Analysis of Order XXXVII, Rule 3(6) CPC

Apr 23, 2025
EDITORIAL BOARD Legal Editor Apr 23, 2025

An Exposition of Order XXXVII, Rule 3(6) of the Code of Civil Procedure, 1908: Principles and Judicial Application in India

Introduction

The Code of Civil Procedure, 1908 (CPC) provides for various procedures to ensure the efficient administration of justice. Among these, Order XXXVII lays down a summary procedure for certain classes of suits, primarily those based on negotiable instruments or where the plaintiff seeks to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising on a written contract, an enactment, or a guarantee. The objective of this summary procedure is to prevent unreasonable obstruction by a defendant who has no tenable defence and to assist in the expeditious disposal of cases. A critical component of this mechanism is Rule 3, particularly sub-rule (6), which delineates the consequences at the hearing of the summons for judgment. This article provides a comprehensive analysis of Order XXXVII, Rule 3(6) of the CPC, examining its provisions, judicial interpretations, and its impact on summary suits in India, drawing upon key precedents and legal principles.

The Framework of Summary Suits and the Role of Leave to Defend

Order XXXVII CPC is designed to ensure swift justice in commercial matters where the defendant's liability is prima facie clear from the documents sued upon. This expedited process, however, is balanced by the requirement that the defendant be given an opportunity to defend the suit if a genuine case is made out.

An Overview of Order XXXVII CPC

Suits under Order XXXVII are initiated by a plaint which must contain a specific averment that the suit is filed under this Order (Tvc Skyshop Limited v. Reliance Communication And Infrastructure Limited, 2013). The defendant, upon service of summons, must enter an appearance within a stipulated time. Failure to do so results in the allegations in the plaint being deemed admitted, entitling the plaintiff to a decree (Order XXXVII, Rule 2(3) CPC, as discussed in Babu Lal Yadav v. R.S. Yadav, 2010). If an appearance is entered, the plaintiff serves on the defendant a summons for judgment, and it is at this stage that the defendant must apply for leave to defend.

The Application for Leave to Defend: Rule 3(5) as a Precursor

Order XXXVII, Rule 3(5) CPC governs the procedure for seeking leave to defend. As elucidated in V.K.K Nair Petitioner v. Mrs. Kanchan Kawar (2005), the defendant must, within ten days of service of summons for judgment, apply for leave to defend by affidavit or otherwise, disclosing facts sufficient to entitle him to defend. The proviso to Rule 3(5) states 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." The court's decision on this application – whether to grant leave unconditionally, conditionally, or to refuse it – directly leads to the application of Order XXXVII, Rule 3(6).

Deciphering Order XXXVII, Rule 3(6): Text and Judicial Mandate

Order XXXVII, Rule 3(6) specifies the outcomes at the hearing of the summons for judgment, contingent upon the defendant's actions regarding the leave to defend. The provision, as quoted in cases like Agarwal Developers Pvt. Ltd. v. Icon Buildcon Pvt. Ltd. (2013) and Vijay Kumar Jagdisray Chawla v. Cogent Enterprises Limited And Others (2016), reads:

"(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."

Sub-rule 3(6)(a): Consequences of Non-Application or Refusal of Leave

This sub-rule addresses two scenarios: first, where the defendant fails to apply for leave to defend after entering an appearance and being served with summons for judgment; and second, where the defendant applies for leave, but the court refuses it. In either situation, the plaintiff "shall be entitled to judgment forthwith." The Supreme Court in Sam Higginbottom of Agriculture Technology and Science v. Acurite Contractors (2016) observed that a decree passed in a summary suit where leave to defend has been refused is almost automatic. The Gujarat High Court in Jitendra Gupta v. Ramchandra Sardare (1991) dealt with a situation where the defendant had not filed an application for leave to defend, and the plaintiff sought a decree under Order XXXVII Rule 3(6)(a). The court's power to pronounce judgment in such circumstances is a cornerstone of the summary procedure's efficacy.

Sub-rule 3(6)(b): Conditional Leave and the Ramifications of Non-Compliance

This sub-rule deals with situations where the court grants the defendant leave to defend, but imposes conditions, such as furnishing security. If the defendant fails to comply with these conditions within the specified time, or fails to carry out other directions, the plaintiff "shall be entitled to judgment forthwith." This provision underscores the binding nature of conditional leave. The judiciary has consistently upheld the strict consequences of non-compliance. In Agarwal Developers Pvt. Ltd. v. Icon Buildcon Pvt. Ltd. (2013), the Delhi High Court, referencing Order XXXVII Rule 3(6)(b), noted that upon failure to deposit the amount as a condition of leave, the plaintiff is entitled to judgment forthwith. Similarly, the Bombay High Court in K.R. Patel (Huf), Mumbai v. M.M. Developers, Mumbai And Others (2015), and more recently in NATIONAL COMMODITY CLEARING LTD. (NCCL) v. DITA COMTRADE LTD. (2025), reiterated that failure of the defendant to comply with a conditional order for deposit entitles the plaintiff to judgment forthwith. The latter case emphasized that "forthwith" means without delay, leaving little room for alternative interpretations once non-compliance is established. The Karnataka High Court in SRI. HAFEEZ UR RAHMAN v. S. A. RAWTHER SPICES (P) LIMITED (2022) also stressed the mandatory nature of Order XXXVII Rule 3(6)(b) regarding non-compliance with conditional orders.

