ABSTRACT
Commonly the civil litigation is time taking and lengthy in judicial system of Pakistan. In the same set of law and rules, there is summary procedure for negotiable instruments for quick settlement of disputes on dishonoring the instruments. The Code of Civil Procedure, 1908 (CPC) provides Order XXXVII for summary procedure on negotiable instruments . The form of summons is also different as provided under Form IV Appendix B CPC wherein it is specifically mentioned that the defendant shall have to seek leave to appear and defend the suit within 10 days of service of summons. The High Court, the District Court ( including Additional District court) so also Banking courts are having jurisdiction to entertain summary suits within respective jurisdiction as provided by law, by adopting given procedure under CPC. As for as service of summons is concerned; the general procedure of CPC is applicable as provided under Order V and its relevant rules. In this article it is tried to explain and explore the procedure of summary suit as easy as possible for the law students and to quench the thirst of queries raised by them in dealing Summary Suits. The execution of a summary decree shall be discussed in detail in a distinct article.
Key words: Negotiable Instrument, Summary Suit, leave to appear and defend
INTRODUCTION
The object of summary suit is to provide a mechanism for speedy, efficacious and summary remedy for recovery of money in suits on basis of negotiable instruments as held in case of Asif Khursheed vs Saeed Ahmed. The Code of Civil Procedure, 1908 provides exclusive Order XXXVII regarding summary procedure on negotiable instruments. The order relates to the procedure before the High Court and Court of District Judge of any other civil court specially notified by the High Court concerned. The definition of Negotiable Instruments is provided under section 13 of the Negotiable Instruments Act, 1881. All the negotiable instruments can be enforced through Summary procedure. The Institution of Summary Suit is initiated by presenting a plaint in the form prescribed under law. On admission of the suit, the summons shall be in Form No.4 in Appendix B. The plaintiff may be entitled to a decree for principle sum, subsequent interest and costs. In case a decree is passed it shall be executed forthwith. On service of summons in Form No.4 Appendix B, the defendant shall submit an application for leave to appear and defend. The court, after hearing both parties, may grant leave to appear and defend conditionally or unconditionally. The trial court has power to set aside decree and stay execution. The procedure in suit is followed as that of a regular suit. The execution proceeding shall follow to satisfaction of decree.
DEFINITIONS
Negotiable Instruments: Negotiable Instrument is a written document with payment of sum of money to a certain person at some definite time. Negotiable Instrument is defined under section 13 of the Instruments Act, 1881. It is reproduced as under:
13. “Negotiable instrument”. [(1) A “negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer. Explanation (i).― A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable. Explanation (ii).― A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last endorsement is an endorsement in blank. Explanation (iii).―Where a promissory note, bill of exchange or cheque, either originally or by endorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option.] [(2) A negotiable instrument may be made payable to two or more payees jointly or it may be made payable in the alternative to one of two, or one or some of several payees.]
Summary Suit: The word Suit is not defined in CPC. Generally, it is a process in civil rights where a plaintiff applies to a court of competent jurisdiction to seek a remedy provided under any civil law. The procedure of a regular suit is different from that of a summary suit. In regular suit, the court requires the parties to bring all relevant evidence in shape of documents, witness and other proof. Conversely, in Summary Suit, the court does not adopt full trial as that of regular suit. The court only relies upon the documentary proof produced by parties and pass the judgment and decree. In summary proceedings no evidence or formal process of issues, evidence etc.
Leave to appear and Defend: As per Order XXXVII Rule 3 CPC where a summons in Form No.4 Appendix B are served upon the defendant, then he has to make an application supported with an affidavit to seek leave to appear and defend the suit. Such leave may or may not be granted to defendant. The leave may be conditional or it may be unconditional.
Promissory Note: Promissory Note is defined under section 4 of the Negotiable Instruments Act, 1881. It is an instrument in writing (not being a bank note or currency note) with unconditional undertaking to pay on demand or at fixed time a certain sum of money to a certain person or to the bearer of the instrument. It excludes the bank note and currency note. The given definition of Promissory Note is reproduced as under for convenience:
“4. “Promissory note.” A “promissory note” is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay 2[on demand or at a fixed or determinable future time] a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.”
