Law Related to Summary Judgment: A Critical Analysis

Introduction

Summary judgment, as the combination of two words suggests, is an outcome of a case decided summarily, based on the documentary evidence produced before the Court by the parties, without going for recording of the oral evidence. The cause of action for filing the application under Order XIII-A[1] of the Code of Civil Procedure, 1908 (in short “the Code”), as inserted by the Commercial Courts Act, 2015 (in short “the Act”), arises only when the summons are served upon the defendant. The Order is applicable to both the parties to the litigation. It is not limited to the claim of the plaintiff, rather it is extended to the counterclaim filed by the defendant as well. Application by a party for the summary judgment is filed not merely for deciding a claim or counterclaim but also to seek answer of any particular question on which the claim depends.

The High Court of Delhi, in Oxbridge Associates Ltd.  v. Atul Kumra[2], has held that “an application is not essential to seek the summary judgment and the Court, on its own or on the asking of either party, is entitled to see/adjudicate, whether a case for summary judgment is made out.” The Court further observed that the Delhi High Court (Original Side) Rules, 2018, in Chapter X-A thereof, also provides for summary judgment and does not provide for any application to be moved. The Law Commission has also discussed this concept and made certain recommendations in its 253^rd Report[3].

253^rd Law Commission Report

In pursuant to the Law Commission’s 188^th Report[4] wherein necessity for commercial courts was expressed, the Law Commission further, in its 253^rd Report, submitted that a new procedure for “summary judgment” be introduced to permit the courts to decide a claim pertaining to any commercial dispute without recording oral evidence, as long as the application for summary judgment has been filed before the framing of issues. Courts are also to be empowered to make “conditional orders” wherever necessary.

 Intention and Objective 

The Supreme Court, in Ambalal Sarabhai Enterprises  v. K.S. Infraspace Llp,[5] has held:

“… Keeping in view the object and purpose of the establishment of the commercial courts and fast tracking procedure provided under the Act, the statutory provisions of the Act and the words incorporated thereon are to be meaningfully interpreted for quick disposal of commercial litigations so as to benefit the litigants especially those who are engaged in trade and commerce which in turn will further economic growth of the country.”

The Division Bench of the Madras High Court, in Syrma Technology Pvt. Ltd. v. Powerwave Technologies Sweden AD [6], has held

“11. … the Commercial Courts Act has been introduced with the intention to give qualitative and quantitative decisions. Interestingly, the enactment fixes responsibility on all the stakeholders, including judiciary, in achieving the avowed object.”

The Delhi High Court further held, in Bright Enterprises Pvt. Ltd.  v. MJ Bizcraft LLP [7],

“ …from the provisions laid out in Order XIII-A, it is evident that the proceedings before Court are adversarial in nature and not inquisitorial. It follows, therefore, that summary judgment under Order XIII-A cannot be rendered in the absence of an adversary and merely upon the inquisition by the Court.”

In order to have a better understanding of the concept, it will be pertinent to have a look at some of the provisions concerned under the Code and their interpretation.

Statutory Provisions for Summary Judgment

A. Rule 1 of Order XIII-A of the Code sets out the procedure by which the Courts may decide a claim pertaining to any commercial dispute without recording oral evidence. Sub-rule (2) for the purpose of this order includes the word “claim”;

i) part of a claim;

ii) any particular question on which the claim (whether in whole or in part) depends; or

iii) a counterclaim.

Sub-rule (3) clarifies that no application for summary judgment can be filed in a summary suit in respect of any commercial dispute originally filed under Order XXXVII of the Code.

B. Rule 2 of Order XIII-A of the Code provides that an application for the summary judgment can be filed any time after the service of the summons has been served upon the defendant. Proviso to the clause reads that no application for summary judgment may be made after issues are framed by the Court. The High Court of Madras has held, in Syrma[8]:

“Thus, if one reads the provision as a whole, what emerges is that an application may not be filed after framing of the issues. The first part speaks of the entitlement to file an application and the second is the outer limit. Although, the legislation uses the words ‘may’, one has to see the preceding words, ‘no application for summary judgment‘.. The power being discretionary, it has to be exercised before the framing of issues. The reason being that once issues are framed and taken note of to be answered, regular trial is the way out.”

