Calcutta High Court
Mmc Exports Limited vs New Toyo Sea Foods Company Limited on 27 July, 1999
Equivalent citations: (1999)3CALLT52(HC)
Author: S.B. Sinha
Bench: S.B. Sinha
JUDGMENT S.B. Sinha, J.
Whether a conditional decree based on purported admission can be passed under Chapter XIIIA of the Original Side Rules of this Court is in question in this appeal.
2. The fact of the matter is as follows:-
The repondent filed a suit marked as Civil Suit No. 247 of 1998 in the original side of this Court claiming, Inter alia, the following reliefs: -
"a) Decree for US $ 40.000 (Forty thousand); b) in the alternative a decree for the sum of money in Indian rupees, equivalent to the sum of US $ 40,000 (Forty thousand) at the rate of exchange at the date of the decree; c) Interest; d) Receiver; e) Costs including Court fees paid: f) Further and other reliefs as may be just."
3. In the said suit allegedly on the basis of certain admissions made by the appellant herein to pay a part of the amount, a summons was taken out purported to be .under Chapter XIIIA of the said Rules. An objection to the said prayer of the plaintiff was made, by the appellant herein, inter alia, on the ground that no concluded contract had yet been entered into as there are disputes and differences as regard a term relating to minimum guarantee as well as on the ground that the said contract is illegal as no approval in relation thereto had been obtained from the Reserve Bank of India as is required under the Foreign Exchange Regulation Act.
4. The learned trial judge upon hearing the counsels for the parties recorded the submissions of the appellant and directed;
" it has been submitted by Mr. Ajit Kumar Panja appearing on behalf of the defendant, that the agreement is illegal, since no approval from the Reserve Bank of India has been obtained. Mr. Panja in support of his submission, has relied on a case . In my judgment, the said decision is distinguishable. Further, my attention has been drawn by Mr. Panja to sections 8 & 9 of Foreign Exchange Regulation Act. In my judgment, the provision applicable to this case is section 47 of the said Act, which permits institution of the suit - but requires Resrve Bank approval prior to payment of the decree passed in such suit.
Upon hereing the submission made on behalf of the respective parties, I consider that it is just and proper to pass the following order :
The defendant shall furnish security by way of immovable property or any other security to the satisfaction of the Registrar. Original Side of this Court for the aforesaid sum of Rs. 10.75.000/- within four weeks after summer vacation.
In default, there will be a decree for the said sum.
In so far as the rest of the claim of the plaintiff is concerned, the same shall be adjudicated in the suit.
The hearing of the suit is expedited. The defendant waives formal service of the writ of summons. The defendant shall file its written statement within three weeks after summer vacation. There will be cross-order for discovery of documents whithin two weeks thereafter and inspection forthwith thereafter. The suit will appear in the appropriate list for hearing seven weeks after the summer vacation.
The application is accordingly disposed of.
5. A negotiation had taken place between the plaintiff and the defendant relating to the former's appointment to act and render services as latter's representative in Japan to popularise as also to create interst in the Sea Food Products under the mark "MMG GOLD" in Japan.
The Plaintiff by fax dated 18.7.1997 stated; Rahem San, Hereby sending the agreement with all the dtls kdly go thru it n make the final agreement to be exchanged dtwn out firms."
6. Although the agreement in question was forwarded to the Reserve Bank of India for its approval, it is now contended that the defendant-appellant had not agreed to the minimum guarantee which was contained in the draft agreement. The plaintiff-respondent, on the other hand, contended that as such agreement having been sent for approval to the Reserve Bank of India, the offer of the defendant must have been accepted by the plaintiff and, this, the parties arrived at a concluded contract. It was further stated that the correspondences exchanged between the parties and annexed to the affidavits would show that the parties transacted on the basis that the agreement which was accepted by the defendant.
7. It Is, however, relevant to note that by a fax dated 10.6.98 the defendant appellant intimated to the plaintiff:-
"This has reference to our fax of 6.5.98 on the aforementioned subject.
Due to low catch situation as well as certain commitments to the financial institutes it has been decided to clear your dues payable to you by 30th of June this year. In the meantime we would like to draw your attention the amount of USD 40,000 which you have mentioned in your fax wherein we would like to recall our meeting with you wherein it has been agreed a figure of USD 25.000 for the time being & subsequently further payment will be worked out based on value added products. Therefore, the figure amount will remain as USD 25,000 instead of USD 40.000."
