Site icon Legal Vidhiya

WHAT IS SUMMARY PROCEDURE

Admin
Advertisements
Spread the love

This article is written by Ab Wahid Lone of 10th Semester of Central University Of Kashmir, an intern under Legal Vidhiya

Abstract

A Summary suit or summary procedure is provided under Order 37 of the Code of Civil Procedure, 1908. This unique legal procedure is used for enforcing a right efficiently, as the courts pass judgment without hearing the defence. Though this appears to be a violation of the basic principle of natural justice, ‘audi alteram partem’, which states that nobody should be condemned unheard. However, this procedure is only used in cases where the defendant has no defence and applies only to limited subject matters. Therefore, an interesting question arises: What constitutes having no defence? Answering this question is important to the practical application of Order 37, and this paper analyses this topic by considering a catena of recent judgments and provisions under this Order. Additionally, this paper compares summary suits with ordinary suits and highlights the salient features of summary suits. This will clarify summary suits’ role in civil justice and its purpose to the readers.

Keywords: Summary suit, leave to defend, quick, Promissory Notes, Bills of Exchange, Hundis, Liquidated Demand

Introduction

What is an Order 37 suit?

Order 37 of the Civil Procedure Code (CPC) deals with the summary procedure. It was created to provide a faster way of resolving certain cases where the defendant has no credible defence. In the summary procedure, the trial begins only after the judge grants permission to the defendant to challenge the case. If the defendant has not applied for leave to defend, or if such a request has been made but rejected, or if the defendant who is allowed to defend fails to follow the terms and conditions of the leave granted, the judge can pass judgment in favour of the plaintiff. This helps to avoid undue delays caused by the defendant’s actions.

The constituents of Order 37 CPC are:

Rule 1: Application of the order

Rule 2: Institution of summary suits upon bills of exchange

Rule 3: Defendant showing defence on merits to have leave to appear

Rule 4: Power to set aside a decree

Rule 5: Power to order bills to be deposited with the officer of the court

Rule 6: Recovery of the cost of noting non-acceptance of dishonoured bill or note

Rule 7: Procedure in suits

Summary suits: Order 37

The Code of Civil Procedure (CPC) is a procedural law that governs the legal process of civil cases in India. One of the provisions under the CPC is Order 37, which deals with summary suits or summary procedure, which is used to enforce a right quickly and efficiently. Unlike ordinary suits, the summary procedure does not provide for a hearing of the defence and is intended to ensure the Summary suit has a quick hearing and disposal of the suit. The advantage of this ruling depends on the defendant’s ability to present a proper substantive defence. If the defendant fails to do so, the plaintiff is entitled to an immediate judgment. Summary suits are suitable in cases where the plaintiff’s claim is based on a negotiable instrument (such as a promissory note, bill of exchange, or cheque) or on an agreement that provides for the payment of a debt or liquidated demand in money. To be eligible for a summary suit, the plaintiff’s claim must be for a specific amount of money and must not be disputed by the defendant.

Compared to a regular civil suit, the process for a summary suit is relatively streamlined. After filing the suit and serving notice on the defendant, the court may proceed to a judgment without requiring a full trial as long as the defendant does not dispute the claim or raise any other objections. This can save both time and money for the parties involved and help expedite the dispute resolution.

The summary suit procedure benefits both parties involved in a legal dispute. For the plaintiff, it provides a quicker remedy, and for the defendant, it provides an opportunity to defend against the claim without being subjected to long and time-consuming litigation. However, it is important to note that the summary suit procedure does not allow for an appeal against the summary decree. In case the defendant wishes to challenge the decree, they must file a regular suit.

Object

The main objective of a summary suit is to provide a quick and efficient legal remedy to recover debts or liquidated demands without going through the normal process of a regular civil suit. However, it is important to note that the summary suit procedure is only available for cases where the plaintiff’s claim is a debt or a liquidated demand arising from a written contract, an enactment or a guarantee. If the plaintiff’s claim does not fall within this category, they cannot file a summary suit.

The Gujarat High Court has stated that the main goal of summary suits is to boost commerce and industry by instilling confidence in business people that their money claims, particularly those involving liquidated amounts, will be quickly resolved. This will prevent their money from being blocked for an extended period, allowing them to easily move on with their business operations[1].

Taken by and large, the object of the provision is to ensure that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining a degree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interest of commercial transactions.

