The Supreme Court set aside a Bombay High Court order which had permitted the defendant to file a reply in a commercial summary suit without first seeking leave to defend, holding that such a procedural deviation “strikes at the very root” of the summary procedure under Order XXXVII of the Civil Procedure Code, 1908 (CPC). The Court observed that if a reply or defence is allowed to be filed without leave, “the distinction between a regular civil suit and a summary suit under Order XXXVII stands effaced.”
The parties had engaged in business transactions over a period of time, following which the plaintiff filed a commercial summary suit to recover an admitted liability of over Rs. 2 crore along with interest. After the defendant entered an appearance, the plaintiff issued summons for judgment. Instead of seeking leave to defend as required under Order XXXVII, the defendant filed an application seeking dismissal of the suit for non-compliance with Section 12A of the Commercial Courts Act. The matter was referred to mediation, which failed. The plaintiff was subsequently allowed to amend the plaint, and the defendant later filed an application seeking condonation of delay in applying for leave to defend, which remained pending. Despite this, the High Court directed the defendant to file a reply to the summons for judgment.
The counsel for the plaintiff argued that the High Court’s order permitting a reply was legally unsustainable, as sub-rule (5) of Rule 3 of Order XXXVII mandates that the defendant must first seek leave to defend by filing an affidavit disclosing a substantial defence. The plaintiff contended that permitting a reply without leave undermines the entire summary procedure and deprives the plaintiff of the right to seek immediate judgment if leave is not sought.
On the other hand, counsel for the defendant argued that an application for condonation of delay in seeking leave was already pending and that the plaintiff’s assertion regarding the delay was incorrect. It was further submitted that even if the application was filed under an incorrect provision, it did not automatically entitle the plaintiff to a decree.
The Court emphasised the procedural framework of Order XXXVII, particularly sub-rules (4) and (5) of Rule 3, which require a defendant to seek leave to defend by disclosing a substantial defence. The Court noted, “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 a summary suit under Order XXXVII of the CPC stands effaced. The procedural deviation goes to the root of the matter.”
The bench held that the High Court’s approach of permitting a reply without leave was contrary to the very purpose of summary proceedings, which are designed to ensure swift adjudication where the defendant lacks a substantial defence.
Setting aside the Bombay High Court’s order, the Top Court allowed the appeal and directed that the matter proceed strictly in accordance with the procedure under Rule 3 of Order XXXVII of the CPC. The Court clarified that its observations should not prejudice the rights of either party and that the defendant remains free to pursue available remedies in accordance with law. No order as to costs was made.
Case Title: Executive Trading Company Private Limited. vs. Grow Well Mercantile Private Limited
Case No.: SLP(C) No. 1134 of 2024
Coram: Justice Ahsanuddin Amanullah, Justice S.V.N. Bhatti
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