Jyotsna K. Valia vs T. S. Parekh & Co.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2007 Supreme(Bom) 624

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Rebello F.I., Tahilramani V.K. (Smt) & Oka
A.S., JJ.
Jyotsna K. Valia ....Plaintiff
V/s.
M/s.T.S. Parekh & Co. ....Defendants
Summons for No. 1117, 968, 999, 12121 of 2003 & 111,& 12 of 1994 & 90 of, 19 1995 & 347 of 1998 & 685 of 2002 & 140,189,351,352,430,435,436,464,570,571,600, 601, 602, 606, 625, 626, 644, 656, 657,658,697, 720, 730, 731, 732, 733, 735, 738,740, 762, 778 & 779 of 2004 & 359 360,361, 362,363,364,365,366,367,368,369,370,371, 372; 373, 396, 379, 398, 399 & 400, 401,402,449,452,522,524,546,549,568, P 570,571, 600 & 605 of 2005 in Suit No, 1551, 2402, 2403, & 2404 of 1993 of 10 & 4549 of 1994 & 978 of 1997 & 2123 & 1461 of 2002 & 2074, 1482, 1779, 3040, 2074, 2387 & 0 3470 of 2003 & 145, 586, 607, 1007, 1119,1643, 1732, 1976, 1962, 1975, 1987, 1885, 2065, 1044, 1379, 995, 1672, 2155, 2358, 2394, 2336, 2337, 1964, 224, 1965, 1138, 2353,2354,3714 & 6060 of 2004, & 185, 409, 259, 413,260, 46,259, 438, 544,258,410,438411,407,255,1301,1271,1165,1154, 1153,1270,1273,1272,1126,2015,1691, 1261,1744 & 1579 of 2005,
Decided on 26-4-2007.
Advocates appeared:
A.R. Gyani with Vatsal Verma i/b. Halwasia & Co. in Summons for judgment No. 1117/2003 in Summary Suit No. 1551/ 2003, for plaintiff.
Ketan Parekh with Ms. Somya Srilcrishna i/b. Kanga & Co. in Summons for judgment No. 12/1994 in Summary Suit No. 2404/1993, for plaintiffs.
N.C. Parekh i/b. Mansukhlal Hiralal & Co. in Summons for judgment No. 90/ 1995 in Summary Suit No. 4549/ 1994, for plaintiff.
Mrs. Suchi Halvasia i/b. Halvasia & Co. in Summons for judgment No. 347/1998 in Summary Suit No.978/1997, for plaintiff.
H. Toor with Sohaib Khan i/b. P.J. Ranga & Co. in Summons for judgment No. 968 /2003 in Summary Suit No. 1482 /2003, for plaintiff.
P.K. Vora i/b. Pramodkumar & Co. in Summons for judgment No. 968 /2003 in Summary Suit No. 1482 /2003, for defendant No. 1.
H.V. Chande, in Summons for judgment No. 1002/ 2003 & Summary Suit No. 1779/2003, & in Summons for judgment Nos. 351, 352/2004 & Summary Suit No. 607/2004, for plaintiff.
Birendra Saraf i/b. Nankani & Associaes in Summons for judgment No. 1021/2003 in Summary Suit No. 3040/2003, for defendant.
Sachin Satpute i/b. S. Ashwinkumar & Co. in Summons for judgment No. 140 /2004 in Summary Suit No. 2387/2003, for plaintiff. .
R.J. Majra i/b. M.G. Gawde, in Summons for judgment No. 140/2004 in Summary Suit No. 2387/ 2003, for defendants.
M.G. Mimani in Summons for judgment No. 189/ 2004 in Summary Suit No. 145/2004, for plaintiff.
B. Dalal i/b. Dalal & Co., in Summons for judgment No. 464/2004 in Summary Suit No. 1461/2002, for defendant.
S.C. Naidu i/b. C.R. Naidu & Co. in Summons for judgment No. 658/2004 in Summary Suit No. 995/ 2004, for the plaintiff.
T.N. Tripathi in Summons for judgment No. 658/2004 in Summary Suit No. 995/2004, for defendants, in S.J. Nos. 656 of 2004, 657 of 2004 & 658 of 2004. Ms. Dipti Das i/b. Dunmorr Sett, in Summons for ) judgment No. 697/2004 in Summary Suit No.
1672/2004, for defendant. r Ms. Preeti Shah in Summons for judgment No. 762/ 2004 in Summary Suit No. 1138/2004, for plaintiff.
L.H. Rambhai in Summons for judgment Nos, 780/ 2004 & 402/2005 in Summary Suit Nos. 2426/ 2004 & 1270/2005, for defendants, in S.J. Nos.
778,779 & 780 of 2004.
Tushar Bhavasar i/b. Manoj Bhatt in Summons for judgment No. 810/2004 in Summary Suit No.
2588/2003, for defendant Nos. 1 & 3.
Y.R. John with Ajay K.J.Panicker in Summons for judgment No. 373/2005 in Summary Suit No. 448/ 2005, for plaintiffs, in S.J. Nos. 355 & 373 of 2004.
Arif Bookwala, Sr. C. i/b. Ranjit & Co, in Summons for judgment No. 373/2005 in Summary Suit No. 448/2005, for defendants in Nos. 56,57,61 & 69.
Virag Tulzapurkar, Sr.C. with Ms. Somya Srikrishna i/ b. Little & Co. in Summons for judgment No. 524/ 2005 in Summary Suit No. 1126/2005, for plaintiff.
Shyam Mehta i/b. Kanga & Co. in Summons for judgment No. 524/2005 in Summary Suit No. 1126/ 2005, for defendants.
Naushad Engineer i/b, Desai & Diwanji in Summons for judgment No. 549/2005 in Summary Suit No.1691/2005, for plaintiff.
Anoop Sharma in Summons for judgment No. 549/ 2005 in Summary Suit No. 1691/2005, for defendants.
C.S. Balsara with P.S. Colabawala i/b. Ramesh Makhija & Co. in Summons for judgment No. 568/2005 in Summary Suit No. 1261/2005, for defendants.

