Calcutta High Court
Dalgreen Agro Pvt. Ltd vs Shaikh Asadur Rahaman & Ors on 21 June, 2018
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
OD-3
ORDER SHEET
GA 1295 of 2018
CS 58 of 2016
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
DALGREEN AGRO PVT. LTD.
Versus
SHAIKH ASADUR RAHAMAN & ORS
BEFORE:
The Hon'ble JUSTICE MOUSHUMI BHATTACHARYA
Date : 21st June, 2018.
Appearance:
Mr. Anirban Ray, Adv.
Mr. Pratik Shanu, Adv.
...for the plaintiff Mr. Reetobroto Kumar Mitra, Adv.
Mr. Subhashis Sengupta, Adv.
Mr. Sarosij Dasgupta, Adv.
Ms. Sutapa Mitra, Adv.
...for the defendant nos. 1, 2, 3, 6 & 7 Mr. Subhadip Biswas, Adv.
Mr. Ratul Das, Adv.
...for the defendant no.5 The Court :- This is an application filed by the defendant no. 2 in the suit for stay of trial in the suit on the ground that two suits have been filed by the defendant in the District Court at Khulna, Bangladesh, in respect of the same transaction between the same parties. The suits filed in Bangladesh are admittedly prior proceedings and according to the defendant no. 2 the trial in the Bangladesh suit is about to be completed. The defendant no. 2 is the plaintiff in Suit No. 6 of 2016 before the District Court at Khulna and the plaintiff herein is first defendant in the Bangladesh Suits.2
The present suit before this court has been filed against the defendant no. 2 and others for recovery of money and damages for goods exported to the defendant no. 2 and two others in Bangladesh. The Bangladesh suits are for decree against the plaintiff herein and for an injunction restraining the plaintiff for transferring the amounts in the letters of credit to the plaintiff's banks in Kolkata.
In support of the application for stay of the trial of the suit, Mr. Reetobroto Mitra, counsel appearing for the defendant no. 2, invites this Court to consider the Explanation to Section 10 of The Code of Civil Procedure, 1908 (CPC) and submits that the explanation confers a discretion on a Court whether to stay a suit when another suit is pending in a foreign Court on the same cause of action. He submits that the words "does not preclude" in the Explanation gives an option to a Court to stay a suit despite the language used in Section 10 which limits the operation of the said section to Courts in India. He relies on the principle of Comity of Courts and urges that the said principle has evolved into more than a request extended by one Court to another. He relies on the fact that the suits in Bangladesh are at an advance stage of hearing and any orders passed by this Court on the present suit would have an irreversible bearing on the suits in Bangladesh which have admittedly been filed earlier. He points to the conduct of the plaintiff in refusing to enter appearance before the First Joint District Judge, Khulna and instead invoking the jurisdiction of this Court by filing a later suit on the same cause of action. The authorities relied upon by counsel are Lloyds Triestino Societa ... vs. Laxminarayan Ramniwas reported in AIR 1959 Cal 669 (upheld in AIR 1960 Cal 155) and Jugometal 3 Trg Republike vs. Rungta And Sons (Private) Ltd. reported in AIR 1966 Cal 382 CWN 375 as instances where a subsequent proceeding was stayed Section 10 of the CPC.
However, on a closer inspection of the facts involved in those decisions, it appears that in Triestino there was an exclusive jurisdiction clause under which the parties had agreed to go before the Judicial Authorities to Trieste or Genoa, expressly renouncing the competence of any other judicial authorities. This was in fact the deciding factor by which this Court, despite the suit having been instituted almost a year prior to the date of the decision, passed an order that the legal proceedings should be confined to the chosen forum of the parties and all further proceedings in the Calcutta High Court should be stayed. In the case of Jugometal Trg Republike vs. Rungta And Sons (Private) Ltd., the deciding factor for stay of the subsequent suits was that the Court in which the first suit was pending lacked the jurisdiction to grant the relief claimed and was also not competent to grant the relief in the second suit . It may be mentioned that in that decision although this Court was in agreement that no case of stay under Section 10 of the CPC had been made out, it was found to be a fit case for granting unconditional stay under Section 151 of the CPC.
