Madhya Pradesh High Court
Sai Udyog (Pvt. Ltd.), Raipur And Ors. vs Central Bank Of India, Raipur on 8 October, 1997
Equivalent citations: AIR1998MP191, [2001]103COMPCAS618(MP), AIR 1998 MADHYA PRADESH 191, (2000) 3 BANKCLR 462, (2001) 103 COMCAS 618, (1999) BANKJ 779
ORDER R.S. Garge, J.
1. The applicants/defendants being aggrieved by the order dated 14-2-95, passed by the District Judge, Raipur in Civil Suit No. 43-A/ 89, rejecting the applicants application filed under Section 151 CPC seeking stay of the civil suit, have preferred this revision petition.
2. The facts material for disposal of the present revision petition are that non-applicant/ Bank filed a civil suit against defendants for recovery of Rs. 1,26,26,441/- pendente lite and future interest, sale of hypothecated goods and mortgaged property, has also been claimed. According to the Bank, transactions commenced in the year 1980 and thereafter the said limits were enhanced several times. The plaintiff/Bank submits that lesser rate of the interest was agreed between the parties as the goods to be manufactured by the defendants were to be exported. Bank submitted that contrary to the terms of the agreement, the goods were sold in the open market, were notexported and, therefore, the Bank is entitled to interest at the rate of 18% p.a. The Bank also submitted that after breaking open the locks of the godowns, the defendants surruptiously removed the pledged goods. The Bank Reeling aggrieved by the acts of the defendants had also lodged the first information report in relation to the alleged offences. It is not in dispute that a criminal case is pending against the defendants is relation to the said removal of the goods and sale of the articles in the open market.
After putting in appearance, in the civil suit, the defendants moved an application under Section 151 CPC inter alia pleading that as a criminal case js pending against the defendants, on the same set of facts and if the defendants are compelled to file their written statement, their defence in the criminal case shall be seriously prejudiced, they would be required to examine as witnesses in the civil matter as their statements recorded in the civil matter may be Used against them in the criminal case. They prayed that till final disposal of the criminal matter, proceedings in the civil suit be stayed. The plaintiff Bank contested the application tooth and nail. Relying upon the judgment of the Supreme Court in the matter of State of Rajasthan v. Kalyan Sundaram Cement Industries, (1996) 3 SCC 87, it was contended that pendency of the criminal matters would not be an impediment to proceed with the civil suit.
3. After hearing the parties, the learned trial Court came to the conclusion that by filing the written statement or taking part in the civil suit, the defendants are not likely to suffer any prejudice. The Court found that it was not a fit case where the proceedings in the civil suit were required to be stayed. It accordingly rejected the application being dis-satisfied by the said order, the applicants have preferred thisrevision petition.
4. Shri Revindra Shrivastava, learned counsel for the applicants states that the judgment in the matter of State of Rajasthan (1996 (3) SCC 87) (supra) is per incuriam. He submits that in the matter of M. S. Sheriff v. State of Madras, AIR 1954 SC 397. the Supreme Court has clearly observed that in peculiar facts of a particular case, the civil proceedings can be stayed if the Court is convinced that the submission of the defence is likely to cause some prejudice to the defence of the defendants which he is likely to take in the criminal matter. He also submits that filing of the written statement may embarrass the defence or may lead to serious prejudice to his defence in the criminal matter.
5. On the other hand, Shri M. N. Agarwal, learned counsel of the non-applicant/Bank states that stay of the civil suit cannot be claimed as of a right. He submits that if the criminal action leads to acivil liability, then the civil suit may not proceed till final disposal of the criminal case. but reverse would not be true. He submits that if the plaintiff is entitled to recover the money on basis of some agreement, then the civil suit cannot be stayed even if the defendants have committed certain criminal lapses.