Headnote:Civil Procedure Code, 1908 - Order XXXVII, Rule 1 - Summary suit - Filing of - There must be a concluded contract - Contract must be in writing - Contract must contain an express or an implied promise to pay. - There must be the following requirements before a summary suit would lie : -
       (1) There must be a concluded contract;
       (2) The contract must be in writing;
       (3) The contract must contain an express or an implied promise to pay.

Judgement Key Points

Certainly. Based on the provided legal document, the key legal principles and considerations are as follows:

Conditions for Filing a Summary Suit:
There must be a concluded contract.
The contract must be in writing.
The contract must contain an express or implied promise to pay (!) .
Nature of "Contract in Writing":
A "written contract" does not necessarily require signatures from both parties; it can be established through exchange of correspondence or documents that clearly demonstrate an agreement (!) (!) .
The writing must be such that it clearly indicates an agreement has been brought into existence and that the claim under it is indisputable (!) .
Difference Between Acknowledgment, Receipt, and Contract:
An acknowledgment of a debt is a unilateral act that states a debt is due but does not necessarily contain a promise to pay unless it explicitly states so (!) (!) .
An acknowledgment coupled with a promise to pay or containing an implied promise can form a basis for a contract (!) (!) .
A mere receipt or acknowledgment without an express or implied promise to pay generally does not suffice for a summary suit (!) .
Implied Terms and Promises:
Terms can be implied by law or by the conduct of the parties, especially in standard types of contracts (e.g., sale of goods, employment) (!) (!) .
Implied terms that create an obligation to pay must be necessary to give business efficacy or be so obvious that they go without saying (!) (!) .
The presumption is against implying terms into a written contract unless it is necessary and consistent with the express terms (!) .
"Settled Account" and "Account Stated":
A "settled account" is one where accounts are mutually accepted as correct, which can give rise to a new contract with an implied promise to pay (!) (!) .
An "account stated" involves mutual agreement on the correctness of the account, which, if confirmed, can serve as a basis for a summary suit (!) .
Acknowledgment of Liability:
An acknowledgment of a debt is an admission that a debt exists but does not necessarily include a promise to pay unless it explicitly states so or contains an implied promise (!) (!) .
The acknowledgment must be in a form that indicates an intention to create a legal obligation to pay (!) .
Items Not Supporting a Summary Suit:
A settled account not confirmed by the defendant does not support a summary suit.
An honored cheque alone does not constitute a basis for a summary suit unless it forms part of a written contract or acknowledgment with an implied promise (!) .