Mr. Anirban Ray, counsel for the plaintiff relies on the express language of Section 10 of the CPC and the legislative intent behind the said Section. According to him, the Explanation to the said Section reveals a clear tilt in favour of a Court in India trying a later suit despite an earlier suit pending in a foreign Court provided both are founded on the same cause of action. He further stresses on the objective of Section 10 in that it is restricted only to Courts in 4 India having jurisdiction to grant the relief claimed and can only stretch to a Court beyond India provided the same has been established or continued by the Central Government and having like jurisdiction as a Court in India. He points to the ambiguity in the pleadings contained in the application where no particulars have been disclosed as to the exact status of the trial and how far the hearing of the suits have progressed in Bangladesh. He submits that in view of the express language of Section 10, the petitioner cannot take recourse to the said section. He relies on The Newabganj Sugar Mills Co. Ltd. And Others vs. The Union of India And Others reported in (1976) 1 Supreme Court Cases 120; K. K. Velusamy vs. N. Palanisamy reported in (2011) 11 Supreme Court Cases 275 and National Institute Of Mental Health and Neuro Sciences vs. C. Parameshwara reported in (2005) 2 SCC 256 on the proposition that inherent jurisdiction of the Court can only be invoked when no remedy or procedure has been prescribed under the CPC.
On facts, Mr. Ray submits that the present suit in any event has been filed in relation to 3 L/Cs as opposed to a single L/C before the Court in Bangladesh and further that the parties in the two suits are also not the same. He, however, does not deny that the same transaction for export of goods from Calcutta to Khulna forms the subject matter in both suits. He urges that by filing a written statement the defendant no. 2 has subjected itself to the jurisdiction of this Court and cannot now shy away from going through the rigours of the present proceedings.
I have heard learned Counsel appearing for the defendant no.2 in this suit (the applicant herein) and the plaintiff. Several facts appear from 5 records. First, the Indian seller (plaintiff) agreed to export rice and wheat to the Bangladeshi buyer (the defendant no.2) who, under letters of credit (LC), agreed to receive and take delivery of the said goods. The payment for the said goods was to be made through the letters of credit opened by the defendant no.2 for an agreed amount of money with the defendant no.2's bank at Khulna, Bangladesh. The LC was to be opened for each of the invoices raised by the plaintiff and the defendant no.2, through the defendant no.2's bank at Khulna, Bangladesh would pay the plaintiff for the goods delivered to the defendant No.2. The starting point of the dispute (as raised by the defendant No.2) arose when the goods imported by the plaintiff consignor did not reach the defendant no.2 consignee in Bangladesh. The cause for the goods not being delivered to the intended consignee (defendant no.2) is alleged to be fabricated documents with regard to the LCs and the fraud perpetrated by the parties upon each other. In other words, the plaintiff says that the goods exported by it were duly delivered to the defendant no.2 in Bangladesh, despite which the defendant no.2 failed to make any payment to the plaintiff in terms of the three LCs stated in the plaint. The defendant no.2 says that the goods did not enter Bangladesh and hence the question of the defendant no.2 receiving the goods or making payment for the same did not arise.
The most significant undisputed fact is that on 14th February, 2016, the defendant no.2 filed two suits, being Money Suit Nos. 5 of 2016 and 6 of 2016 in the Court of the District Judge at Khulna, Bangladesh, for recovery of money and permanent injunction along with other consequential reliefs pertaining to the sale of goods by the plaintiff in Kolkata to the defendant no.2 in 6 Khulna, Bangladesh. The transaction in respect of which the aforesaid suit was filed in Bangladesh is the same transaction which is the subject matter of the present suit. The plaintiff in this suit, (first defendant in the Bangladesh suit), has not till date, entered appearance in the said suit but on 15th February, 2016, filed the instant suit in this Court for decree and damages against the defendant no.2 and other defendants for payment with regard to the three LCs which were not made to the plaintiff. The defendant nos. 1, 2 (the applicant herein), 3 and 8 are all residents of Bangladesh, who the plaintiff alleges to have colluded with each other to defraud to plaintiff. The transaction was on the basis of an oral agreement which the plaintiff thought to be an "attractive proposal" for doing business in the form of exporting the concerned goods from India to Bangladesh. The defendant no.2 and some of the other defendants have entered appearance and filed written statements in the suit before me. By an order dated 4th June, 2018 this Court had fixed the matter for framing of issues.