8. Although prima facis it appears that the transaction had been entered into on the basis of certain understanding but it appears the question as regard the minimum guarantee was yet to be finalised despite the fact that the defendant had sent the said agreement for approval of the Reserve Bank of India. The said question is required to be gone into in details at the trial of the suit.
9. The question which, however, has been raised in this appeal is as to whether in the aforementioned situation the learned trial Judge could have passed the order under appeal.
10. The relevant provisions of Chapter XIIIA of the Original Side Rules of this court are as follows:-
1. Nature of cases in which applicable--The provisions of this chapter shall not be applicable save to suits.-
(A) in which the plaintiff seeks to recover a debt or liquidated demand in money payable by the defendant with or without interest arising -
(i) on a contract express or implied; or (ii) on an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or (iii) on a guarantee where the claim against the principal is in respect of a debt or a liquidated demand only; or (iv) on a trust; or (B) for the recovery of immovable property with or without a claim for rent or niesne profits by a landlord against a tenant whose term has expired or has been duly determined by notice to quit or has become liable to forfeiture for non-payment of rent or against persons claiming under such tenant.
3. When applicable to be made--Where the defendant in any suit which is within the terms of Rule 1 has entered appearance the plaintiff may, as regards any claim which is within the terms of Rule 1, on affidavit made by himself or by any other person who can swear positively to the facts verifying the cause of action and the amount claimed, if any, and stating that in his belief there is no defence to the claim, apply to the Judge for final Judgment for the amount claimed together with interest. If any, or for the recovery of the land ( with or without rent or niesne profits) as the case may be and costs:
Provided that as against any defendant who has filed a written statement such application shall not be permissible unless the summons is taken out as in Rule 4 mentioned within ten days after receipt of notice of the entering of appearance under Chapter VIII, rule 18.
4. Application by summons--The application by the plaintiff for judgment under Rule 3 shall be made summons returnable not less than seven clear days after service accompanied by a copy of the plaint and affidavit.
5. Defendant may show cause-
(a) The defendant may show cause against such application by affidavit.
(b) Affidavit--The affidavit shall state whether the defence alleged goes to the whole or to part only and (If so) to what part of the plaintiffs claim and shall deal specifically with all matters of fact,
(c) Examination--The Judge may, if he thinks fit, order the defendant or in the case of a Corporation any Officer thereof to attend and be examined upon oath or to produce any lease, deed-book or document or copy of or extra thereform.
6. Judgment unless good defence--Upon such application the Judge may, unless the defendant by affidavit or otherwise as the Judge may direct shall satisfy him he has a good defence to the claim on its merits or disclose such facts as may be deemed sufficient to entitle him to defend, make an order refusing leave to defend and forthwith pronounce judgment, in favour of the plaintiff.
8. Judgment for the part of claim--if it appears that the defence set up by the defendant applies only to a part of the plaintiffs claim or that any part of his claim is admitted, the plaintiff may have judgment forthwith for such parts of his claim as the defence does not apply to or is admitted, subject to such terms, if any, as to suspending execution or payment into court or costs or otherwise as the judge may think fit; and the defendant may be allowed to defend as to the residue of the plaintiffs claim.
9. Leave to defend--Leave to defend may be given unconditionally or subject to such terms as to giving security, or time, or mode of trial or otherwise as the Judge may think fit.
11. A bare perusal of the aforementioned provisions would clearly show that the said chapter contemplates three different situations viz. (a) where a leave is refused, a judgment can be pronounced summarily;
(b) a leave is granted to the defendant to defend the suit unconditionally, and (c) conditional leave to defend the suit is granted to the defendant.
12. There cannot be any doubt that the master's summons praying fora relief under Chapter XIIIA must be in consonance with the pleadings of the parties.
13. A distinction has also to be borne in mind between a judgment which may be passed under Chapter XIIIA of the Original Side Rules and a judgment on admission as envisaged under Order 12 Rule 6 of the Code of Civil Procedure.