Nature and Scope

Order 37 provides a summary procedure for cases related to negotiable instruments or where the plaintiff seeks to recover a debt or liquidated amount. Summary suits are different from ordinary suits in that the defendant is not entitled to the right to defend the suit in the usual manner. Instead, the defendant must apply for leave to defend the suit within ten days. The court will grant such leave only if the defendant’s affidavit discloses facts that make it necessary for the plaintiff to prove consideration or other relevant facts. It’s important to note that the provisions of Order 37 are simply rules of procedure and do not change the nature of the case or the court’s jurisdiction[2].

Constitutional validity

The provision of this code, which prescribes special trials for certain classes of suits and assigns certain courts for the same, does not violate Article 14 of the Constitution[3]. This is because such provisions are based on reasonable classifications. Rule 8, made under the Bombay Rents Hotels and Lodging Hall Rates (Controls) Act 1947, allows for ejectment suits to be instituted per order 37. This rule is not ultra vires.[4]

In the case of Ambalal Purusottamdas and Co. v. Jawarlal Purusottam Dave[5], the constitutional validity of Order 37 CPC was challenged. One of the grounds for the challenge was that the procedure provided between the defendants in ordinary civil suits and suits based on negotiable instruments is arbitrary, discriminatory and ultra vires to Article 14 of the Constitution.

However, the High Court of Calcutta rejected all contentions, holding that the distinction was based on reasonable classification. If the defendant appears within time and shows good cause, he gets leave to defend. Again, he is heard before the leave is refused. Such a provision can neither be said to be arbitrary nor unreasonable.[6]

Extent and applicability

Order 37 provisions apply to High Courts, City Civil Courts, Courts of Small Causes and other superior courts. These provisions apply to two categories of suits: (a) suits based on bills of exchange, hundies, and promissory notes and (b) suits in which the plaintiff seeks to recover a debt or liquidated amount 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 debt other than a penalty; or (iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated amount.

The order applies to promissory notes, bills of exchange, and hundis. The Negotiable Instruments Act defines a ‘promissory note’ and a ‘bill of exchange’ under Sections 4 and 5. However, the term ‘Hundi’ is not defined by either the Negotiable Instruments Act or the Code.

The rule applies to all types of bills, hundis and promissory notes, whether negotiable or not. This means that a suit can be filed under the summary procedure even if it is based on a crossed cheque that bears an endorsement of ‘account payee only’[7].

Debt refers to a current obligation to pay a sum of money that is not yet determined, whether the payment is due at present or in the future. If the payment is due right now, it is called a debt owing; if it is due in the future, it is called a debt due. However, a sum payable upon a contingency does not become a debt until the said contingency has happened[8].

The term “liquidated demand” means an amount that can be determined mathematically based on information available to the party responsible for paying. A claim for damages expressed as a percentage is considered a liquidated amount under order 37.

Discretionary power

The court’s discretionary power under Order 37 must be executed judiciously, judicially, and based on well-established principles of natural justice. If the defence presents triable issues, leave must be granted unconditionally. Failure to do so may render leave illusory[9].

It is important to maintain the rule’s objective of expeditiously disposing of commercial cases. However, it should also be ensured that excessively severe deposit orders do not prevent genuine triable issues from being heard[10].

Procedure in summary suits

When bringing a suit under Order 37 of the CPC, a proper procedure must be followed. Here is an overview of the procedure followed in a summary suit:

  1. The plaintiff filed a complaint.
  2. Summons are given to the defendant to appear in court. The summons must include the sum of money that is claimed in the litigation, as well as a copy of the plaint.
  3. The defendant must appear within ten days of receiving the summons.
  4. If the defendant fails to attend, the claim is presumed acknowledged, and the plaintiff is entitled to a decision in an amount not exceeding the sum specified in the summons.
  5. If the defendant appears within ten days, they must provide notice of their attendance to the plaintiff’s counsel or to the plaintiff themselves. They must also submit an address for service of notices in court.
  6. After receiving the defendant’s notification of presence, the plaintiff issues a summons for judgment.
  7. The defendant should ask for permission to defend within ten days of receiving the summons. Permission will only be given if the defendant’s declaration reveals sufficient information to allow them to defend.

Procedure for the appearance of a defendant

In a summary procedure case, the defendant is not entitled to defend their case. Within ten days of receiving the summons, they must appear either in person or through their pleaders. The defendant must inform the plaintiff’s representative or the plaintiff on the day of their appearance. Once the defendant has appeared, the plaintiff can issue a summons for judgment. 

