Special Procedure (Order XXXVII — Summary Suits)

Order XXXVII of the Code of Civil Procedure, 1908 sets out a special, accelerated procedure for a narrow class of money claims — bills of exchange, hundis, promissory notes, and suits for a debt or a liquidated demand on a written contract, an enactment, or a guarantee. The architecture is unusual in one decisive respect. In every other suit governed by the Code, the defendant has a right to file a written statement and contest the claim. In a summary suit he does not. He must first enter appearance within ten days of service, then apply for leave to defend, and only if the court is persuaded that he has a substantial defence — or at least a triable issue raised in good faith — does the suit proceed to a trial at all. Otherwise the plaintiff walks away with a decree.

The object is unmistakable: to prevent unreasonable obstruction by a defendant who has no defence and is merely buying time. The Supreme Court restated this purpose in Indian Bank v. Maharashtra State Co-op Marketing Federation (1998) 5 SCC 69, and again in IDBI Trusteeship Services Ltd v. Hubtown Ltd (2017) 1 SCC 568, where it laid down the modern six-fold test that now governs every leave-to-defend application across the country.

Statutory anchor and scheme

Order XXXVII contains seven rules. Rule 1 fixes the courts to which the Order applies and the classes of suits it covers. Rule 2 prescribes the form of the plaint. Rule 3 lays down the procedure from service of summons through the application for leave to defend. Rule 4 confers on the court a narrow power to set aside a decree under “special circumstances.” Rules 5, 6 and 7 are short supporting provisions on deposit of the negotiable instrument, recovery of noting charges, and the residual application of ordinary procedure.

The scheme proceeds in stages. The plaintiff drafts the plaint with the inscription required by Rule 2(1)(c) and presents it. The court issues summons in Form No. 4 of Appendix B. The defendant has ten days to enter appearance under Rule 3(1). If he does not, the allegations in the plaint are deemed admitted and the plaintiff obtains a decree under Rule 2(3). If he does enter appearance, the plaintiff serves a summons for judgment in Form No. 4A under Rule 3(4), supported by an affidavit verifying the claim and stating that the deponent believes there is no defence. The defendant then has another ten days under Rule 3(5) to apply for leave to defend, on affidavit. The court grants or refuses leave. The trial, if there is one, follows.

Courts to which the Order applies — Rule 1

By Rule 1(1) the Order applies, of its own force, to the High Courts, the City Civil Courts and the Courts of Small Causes. To other civil courts it applies only when the High Court issues a notification in the Official Gazette extending it. The notification may restrict, enlarge or vary the categories of suits brought under the Order in those subordinate courts.

The classes of suits to which Rule 1(2) makes the Order applicable are three. First, suits upon bills of exchange, hundis and promissory notes — in essence, suits on negotiable instruments, whether negotiable in form or not. A crossed cheque bearing an “A/c payee only” endorsement falls within the rule. So does a dishonoured cheque, since a cheque is a species of bill of exchange. But a transaction in which a loan has merely been advanced by cheque — where the underlying suit is on the loan, not on the cheque — is outside Rule 1.

Second, 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 on a written contract, on an enactment imposing a fixed-sum liability other than a penalty, or on a guarantee where the claim against the principal is itself a debt or liquidated demand. The 1976 amendment widened this category significantly. A “debt” is a present obligation to pay an ascertainable sum, whether the amount is payable in praesenti or in futuro: see Kesoram Industries v. Wealth Tax Commissioner, AIR 1996 SC 1370. A “liquidated demand” means an amount susceptible of being made certain by mathematical calculation from factors within the knowledge of the party charged. Arrears of rent under a written lease deed have been held to be a debt arising on a written contract within the rule. A sub-underwriter’s liability, by contrast, is not a liquidated demand because it is contingent on the number of shares subscribed by the public.

Third, by a more recent insertion, a suit for the recovery of receivables instituted by an assignee of the receivable.

The provision of a special procedure for a defined class of suits has been held not to violate Article 14 of the Constitution. The classification — negotiable instruments and ascertainable money claims — has a rational basis in the speed with which such cases ought to be disposed of, and in the limited room they leave for genuine factual dispute.

