Bombay High Court
The Maharashtra State Co-Operative ... vs Indian Bank on 21 June, 1996
Equivalent citations: 1997(1)BOMCR524
JUDGMENT B.P. Saraf, J.
1. An important and interesting question of law for consideration in these appeals is as to whether section 10 of the Code of Civil Procedure, 1908 ("C.P.C.") would apply to summary suits under Order XXXVII of the C.P.C.
2. The facts of the case giving rise to this controversy, briefly stated, are as follows:
A summary suit was filed by the Indian Bank (respondents herein) against the Maharashtra State Co-operative Marketing Federation Ltd. (appellants herein) for recovery of a sum of Rs. 4,96,59,160.25. It was filed on 6th February, 1992. In the said suit, a notice of motion was taken out by the original defendants (appellants herein) for stay of the trial of the above suit in view of the fact that the matter in issue in the said suit was also directly and substantially in issue in a suit previously instituted by the appellants against the respondents in this Court numbered as Suit No. 400 of 1991 which was pending. The case of the appellants was that the matter in issue in the summary suit filed by the respondents against the appellants was directly and substantially in issue in above previously instituted suit. The contention of the appellants therefore was that the subsequent suit instituted by the respondents should be stayed pending the hearing and final disposal of the previously instituted suit.
3. On receipt of the summons for judgment in the above summary suit, the appellants also field their affidavit-in-reply to the summons for judgment. Both the notice of motion for stay of the summary suit under section 10 of the C.P.C. as well as the summons for judgment were taken up by the learned Single Judge for consideration on 24th October, 1994. The learned Single Judge, on hearing the parties, rejected the notice of motion taken out by the appellants as he was of the opinion that section 10 of the C.P.C. did not apply to summary suits under Order XXXVII, Rules 2 and 3 of the C.P.C. The learned Single Judge held that section 10 of the C.P.C. applies only to ordinary suits and not to summary suits under Order XXXVII of the C.P.C. The learned Single Judge also heard the summons for judgment and on such hearing directed the appellants (original defendants) to deposit a sum of rupees four crores as a condition for leave to defend the suit. Appeal No. 954 of 1994 is directed against the dismissal of the notice of motion taken out by the appellants for stay of the summary suit under section 10 of C.P.C. Appeal No. 953 of 1994 is directed against the order of the learned Single Judge directing the appellants to deposit a sum of rupees four crores as a condition to defend the suit.
5. We have heard the learned Counsel for the parties on the question of applicability of section 10 of the C.P.C. to suits under Order XXXVII of the C.P.C. The submission of the learned Counsel for the appellants is that the summary suit instituted under Order XXXVII is also a suit which is triable like any other suit except with the difference that in such a suit, the trial has to be conducted in accordance with the special procedure laid down in Rules 2 to 7, Order XXXVII. It is, contended that in that view of the matter, provisions of section 10 will be applicable to summary suits under Order XXXVII with the same force as they are applicable to other suits. Reliance is placed in support of this contention on a Division Bench decision of this Court in Indian Express v. Basumati Pvt. Ltd., , where it was held that a defendant in a summary suit under Order XXXVII is entitled to apply to the Court for stay of the subsequently instituted suit. Our attention was also drawn to the object and scheme of Order XXXVII of the C.P.C. in support of the contention that Order XXXVII contemplates trial of a suit and a judgment in pursuance thereof. The contention of the learned Counsel for the respondents, on the other hand, is that there is no trial whatsoever in case of summary suits under Order XXXVII. According to him, in a summary suit under Order XXXVII, there can be a decree without trial and hence question of stay of trial under section 10 of the C.P.C. can never arise in case of such suits.
5. We have given our careful consideration to the rival submission of the counsel for the parties and persued the provisions of section 10 of the C.P.C. and Order XXXVII. Section 10 provides for stay of suit in the circumstances set out therein. It reads as follows :
"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 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."
Section 10 thus mandates the Court not to proceed with the trial of any suit in which the matter in issue is directly and substantially in issue in a previously instituted suit between the same parties. The provisions of stay in this section are mandatory. The object of this section is to prevent courts of concurrent jurisdiction from simultaneously trying two parallel suits between the same parties in respect of the same matter in issue. Though the heading of this section is "stay of suit", it does not operate as a bar to the institution of the subsequent suit. It is only the trial of the suit that is not to be proceeded with.
6. The question that arises for consideration is whether provisions of section 10 would be applicable to a suit instituted as a summary suit under Order XXXVII of the C.P.C. In other words, the question for determination is whether any trial is envisaged in a summary suit under order XXXVII which can be stayed by resort to section 10. For a proper appreciation of this controversy, it is necessary to examine the scheme of Order XXXVII and the special procedure laid down therein for disposal of certain classes of suits and the object and purport thereof.