14. In Santosh Kumar v. Bhai Mool Singh reported in AIR 1968 SC 321. the apex court has, inter alia, held that the court must consider the real issue between the parties and not a sham issue which may be raised by the defendant.
15. In M/s. Mechalec Engineers & Manufacturers v. M/s Basic Equipment Corporation . the apex court has approved the principles laid down by this court in Sm. Kiranmoyee Dassi v. Dr. J. Chatterjee reported in 49 CWN 246, which are as follows :-
"(a) if the defendant satisfies the court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave the sign judgment and the defendant is entitled to unconditional leave to defend.
(b) if the defendant raises a trial 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 sign judgment and the defendant is entitled to unconditional leave to defend.
(c) if the defandant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say. although the affidavit does not positively and immediately make it clear that he had a defence, yet. shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiffs claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into court or furnishing security.
(d) if the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave the sign Judgment and the defendant is not entitled to leave to defend.
(e) if the defendant has no defence or the defence is illusory or sham or practically moon-shine then although ordinarily the plaintiff, is entitled to leave to sign judgment, the court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid Into court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defence."
16. The said principle has also been reiterated in Sunil Enterprises V. Sri Commercial & International Bank Ltd,, .
17. The learned trial judge, as noticed hereinbefore, has not specifically stated as to whether leave to defendant had been granted either conditionally or unconditionally as regard a part of the plaintiffs claim. However, keeping in view the fact that the learned trial Judge was entertaining an application under Chapter X111A of the Original Side Rules, it is not difficult for this Court to arrive at a conclusion that such a leave, if any, had been granted in terms of Rule 9 thereof. When a conditional leave is granted in respect of a part of the plaintiffs claim, failure to comply with the said condition coxild not automatically lead to grant of a decree in respect of part of the amount claimed in suit as the same was not a severable one. In fact, the plaintiff had sought for a decree in respect of its entire claim which was a composite one.
18. The two principles, enunciated by the apex court in M/s. Mechalic Engineers (supra) may be held to be applicable in the instant case, viz, clauses (c) and (e) thereof.
19. However, before dealing with the said matter we may note that the clauses referred to in the said decisions are mutually exclusive, clause (c) authorises a court to impose conditions as to the time or mode of trial but not as to payment into court or furnishing security where ir arrives at a finding that the defendant had not been able to make it clear that he had a defence, yet shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiffs claim the plaintiff is not entitled to Judgment and the defendant is entitled to leave to defend. In the instant case the defendant has raised a positive defence viz. there does not exist any contract and/or the purported contract is illegal being opposed to public policy and, thus, attracts the principles laid down under section 23 if the Indian Contract Act. The question which should be posed and answered is as to whether Chapter XlllA of the Original Side Rules was at all applicable in the facts and circumstances of this case. The learned trial Judge has also not arrived at such a finding. The learned trial Judge has also not arrived at a finding that the defence of the defendat/appellant is illusory or sham or practically moonshine in respect of that part of the claim for which security has been directed to be furnished and in default a decree shall be passed. Had he arrived such a finding, he would not have any leave to defend the suit to the appellant at all in respect of a part of the plaintiffs claim. The very fact he had passed a conditional order in respect of a part of the claim although, as herinbefore, the defence of the defendant is in relation to the entire transaction; we are of the opinion that the impugned judgment could not have been passed.
20. We cannot presume as was urged by Mr. Hirak Mitra, the learned counsel appearing on behalf of the respondent that the learned Judge had shown sympathy and had given an opportunity to the defendant to defend the claim of US $ 25.000 provided it furnishes securities to that extent. Such a presumption cannot be raised in view of the fact that in respect of the remaining claim, unconditional leave has been granted.
21. For the views we have taken it is not nessessary for us to consider the decision of this Court in Union of India & Anr. v. Bata India Ltd. & Ors., or Judgment of Chagta, J. In Rawalpindi Theatres Private Ltd. v. M/s Film Group, Bombay reported in 1958 Bombay Law Reporter, 1375 as the fact situation obtaining therin were different.
For the reasons aforementioned ,the appeal is allowed. The Judgment under appeal is set aside. In the facts and circumstances of this case there will be no order as to costs.
M.H.S. Ansari, J
22. I agree.
23 Appeal allowed