Bill of Exchange: It is an instrument in writing containing an unconditional order by maker directing a person to pay certain a sum at some certain time or on demand to a certain person or bearer. The definition of Bill of Exchange is give under section 5 of the Negotiable Instruments Act, 1881 as under:
“5. “Bill of exchange”. A “bill of exchange” is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay l[on demand or at a fixed or determinable future time] a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”
Hudni: A verbal or written agreement to pay a certain sum, used as part of an informal system in Asia for transferring money from one place to another place. The definition of Hundi is not provided under the law in Pakistan.
Bond
The word bond is not defined in Negotiable instruments Act, 1881 and CPC, however the general definition of a bond, in law, is that it is a formal written agreement by which a person undertakes to perform a certain act (e.g., appearing in court or fulfilling the obligations of a contract). Failure to perform the act obligates the person to pay a sum of money or to forfeit money on deposit
JURISDICTION OF THE COURT
The jurisdiction of the court to deal a summary suit is the residence of defendant or place of his business or the place where cause of action has accrued fully or partly. However the pecuniary jurisdiction shall be determined as per notification issued from time to time to assign such jurisdiction. In Karachi division, the High court of Sindh has also original civil jurisdiction to adjudicate summary suits falling within its pecuniary jurisdiction. The district judges out of Karachi division have unlimited civil jurisdiction to adjudicate a summary suit.
INSTITUTION OF SUMMARY SUIT
The Summary procedure is applied to the High Court in its original Jurisdiction, District court (including Additional District Court) and such civil courts as the high court may specially authorize . The summary suits are filed upon negotiable instruments, which are bills of exchange, hundies, or Promissory Note. Now a days, Hundi and bills of exchange are not in common practice, rather the hundi is now made offence with reference to Havala and Hundi. The summary suit is a deviation from general principle of civil suit. The most important factor of bringing a summary suit, it is the discretion of plaintiff as to filing of a summary suit or to prefer a regular civil suit. The word “may” and “the plaintiff desires” are used under Rule 2 of Order XXXVII CPC. The plaint shall be presented to the competent court. The details of the draft of plaint and its contents and format are give under Order 6 and 7 which shall be considered while drafting a plaint in a summary suit. The summons for service upon the defendant is special summons on different format. Rule 2 of Order XXXVII CPC provides that the summons shall be in Form No.4 Appendix B. a bare reading of the summons in Form No.4 Appendix B it is evident that the defendant shall have no right to appear and plead the suit until and unless he applies to the court for leave to appear and defend the suit. Such application shall be supported with an affidavit or declaration to the extent that the defendant has some defense in the court which cannot be determined in summary manner. The most important thing in applying for leave to appear and defend is the limitation, which is discussed here-in-below in detail.
SUMMONS IN SUMMARY SUIT UNDER FORM NO.4 APPENDIX-B.
There is special form of summons in summary suit as provided under Form No.4 Appendix-B. The summons contains the condition that on service of summons the defendant has to apply for leave to defend within 10 days. The limitation law applies on it. If the defendant fails to apply for leave to appear and defend, then the court may pass judgment forthwith. The summons Performa is given as under:
“Form No.4 Appendix-B
Summon in Summary Suit on Negotiable Instrument (O.37 Rule 2)
To, ------- (name, description, and place of residence)
Whereas_________ has instituted a suit against you under Order XXXVII of the Code of Civil Procedure, 1908, for Rs.___ balance of Principal and interest due to him as the ________ of a ___of which a copy is hereto annexed, you are hereby summoned to obtain Leave from the court within ten days from the service hereof to appear and defend the suit, and within such time to cause an appearance to be entered for you. In default whereof the plaintiff will be entitled at any time after the expiration of such ten days to obtain a decree for any sum not exceeding the sum of Rs._____and the sum of Rs____, for costs (together with such interest, if any, from the date of the institution of the suit as the court may order.
Leave to appear may be obtained on an application to the court supported by affidavit or declaration showing that there is a defence to the suit on the merits or that it is reasonable that you should be allowed to appear in the suit.
Given under my hand and the seal of the Court, this__th day of ______ 19___.
