Monday, 9 April 2012

Summary Suits - Order 37

Summary Suits are contemplated under Order XXXVII (Order 37) of Civil Procedure Code of 1908, a very powerful and expeditious remedy provided under the law for recovering money, which is routinely trapped in commercial transactions and in contracts. In Summary Suits, the Principal amount to be recovered must be certain.

As observed by Gujrat High Court- “The sheer purpose of enacting Summary Suits is to give impetus to commerce and industry by inspiring confidence in commercial population that their causes in respect of money claims of liquidate amounts (ascertained amount) would be expeditiously decided and their claims will not hang on for years blocking their money for a long period. Navinchandra Babulal Bhavsar versus Bachubhai Dhanabhai Shah AIR 1969 Gujrat 124 (128) DB.

The underlying public policy behind Order 37 is the expeditious disposal of suits of commercial nature. Bankyag B G Agarawal versus Bhagwanti Mehji 2001 (1) Bom LR 823 (DB)



The procedure contemplated by Order 37 of CPC constitutes a clear departure from usual procedure prescribed under the CPC. According to usual procedure, every defendant has a right to defend his case in the manner best suited to him.



The Summary procedure is a powerful weapon in the hands of Court to shut out frivolous defences which are raised in commercial causes with a view to prolong the litigation. Kocharabhai ishwarbhai patel versus Gopal bhai C patel AIR 1973 Gujrat 29 (31)
The provisions of this Order 37 are enacted to ensure that the defendants doesn’t prolong the litigation by raising untenable and frivolous defences. K R Kesavan versus The South Indian Bank Ltd AIR (37) 1950 Madras 226 (228) DB
The provisions of Order 37 are enacted by Parliament to discourage litigants from coming forward with untenable pleas with the object of delaying admitted liabilities and prolonging the inevitable decree. Dena Bank versus M/s Gladstone Lyall & Co 87 Bombay Law Reporter 477 (480)


SUMMARY PROCEDURE- THE GENIUS OF SUMMARY SUITS
The procedure contemplated by Order 37 of CPC constitutes a clear departure from usual procedure. According to usual procedure, every defendant has a right to defend his case in the manner best suited to him. The Summary procedure is a powerful weapon in the hands of Court to shut out frivolous defences which are raised in commercial causes with a view to prolong the litigation. Kocharabhai ishwarbhai patel versus Gopal bhai C patel AIR 1973 Gujrat 29 (31)

The procedure is--

1. The Plaint is filed in the competent court of jurisdiction.
2. The Plaint gets numbered.
3. The Plaintiff takes out summons and arranged to get it serve upon the Defendant through Bailiff.
4. Once the Summons is served upon the defendants, defendant has to file his appearance in the court within 10 days from the receipt of summons.
5. If the defendant fails to file his appearance within 10 days, the Plaintiff may approach the Court to pass an ex-parte decree and courts are empowered to pass ex-parte decree in such circumstances. The defendant is however entitled to set aside the ex-parte decree so passed on showing “Sufficient cause”.
6. If the defendant file his appearance, than the Plaintiff has to take out Summons for Judgment and arranged to get it serve upon the defendant through Bailiff.
7. The defendant in receipt of Summons for Judgment has to move court within 10 days and file his Affidavit of Defence. In his Affidavit of Defence, he must satisfy the Court that he has a substantial defence.
8. After looking at the averments made in the Affidavit of Defence, the Court may allow the Defendant to defend the case on imposition of any condition or unconditionally, or the Court may pass the decree.


DISPUTES WHICH ARE COVERED UNDER SUMMARY SUITS

1. Summary Suits can be filed on the basis of money to be recovered on Written Contracts / agreements.

2. Summary Suits can be filed on the basis of money to be recovered under dishonoured cheques / Bills of Exchange/ Promissory Notes / Hundies.

3. Summary Suits can be filed against Guarantor, if the claim against the Principal is in respect of a debt or liquidated amount.


Widest possible interpretations may be given to the scope of written contracts. The words in Summary Suits, “Written contract” doesn’t requires that the contract must be signed by the parties concerned. In my view, it says- the contract must be expressed and when its existence and enforceability can be traced to conduct of the parties to the contract, although the expressed contract may not be signed by the parties concerned.




Here are some of the court rulings and observations which define the scope of Written Contracts. The words in Summary Suits, “Written contract” doesn’t requires that the contract must be signed by the parties concerned. In my view, it says- the contract must be expressed and when its existence and enforceability can be traced to conduct of the parties to the contract, although the expressed contract may not be signed by the parties concerned.


