2024 (4) TMI 1292 - HC - Indian Laws

Summary Judgment Set Aside for Lack of Notice Under Order XIII-A CPC, Other Trial Court Decisions Upheld

The HC held that the Trial Court erred in granting summary judgment under Order XIII-A CPC without a formal application and without affording the ... Rejection of plaint - seeking rejection of the plaint on the ground that since the amount sought to be recovered is more than Rupees Ten Lakhs, therefore, the jurisdiction to recover the said amount lies with the Debt Recovery Tribunal and not the learned Trial Court - failure to follow the statutory requirements under Order XIII-A of the CPC. Whether the learned Trial Court has passed the impugned judgment in accordance with Order XIII-A of the CPC? - HELD THAT:- Provisions relating to summary judgment are contained in Order XIII- A of the CPC and the same was introduced by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. Order XIII-A of the CPC sets out the procedure by which Courts can decide a claim arising in a ‘Commercial Dispute’, without recording oral evidence. Therefore, the said Order is only applicable for disputes covered under the Act. In other words, a suit has to be a commercial dispute for the Summary Judgment provisions under Order XIII-A to apply - It is apparent from a plain reading of Order XIII-A of the CPC that a Court can pass an order or a judgment on claims at the threshold stage, before framing the issues. In terms of Rule 2 of the said Order, an applicant is entitled to apply for summary judgment at any time after the summons has been served on the defendant. Rule 4 of Order XIII-A of the CPC prescribes the procedure to be followed while adjudicating upon an application for summary judgment. Sub-rule (1) of Rule 4 explicitly provides for ‘matters’ which are required to be included in an application for summary judgment. It is stated therein that firstly the application must state that it is for summary judgment under Order XIII-A of the CPC. Secondly, it must also disclose all material facts and identify the point of law, if any. Thirdly, the person making the application may rely on any documentary evidence, which is required to be included in the application and the relevant contents of it are also required to be identified. Lastly, the reasons that there is no real prospect of succeeding in the suit must be stated in the application along with the relief being sought. It is further stated that the respondent has thirty days to file a response to the said application for the summary judgment and the notice of hearing. In Bright Enterprises Private Ltd. v. MJ Bizcraft LLP, [2017 (1) TMI 1858 - DELHI HIGH COURT], it was submitted before the Division Bench of this Court that the power of the Courts under Order XIII-A, Rule 3 of the CPC, cannot be curtailed or whittled down by subjecting it to the fulfillment of the condition of filing an application for summary judgment. The said submission was rejected by the Division Bench and it was held that a summary judgment is not permissible without there being an appropriate application for summary judgment. It was further held that the above said provision empowers the Court to give a summary judgment against a plaintiff or defendant on a claim in the event it is noted that the plaintiff has no prospect of succeeding in a claim or that the defendant has no case for his defence and there are compelling reasons before the Court to not dispose of the claim before recording oral evidence. This Court is of the view that that as per contents of the provision, when read as a whole, it is inferred that if an application for a summary judgment is made in accordance with Sub-rule (1) of Rule 4 of Order XIII-A of the CPC at the stage as mentioned in Rule 2 of Order XIII-A of the CPC, the Court is required to fix a date for hearing the said application. Admittedly, the said rule has been violated and not followed here. In this regard, this Court is of the view that although the learned Trial Court has drawn sustenance from Order XIII-A of the CPC for adjudicating the respondent bank’s dispute but the procedure as set out in the said provision has been completely disregarded. Firstly, no application was filed by the respondent bank; instead there was merely an oral submission seeking summary judgment. Secondly, even if the above is overlooked, nowhere can it be inferred that the learned Trial Court afforded the appellants notice period of thirty days’ - In the instant case there was no application filed before the learned Court setting out the reasons for which the respondent bank’s claim was liable to be decreed. In absence of any such application, the recourse to a summary judgment under Order XIII-A of the CPC was illegal since the appellants had no opportunity to respond to the contentions raised by the respondent. This Court is of the view that the decision of the learned Trial Court that the respondent bank’s suit was liable to be decreed in terms of Order XIII-A of the CPC is erroneous and only to the said extent, the same is set aside being contrary to the statutory provisions as well as the settled law - the issue is decided in favour of the appellants. Whether the learned Trial Court has passed the impugned judgment in accordance with Order VIII Rule 10 of the CPC? - HELD THAT:- Rule 1 of Order VIII of the CPC state that a written statement has to be filed within thirty days from the date of service of summons on the defendant. Proviso to Rule 1 also states that where the defendant has failed to file written statement within thirty days, he shall be allowed to file the same, with reasons recorded, not later than ninety days. The other proviso to the said rule further state that if the written statement is not filed even after lapse of ninety days, the defendant may be allowed to file the same, with reasons recorded and payment of costs, but not later than one hundred and twenty days - Order VIII Rule 10 of the CPC