SD/Judge”
LEAVE TO APPEAR AND DEFEND
The summary suit is an exception to general suits under the code of Civil Procedure, 1908. The legal presumption if generally attached to the negotiable instrument and the burden lies upon the defendant to prove if he has some valid defense against the claim of plaintiff. In case of failure of the defendant to apply for appearing and defending the suit by moving an application supported with affidavit or later on his failure to appear and defend, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree. In these circumstances, neither the proceedings would not be ex parte’ nor the decree would be ex parte’. Same proposition is held by the Honorable Sindh High Court in Emirates Bank case. It is mandatory that the summons shall be issued in the prescribed form No.4 Appendix B. where summons is issued other than the prescribed form, then the service shall not be deemed to have been held properly. The court may permit defendant to appear and defend the suit conditionally and may also order unconditional permission to appear and defend. The grant of leave is not claimed as a matter of right. The defendant has to show that he is able to establish such a defense to be tried on issues, such proposition is also held in case of Rafique Saigol vs Bank of Credit . In case the defendant failed to comply with the order for leave to appear and defend the suit, then such order shall cease to have effect. In the case of Abbas Ali vs Asif Abbas it was held that whee conditions were not fulfilled on leave to defend, the suit shall be decreed .
Leave to defend under the Financial Institution (Recovery of Finances) Ordinance, 2001 is dealt under section 10. The Banking Court shall also issue summons in Form No.4 Appendix B. The summons shall be issued through bailiff or process server of banking court, by registered Post AD, by courier service and by publication in one English and one Urdu language newspapers with wide circulation within jurisdiction of the court. The language of the provisions of sub section 5 of section 9 of the Financial Institution (Recovery of Finances) Ordinance, 2001 are clear and unambiguous. The service is made through all modes. Any mode of service shall be considered to be service upon defendant. The Banking Court may extend the time for leave to appear and defend from 30 days if service is held through publication only on application filed by the defendant that he had no knowledge of publication, to the satisfaction of the court. Clause 4 of Section 10 of the Ordinance provides details to be given in application for leave to defend. It is also pertinent to mention here that at any stage of proceedings any information is found to be against facts and incorrect in leave to defend, the defendant shall lose the right to defend and penalty of not less than 5% of the claimed amount shall be imposed upon defendant, unless
LIMITATION TO FILE SUMMARY SUIT
Limitation to bring a suit under Order XXXVII CPC is three years under Article 64-A of the Limitation Act, 1908. It provides that when the debit becomes payable. The limitation shall be reckoned from the date of accruing cause of action for the first time. The limitation to bring a suit for recovery under the ordinary procedure regarding bill of exchange, promissory note or bond payable is also three years as provided under article 69 to 80 of the Limitation Act, 1908. Under the provisions of section 8 of the Financial Institution (Recovery of Finances) Ordinance, 2001 the financial institution may institute a suit within five years so also a customer.
LIMITATION TO SEEK PERMISSION TO APPEAR AND DEFEND SUMMARY SUIT
The law generally provides for a defendant to seek permission within 10 days from date of service of summons, by moving an application supported with an affidavit, to appear and defend the summary suit. Where the summons was not issued on the prescribed Performa then the service shall not be deemed to have been held properly.
Under the Financial Institution (Recovery of Finances) Ordinance, 2001 the limitation to seek permission to appear and defend is 30 days from the date of first service in any of the five modes of service as provided under Section 9 (5) of the Ordinance, 2001. The ordinance provides an exception for extension of time from 30 days in case service was effected only through publication in two newspapers.
INTERIM DECREE
The banking court may pass an interim decree under section 11 of the Ordinance, 2001. The affidavit under oath by the customer and court considered that the claim as whole is not disputed. The amount of interim decree shall be adjustable in the final decree.
The Ordinance, 2001 provides under section 19 that on conclusion of trial a decree shall be passed and the suit is automatically converted into execution. There is no need to file a separate execution application before a banking court under the Ordinance, 2001.
