2023 (1) TMI 1398 - HC - Indian Laws

Summary judgment denied in commercial suit due to substantial limitation defense requiring trial determination

Ashok Commercial Enterprises and Ors. Versus Rajesh Jugraj Madhani

Bombay HC dismissed petition challenging City Civil Court's rejection of summary judgment application under Order XIII-A CPC. Court clarified that ... Rejection of Petitioners/Plaintiffs' application for summary judgment - commercial suit instituted for recovery of money with interest - whether the application for Summary Judgment of the Petitioners/Plaintiffs is required to be considered under the provisions of Order XXXVII or Order XIII A of the Code? - time limitation. HELD THAT:- This confusion is created essentially on account of reliance placed on provisions of Order XXXVII of the Code as well as on judgment in IDBI TRUSTEESHIP SERVICES LTD. VERSUS HUBTOWN LTD. [2016 (11) TMI 1529 - SUPREME COURT] laying down broad principles on the issue of grant of leave to defend under those provisions. These submissions created an impression as if the Petitioners/Plaintiffs are pressing their claim under the provisions of Order XXXVI of the Code. However, as the submissions of the rival parties progressed it became apparent that Plaintiffs' claim is required to be considered under the provisions of Order XIII-A of the Code. To achieve more clarity, it would be profitable to make reference to the order passed by the City Civil Court on November 22, 2019 when Unregistered Summons for Judgment was filed by Plaintiffs under the provisions of Order XXXVII of the Code. Thus, as per order dated November 22, 2019, Plaintiffs' application came to be numbered as the one for Summary Judgment under the provisions of Order XIII-A of the Code. Therefore, the provisions of Order XXXVII of the Code would not be directly relevant while examining correctness of the impugned order dated August 11, 2021 passed by the City Civil Court. Now that a clarity is achieved about the exact provision of the Code under which application was filed for Summary Judgment, the objection raised about maintainability of Plaintiffs' application under Order XIII-A of the Code needs to be determined. Relying on provisions of sub-rule (3) of Rule 1 of Order XIII A of the Code, it is contended that since the suit was initially filed as a summary suit, the provisions of Order XIII-A of the Code would have no application to Plaintiffs' suit. Here again, there is some degree of dispute as to whether the suit was initially filed as a summary suit or not. It was undoubtedly presented as a summary suit. It was however registered as Commercial Suit by the Court on its own. Whether act of 'presentation' would amount to 'filing' within the meaning of sub-rule 3 of Rule 1 of Order XIII A of the Code will have to be decided. Undoubtedly sub-rule 3 of Rule 1 of Order XIII A of the Code uses the word 'filed', and not 'presented' or 'registered' - No doubt Commercial Court is required to pronounce summary judgment in the event it finds that there would be no real prospect of the Defendant successfully defending the claim. It is, therefore, necessary to examine whether there is a possibility of Defendant in the present case defending the claim. The present case would not be covered by eventuality of clause (a) of Rule 3 of Order XIII A of the Code where this court is in a position to record a finding with degree of certainty that Defendant has no real prospect of successfully defending the claim. Therefore, no case was made out for City Civil Court to pronounce a summary judgment on the claim of Plaintiffs under Order XIII Rule 6 of the Code. The defence of defendant inter alia on the point of limitation is substantial one considering the fact that plaintiffs demanded the amount by depositing cheques in November 2015. Plaintiffs contend that the defendant requested for deferring the demand, which is required to be proved by adducing evidence as the alleged request is not in the form of a written communication. Thus, it is not possible to record a finding at this juncture that there is certain possibility of success of claim of plaintiffs. To arrive at such that finding, process of trial may have to be undertaken. Therefore, even making of a conditional order under Rule 6(1)(b) of Order XIII A of the Code is not warranted. Thus, no error is being committed by the City Civil Court in passing the impugned order. The Petition is devoid of merits - petition dismissed. Issues Involved:1. Rejection of the application for summary judgment.2. Requirement of a moneylender's license.3. Limitation period for filing the suit.4. Applicability of Order XIII-A and Order XXXVII of the Code of Civil Procedure (CPC).Detailed Analysis:1. Rejection of the Application for Summary Judgment:The Petitioners challenged the order dated August 11, 2021, by the City Civil and Sessions Court, Mumbai, which rejected their application for summary judgment. The Petitioners, as Plaintiffs, instituted a commercial suit for the recovery of money with interest against the Defendant. Despite the Defendant's issuance of a Bill of Exchange and post-dated cheques, the cheques were dishonored due to insufficient funds. The City Civil Court held that there were triable issues involved, thus rejecting the summary judgment application. The High Court supported this decision, noting that the existence of triable issues, particularly regarding the limitation period, warranted a full trial rather than a summary judgment.2. Requirement of a Moneylender's License:The Defendant raised a defense based on the Plaintiffs' lack of a moneylender's license under the Maharashtra Money-Lending (Regulation) Act, 2014. However, it was conceded that this requirement does not apply to suits based on Bills of Exchange. The High Court acknowledged this concession, indicating that the absence of a moneylender's license was not a valid defense in this context.3. Limitation Period for Filing the Suit:One of the critical defenses raised by the Defendant was that the suit was barred by limitation. The events leading to the suit occurred in 2015, with the first Bill of Exchange issued on May 27, 2015, and the cheques dishonored on November 2, 2015. The Plaintiffs issued a demand notice on June 28, 2019, almost four years later. The Defendant argued that the limitation period commenced either from the due date of the Bill of Exchange or from the date of dishonor of the cheques. The High Court noted that this issue of limitation constituted a triable issue, thus justifying the City Civil Court's decision to reject the summary judgment application.4. Applicability of Order XIII-A and Order XXXVII of the CPC:The confusion regarding whether the application for summary judgment should be considered under Order XIII-A or Order XXXVII of the CPC was addressed. The High Court clarified that the application was filed under Order XIII-A, as per the City Civil Court's order dated November 22, 2019. The provisions of Order XIII-A, which were introduced by the Commercial Courts Act, 2015, are broader than those of Order XXXVII. The High Court emphasized that the objective of sub-rule 3 of Rule 1 of Order XIII-A is to prevent a Plaintiff from seeking a second judgment after an initial attempt under Order XXXVII. The High Court rejected the Defendant's objection regarding the non-applicability of Order XIII-A, stating that the Plaintiff should not be disadvantaged by the conversion of their summary suit into a commercial suit.Conclusion:The High Court dismissed the Petition, upholding the City Civil Court's decision to reject the application for summary judgment. It found that the presence of triable issues, particularly regarding the limitation period, warranted a full trial. Additionally, the High Court clarified the applicability of Order XIII-A and Order XXXVII of the CPC, ensuring that the Plaintiff's rights were preserved despite the conversion of the suit. The Petition was dismissed without any orders as to costs.