6. In'the matter of M. S. Sheriff v. State of Madras (AIR 1954 SC 397) (supra), the Supreme Court was required to consider a case where two persons filed a civil suit for recovery of damages. It was contended by them that they were illegally detained by two Sub Inspectors of police, the Police Inspectors made the statements in proceedings under Section 491. Cr.P.C. that these petitioners were not in their custody. As there was a factual dispute, the High Court in that case directed the District Judge to make an enquiry. After the enquiry report was submitted before the High Court, the High Court reached to the conclusion that the petitioners were telling truth and not the Sub-Inspectors. The High Court also found that after the illegal detention of the said petitioners, the petitioners were regularly arrested after their petitions and before the High Court's order. On these set of facts, the High Court directed the Deputy Registrar to make a complaint against the said Sub-Inspectors. The said petitioners thereafter filed two civil suits for damages for wrongful confinement. Two criminal prosecutions under Section 344, I.P.C. for wrongful confinement, one against each Sub-Inspector were also filed. It was contended before the Supreme Court that the simultaneous prosecution of the said matters was likely to embarrass the accused, though it was brought to the notice of the Supreme Court that during the pendency of the appeal before the Supreme Court, two criminal prosecutions were closed with liberty to file fresh complaints. The Supreme Court, however, found it fit to decide as to which proceeding requires to be stayed. The Supreme Court observed that between the civil and the criminal proceedings, the criminal matters should be given precedence. Observing that there was some difference of opinion in the High Courts of India on the said point, the Supreme Court further observed that no hard and fast rule can be laid down and was also of the opinion that it was not required to be considered nor would it be a relevant consideration that there was possibility of conflicting decisions in the civil and criminal Courts. It was observed that "The law envisages such an eventuality when it expressly refrains from making the decision of one Court binding on the other, or even relevant, except for certain limited purposes, such as sentence or damages. The only relevant consideration here is the likelihood of embarrassment. "The Supreme Court in para 16 of the judgment observed as under:-
"Another factor which weighs with us is that a civil suit often drags on for years and it is undesirable that a criminal prosecution should wait till everbody concerned has forgotten all about the crime. The public interests demand that criminal justice should be swift and sure, that the guilty should be punished while the events are still fresh in the public mind and that the innocent should be-absolved as early as is consistent with a fair and impartial trial. Anotherreason is that it is undesirable to let things slide till memories have grown too dim to trust.
This, however, is not a hard and fast rule. Special considerations obtaining in any particular case might make some other course more expedient and just. For example, the civil case or the other criminal proceeding may be so near its and as to make it inexpedient to stay it in order to give precedence to a prosecution ordered under Section 476. But in this case we are of the view that the civil suits should be stayed till the criminal proceedings have finished."
7. All that weighed upon the Supreme Court was that a civil suit often drags for years and it would be undesirable that a criminal prosecution should wait till everybody concerned has forgotten all about the facts. In the opinion of the Supreme Court, public interest demanded that criminal justice should be swift and sure, and the guilty should be punished while event were fresh in the public mind and that the innocents were absolved as is consistent with a fair and impartial trial. The Supreme Court in very clear terms observed that the same is not a hard and last rule. The Court was of the opinion that Special circumstances in any particular case might make some other course more expedient and just. The Supreme Court on the particular facts of the case was of the opinion that the civil suits for damages were required to be stayed. A careful reading of the judgment of the Supreme Court would lead to one single conclusion that if the civil suit is an outcome of criminal offence, then the proceedings in the civil suit may be stayed if the facts are requiring such a stay. It is to be noted that the Supreme Court was considering the case relating to wrongful confinement. The plaintiffs were demanding the damages on the ground that they were wrongfully confined. If the Criminal Court comes to the conclusion that there was no wrongful confinement but the said plaintiffs were detained by the Sub-Inspectors in discharge of their official duties, then the very foundation for seeking damages would have been removed. True it is, that the High Court had recorded a prima-facie finding that the plaintiffs were wrongfully confined, but that was for disposal of the petition filed before the High Court. The criminal Court was yet to consider the matter on the defendants are required to deliver their written statement, it would virtually be compelling them to disclose their defence, in form of the written statement which they were likely to take in the criminal Court. On particular facts, without laying down a hard and fast rule, the Supreme Court observed that the civil matters were required to be stayed.
