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Judgment
Sabyasachi Bhattacharyya, J
The present two revisional applications under Article 227 of the Constitution of India arise from connected money suits and are thus taken up together for hearing. By virtue of the impugned orders, both dated February 15, 2018, the trial court turned down the application of the defendant/petitioner, challenging maintainability of the money suits as summary proceedings under Order XXXVII of the Code of Civil Procedure (hereinafter referred to as the "CPC"), holding that those were maintainable as summary suits.
By the impugned orders, the trial court also directed the defendant/petitioner to deposit a sum of Rs.50 lakh in each of the suits.
Learned counsel for the petitioner argues that, by the impugned orders, the trial court virtually closed the defence of the petitioner and directed the claim amount to be deposited. It is argued that the courts ought to be slow in treating money suits as summary suits under Order XXXVII of the CPC when some sort of defence has been raised by the defendant.
In the present case, the defendant specifically raised a contention as to the veracity of the signatures allegedly put on behalf of the defendant on the balance confirmation documents. The petitioner also disputed any cheque being paid by the petitioner and/or part repayment of the alleged loan by the petitioner.
Moreover, since the trial court, in the impugned order, relied primarily on the defendant having paid amounts by way of repayment of the alleged loan, the trial court ought to have been cautious in accepting such contention of the plaintiff/opposite party in the teeth of specific denial that the payments were made for the purpose of such repayment.
It is further contended that the plaintiff did not furnish any explanation or proof as to the purpose for which such amounts were paid by the defendant to the plaintiff. In the absence of any such explanation and in view of the previous good relationship between the parties, the trial court resorted to conjecture in accepting the plaint case that such payments were repayments of loan, without any material basis.
Learned counsel for the petitioner next argues that the City Civil Court did not have territorial jurisdiction to take up the suit since the bulk of the transactions and issuance of the cheques‐in‐question took place outside the jurisdiction of the said court. In this context, counsel for the petitioner relied on the plaints of the two suits, which were virtually identical. The mere statement in paragraph no.13 of the plaints as to the alleged handing over of a post‐dated cheque by the defendant to the plaintiff for an amount of Rs.50 lakh at 8, Jackson lane, Kolkata and a further confirmation and handing over of a statement of accounts by the defendant to the plaintiff at the same locale could not confer jurisdiction on the City Civil Court, without any further prima facie proof of such transactions.
The petitioner also argues that the suits were barred by limitation, which aspect was not considered by the court below.
Learned counsel for the plaintiff/opposite party argues that the question of limitation does not arise since the statutory limitation period for filing of the suits began to run from the refusal to recompense the loan and not from the date of the loan itself, as claimed by the defendant. Moreover, the trial court dealt with the said question in the impugned orders in consonance with law and the same ought not to be interfered under Article 227 of the Constitution of India.
Learned counsel for the opposite party places reliance on a three‐Judge bench decision of this court, reported at AIR 1963 Cal 36 [Tailors Priya vs. Gulabchand], wherein it was laid down that Order XXXVII of the Code of Civil Procedure is applicable to all suits on bills, hundis and promissory notes, whether they are negotiable or not and, accordingly, a suit based on a crossed cheque bearing an endorsement "A/C payee only" can be filed under the summary procedure. As such, in the instant case, the suit was maintainable on the basis of such a cheque.
It is next argued on behalf of the plaintiff/opposite party that Order XXXVII Rule 3(5) provides that the defendant is to apply on summons for leave to defend the suit, by affidavit or otherwise, disclosing such facts as may be deemed sufficient to entitle him to defend, within ten days from the service of summons. Since, in the present case, the leave to defence filed by the petitioner was bald on facts and merely contained evasive denial without any positive assertion pertaining to the defence, the defence disclosed was illusory and ought not to have been accepted by the trial court at all.
Pointing out to the statements made by the defendant/petitioner in the present applications under Article 227 of the Constitution of India, in particular paragraph no.
10e thereof, it is argued that the petitioner admitted as follows:
"e.
That the purported cheque, allegedly shown as dishonored which was also relied to save the limitation, was obtained as a security not issued in ordinary course of business. Admittedly, from bare reading of the Plaint, it was clear that same was handed over to the Plaintiff, at the initiation understanding of loan transaction by and between the parties."
In view of such admission of issuance of the cheque and in the absence of any explanation whatsoever as to the subsequent payments made by the defendant in favour of the plaintiff, which were palpably evidenced by the statements of accounts of the concerned banks produced by the plaintiff in the court below, the court had no other option but to accept the plaint case as to admitted disbursements by the defendant to repay the loan in installments.
The burden, according to the opposite party, lay on the defendant to explain such disbursals, as envisaged in Order XXXVII Rule 3(5) of the CPC. Since no such explanation came forth from the defendant, the trial court was justified in holding the summary procedure maintainable.