The defendant can apply for notice to defend by submitting an affidavit or providing factual information within ten days of receiving the summons. The court cannot deny the defendant’s defence unless they believe the facts presented are irrelevant.

What constitutes no defence?

When deciding whether to grant leave to defend in a case, the court must determine if the defence raises a genuine, honest, and legitimate dispute that can be tried in court. If the court finds that the defence raises a triable or fair dispute, it should not reject the request for leave to defend[11]. However, it can only refuse to grant unconditional leave in cases where the defence is patently dishonest or so unreasonable that it could not reasonably be expected to succeed[12].

As the court has discretion in such matters, it cannot establish a strict rule for when to grant unconditional leave to the defendant. The general test determines whether the defence raises a real issue rather than a false one. This means that if the facts alleged by the defendant are proven, there would be a good or plausible defence based on those facts[13].

In special circumstances, the court can set aside a decree, stay the execution, and grant leave to the defendant to appear and defend the suit. However, the court cannot exercise inherent power under Section I5I of the code to set aside such a decree[14].

The Supreme Court recently (in 2016) addressed what conditions must be met for a leave to defend to be granted. In IDBI Trusteeship Services Ltd v. Hubtown Ltd[15], the Court held that the trial judge has the discretion to grant leave to defend a summary suit based on the facts of each case. The judge must ensure that justice is done. On one end of the spectrum is unconditional leave to defend, which is granted in cases with a substantial defence. On the other end are frivolous or vexatious defences, which should result in a refusal of leave to defend. It is important to keep in mind both ends of the spectrum when considering whether to grant leave to defend.

Various defences are raised between these two extremes, which usually yield conditional leave to defend. The judgement lays out principles that have been summarized below.

▪ If the defendant raises issues that could be considered reasonable defences, the plaintiff cannot sign the judgment even if they are not strong defences. In this case, the defendant is usually entitled to unconditional leave to defend.

This reiterates the position laid out in Precision Steel & Engg. Works vs Prem Deva Niranjan Deva Tayal[16], It was held that the mere disclosure of facts is not a substantial defence and further evidence is required. What constitutes a substantial defence varies depending on the facts and circumstances of each case. Even if the defendant raises triable issues, the judge may impose conditions on the defendant, such as time or mode of trial, payment into Court or furnishing security, if there is a doubt about the defendant’s good faith or the genuineness of the triable issues. These issues may be plausible but not probable.

Moreover, in Uma Shankar Kamal Narain v. MD Overseas Limited, the Supreme Court recently upheld previous judgments such as Southern Sales and Services v. Sauermilch Design and Handles GMBH[17] and Sunil Enterprise v. SBI[18]. The court reiterated the principles to be followed in the case of leave to defend a summary suit related to dishonoured cheques.

It was ruled that an unconditional leave to defend a lawsuit cannot be granted unless the defendant deposits the amount admitted to be due into the court.

The difference between summary suits and ordinary suits.

The main difference between a summary suit and an ordinary suit is the nature of the claim. A summary suit can only be filed for claims based on a negotiable instrument or an agreement that provides for the payment of a debt or a liquidated demand in money. On the other hand, an ordinary suit can be filed for any civil claim, whether it is based on a contract, tort, or any other cause of action.

Procedure: The procedure for a summary suit is more streamlined and expedited than an ordinary suit. In a summary suit, the court may proceed to a judgment without requiring a full trial if the defendant does not dispute the claim or raise any other objections. In an ordinary suit, the court typically follows a more elaborate and time-consuming procedure that involves a full trial with witness examination, document production, and cross-examination.

Timeframe: Because the procedure for a summary suit is more simplified and expedited, it generally takes less time to resolve a summary suit than an ordinary one. This can be beneficial for parties who are looking for a faster resolution of their dispute.

Evidence: In a summary suit, the court relies primarily on the written evidence submitted by the parties, such as the negotiable instrument or agreement in question. In an ordinary suit, the court may consider a wider range of evidence, including witness testimony and expert reports.

In an ordinary lawsuit, the defendant has the right to defend the case. However, they cannot do so in a summary lawsuit without the court’s permission. The trial court cannot set aside the verdict in an ordinary suit except on review. But the court can set aside the verdict under special circumstances in a summary suit. Therefore, it is more challenging to set aside an ex-parte verdict in summary suits, and non-appearance needs to be explained in special circumstances. On the other hand, in ordinary suits, only sufficient cause needs to be shown.

