Summary Suits

DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY LUCKNOW SUMMARY SUITS (ORDER XXXVII)

SUBJECT – CODE OF CIVIL PROCEDURE

SUBMITTED TO - PROF. GYAN SINGH CHAUHAN SUBMITTED BY – ANOOP KUMAR YADAV 7 SEMESTER, 4 YEAR TH

TH

1

ACKNOWLEDGEMENT

I am highly obliged to our respected teachers of C.P.C. Mr.Gyan Singh Chauhan and Ms. Shakuntla Devi, without whose support this project could not have seen the light. Secondly I would also like to mention the name of our Library Staff members who had provided me with the enough material on my project topic, because of which I was able to prepare this project on time. Thirdly I am highly obliged to my parents whose blessings always turned out to be a solution of every problem in my project. I am also thankful to my dear friends who provided me their help and support at every stage. Last but not the least I would like to thank the Almighty God, without whose blessings my project would have never been complete. ANOOP KUMAR YADAV

2

TABLE OF CONTENTS: INTRODUCTION

4

SUMMARY PROCEDURE

5

KINDS OF SUITS

6

THE CONSTITUTIONALITY AND SCOPE

6

AMENDMENT OF PLAINT

7

INSTITUTION OF SUMMARY SUITS

7

PROCEDURE FOR THE APPEARANCE OF DEFENDANT

9

POWER TO SET ASIDE DECREE

12

POWER TO ORDER BILL, ETC., TO BE DEPOSITED WITH OFFICER OF COURT 12 RECOVERY OF COST OF DISHONOURED BILL OR NOTE. PROCEDURE IN SUITS.

NOTING

NON-ACCEPTANCE OF 12 13

DIFFERENCE BETWEEN SUMMARY SUIT AND ORDINARY SUIT: 13 CONCLUSION

13

BIBLIOGRAPHY

14

3

INTRODUCTION: Order 37 of the Civil Procedure Code 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 granted1. No longer, it is mandatory to supply the copy of the documents. However, it is mandatory to supply annexure and therefore, even if it is assumed that the documents were not supplied, it would not render the service of summons under O 37 nugatory2.

SUMMARY PROCEDURE: 1 2

Indian Bank v. Maharashtra State Co-op Marketing Federation (1998) 5 SCC 69. SV Electrical Limited v. Sylvania Laxman Ltd. AIR 2000 Del 156.

4

ORDER XXXVII of the Code reads as follows: 1. Courts and classes of suits to which the Order is to apply (1) This Order shall apply to the following Court, namely:(a) High Courts, City Civil Courts and Courts of Small Causes; and (b) other Courts; Provided that in respect of the Courts referred to in clause (b), the High Court may, by notification in the Official Gazette, restrict the operation of this Order only to such categories of suits as it deems proper, and may also, from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette, further restrict, enlarge or vary, the categories of suits to be brought under the operation of this Order as it deems proper. (2) Subject to the provisions of sub-rule (1) the Order applies to the following classes of suits, namely:(a)

suits

upon

bills

of

exchange,

hundies

and

promissory

notes;

(b) 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,(i) on a written contract, or (ii) on 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 (iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.

The scope of the rule has been amended by the amendment of 1976. Adopting the Bombay Amendment, summary procedure has been made applicable to all courts. The Code of Civil Procedure, 1908 provides for a summary procedure in respect of certain suits. Provisions relating to summary procedure are found in O. 37, Rules 1 to 7 of the Code. A Summary suit is intended to facilitate the speedy disposal of cases. The object that underlies the summary procedure is to guard against delaying tactics that are indulged in by a defendant, who may have no genuine defence. In short, the essence of summary suits is that the defendant is not, as in an ordinary suit, automatically endowed with the right to defend a suit. The right to exercise his defence will be granted to the defendant only if the court is convinced as to the authenticity of his claims. The summary procedure is a powerful weapon in the hands of a court to discourage frivolous defences. 5