1. Invoices/Bills are written contract within the contemplation of Order 37 of CPC 1908. KIG Systel Ltd versus Fijitsu ICIM Ltd AIR 2001 Del 357.

2. As a result of acceptance of goods delivered in pursuance of the invoice, the demand for the price of goods admittedly received by the purchaser on the basis of the invoice is written contract.

3. Agreement in writing does not necessarily mean documents are formally signed by the parties. Documents exchanged by and between the parties may be construed as agreement in writing. BOI Finance versus padma Alloy Casting Bom CR 218.

4. Summary Suit can be filed on the basis of confirmed Balance / Khata and the reconciliation statement. Hindustan Wires Ltd versus Ralsons Tires Ltd 90 (2001) Delhi Law Times 777.

5. Where the liability was acknowledged in Balance sheet which was signed by partners of the firm, it was held that it amounted to a promise within the meaning of section 25(3) of the Contract Act 1872. Section 2593) validates a promise to pay a debt barred by limitation. M/s R Suresh Chandra & Co versus Vednere Chemicals Works & Ors AIR 1991 Bom 44 (47 Para 10)

6. The acknowledgment of debt in Balance Sheet amounts to acknowledgment in writing within the meaning of section 18 of the limitation Act. Rishi Pal Gupta versus S J knitting & Finishing Mills Pvt Ltd 73 (1998) Delhi Law Times 593 (598 para 14) A V Murti veresus B S Nagabasavanna 2002 (1) Supreme 517 (520 para 5)

7. Where a receipt indicates that money was borrowed, it becomes an acknowledgement. M/s Kalyani Hansraj & Ors versus Mrs Kamong A Agarwal & Ors 1990 (1) Bombay Cases Reporter 386 (389 para 10)

8. Where the suit was filed for recovery of price of goods sold and delivered, it was observed that Plaintiffs has delivered the goods to the defendants not intending to do so gratuitously and the defendants had enjoyed the benefits of them and under the provisions of section 70 of Contract Act, the Defendants are liable to pay compensation in respect of such goods to the plaintiffs. Jaishree Chemicals versus M/s Esskay Dyeing & printing Works, BHC Summons for Judgment No.23 of 1976 in Suit no. 1405 of 1975 decided on 19th April 1976.

Summary Suit by Bank on entries – Punjab and Sind Bank Ram Prakash Jagdish Chander (1990) 4 Del LT 497

If money of a depositor is misappropriated by the Bank, Summary Suit is maintainable. AIR 1996 Bom 386

There must be necessary averment in the Plaint to give necessary jurisdiction to court under Summary procedure. AIR 2001 AP 56.

AIR 2005 Del 369

Written Contract: BOI Finance versus Padma Alloys Casting AIR 1999 Bom 340

Summary Suit is also maintainable in following cases –

For recovery of inter-corporate loan on the basis of receipt and agreement – A 2002 Bom 481, 483, 484;

Where amount thereof is not properly quantified or is in excess of what the plaintiff is entitled to, Summary Suit is maintainable – A 2004 Bom 186; (2004) 2 CTC 641; (2004) 106 (2) Bom LR 294 (FB);

Merely because a counterclaim is filed does not render a Summary Suit not maintainable. A 2001 Bom 481, 484;

Suit for recovery of money of sale of equity shares – A 2006 (NOC) 352 (Cal);

Recovery of price of goods, interest claimed – A 2006 (NOC) 1094 (Cal)

Invoice / Bills are written contracts – A 2001 Del 357, 362;

Recovery of money paid to purchase Air Tickets – A 2006 (NOC) 1042 (Del )



Some Judgments explaning the scope of Summary Suit
Rule – 1. Classes of Suits – Lalchand Jain versus Gheesi AIR 1999 Raj 69

Rule 1 – Indian Bank versus Maha State Co-op Marketing Fed (1998) 5 SCC 69



Summary Suit Not Maintainable in following cases –
Claim based on Indemnity Bonds – (2002) 4 SCC 736, 742;


THE VERY CRITICAL- SUMMONS FOR JUDGMENT / LEAVE TO DEFEND
Once the Summons is served upon the Defendants and he files his appearance in the Court, the Plaintiff has to move an application to the Court, i.e. called Summons for Judgment. This Summons for Judgment is then served upon the Defendants and he is called upon to make an application to the Court to grant him the leave to defend the case, within 10 days from the receipt of that Summons for Judgment.

