The Supreme Court of India, in a significant ruling on civil procedure, has held that allowing a defendant to file a reply or defence in a summary suit under Order XXXVII of the Civil Procedure Code, 1908 (CPC) without first obtaining ‘leave to defend’ from the court is a procedural deviation that “goes to the root of the matter.” The bench, comprising Justice Ahsanuddin Amanullah and Justice S.V.N. Bhatti, set aside an order of the Bombay High Court that permitted a defendant to file a reply to a Summons for Judgment without such leave.
The apex court concluded that bypassing this mandatory step effaces the distinction between a regularly instituted suit and a summary suit, thereby undermining the specific procedure laid out in Order XXXVII of the CPC.
Case Background
The appeal was filed by Executive Trading Company Private Limited, the original plaintiff, against Grow Well Mercantile Private Limited. The plaintiff had initiated a Commercial Summary Suit before the High Court of Judicature at Bombay to recover an alleged admitted liability of Rs. 2,15,54,383.50, along with interest.
The suit was filed on October 15, 2019. After summons were served, the defendant entered an appearance on January 28, 2020. Subsequently, the plaintiff served a Summons for Judgment on the defendant on January 11, 2022.
According to the procedure under Order XXXVII, the defendant was required to apply for leave to defend within ten days. Instead, the defendant filed an application for the dismissal of the suit, citing non-compliance with Section 12A of the Commercial Courts Act. This application was allowed on April 8, 2022, and the matter was referred to mediation, which ultimately failed.
Following the failure of mediation, the plaintiff was permitted to amend the plaint and the Summons for Judgment. It was at this stage, on December 5, 2023, that the High Court passed the impugned order, directing the defendant to file a reply to the Summons for Judgment by December 20, 2023. The plaintiff challenged this order before the Supreme Court, arguing it was procedurally flawed. The judgment notes that the defendant later filed an application to condone the delay in seeking leave to defend on January 23, 2024, which remains pending before the High Court.
Arguments of the Parties
Appearing for the appellant (plaintiff), Advocate Debesh Panda contended that the High Court’s order was procedurally incorrect and unsustainable. He argued that under sub-Rule (5) of Rule 3 of Order XXXVII of the CPC, the defendant is mandated to first file an application seeking leave to defend. The court must then decide whether a case for granting leave is made out. Allowing a reply to be filed directly bypasses this crucial step.
Representing the respondent (defendant), Advocate Sanampreet Singh argued that an application for condonation of delay in seeking leave was already pending. He submitted that even if an application is filed under a wrong provision, it does not automatically entitle the plaintiff to a decree, and it is always open for the defendant to convince the court to grant leave.
Court’s Analysis and Decision
The Supreme Court bench, after examining the procedural steps outlined in Order XXXVII, Rule 3 of the CPC, agreed with the appellant’s contentions. The judgment authored by Justice S.V.N. Bhatti systematically detailed the procedure, noting that after a Summons for Judgment is served, the defendant has ten days to apply for leave to defend by filing an affidavit disclosing a genuine defence. Only if such leave is granted, conditionally or unconditionally, can the defendant proceed to defend the suit.
The Court observed that the High Court had bypassed the requirements of sub-Rules (4) and (5) of Rule 3. The bench stated that allowing a defence to be placed on record without the court’s leave would nullify the specific purpose of a summary suit.
In its dispositive reasoning, the Court held:
“if a reply or defence is allowed to come on record in a summary suit without the Leave of the Court then the distinction sought to be maintained between a Suit normally instituted and Summary Suit under Order XXXVII of the CPC stands effaced. The procedural deviation goes to the root of the matter.”
Consequently, the Supreme Court set aside the High Court’s order dated December 5, 2023. However, the Court clarified that its decision should not be interpreted as foreclosing the options available to the defendant under the law. The bench allowed the appeal, leaving it open to the parties to pursue their remedies strictly in accordance with the steps envisaged in Rule 3 of Order XXXVII of the CPC. No order as to costs was made.
