for Judgment has filed an affidavit in reply dated 13th June, 2003. In paragraph No. 2 of the affidavit in reply, the defendant No. 1 who is the son of the deceased has specifically stated that the deceased Fateh Bahadur Shrivastava had never signed the promissory notes on which the plaintiff is relying her claim. In the affidavit, the defendant has further denied that deceased Fateh Bahadur Shrivastava took the loan as alleged by the plaintiff. In view of the denial of the signature on the promissory notes, the plaintiff Would be required to prove that the execution of promissory notes was by late Fateh Bahadur Shrivastava. The learned counsel for the plaintiff contends that under Section 118 of the Negotiable Instruments Act, there ts a presumption of consideration and therefore, the burden of proof that the deceased had not taken the loan was on the defendant No. 1 Which he had got discharged and therefore, no leave to defendant should be granted. Under Section 118, there is no presumption about the execution of a Negotiable Instrument by a person. The execution must be proved in accordance with law. Only after the execution of Negotiable Instrument is proved, then the presumption of consideration would arise. In the present case, there is not only denial of the receipt of consideration but even the denial of the execution of the promissory notes. Therefore, the contention of the learned counsel for the plaintiff cannot be accepted. As the plaintiff would be required to prove the signatures on the promissory notes, triable issue arise. The defendant No. 1 would therefore, have to be granted unconditional leave to defend the suit.

Bombay High Court

Smt. Sheel Arora vs Sanjay Fetah Bahadur Srivastava on 19 November, 2003

Equivalent citations: AIR 2004 Bom 99

Bench: D Karnik

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Whether admissibility of documents has to be seen at time of filing of summary suit?

The defendant has also taken up a contention that the said writing was not admissible as it was not properly stamped. The learned Judge takes a note of this contention, but he observe that this question can be gone into at a later stage at the final hearing of the suit. It is here, he makes a fundamental error.

5. What is to be noted is that a Summary Suit is a suit on a document. Therefore, if the document itself is not admissible or cannot be acted upon, for want of proper stamp, no Summary Suit can lie. There is a basic different between an ordinary suit in which a document is to be tendered in evidence, and a Summary Suit which is a suit on the document itself. In all ordinary suits, documents may be tendered and the question of admissibility of documents would then arise and the Court will then decide the question according to the Stamp Act. But in a summary suit at the time of the filing of the suit, the document itself upon for want of requisite stamp, the suit is not maintainable as a summary Suit. That is why in a summary suit, if there is no defence to the suit, on production of the document itself, a decree is passed without recording any evidence as such. But the document must be such as can be acted upon.

6. Under Order 37, Rule 1 of the Code of Civil Procedure, summary Suits can be filed on bills of exchange, hundies and promissory notes and where the debt sought to be recovered is a liquidated amount, if the same arises on a written contract, or on an enactment or on a guarantee. In the case of negotiable instrument there is a statutory presumption that the same is for consideration and there is no question of any further proof in that behalf. Similarly in the case of a debt if the amount is a liquidated amount, the written contract itself is the proof of the same. On production of these documents, if the documents are otherewise valid as can be acted upon, and if there is no defence, the decree will follow as a matter of course. But if the document suffers from any defect such as want of requisite stamp, or because of any other inherent infraction, evidence will have to be led on the original consideration. In that case, it ceases to be a summary suit. In the present case, the document, though termed as an undertaking, was, in fact, a contract or a bond and in either case, it attracted the stamp duty, and having regard to section 34 of the Bombay Stamp Act, 1958, the Court could not have acted upon the same.

7. On the other hand, if this document is to be treated as a mere writing I am afraid, no summary suit lies on a mere writing, even if the amount mentioned is an agreed amount. Summary suit being a special suit where the right to defend depends on leave being granted, that too very often on terms such as deposit of a part or whole of the amount, will have to be construed strictly, and the cause of action must arise on the items mentioned under Order 37, Rule 1 of the Code of Civil Procedure. No extension of the items, not falling within the scope of the said provision, is legally permissible.

8. Even on merits, Prima facie, trible issues do arise in the present case and unconditional leave to defend ought to have been granted.

Bombay High Court

Yogendra Patwardhan vs Khandelwal Hermann Electronics ... on 16 November, 1988

Equivalent citations: 1989 (1) BomCR 96, (1988) 90 BOMLR 560, 1989 MhLJ 310

Bench: H Suresh

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When deft is entitled to get unconditional leave to defend in summary suit?

Apart from these, the substantial revelations of the defendant (appellant) in the affidavit coupled with the views expressed by the Division Bench of the High Court makes it clear that there are certain triable issues for adjudication and the defendant/appellant is entitled to defend the Suit. The appellate side of the High Court ought to have taken into consideration the factual matrix of the case before recording its finding. Taking into consideration the totality of the facts and circumstances of the case, we are of the opinion that the defendant/appellant has made out a prima facie case of triable issues in the Suit which needs to be adjudicated. Therefore, the defendant is entitled to grant of unconditional leave to defend the Suit.

Supreme Court of India

State Bank Of Hyderabad vs Rabo Bank on 1 October, 2015

Bench: Ranjan Gogoi, N.V. Ramana

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