Drafting the plaint — Rule 2

Rule 2(1) is mandatory in form. The plaint in a summary suit must contain three things: a specific averment that the suit is filed under Order XXXVII; a statement that no relief outside the ambit of the rule is being claimed; and the inscription “(Under Order XXXVII of the Code of Civil Procedure, 1908)” immediately below the suit number in the title. The general principles of pleading under Order VI apply equally; what Rule 2 adds is a labelling requirement that puts the defendant on notice that the suit will travel by the summary track.

Failure to draft strictly in compliance is not always fatal. Where the title of the plaint described the suit as a summary suit and the substantive averments were intact, a Jammu & Kashmir decision held the requirements of Rule 2 substantially complied with. The relief prayed for, however, must lie within Rule 1(2). A suit cannot be dressed up as a summary suit in order to recover, alongside a debt, a relief outside the Order. The Bombay Full Bench drew the distinction in SICOM Ltd v. Prashant S. Tanna, AIR 2004 Bom 186, between sustainability of a claim and maintainability of the action under the Order. A claim falls outside Order XXXVII only where its nature falls outside Rule 1(2); a claim does not fall outside the Order merely because the quantum is excessive.

Rule 2(2) prescribes the summons in Form No. 4. Rule 2(3) supplies the consequence of the defendant’s default. If the defendant does not enter an appearance within ten days, the allegations in the plaint are deemed admitted and the plaintiff is entitled to a decree for the sum claimed (not exceeding what is mentioned in the summons), with interest as specified up to the date of the decree, and costs as the High Court rules prescribe.

Service of summons and entry of appearance — Rule 3

Together with the summons under Rule 2, the plaintiff must serve a copy of the plaint and its annexures on the defendant. After the 1976 amendment it is no longer mandatory to supply copies of every supporting document; the annexures are mandatory. Within ten days of service, the defendant must enter an appearance, in person or by a pleader, and file an address for service. Rule 3(2) makes that address the deemed address for all subsequent processes. Rule 3(3) requires notice of appearance to be given to the plaintiff or his pleader.

This entry of appearance is jurisdictional in a way that has no parallel in ordinary appearance under Order IX. Without it, the defendant is shut out. The Supreme Court in TVC Skyshop Ltd v. Reliance Communication & Infrastructure Ltd (2013) 11 SCC 754 held that the resignation of an officer of the corporate defendant was not by itself a ground for relieving the company from the consequences of failure to appear; the policy of the Order would not survive such an indulgence. Rule 3(7) does, however, empower the court to excuse, on sufficient cause shown, the delay in entering appearance or in applying for leave to defend.

Summons for judgment

Once the defendant has entered appearance, the plaintiff serves a summons for judgment under Rule 3(4). It is in Form No. 4A in Appendix B and is returnable not less than ten days from service. It must be supported by an affidavit verifying the cause of action and the amount claimed and stating that the plaintiff believes there is no defence to the suit. The summons for judgment is the procedural fulcrum of the Order: it is on this summons, and not at the trial, that the defendant’s right to contest is decided.

Leave to defend — Rule 3(5) and the four-class test

Within ten days of service of the summons for judgment, the defendant may, by affidavit, apply for leave to defend, disclosing such facts as he says entitle him to defend. The court grants leave — unconditionally, or on terms it considers just, or refuses it altogether.

Two provisos restrict the discretion. The first proviso says that leave to defend shall not be refused unless the court is satisfied that the facts disclosed do not indicate a substantial defence, or that the defence intended is frivolous or vexatious. The second proviso, added in 1976, is a hard rule: where any part of the amount claimed is admitted by the defendant to be due, leave to defend shall not be granted unless the admitted amount is deposited in court. The Supreme Court explained the effect of this proviso in Southern Sales & Services v. Sauermilch Design & Handles GmbH, AIR 2009 SC 320: deposit of the admitted amount has, since 1976, been a condition precedent to the grant of leave — a position that the unamended rule did not contain.

