INDIAN BANK V. MAHARASHTRA STATE CO-OP. MARKETING FEDERATION LTD., AIR 1998 SC 1952 (G.T. NANAVATI, J.)

INDIAN BANK V. MAHARASHTRA STATE CO-OP. MARKETING FEDERATION LTD., AIR 1998 SC 1952 (G.T. NANAVATI, J.)

 

FACTS

• On request of the respondent, the appellant opened an irrevocable line of credit of ₹ 4 crores for a 3rd party.
• The appellant later filed a summary suit u/o 37 of the CPC in the High Court to claim ₹ 5 crores which had become recoverable under the letter of credit. The appellant took out summons for judgment.
• The respondent appeared before the court & took out notice of motion seeking stay on the summary suit on the ground that a suit on the same matter is already instituted by it prior to the filing of the summary suit.
• The single judge bench of the High Court held that trial under Section 10 of the CPC is only applicable to regular/ordinary suits and not summary trials under Order 37 of the CPC and hence summary suit was not required to be stayed. The respondent was granted leave to defend and was asked to deposit 4 crores.
• The division bench of the HC upon appeal by the respondent held that trial under Section 10 of the CPC encompasses entire proceedings after the defendant enters his appearance and hence includes summary suit as well and by that allowed the appeal, set aside the single judge bench order and stayed the summary suit.

 

ISSUE

• Whether the summary suit proceeding is barred by Section 10 of the CPC when a regular suit is already instituted on the same cause of action?

 

HELD

The appeal was allowed, the judgment of the division bench set aside & that of the single judge bench restored.

• Referring to the meaning of trial in Stroud’s judicial dictionary & Webster, the court observed that trial broadly would include all proceedings from the institution of plaint to final determination by judgment & decree by the court.

• Object & Nature of S.10

• Object of prohibition in s.10:
  • to prevent courts of concurrent jurisdiction from simultaneously trying 2 parallel suits
  • To avoid inconsistent findings on the same issue

• Nature of the provision: 
  • It is a rule of procedure
  • Does not affect the jurisdiction of the court to entertain & deal with later suit
  • Nor create any substantive right in the matter

• Not a bar:
  • To the institution of a suit, or
  • To passing of interlocutory orders such as – consolidation order of later with earlier suit or appointment of receiver or injunction or attachment before judgment
  • As per S.10 court cannot proceed with the trial but can deal with the subsequent suit for other purpose

• Harmonious construction of S.10 & Order 37
  • 10 is a general provision applicable to all categories of cases; provides bar against proceeding with the trial
  • 37 applies to certain classes of suits; and provides granting of quick relief
  • To not frustrate the object of both provisions they have to be read harmoniously

• O37 Rule 2 enables the plaintiff to institute a summary suit in certain cases in which the defendant is required to be served with a copy of the plaint & summons. Within 10 days, the defendant has to appear and apply for leave to defend within further prescribed time and the court may grant so unconditionally or with certain conditions.

• The plaintiff becomes entitled to judgment forthwith & hence not hit by S.10 :
  • if the defendant does not apply for leave to defend or
  • the same is made & refused by the court or
  • Conditional grant is not complied with.

• O37 rule 7 provides that the procedure in a summary suit shall be the same as the procedure of an ordinary suit except when otherwise provided.
• Therefore, trial begins only after leave is granted
• Whether the word “trial” should be broadly or narrowly construed depends on the nature & object of the provision & context in which it is used
• In respect of object, nature & court’s power to pass interlocutory orders, “trial” in S.10 is not used in the widest sense
• As per the scheme of order 37, trial in s.10 cannot mean the entire proceeding starting from the institution of a suit in the context of a summary suit.

 

COMMENTARY

• Section 10 applies to trial of a suit and not the institution thereof. It also does not preclude a court from passing interim orders, such as, grant of injunction or stay, appointment of receiver, etc. It, however, applies to appeals and revisions.
• The word "trial" in Section 10 has not been used in its widest sense and hence is not applicable to subsequently instituted summary suits. Section 10 of the Code is applicable only to a regular/ordinary suit and not to a summary suit filed under this rule.
• Considering the objects of the both the provisions, i.e. s 10 and O 37, wider interpretation of the word trial is not called for. The word trial in s 10, in the context of a summary suit, cannot be interpreted to be the entire proceedings starting with the institution of the suit by lodging a plaint. In a summary suit, the trial really begins after the court or the judge grants leave to the defendant to contest the suit.
• Therefore, the court or the judge dealing with the summary suit can proceed upto the stage of hearing the summons for judgment and passing the judgment in favour of the plaintiff if :
  1. the defendant has not applied for leave to defend, or if such application has been made and refused; or if,
  2. the defendant who is permitted to defend fails to comply with the conditions on which the leave to defend is granted.