Special circumstances meaning

The term “special circumstances” is not provided with any specific definition in the Code of Civil Procedure and cannot be defined precisely by the court as different individuals face varied and complex issues. In its general dictionary meaning, it signifies something that is exceptional and uncommon in nature, significant, and out of the ordinary. It is an antonym of common, ordinary, or general. It is neither practical nor advisable to list such circumstances. The decision can be made based on the facts and circumstances of each individual case, and no universal rule can be established[19].

Special circumstances v. sufficient cause

In the case of Karumili Bharathi v. Prichikala Venkatchalam[20], the terms “special circumstances” and “sufficient cause” were juxtaposed. The defendant must provide reasons demonstrating they could not appear before the court on a relevant day. For instance, if there was a strike and all public transportation was shut down, this may constitute “special circumstances”. However, if the defendant simply missed the bus they wanted to board and, as a result, could not appear before the court, this would be considered a “sufficient cause” but not a “special circumstance”. Therefore, a “special circumstance” must be accompanied by a “cause” or “reason” that makes it nearly impossible for the person to attend the court or perform certain required acts. The “reason” or “cause” found in “special circumstances” is stricter and more stringent than in “sufficient cause” and ultimately depends on the specific facts of each case.

What is the limitation period to file a summary suit?

Under the Indian Limitation Act of 1963, the time limit for filing a summary suit is three years from the date when the cause of action arose. This means that if you wish to file a summary suit in India, you must do so within three years of the cause of action occurring.

What Decree may be expected in Summary Suits?

In summary suits, the plaintiff can expect a decree for a sum not exceeding the amount mentioned in the plaint, which includes interest and cost, under the following conditions:

Jurisdiction of summary procedure

Under summary procedure, claims can be brought in the following scenarios:

The pecuniary jurisdiction, determined by the value of the lawsuit, determines whether the claim can be brought in the high or district court.

Suppose a claim is brought under Order 37 of CPC. In that case, the court has a legal responsibility to scrutinize the details of the situation and analyze the documents submitted along with the plaint to ensure that it meets the requirements of Order 37 of CPC. If the honourable judge finds that the claim cannot be heard under the summary process, they may issue an order treating the plaint as a regular civil complaint.

Principles

In the case of Kiranmoyee Dassi v. J. Chatterjee[21], the High Court of Calcutta outlined the following principles with regard to summary suits:

  1. If the defendant can prove to the court that they have a valid defence to the claim, the plaintiff is not entitled to obtain a judgment, and the defendant should be granted unconditional leave to defend.
  2. ii. If the defendant raises a triable issue that suggests they have a fair, bona fide, or reasonable defence, even if not a positive one, the plaintiff is not entitled to obtain a judgment, and the defendant should be granted unconditional leave to defend.
  3. If the defendant presents facts that may be sufficient to allow them to defend themselves, even if such facts do not immediately establish a defence, and if such facts suggest that the defendant may be able to establish a defence at the trial, the plaintiff is not entitled to obtain a judgment. The defendant should be granted leave to defend. However, in such cases, the court has the discretion to impose conditions regarding the time or mode of trial, not payment or security.
  4. If the defendant has no defence, or the defence raised is illusory, sham, or essentially baseless, then the plaintiff is ordinarily entitled to obtain a judgment, and the defendant should not be granted leave to defend.
  5. If the defendant has no defence, or if the defence raised is illusory, sham, or essentially baseless, then although the plaintiff is ordinarily entitled to obtain a judgment, the court may allow the defence to proceed. However, only if the amount claimed is paid into court or otherwise secured and the defendant is granted leave to prove a defence[22].

Conclusion

In the case of Neebha Kapoor v. Jayantilal Khandwal (2008), the Supreme Court ruled that “summary cases are an instrument of speedy remedy”. However, it is important to remember that “justice hurried is justice buried”. It is often difficult to distinguish between frivolous and significant defences, so the power provided by the order mentioned above must be used carefully and cautiously.

Additionally, the “audi alteram partem” concept is a critical aspect of natural justice and a fundamental element of the Constitution. Nonetheless, in summary procedures, the presentation of the defendant’s case is omitted, giving the plaintiff an advantage over the defendant. In summary suits, the right to defend oneself is not guaranteed; it must be claimed to the court’s satisfaction.