As regards the territorial jurisdiction, it is argued that Section 20(c) of the CPC squarely applies and the court has to proceed on the basis of the plaint averments in that regard. Since the plaint is specific as to the cause of action, or at least a part of it, having arisen within the jurisdiction of the City Civil Court, the question of the City Civil Court not having any jurisdiction does not arise at all.
Learned counsel for the opposite party submits that the petitioner has no cause of action for filing the present applications under Article 227 of the Constitution since, by the impugned orders, the trial court, in fact, granted leave to the petitioner to defend the suit and directed the defendant / petitioner to deposit the principal amount within ten days from the impugned orders. The petitioner, as such, could not have any grievance since his defence was accepted by the court and the defendant was directed to give security by way of deposit of the amount directed by the court. Hence, within the contemplation of Order XXXVII Rule 3(6)(b), on the failure to deposit such security within the time specified by the court, that is, ten days from the date of impugned orders, the plaintiff/opposite party should be entitled to judgment forthwith. There is no scope of any other course of action by the trial court within the scheme of Order XXXVII of the CPC.
As such, apart from having no cause of action to challenge the impugned orders on the part of the petitioner since leave to defence was granted, there is also no scope to challenge the said order, since by necessary implication the order has culminated in a judgment as per the mandate of Order XXXVII Rule 3(6)(b). Hence, the only recourse open to the petitioner now is to challenge the final decree passed on such judgment by the trial court in a regular appeal. No challenge under Article 227 of the Constitution is now available to the defendant/petitioner.
Learned counsel for the opposite party cites a judgment reported at (2017) 1 SCC 568 [IDBI Trusteeship Services Limited vs. Hubtown Limited], wherein the modalities of a summary procedure under Order XXXVII of the CPC were discussed. Learned counsel places particular reliance on paragraph no.17 and the sub‐paragraphs thereof, of the said judgment, which are as follows:
"17. Accordingly, the principles stated in para 8 of Mechelec case will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four Judges in Milkhiram case , as follows:
17.1. If the defendant satisfies the court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.
17.2. If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend.
17.3. Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendantʹs good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.
17.4. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.
17.5. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith.
17.6. If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court."
In order to decide the questions raised herein, a consideration of Order XXXVII of the CPC would be appropriate. The said provision is set out below:
"Order XXXVII (Summary Procedure):
Courts and classes of suits to which the Order is to apply. - (1) This Order shall apply to the following Courts, namely: ‐
(a) High Courts, City Civil Courts and Courts of Small Causes; and
(b) other Courts:
Provided that in respect of the Courts referred to in clause (b), the High Court may, by notification in the Official Gazette restrict the operation of this Order only to such categories of suits as it deems proper, and may also, from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette, further restrict, enlarge or vary, the categories of suits to be brought under the operation of this Order as it deems proper.
(2) Subject to the provisions of sub‐rule (1), the Order applies to the following classes of suits, namely: ‐
(a) suits upon bills of exchange, hundies and promissory notes;
(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising, ‐
(i) on a written contract; or
(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or
(iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.
(iv) suit for recovery of receivables instituted by any assignee of a receivable.
Institution of summary suits. - (1) A suit, to which this Order applies, may if the plaintiff desires to proceed hereunder, be instituted by presenting a plaint which shall contain, ‐
(a) a specific averment to the effect that the suit is filed under this Order;
(b) that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint; and
(c) the following inscription, immediately below the number of the suit in the title of the suit, namely:‐
"(Under Order XXXVII of the Code of Civil Procedure, 1908)."
(2) The summons of the suit shall be in Form No.4 in Appendix B or in such other Form as may, from time to time, be prescribed.
(3) The defendant shall not defend the suit referred to in sub‐rule (1) unless he enters an appearance and in default of his entering an appearance the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree for any sum, not exceeding the sum mentioned in the summons, together with interest at the rate specified, if any, up to the date of the decree and such sum for costs as may be determined by the High Court from time to time by rules made in that behalf and such decree may be executed forthwith.
Procedure for the appearance of defendant. - (1) In a suit to which this Order applies, the plaintiff shall, together with the summons under Rule 2, serve on the defendant a copy of the plaint and annexures thereto and the defendant may, at any time within ten days of such service, enter an appearance either in person or by pleader and, in either case, he shall file in Court an address for service of notices on him.
(2) Unless otherwise ordered, all summonses, notices and other judicial processes, required to be served on the defendant, shall be deemed to have been duly served on him if they are left at the address given by him for such service.
(3) On the day of entering the appearance, notice of such appearance shall be given by the defendant to the plaintiff's pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice delivered at or sent by a pre‐paid letter directed to the address of the plaintiff's pleader or of the plaintiff, as the case may be.
(4) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment in Form No. 4‐A in Appendix B or such other Form as may be prescribed from time to time, returnable not less than ten days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit.