(emphasis added)

One may argue that the defendant may file an application for summary judgment under the above said order after receiving the summons under sub-clause (b) of clause 2 of sub-rule (1) of Rule 1 of Order XIII-A of the Code. However, filing the same will not entitle him to claim an extension of the time period, statutorily fixed for filing the Written Statement.

The Division Bench of the High Court of Delhi has held in Bright Enterprises[9] :

“…the provisions related to summary judgment, which enables courts to decide claims pertaining to commercial disputes without recording oral evidence, are exceptional in nature and out of the ordinary course which a normal suit has to follow. In such an eventuality, it is essential that the stipulations are followed scrupulously, otherwise, it may result in gross injustice.”

C. Rule 3 of Order XIII-A of the Code laid down the following grounds for the summary judgment against a party on a claim when it considers that:

(a) the plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim; and

(b) there is no other compelling reason why the claim should not be disposed of before recording of oral evidence.

To narrow down the grounds for summary judgment, the court, while deciding the said application, is required to disclose the grounds that the plaintiff has no real prospect of succeeding on the claim, or, the defendant has no real prospect of successfully defending the claim and also, that there is no other justifiable reason for keeping the claim alive and allowing the recording of oral evidence.

The High Court of Delhi has held in Su-Kam Power Systems Ltd. v. Kunwer Sachdev[10]:

“91. Rule 3 of Order XIII-A CPC, as applicable to commercial disputes, empowers the court to grant a summary judgment against the defendant where the court considers that the defendant has no real prospects of successfully defending the claim and there is no other compelling reason why the claim should not be disposed of before recording of oral evidence. The expression “real” directs the court to examine whether there is a “realistic” as opposed to “fanciful” prospects of success. This Court is of the view that the expression “no genuine issue requiring a trial” in the Ontario Rules of Civil Procedure and “no other compelling reason…..for trial” in the Commercial Courts Act can be read mutatis mutandis. Consequently, Order XIII-A CPC would be attracted if the Court, while hearing such an application, can make the necessary finding of fact, apply the law to the facts and the same is a proportionate, more expeditious and less expensive means of achieving a fair and just result.

92. Accordingly, unlike ordinary suits, courts need not hold trial in commercial suits, even if there are disputed questions of fact as held by the Canadian Supreme Court in Robert Hryniak[11] , in the event, the Court comes to the conclusion that the defendant lacks a real prospect of successfully defending the claim.”

The High Court of Delhi, in an another case of Ambawatta Buildwell Pvt. Ltd. v. Imperia Structure Ltd.[12], has held:

“what has to be seen is, whether the defence pleaded, has any chance of succeeding in law and if the answer is in the negative, a decree on admissions or under Order XV of CPC or a summary judgment under Order XIII-A of the CPC as applicable to commercial disputes read with Chapter X-A of the Delhi High Court (Original Side) Rules, 2018, has to follow.”

D. Rule 4 of Order XIII-A of the Code laid down the following procedure for filing such application:

(1) An application for summary judgment to a court shall include the following matters:

(a) the application must contain a statement that it is an application for summary judgment made under this Order;

(b) the application must precisely disclose all material facts and identify the point of law, if any;

(c) in the event the applicant seeks to rely upon any documentary evidence, the applicant must,–

(i) include such documentary evidence in its application, and

(ii) identify the relevant content of such documentary evidence on which the applicant relies;

(d) the application must state the reason why there are no real prospects of succeeding on the claim or defending the claim, as the case may be;

(e) the application must state what relief the applicant is seeking and briefly state the grounds for seeking such relief.

The procedure is mandatory for both the parties to follow. The application must contain a statement that the said application is for summary judgment and also the reason as to why the party thinks that there are no real prospects of succeeding on the claim or defending the claim. It is further necessary for the parties to state the relief being sought from the court and the grounds for seeking such relief. It makes clearer that the applicant has to give the reasons for the relief being sought from the court.

