~

' .

INDIAN BANK

v.

MAHARASHTRA STATE CO-OPERATIVE

MARKETING FEDERATION LTD.

MAYS,1998

[S.C. AGRAWAL AND G.T. NANA VAT!, JJ.]

Code of Civil Procedure, 1908 :

A

B

S.10, Order XXXVJJ-Trial of Suit-Stay of-Summary suit file under C

Order 37-Dependent seeking stay of the suit on the ground that it has

already filed a regular suit

in respect of the dispute between the parties­

Single Judge of the High Court declining to stay the summary suit holding

that concept

of trial in

s.10 applies only to a regular suit and not to a

summary suit-Division Bench

of the High Court, in appeal, held that s.

10 D

applies to summary suit also and the word 'trial' cannot be construed in a

narrow sense but would mean entire proceedings after defendant entered his

appearance-Held, provisions

of

s.10 and order 37 have to be interpreted

harmoniously-Words 'trial

of any suit' occurring in

s.10 will have to be

construed

in the context of provisions of order 37-1n the context of summary

suit wider interpretation

of the word 'trial' is not called for-Judgement of E

single Judge of High Court restored.

Word and Phrases:

Words 'trial of any suit' occurring in

s.10 CPC-Jnterpretation of

F

">-· A suit under order 37 of the Code of Civil Procedure, 1908 was filed

by the appellant-Bank against the

respondent-Federation, which had been

granted

Letter of Credit by it, for recovery of certain amount, which as

alleged by the Bank become recoverable under the said Letter

of Credit. The

Federation

appeared before the court to seek stay of the summary suit on

the

strength of

s.10 of the Code, contending that prior to the filling of the G

summary suit by the Bank, it had filed a suit against the Bank. The single

Judge of the High Court held that the concept of trial as contained in s.10,

CPC was applicable only to a regular/ordinary suit and not to a summary

suit filed under order 37 CPC and, therefore, further, proceedings under the

su111mary suit filed by the Bank were not required to be stayed. On appeal, H

187

188 SUPREME COURT REPORTS (1998] 3 S.C.R.

A the Division Bench held thats.IO CPC applied to the summary suit also as

in its view the word 'trial' ins.IO could not be construed in a narrow sense,

and would mean the entire proceedings after the defendent entered his

appearance.

It stayed the summary suit

till the disposal of the suit filed by

the Federation. Aggrieved, the Bank filed the present appeals.

B It was contendent for the appellant-Bank that the Single Judge of the

c

High Court rightly held that s.10 CPC would not apply to the summary suits,

otherwise the very object of making a separate provision for summary suits

would be frustrated ..

Allowing the appeals, this _Court

HELD :

1.1. Considering the objects of both the provisions i.e. Section

IO and order 37 of the Code of Civil Procedure,

1908, wider interpretation

of the word 'trial' is not called for. The word 'trial' in section IO, in the

context

of a summary suit, cannot be interpreted to mean the entire

D proceedings starting with institution of the suit by

loading a plaint.

1.2. The provisions contained in section 10 is a general provision

applicable to all categories of cases. The provisions contained in order 37

apply to certain classes of suits. One provides a bar against proceeding with

the trial of a suit, the other provides for granting of quick relief. Both these

E provisions have to be interpreted harmoniously so that the objects of both are

not frustrated. Accordingly, the words 'trial of any suit' occurring in s.10

will have to be construed in the context of the provisions of order 37 of the

Codt:. The stage of determination of the matter in issue will arise in a

summary suit only after the defendant obtains leave or the court grants him

F leave to defend the suit The trial would really begin thereafter. This clearly

appears to be the scheme of summary procedure as provided by Order 37

of the Code. Therefore, the court

or the judge

dealing with the summary suit

can proceed upto the stage of hearing the summons for judgement and

passing the judgement in favour

of the plaintiff if (a) the defendent has not

applied for leave to defend or if such application has been made and refused

G or if (b) the defendant who is permitted to defend fails to comply with the

conditions on which leave to defend is granted.

1.3. The word 'trial' in section 10 of the Code will have to be interpreted

and construed keeping in mind the object and natu~ of that provision and

the prohibition to 'proceed with the trial

of any suit in which the matter in

H issue is also

directly and substantially in issue in a previously instituted

INDIAN BANK. v. MAHA. STATECO-OPMKT. FED. LTD. [NANAVATI,J.] 189

suit'-The object of the prohibition is to prevent the courts of concurrent A

jurisdiction from simultaneously trying two parallel suits and also to avoid

inconsistent findings on the

matter in issue. The provision is in the nature

of a rule of procedure and does not affect the jurisdiction of the court to

entertain and deal with the later suit nor does it create any substantive right

in the matters. It is not a bar to the institution of a suit; nor is it a bar to B

the passing of interlocutory orders such as an order for consolidation of the

letter suit with the earlier one,

or appointment of a Receiver or an injunction

or attachment before judgment. The course of action which the court has to

follow according to section

10 is not to proceed with the 'trial'. Thus the

word

'trial' in section

10 is not used in its widest sense.

