S.103 Evidence Act Applies To Order XIII-A CPC; Suit Can't Be Decreed Summarily Unless Plaintiff Duly Proves His Claim: Madras High Court
While discussing extensively the scope of issuing summary judgments, the Madras High Court recently observed that suits cannot be summarily decreed at the instance of a plaintiff unless such plaintiff satisfies the court that the suit claim stands duly proved.The two requirements for the grant of summary judgments under Rule 3 Order XIII-A CPC are that the applicant should establish that...
While discussing extensively the scope of issuing summary judgments, the Madras High Court recently observed that suits cannot be summarily decreed at the instance of a plaintiff unless such plaintiff satisfies the court that the suit claim stands duly proved.
The two requirements for the grant of summary judgments under Rule 3 Order XIII-A CPC are that the applicant should establish that the counterparty has no real prospect of successfully defending the claim/succeeding the claim and that there is no other compelling reason why the claim should not be disposed of before recording oral evidence.
With reference to an application for summary judgment, Justice Senthil Kumar Ramamoorthy observed that both the parties are required to set out the grounds on which the application is being prosecuted or defended, along with all documents proposed to be relied upon for such purpose. The court also observed that even though the Rules stands so, the burden of proof is primarily on the applicant. Thus, the applicant had to establish that the counterparty had no real prospect of defending the claim or succeeding in the claim.
"The general principle under the law on evidence, which is enshrined in Section 103 of the Indian Evidence Act, 1872, that the burden of proof lies on the person who makes an assertion applies to an application under Order XIII-A CPC also."
Discussing the meaning of the term "no real prospect", the court observed that in Terence Paul Swain v. T Hillman (Male) and T C Gay,(1999) ECWA Civ 3053, the Court of Appeals (Civil Division) had held that the word "real" is used in contrast to the word "fanciful".
The court observed that there was a high level of burden of proof placed upon the applicant to show that the counterparty does not have the realistic possibility of successfully defending or contesting the suit at trial. To test whether this high level of burden of proof has been met, the pleadings and documents should be examined.
In the present case, the applicant/plaintiff submitted that the First Defendant had borrowed money from the Plaintiff under multiple facility agreements which were guaranteed by the second and third Respondent/Defendant. The applicant/plaintiff pleaded that a sum of Rs. 38,16,45,711/- is due and payable by the defendants. The applicant submitted a Book Debt Certificate referring to the outstanding debt and a letter whereby the aggregate principal exposure of Rs 40.56 crore was referred.
The court observed that though the defendants had denied the reference to documents admitting liability, the basis of such denial was not indicated except to the extent of stating that ''the statement relied on by the Plaintiff cannot in any way be construed to be clear admission of the debts owed to the Plaintiff'''. It held that the defendant was required to state the reasons for the denial and put forward the defendant's version of events. If the denial was not in accordance with Rule 3-A Order VIII CPC, the statements in the plaint would be taken as admitted.
Other defences put forward by the defendants were that the Facility Agreements were not adequately stamped and that the prayer for summary judgment is contrary to the Prudential Framework for Resolution of Stressed Assets dated 07.06.2019, which is a statutory circular issued by the Reserve Bank of India, and prescribes that a lender cannot initiate separate legal proceedings after entering into an inter-creditor agreement with other lenders.
The court considered these defences. With respect to inadequate stamps, the court observed that the same was not a valid defence to the present application and would have to be considered during final disposal. With respect to the reference to RBI's Prudential Framework, the court observed that the said circular related to apportionment and recovery of dues and not to the institution of legal proceedings.
Though the court was satisfied that oral evidence was not necessary and the suit can be disposed of expeditiously, the court was reluctant to dispose of the case summarily and observed that further documentary evidence was necessary. Hence, the court directed that the suit be listed for framing issues.
Case Title: Northern Arc Capital Limited v Sambandh Finance Private Limited and others
Case No: A No. 4248 of 2021 in CS No 318 of 2020
Citation: 2022 LiveLaw (Mad) 246
Counsel for Applicant: Mr Anirudh Krishnan, Mr Adarsh Subramanian and Mr Shiva
Counsel for the Respondent: Mr Rahul M Shankar for Mr Supriyo Ranjan Mahopatra (D1) and Mr Prashant Rajagopal for TM Mano (D2)