(2) Where a hearing for summary judgment is fixed, the respondent must be given at least thirty days’ notice of:

(a) the date fixed for the hearing; and

(b) the claim that is proposed to be decided by the court at such hearing.

(3) The respondent may, within thirty days of the receipt of notice of application of summary judgment or notice of hearing (whichever is earlier), file a reply addressing the matters set forth in clauses (a) to (f) mentioned hereunder in addition to any other matters that the respondent may deem relevant:

(a) the reply must precisely–

(i) disclose all material facts;

(ii) identify the point of law, if any; and

(iii) state the reasons why the relief sought by the applicant should not be granted;

(b) in the event the respondent seeks to rely upon any documentary evidence in its reply, the respondent must–

(i) include such documentary evidence in its reply; and

(ii) identify the relevant content of such documentary evidence on which the respondent relies;

(c) the reply must state the reason why there are real prospects of succeeding on the claim or defending the claim, as the case may be;

(d) the reply must concisely state the issues that should be framed for trial;

(e) the reply must identify what further evidence shall be brought on record at trial that could not be brought on record at the stage of summary judgment; and

(f) the reply must state why, in light of the evidence or material on record if any, the Court should not proceed to summary judgment.

Once the application for summary judgment is filed, the respondent has to be given 30 days’ notice intimating him the next date fixed for the hearing and also the claim to be adjudicated upon. This Order casts a duty upon the respondent that the reply, among other things, must concisely state the issues that should be framed for trial and also identify what further evidence shall be brought on record at trial that could not be brought on record at the stage of summary judgment. Besides, the reply must also state as to why, in light of the evidence brought before it, the court should not proceed to issue a summary judgment. Onus has been shifted on the respondent, if he opposes the application for summary judgment, to file the proposed issues before the court. This will enable the court to verify the authenticity of the defence adopted by the respondent.

E. Rule 5 of Order XIII-A of the Code provides for evidences to be placed before the court for hearing of summary judgment and further clarifies that if a respondent in an application for summary judgment wishes to rely on an additional documentary evidence, he must file such documentary evidence and serve copies of such evidence to other parties to the application at least 15 days prior to the date of hearing. It has further provided that if the applicant to the summary judgment wishes to rely on documentary evidence upon respondent’s evidence then he must file it in his reply and serve on the respondent at least 5 days from the date of hearing. The parties are restrained from filing such documentary evidence again if the same has already been filed or served to the parties concerned.

F. Rule 6 of Order XIII-A of the Code provides the list of orders to be made by the court i.e.

(a) judgment on the claim;

(b) conditional order in accordance with Rule 7 of this Order;

(c) dismissing the application;

(d) dismissing part of the claim and a judgment on part of the claim that is not dismissed;

(e) striking out the pleadings (whether in whole or in part); or

(f) further directions to proceed for case management under Order XV-A.

It is clarified that the Court may pass any other order in addition to the above orders and the Court is also obliged to record the reasons for making the orders. The High Court of Madras has held in Syrma Technology[13]:

“ Thus, to conclude, we are of the view that when an application is filed under Order XIII-A, a court is expected to keep in mind the provisions contained in Order XIII-A Rules 6 and 7 before considering a summary judgment under Order XIII-A Rule 3. We are conscious that Order XIII-A Rule 6 also speaks of a judgment on the claim both part or full. Order XIII-A Rule 7, read with other modes mentioned under Order XIII-A Rule 6, act as contraceptive to grant of summary judgment under Order XIII-A Rule 3. The question as to whether the case is complicated or not is not the concern of the court especially in deciding an application filed invoking Order XIII-A CPC. Obviously, the respondent in the application has to produce his best evidence, which would be his “lead trump” as he would stand the chance of losing his case.”

G. Rule 7 of Order XIII-A of the Code talks about the conditional order. By conditional order, it means that when the court is of the opinion that a claim or defence may succeed but it is improbable that the court shall do so, the court may pass a conditional order as set forth in clause (b) of sub-rule (1) of Rule 6. At the time of making the conditional order, the court may:

(a) make it subject to all or any of the following conditions:

(i) require a party to deposit a sum of money in the court;

(ii) require a party to take a specified step in relation to the claim or defence; (iii) require a party to give such security or provide such surety for restitution of costs as the court deems fit and proper;

(iv) impose such other conditions, including providing security for restitution of losses that any party is likely to suffer during the pendency of the suit, as the court may deem fit in its discretion; and

(b) specify the consequences of the failure to comply with the conditional order, including passing a judgment against the party that have not complied with the conditional order.