In an Application for leave to defend, what the Court must do is to find out if whether the defendant has raised the triable issues and whether the defence is not sham and illusory and whether the defendant has raised such issues, which if proved at the trial, will result in the dismissal of the plaintiff's Suit. If it is so, the defendant is entitled to leave to defend.
N Prabhakaran versus Manager CITIBANK N A Chennai (2001) 3 MLJ 540 (542- para 5)

The jurisdiction to grant leave or refuse the same is to be exercised on the basis of the affidavit filed by the defendant. That alone at that stage is the relevant document and the inquiry of the court is to be confined to the averments made in the affidavit by the defendant. At the hearing of Summons for Judgment it is not open to the plaintiff to request the Court to look into any evidence. Adverse inference cannot be drawn against the defendant if documents are not produced in support of statements made in the Application for leave to defend. Raghavaveera Sons versus Mrs Padmavati AIR 1978 Madras 81 (85, 86 & 87) (Paras 12 & 13)

If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based or uncertainty as to the amount actually due or where the alleged acts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross examine his witnesses, leave to defend should not be denied. Rajduggal versus Rameshkumar Bansal 1991 sup (1) SCC 191.

In Indian Rayon & Industries Ltd versus M/s Sirohya Enterprises AIR 1992 Bombay 60 (61 & 62) it was held that in order to obtain unconditional leave to defend, it is not sufficient to raise triable issues, but he should satisfy the court that he has a substantial defence.

In a case the Court observed that the defence of the defendant bank was patently dishonest and so unreasonable that it cannot reasonable be expected to succeed. Leaver to defend refused. R K Agencies Ltd versus Central Bank of India AIR 1992 Calcutta 193 (198, 199, Paras 24, 25 & 29)


The Principle adopted by our Constitutional Courts to deal with the disposal of Winding up Petitions by Creditors may profitably be imported here to decide Summons for Judgment. The rules as regards the disposal of winding up Petition based on disputed clams are thus stated by the SC in Madhusudan Gordhandad and Co. versus Madhu Woolens Industries Pvt Ltd – (1972) 42 Com Cases 125 : AIR 1971 SC 2600 –


“two rules are well settled. First – if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay but chooses not to pay that particular debt. The principle on which the court act are – (1) that the defence of the company is in good faith and one of substance; (2) the defence is likely to succeed in point of law; (3) the company adduces prima facie proof of the facts on which the defence depends. ****** Tata Iron & Steel Co Ltd versus Micro Forge India Ltd – 2000 CLC 1669.






TEST TO DETERMINE FOR GRANTING LEAVE TO DEFEND

Powers conferred upon court by Order XXXVII (Order 37) is a sophisticated and delicate instrument and the same must be handled with great care and caution. In reality, it may be sometime, extremely difficult for courts to identify “frivolous defences”, Sham & illusory defences” “substantial defence, unreasonable or dishonest defence”, so as to decide whether leave to defend the Suit should be granted or refused to the Defendant.

Therefore, I here produce some simple cases wherein the Courts granted or refused leave to defend. It is necessary to understand the principles on which the court may identify whether a defence raised by the Defendant is frivolous or illusory or if it may be genuine.

In all the cases listed below, it may be noted that, the cases in which where the leave to defend was granted, the defendant has placed such facts before court, that if proved, will dislodge / washout the case of the Plaintiff.

ILLUSTRATIONS FOR GUIDANCE OF THE COURT

1. In a Case before the Hon'ble Delhi high Court, a Summary Suit was filed on the basis of dishonoured cheque of Rs.27,000/- alleged to have been issued in payment of some computer hardware and software sold by Plaintiff and where the Defendant alleged that he has issued a post dated cheque on the assurance from the Plaintiff that the said cheque will be deposited after the delivery of the said hardware and software. The Cheque was however came to be deposited without the said supply of computer hardware and softwares. It was held that the plea raised by the defendant raises a triable issue inasmuch as the material on record it cannot be said that the defence of the Defendant is malafide or vexatious and is not bonafide. The Defendant was granted unconditional leave to defend. International Computers Consultants versus Home Computer Services (P) Ltd 68 (1997) Delhi Law Times 407 (413 Paras 23 & 24) (DB)