The pre-amendment classical four-class test was settled by the Supreme Court in Mechelec Engineers and Manufacturers v. Basic Equipment Corporation, AIR 1977 SC 577, drawing on the earlier Calcutta Bench decision in Sm. Kiranmoyee Dassi v. Dr J. Chatterjee, AIR 1949 Cal 479, and the Supreme Court’s own ruling in Santosh Kumar v. Bhai Mool Singh, AIR 1958 SC 321. In its original form the test ran:

1. If the defendant has a good defence on the merits, leave is granted unconditionally.
2. If the defendant raises a triable issue indicating a fair or bona fide or reasonable defence, leave is granted unconditionally.
3. If the defendant discloses facts sufficient to entitle him to defend, leave is granted, but the court may impose conditions as to time or mode of trial — not as to deposit or security.
4. If the defence is illusory or moonshine, the plaintiff is entitled to sign judgment; the court may, in its mercy, allow defence on payment into court or security.

The principle that conditions could only relate to time or mode of trial has been held in many High Court decisions to follow logically from the words of the rule: see T. Sukender Reddy v. M. Surender Reddy, AIR 1998 AP 399.

The IDBI Trusteeship six-fold test

The 1976 amendment, and in particular the second proviso to Rule 3(5), required the four-class test to be restated. The Supreme Court did so in IDBI Trusteeship Services Pvt Ltd v. Hubtown Ltd (2017) 1 SCC 568. Mechelec was treated as superseded to the extent it could not accommodate the second proviso. The test now runs as a six-fold matrix:

1. If the defendant satisfies the court that he has a substantial defence — 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.
2. If the defendant raises triable issues indicating a fair or reasonable defence, although not positively a good one, the plaintiff is not entitled to sign judgment and the defendant is ordinarily entitled to unconditional leave.
3. If the defendant raises triable issues but the trial judge has a doubt about good faith or genuineness, conditions may be imposed — as to time or mode of trial, or payment into court or furnishing security — provided the conditions are not so severe as to shut out a triable issue.
4. If the defence is plausible but improbable — it does not amount to a triable issue — the trial judge may impose conditions including deposit or security up to the entire principal sum, with such interest as the justice of the case requires.
5. If the defendant has no substantial defence and raises no triable issue, the court finds the defence frivolous or vexatious, and leave is refused; the plaintiff is entitled to judgment forthwith.
6. If any part of the amount claimed is admitted by the defendant to be due, leave shall not be granted — even if a triable issue or a substantial defence is raised on the rest — unless the admitted amount is deposited in court.

Class (3) is where most of the litigation now sits. The court must impose conditions calibrated to keep the suit moving without throttling a genuine defence. The Supreme Court has more than once set aside conditions found to be oppressive: in Fixity Packaging Industries Pvt Ltd v. Udyen Jain (HUF), AIR 2010 SC (Supp) 411, a deposit of Rs. 2 crores against a claim of Rs. 2.66 crores was struck down as not sustainable. In Neebha Kapoor v. Jayantilal Khandwala (2008) 3 SCC 770, the failure of the plaintiff to file the originals of the promissory note and dishonoured cheques was held to justify unconditional leave; production of the originals was essential to the suit.

Once leave is granted unconditionally, the suit follows the procedure of an ordinary suit — written statement, framing of issues, evidence and judgment. Where the leave is conditional, failure to comply with the conditions is fatal: the plaintiff is then entitled to a decree forthwith under Rule 3(6)(b).

Setting aside an ex parte decree — Rule 4

Rule 4 confers on the court a narrow power to set aside a decree passed under the Order, on “special circumstances” shown by the defendant. The phrase is deliberately stricter than the “sufficient cause” standard that governs setting aside an ex parte decree under Order IX Rule 13. The Supreme Court explained the difference in Rajni Kumar v. Suresh Kumar Malhotra (2003) 5 SCC 315: the gravity of reasons must be higher; what makes out “special circumstances” for Rule 4 will usually also amount to “sufficient cause” under Order IX Rule 13, but the converse does not hold. The defendant must, in the same application, also place on affidavit the facts that would entitle him to leave to defend the suit if it were re-opened. Rule 4 does not contemplate two successive applications — one to set aside, another for leave — the way Order IX does.