7. Order XXXVII provides for a summary procedure in respect of certain suits. Originally this order was confined to suits on negotiable instruments and was confined to superior courts, though in its application to Bombay, it was amended by the High Court of Bombay to extend its application to the Bombay City Civil Court, Bombay, the Presidency Small Cause Court, Bombay and such other courts as may be empowered by the High Court. However, by the Code of Civil Procedure (Amendment) Act, 1976 (Act 104 of 1976), Rule 1 of this Order was substituted to provide for extending the summary procedure to the trial of specified classes of cases by all courts. The substituted sub-rule (1) of Rule 1, in its application to the State of Maharashtra, was substituted by the Bombay High Court by a new sub-rule (1) with effect from 1-10-1983. Rule 1 of Order XXXVII (as amended by the Bombay High Court) reads as follows :
1. Courts and classes of suits to which the order is to apply.---(1) This order shall apply to the following courts, namely :---
(a) High Courts, City Civil Court and Courts of Small Causes; and
(b) such other courts as may be specifically empowered in this behalf by the High Court from time to time by a Notification in the Official Gazette:
Provided that in respect of the courts referred to in the Clause (b), the High Court may, by notification in the Official Gazette, restrict the operation of this order only to such categories of suits as it deems proper and may also from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette further restrict, enlarge or vary the categories of suits to be brought under the operation of this order as it deems proper.
(2) Subject to the provisions of sub-rule (1), the order applies to the following classes of suits, namely :---
(a) suits upon bills of exchange, hundies and promissory notes;
(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendants, with or without interest, arising ,-
(i) on a written contract; 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 liquidated demand only.
Rule 2 of Order XXXVII deals with the institution of summary suits. It provides for issue of summons to the defendants in Form No. 4 in Appendix B which requires the defendants to enter appearance within ten days from the service thereof. It is stated in the said summons that in the event of the default of the defendants to appear, the allegation in the plaints shall be deemed to have been admitted and the plaintiff shall be entitled to a decree for the sum specified therein. If the defendant enters an appearance in response to the summons, he is served with summons for judgment in Form 4-A in Appendix B. The recitals in Form 4-A are as follows :
"Under reading the affidavit of the plaintiff the Court makes the following order, namely :--- Let all parties concerned attend the Court or Judge, as the case may be, on the day of 19 , at o'clock in the forenoon on the hearing of the application of the plaintiff that he be at liberty to obtain judgment in this suit against the defendant (or if against one or some or several, insert names) for Rs. and for interest and costs."
On receipt of the summons for judgment, the defendant, may at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just.
At the hearing of the summons for judgment, if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith, or if the defendant is permitted to defend as to whole or any part of the claim, the Court may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security within the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or Judge, the plaintiff shall be entitled to judgment forthwith.
Rule 7 of Order XXXVII provides that save as provided in the said order, the procedure in suits under the said order shall be the same as the procedure in suits instituted in the ordinary manner.
8. From the above summary of the provisions of Order XXXVII it is clear that the essence of the summary suit is that the defendant is not, as in the ordinary suit, entitled as of right to defend the suit. He must apply for leave to defend within ten days from the date of the service of the summons upon him and such leave will be granted only if the affidavit filed by the defendant discloses such facts as will make it incumbent upon the plaintiff to prove consideration or such other facts as the Court may deem sufficient for granting leave to the defendant to defend the suit. If no leave to defend is granted, the plaintiff is entitled to a decree. The object underlying the summary procedure is to prevent unreasonable obstruction by a defendant who has no defence. There is thus a "trial" in a summary suit though by the summary procedure. The Court gives a hearing to the parties on the summons for judgement and may refuse to grant leave to defend if it finds that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious. In that event, the plaintiff is entitled to judgment forthwith. If he is given leave to defend, the suit shall be decided by the same procedure as applicable to suits instituted in ordinary manner.
9. It is obvious from the above discussion that in a summary suit also there is trial by the Court, though by the summary procedure laid down in Order XXXVII, before a decree is passed. The procedure of trial is set out in Rule 3. It starts with the service of summons for judgment in Form 4-A in Appendix B on the defendants and ends with the hearing on such summons for judgment, either with a judgment or with leave to defend, in which case further trial will be held which will be governed by the same procedure as is applicable to the trial of suits instituted in the ordinary manner. The word "trial" has not been defined in the C.P.C. According to the appellants it is a word of wide import and connotes the entire proceeding before the Court after the institution of the suit. According to the respondents, "trial" means final hearing of the suit which commences only after settlement of the issues. "Trial" according to the respondents consists of examination of witnesses, hearing of arguments etc. The contention of the respondent is that in summary suit under Order XXXVII, there is no "trial" at all. The appellants, however, urge that in a summary suit under Order XXXVII trial commences the moment the defendant enters appearance and is served with summons for judgment.
