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2007 (4) TMI 748 - HC - Indian LawsSuit for recovery - Order XXXVII of Code of Civil Procedure, 1908 - Inconsistencies or conflicts in judgments of learned Single Judges and of the Division Benches - 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 - 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; HELD THAT:- We must note that 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 implied promise to pay. There is no dispute in respect of the first two predicates. The only issue is in respect of the third predicate. As we have noted, we are not concerned here with an implied contract, but an implied term in a written contract. The Defendants would be right to contend that an implied contract is not a written contract. Is a summary suit maintainable on an implied term in a written contract with an implied term to pay. We have noted that the expression "implied" term is used in different senses. In some contract it would not depend on actual intention of the parties, but on a rule of law, such as the terms, warranties or conditions, which if not expressly excluded the law imports, as for instance under the Sale of Goods Act, Marine Insurance Act, Master and Servant and Landlord and Tenant. To imply a term in the contract as implied term in our opinion the test laid down by Kim Lewison in 'Interpretation of Contract" would be relevant. At the same time the Court would have to note that the general presumption is, however, against the implying of terms into a written contract. It is, therefore, again not possible to lay down a general Rule as to when an implied term in a contract can be the subject matter of a summary suit. The issue before us is limited to an implied promise to pay. That would necessarily depend on the facts of each case. The two issues as formulated may now be answered. In so far as the 'settled account is concerned,' it is no doubt true as noticed by the learned single Judge, that the various judgments adverted to, for holding that the summary suit would lie on a settled account, either of the Privy Council or of the Supreme Court did not arise from suits filed as summary suits. However, after the judgment of the Privy Council (Elvira L. Rodrigues) Sequeira, which has been considered by the Supreme Court in Hiralal & Ors. [1953 (3) TMI 36 - SUPREME COURT], a summary suit on a settled account, duly confirmed by the Defendant is maintainable as it is an acknowledgement by the Defendant in the ledger in which mutual accounts have been entered and the accounts settled between them. Such settling of accounts gives rise to a written contract on a fresh cause of action, with an implied promise to pay the amount settled. A summary suit would therefore lie on 'Settled accounts duly confirmed by the defendants. Issue (1) is answered accordingly. In so far as acknowledgements writing or receipt are concerned, considering the various judgments adverted to earlier on behalf of the plaintiffs and Defendants and the discussion, it is not possible to lay down any precise test as to when a Summary Suit would lie on an acknowledgement writing or receipt. That would depend firstly on the document itself, the practice, usage and customs of the trade as also the facts of each case. By so holding it is not as if the Defendant is denuded of his defences when he applies for leave to defend. The Supreme Court in Machalec Engineering and Manufacturers v. Basic Equipment Corporation [1976 (11) TMI 194 - SUPREME COURT] has laid down the tests, which thereafter have been reiterated by the Supreme Court in Sunil Enterprises v. S.B.I. Commercial and International Bank Ltd. [1998 (4) TMI 556 - SUPREME COURT]. The tests laid down are as under: (a) If the defendant satisfies the Court that he has a good defence to the claim on merits, the defendant is entitled to unconditional leave to defend. (b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence, although not a possibly good defence, the defendant is entitled to unconditional leave to defend. (c) If the defendant discloses such facts may be sufficient to entitle him to defend, that is, if the affidavit discloses that at the trial he may be able to establish a defence to the plaintiffs claim the Court may impose conditions at the time of granting leave to defend the conditions being as to time of trial or mode of trial but not as to payment in to Court or furnishing security. (d) If the defendant has no defence, or if the defence is sham or illusory or practically moon-shine, the defendant is not entitled to leave to defend. (e) If the defendant has no defence or the defence is illusory or sham or practically moon-shine, the Court may show mercy to the defendant by enabling him to try to prove a defence but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into Court or otherwise secured. Thus, the issues referred to us are accordingly answered. The Registry to place the matters before the Learned Bench assigned to hear the matters - In the circumstances of the case there shall be no orders as to costs.
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