The decisional law on “special circumstances” is fact-driven. In Mahesh Kumar Joshi v. Madan Singh Negi (2015) 12 SCC 254, the Supreme Court underscored that setting aside under Rule 4 cannot be done as a matter of routine; the court must balance the equities, but if a debatable case is made out, conditions can be imposed. In Mohan Lal v. Om Prakash, AIR 1989 Raj 132, an assurance from the plaintiff that the suit would be settled out of court was held not to amount to a “special circumstance” — it might at most be sufficient cause under Order IX Rule 13. “Special circumstances” typically refers to circumstances that did not exist when the decree was passed, or that existed but were not brought to the court’s notice.

Limitation for an application under Rule 4 is governed by Article 123 of the Limitation Act, 1963 — thirty days from the date of the decree, or from the date the applicant had knowledge of it where summons was not duly served. Order XXXVII has been treated as a self-contained code on this question: Order IX Rule 13 has no application to a decree passed in absentia under Rule 2(3).

Other supporting rules — Rules 5, 6, 7

Rule 5 empowers the court, in any proceeding under the Order, to direct that the bill, hundi or promissory note on which the suit is founded be deposited forthwith with an officer of the court, and to stay further proceedings until the plaintiff gives security for costs. Rule 6 preserves to the holder of a dishonoured negotiable instrument the same remedies for recovery of noting charges as the Order gives for recovery of the amount of the bill itself. Rule 7 is the residuary clause: save as the Order otherwise provides, the procedure in summary suits is the same as in suits instituted in the ordinary manner. Pre-trial steps such as payment into court under Order XXIV are available; the framing of issues, recording of evidence and pronouncement of judgment, once the suit reaches trial, follow the ordinary track.

Distinguishing summary suits from ordinary suits on negotiable instruments

The plaintiff who holds a negotiable instrument has a choice. He may sue in the ordinary manner, or he may institute a summary suit under Order XXXVII. The differences are practical. In an ordinary suit the defendant has a right to file a written statement and contest. In a summary suit he must apply for leave to defend, and his right to contest is contingent on the court’s discretion under the IDBI Trusteeship test. In an ordinary suit the procedure for default appearance is governed by Order IX. In a summary suit Rule 2(3) treats default of appearance as deemed admission of the plaint allegations, with a decree to follow.

The advantages run mostly in the plaintiff’s favour: speed, the threat of judgment without trial, and the second-proviso lever that compels deposit of admitted amounts. The countervailing burden is the drafting discipline of Rule 2(1) and the narrowness of the relief that may be claimed. Limitation for the underlying suit on a negotiable instrument is three years — the same whether brought summarily or in the ordinary manner — since the Limitation Act, 1963 did not re-enact the special one-year period of Article 5 of the 1908 Act. Limitation for the application for leave to defend is the strict ten days from service of the summons for judgment, governed by Article 118 of the Limitation Act, 1963.

Appeal and revision against an Order XXXVII decree

A decree passed under Order XXXVII is a decree, and a first appeal under Section 96 CPC lies on the same principles as in any other suit. The Bombay High Court in D. Shantilal v. Bank of Maharashtra, AIR 1989 Bom 150, held that an appeal lies against a decree passed for failure to furnish security under Rule 3(2) (Bombay), both on the principle of Section 96 and as a judgment within Clause 15 of the Letters Patent. The Supreme Court in Wada Arun Asbestos (P) Ltd v. Gujarat Water Supply & Sewerage Board, AIR 2009 SC 1027, held that where a conditional leave is granted under Rule 3(6)(b) and the defendant fails to comply, the order granting conditional leave can itself be challenged in the appeal against the resulting decree — even though a revision under Section 115 would also have been maintainable against the order. An order under Rule 4 refusing to set aside a decree, however, is not appealable.

Where deposit was directed and the suit decreed, the deposited amount is treated as earmarked for payment of the decretal sum, and the court can permit withdrawal under its inherent powers under Section 151. Order XXXVII does not displace the ordinary jurisdiction of civil courts; it overlays a procedural track on suits that fall within Rule 1(2). Suits not within that rule must travel by the ordinary track or, where applicable, by other special procedures such as interpleader under Order XXXV.

MCQ angle and exam pointers

Five distinctions recur in objective papers and ought to be locked in.

