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Ram Bahadur Thakur and Co. Vs. Devidayal (Sales) Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtMumbai High Court
Decided On
Case NumberO.C.J. Appeal Nos. 48 and 49 of 1953
Judge
Reported inAIR1954Bom176; (1953)55BOMLR931; ILR1954Bom334
ActsCode of Civil Procedure (CPC), 1908 - Sections 9, 10 and 151 - Order 39, Rules 1 and 2 - Order 45, Rule 13; Indian Contract Act - Sections 28
AppellantRam Bahadur Thakur and Co.
RespondentDevidayal (Sales) Ltd.
Appellant AdvocateK.T. Desai and ;P.R. Vakil, Advs.
Respondent AdvocatePurshottam Tricumdas and ;H.M. Desai, Advs.
Excerpt:
.....the result of the agreement between the parties is clearly not to oust the jurisdiction of the calcutta high court. desai says that the civil procedure code has in terms dealt with staying of suits by section 10 and it has given mandatory directions to the court to stay a subsequently tiled suit if the conditions laid down in section 10 are complied with, and it is not open to the court to act under section 151 and to depart from the provisions of section 10 and refuse to stay the suit although the conditions are satisfied. it is well settled that under section 151 a court cannot act contrary to the specific provisions of the statute. 8. therefore, in coming to the conclusion that we do, we are not extending the scope of section 151 which is now well settled by a long line of..........taken out by the respondents he made an order restraining the appellants from proceeding with the suit filed by them in the calcutta high court.2. now, a few facts might be stated. a contract was entered into between the parties by which the appellants agreed to sell to the respondents 10,000 tons of iron ore of indian origin. the formal contract is dated august 19, 1952, and the period of delivery stipulated in the contract is between the months of october 1952 to january 1953, i.e., 2,500 tons approximately every month, and one of the important provisions of the contract is that the contract is made subject to the bombay jurisdiction. it is unnecessary to go into the correspondence which ensued between the parties subsequent to the execution of this contract, each party complaining of.....
Judgment:

Chagla, C.J.

1. These are two appeals from two orders passed by Mr. Justice Coyajee. One is on a notice of motion taken out by the appellants, who are the defendants in a suit, filed in Bombay, being suit No. 284 of 1953, for an order under Section 10 of the Civil Procedure Code staying the suit on the ground that they had filed a previous suit on the same cause of action in the Calcutta High Court. The other is on a notice of motion taken out by the plaintiffs in suit No. 284 of 1953 for an order restraining the appellants and the defendants from proceeding with the suit which they had filed in the Calcutta High Court. Mr. Justice Coyajee dismissed the appellants' notice of motion for stay, and on the notice of motion taken out by the respondents he made an order restraining the appellants from proceeding with the suit filed by them in the Calcutta High Court.

2. Now, a few facts might be stated. A contract was entered into between the parties by which the appellants agreed to sell to the respondents 10,000 tons of Iron ore of Indian origin. The formal contract is dated August 19, 1952, and the period of delivery stipulated in the contract is between the months of October 1952 to January 1953, i.e., 2,500 tons approximately every month, and one of the important provisions of the contract is that the contract is made subject to the Bombay jurisdiction. It is unnecessary to go into the correspondence which ensued between the parties subsequent to the execution of this contract, each party complaining of a breach of contract on the part of the other; but on December 8,1952, the respondents wrote to the appellants stating that if the appellants did not carry out one of the terms of the contract, they would consider it as a breach and would proceed against them as advised by their legal advisers.

This letter was followed up by a formal letter from the solicitors dated February 18, 1953. In this letter the solicitors intimated to the appellants that according to their clients the appellants had committed a breach of the contract and that they had suffered damages in the sum of Rs. 70,000 and they called upon the appellants to pay the said sum within eight days from the receipt of this letter. The appellants did not send any reply either to the letter of December 8, 1952, or to the letter of February 18, 1953. Instead they filed a suit in the Calcutta High Court on March 11, 1953, alleging that the respondents had committed a breach of the contract and claiming damages from them in the sum of Rs. 30,000.

The respondents filed the Bombay suit on March 18, 1953. Therefore it is clear that the Calcutta, suit is the previously instituted suit and there is no dispute that there is a substantial identity in the subject matter between the two suits filed in the Calcutta High Court and the Bombay High Court.

3. The contention raised before us by Mr. Desai is that in view of the fact that the Calcutta suit is the previously instituted suit, Section 10 of the Civil Procedure Code applies and it was obligatory upon this High Court to stay the Bombay suit which was the subsequently instituted suit. Mr. Desai's contention is that inasmuch as the provisions of Section 10 are mandatory, it was not competent for the learned Judge below to depart from those provisions, not to stay the suit, and on the other hand prevent the appellants from proceeding with the suit which they had filed in the Calcutta High Court. The point raised by Mr. Desai is an extremely interesting and an extremely important one.