2. Where the defendant applied for setting aside ex parte decree in summary suit based on dishonoured cheque on the ground that the plaintiff had suppressed material facts to the effect that the plaintiff had not disclosed his complaint under section 138 of the Negotiable Instruments Act, in the plaint and that plaintiff had received a sum of Rs.90,000/- as compensation out of fine imposed on the defendant in the said criminal complaint, it was held that" the suppression of the material facts has to be such which would materially affect the decision of case. The pendency of criminal complaint could have no bearing on the merits of the claim of the plaintiff in the summary suit. The law permits the plaintiff to take out both civil and criminal proceedings. Both proceedings can be continued simultaneously. Both remedies are independent of each other. The Court declined to set aside the ex parte decree. Vijay Kumar versus Govind Bhai 1999 (4) LJ 14 (para 5)


3. In cases where the defendant raises a prima facie case of fraud, including details as contemplated in the CPC, the Court ought to act on that and grant him leave to defend without imposing any condition that he should pay money into the Court. (1932) 2 KB 353 (358 & 359)

4. Where the Defendant describes the documents relied upon by the plaintiffs as forged documents, the matter requires a trial in view of the nature of defence. Amarjeet Singh versus Mrs.Savitri Devi Bhalla 70 (1997) Delhi Law Times 655 (Paras 4 & 7)

5. In Jivaram Ramchand Fegade Group versus T Udha Ram Fruit Co and Ors, the Division Bench of Delhi High Court observed that where the Defendant alleged forgery and fabrication of documents by the Plaintiffs, it would be too much to say that the defendant must produce a surety before they can defend the Suit. 29 (1986) Delhi Law Times 305 (para 4)

6. Where the Defendant alleged that the Plaintiff did not act in accordance with the terms of the agreement and therefore the defendant has stopped payment of cheques and stated that defendant has already filed suit for Specific performance of agreement. It was held that the defence raised triable issues and defendant was granted unconditional leave to defend. Radhey Shyam & Ors versus Jaibir Singh 67 (1997) Delhi Law Times 875 (877)

7. Leave to defend was refused where the defendant in various letters admitted the correctness of the amount claimed by the plaintiff. Corporate Voice Pvt Ltd versus Union Leather India Ltd 60 (1995) Delhi Law Times321 (323 para 8).

8. If tenor of defences raised by the defendants blows hot and cold and is self contradictory, he forfeits his right to defend. Vinod Kumar versus Keshav Anand 2002 AIHC 1621 (1624 Para 12)

9. In a case it was held that a claim for unliquidated (unascertained) damages does not gives rise to a debt until the liability is adjudicated. KSL & Industries Ltd versus Nath Seeds 2001 (4) All MR 134 (137 Para 6)

10. Where the defendant alleged that two cheques relied upon by the plaintiff were stolen cheques and the defendants never borrowed any money and never issued any cheque to the plaintiff and one of the two cheques relied upon by the plaintiff bears signature of the partner of the defendant who had expired much prior to date mentioned on the cheque, it was held that the defence taken by the defendants 1 to 3 could not be said to be false or frivolous on the face of it did raise triable issues. Unconditional leave to defend was granted in respect of one cheque and conditionally leave to defend was granted in respect of another cheque. Dhaliwal Trading Agency versus Varindar Singh 2002 (1) Bank J 205 (209 para 8)

11. Where a summary suit was filed to recover the amount due on credit card facility and where the trial court rejected application for leave to defend and passed decree for Rs. 2,22,644.92 by treating the computerised bank statement as conclusive proof through the said statement was neither a certified copy of the entries contained in bank's books nor it carried a certificate as contemplated under the Bankers Book of Evidence Act and where the defendant contended that only Rs. 29,906.00 was payable by him and placed a statement of account on record to show that Rs. 1,10,0007- was paid by him to liquidate liability, it was held that the defendant had made a point and it appeared that his approach was fair. Leave to defend was granted on condition of the defendant's depositing Rs. 50,000/-. Bipin Narain Karn versus Bank Of Baroda 89 (2001) Delhi Law Times 763.