The purpose of the conditional order is to safeguard the interests of the parties. The Madras High Court observed in Syrma[14]:

“This rule provides sufficient power to the court to pass a conditional order. This power has to be exercised when “it appears” to the court that it is possible that a claim or defence may succeed but it is improbable that it shall do so. If we read order XIII-A Rules 6 and 7 together, a clear picture would emerge. If it appears to the court that a claim or defence may succeed and it is also probable, then the application filed seeking a summary judgment will have to be dismissed. If it appears to the court that it is possible but improbable as stated in Rule 7 of Order XIII-A of the Code, then it may consider passing a conditional order. If the court considers that a plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim there is no other compelling reason as to why the claim should not be disposed of before recording of oral evidence, it may give a summary judgment. Alternatively, the court can also consider striking out the pleadings either in whole or in part. This discretion is given to the court before deciding to give a summary judgment. Therefore, the court has to keep in mind and decide as to whether it is a fit case for striking out the pleadings dismissing an application and proceed further or a conditional order could be passed. After exhausting these stages, the question of granting a summary judgment would arise.”

It is relevant to point out that under Rule 8, the court is empowered to impose cost upon the defaulting parties as per the dynamic provisions incorporated under Sections 35 and 35- A of the Act[15].

Summary Judgment Vis-à-vis Judgment on Admission

The  High Court of Delhi, in Su-Kam Power Systems Ltd. v. Kunwer Sachdev [16], has held that the “ legislative intent behind introducing summary judgment under Order XIII-A of the Code is to provide a remedy independent, separate and distinct from judgment on admissions and summary judgment under Order XXXVII of the Code.”

Conclusion

The procedure given under Order XIII-A of the Code has the sole purpose to reduce the time period in deciding the commercial dispute of a specified value. It is not alien to say that the amendment in the Code is basically to strengthen the confidence of the merchant class in the fairness, transparency and effective justice delivery system. Loopholes exploited by some of the parties have also been taken care of in the present provision. Moreover, it can be noted that the special courts, that too, of District Judges, which are superior courts at the district level, have been designated to adjudicate the matters. The fact that trial is a default process in every civil suit has been done away with the insertion of Order XIII-A of the Code. Therefore, the intention of the legislature is to enable the courts to decide the commercial disputes of a specified value in a time bound and efficient manner.

---

*Author is a founding partner at Actus Legal Advocates and Associates. He may be contacted at rajnish@actuslegal.in

[1] Civil Procedure Code, 1908, Order XIII-A 

[2] 2019 SCC OnLine Del 10641

[3] Law Commission of India, 253^rd Report on Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015 (January 2015) 

[4] Law Commission of India, 188^th Report on Proposals for Constitution of Hi-Tech Fast — Track Commercial Divisions in High Courts  (December, 2003)

[5] 2019 SCC OnLine SC 1311

[6] Syrma Technology Pvt. Ltd. v. Powerwave Technologies Sweden AD,2020 SCC OnLine Mad 5737 

[7] 2016 SCC OnLine Del 4421

[8]  Syrma Technology Private Limited vs. Powerwave Technologies Sweden AD, 2020 SCC OnLine Mad 5737   

[9] 2016 SCC OnLine Del 4421

[10] 2019 SCC OnLine Del 10764

[11] Robert Hryniak v. Fred Mauldin, 2014 SCC OnLine Can SC 53

[12] 2019 SCC Online Del 8657 

[13]  Syrma Technology Pvt. Ltd. v. Powerwave Technologies Sweden AD, 2020 SCC OnLine Mad 5737   

[14] Ibid

[15] The Commercial Courts Act, 2015 [Act No. 04 of 2016]

[16] 2019 SCC OnLine Del 10764