empowers a civil Court to pass a judgment/order in the event the defendant fails to file his written statement in accordance with Rule 1 of Order VIII. The time period prescribed for filing the written statement in Rule 1 shall not be extended by the court. It is a settled position of law that Order VIII Rule 10 of the CPC is a permissive rule that provides the Court with two alternatives in case the defendant fails to file the written statement. It can either pronounce the judgment or direct the parties to prove their case by adducing evidence. Therefore, mere failure of the defendant to file the written statement does not relieve the plaintiff of its obligation to prove their case as the Court cannot pass a judgment in mechanical manner by invoking Rule 10 of Order VIII of the CPC - this Court is of the view that it is a matter of the Court’s satisfaction and, therefore, only after being satisfied that there is no fact which need be proved, the Court can pass a judgment against the defendant who has not filed the written statement, however, if the plaint itself indicates that there are disputed questions of fact involved in the case regarding which two different versions are set out in the plaint itself, it would not be prudent for the Court to pass a judgment without the plaintiff proving the facts so as to settle the factual controversy. This Court is of the view that despite the fact the appellants had received the entire set of plaint and the annexures and that their counsel was also informed that the above said civil suit was filed on 23rd January, 2019, and it involves a Commercial dispute within the meaning of the Act, the appellants failed to file their written statement - the learned Trial Court was satisfied with the plea raised by the respondent bank and it accordingly closed the appellants’ right to file written statement based on the documents filed with the plaint - The issue is decided against the appellant. While passing the impugned order, the learned Trial Court had assigned reasons which were two fold. The first reason was that the suit of the respondent bank was liable to be decreed in terms of Order XIII-A of the CPC, i.e., summary judgment. This Court holds the first reason to be inappropriate and the same is set aside - the impugned judgment dated 14th October, 2019, passed in CS (COMM) no. 292/2019 by the learned ADJ-03 (East), Karkardooma Courts, Delhi is upheld. Appeal dismissed. ISSUES: Whether the learned Trial Court passed the impugned judgment in accordance with the procedural and substantive requirements of Order XIII-A of the Code of Civil Procedure, 1908 (CPC) relating to summary judgment in commercial suits'Whether the learned Trial Court correctly exercised its powers under Order VIII Rule 10 of the CPC in passing judgment due to the appellants' failure to file a written statement within the prescribed statutory period? RULINGS / HOLDINGS: On the first issue, the Court held that the learned Trial Court erred in passing a summary judgment without a formal written application as mandated by Order XIII-A Rule 4(1) CPC, without affording the appellants the mandatory thirty days' notice under Rule 4(2), and without allowing them an opportunity to file a reply. The Court emphasized that 'the procedure, as prescribed under Order XIII-A of the CPC is mandatory and is required to be followed if a summary judgment under Order XIII-A is to be rendered.' Consequently, the portion of the impugned judgment relying on Order XIII-A was set aside.On the second issue, the Court upheld the learned Trial Court's exercise of jurisdiction under Order VIII Rule 10 CPC, observing that since the appellants failed to file their written statement within the statutory period of 120 days (as extended under the Commercial Courts Act, 2015), their right to file was correctly closed. The Court found the plaintiff's case prima facie unimpeachable on the basis of the documents filed with the plaint, and held that the Trial Court was justified in passing judgment without requiring further proof. Accordingly, the impugned judgment was upheld to the extent it was based on Order VIII Rule 10 CPC. RATIONALE: The Court applied the statutory framework under the Commercial Courts Act, 2015 and the CPC, particularly Order XIII-A (introduced by the Commercial Courts Act for summary judgment in commercial disputes) and Order VIII Rule 10 CPC (procedure when a party fails to file a written statement). The Court relied on the express provisions of Order XIII-A CPC which require a written application for summary judgment, inclusion of specified particulars, and a minimum thirty days' notice to the respondent to ensure adherence to principles of natural justice. It rejected the notion that summary judgment can be granted on an oral application or without notice, emphasizing the adversarial nature of such proceedings and the mandatory procedural safeguards.The Court also considered binding precedent which clarifies that Order VIII Rule 10 CPC is permissive, allowing the Court discretion to either pronounce judgment or require proof of facts despite non-filing of written statement. It must be satisfied that no fact requires proof beyond the deemed admissions before passing judgment. The Court found that the Trial Court correctly exercised this discretion given the appellants' failure to file written statement within the extended statutory timeline and the absence of disputed factual issues in the plaint.The Court distinguished the two grounds relied upon by the Trial Court in the impugned judgment, setting aside the summary judgment portion for procedural non-compliance while affirming the judgment based on the forfeiture of the right to file written statement. This represents a doctrinal reaffirmation of the mandatory procedural safeguards in summary judgment applications under Order XIII-A CPC and the cautious exercise of discretion under Order VIII Rule 10 CPC to avoid mechanical decrees.