Judicial Scrutiny in Granting Leave: The Bedrock for Invoking Rule 3(6)

The application of Order XXXVII, Rule 3(6) is predicated on the court's decision regarding leave to defend. The principles governing this decision have been extensively elaborated by the Supreme Court and various High Courts.

The "Triable Issue" Doctrine

A central tenet is that leave to defend should be granted if the defendant raises a "triable issue." The Supreme Court in Raj Duggal v. Ramesh Kumar Bansal (1990) articulated that the test is to see whether the defence raises a real issue and not a sham one, meaning if the facts alleged by the defendant are established, there would be a good or even a plausible defence. In Mechelec Engineers & Manufacturers v. Basic Equipment Corporation (1976), the Court emphasized that if triable issues arise, leave should be granted, and a conclusion that the defence is not bona fide cannot be reached arbitrarily. The case of Milkhiram (India) Private Ltd. And Other v. Chamanlal Bros. (1965) also highlighted that leave to defend must be granted if the defense raises a real issue. This principle was reaffirmed in Sunil Enterprises And Another v. Sbi Commercial & International Bank Ltd. (1998), where unconditional leave was granted as the defence was not found to be totally defenceless or illusory. The Supreme Court in Idbi Trusteeship Services Limited v. Hubtown Limited (2016) also revisited these principles, noting that leave should be granted if a triable issue exists.

Distinguishing Bona Fide Defences from Sham Pleas

Courts are tasked with discerning genuine defences from those that are frivolous, vexatious, or merely intended to prolong litigation. In Raj Duggal (1990), it was stated that leave is declined where granting it would merely enable the defendant to prolong litigation with untenable defences. Sunil Enterprises (1998) reiterated that if the defence is sham, illusory, or "practically moonshine," the defendant is not entitled to leave. The proviso to Order XXXVII Rule 3(5), as noted in V.K.K Nair (2005), explicitly allows refusal of leave if the defence is frivolous or vexatious.

The Court's Discretion: Imposition of Conditions

While a bona fide triable issue generally warrants unconditional leave, courts possess the discretion to impose conditions. The Supreme Court in Milkhiram (1965) upheld the trial court's decision to grant conditional leave, emphasizing the trial judge's discretion in assessing the genuineness of the defence and the necessity of conditions to prevent frivolous litigation. The judgment noted the Bombay High Court's amendment to Order 37 Rule 2 (which corresponds to aspects of Rule 3 in the standard CPC), allowing trial judges discretion to impose conditions even when a triable issue is present. Idbi Trusteeship (2016) further clarified that amendments to Order 37 Rule 3 grant greater discretion to trial judges in imposing conditions like deposit security, especially when there is doubt about the defendant's good faith. The Madhya Pradesh High Court in Kundanlal Khanduza v. Sany (2016), while dealing with a challenge to a condition of deposit under Order XXXVII Rule 3(6)(b), underscored that the court must apply its mind to the facts and circumstances of each case to ascertain whether the nature of the defence warrants conditional or unconditional leave, and in determining the conditions themselves.

The "Judgment Forthwith" Dictum: Interpretation and Effect

The phrase "plaintiff shall be entitled to judgment forthwith" in both sub-rules (a) and (b) of Order XXXVII, Rule 3(6) has significant implications.

Mandatory Nature and Judicial Consistency

The term "shall" generally indicates a mandatory command. Courts have interpreted "judgment forthwith" to mean that upon the specified default by the defendant, the plaintiff's entitlement to a decree is immediate and largely unavoidable. As seen in Agarwal Developers (2013), K.R. Patel (2015), and particularly NATIONAL COMMODITY CLEARING LTD. (2025), the judiciary has emphasized the imperative nature of this consequence. The NATIONAL COMMODITY CLEARING LTD. case explicitly rejected alternative interpretations of "forthwith," stating it means "without delay; at the very same time." This strict interpretation is crucial for maintaining the summary nature of the proceedings.

Curtailment of Defendant's Rights Post-Default

Once a defendant fails to comply with the conditions for leave or fails to apply for leave/has leave refused, their rights to contest the suit are severely curtailed. In Vijay Kumar Jagdisray Chawla v. Cogent Enterprises Limited And Others (2016), the Bombay High Court, considering Order XXXVII, Rule 3(6)(b), held that where a defendant failed to comply with a conditional order for leave (furnishing a bank guarantee), the plaintiff was entitled to judgment forthwith, and the defendant was not entitled to cross-examine the plaintiff's witness. This illustrates the stringent outcome of default under this provision.

Conclusion

Order XXXVII, Rule 3(6) of the Code of Civil Procedure, 1908, serves as a vital tool in the mechanism of summary suits, ensuring that plaintiffs with strong prima facie cases based on specified documents are not unduly delayed by defendants who either have no defence or fail to comply with the court's directions. The provision meticulously balances the plaintiff's right to an expeditious remedy with the defendant's right to be heard, provided a genuine triable issue is presented. The judiciary, through consistent interpretation, has reinforced the mandatory nature of the consequences stipulated in Rule 3(6)(a) and (b), particularly the entitlement of the plaintiff to "judgment forthwith" upon the defendant's default. While courts exercise careful discretion in granting or refusing leave to defend, and in imposing conditions, the failure to secure leave or adhere to its terms leads to an almost inevitable decree in favour of the plaintiff. This strict application of Order XXXVII, Rule 3(6) is fundamental to achieving the objectives of summary procedure: speed, efficacy, and the prevention of frivolous litigation in commercial disputes, thereby upholding the sanctity of commercial obligations and promoting timely justice.