Case Note & Summary
The respondent-plaintiff filed Special Civil Suit No.120 of 2017 before the Civil Judge Senior Division, Pune, seeking recovery of Rs.12,00,000/- (including interest) from the petitioner-defendant. The respondent claimed that he had paid Rs.10,00,000/- as earnest money for the purchase of the petitioner's residential house under an oral agreement of sale. The suit was filed under Order 37 Rule 2 of the Code of Civil Procedure, 1908 (CPC), asserting that it was a simple monetary claim and that the defendant had no defence. The petitioner-defendant appeared and filed an application (Exh.20) seeking unconditional leave to defend the suit, contending that the suit was not maintainable under Order 37 CPC because it was based on an oral agreement, not a written contract. The trial court rejected the application, leading the petitioner to file the present writ petition. The High Court framed the issue of whether a summary suit for recovery of earnest money paid under an oral agreement of sale can be filed under Order 37 Rule 1 CPC. The court held that Order 37 CPC applies only to suits based on written contracts, bills of exchange, promissory notes, or other specified instruments. Since the suit was based on an oral agreement, it did not fall within the ambit of Order 37. The court further held that the petitioner-defendant had raised a triable issue regarding whether the amount was earnest money or a loan, and therefore unconditional leave to defend must be granted. The High Court allowed the writ petition, set aside the trial court's order, and granted unconditional leave to defend, directing the suit to proceed as an ordinary suit.
Headnote
A) Civil Procedure - Summary Suit - Order 37 Rule 1 CPC - Maintainability - Suit for recovery of earnest money paid under oral agreement of sale - Held that such a suit is not maintainable under Order 37 CPC as it is not based on a written contract, bill of exchange, promissory note, or other specified instrument. The suit must be tried as an ordinary suit. (Paras 4, 8-10) B) Civil Procedure - Leave to Defend - Order 37 Rule 3 CPC - Triable Issue - Where the defendant raises a triable issue, unconditional leave to defend must be granted - Held that the petitioner-defendant raised a triable issue regarding the nature of the transaction (loan vs. earnest money), thus unconditional leave to defend was warranted. (Paras 9-10)
Issue of Consideration
Whether a Summary Suit for recovery of earnest money paid in pursuance of an oral agreement of sale can be filed under Order 37 Rule 1 of the Code of Civil Procedure, 1908.
Final Decision
The High Court allowed the writ petition, set aside the trial court's order, and granted unconditional leave to defend to the petitioner-defendant. The suit was directed to proceed as an ordinary suit.
Law Points
- Summary suit under Order 37 CPC is maintainable only for suits based on written contracts
- bills of exchange
- promissory notes
- or other specified instruments
- oral agreement for sale does not qualify
- leave to defend must be granted if defendant raises a triable issue.
