Commercial Courts Must Assign Reasons For Not Passing Conditional Orders In Summary Judgment Applications: Calcutta High Court

Commercial Court, on an application for summary judgment has to assign reasons as to why conditional order as contemplated in Rule 6(b) read with Rule 7 of Order XIIIA should not be passed in a given case, Calcutta High Court, in a significant ruling dated May 20, 2026, held that Commercial Courts are duty-bound to assign specific reasons even when they are not inclined to pass conditional orders under Order XIIIA of the Code of Civil Procedure (CPC).

A bench of Justice Hiranmay Bhattacharyya observed that any contrary interpretation would frustrate the legislative object of the Commercial Courts Act, which seeks the speedy disposal of commercial disputes by dispensing with oral evidence where claims can be decided on documents.

The petitioner, a lessor, filed a commercial suit for recovery of possession and arrears of rent after the respondent lessee failed to pay the agreed monthly lease rent from April 2020, citing the COVID-19 pandemic. The petitioner sought a summary judgment under Order XIIIA of the CPC, contending that the lessee had no real prospect of defending the claim. The Commercial Court at Rajarhat rejected this application, leading to the present revisional challenge before the High Court.

The primary question before the court was whether the Commercial Court was justified in rejecting the summary judgment application without recording reasons as to why oral evidence was necessary. The court also examined the mandatory nature of considering conditional orders under Rule 6(b) and Rule 7 of Order XIIIA when dealing with such applications.

The Scope and Object of Order XIIIA CPC

The Court noted that Order XIIIA was specifically inserted by the Commercial Courts Act, 2015, to ensure the speedy disposal of claims by allowing courts to decide matters without recording oral evidence. The bench observed that the court is empowered to give a summary judgment against a defendant if it considers that the defendant has no real prospect of successfully defending the claim and there is no other compelling reason for a full trial.

Court Explains Duty to Scrutinize Documentary Evidence

Justice Bhattacharyya emphasized that Order XIIIA allows parties to put forward their respective cases and documentary evidence at an early stage. The Court observed that if a claim or a particular question can be decided on a point of law or through the interpretation of documents which form the foundation of the claim, the Commercial Court must not relegate the matter to a full-fledged trial unnecessarily.

"Order XIIIA only dispenses with the recording of oral evidence in order to save time as well as to ensure speedy disposal of commercial disputes."

Necessity of Assigning Reasons for Refusing Conditional Orders

The High Court found that the Commercial Court failed to exercise its jurisdiction properly by not considering whether a conditional order could have been passed. Under Rule 6(b) read with Rule 7, even if a defense is possible but improbable, the court can direct the defendant to deposit money or provide security. The bench held that the Commercial Court has a duty to assign reasons as to why such an order should not be passed in a given case.

Commercial Court Cannot Relegate Matter To Trial Mechanically

The bench noted that the lower court had formulated points for decision but dismissed the application by stating that rent issues should be decided at the trial stage. The High Court remarked that the learned Judge ought to have returned a finding on whether the issues truly required oral evidence or could be settled via additional documentary evidence, such as bank statements, which is permissible under Rule 5 of Order XIIIA.

"The learned Judge of the Commercial Court, even after observing that the defendant cannot lounge and sit idle on the suit property without payment of rent, did not consider whether a conditional order could have been passed."

Legal Validity of COVID-19 as Force Majeure

The Court pointed out that issues like whether the COVID-19 lockdown constitutes a 'Force Majeure' event or whether a combined notice of termination is valid are primarily questions of law and document construction. The bench observed that such determinations often do not require the recording of oral evidence and can be adjudicated within the framework of a summary judgment application.

Requirement of Reasoned Orders Under Rule 6(2)

The Court highlighted that Rule 6(2) of Order XIIIA explicitly requires the Court to record its reasons for making any of the orders mentioned in the rule, including the dismissal of an application. The bench held that the Commercial Court must explain why it believes oral evidence is indispensable for deciding the formulated points of dispute rather than dismissing the summary judgment plea summarily.

The High Court set aside the impugned order of the Commercial Court and restored the application for summary judgment. The matter was remanded back to the Commercial Court at Rajarhat with directions to decide the application afresh by passing a reasoned order within twelve weeks. The Court emphasized that the lower court must allow parties to produce additional documentary evidence in compliance with the procedural requirements of Order XIIIA.

Date of Decision: 20 May 2026