It has been the established practice in this Court for at least last 25 years known to the bar that injunctions have been issued by this Court restraining defendants from proceeding with the suits which they had filed, even though the suits filed by them were previously instituted suits and even though the subsequently filed suit was liable to be stayed under Section 10 of the Civil Procedure Code. This Court has proceeded on the basis that if a suit filed by a defendant is vexatious or frivolous or oppressive to the plaintiff, then this Court will prevent the defendant from going on with that suit although that suit may fall within the ambit of Section 10.

This Court has also taken the view that Sf parties by their agreement decide to have their disputes adjudicated upon by the Bombay Courts and if in violation of that agreement the defendant files a suit in another Court, this Court will restrain the defendant from going on with that suit, although again that suit may fall within the ambit of Section 10. But Mr. Desai is right that if this practice is contrary to law, then the practice must go and we must give effect to the law, and the question that we have to consider is whether the practice followed by this Court is consistent with the law.

4. Now, as far as this Court is concerned, this question was really considered only in one case. & Unfortunately even in that case the observations of Sir Amberson Marten, Chief Justice, although entitled, to respect were 'obiter', & that decision is --'Tilakram v. Kodumal', AIR 1928 Bom 175 (A). In that case Sir Amberson Marten. Chief Justice, and Mr. Justice Blackwell were hearing an appeal from an order made by Mr. Justice Rangnekar. Mr. Justice Rangnekar, on a motion similarly taken out PS here by the plaintiff in the Bombay suit, restrained the defendant from proceeding with a suit which he had filed in the Ludhiana Court. The point with regard to Section 10 was expressly raised before Mr. Justice Rangnekar snd Mr. Justice Eansrnekar held that though the identity of the subject matter was substantially the same in both the suits, the parties to them were not the same, and therefore Section 10 did not apply.

When the matter came up before the Court of appeal, the learned Chief Justice expressed the opinion that Section 10 had really nothing whatever to do with the question. Therefore the learned Chief Justice did not consider the question whether Mr. Justice Rangnekar was right in coming to the conclusion that Section 10 did not apply. If Section 10 did not apply, then the observations of the learned Chief Justice were clearly 'obiter'. But the learned Chief Justice points out that in this case there was a clause in the contract by which the parties had agreed that no suits in regard to any matter arising out of the transaction shall be instituted in any Court save the High Court of Judicature at Bombay or the Court of Small Causes at Bombay, and the, view taken by the Chief Justice was that Section 10 was not a section which prevented the Court from enforcing contractual rights of this nature as between two parties to a contract.

Therefore, the view taken by the learned Chief Justice was that where parties agree to have their disputes decided by a particular Court, this Court would enforce that contract notwithstanding the provisions of Section 10 and Section 10 would not come in the way of the Court granting an injunction. This principle has been subsequently extended in some cases which are reported and in some which are not to cases where the previously instituted suit has been considered to be vexatious or frivolous or oppressive. But, as we shall presently point out, the principle underlying both classes of cases with regard to the application of Section 10 is the same and therefore we must consider both the classes of cases.

5. In this particular case we have an agreement in the contract similar to the one that Sir Amberson Marten had to consider. The parties by their contract have agreed that disputes arising out of the contract should be decided by the Bombay Courts. It is almost elementary that parties by their agreement cannot confer jurisdiction upon a Court which has no jurisdiction, nor can they by their agreement oust the jurisdiction of the Court when the Court possesses jurisdiction. But it is equally well settled that parses can by a contract prefer one of two competent Courts.

They can say that rather than the Calcutta High Court we would have the Bombay High Court deciding our disputes, and the authorities are clear that, such an agreement would not contravene the provisions of Section 28 of the Indian Contract Act. Such an agreement would not be an agreement to oust the jurisdiction of any Court because the jurisdiction of the Court would continue, but the parties by their agreement decide to go to one Court which also has jurisdiction rather than the other Court which equally has jurisdiction.

6. Section 10 for its application requires a previously instituted suit in which the matter in issue is also directly and substantially in issue in the-subsequent suit. It requires that the parties should be the same and it further requires that the Court in which the suit is previously instituted should have jurisdiction to grant the relief claimed in the subsequent suit, and Mr. Purshottam's contention is that by reason of the agreement between the parties the Calcutta High Court has no jurisdiction to grant the relief in the suit instituted by the appellants, and therefore Section 10 has no application.

In our opinion that contention is untenable. The result of the agreement between the parties is clearly not to oust the jurisdiction of the Calcutta High Court. The Calcutta High Court has Jurisdiction to grant the relief, but the Calcutta High Court would not entertain the suit by reason of the agreement arrived at between the parties. It is a very different thing to say that the Court will not entertain a particular suit from saying that the Court has no jurisdiction to try the suit.