In the above factual context, the issue in the instant application is whether this Court should stay the present suit by reason of the prior suits having been filed by the defendant no.2 against the plaintiff in the Court in Bangladesh. It is not in dispute, that the instant application has been filed on the lines of the principles laid down in Section 10 of The Code of Civil Procedure, 1908. Since, Counsel appearing for both the petitioner and the plaintiff have argued at length on the scope and objective of Section 10, it would be useful to set out the said Section:-
"10. Stay of suit:- No Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue 7 in a previously instituted suit between the same parties, or between parties under whom they or any of them claim litigating under the same title where such suit is pending in the same or any other Court in [India] having jurisdiction to grant the relief claimed, or in any Court beyond the limits of [India] established or continued by [the Central Government] and having like jurisdiction, or before [the Supreme Court].
Explanation:- The pendency of a suit in a foreign Court does not preclude the Courts in [India] from trying a suit founded on the same cause of action."
The primary argument of Mr. Ray rests on the explanation to Section 10 which essentially is that even if a suit is pending in a Foreign court, a court in India would not be precluded from proceeding with the trial of a subsequent suit founded on the same cause of action as that of the prior suit. Even otherwise, there is a clear emphasis on the word "India" including other expressions reinforcing the underlying objective of the said Section that only Courts in India would come under the purview of Section 10 and Courts outside India can assume jurisdiction only if they have been established or continued by the Central Government and having like jurisdiction as the Courts in India. The explanation to Section 10 hence gives a stamp of primacy to Indian courts. Mr.Ray's argument in favour of continuing with the present suit would have sailed through had the defendant no.2 anchored its entire case on Section 10 alone. Indeed, the explanation to Section 10 would have been sufficient by itself 8 to knock the application out and convince this Court that despite a prior suit having been filed in Bangladesh, admittedly on the same cause of action, the prior suit cannot prevent this Court from proceeding with the trial of the suit before it. The decisions cited by Mr. Ray are absolutely correct on principle namely that inherent powers cannot trample over statutory provisions and that the power under Section 151 of the Code of Civil Procedure can be invoked only where a remedy or a procedure has not been provided by the Code. However, all the decisions cited hinge on Section 10 of the CPC where there was a friction with the inherent powers under Section 151 and whether the latter could be applied even where the statute had laid down the procedure. To be fair to Mr. Ray, this is the only line of argument available to the plaintiff since the pleadings in the application of the 2nd defendant substantially borrow the tone and tenor of Section 10. In the view of this Court however, since both parties agree that the application could not have been filed under Section 10 in view of the clear legislative intend expressed therein, the only issue which remains to be decided therefore is whether sufficient grounds have been made out in the instant application to invoke the inherent powers of this Court to do substantial justice or to prevent abuse of the process of this Court.
In this context, the main issues urged by Counsel can be summarised as:-
a) Both the suits relate to the same transaction between the parties before this Court.
b) The plaintiff has chosen not to appear and contest in the said suits. 9
c) The defendant no.2 has filed prior suits in Bangladesh where the trial is about to be completed.
d) Any order passed in the present suit would frustrate the earlier suit in Bangladesh and the defendant no.2, being the plaintiff in the Bangladesh suit, would be non-suited.
e) The plaintiff has suppressed the institution of the suit in Bangladesh and has filed the present suit on the same cause of action.
f) The plaintiff is threatening to extract the LC amount from the issuing bank and may do so at any moment (allegation contained in the petition for temporary injunction filed by the defendant no.2 in Bangladesh).
To assess the relative concerns of the parties it is necessary to reach beyond the points urged and assess the case made out in the plaint and some of the written statements, including that of the defendant no.2.