The important feature of "summary suit", is that, here the Defendant is not allowed to defend the suit, unless he takes the permission from court. Defendant is allowed to defend himself only if according to the affidavit filed by him, it is must for the plaintiff to prove charges against him. If by affidavit by Defendant, it appears that he has no defense, then court will decline him the permission and pass necessary orders in favor of plaintiff. KINDS OF SUITS: 1. Suits upon bills of Exchanges, hundies or promissory notes; 2. Any suit filed by the plaintiff for recovery of a debt / money payable by the defendant according to a written contract, or 3. In case of an enactment wherein the amount to be recovered is a fixed amount of money, or a debt other than a penalty, or A guarantee, where the claim against the principal is in respect of a debt or for money only. The object behind provision of summary procedure was to ensure a speedy trial for recovery of money in cases where the defendant has no defence and thus any unreasonable delay sought to be caused is eliminated. THE CONSTITUTIONALITY AND SCOPE: The provisions of this Order, prescribing for the special trail of certain classes of suits, and by certain courts, are not repugnant to Article 14 of the Constitution, as they are based on reasonable classification3. Rule 8 made under the Bombay Rents Hotels and Lodging Hall Rates (Control) Act 1947 provides that ejectment suits may be instituted in accordance with O 37 is not ultra vires4. •

3 4

Promissory Notes, Bills of Exchange and Hundis.

Cf Khemchand v. Hari AIR 1979 Del 7. Ramkarandas v. Bhagwaandas AIR 1965 SC 1144.

6

The Order applies on the promissory notes, bills of exchange and hundis. The Negotiable Instruments Act under ss 4 and 5 define a ‘promissory note’ and a ‘bill of exchange’. However, neither the Negotiable Instruments Act nor the Code defines the term Hundi. •

Account Payee Cheques.

The rule is applicable to all suits on bills, hundis and promissory notes, whether they are negotiable or not. Thus, a suit based on a crossed cheque bearing an endorsement ‘a/c payee only’ can be filed under the summary procedure5. •

Debt or Liquidated Demand.

A debt is a present obligation to pay an unascertainable sum of money whether the amount is payable in presenta or in futuro. The former is a debt owing and the latter is a debt due. However, a sum payable upon a contingency does not become a debt until the said contingency has happened6. ‘Liquidate demand’ means an amount susceptible of being made certain by mathematical calculation from factors in possession or knowledge of the party to be charged. A claim of damages in percentage is a liquidated amount within the meaning of O 377. AMENDMENT OF PLAINT. In a suit under O 37 on promissory note, amendment was sought to introduce additional facts and documents, to take the defendants liable as guarantors. It was held that on the particular facts of the case amendment (though belated) should be granted8. INSTITUTION OF SUMMARY SUITS. Order 37 rule 2 deals with the institution of summary suits. 2. Institution of summary suits (1) A suit, to which this Order applies, may if the plaintiff desires to proceed hereunder, be instituted by presenting a plaint which shall contain,5

Tailors Priya v. Gulabchand AIR 1963 Cal 36. Kesoram Industries v. Gheesi AIR 1999 Raj 69. 7 Rajinder Kumar Khanna v. Oriental Insurance Co. AIR 1990 Del 278. 8 Dena Bank v. Gautam Ratilal Shah AIR 1988 Bom 1. 6

7

(a) a specific averment to the effect that the suit is filed under this Order; (b) that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint; (c) the following inscription, immediately below the number of the suit in the title of the suit, namely:"(Under Order XXXVII of the Code of Civil Procedure, 1907)." (2) the summons of the suit shall be in Form No. 4 in Appendix B or in such other form as may, from time to time, be prescribed. (3) The defendant shall not defend the suit referred to in sub-rule (1) unless he enters an appearance and in default of his entering an appearance the allegations in the plaint shall be deemed to be admitted and the plaintiff shall entitled to a decree for any sum, not exceeding the sum mentioned in the summons, together with interest at the rate specified, if any, up to the date of the decree and such sum for costs as may be determined by the High Court from time to time by rules made in that behalf and such decree may be executed forthwith.