12. Where summary suit was filed on the basis of dishonoured cheque for Rs. 5 crores and written contract containing terms of inter corporate deposit and where the defendants had handed over shares of listed company as collateral security with right to plaintiff to dispose off the said shares in case of default in repayment and where the defendants contended that the defendants were entitled to claim set off and counter claim as the plaintiff should have sold the shares when the defendants committed default as the shares would have fetched more than Rs. 10 crores at that time and that though the plaintiffs had decided to give up the security, the shares were not physically handed over to the defendants, it was held that the defendants had raised substantial defence and triable issues but in view of clear cut admission and disputed facts, leave to defend was granted on the defendants depositing a sum of Rs. 5 crores. Leela Capital Finance Ltd Modiluft Ltd 2001 (2) Bom C R 110 (115 Paras 12 & 13)

13. In State Industrial & Investment Corp of Maharashtra ltd versus Hargovind Vithaldas & Ors, the Court observed that where the defend to leave was granted conditionally, it need not necessarily be an order of deposit as such. Instead of deposit, there could be various other items such as time bound schedue for the hearing of the suit, or an order of restraint on the disposal of defendant's property or an order to furnish any surety etc. 1990 Mah LJ 74.


14. Where the price of the goods were payable on the basis of “Cash on Delivery” and where the defendant accepted the delivery of the goods without any reservation and the defendant has dealt with the goods after taking delivery, it was held that trial court was justified in refusing leave to defend. MMTC Ltd versus Dimple Overseas Ltd AIR 2001 Delhi 427


15. Where in a suit on promissory note the defendant admitted his signature on promissory note but alleged that he had executed blank promissory note in favour of one broker who did not return the said promissory note after the defendant cleared his liability and where he alleged that he had never seen the plaintiff and never borrowed any money from plaintiff and where the trial Court refused to grant leave to defend the suit, it was held that the trial Court was justified in refusing the leave to defend the suit as the defendant had not taken any such plea in first instance which he could have very easily done by replying the registered notice. S Anand versus S Aruna 2000 AIHC 4372


16. Where the defendant admitted execution of cheque but pleaded that it was only given as collateral security for the price of goods which the plaintiff supplied to the defendants and contended that these goods were paid for by cash payments made from time to time and by other cheques and set out the exact dates on which according to the defendants the payment had been made and gave numbers of cheques, the Supreme Court held that the facts given in the affidavit were clear and precise. The Supreme Court found fault with the trial Judge's observation to the effect that "In the absence of those documents, the defence of the defendants seems to be vague consisting of indefinite assertions. The Supreme Court held that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit and that the nature of the defence has to be determined at the time when the affidavit is put in. At that stage all that the Court has to determine is whether "if the facts alleged by the defendant are duly proved" they will afford a good, or even a plausible, answer to the plaintiff's claim. Once the Court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise; and once leave is granted, the normal procedure of a suit, so far as evidence and proof go. At the hearing of Summons for Judgment it is not open to the plaintiff to request the Court to look into any evidence. Adverse inference cannot be drawn against the defendant if documents are not produced in support of statements made in the Application for leave to defend. Raghavaveera Sons versus Mrs Padmavati AIR 1978 Madras 81 (85, 86 & 87) (Paras 12 & 13)


17. In M/s. Aganall Traders Ltd. v. Shyarn Ahuja, the suit was filed on the basis of dishonoured cheque and promissory note and written agreement. In leave to defend application the defendant inter alia pleaded that a sum of Rs. 5 lacs was withdrawn from bank and paid in cash to the plaintiff for which no receipt was issued by the plaintiff. It was held that the defence taken by the defendant by no stretch of imagination can be said to be fair, bona fides or reasonable and that the defence was totally frivolous, false, illusory or sham or practically a moonshine. Leave to defend was refused and the decree was passed against the defendant. AIR 1999 Delhi 369 (371)

18. Where the summary suit was filed for the recovery of hotel charges amounting to Rs. 22,02,555.87 and where the defendant did not dispute her stay in the hotel, the invoice amount, the legal notice and her reply to the notice wherein she admitted her liability and where the defendant inter alia alleged in the application for leave to defend that the admission of liability was made under duress and that a third party was liable to make payment of hotel charges in respect of the defendant's stay in the said hotel, it was held that it was a case of setting up a defence which was illusory or sham or practically a moonshine and hence the defendant was not entitled for leave to defend. Indian Hotels Co Ltd versus Mrs V P Singh 59 (1995) Delhi Law Times 301 (304 & 306, Paras 5, 6 & 9)


19. Extraneous Controversies: Here the principal filed suit under Order XXXVII of C.P.C. on the basis of hundis executed by his agent and where the agent claimed commission alleged to be due on sale of goods, it was held that the agent was not entitled to permission to defend the suit on the ground of alleged claim of commission as the two claims constituted different causes of action. The Court held that extraneous controversies and different causes of action cannot justify enlargement of scope and purpose of summary action brought under Order XXXVII of C.P.C. M/s Brame Suri Pvt Ltd Suri Smith Chemicals & Asbestos Pvt Ltd 19 (1981) Delhi Law Times (SN) 12


Therefore, the test to determine whether Defendant deserves a leave to defend the case is- whether the nature of defence raised by Defendant is such which challenges the very issue, on which the Plaintiff has founded his case.