It is clear from the statements made in the plaint that there is no written contract and that the parties agreed to enter into an oral agreement of cross border sales upon being convinced of its viability. It is also clear that four of the parties, against who the plaintiff has claimed relief are based in Bangladesh. In fact, in paragraph 3 of the plaint, it is stated that even the defendant no.4 was initially introduced to the plaintiff as being a resident of Bangladesh.
i) Even otherwise the goods were due to be delivered at Bangladesh. 10
ii) The alleged fraud was perpetrated and fabrication of documents took place in Bangladesh.
iii) The LCs were opened through the defendants Bank in Bangladesh.
iv) The failure to make payment in terms of the LCs took place in Bangladesh.
v) The breach of obligations on the part of the defendants giving rise to the cause of action in the present suit took place in Bangladesh.
vi) The relevant documents pertaining to the transaction including the proforma invoices, and transport challans other documents mentioned in the LCs were provided by the plaintiff to the defendants in Bangladesh.
vii) The goods were received by the defendant no.8 in Bangladesh.
viii) The complaint of discrepancies with regard to documents referred in the LCs were made by the defendant's bankers in Bangladesh.
ix) The agreement in any event took place between the parties at Bangladesh.
x) The bank, through which the defendant nos. 1,2 and 3 were to make payment, is recalled in Bangladesh.
xi) The stamp and signature endorsed on the packing list and the shipping bills which the plaintiff alleges to be forged, are of the Bangladesh customs authority.
xii) The entire lot of documents which the plaintiff claims to have been tampered with took place at the Bangladesh Port. 11
The only cause of action which seems to have pushed the plaintiff to file a subsequent suit in this Court arises from the plaintiff/consignor of the goods in question, being based in Kolkata and the defendant nos.4,5,6 and 7 who, held themselves (defendant nos.4 and 5) out to be commodity brokers in relation to the transaction entered between the parties. Defendant nos.6 and 7 have been described as carrying on the business of clearing agents and/or facilitators of the transaction in question. What is important in this context is that the defendant nos. 4, 6 and 7, who are based in Kolkata, have filed written statements specifically stating that the Calcutta High Court does not have the territorial jurisdiction to try and entertain the present suit.
This Court cannot shut its eyes to several facts. First, the plaintiff has not contested the Bangladesh suit, despite the said proceedings having precedence over this suit. Instead, the plaintiff has filed the present suit on a cause of action which the plaintiff claims to be in respect of the same transaction, although with two more LCs and new defendants being added in the suit. The aforesaid brings this Court to test, not whether this Court lacks territorial jurisdiction to try the suit - academic questions when leave under Clause 12 of the Letters Patent has already been granted and the defendants have not applied for revocation of such leave - but whether the plaintiff deliberately chose its forum over the more natural and convenient one at Khulna, Bangladesh? If the cause of action pleaded in the plaint is to be seen, there is little doubt that the plaintiffs could have raised all the issues pleaded in the plaint in the Bangladesh suit. The plaintiff has impleaded parties having a tenuous link to the complaint, misjoinder being a defence in the written 12 statements. Significantly, the plaintiff has not made out a case anywhere in the plaint that this Court is the natural or the forum most convenient for trying the suit. Having filed the later suit, the plaintiff would have to discharge that onus or at least show that Bangladesh was not the natural or appropriate forum for the plaintiff to present its defence.
Instances when a Court would decline to assume jurisdiction in relation to a subsequent proceeding have been fairly well-settled in decisions starting with Spiliada Maritime; (1986) 3 All ER and 843 and Aerospatiale; (1987) 3 AllER 510 to Indian cases covering grant of anti-suit injunction; Modi Entertainment Network (2003) 4 SCC 341. Excluding cases involving a contractual jurisdiction clause, courts have generally asked the applicant seeking stay of proceedings in a foreign court to show that it would be hugely inconvenient for that party to contest the proceedings in the other; the underlying objective being that litigants should not be dragged to an inconvenient forum by an artful dodger who chooses a subsequent forum knowing fully well that it is not the natural or the appropriate forum to entertain the dispute. In all such cases, the Court has to be satisfied that the party seeking to proceed with the later proceedings has established that the subsequent court is the most appropriate forum to try the dispute.
In the case before me, the defendant no.2 has urged that the Bangladesh suit is not only the prior suit but that the trial in the said suit is already at an advanced stage. It has also strongly urged that this Court lacks the territorial jurisdiction to try the present suit and further that the plaintiff has suppressed the Bangladesh suit altogether in the plaint. The plaintiff, on the 13 other hand, has not discharged its onus of showing that this Court is the only forum to which all the parties must naturally approach to thrash out the compelling claims. Having perused the plaint, it is clear that the plaintiff could have entered appearance in Bangladesh (forum No.1) to contest the claim of the defendant no.2 but chose instead to file a fresh suit before this Court (forum No.