Harish Chandra v. Triloki Singh, AIR (1957) SC 444 -[1957) SCR

370, held inapplicable.

1.4. The judgment

of the Division of the High Court is set aside and

the

order passed by the Single Judge is restored.

CIVIL

APPELLATE JURISDICTION : Civil Appeal Nos. 2580-81

of 1998.

From the Judgment and Order dated 7.8.96 of the Bombay High Court

in A. No. 953-954 of 1994.

Sameer Parekh, Ms. Bina Madhavan and P.H. Parekh for the Appellant.

D.M. Nargolkar for the Respondents.

The Judgment

of the Court was delivered by

NAN AV ATI, J. Leave granted.

The question which arises for consideration in these appeals

is whether

the bar to proceed with the trial

of subsequently instituted suit, contained in

section I

0 of the Code of Civil Procedure, 1908(hereinafter referred to as the

'Code')

is applicable to summary suit filed under Order 37 of the Code.

The respondent Federation applied to the appellant Bank on 5.6.1989 to

open

an Irrevocable Letter of Credit for a sum of

Rs.3,78,90,000 in favour of

c

D

E

F

G

• ~ Mis. Shankar Rice Mills. Pursuant to that request the Bank opened an

Irrevocable Letter

of Credit on 6.6.1989. The agreed arrangement was that the

documents drawn under the said Letter

of Credit when tendered to the H

190 SUPREME COURT REPORTS [1998] 3 S.C.R.

A appellant Bank were to be forwarded to the Federation for their acceptance

and thereafter the Bank had to make payments to Mis. Shankar Rice Mills on

behalf of the Federation. On 6.2.1992 the Bank filed Summary Suit No. 500 of

1992 in the Bombay High Court under Order 37 of the Code against the

Federation for obtaining a decree for Rs.4,96,59,160 alleging thaf the said

amount has beome recoverable under the said Letter

of Credit. The Bank took

B out summons for judgment (No. 278 of 1992). The Federation appeared before

the

Court and took out Notice of Motion seeking stay of the summary suit

on the ground that it has already instituted a suit being Suit No. 400 of 1992

against the Bank for recovery

of Rs. 3,70,52,217.88 prior to the filing of the

summary suit.

c

A learned

Single Judge of the Bombay High Court, who heard the

summons for judgment and the Notice

of Motion, held that the concept of

trial as contained in

Section 10 of the Code is applicable only to a regular/

ordinary suit and not to a summary suit filed under Order 3 7 of the Code and,

therefore, further proceedings under Summary Suit No. 500 of 1992 were not

D required to be stayed. The learned Judge was also of the view that there was

no merit

in the defence raised by the Federation. He, therefore, granted leave

E

F

to the Federation to defend the suit conditionally upon the Federation

'-

depositing Rs. 4 crores in the Court. The summons for judgment was disposed

of accordingly and the Notice of Motion was dismissed.

Aggrieved by the order

of the learned

Single Judge in summons for

judgment the Federation filed Appeal No.953

of 1994 before the Division

Bench

of the High Court; and, against the order passed on Notice of Motion

it preferred Appeal

No.954of1994. The Division Bench was of the view that

the word 'trial'

in section 10 has not been used in a narrow sense and would

mean entire proceedings after the defendant enters his appearance, held that

section I 0

of the

Code applies to a summary suit also. It also held that the

summary suit filed by the Bank being a subsequently instituted suit filed by

the Bank being a subsequently instituted suit was required to be stayed.

It

allowed both the appeals, set aside the orders passed by the learned

Single

Judge and stayed the summary suit till the disposal of the prior suit filed by

G the Federation.

The submission

of the learned counsel for the appellant was that the

view taken by the learned

Single Judge was correct and Division Bench has

committed an error

of law in taking

a contrary view. It was his contention that

if section 10 is made applicable to summary suit also the very object of making

H a separate provision for summary suits will be frustrated. The learned counsel

INDIAN BANK. v. MAHA. STATE CO-OP MKT. FED.LTD. [NANAVATI, J.] 191

for the respondent, on the other hand, supported the view taken by the A

Division Bench.

Section 10 of the Code prohibits the court from proceeding with the trial

of any suit in which the matter in issue is also directly and substantially in

issue in a previously instituted suit provided other conditions mentioned in

the section are also satisfied. The word 'trial' is no doubt of a very wide B

import as pointed out by the High Court. In legal parlance it means a judicial

examination and determination

of the issue in civil or criminal court by a

competent Tribunal. According to Webster

Comprehensive Dictionary,

International Edition,

it means the examination, before a tribunal having

assigned jurisdiction,

of the facts or Jaw involved in an issue in order to

determine that issue. According to Stroud's Judicial Dictionary (5th Edition),

C

a 'trial' is the conclusion, by a competent tribunal, of question in issue in legal

proceedings, whether civil or criminal. Thus

in its widest sense it would

include all the proceedings right from the stage

of institution of a plaint in

a civil case to the stage of final determination by a judgment and decree of

the

Court. Whether the widest meaning should be given to the word 'trial' D

or that it should be construed narrowly must necessarily depend upon the

nature and object

of the provision and the context in which it used.