8. Shri Shrivastava placed reliance on ajudg-ment of this Court in the matter of New Bank of India v. M/s. Radhakishan and Co., 1988 Jab LJ 687. In the said matter, the trial Court stayed the proceeding of the civil suit till pendency of the criminal proceedings. The order was challenged by the plaintiff/Bank before the High Court. The High Court referring to the various decisions found that it was not proper for the Court in the facts and in the circumstances of the case to interfere in the order impugned. The Court was of the opinion that the ground or the cause of action for prosecution and recovery were the same, therefore, the trial Court was justified in slaying the proceedings in the suit. Shri Shrivastava also placed reliance on the judgment of the Supreme Court in the matter of Kusheshwar v. Bharat Coking Coal Ltd., AIR 1988 SC 2118. In the said matter, for certain lapses on the part of the dcliquent employee, a departmental enquiry was initiated and a criminal prosecution was also launched. The Supreme Court found that the criminal action and the disciplinary proceedings were grounded upon the same set of facts and the disciplinary proceedings should have been stayed and the High Court was not-right in interfering with the trial Court's order of injunction, which had been affirmed in appeal. In the said matter the Supreme Court observed that while there should be no legal bar for simultaneous proceedings being taken, yet, there may be cases where it would be appropriate to defer disciplinary proceedings awaiting disposal of the criminal case. In the latter class of cases, it would be open to the the delinquent employee to seek such an, order of stay or injunction front the Court. Whether in the facts and circumstances, of a particular case, there should or should not be such simultaneity of the proceedings would then receive judicial consideration and the Court will decide in the given circumstances of a particular case as to whether the disciplinary proceedings should be interdictated pendingcriminal trial. The Supreme Court further observed that it was neither possible nor advisable to evolve a hard and fast, straight-jacket formula valid for all cases and of general application without regard to the particu-larities of theindivjdual situation. Shri Shrivastava stales that it hardly makes difference whether the civil matter is pending in a civil Court or the disciplinary enquiries are pending before the department. The question to be considered by the Court is whether during the pendency of the criminal action, should the civil proceedings be stayed. He submits that the facts of each case are required to be considered and if the Court comes to the conclusion that the foundation or the cause of action of both the cases is the same and conlinuance of the civil proceeding is likely to cause, serious prejudice lo the defence of the defendant, then the civil proceedings must be stayed.
9. On the other hand, Shri Agarwal learned Counsel for the non-applicant placing strong reliance on the judgment of the Supreme Court in the matter of State of Rajasthan v. Kalyan Sunderam Cement Industries Ltd., (1996 (3) SCC 87). and a judgment of this Court in the matter of Central Bank of India v. Laxmi Cotton Co.. 1996 MPLJ 1068. Submitted that the pendency of a criminal proceeding relating to the same matter is no bar to continue a civil suit. He submits that the Court is required to see the allegations made in the civil and criminal proceedings and must come to a conclusion that whether the defence of the accused is likely to be prejudiced or not. He submits that civil suits cannot be stayed as a matter of course.
10. In the matter of State of Rajasthan (1996 (3) SCC 87) (supra) the Supreme Court observed that "It is settled law that pendency of criminal matters Would not be an impediment to proceed with the civil suit. The criminal Court would deal with the offence punishable under the Act. On the other hand the Court rarely stay the criminal cases and only when the compelling circum-staneds require the exercise of their power". The Supreme Court observed that 'we have never come across stay of any civil suits by the Courts so far. The Supreme Court further observed that "The High Court proceeded on a wrong premise their defence in the criminal case by asking them to proceed with the trial of the suit. It is not a correct principle of law. Even otherwise, it no longer subsists since many of them have filed their defences in the civil suit. On the principle of law, we hold that the approach adopted by the High Court is not correct. But since the defence has already been filed nothing survives in this matter". In the matter of Central Bank of India (1996 MPLJ 1068) (supra), this Court placed reliance on the judgment of the Supreme Court in the matter of Stale of Rajasthan (1996(3) SCC 87) (supra). In the matter of Central Bank (supra), the trial Court ordered stay of the proceedings of the civil suit. Since no progress was made in the criminal case, the