Civil litigation is a lengthy procedure where matters take years to resolve. Therefore, Order 37 of CPC is a sigh of relief to the plaintiff where speedy redressal is necessary for the interest of commercial dispute. Furthermore, it prevents the defendant from creating any unnecessary delay in litigation and prevents the plaintiff from obtaining a decree.
What is a Summary Suit?
The summary suit is a fast-track procedure where the Court can pass judgment without hearing the defence to enforce the plaintiff’s rights effectively. It is embedded in Order XXXVII of the Code of Civil Procedure (CPC). Though Summary Suit appears to be violative to the principle of natural justice and Audi Alteram Partem (let the other party be heard), it is only applicable if the defendant has no defence.
What is the object of a Summary Suit?
The main object of the summary suit is to prevent the defendant from making any unreasonable obstructions where the defendant has no defence, thereby enabling speedy disposal of cases.
In which courts can you file a suit for the summary procedure?
A suit for the summary procedure can be filed before the High Courts, City Civil Courts, Court of Small Causes, and other courts as the High Court may deem fit.
What are the classes of suits to which Order 37 applies?
Order 37 of CPC applies to the following classes of suits:
a) Suits upon Promissory notes, hundi, bills of exchange and
b) Suits to recover liquidated demand in money or debt payable by the defendant with or without interest arising on –
· Written contract; or
· Enactment, where a fixed sum of money is to be recovered or debt other than a penalty; or
· Guarantee, where the claim against the principal is in respect of liquidating demand or debt only.
When can we file a Summary Suit?
A summary suit can be filed for a speedy recovery of the amount of bill or promissory note that has been dishonoured in a commercial transaction.
How do we file a summary suit?
1. A summary suit can be filed by the plaintiff with a plaint containing the following:
a) a specific averment or affirmation that a suit under Order 37 CPC has been filed;
b) no relief has been claimed in the plaint and
c) the title of the suit should be inscribed with “Under Order XXXVII of the Code of Civil Procedure, 1908” below the number of the suit.
2. Summon of the suit under Form No. 4 and Annexure B shall be issued to the defendant
3. The defendant will be required to enter an appearance before the Court. Once the defendant enters an appearance, the allegations in the plaintiff’s plaint will be deemed to be admitted.
4. Thereafter, the plaintiff will be entitled to a decree for any amount not exceeding the amount stated in the summons along with interest up to the date of the decree, including such other cost as the High Court may deem proper.
What is the period of limitation in a suit filed under Order 37 of CPC?
A summary suit has to be filed within 3 years from the date the cause of action arises.
What is the process for the appearance of the defendant?
Order 37 Rule 3 of CPC has laid down the procedure for the appearance of the defendant.
1) The defendant has no right to defend under a summary suit unless the defendant’s appearance is made either in person or through a pleader within 10 days from the date he receives the summons in Form 4 in Appendix B with a copy of plaint and annexures.
Thereafter, the defendant has to file an “Application under Rule 3(1) of Order 37 CPC on behalf of the defendant for Entering Appearance” stating the address for service of notice on him. This application should be made to the Court and sent to the plaintiff or his advocate through a registered post or email.
2) All the notices, summonses, or other judicial processes shall be deemed to be served on the defendant when they are delivered at the address given by the defendant.
3) The day the defendant enters an appearance, he will send a notice to the plaintiff or his pleader about his appearance. Such notice may be delivered to the plaintiff’s address or his pleader as the case may be.
4) Summons of Judgement: Once the appearance is entered by the defendant, a Summons for Judgement under Form 4-A in Annexure B will be served on him by the plaintiff. This form would be supported by an affidavit that verifies the cause of action and the sum claimed, stating that the defendant has no defence to the suit.
5) Leave to defend: The defendant may apply for leave to defend the suit within 10 days from the date the Summons for Judgement was served on him. The leave to defend the suit should be supported by an affidavit stating the facts that are sufficient to allow him to defend. Hence, the Court may grant the defendant a leave to defend based on terms or unconditionally as the Court deems fit.
Generally, the leave of defence will not be refused by the Court if the Court is satisfied that the facts stated by the defendant indicate that the defendant wants to raise a substantial defence or that defence raised by the defendant is not frivolous or vexatious.
However, if the defendant has admitted the part of the amount claimed by the plaintiff to be due. Then, in such a situation, a leave to defend will not be granted unless the defendant deposits the amount to be due to the plaintiff in the Court.
6) Judgement: Upon hearing of summons for judgment –
a) If the defendant did not apply to leave of defence or where he has applied but it got rejected by the Court, then in such case, the plaintiff is entitled to a judgment without any delay;
b) If the defendant is allowed to defend for a partial or whole claim, the Court may pass an order directing him to deposit security within a stipulated time as the Court may deem fit. However, on the failure of depositing such security within the given time, the plaintiff will be entitled to a judgment without any delay.
7) If the defendant has delayed in entering of appearance or applying for leave of defence, then in such case, the Court may excuse such delay if it is satisfied with the sufficient cause of delay shown by the defendant.
What is the power to set aside decree?
Order 37 Rule 4 of CPC, When the Court has passed a decree, then in special circumstances, the Court may be based on such terms as the Court deems fit –
· set aside the decree,
· stay or set aside its execution or
· give leave to appear to the summons or defend the suit.