Some Judgments on Appeal filed in Summons for Judgment:
Madanlal versus Kedarnath AIR 1930 Bom 364
Ramanlal versus Chunilal AIR 1932 Bom 163
V S Saini versus DCM Ltd AIR 2004 Del 219
Simruthmull versus Jagraj AIR 1954 Mad 334
A S Chettiar firm versus V T Veerappa AIR 1935 Rang 245
Banwarilal versus Sohanlal (1955) 1 ILR Cal 299
Hiralal versus Salilkumar AIR 1973 Cal 320
Mohammadunissa versus Fayaz Ali 1958 Punj 437
D Shanlal versus Bank of Maha AIR 1989 Bom 150 (DB)



REASONED ORDER
In Sudeshkumar B. Dhawan v. J.S. Sood & ors. the High Court refused to interfere with the impugned order of conditional leave to defend stating that the District Judge had given cogent reasons and the discretion was not exercised arbitrarily. pg 203 of book

Reasoned Order
Waman Vasudeo versus Pratapmal Dipaji – AIR 1960 Bom 520



Insufficiently Stamped Instruments


The failure to appropriately stamp a document has necessary consequences as envisaged in the Indian Stamp Act 1899. At the same time regard must be had to what was observed in AIR 1969 SC 1238 to the effect that Stamp Act is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The leave to defend was granted upon condition that the defendant will deposit the amount in the Court of first two bills of exchange payable on Demand.


Whostenholme International ltd versus Twin Stars Industrial Corp & Ors 2001 (4) Bom C R 114 (120 & 121, Paras 12 & 15)



Where the defendant pleaded that his signature were obtained on Blank proforma, the court held that the Defence did not raise any triable issue. The Court observed that u/s 20 of the Negotiable Instruments Act, 1881, when a person signs and delivers to another a paper stamped in accordance with law relating to Negotiable instruments, either wholly blank or having written thereon an incomplete instrument, he prima facie thereby gives the authority to the holder of such an instrument to complete upon it a negotiable instrument for any amount which may be covered by the amount of stamp affixed on it. Punjab & Sind Bank versus Ram Prakash Jagdish Chander 40 (1990) Delhi Law Times 497 (500 para 7)



In a case where the wife of plaintiff had supported the application for Summons for Judgment on the basis of Special Power of Attorney granted to her by plaintiff and when it turned out that Power of Attorney was not duly stamped, the Court held that the plaintiff could be directed to pay the stamp duty and penalty. The said power of Attorney becomes admissible on such payment. Lt Col R K Jain versus Col S K Mehta 29 (1986) Delhi Law Times 140 (142 para 6)



Adverse inference cannot be drawn against a party for non producing books of account in Court where no notice was given to the party for producing books of accounts for the perusal of the Court or no appropriate proceedings were adopted for necessary direction from the Court for giving inspection of books of account. Summary Suit No.2014 of 1985, Summons for Judgment No.451, Bombay High Court. Refrigeration & Machinery Corp versus Dena Bank.


A delay in taking out summons for Judgment beyond the period of six months does not automatically entitle the defendant to unconditional leave to defend the suit, but it is relevant factor to be considered in conjunction with the nature of the defence while granting conditional or unconditional leave to defend the suit or refusing application for leave to defend. Bankey Bihari B Agarwal versus Bhagwanji Meghji 2001 (2) Bom C R 86 (109 Para 54)



Where the trial Court dismissed the application for leave to defend for default of appearance, it was held that from the first proviso to sub- rule (5) of Rule 3 of Order XXXVII of C.P.C. It is clear that leave to defend can 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 and for this purpose the presence of the defendant or his advocate was not necessary and as such the application filed by the defendant seeking leave of the Court to defend the suit, could not be ignored by trial Court while passing the Judgment. The decree was set aside and matter was remanded to the trial court. Sat Pal Singh versus Harjit Singh 1999 AIHC 1455 (1457 para 7)