2). It matters little that the first suit is before a district court presumably not having 'like jurisdiction', what matters is that the District Court at Khulna was already seized of jurisdiction on 15th February, 2016 when the present suit was filed in this Court. The principle of Comity of Courts has been elevated to more than a courtesy extended by one court to another in recent times; refer Dicey and Morris 12th Edition on Conflict of Laws. The main objective, like most equitable processes of court is for the ultimate clarity of a litigant, so that a hapless defendant is not made to run to a court of the plaintiff's choosing, particularly when the facts point to it to be an unnatural forum for entertaining the suit. Even from a cursory reading of the plaint and the application, the actions in issue are really and substantially most connected with Bangladesh. Since we are looking at countries where the distance and time-difference cannot lead to immense inconvenience or harassment to either party, it is even more strange as to why inconceivable why the plaintiff would opt to stay away and drag the defendants to a court in India. Further, the varying accounts of the transaction must necessarily require evidence to be taken, hence the availability of witnesses and expense in shifting an ongoing proceedings to a court in India are factors which this Court must take into account.
14
The decisions cited by Counsel proceed on the basis of the application having been filed and reliefs claimed under Section 10 of the CPC. Since it is the view of this Court that Section 10 cannot be summoned to the aid of the petitioner, none of the decisions really apply to the facts before me. It would, however, be useful to quote an extract from the Jugometal decision where G. K. Mitter, J, after holding that no case for stay of suit has been made out under Section 10 of the CPC, proceeds to hold the following;-
"...As has been said in many cases this power is to act ex debito justitiae and to do real and substantial Justice and to do real and substantial Justice for the administration of which alone the court exists. Even if the case is not covered by the express provision of Section 10 of the Code we must see whether an order for stay ought to be made in the interest of justice without curtailing the rights which the litigant has to seek redress in court."
The above would, in my view, automatically attract the principles underlying the inherent powers of a court under section 151 of the CPC. The cause of action pleaded in the plaint, the situs and nerve-centre of the transaction on which the dispute is based, the institution of the suits in Bangladesh and the progress made therein, the conduct of the plaintiff in dodging the first suit and taking the reins in the second suit are factors which would amount to abuse of process which this court should prevent from taking an irreversible form.
15
On a fair assessment, since Issues are yet to be framed in the present suit, the plaintiff would not suffer great prejudice if it is asked to wait till the Khulna District Court expresses its mind in the suits before it. On the other hand, if the present suit proceeds to trial and judgement is pronounced on the merits of the transaction, the earlier suits will be rendered completely infructuous. In the absence of the parties having shown Khulna or Calcutta to be the forum of choice, the plaintiff must show that continuing the suits in Bangladesh is oppressive and vexatious or would cause grave injustice to the plaintiff. The clinching issue is whether a suit instituted prior in point of time should be frustrated thus when the plaintiff in a later suit can very well wait for a limited period of time until the first court speaks its mind-?
The propriety underlying the principle of comity of courts also involves judicial restraint; a 'letting go' or declining to proceed with a matter when such a course would lead to inevitable confusion and multiplicity of litigation arising from conflicting decisions. It also entails respect for another court which was seized of a matter and has expended valuable judicial time and consideration in the matter.
In view of the above, there will be a stay of the present suit for a period of eight (8) weeks from date or until a decision is given by the District Court at Khulna in relation to that Court having jurisdiction to entertain the suits being heard by it, whichever is earlier. The defendant no.2 will be at liberty to apprise this Court of such order at the end of the period stated above, failing which the present suit will proceed in the usual course and as per the last order passed on 4th June 2018.
16
Although the relief claimed for stay of the suit in the instant application has been made only by the defendant no.2, permitting the suit to proceed against the other defendants will lead to an anomalous outcome in the event the Bangladesh Court comes to a decision on the merits of the suits before it. The order will, therefore, be in accordance with prayer framed in the instant application for stay of suit.
GA 1295 of 2018 is disposed of with the above direction. Since affidavits have not been called for in the matter, the statements made in the petition will not be taken to have been uncontroverted.
(MOUSHUMI BHATTACHARYA, J.) GH/sp3