What is the power to order bills, etc., to be deposited with the officer of the Court?
Order 37 Rule 5 of CPC, the Court may order the plaintiff to deposit with the officer of the Court all the promissory notes, bill, or hundi in relation to which a suit is instituted. The Court may further order to stay all the proceedings until the security for the costs is given by the plaintiff.
What is a recovery of the cost of noting the non-acceptance of dishonoured bills or notes?
Order 37 Rule 6 of CPC, every dishonoured promissory note or bill of exchange holder shall have the same remedy for recovery of expenses that are incurred in noting the non-payment or non-acceptance due to such dishonour, as he may have under Order 37 of CPC for recovery of the amount of such note or bill.
What is the procedure in suits?
Order 37 Rule 7, the procedure in suits for summary proceeding is the same as the procedure in suits that is instituted in an ordinary manner.
Format for Legal notice under Order 37 CPC demanding amount of cheque bounced:
Date:
(By Regd. Post Ack. Due and Courier)
To;
MR. XYZ
Managing Director
_______ Pvt. Ltd.
(Address)
Subject: Legal Notice under Section 138, Negotiable Instruments Act / Order 37 of the Code of Civil Procedure for Cheque Dishonoured due to insufficient balance.
Dear Sir,
This is under the instruction and authority of our client Mr. XYZ (“My Client”); having their registered office at __________ and workshop at _________, we serve upon you the following notice of demand for an amount under Section 138 of the Negotiable Instruments Act / Order 37 of the Code of Civil Procedure (CPC).
1. My client is engaged in the business of manufacturing and selling furniture that is designed by a highly skilled interior designer and craftsperson.
2. In the year _______, Mr. ABC (“you”, “your”) had approached my client and placed an order to purchase _____ product that is worth Rs. ______ (Rupees ______ Only).
3. The order was delivered as per the agreed delivery date i.e., ________.
Invoice No. _______, Date: _______, Amount: ________.
4. As agreed, You had made a part payment of Rs. ______/- (Rupees ____ Only) (“Part Payment”) against the said invoices. The balance of Rs. _______/- (Rupees ______ Only) (“Balance Amount”) is pending to be received by my client.
5. That a cheque for Balance Amount was drawn by You on ______.
6. That the abovementioned cheques, namely;
Cheques No. ______ dated ______ for Rs. _______ (Part Payment Amount), and Cheque No. _______, dated ______ for Rs. ________ (Balance Amount);
Total Amount Rs. ______/- (Rupees _____ Only) was presented to the ______ Bank, Mumbai by my client on ________.
7. To the shock and surprise of my client, the said cheque for the Balance Amount had been dishonoured by the bank stating “insufficient balance,” which was intimated to my client by the ______ Bank, Mumbai through the cheque return memo dated ______, received on ______.
8. Thereafter, my client had tried to contact you through email, telephone, and personal visits. Still, there was no reply from your side, and the Balance Amount was not paid by you.
9. It was clear from your behaviour that you had a dishonest intention at the time of purchasing the product. Thereby deceived my client to the Balance Amount of Rs. ______ (Rupees _____ Only).
10. My client believes that you were aware that there was no money in your account, and you had intentionally given the cheques to cheat my client, which makes you liable for an offence under Section 138, Negotiable Instruments Act.
11. Take notice that you are, under these circumstances, called upon to pay the Balance Amount of Rs. ______/- (Rupees ______ Only) along with interest @ 12 % p.a. for the delayed period, immediately within 15 days from the date of receipt of this notice.
12. Take further notice that if you fail to comply with the above requirement, my client will have no option but to take legal action against you. You will be liable to face all the consequences and costs.
Yours Sincerely;
_______
Adv. ______.
(On behalf of _____)
_______
Client
Case Laws
B. L. Kashyap & Sons Ltd Vs. M/S JMS Steel & Power Corporation & Anr. (2022)
In this case, the defendant had made two purchase orders to supply 200 tonnes of steel from the plaintiff. The plaintiff had delivered the order and raised invoices to defendant 2. Defendant 1 had given two cheques to the plaintiff, asking him to deposit these cheques only after receiving intimation from defendant 1. However, the plaintiff did not receive any intimation from the defendant. Therefore, despite reminding both the defendants, there was no payment made by either of them. Thus, the plaintiff had filed the summary suit under Order 37 of CPC.
The Court had to decide whether leave to defend should be granted to the defendant and the defendant’s liability.
The Court held that the suit under Order 37 CPC is maintainable even if the cheque was not presented or dishonoured. The Court further granted the defendant leave to defend. The amount deposited by the defendant was taken as a condition for leave to defend. The Court had also directed the trial court to proceed with the suit against defendant 2 and decide about the treatment of the amount deposited by the defendant.
Conclusion
A summary suit can be filed under Order 37 of CPC to speed up the amount due in a commercial dispute. The defendant is not granted a right to defend the suit unless it has entered the appearance with an affidavit stating substantial evidence to support it. For example, a summary suit is filed in a suit to recover the amount from dishonoured bills of exchange, promissory notes, cheques, etc.