plaintiff/bank moved an application for revocation of the earlier order staying the suit. The application was rejected. The matter came before the High Court. The High Court observed that the trial Court was not justified in observing that the earlier order attained finality. The High Court was of the opinion that the trial Court had powers. ..... under Section 151 C.P.C. The Court found that the defendants had already filed their written statement and as such the cause of action for stay no longer subsisted. Referring to, many unrcported decisions, the learned single Judge observed that the consensus appears to be that the matter of stay of civil suil pending the decision of the criminal proceedings, there cannot be any hard and fast rule and it depends on the facts and circumstances of each case. It was also observed that in view of the judgment in the mailer of Slate of Rajasthan (1996(3) SCC 87) (supra), the controversy stands finally resolved. Shri Agrawal submils that as the controversy stands resolved by the judgment of the Supreme Court, the trial Court was not unjustified in not staying the proceeding. Shri Shrivasiava, in reply, submits that the judgment of the Supreme Court in the matter of State of Rajasthan (supra) is per incuriam. He states that the Supreme Court did not consider the case of Sheriff and proceeded on the wrong assumption that there was no case wherein ihe principle about stay was laid down. He also submits that in the mailer of `Slale of Rajasihan' and the 'Central Bank', written statements were already filed, therefore, the Court observed that the cause of action for stay ot the suit disappeared. Placing reliance on the judgment of the Supreme Court in the matter of State of U. P. v. Synthetics and Chemicals Ltd., (1991) 4 SCC 139, he submits that a judgment which is per incuriam would only mean that the Court did not apply its mind and was careless in making the observations. In the matter of State of U. P. considering the words per incuriam, the Supreme Court has observed :
'Incuria' liberally means 'carelessness'. In practice per incuriam appears to means per ignoraiium, English Courts have developed this principle in relaxation of the rule of stare decisis. The 'quotable in law is avoided and ignored if it is rendered, 'in ignoration of a statute or other binding authority'. (Young v. Bristol Aeroplane Co. Ltd., (1944) 2 KB 718 :(1994) 2 All ER 293. Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubcy, AIR 1962 SC 83. the Court while pointing out the procedure to be followed when conflicting decisions are placed before a bench extracted a passage from Halsbury' s Laws of England, incorporating one of the exceptions when the decision of an appellate Court is not binding.
Does this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words, can such conclusion be considered as declaration of law ? Here again the English Courts andjurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. 'A decision passes sub-silentio, in the technical sense that has come to be a attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind'. (Salmond on Jurisprudence 12th Edn.P. 153). In Lancaster Motor Company (London) Ltd. v. Bremith Ltd., (1941) 1 KB 675, 677, the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words of the rule and without any citation of the authority'. It was approved by this Court in Municipal Corporation of Delhi v. Durnam Kaur, (1989) I SCC 101 : (AIR 1989 SC 38). The Bench held that 'precedents sub-silentio and without any arguments arc of no moment'. The Courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reason nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is nol ratio dccidcndi. In B. Sharma Rao v. Union Territory of Pondicherry. AIR 1967 SC 1480 if is observed, 'it is trite to say that a decision is binding 'not because of its conclusions but in regard to its ratio and the principles laid down therein'. Any .declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law."
11. He also submits that in the mutter of State of U. P. v. Ramchandra Trivedi, AIR 1976 SC 2547, the Supreme Court clearly observed that in a case where the High Court finds any conflict between the viewsexprcssed by larger and smaller benches of the Supreme Court, it cannot disregard or skirt the views expressed by the larger benches. The proper course for a High court in such a case is to try to find out and follow the opinion expressed by the larger benches of Supreme Court, in preference to these expressed by smaller benches of the Court.
12. True it is that whenever there are conflicting judgments of the Supreme Court by different Benches which arc larger and smaller benches, then the High Court is bound to follows the opinion expressed by the larger Benches of the Supreme Court in preference to those expressed by smaller Benches of the Supreme Court because such practice of following the judgment of larger benches has Hardened into a rule of law and the same is followed by every Court, including the Supreme Court.