10. We have considered the rival submissions in regard to the meaning of the word "trial". It appears to us that though the word "trial" standing by itself is susceptible of both the narrow and the wider meaning, in the context and setting of Order XXXVII, "trial" has to be construed to mean the entire proceeding before the Court after the defendant enters appearance and is served with summons for judgment until the pronouncement of the judgment.
11. We are supported in our above conclusion by the decision of the Supreme Court in Harish Chandra v. Triloki Singh, . In that case the Supreme Court was called upon to ascertain the meaning of the word "trial" in section 90(2) of the Representation of the Peoples Act (as it stood at that time). The contention of the appellants in the above case before the Supreme Court was that the word "trial" must be understood in a limited sense, as meaning the final hearing of the petition, consisting of examination of witnesses, filing documents and addressing arguments. According to the respondents, it meant the entire proceeding before the Tribunal from the time that the election petition was transferred to it until the pronouncement of the award. On consideration of these rival submissions, the Supreme Court observed :
"While the word "trial" standing by itself is susceptible of both the narrow and the wider senses indicated above, the question is, what meaning attaches to it in section 90(2), and to decide that, we must have regard to the context and the setting of the enactment."
After elaborate discussion on the wider and narrower meaning of the word "trial", and on a reading of Chapter III of the said Act as a whole, the Supreme Court held that the word "trial" was used in section 90(2) as meaning the entire proceeding before the Tribunal from the time when the election petition was transferred to it until the pronouncement of the Award.
12. We are also supported in our conclusion in regard to applicability of section 10 of the C.P.C. to summary suits under Order XXXVII by a Division Bench decision of this Court in Indian Express v. Basumati Pvt. Ltd., where it was held that a defendant in a summary suit is entitled to apply to the Court for stay of the subsequently instituted suit. The reason for this conclusion was summed up thus :
"This is so because the true intent of the provisions in section 10 is that common matters in issue in two suits should be ordinary decided in a previously instituted suit."
13. We have also given our careful consideration to the decision of a Single Judge of this Court in Sujanbai v. Motiram, where it was held that the word "trial" has been used in section 10 of the C.P.C. in the narrow sense namely, the final hearing of the suit consisting of examination of witnesses, filing documents and addressing arguments. We, however, find it difficult to accept the above interpretation of the word "trial" in section 10 of the C.P.C. In our view, the meaning of the word "trial" in section 10 will vary depending upon the subject and context.
14. The learned Counsel for the respondents, at this stage, contended that the first suit filed by the appellants is a vexatious suit and, that being so, the appellants cannot be allowed to get the trial of the subsequently filed suit of the respondents stayed. We have given our anxious consideration to the above submission. We, however, do not find any merit in the same because of the well-settled legal position that the provisions of section 10 of the C.P.C. do not become inapplicable on a Court holding that the previously instituted suit is a vexatious suit. Reference may be made in this connection to the decision of the Supreme Court in Manohar Lal v. Seth Hiralal, where it was held.
"The provisions of that section are clear definite and mandatory. A Court in which a subsequent suit has been filed is prohibited from proceeding with the trial of that suit in certain specified circumstances. ..... The provisions of section 10 do not become inapplicable on a Court holding that the previously instituted suit is a vexatious suit or has been instituted in violation of the terms of the contract."
15. In view of above discussion, we are of the clear opinion that section 10 is also applicable to the summary suits which are to be tried by the special procedure laid down in Order XXXVII of the C.P.C. There is no dispute in this case in regard to the fact that subsequent suit was for recovery of the amount under a letter of credit, being letter of credit No. 12 of 1989, and that the very same letter of credit, was subject-matter of the earlier suit. That being so, in our view, section 10 of the C.P.C. clearly applies and the trial of the subsequent suit under Rule 3 of Order XXXVII has to be stayed.
16. In the result, Appeal No. 954 of 1994 is allowed. The impugned order of the learned Single Judge dismissing the notice of motion is set aside. The notice of motion is made absolute in terms of prayer Clause (a) which reads as follows :
"(a) that hearing of the above suit and all proceedings therein be stayed pending hearing and final disposal of the prior suit pending in this Hon'ble Court being Suit No. 400 of 1991."
17. In view of the above order in Appeal No. 954 of 1994, the learned Counsel for the parties are agreed that the order of the trial Court in Summons for Judgment No. 278 of 1992 which is impugned in Appeal No. 953 of 1994 will also have to be set aside. Accordingly, we set aside the order of the trial Court in the Summons for Judgment No. 278 of 1992 by which the appellant is directed to deposit a sum of Rs. Four Crores for leave to defend the suit.
18. In the result, both the appeals are allowed. In the facts and circumstances of the case, there shall be no order as to costs.
Appeals allowed.