Therefore, the word

"trial" in section I 0 will have to be interpreted and

construed keeping

in mind the object and nature of that provision and the

prohibition to 'proceed with the trial

of any suit in which the matter in issue E

is also directly and substantially in issue in a previously instituted suit'. The

object

of the prohibition contained in section

10 is to prevent the courts of

concurrent jurisdiction from simultaneously trying two parallel suits and also

to avoid inconsistent findings on the matters

in issue. The provision is in the

nature

of a rule of procedure and does not affect the jurisdiction of the court

to entertain and deal with the later suit nor does it create any substantive

F

right in the matters.

It is not a bar to the institution of a suit. It has been

construed by the courts

as not a bar to the passing of interlocutory orders

such

as an order for consolidation of the later suit with the earlier suit, or

appointment of a Receiver or an injunction or attachment before judgment.

The course

of action which the court has to follow according to section IO

is not to proceed with the 'trial' of the suit but that does not mean that it G

cannot deal with the subsequent suit any more or for any other purpose. In

view of the object and nature of the provision and the fairly settled legal

position with respect to passing

of interlocutory orders it has to be stated

that the word 'trial' in Section

10 is not usP-d in its widest sense.

The provision contained

in section l

0 is a general provision applicable H

192 SUPREME COURT REPORTS (1998] 3 S.C.R.

A to all categories of cases. The provisions contained in Order 37 apply to

certain classes

of suits.

One provides a bar against proceeding with the trial

of a suit, the other provides for granting of quick relief. Both these provisions

have to be interpreted harmoniously so that the objects

of both are not

frustrated. This being the correct approach and as the question that has

arisen for consideration

in this appeal is whether the bar to proceed with the

B trial of subsequently instituted suit contained in section IO of the Code is

applicable to a summary suit filed under

Order 37 of the Code, the words 'trial

of any suit' will have to be construed in the context of the provisions of Order

37 of the Code. Rule 2 of Order 37 enables the plaintiff to institute a summary

suit

in certain cases.

On such a suit being filed the defendant is required to

be served with a copy

of the plaint and summons in the prescribed form.

C Within I

0 days of service the defendant has to enter an appearance. Within

the prescribed time the defendant has

to apply for leave to defend the 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.

If the defendant has

not applied for leave to defend, or

if such an application has been made and

D refused, the plaintiff becomes entitled to judgment forthwith. If the conditions

on which leave was granted are not complied with by the defendant then also

the plaintiff becomes entitled

to judgment forthwith. Sub-rule (7) of

Order 37

provides that save as provided by that order the procedure in summary suits

shall be the same as the procedure

in suits instituted in the ordinary manner.

Thus in classes

of suits where adopting summary procedure for deciding

E them is permissible the defendant has to file an appearance within I

0 days

of the service of summons and apply for leave to defend the suit. If the

defendant does not enter his appearance

as required or fails to obtain leave

the allegations

in the plaint are deemed to be admitted and straightaway a

decree can be passed

in favour of the plaintiff. The stage of determination

of the matter in issue will arise in a summary suit only after the defendant

F obtains leave. The trial would really begin only after leave is granted to the

defendant. This clearly appears to be the scheme

of summary procedure as

provided by

Order 3 7 of the Code.

Considering the objects

of both the provisions, i.e.,

Section I 0 and

G Order 37 wider interpretation of the word 'trial' is not called for. We are of

the opinion that the word 'trial' in section I 0, in the context of a summary

suit, cannot be interpreted to mean the entire proceedings starting with

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

H proceed up to the stage of hearing the summons for judgment and passing

INDIAN BANK. v. MAHA. STATECO-OPMKT. FED. LTD. [NANA VAT! ,J.] 193

the judgment in favour of the plaintiff if (a) the defendant has not applied for A

... leave to defend or if such application has been made and refused or if (b) the

defendant who

is permitted to defend fails to comply with the conditions on

which leave to defend

is granted,

........

In our opinion, the Division Bench of the Bombay High Court was in

error in taking a different view. It had relied upon the decision of this Court B

in Harish Chandra v. Triloki Singh, AIR (1957) SC 444 = [1957] SCR 370. That

was a case arising under the Representation

of People's Act and, therefore,

it was not proper to apply the interpretation of word 'trial' in that case while

interpreting section

I

0 in the context of Order 3 7 of the Code.

We, therefore, allow these appeals, set aside the impugned judgment of

the Division Bench of the High Court and restore the order passed by the

learned Single Judge. In view of the facts and circumstances of the case, we

make no order as to costs.

R.P. Appeals allowed.

c

D