A) Abstract / Headnote

This case examines the legal implications of a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 (CPC), addressing whether the High Court’s directive to accept a respondent’s memo and pass appropriate orders was justified. It delves into whether the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) prevents such proceedings. The Supreme Court ultimately dismissed the appeal as infructuous since the trial suit was finalized before the matter reached resolution.

Keywords: Memo, Summary suits, Recovery of money, Decree, Moratorium, Insolvency, Infructuous.

B) Case Details

i) Judgment Cause Title:
Anish M Rawther @ Anees Mohammed Rawther v. Hafeez Ur Rahman & Ors.

ii) Case Number:
Civil Appeal No. 4120 of 2024.

iii) Judgment Date:
14 June 2024.

iv) Court:
Supreme Court of India.

v) Quorum:
Justices Vikram Nath and Prashant Kumar Mishra.

vi) Author:
Justice Prashant Kumar Mishra.

vii) Citation:
[2024] 6 S.C.R. 959; 2024 INSC 460.

viii) Legal Provisions Involved:

• Code of Civil Procedure, 1908: Order XXXVII, Rule 3(6)(b).
• Insolvency and Bankruptcy Code, 2016: Section 14.

ix) Judgments Overruled:
None.

x) Case Related to Law Subjects:
Civil Procedure, Insolvency Law.

C) Introduction and Background of Judgment

This appeal arises from a dispute over the rejection of a memo submitted by the respondents under Order XXXVII, Rule 3(6)(b) of the CPC in a summary suit seeking recovery of money. The High Court of Karnataka allowed the respondents’ writ petition, overturning the trial court’s rejection of the memo. The appellants invoked the IBC, 2016, arguing a moratorium barred the proceedings, which the High Court rejected. Subsequently, the Supreme Court stayed the High Court’s directive, but the suit concluded before a final decision, rendering the appeal infructuous.

D) Facts of the Case

1. Nature of Suit:
   The respondents filed a summary suit under Order XXXVII of the CPC to recover Rs. 1,04,16,576/- with interest.

2. Trial Court Proceedings:
   The appellants sought leave to defend, which the trial court granted with a condition to deposit 50% of the suit amount. This order was upheld by the High Court and the Supreme Court, with the appellants failing to seek variation as allowed.

3. Respondents’ Memo:
   The respondents later filed a memo under Order XXXVII, Rule 3(6)(b) to decree the suit, which the trial court rejected.

4. High Court Intervention:
   The High Court overturned the trial court’s decision and directed acceptance of the memo.

5. Supreme Court Stay:
   The Supreme Court stayed the High Court’s order, but the trial court finalized the suit by decree before this decision.

E) Legal Issues Raised

1. Whether the trial court was justified in rejecting the memo under Order XXXVII, Rule 3(6)(b) of the CPC.
2. Whether the moratorium under Section 14 of the IBC, 2016, prevented proceedings in the summary suit.
3. Whether the High Court exceeded its jurisdiction by directing the trial court to accept the respondents’ memo.

F) Petitioner/Appellant’s Arguments

1. IBC Moratorium:
   The appellants argued that the moratorium under Section 14 of the IBC halted all proceedings against the corporate debtor, including summary suits.

2. Jurisdictional Overreach:
   They contended that the High Court had erred in interfering with the trial court’s discretionary order rejecting the memo.

3. Final Decree:
   They highlighted procedural irregularities, arguing that the High Court’s directive undermined the appellants’ defense rights.

G) Respondent’s Arguments

1. Summary Suit Mechanism:
   The respondents claimed the trial court erred in rejecting their memo, which aligned with Order XXXVII, Rule 3(6)(b) allowing decrees in summary suits upon the defendant’s failure to meet conditions.

2. IBC Inapplicability:
   They contended that Section 14 of the IBC does not preclude suits seeking monetary recovery unless explicitly barred.

3. Substantive Compliance:
   They argued that the appellants’ non-compliance with the leave-to-defend condition justified their memo.

H) Judgment

a. Ratio Decidendi

1. The Supreme Court ruled the appeal infructuous as the suit was finalized by decree before the interim stay order.
2. The moratorium under Section 14 of the IBC was deemed inapplicable to the specific procedural aspect of the summary suit.

b. Obiter Dicta

• The Court emphasized the necessity of adhering to procedural compliance in summary suits to ensure fairness.

c. Guidelines

1. IBC Moratorium Scope:
   Courts must determine moratorium applicability on a case-by-case basis, considering procedural vs. substantive claims.

2. Memo Filing under CPC:
   Trial courts should judiciously balance procedural efficiency and defendants’ rights when addressing summary suit memos.

I) Conclusion and Comments

The judgment underscores the interplay between insolvency law and civil procedure. It highlights the need for clarity in applying moratorium provisions and adjudicating summary suits. While the appeal was dismissed, the procedural timeline raises important questions about legal efficiency.

J) References

1. Code of Civil Procedure, 1908: Order XXXVII, Rule 3(6)(b).
2. Insolvency and Bankruptcy Code, 2016: Section 14.
3. Anish M Rawther @ Anees Mohammed Rawther v. Hafeez Ur Rahman & Ors., [2024] 6 S.C.R. 959.