In conclusion, summary suits are a unique way to prevent unwarranted delays caused by the defendant with no defence. They are beneficial to businesses since the claimant can receive a judgment if the defendant lacks a strong defence. Order 37 CPC ensures that the defendant cannot prolong the proceedings unnecessarily. In such cases, the defendant can request permission to defend if they have a substantive defence to show; otherwise, the plaintiff has a stronger case. It also establishes an efficient mechanism to prevent the defendant from prolonging the lawsuit, especially since time is of the essence in business scenarios and supports the goal of justice.

References:

  1. C.K. Takwani, Civil Procedure with Limitation Act, 1963, Eastern Book Co., (9th ed ).
  2. IDBI Trusteeship Services Ltd. Vs Hubtown Ltd. [November 15, 2016] | Judgments | Supreme Court Judgments: November 2016 | Law Library | AdvocateKhoj. https://www.advocatekhoj.com/library/judgments/index.php?go=2016/november/26.php ( Last Visited 25 Oct. 2023)
  3. Summary Procedure (Order XXXVII). https://www.legalserviceindia.com/legal/article-8746-summary-procedure-order-xxxvii-.html ( Last Visited 22 Oct. 2023)
  4. https://www.ilms.academy/blog/what-is-summary-suit-under-cpc#:~:text=In the context of Indian, need for a full trial. ( Last Visited 23 Oct. 2023)
  5. Summary Suits Explained https://www.lawctopus.com/summary-suits-explained/ ( Last Visited 24 Oct. 2023)
  6. Order 37 CPC, 1908 https://blog.ipleaders.in/order-37-cpc-1908/ ( Last Visited 23 Oct. 2023)
  7. Summary procedure under CPC https://www.academia.edu/50364442/Summary_Procedure_under_CPC  ( Last Visited 24 Oct. 2023)

[1] Navinchandra Babulal Bhavsar v. Bachubhai Dhanabhai Shah AIR 1969 Gujrat 124 (128) DB

[2] Prayag Deb v. Rama Roy, AIR 1977 Cal 1(FB)

[3] CF Khemchand v. Hari AIR 1979 Del 7.

[4] Ramkarandas v. Bhagwaandas AIR 1965 SC 1144.

[5]Ambalal Purusottamdas and Co. v. Jawarlal Purusottam Dave, 1953 SCC Online Cal 159

[6] Ibid.

[7] Tailors Priya v. Gulabchand AIR 1963 Cal 36.

[8] Keshoram Industries v. Gheesi AIR 1999 Raj 69.

[9] Santosh Kumar v. Bhai Mool Singh , AIR 1958 SC 321

[10] Ibid.

[11] Raj Duggal v. Ramesh Kumar , 1991 Supp(I) SCC 191

[12]Supra 11.

[13] Santosh Kumar v. Bhai Mool Singh, AIR 1958 SC 321

[14] Ramkarandas Radhavallah v. Bhagwandas Dwarkadas, AIR 1965 SC 1144 at p. 1145

[15] IDBI Trusteeship Services Ltd v. Hubtown Ltd, 2016 SCC OnLine SC 1274

[16] Precision Steel & Engg. Works vs Prem Deva Niranjan Deva 1982 Air 1518

[17] Southern Sales and Sevices v. Sauermilch Design and Handles GMBH 1982 AIR 1518

[18]  Sunil Enterprise v. SBI, (1998) 5 SCC 354

[19] Rajni Kumar v. Suresh Kumar Malhotra, (2003) 5 SCC 315 at p. 318; TVC Skyshop Ltd. V. Reliance Communication and Infrastructure Ltd. (2013) 11 SCC 754: (2014) 1 SCC (Civ) 234.

[20]  Karumili Bharathi v. Prichikala Venkatchalam 1999 (3) ALD 366

[21] Kiranmoyee Dassi v. J. Chatterjee AIR 1949 Cal 479 : (1994) 49 CWN 246 : ILR (1945) 2 Cal 145.

[22] Ibid, at p. 486 (AIR): at p. 253 (CWN); approved in Mechelec Engineers and Manufactures v. Basic Equipment Corp., (1976) 4 SCC 687; Sunil Enterprises v. SBI, (1998) 5 SCC 354; State Bank of Hyderabad v. Rabo Bank, (2015) 10 SCC 521: (2016) 1 SCC (Civ) 199; IDBI Trusteeship Services Ltd. V. Hubtown Ltd., (2017) 1 SCC 568: (2017) 1

SCC (Civ) 386.

PDF 📄
Exit mobile version