The reasons offered to explain special circumstances should be such that a person absolutely had no possibility of appearing before the court on the relevant day. For instance there was a strike and all the buses were withdrawn and there was no other mode of transport, so as to go from the place where he resides to the place where the court is situated may constitute" special circumstances." The' reason' or 'cause' found' in special circumstances ' is more strict or more stringent then in " sufficient cause." What would constitute special circumstances would depend upon the facts of each case. Karumili Bharathi versus Prichikala Venkatachallam AIR 1999 A P 427 (431, 434 paras 8 & 12)

Where an application for leave to defend was dismissed for default of the counsel, it was held that the defendant cannot be penalized therefore as he was prevented by sufficient cause from getting leave to defend. L R raja versus Sha Rikhabdas Suresh Kumar 1986 (1) Madras L J 108 (110 para 4)

A litigant seeks justice from the court and he should not be punished for his no fault. Rafiq & another versus Munshi Lal & another. AIR 1981 SC 1400. Prabhati Lal Gurmukh Singh 29 (1986) Delhi Law Times 342 (343)

By questioning the maintainability of suit as a summary suit under Order XXXVII, the very jurisdiction of the Court to try the suit as a summary suit is challenged. M/s Kalyani Hansraj versus Mrs Kamini Agarawal 1990 (1) Bombay Case Reporter 348 (354 & 358, paras 6 & 12)

The Order granting conditional leave touches upon the jurisdiction aspect, and if a Court fails to exercise the said jurisdiction legally or commits material irregularity then High Court can interfere.



If the conclusion of trial Court is based on no material at all, then it not only amounts to a manifest illegality in the exercise of the trial Court's jurisdiction, but it also amounts to a wrong assumption of jurisdiction, for the purpose of imposing condition for leave to defend. Any conclusion as regards the existence of bona fides or malafides of a particular plea without going into the merits of the case, cannot be reached in an arbitrary fashion. The question of using discretion would obviously arise in cases where two alternative views are possible. The view which is merely arbitrary or fanciful is vitiated by a patent illegality and therefore results in exercise of jurisdiction not vested in law.


Where the trial Court without first deciding as to whether there was a triable issue and the defendant has got reasonable bona fide defence, directed the defendant to produce security, it was held that impugned judgment suffered from a serious error of jurisdiction and set aside the Judgment.


Where the trial Court imposed condition of furnishing security for grant of leave to defend without deciding the question as to whether there was a triable issue in the suit or whether the claim made by the defendant was moon-shine, the High Court set aside the said Order.



Where the trial Court granted leave to defend on the defendant's furnishing security in the sum of Rs.25,000/= but did not give any reason, the High Court held that leave to defend the suit should have been granted unconditionally unless the trial Court came to the conclusion that the defence raised by the defendant was sham or moonshine.


 
Where no infirmity is found in the findings of trial Court that the defence sought to be raised by the defendants was not substantial, the High Court would not interfere with the trial Court's decision.



ln M/s. Mechalec Engineers & Manufactures,2 the Supreme Court set aside the order of conditional leave to defend passed by High Court. In this case the trial Court had granted unconditional leave to defend the suit after setting out not less than seven contentions on which the parties were not at issue. In Revision Petition the High Court held that triable issues arose for adjudication, nevertheless, concluded that the defences were not bona fide. The High Court set aside the order of trial Court and granted conditional leave to defend. The Supreme Court held that any decision on such a question of fact whether the defence could be honest and bona fide, even before evidence has been led by two sides, is generally hazardous. It is not fair to pronounce a categorical opinion on such a matter before evidence of the parties is taken so that its effect could be examined. It is only in cases where the defence is patently dishonest or so unreasonable that it could not reasonably be expected to succeed that the exercise of discretion by trial Court to grant leave unconditionally may be questioned.



Special Leave Petition against order of refusing leave to defend:-


In Raj Duggal v. Ramesh Kumar Bansal,2 the Supreme Court set aside order refusing leave to defend and granted leave to defend on condition that the amount of Rs. 20,0007- deposited in that case pursuant to an earlier order made in the proceeding be paid to the plaintiff subject to condition that if ultimately respondent plaintiff fails in his suit he shall be liable to restitute the said sum of Rs. 20,0007- to defendant with interest thereon at 9% p.a. It was held that leave is declined where the Court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defences.



