Can a Commercial Suit be Dismissed by a Civil Court Suo Moto?

J. Sai Deepak | May 2017

Can a commercial suit be dismissed by a Court suo moto even without summons being issued to the defendant? In a judgement delivered in Bright Enterprises Private Ltd & Anr v. MJ Bizcraft LLP & Anr in January this year, a Division Bench of the Delhi High Court comprising Hon’ble Justices Badar Durrez Ahmed and Ashutosh Kumar had the occasion to address this question in the context of Order XIIIA of the Civil Procedure Code, 1908 (“CPC”) which was newly introduced through the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Commercial Courts Act, 2015”).

The issue is better understood by reviewing the position of law with respect to disposal of conventional suits without trial. A conventional suit may be disposed of through rejection of the plaint on the ground that, having regard to the pleadings in the plaint, the suit is barred by law under Order VII Rule 11(d) of the CPC. For example, if a defendant in a suit for copyright infringement takes the defense that the subject matter in which copyright allegedly vests, is ineligible for copyright protection since it falls outside the definition of “work” under the Copyright Act, 1957, it may be possible for a court to reject the plaint and decree the suit on that ground alone if it concurs with the defendant.

Another provision which may be invoked to obviate the need for trial is Order XII Rule 6, which empowers a court to pronounce judgment and decree a suit on the basis of admissions of fact made by a party to the suit in a pleading or otherwise, orally or in writing. This would, however, require such admission to be unequivocal, unambiguous, and material to the claim of the plaintiff or defense of the defendant, as the case may be. If there is scope for more than one plausible interpretation of the fact or further evidence needs to be led in relation to that fact, a court may deem it fit to allow the suit to proceed to trial on the ground that a clear-cut case of admission, as required under Order XII Rule 6, has not been made out by the applicant.

A suit may also be decreed in terms of a settlement arrived at by the parties under Order XXIII Rule 3. While a judgement delivered under Order VII Rule 11 or Order XII Rule 6 is appealable, a consent decree is not unless the terms were arrived at by fraud or misrepresentation.

While each of the above mechanisms is applicable to a commercial suit as well, Order XIIIA of the amended CPC provides yet another way to summarily decree a commercial suit without it having to go through the motions of a conventional trial, provided the conditions set out in the provision are satisfied. In order to address the issue of suo moto summary dismissal of a suit under Order XIIIA without issuance of summons to the defendant, in Bright Enterprises, the Division Bench of the Delhi high Court undertook a detailed examination of the scheme of Order XIIIA, including its placement in the CPC after issuance of summons to the defendant under Order V and before framing of issues in Order XIV.

A clear reading of the procedure laid out in Order XIIIA reveals the following:

An application under Order XIIIA is contemplated to set the ball rolling.
The application may be made at any time after summons has been served on the defendant, but not after issues have been framed in the suit.
The application may be moved by either the plaintiff or the defendant.
What the application must specifically contain has been prescribed in Rule 4 of Order XIIIA.
The respondent to the application must be given a period of 30 days to respond to it.
Apart from the evidence already on record, both parties may lead additional evidence to support their respective contentions.
A date of hearing in the application must be fixed, of which the respondent to the application must be informed.
The necessary grounds on which a summary judgement may be delivered by a court are – (a) that the respondent to the application (either the plaintiff or the defendant) has no real prospect of succeeding in the suit and (b) there is no compelling reason why the suit should not be disposed of before recording of oral evidence.
Rules 6, 7, and 8 set out the various orders that a court may pass in deciding such an application

Nowhere does Order XIIIA expressly permit a court to invoke and apply this framework suo moto, much less dismiss the suit even before the defendant enters appearance. That apart, such a power, if it had been vested in a Court, would have been at loggerheads with the adversarial nature of the Indian legal system. Taking note of the above, the Division Bench held as follows:

“23. From the provisions laid out in Order XIIIA, it is evident that the proceedings before Court are adversarial in nature and not inquisitorial. It follows, therefore, that summary judgment under Order XIIIA cannot be rendered in the absence of an adversary and merely upon the inquisition by the Court. The Court is never an adversary in a dispute between parties. Unfortunately, the learned Single Judge has not considered the provisions of Order XIIIA CPC in this light. 24. In view of the discussion above, since no summons had been issued and obviously no application had been filed by the respondents for a summary judgment, the learned Single Judge could not have dismissed the suit invoking the provisions of Order XIIIA CPC.

In view of the discussion above, since no summons had been issued and obviously no application had been filed by the respondents for a summary judgment, the learned Single Judge could not have dismissed the suit invoking the provisions of Order XIIIA CPC.”

The Court’s recognition and reinforcement of the adversarial nature of the Indian legal system, notwithstanding the amendments made to the discovery mechanisms in the CPC in 2002 and through the Commercial Courts Act, 2015, is one of the highlights of the decision. In the near future, quite a few decisions that revolve around provisions introduced through the Commercial Courts Act may be expected.

About Author

J. Sai Deepak

J. Sai Deepak is an engineerturned- arguing counsel who appears primarily before the High Court of Delhi and the Supreme Court of India. Sai has been a litigator since July 2009 and was an Associate Partner (litigation) at Saikrishna & Associates until June 2016. In June 2016, Sai founded Law Chambers of J. Sai Deepak and set up practice as an arguing counsel. Sai runs the blawg “The Demanding Mistress” and is @jsaideepak on Twitter. Sai may be reached at jsaideepak@lawchambersofjsaide epak.com.