This rule provides that after the summons of the suit has been issued to the defendant, the defendant must appear and the plaintiff will serve a summons for judgment on the defendant. The defendant is not entitled to defend a summary suit unless he enters an appearance. In default of this, the plaintiff will be entitled to a decree which will be executed forthwith. •

Failure to Enter Appearance:

As provided by sub-rule(3), in a summary suit, if the defendant fails to enter appearance, the court can pass a decree on the basis that allegations in the plaint are deemed to have been admitted9. •

Form of summons in a Summary Suit:

The summons in a summary suit requires the defendant to obtain leave from the court within ten days from the service thereof to appear and defend the suit and within such time to cause an appearance to be entered on his behalf. •

9

Limitation for Application for Leave to Defend:

Vijaya Home Loans Ltd. V. Crown Traders Ltd., AIR 1998 Del 183.

8

The period for an application for leave to appear and defend is ten days from the date when the summons is served. The court has no power to extend the time10, unless the court has, by a rule framed in that behalf, made s 5 of the Limitation Act applicable to such applications as done by the High Court of Bombay. It has been held in some decisions of Madras High Court that a court could entertain, for sufficient cause, an application presented beyond ten days, as a power to excuse delay should be implied from the power to set aside an ex parte decree for sufficient cause, under rule 411. But most of the authorities hold the view that there is no power in the court to excuse delay, as section 5 of the Limitation Act is inapplicable12. •

Obtaining Leave is Must:

Before the amendment of 1976, this rule provided that a defendant who has failed to obtain a leave to defend can not be allowed to appear while the hearing is proceeding. But the scheme after the amendment is different. The defendant must enter an appearance and thereafter he has to seek leave to defend. PROCEDURE FOR THE APPEARANCE OF DEFENDANT: 3. Procedure for the appearance of defendant (1) In a suit to which this Order applies, the plaintiff shall, together with the summons under rule 2, serve on the defendant a copy of the plaint and annexures thereto and the defendant may, at any time within ten days of such service, enter an appearance either in person or by pleader and, in either case, he shall file in Court an address for service of notices on him. (2) Unless otherwise order, all summonses, notices and other judicial processes required to be served on the defendant, shall deemed to have been duly served on him if they are left at the address given by him for such service. (3) On the day of entering the appearance, notice of such appearance shall be given by the defendant to the plaintiffs pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice delivered at or sent by pre-said letter directed to the address of the plaintiffs pleader or of the plaintiff, as the case may be. (4) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment in Form No. 4A in Appendix B for such other Form as may be prescribed from time to time, returnable not less than ten days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is 10

Mahmudar v. Saratchandra (1900) 5 CWN 259. Murahari Rao v. Bapayya AIR 1949 Mad 742. 12 Kamalammu v. Venkata Sastri (1951) 1 MLJ 676, AIR 1951 Mad 895. 11

9

no defence to the suit. (5) The defendant may, at any time within ten days from service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just: Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious: Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court. (6) At the hearing of such summons for judgment,(a) if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith; or (b) if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security with the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or judge, the plaintiff shall be entitled to judgment forthwith. (7) The Court or Judge may, for sufficient cause shown by the defendant, execute the delay of the defendant in entering an appearance or in applying for leave to defend the suit.

This rule prescribes the mode of service of summons and leave to defend. The defendant must apply for leave to defend within ten days from the date of service of summons upon him and such leave will be granted only if the affidavit filed by the defendant discloses such facts as may be deemed sufficient to entitle him to defend. Such leave may grant to him unconditionally or upon such terms as may appear to the court or judge to be just13. Leave to defend, however, should not be refused unless the court is satisfied that the facts disclosed by the defendant do not indicate that he has substantial defence to rise or that the defence intended to be put by him is frivolous or vexatious. •

Sub-rule(5):

As a rule, leave to defend must be given unconditionally if the defendant shows a prima facie case or raises a triable issue. Leave should be made conditional if the court doubts the bona fides of defendant or thinks that the defence is put in only in order to gain time14. 13 14

Mechalec Engineers v. Basic Equipment Corpn., (1976) 4 SCC 687. Santosh v. Moolsingh AIR 1958 SC 321.