(5) The defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just:
Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious:
Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.
(6) At the hearing of such summons for judgment, ‐
(a) if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith; or
(b) if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security within the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or Judge, the plaintiff shall be entitled to judgment forthwith.
(7) The Court or Judge may, for sufficient cause shown by the defendant, excuse the delay of the defendant in entering an appearance or in applying for leave to defend the suit.
Power to set aside decree. - After decree the Court may, under special circumstances set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit.
Power to order bill, etc., to be deposited with officer of Court. - In any proceeding under this Order the Court may order the bill, hundi or note on which the suit is founded to be forthwith deposited with an officer of the Court, and may further order that all proceedings shall be stayed until the plaintiff gives security for the costs thereof.
Recovery of cost of noting non‐acceptance of dishonoured bill or note. - The holder of every dishonoured bill of exchange or promissory note shall have the same remedies for the recovery of the expenses incurred in noting the same for non‐acceptance or non‐payment, or otherwise, by reason of such dishonor, as he has under this Order for the recovery of the amount of such bill or note.
Procedure in suits. - Save as provided by this Order, the procedure in suits hereunder shall be the same as the procedure in suits instituted in the ordinary manner."
In the context of Order XXXVII, CPC, it is well‐settled that the said provision was introduced to expedite the hearing of money claims, keeping in view the larger issue of developing the economy of the country. Since huge funds are held‐up in monetary disputes, it would be for the interest of the economy as a whole to see to it that legal wrangles do not fetter money claims for an inordinately long period.
The scheme of Order XXXVII, CPC does not allow for unnecessary legal hassles or procedural paraphernalia.
The "leave to defence" contemplated in the said provision has to be a solid disclosure of the facts entitling the defendant to a full‐fledged hearing of the litigation as a regular suit, justifying the remittance of the suit outside the purview of a summary procedure.
In Order XXXVII matters, the burden is entirely on the defendant to disclose all such facts which may be deemed to be sufficient to entitle him to defend. The expression 'deemed' has to be read in its true meaning, bringing within its fold all possible factual explanations which could be construed to entitle the defendant to a valid defence and not merely the core pleadings only, as might be sufficient in a regular suit.
The burden and initial onus in summary procedures lie entirely on the defendant to establish, at least prima facie, that the defence projected by the defendant is not flimsy or mere moonshine.
In the present case, proceeding on the above premise, it is seen that the plaintiff not only categorically alleged about the transactions‐in‐question, including the loan transaction and subsequent disbursal of amounts by the defendant, by way of repayment of the loan in instalments, but also substantiated such claims prima facie by producing the relevant cheque, bank statements and documents pertaining to confirmation of accounts by the defendant. Even on a layman's glance of the signatures of the petitioner on the balance confirmation documents and the admitted signature of the petitioner in the affidavit supporting the present revisional applications, it would be evident that the signatures were of the same person, of course, subject to final decision, if any, in the suit.
The question of limitation, raised by the petitioner, does not hold water since limitation has to run from the refusal of the loan and not from the grant of loan.
There was sufficient material on record for the trial court to hold that the suits are maintainable as summary suits under Order XXXVII of the CPC.
However, the plaintiff/opposite party has a point in arguing that, by the impugned orders, the court did not merely hold the suit to be maintainable as a summary suit, but went a step further in directing the defendant/petitioner to deposit a sum of Rs.50 lakh in each of the suits within ten days from the impugned order. In default, the plaintiff should be entitled to judgment forthwith.
The language of the said direction brought the impugned orders within the purview of Rule 3(6)(b) of Order XXXVII of the CPC. The said rule permitted the defendant/petitioner to defend the suit as a regular suit and entitled the defendant to a regular trial, of course, subject to depositing the security directed by the trial court. The security, as directed, was also not exorbitant keeping in view the total claim including interest, since it covered only the principal amounts claimed in each of the suits.
Thus, there cannot be any challenge to the impugned orders on the score of the security amount being exorbitant as well.
Hence, in view of non‐deposit of the security amount as directed in the impugned orders, the petitioner lost the chance of having a full‐fledged defence in the suit. As the circumstances now stand, the petitioner has to wait for decrees to be drawn up on the judgments, which it was incumbent upon the trial court to pass forthwith after ten days from the impugned orders, on the failure of the defendant to put in the security amount of Rs.50 lakh in each of the suits, and prefer appeals against such decrees, if the defendant/petitioner so chooses. Seen thus, the present applications under Article 227 of the Constitution of India ought not to be entertained at this juncture, either on merits or on maintainability, in view of the aforesaid discussions.
Accordingly, there is no scope of interference with the impugned orders. C.O. No.623 of 2018 and C.O. No.624 of 2018 are thus dismissed on contest, affirming the orders impugned therein, without any order as to costs.
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.