Order XXXVII of CPC

Source: Supreme Court  

Why in News? 

Recently, the bench of Justices Ahsanuddin Amanullah and SVN Bhatti held that in a summary suit under Order XXXVII Code of Civil Procedure, 1908 (CPC)  , no defence can be filed without the court’s leave, overturning a Bombay High Court order that had allowed the defendant to file a reply without such permission—clarifying the distinct procedure meant for speedy disposal of summary suits. 

• The Supreme Court held this in the matter of Executive Trading Company Private Limited. v. Grow Well Mercantile Private Limited (2025). 

What was the Background of Executive Trading Company Private Limited. v. Grow Well Mercantile Private Limited (2025)? 

• The appellant, Executive Trading Company Private Limited, and the respondent, Grow Well Mercantile Private Limited, had business transactions for a reasonably good period of time. 
• The appellant filed a Commercial Summary Suit No. 19 of 2020 before the High Court of Judicature at Bombay seeking recovery of an alleged admitted and confirmed total liability of Rs. 2,15,54,383.50/- together with interest at 24% per annum amounting to Rs. 2,38,50,845.00/-. 
• The suit was filed on 15th October 2019 under Order XXXVII of the Civil Procedure Code, 1908. 
• Summons were issued on 15th January 2020, along with the Plaint and Annexures, which were served upon the defendant on 18th January 2020. 
• On 28th January 2020, the defendant entered appearance in terms of sub-Rule (3) of Rule 3 of Order XXXVII of the CPC. 
• The plaintiff filed Summons for Judgment No. 75 of 2021 in Commercial Summary Suit No. 19 of 2020, which was served upon the defendant on 11th January 2022. 
• Instead of filing an application seeking leave to defend the suit, the defendant filed I.A. (L) No. 7771 of 2022 praying for dismissal of the suit for non-compliance with Section 12A of the Commercial Courts Act, 2015, which mandates pre-institution mediation. 
• On 8th April 2022, the said application was allowed, the parties were referred to mediation, and the Summary Suit was kept in abeyance. 
• A Mediation Report dated 9th February 2023 was filed by the Mediator, indicating that the mediation had failed to resolve the dispute. 
• The plaintiff filed I.A. No. 1353 of 2023 seeking permission to amend the plaint and summons for judgment as per the Schedule annexed thereto. 
• The said application was allowed by order dated 29th August 2023, and the plaintiff was directed to carry out amendments to the plaint and summons for judgment within two weeks and serve the same upon the other side within one week thereafter. 
• On 5th December 2023, the High Court passed an order directing the defendant to file reply to the Summons for Judgment by 20th December 2023 with a copy to the other side, and rejoinder, if any, to be filed by 9th January 2024. 
• The defendant filed an application for condoning the delay in applying for leave to defend on 23rd January 2024, which remained pending before the High Court. 
• The plaintiff challenged the High Court's order dated 5th December 2023 before the Supreme Court, contending that the direction to file a reply to the Summons for Judgment without seeking leave to defend was procedurally incorrect and contrary to the mandatory requirements of Order XXXVII of the CPC. 

What were the Court’s Observations? 

• The Court held that if a reply or defence is allowed to come on record in a summary suit without the leave of the court, then the distinction between a suit normally instituted and a summary suit under Order XXXVII of the CPC stands effaced. 
• The Court observed that the procedural deviation committed by the High Court goes to the root of the matter and the impugned order cannot be sustained. 
• The Court emphasised that under Order XXXVII of the CPC, the defendant must apply for leave to defend by filing an affidavit disclosing a genuine and substantial defence. 
• The Court clarified that leave to defend shall not be refused unless the defence is frivolous or vexatious, and if the defendant admits owing part of the amount, that amount must be deposited in court to obtain leave to defend. 
• The Court noted that if the defendant does not apply for leave or the application is refused, the plaintiff is entitled to immediate judgment. 
• The Court acknowledged that the court has discretion to condone any delay in applying for leave to defend if the defendant shows sufficient cause. 
• The Court clarified that setting aside the impugned order shall not foreclose the options available to the defendant in the Judgment Summons already issued, and the observations shall not prejudice either party's case. 
• The Court allowed the appeal, leaving the option to the parties to pursue remedies in accordance with the steps envisaged in Rule 3 of Order XXXVII of the CPC. 

What are the Sequence of Steps for Filing a Summary Suit under Order XXXVII ? 

• Upon filing the summary suit, the plaintiff must serve the defendant with the plaint and annexures, together with the summons. 
• The defendant has ten days to enter an appearance, either in person or through a pleader, and provide a service address. 
• On the same day of entering appearance, the defendant must notify the plaintiff or its pleader of its appearance. 
• The plaintiff then serves a summons for judgment on the defendant in the court-prescribed format, supported by an affidavit verifying the cause of action, the amount claimed, and the belief that the defendant has no defence. 
• Thereafter, the defendant has ten days to apply for leave to defend by filing an affidavit disclosing a genuine and substantial defence. 
• The court may grant leave to defend unconditionally or on such terms as may appear to be just. 
• The court shall not refuse leave unless the defence is frivolous or vexatious. 
• If the defendant admits to owing part of the amount, it must deposit that amount in court to obtain the leave to defend. 
• If the defendant does not apply for leave or its application seeking leave is refused, the plaintiff is entitled to immediate judgment. 
• If the court grants leave to defend but the defendant fails to comply with any condition or other directions, the plaintiff is also entitled to immediate judgment. 
• The court has the discretion to condone any delay in entering an appearance or applying for leave to defend if the defendant shows sufficient cause.