In summary, for a summary suit to be maintainable based on a written document, there must be a clear, enforceable contract in writing that expressly or impliedly promises to pay. Mere acknowledgment or receipt without an implied promise generally does not suffice unless it is part of a settled account or constitutes a recognized form of enforceable agreement.

JUDGMENT:

(PER F.I. REBELLO, J.)

A learned Single Judge noticing apparent inconsistencies or conflicts in judgments of learned Single Judges and of the Division Benches, as to whether a suit based on a writing or a receipt or an acknowledgement of liability, or honoured cheque or a settled account is maintainable as a summary suit, referred the matter to the Hon’ble the Chief Justice, who has placed the matter for consideration before the Full Bench. The issues which arise for our consideration and as referred to us, arise under Order XXXVII, Rule 2 (Summary Suit), in cases where the suit is based :-

i) On a settled account duly confirmed by the Defendants;

ii) On a settled account which is not confirmed by the Defendants;

iii) On an acknowledgment of liability;

iv) On honoured cheque; and

v) On a mere writing or a receipt;

2. Before we proceed to answer the reference, we may consider the legislative history of the relevant rule of Order XXXVII. Order XXXVII Rule 2, the relevant rule, as originally enacted read as under:- "All suits upon bills of exchange, hundies and promissory notes, may, in case the Plaintiff desires to proceed hereunder, be instituted by presenting the plaint in the form prescribed, but the summons shall be in Form No.4 in Appendix B or in such other form as may be from time to time prescribed."

3. This High Court amended Order XXXVII Rule 2(2) by a notification on 29.9.1936. The rule read as under :-

"(1) All suits upon bills of exchange, hundies or promissory notes and all 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 contract express or implied, or on an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of debt other than a penalty, or on a guarantee, where the claim against the principal is in respect of a debt or a liquidated demand only, or in suits in which the landlord seeks to recover possession of immovable property, with or without a claim for the rent or mesne profits against a tenant whose term has expired or has been duly determined by notice to quite, or as become liable to forfeiture for non-payment of rent or against persons claiming under such tenant may in case the plaintiff desires to proceed hereunder, be instituted by presenting a plaint in the form prescribed, but the summons shall be in Form No.4 in Appendix B or in such other form as may be from time to time prescribed."

4. By a further amendment dated 1st November, 1966 by this Court, the provisions of Order XXXVII Rule 2 of the Code of Civil Procedure was substituted as under :-

"2. Institution of Summary suits upon bills of exchange, etc.-- (1) All suits upon bills of exchange, hundies or promissory notes, and all 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 or on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty, or on a guarantee, where the claim against the principal is in respect of a debt or a liquidated demand only, may, in case the plaintiff desires to proceed hereunder, be instituted by presenting a plaint with a specific averment therein that the suit is filed under this Order, and that no relief not falling within the ambit of this rule has been claimed, and with the inscription within brackets "(Under Order XXXVII of the Code of Civil Procedure, 1908)" just below the number of the suit in the title of the suit, but the summons shall be in Form No.4, in Appendix B or in such other form as may be from time to time prescribed.")

5. The Code of Civil Procedure, 1908, subsequently came to be amended by amendment of the Code of Civil Procedure in 1976. The relevant amended provision of Order XXXVII rule (1)(2) reads as under :-

"(2) Subject to the provisions of sub-rule (1), the Order applie

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