10

The Madras High Court has held that if the defendant sets up a defence which if proved would entitle him to succeed, the court has no discretion but must grant leave unconditionally15. In the Santosh Kumar v. Mool Singh16, the Supreme Court approved the decision of Sundaram v. Vallimal17 held that once it was found that there was a triable issue, leave should be given. •

Discretion:

After the amendment of 1976, the discretion to give leave to defend is delineated by the provisios. Order 37, rule 3(5) provides that leave to defend shall not be refused unless the court is satisfied that there is absence of substantial defence, or the defence is frivolous or vexatious. Following principles are to be followed, while touching upon the issue of granting leave: 1. If the defendant satisfies the court that he has a good defence to the claim on its merits, the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend. 2. If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence (although not a positively good defence), the plaintiff is not entitled to sign judgment and defendant is entitled to unconditional leave to defend. 3. If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend, but, in such a case, the court may, in its discretion, impose conditions as to the time or mode of trial, but not conditions as to payment into court or furnishing security. 4. If the defendant has no defence or the defence set up is illusory or shown to be practically moonshine, then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. 15

Sunderam v. Valli Ammal (1935) ILR 58 Mad 116, 152 IC 687. AIR 1958 SC 321. 17 (1935) ILR 58 Mad 116, 152 IC 687. 16

11

•

Sub-rule (7)

Under rule 3(7), time cannot be given until the defendant enters appearance. For leave to defend in a summary suit for recovery of money, the defendants must show that they have substantial defence and triable issues to raise, and that their defence is not frivolous. Only copy of plaint and annexure thereto has to be furnished to defendants. Furnishing of copies of document which are the basis of the suit is not necessary. Defendant would not be entitled to leave to defend on the ground of non-furnishing of copies. The expression ‘within ten days’ may mean that the period may be less than ten days or, at the most, on the tenth day. But it cannot go beyond that. POWER TO SET ASIDE DECREE. 4. Power to set aside decree After decree for the Court may, under special circumstances set aside the decree, and if necessary stay or set aside execution, and may 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.

Under this rule, the court can set aside the decree and stay the execution and may grant leave to the defendant to appear and defend the suit. POWER TO ORDER BILL, ETC., TO BE DEPOSITED WITH OFFICER OF COURT. In any proceeding under this Order the Court may order the bill, hundi or note on which the suit is founded to be forthwith deposited with an officer of the Court, and may further order that all proceedings shall be stayed until the plaintiff gives security for the costs thereof18. RECOVERY OF COST OF NOTING NON-ACCEPTANCE OF DISHONOURED BILL OR NOTE. The holder of every dishonoured bill of exchange or promissory note shall have the same remedies for the recovery of the expenses incurred in noting the same for non-acceptance or non-payment otherwise, by reason of such dishonour, as he has under this Order for the recovery of the amount of such bill or note19. PROCEDURE IN SUITS. 18 19

Rule 5 Rule 6.

12

Save as provided by this Order, the procedure in suits hereunder shall be the same as the procedure in suits instituted in the ordinary manner20. DIFFERENCE BETWEEN SUMMARY SUIT AND ORDINARY SUIT: 1. In the ordinary suit the defendant is entitled to defend the suit as of right. But in a summary suit he is not entitled for the same except with the leave of the court. 2. in an ordinary suit the decree can not be set aside by the trial court except in review. But in the summary suit the trial court may set it aside under special circumstances. CONCLUSION: Summary suit of recovery is a quick procedure, under Order XXXVII of the Code of Civil Procedure for recovery of money when certain conditions are satisfied- that is written agreement. The difference in procedure is that in ordinary suit, the defendant has a right to contest whereas in summary procedure the defendant can enter into his defence only after getting leave of the Court. The constitutional validity of the summary suits have been upheld.

BIBLIOGRAPHY

Books Reffered: • Anil Nandwani, Law of Civil Procedure in India, 1st ed.2006, Allahabad Law Agency, Faridabad. 20

Rule 7.

13

• C.K Takwani, Civil Procedure, 5th ed.2003, Eastern Book Company, Lucknow. • M.P Jain, The Code of Civil Procedure, 1st ed. 2004, Wadhwa and Company, Nagpur. • Sarkar, Code of Civil Procedure, 10th ed.2002, Vol.2, Wadhwa and Company, Nagpur.

14