POWER TO SET ASIDE THE DECREE UNDER ORDER XXXVII RULE 4 CPC
The court which passed a decree may under special circumstances set aside the decree and also stay or set aside execution. The court may also give leave to the defendant to appear and defend the suit to the summons. The defendant has to show special circumstance for his non appearance before the court as held in the case of Ali Khan vs Allied Bank . The provisions of Rule 4 Order XXXVII CPC are only applied where decree was passed under Rule 2 (2) Order XXXVII CPC as an ex parte’ decree after summons in form No.4 appendix B, served upon the defendant as held in the case of National Bank of Pakistan vs Tradewell Pakistan. The words “special circumstance” is more serious than that of “sufficient cause” . In case where the defendant has once appeared and filed an application for leave to appear and defend the suit but later on the defendant disappeared. The court may proceed to dismiss the application for leave to appear and defend and proceed the suit as per law. Where the defendant applied under Rule 4 to set aside such order, the limitation for restoration of such application would be calculated under Article 164 of the Limitation Act, 1908 that is 30 days from date of knowledge, as held in the case of Tahir Ali Khan vs Messrs United Air.
The banking court is also empowered under section 12 of the Ordinance, 2001 to set aside the decree on application of the defendant moved within 21 days of the decree or knowledge by showing sufficient cause. The CPC provides words special circumstances, whereas in the Ordinance sufficient cause is mentioned.
BAR ON SUMMARY SUIT
Where the amount of dishonored instrument is also secured otherwise by way of any additional instrument like a mortgage, charge, pledge etc, then no summary suit is competent. The provisions of order 34 Rule 14 CPC shall come into play in cases of additional instruments. The summary suit shall not be competent in case of an instrument of guarantee, indemnity bond, expired cheque. No suit shall also lie against a person who is not associated with dishonored instruments.
ADVANTAGES OF SUMMARY SUIT
The summary suit is a deviation from general civil procedure to deal with suits particularly suits for recovery. The general procedure is lengthy and time consuming. The summary procedure is speedy in nature. The commercial activities are mainly protected in this procedure. The presumption of genuineness is attached to the claim of plaintiff whereas the defendant has no right to appear and defend the suit, unless he seeks permission of the court. The limitation, of 10 days, is provided under CPC whereas the limitation 30 days is provided under the Financial Institutions (Recovery of Finances) Ordinance, 2001 for leave to appear and defend. The law also provides the ample power to the same court to set aside the decree. The main purpose of the legislator is to save time, therefore, the time is essence of the summary suits. It is generally observed that limitation of three years to file a summary suit is not condonable. In case the defendant fails to apply within prescribed time for leave to appear and defend, the suit shall be decreed forthwith and the stance of plaintiff shall be deemed to be true and the defendant shall be deemed to have no defense.
CONCLUSION
Summary suit provides a speedy remedy to the plaintiff who seeks relief on basis of negotiable instrument. It is the main spirit of summary procedure to provide an alternate remedy with some exceptional time frame. The option to adopt the procedure lies upon the plaintiff as a summary suit or a regular suit may be brought on the basis of negotiable instruments. The jurisdiction of High Court, Court of District Judge or a civil court which is specially empowered by the High Court is to be invoked under Code of Civil Procedure. However, the special courts are established under the Financial Institutions (Recovery of Finances) Ordinance, 2001. These courts are given special jurisdiction to adjudicate the summary suits between a Financial Institution and a costumer. The presumption of correctness is attached to the plea of plaintiff in a summary suit. The defendant has no right to appear and defend the summary suit, until the defendant seeks permission of the court within prescribed time since service of summons under Form No. 4 Appendix B. The general principles of burden to prove are not applied in a summary suit, rather presumption of correctness is attached to the plea of plaintiff. Where the defendant fails to appear or seek the permission within prescribed period, the suit shall be decreed to the extent of amount mentioned in the summons/negotiable instrument. In case leave is granted to the defendant conditionally or unconditionally, then the suit is termed to be a regular suit. The court has also powers to set aside the decree passed by it under the law if defendant has special circumstances for his non appearance. The time is essence in summary suit for leave to defend. CPC provides 10 days limitation to seek permission to for leave to appear and defend the suit from date of service. In case the summons were not issued on the prescribed form No.4 Appendix B, then service shall not be termed to have been valid service upon defendant. The time of 30 days is provided under Financial Institutions (Recovery of Finances) Ordinance, 2001. The said time may be extended if service was held through publication only. Where leave to defend is declined the suit is to be decreed forthwith. Execution proceedings are followed after decree by filing of an execution application under Code of Civil Procedure, 1908 whereas under the Financial Institutions (Recovery of Finances) Ordinance, 2001 the suit is automatically converted into execution.