1. Limitation for leave to defend. Ten days from service of the summons for judgment under Article 118 of the Limitation Act, 1963. The court has no power to extend it under Section 5 of the Limitation Act, save where Rule 3(7) is invoked for sufficient cause shown.
2. Limitation under Rule 4. Thirty days under Article 123, with the strict “special circumstances” test; not the “sufficient cause” test of Order IX Rule 13.
3. Effect of admitted amount. Second proviso to Rule 3(5) — deposit of the admitted sum is a condition precedent to grant of leave to defend, even where a triable issue exists on the balance.
4. Conditions on leave. Under the post-1976 IDBI Trusteeship test, conditions may include deposit or security, and are not confined (as Mechelec originally suggested) to time or mode of trial.
5. Appeal versus revision. Section 96 lies against the decree; Section 115 revision lies against an order granting conditional leave under Rule 3(6)(b); Rule 4 rejection is not appealable.

The IDBI Trusteeship ladder is the single most asked authority on this Order. Mechelec, Santosh Kumar v. Bhai Mool Singh, Kiranmoyee Dassi, Sunil Enterprises v. SBI Commercial (1998) 5 SCC 354, Rajni Kumar and Neebha Kapoor are the supporting authorities most likely to appear in mains-style questions on summary procedure.

Frequently asked questions

Can a summary suit be filed on a dishonoured cheque?

Yes. A cheque is a bill of exchange within the meaning of Section 6 of the Negotiable Instruments Act, 1881, and falls under Rule 1(2)(a) of Order XXXVII. A crossed cheque marked "A/c payee only" also falls within the rule. But where the suit is in substance on a loan transaction — the loan having merely been advanced by cheque — the suit is on the loan, not on the cheque, and the special procedure is not available. The plaintiff must also have presented the cheque for payment and complied with notice requirements where required by the Negotiable Instruments Act.

What is the difference between unconditional, conditional and refused leave to defend?

Under the IDBI Trusteeship six-fold test, unconditional leave is granted where the defendant shows a substantial defence likely to succeed, or raises a fair and reasonable triable issue. Conditional leave — with payment into court, security, or restrictions on time or mode of trial — is appropriate where the court doubts the bona fides of the defence, where the triable issue is plausible but improbable, or where part of the claim is admitted. Leave is refused outright only where the defence is illusory, frivolous or vexatious, in which case the plaintiff is entitled to judgment forthwith under Rule 3(6)(a).

What does "special circumstances" mean under Order XXXVII Rule 4?

The Supreme Court in Rajni Kumar v. Suresh Kumar Malhotra (2003) 5 SCC 315 held that the phrase is stricter than the "sufficient cause" standard of Order IX Rule 13. The defendant must show circumstances that did not exist when the decree was passed, or that existed but were not brought to the court's notice. He must also place on affidavit, in the same application, the facts that would entitle him to leave to defend if the suit were re-opened. Mere failure to enter appearance, or a casual assurance of out-of-court settlement, is not enough. The limitation is thirty days under Article 123 of the Limitation Act, 1963.

If the defendant admits part of the claim, can he still get leave to defend the balance?

Yes, but the second proviso to Rule 3(5) makes deposit of the admitted amount in court a condition precedent. The Supreme Court in Southern Sales & Services v. Sauermilch Design & Handles GmbH, AIR 2009 SC 320, held that this is a hard rule introduced by the 1976 amendment, and it operates even where the defendant raises a triable issue or a substantial defence on the disputed portion. Once the admitted amount is deposited, leave to defend the disputed balance is governed by the ordinary IDBI Trusteeship test.

Is an order refusing leave to defend appealable, or only revisable?

An order refusing leave to defend is followed by a decree forthwith under Rule 3(6)(a), and that decree is appealable as a first appeal under Section 96 CPC. The Supreme Court in Wada Arun Asbestos (P) Ltd v. Gujarat Water Supply & Sewerage Board, AIR 2009 SC 1027, held that where conditional leave is granted under Rule 3(6)(b) and the defendant fails to comply, the order itself can be challenged in the appeal against the resulting decree, even though a revision under Section 115 would also lie. An order under Rule 4 rejecting an application to set aside, however, is not appealable.