Special Leave Petition against decree:-


In Sunil Enterprises and anr. v. S.B.I. Commercial and International! Bank Ltd.5 the trial Judge made summons for judgment absolute against the Appellants and passed a decree for sum of Rs. 57,51,519=43 with interest and certain other incidental charges. The High Court affirmed the order. In this case the suit was filed by the Respondent Bank on the basis of bills of exchange in respect of which the Appellants were acceptors. M/s. Khanna Sales Corporation were the drawers of the bills and they had discounted the said bills of exchange with the Respondent Bank. The Appellant contended that the Bills of Exchange were executed without consideration as neither the goods were sold nor supplied in the transactions in question. The Appellant alleged fraud, collusion and connivance between the officers of the Respondent Bank and the said Khanna Sales Corporation. It was held that it cannot be said that the // defence raised by the Appellant was totally defenseless or moonshine or illusory. The Supreme Court set aside the decree passed by High Court and granted unconditional leave to defendant to defend the suit.


 
In Rafiq and anr. v. Munshilal and anr.,2 the Supreme Court set aside the order of dismissal of Appeal and directed the High Court to dispose of the said appeal in accordance with law. The said appeal was dismissed for default of appellant's counsel. The Supreme Court held that a party should not suffer for the inaction, deliberate omission, or misdemeanor of his agent.




Setting aside ex-parte decree. How to exercise such powers. O.37R.4. 66 BLR 277.


Liquidated demand / liquidated amount


AIR 1989 Bom 264.


AIR 2005 Del 369


Judicial exercise of discretion – 2012 (1) All MR – Para 10;

price fof goods sold – Hetal Ent versus New India Assurance – 2012 (1) All MR 252 – Para 4;

IAL Logistics versus Quantum International – 2012 (1) All MR 305 – Paras 25, 26;

Gaurav Singhania versus Matrix Agri – 2012 (1) All MR 129 – Para 6





Order 37 – Summary Suits –


Harilal & Co versus Gammon India – 2010 (1) All MR 408;


Infra Structure Leasing versus Prabhu – (2010) 5 Bom CR 251;


Vodafone Essar versus Nitin Goel – (2010) 3 Bom CR 782


Bank of India versus Shashank P Ingle – Necessary averments not in the Plaint nor in the Affidavit – curable defects – not a ground for leave to defend – 2010 (4) AIR Bom R 279 : 2010 All MR (Supp) 355;


Conditional grant of leave – conditions should not be onerous – Fixity Packaging versus Udyen Jain – 2010 AIR SCW 489


Leave granted on condition – triable issues – discretion cannot be exercised disregarding law – Smita Yahwant versus Suryakant Sadashiv – 2010 (3) All MR 338


(1998) 5 SCC 354

2011 (1) AIR Bom R 759 – (Nagpur) WP: 5258/2009;

2011 (1) AIR Bom R 770 – (Nagpur) WP 5664-5364/2010 – Paras – 8, 12, 16, 17.

(1976) 4 SCC 687


(2010) 5 Bom CR 208




Summary Suits – HC OS Side Rule 227 – When decree is not applied within 6 months after filing of Plaint ……… Central Bank of India versus Femina Pharma – AIR 1982 Bom 67



Defiance Knitting Industries Pvt Ltd Vs Jay Arts 2006 4 MLJ 939 SC
ONGC Vs SBI Overseas Branch Bombay AIR 2000 SC 2548
Raj Duggal Vs Ramesh Kumar Bansal AIR 1990 SC 2218
Rajni Kumar Vs Suresh Kumar Malhotra and Anr AIR 2003 SC 1322
Sunil Enterprises and Anr Vs SBI Commercial and International Bank Ltd AIR 1998 SC 2317




O.37 – 2012 (2) All MR 901 – Paras 21, 22


Illustration appended in Indian Evidence Act – Bills of exchange – “issue of acceptance” – Section 14 (d);
14(d) The question is, whether A, the acceptor of a bill of exchange, knew that the name of the payee was fictitious.
The fact that A had accepted other bills drawn in the same manner before they could have been transmitted to him by the payee if the payee had been a real person, is relevant, as showing that A knew that the payee was a fictitious person.


Illustration appended in Indian Evidence Act – Consideration as to bills of exchange – Section 114 (c);

114(c) That a bill of exchange, accepted or endorsed, was accepted or endorsed for good consideration;

114(i) That when a document creating an obligation is in the hands of the obligor, the obligation has been discharged.

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