13. In the matter of State of Rajasthan (1996 (3) SCC 87) (supra) the Bench observed that they had never come across stay of any civil suit by Courts so far. I am unable to hold that their Lordships did not know about the judgment of the Supreme Court in Sherifs matter (AIR 1954 SC 397). The Bench was only observing that they had never come across the principle of law that whenever criminal proceedings arc instituted, every civil suit has to be stayed. If the observations of the Supreme Court made in the matter of State of Rajasthan (supra) arc read in their true perspective, it would show that the Court was alive to the situation that matters can be stayed in a particular case and if defence was already filed, nothing survives in the matter. The observations of the Supreme Court cannot be treated to be per incuriam.
14. The law relating to stay of proceedings ultimately can be summarised in a few words, i.e., if the exigencies demand, cause of action or defence for both proceedings is the same and the defence of the defendant/accused is likely to suffer or the defendant/accused has to suffer serious prejudice because of particular/peculiar facts, of the case, the Court can stay the proceedings. As a principle of law, it cannot be laid down that whenever a criminal case is instituted, then the civil suit on the same cause of action must be stayed.
15. The Court may be guided by the attending circumstances. Where a criminal action provides a cause of action for the civil action, then the Court may if the facts so demand, stay proceedings in the civil suit. In the matter of Sheriff (AIR 1954 SC 397) the Supreme Court found that the suit for damages was the result of a criminal action on the part of the accused. There criminality provides a ground for recovery of damages, then the Court can exercise powers in favour of the defendant/accused for staying the proceedings, but where a civil wrong or a civil action provides a foundation for punishing the accused, then the civil Court can refuse to stay civil proceedings. In a case where the defendant issues a cheque which bounces, then the right of the plaintiff to recover the money is not impaired because his right to recover the money would always stand whether the accused is punished or not. If in such a case, action is taken under Section 138B of the Negotiable Instruments Act, the accused cannot be permitted to say that till the pendency of the criminal matter, the civil suit should be stayed. If such a request is accepted, it would add premium to the lapse of the accused because on one side he did not pay the money and on the other hand he is seeking stay of the proceedings virtually avoiding the liability to pay till disposal of the criminal matter.
16. In the present case, breach of the contract provided a ground for institution of the civil suit. The Bank has come with the case that the defendants took a loan with the assurance that they are export oriented industries, they would earn foreign currency and would benefit all concerned. The bank relying upon the said assurance, granted loan facility at the lower rate of interest. The bank found that instead of respecting the assurance given and contrary to the agreement entered into between the parties, the defendants were not exporting the goods but were selling the same in the open Indian market. The Bank filed the suit for the recovery of the money and also claimed higher rate of interest. In the present suit, the bank has asked for a decree for recovery of the money by sale of the pledged and hypothecated goods and the mortgaged property. The criminal case relates to the same action on the part of some of the defendants, according to which the defendants have broken open the lock, removed the pledged goods from the godown and sold the goods in the local market. In the instant case, the defendants cannot say that there was no limit of the loan, they were not indebted and they were not liable to make payments. The cause of action for recovery of the loan amount is the sanction of the loan and non-payment of the said amount. It has nothing to do with the stealthy removal of the goods or its sale in the open market. If the defendants prove that me goods were not sold by them in the local market, then the question of interest alone would be affected. The liability of the defendants to pay money under the loan agreement in any case shall not be affected. When the act of the defendants provides a cause of action to the plaintiffs for instituting a civil matter, then the civil matter can continue but if the civil matter is the direct result of criminal action, then the Court may stay the civil matter. The Supreme Court in the matter of State of Rajasthan (1996 (3) SCC 87) (supra) has certainly provided the guidelines to the Courts that civil matters are ordinarily not required to be stayed. The observations made by the Supreme Court would certainly provide guidelines to every Court because in the matter of Sheriff, (AIR 1954 SC 397) a larger Bench of the Supreme Court has simply observed that no hard and fast rule can be laid down for such matters and the discretion of every Court would by itself be the best guide. It would be appropriate at this stage to quote a passage from the judgment of Kusheshwar's case (supra):
"It is neither possible nor advisable to evolve a hard and fast, straight-jacket formula valid for all cases and of general application without regard to the particularities of the individual situation."
17. The Court below was justified in not staying the proceedings in the present suit. The revision deserves to and is accordingly dismissed, but, however, there shall be no orders as to costs.