Legal Review and Analysis of Executive Trading Company Private Limited vs Grow Well Mercantile Private Limited 2025 INSC 1157

1. Name and Citation of the Judgment

Executive Trading Company Private Limited. vs. Grow Well Mercantile Private Limited.
Citation: Civil Appeal No. of 2025 (@ SLP (C) No. 1134 of 2024), Supreme Court of India, decided on September 25, 2025.
Bench: Hon'ble Mr. Justice Ahsanuddin Amanullah and Hon'ble Mr. Justice S.V.N. Bhatti.

2. Related Laws and Legal Provisions

The judgment primarily interprets and reinforces the procedural mandate of Order XXXVII of the Code of Civil Procedure, 1908 (CPC), specifically Rule 3. This order deals with the special procedure for "Summary Suits" in certain classes of cases, such as suits upon bills of exchange, hundis, and promissory notes. The judgment also references the Commercial Courts Act, 2015, as the suit was filed as a commercial summary suit.

3. Basic Details of the Judgment

• Parties:
  Appellant (Original Plaintiff): Executive Trading Company Private Limited.
  Respondent (Original Defendant): Grow Well Mercantile Private Limited.

• Subject Matter: A challenge to an interim procedural order passed by the High Court of Judicature at Bombay in Commercial Summary Suit No. 19 of 2020.

• Nature of the Original Suit: A summary suit filed under Order XXXVII CPC for the recovery of an alleged admitted liability of Rs. 2,15,54,383.50 along with interest.

• Impugned Order: The High Court's order dated December 5, 2023, which directed the defendant to file a "reply to the Summons for Judgment" and the plaintiff to file a rejoinder, effectively bypassing the mandatory step of applying for "leave to defend."

4. Core Principle and In-Depth Analysis of the Judgment

The Central Issue: Procedural Sanctity of Summary Suits under Order XXXVII CPC

The core issue before the Supreme Court was whether the High Court, in a summary suit governed by the strict procedure of Order XXXVII CPC, could permit the defendant to file a substantive "reply" or "defence" to the Summons for Judgment without first obtaining "leave to defend" from the court.

The Supreme Court's Analysis and Reasoning

The Supreme Court undertook a meticulous analysis of the statutory procedure outlined in Order XXXVII, Rule 3(1) to (7) CPC. The Court highlighted the following sequential steps as mandatory:

1. Service of Summons: The plaintiff serves the defendant with the plaint, annexures, and a summons.

2. Entering Appearance: The defendant must enter an appearance within 10 days.

3. Summons for Judgment: The plaintiff then serves a "Summons for Judgment" on the defendant, supported by an affidavit stating that there is no defence to the suit.

4. The Crucial Step - Application for Leave to Defend: Within 10 days of receiving the Summons for Judgment, the defendant must apply for "leave to defend" by filing an affidavit that discloses what it believes to be a genuine and substantial defence. The court then evaluates this application.

5. Court's Discretion: The court must grant leave to defend unless it finds the defence to be frivolous or vexatious. It may grant leave unconditionally or subject to terms (such as depositing a part of the claimed amount).

6. Judgment for Plaintiff: If the defendant fails to apply for leave, or if the application is refused, the plaintiff becomes entitled to an immediate judgment.

The Supreme Court held that the High Court's order, which allowed the defendant to file a "reply" directly, was a fundamental procedural error. This action "effaced" (erased) the critical distinction between a regular suit and a summary suit. The very essence of a summary suit is its expedited process, where a defendant does not have an automatic right to defend; this right must be earned by satisfying the court, at the threshold, that a triable issue exists.

The Court emphasized that allowing a defence to come on record without the court's prior scrutiny through the "leave to defend" application "goes to the root of the matter." It undermines the entire objective of Order XXXVII, which is to prevent defendants from using delaying tactics in clear-cut cases and to ensure swift justice for plaintiffs in certain classes of undisputed debts.

The Court clarified that it was not making any observations on the merits of the defendant's case or the pending application for condonation of delay in applying for leave to defend. Its intervention was solely on the point of procedural irregularity.

5. Final Outcome and Supreme Court's Directions

The Supreme Court allowed the appeal and set aside the impugned order of the High Court dated December 5, 2023. The Court issued the following directions:

• The parties must pursue their remedies strictly in accordance with the steps envisaged in Rule 3 of Order XXXVII of the CPC.

• The defendant's recourse is to pursue its pending application for condonation of delay in filing the application for leave to defend.

• The setting aside of the High Court's order should not be construed as foreclosing the defendant's options, nor should it prejudice the case of either party when the matter is considered on merits by the High Court.

6. Multiple Choice Questions (MCQs) Based on the Judgment

Question 1: In the case of Executive Trading Co. vs. Grow Well Mercantile, what was the primary procedural flaw identified by the Supreme Court in the High Court's order?

A) The High Court awarded excessive costs to the plaintiff.
B) The High Court allowed the defendant to file a defence without first obtaining leave to defend.
C) The High Court refused to refer the parties to mediation.
D) The High Court dismissed the suit for non-compliance with the Commercial Courts Act.

Answer: B) The High Court allowed the defendant to file a defence without first obtaining leave to defend.

Question 2: According to the Supreme Court's interpretation of Order XXXVII CPC, what is the consequence of permitting a defendant to file a reply to a Summons for Judgment without seeking leave to defend?

A) It accelerates the disposal of the suit.
B) It erases the fundamental distinction between a regular suit and a summary suit.
C) It automatically entitles the plaintiff to a decree.
D) It converts the summary suit into an arbitration proceeding.

Answer: B) It erases the fundamental distinction between a regular suit and a summary suit.