Introduction
In today’s fast-paced economy, achieving a swift resolution of disputes is just as crucial as resolving disputes in your favour. Summary judgment under Order XIII-A of the Code of Civil Procedure, 1908 (“CPC”), as amended by the Commercial Courts Act, 2015 (“the Act”), is an invaluable tool that can expedite justice by enabling courts to dispose of cases without a full trial. This legal mechanism was introduced with one goal: to improve efficiency and reduce delays in claims related to commercial disputes. This would not only bring Indian commercial litigation up to international standards but also benefit litigants by avoiding the delays, costs, and uncertainties associated with protracted litigation, since, such delays can extend over multiple years, leaving the aggrieved party without any sort of compensation until the matter is concluded years later.
This article explores the concept of summary judgment, its applicability in contractual disputes, and the orders that courts may pass in such cases.
Scope of Order XIII-A
As mentioned above, Order XIII-A was introduced to improve efficiency and reduce delays in commercial cases and thus, the summary judgment under Order XIII-A can be only sought in “commercial disputes”, which is defined in Section 2(c) of the Act. However, it is important to note that as per Rule 1 of Order XIII-A, an application for summary judgment cannot be made if a suit in respect of any commercial dispute has already been filed as a summary suit under Order XXXVII.
Rule 3 of Order XIII-A empowers the court to grant summary judgment after the filing of an application if it considers that the defendant has no real prospect of succeeding on the claim or defending against the claim and that there is no other compelling reason why the claim should not be disposed of before the recording of oral evidence. Order XIII-A Rule 3 of the CPC, as applicable to commercial disputes, is reproduced below:
“3. Grounds for summary judgment.—The Court may give a summary judgment against a plaintiff or defendant on a claim if 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 , as the case may be; and
(b) there is no other compelling reason why the claim should not be disposed of before recording of oral evidence.”
The Hon’ble Delhi High Court in the case of Su-Kam Power Systems Ltd. v. Kunwer Sachdev; CS(COMM) 1155/2018, observed that: –
“91. Rule 3 of Order XIIIA, CPC, as applicable to commercial disputes, empowers the Court to grant a summary judgement 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 Ontario Rules of Civil Procedure and “no other compelling reason…..for trial” in Commercial Courts Act can be read mutatis mutandis. Consequently, Order XIIIA, 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 (supra), in the event, the Court comes to the conclusion that the defendant lacks a real prospect of successfully defending the claim.”
Thus, Order XIII-A seeks to avoid the long-drawn process of leading oral evidence in certain situations.
Distinguishing Order XIII-A from Order XXXVII of the Civil Procedure Code, 1908
While both Order XIII-A and Order XXXVII aim to provide expedited relief, they differ significantly in scope and application. The legislative intent behind introducing summary judgment under Order XIII-A is to improve efficiency and reduce delays in commercial suits. In contrast, Order XXXVII is also intended to expedite claims, but it is limited to specific categories of disputes, such as instruments of exchange and written contracts for the recovery of money in the nature of debt or liquidated demands, with or without interest. [1]
It is important to note that while a suit under Order XXXVII may be filed for both commercial and non-commercial matters, the remedy of summary judgment under Order XIII-A is exclusively available for commercial disputes. The summary procedure under Order XXXVII can be availed by a plaintiff from the filing stage by declaring the suit to be specifically filed under Order XXXVII. Under Order XIII-A, however, a separate application praying for summary judgment needs to be filed after the filing of the original commercial suit.
It is also important to note that under Order XIII-A Rule 5, the respondent in a summary application is permitted to file additional documentary evidence in defence of the application. The applicant is also given the opportunity to file fresh documentary evidence in response to the respondent’s evidence, if desired.
Who Can File?
A party (i.e., the original plaintiff or defendant) to a commercial suit may file an application for summary judgment at any time after summons has been served on the original defendant and before issues have been framed.[2] Such an application must comply with the prescribed procedure set out in Rule 4 of Order XIII-A.[3] Furthermore, the respondent may submit its reply to the application within 30 days, also following the procedure outlined in Rule 4 of Order XIII-A.
Orders that May Be Passed under Order XIII-A
Following the filing of the application and reply, and based on the evidence at hand, the Hon’ble Court may, under Order XIII-A Rule 6, in its discretion, pass an Order on judgment on the claim (granting claim or dismissal of claim) or dismissing the application for summary judgment depending on whether the applicant has satisfied the grounds as have been set out in Rule 3, or make any other such orders as it deems fit including Conditional Order[4] (e.g. furbishing security), dismissing part of the claim while issuing a judgment on the part that is not dismissed, striking out pleadings (in whole or in part), and similar actions.
Furthermore, Order XIII-A Rule 6 also empowers the Court to pass various other orders as circumstances require it to do so. For instance, in Impressario Entertainment and Hospitality Private Limited V/s Mocha Blu Coffee Shop; CS (COMM) 733/2017, the Hon’ble Delhi High Court, while deciding a trademark infringement case in which the original defendant failed to enter an appearance or file a written statement, passed an ex-parte summary judgment, while relying solely on the documentary evidence submitted by the applicant. Similarly, in MSC Mediterranean Shipping Co SA Geneva V/s Chloride Alloys (India) Limited; C.S. No. 385 of 2012, the Madras High Court passed summary judgment against the defendant, holding that the decree as passed by it was not merely due to the defendant being set ex-parte but after a careful analysis of the suit file, which revealed that the defendant had no real prospect of successfully defending the claim.
There have also been cases wherein the Court have summarily dismissed cases in favour of the original defendant in a Commercial Suit when he filed for Summary Application for commercial suit to be dismissed. For instance, in Campus EAI India Pvt. Ltd. V/s Neeraj Tiwari; CS (OS) 482/2016, where the case primarily relied on a third-party expert’s report comparing software codes, the Hon’ble Delhi High Court granted the prayer of the defendant’s summary judgment application for dismissal of the commercial suit, when such expert found no evidence of plagiarism.
In each of the above cases, the lengthy process of trial and recording of oral evidence was skipped and the court passed orders based on an analysis of the documents as put on record.
On the other hand, the Courts have also rejected summary judgment applications in cases where it found triable issues requiring recording of oral evidence. For instance, in Rockwool International A/S V/s Thermocare Rockwool (India) Pvt. Ltd.; CS (COMM) 884/2017, the Delhi High Court, in a trademark infringement case, dismissed the summary judgment application because various issues required the recording of oral evidence and could not be determined summarily. Similarly, in Syrma Technology Private Limited V/s Powerwave Technology Sweden AD; Original Side Appeal No. 345 of 2019, the Hon’ble Madras High Court, while deciding an application for summary judgment, observed that there were triable issues in the commercial suit and that the defendant might have, however small, the possibility of successfully defending against the plaintiff’s claims and thus, the matter should proceed to trial. However, the Hon’ble Court in facts and circumstance of the case deemed it necessary to pass a conditional order under Order XIII-A Rule 7, directing the defendants to furnish security and deposit a sum of INR 2.8 Crores with the Registrar General of the High Court.
Thus, it is evident that courts have utilized these provisions to full extent while keeping in mind the legislative intent behind enacting them i.e. to limit delays and swift resolution of commercial disputes.
Conclusion
Summary judgment is an invaluable procedural mechanism that saves time, reduces costs, and delivers justice more swiftly. For businesses embroiled in commercial disputes, it can offer a powerful avenue to enforce rights and recover dues without enduring the lengthy and costly process of a full trial. Understanding how and when to utilize summary judgment, particularly in commercial disputes, can be a key advantage in securing favourable outcomes.