Read Order: NORTHERN ARC CAPITAL LIMITED V. SAMBANDH FINSERVE PRIVATE LIMITED And Ors 

Mansimran Kaur

Chennai, June 10, 2022:While affirming that Order XII Rule 6 of CPC enables Court to pronounce judgment on admissions at any stage, including pre-trial stage, the Madras High Court has held that a suit cannot be summarily decreed at the instance of a plaintiff unless such plaintiff satisfies the court that the suit claim stands duly proved.

The Bench of Justice Senthil Kumar Ramamoorthy disposed of the application filed by the applicant for summary judgment and opined that while oral evidence may not be necessary and the suit may be disposed of expeditiously, further  documentary evidence is necessary and the suit cannot be disposed of summarily on the basis of the material on record.

Factual matrix of the case was such that the plaintiff submitted that the first defendant borrowed money from the Plaintiff under multiple facility agreements. These loans were guaranteed by the second and third respondents/ defendants.  Thereafter, the then Chief Financial Officer and other senior employees of the first Defendant issued a communication stating that the first Defendant did not have sufficient liquidity to service its debt obligations and had defaulted in repayment since September 30, 2020.  Eventually, the plaintiff filed a suit for claiming a  total sum of Rs. 38,16,45,711 along with interest on the said amount at the rate of 18% per annum from November 4, 2020 till the date of the repayment. 

The Court observed that the prime objection that was posed for consideration was whether the present application was liable to be rejected on account of dismissal of the earlier application filed by the plaintiff under Order XVII Rule 6 of CPC.   In view of the same, the Court inferred that it was clear that a party to suit may apply under this provision, or, the court may act suo moto, if admissions of fact were made either in the pleading or otherwise.  It was further observed by the Court that the Supreme Court and various High Courts have consistently interpreted Order XII Rule 6 as being applicable only if the admission is clear, categorical, unambiguous and unequivocal.

Further, the Court noted the stark distinctions between Order XIII-A order Order XII Rule 6 and opined that Order XIII-A enables either the plaintiff(s) or the defendant(s) to apply for summary judgment at any time after the summons has been served on the defendant(s) but before issues are framed in the suit. Another difference that was noted by the Court was that the Court may act on its own motion to pronounce a judgment on admission, whereas an application by one of the parties was mandatory under Order XIII-A.

The Court also took into consideration Rule 3 of Order XIII A wherein grounds for summary judgment are mentioned. The Court noted that there are  two requirements that  should be satisfied for the grant of a summary judgment. The first requirement is that the applicant should establish that the counterparty has no real prospect of successfully defending the claim, if the applicant is the plaintiff, or, if the applicant is the defendant, of succeeding on the claim. The second requirement is that there is no other compelling reason why the claim should not be disposed of before recording oral evidence.

The Bench observed that the present application needed to be entertained and couldnot be solely rejected on the ground that the earlier application under Order XII Rule 6 CPC was rejected. In addition to the same, the Court also observed that there was no realistic possibility that the defendants may successfully defend the suit. 

Thus, the Court concluded this matter by stating that a suit cannot be summarily decreed at the instance of a plaintiff unless such plaintiff satisfies the court that the suit claim stands duly proved. Hence, the application was disposed of while observing that the suit should be listed for further hearing for framing of issues and for filing of affidavits. 

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