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Recovery of Debts by Corporate: Summary Suits

 > Corporate Lawyer  > Recovery of Debts by Corporate: Summary Suits

Recovery of Debts by Corporate: Summary Suits

The Corporates and Business Houses either big or small face this prominent issue whereby there exists a persistent problem of debts and the legal challenges associated thereto. One of the legit ways to enable faster recovery of debts is by way of going for a “Summary Suits” i.e. under Order 37 of the Code of Civil Procedure 1908 respectively. A summary suit is one in which the Corporate can look forward to a faster means of disposal of the case whereby it seeks to recover some form of a debt from the borrower.

There are various benefits for this form of a suit for the modern day Corporate, one of the main ones being that this form of a suit is more faster as compared to the usual filing of a normal civil suit. Its main object is to ensure that the suit is shortened much further, in a case where it is an open and shut case in favour of the Corporate, and where the debtor hardly has anything to state against the Corporate. Also, one should also know that, considering its special nature, it does not in any way modify the jurisdiction of the Court or the nature of the suit in any way. Further, a summary suit can be filed before the Civil Court and/or the High Court depending upon the value of the suit and/or the amount of the case which is the pecuniary jurisdiction of the concerned Court respectively.

But, to put a caution, in order to avail the filing of such a summary case and/or summary suit, the Corporate filing the case must ensure that the debtor hardly has any “triable issue” and/or in easier terms, where there is a well-established case in favour of the Corporate and the debtor has hardly anything to state in reply. And furthermore, unlike an ordinary suit, the debtor is not entitled to defend his/her suit, and can only do so with the permission of the Court, which will be granted if and only if he shows a “triable issue” as mentioned earlier.

The Plaintiff/Corporation should bear two pivotal things before filing summary suits i.e.

  1. The evidences and documentary proof of the debt should be direct.
  2. The creditor has acknowledged that debt and is deliberately withholding the amount without and equitable and justifiable reason.

In the case of IDBI Trusteeship Services Ltd. V. Hubtown Ltd. AIR 2016 SC 5321, the Hon’ble Supreme Court observed that the guarantee defaulter had not raised a substantial defence to the claim of the company in the suit, and it could be seen that the defaulter hardly had any “triable issue” in its favour, and hence, the Court was left with a real doubt in regard to the same. The Court further directed that the defaulter would be granted a permission and/or leave to defend only if it deposited the money due to the company with the Bombay High Court, where the parties had gone to before the appeal. The court finally held that the case was to be tried expeditiously in the form of a summary suit.

Thus, it can be easily ascertained that filing a summary suit is a practically more viable option in order to recover debts. The Corporations can definitely look forward to adopt this approach which yields better results in the shortest time span possible.

Authored By: Adv. Anant Sharma & Abhijith Christopher

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