The Madhya Pradesh High Court has clarified that in summary suits under Order 37 of the Code of Civil Procedure, once a triable issue is identified by the trial court, imposing a condition of furnishing surety as a prerequisite for leave to defend is legally impermissible. This ruling reinforces the principle that the threshold for granting leave is not the strength of the defence but its existence as a bona fide defence requiring adjudication.
Background & Facts
The Dispute
The petitioners, M/s Mahesh Associates (a partnership firm) and others, were defendants in a summary suit filed by the respondent, Hemant Kumar, seeking recovery of a sum of Rs. 33,50,000/- on account of alleged unpaid dues arising from a business transaction. The suit was instituted under Order 37 of the Code of Civil Procedure, 1908, which permits expedited adjudication in cases involving negotiable instruments, contracts for the sale of goods, or other specified money claims.
Key Facts
- The respondent filed the summary suit on 10.04.2025, claiming Rs. 33,50,000/- as outstanding amount due under an oral agreement for supply of goods.
- The petitioners filed their written statement on 25.05.2025, denying liability and asserting that the transaction was contingent upon third-party clearance, which failed, thereby discharging their obligation.
- The petitioners further contended that the respondent had accepted partial payment and issued a receipt dated 12.11.2024, which reduced the claimed amount.
- No cheque, promissory note, or written contract was produced by the respondent to substantiate the claim.
Procedural History
- 10.04.2025: Summary suit filed by respondent before the Principal District Judge, Indore.
- 25.05.2025: Petitioners filed written statement raising factual and legal defence.
- 20.08.2025: Trial Court granted leave to defend under Order 37 Rule 3(5) CPC but imposed a condition of furnishing surety of Rs. 33,50,000/-.
- 22.08.2025: Petitioners filed the present petition under Article 227 of the Constitution challenging the condition.
- 20.04.2026: Hearing concluded before the High Court.
The Parties' Positions
For the Petitioners
The petitioners argued that the trial court had already acknowledged the existence of a triable issue by granting leave to defend. They contended that imposing a surety condition at this stage was contrary to the settled law laid down by the Supreme Court and the Madhya Pradesh High Court’s own coordinate bench.
For the Respondent
The respondent argued that the surety condition was necessary to prevent potential evasion of liability and that the amount was substantial. He relied on the fact that an FIR had been registered against the petitioners in a related matter, suggesting mala fide intent.
Relief Sought
The petitioners sought setting aside of the condition imposed in the impugned order dated 20.08.2025, and a direction for unconditional leave to defend without any surety requirement.
The Legal Issue
The central question was whether Order 37 Rule 3(5) of the Code of Civil Procedure permits a trial court to impose a condition of furnishing surety when it has already found that the defendant has raised a triable issue warranting a trial.
Arguments Presented
For the Petitioner
The petitioners relied on State Bank of Hyderabad v. RABO Bank (2015) 10 SCC 521, where the Supreme Court held that if a defendant raises a triable issue - however weak - it is not open to the court to impose conditions such as deposit of money or furnishing surety. The Court emphasized that the purpose of summary proceedings is to expedite justice, not to create procedural hurdles. They also cited Kamal Maithil v. Ajay Sharma (M.P. No. 6328/2022), a coordinate bench decision of the Madhya Pradesh High Court, which held that once a triable issue is found, the grant of leave must be unconditional.
For the Respondent
The respondent argued that the factual matrix in the cited judgments was different, as those cases did not involve allegations of fraud or criminal proceedings. He contended that the registration of an FIR against the petitioners in a related matter justified the imposition of surety to ensure the respondent’s claim would not be rendered futile. He further argued that the amount claimed was substantial and the petitioners had a history of delaying tactics.
The Court's Analysis
The Court undertook a detailed examination of Order 37 Rule 3(5) CPC, which states that if the court is satisfied that the defendant has a triable issue, leave to defend shall be granted. The Court noted that the rule does not contain any provision for imposing conditions such as surety or deposit.
"Where the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence, the plaintiff is not entitled to a summary judgment and the defendant is entitled to unconditional leave to defend."
The Court observed that the trial court had explicitly found that the petitioners had raised a triable issue, thereby satisfying the threshold under Order 37 Rule 3(5). The imposition of a surety condition of Rs. 33,50,000/- was therefore inconsistent with the very finding that a trial was necessary. The Court held that such a condition effectively nullifies the purpose of granting leave to defend and transforms the summary proceeding into a prejudgment security mechanism.
The Court further distinguished the respondent’s reliance on the FIR, noting that the existence of a criminal complaint does not alter the civil standard under Order 37 Rule 3(5). The civil and criminal jurisdictions operate independently, and the latter cannot be invoked to impose civil procedural conditions.
The Court also emphasized that the Kamal Maithil decision, being a coordinate bench ruling, was binding unless overruled by a larger bench. No such overruling had occurred.
The Verdict
The petition was allowed. The High Court set aside the condition imposed in the impugned order dated 20.08.2025 requiring the petitioners to furnish surety of Rs. 33,50,000/-. The trial court was directed to grant unconditional leave to defend to the petitioners under Order 37 Rule 3(5) CPC. The Court further directed the trial court to expedite the trial of the summary suit and dispose of it within six months from the date of receipt of this order.
What This Means For Similar Cases
Surety Conditions Are Prohibited After Triable Issue Is Found
- Practitioners must oppose any attempt by plaintiffs to impose surety or deposit conditions once leave to defend is granted under Order 37 Rule 3(5) CPC.
- Courts cannot use surety as a proxy for assessing the merits of the defence - only its existence matters.
FIR or Criminal Proceedings Do Not Justify Civil Surety
- The pendency of an FIR or criminal investigation cannot be invoked to impose financial conditions in civil summary suits.
- Civil courts must confine their analysis to the pleadings and documents under Order 37 Rule 3(5), irrespective of parallel criminal proceedings.
Summary Suits Must Be Expeditiously Decided
- The Court’s directive to dispose of the suit within six months reinforces the statutory intent behind summary proceedings.
- Practitioners should file applications under Section 309 CrPC or Order XVIII Rule 1 CPC to press for early hearing dates when delays occur.
