Courts must independently verify territorial jurisdiction and limitation before decreeing summary suits under Order XXXVII.

The Respondent (a doctor) filed a summary suit under Order XXXVII CPC for the recovery of ₹75,20,182/- against the Appellants.

The claim was based on four loans totaling ₹5.25 lakhs advanced between 2013 and 2015 at monthly interest rates of 3% to 7.5% plus 2% penal interest.

The Respondent relied on an affidavit/acknowledgment and a dishonored cheque of ₹1.5 lakhs, both dated 10.05.2017, to extend limitation.

The Appellants, residents of Jind, Haryana, filed their Memo of Appearance on 02.12.2022.

The Trial Court (District Judge, Delhi) observed that the appearance was filed beyond the statutory 10-day limit and immediately decreed the suit for the full amount plus interest.

The Appellants challenged this, asserting that they only learned of the suit via related proceedings in Jind, and argued that the Delhi courts lacked territorial jurisdiction.

The court primarily applied Section 20 of the Code of Civil Procedure (CPC) regarding the place of suing and the fundamental duty of the court to verify territorial jurisdiction suo motu.

It examined the summary procedure under Order XXXVII CPC, specifically the consequences of a delayed appearance.

The court relied on Section 74 of the Indian Contract Act, 1872, which stipulates that only reasonable compensation, not exceeding the named penalty, can be awarded for breach of contract.

The court further applied the doctrine from Fateh Chand v. Balkishan Das (1964) regarding the reasonableness of penalties.

The court applied the doctrine from Central Bank of India v. Ravindra & Ors. (2002), which prohibits the capitalization of penal interest and requires judicial moderation of usurious rates.

The High Court found that the Trial Court committed a grave error by passing a "non-speaking" decree without addressing jurisdictional hurdles.

The court noted that the Plaint itself admitted the Appellants resided in Jind, the loans were executed in Jind, and the Respondent was a temporary resident of Jind.

The mere allegation that the Appellants visited Delhi to seek the loan did not constitute a cause of action in Delhi.

On limitation, the court observed that the 2017 acknowledgment was made more than three years after the initial 2013 loans, rendering them prima facie time-barred.

The court critiqued the "arbitrary" calculation of penal interest which swelled a ₹5.25 lakh loan to ₹75 lakhs, holding that such penal clauses require strict judicial scrutiny under Section 74 of the Contract Act rather than summary disposal.

The court emphasized that a delay in filing an appearance does not absolve the Trial Court of its duty to ensure the suit is maintainable and within its jurisdiction.

The Court set aside the Impugned Order and Decree dated 05.12.2022.

The Plaint was directed to be returned to the Respondent/Plaintiff under Order VII Rule 10 CPC for presentation before the appropriate court in Jind, Haryana.

The Court clarified that while the decree was set aside primarily on jurisdictional grounds, the issues of limitation and usurious interest remained triable issues for the competent court.