7. It is, therefore, clear that in this particular case Section 10 applies, and the question that we have to consider is whether in every case and in every circumstance when Section 10 applies the Court is bound to give effect to that section. The further question is whether the Court has any power under Section 151 not to give effect to Section 10 under certain circumstances and in certain cases. Mr. Desai argues with some force that when the Civil Procedure Code deals with a particular subject matter and gives specific directions to the Court to do certain things or to follow a certain procedure, it is not open to the Court not to do those acts or not to follow that procedure.

Mr. Desai says that the Civil Procedure Code has in terms dealt with staying of suits by Section 10 and it has given mandatory directions to the Court to stay a subsequently tiled suit if the conditions laid down in Section 10 are complied with, and it is not open to the Court to act under Section 151 and to depart from the provisions of Section 10 and refuse to stay the suit although the conditions are satisfied. It is well settled that under Section 151 a Court cannot act contrary to the specific provisions of the statute. Section 151 is intended to deal with cases which have not been dealt with by the Code. It is clear that the Civil Procedure Code cannot deal with every conceivable case that may arise in Courts of law, and Section 151 is therefore enacted in order to save the inherent powers of the Court to do justice in proper cases.

The question is whether the Legislature in enacting Section 10 has dealt with every conceivable case of a previously instituted suit. Would it be true to say that the Legislature contemplated a suit filed which was vexatious, frivolous or oppressive, or the Legislature contemplated a suit which was filed in violation of contractual obligations? If the Legislature did not contemplate these classes of suits, then it is clear that Section 10 does not deal with those suits, and the power of the Court to deal with those suits would arise under Section 151. It is difficult to believe that the Legislature gave a direction to the Courts to stay suits even though the carrying out of this direction would result in an abuse of the process of the Court.

In our opinion Section 10 has no application when a suit is instituted which constitutes an abuse of the process of the Court. If a suit is filed in order to forestall a suit which would be filed subsequently in another Court, or if a suit is filed which is vexatious and frivolous, or if a suit is filed in violation of contractual obligation to have the matter adjudicated upon in another Court, such a suit would constitute an abuse of the process of the Court. In such a case, the Court will have to deal with the situation which arises not under Section 10 but under Section 151 of the Civil Procedure Code, and In dealing with Section 151 the Court issues an injunction preventing the defendant from proceeding with the earlier suit, taking the view that to allow that suit to go on would constitute an abuse of the process of the Court.

8. Therefore, in coming to the conclusion that we do, we are not extending the scope of Section 151 which is now well settled by a long line of authorities, but we are applying the principle underlying that section to a situation that might arise which could not have been contemplated by the Legislature when It enacted Section 10. It would be true to say, in our opinion, that every section in the Code has got to be given effect to provided it does not lead to an abuse of the, process of the Court. The Civil Procedure Code is a procedural Code and no Court can permit any procedure to be followed which denies Justice and leads to its own process being abused. If that principle is accepted, then the application of Section 151 presents no difficulty whatsoever.

9. Fortunately, there is a decision of the Calcutta High Court which is directly in point and which has taken the same view that we are suggesting is the correct view of the law, and that decision is to be found in -- 'Bhsgat Singh Bugga v. Dewan Jagbir sawhney', AIR 1941 Gal 670 (B). That is a judgment of Mr. Justice Lort-Williams, and he WAS dealing with a case which according to the learned Judge had beea maliciously filed by the defendant in the district of Gorakhpur and which, according to him constituted a most flagrant abuse of the process o the Court.

If Section 10 had been applied, the Calcutta suitshould have been stayed and the Gorakhpur suitshould have been allowed to go on, but the learned Judge refused to stay the suit and preventedthe defendant from proceeding with that suit invoking the jurisdiction of the Court under Section 151,and he cites -- 'Durga Djhal Das v. Anorajl', 17 All 29 (C), for a statement of Mr. Justice Blairat p. 672:

'......that the Code is not exhaustive, there are cases which are not provided for in it, and he declined to believe that the High Court must fold its hands and allow Injustice to be done.'

10. In our opinion, therefore, in this case, inasmuch as the appellants have agreed with the respondents to have the disputes arising out of the contract adjudicated upon by the Bombay Courts, it would be permitting the appellants to violate their agreement if they were permitted to proceed with the suit which they have filed in the Calcutta High Court. That is the basis on which, an injunction has been granted against them. They are prevented from breaking their own solemn obligation. If the injunction is properly granted, as indeed it is, and there is no dispute that the Court has power to grant an injunction in cases other than provided for by Order XXXIX, Rules 1 and 2, then it is difficult to understand how at the same time the Court can stay the previously instituted suit under Section 10.

Really, the correct approach seems to be that if the Court is satisfied that the defendant should be restrained from proceeding with the earlier-instituted suit, then the Court cannot be called upon to stay the subsequently instituted suit under Section 10. If the injunction is properly granted, then, no question of stay could arise under Section 10. In this case, apart from the fact, as contended for by the respondents, that the Calcutta suit was-filed to forestall the Bombay suit, inasmuch as there is an agreement to submit disputes to the-Bombay Courts, the learned Judge below was right' in preventing the defendant from proceeding with the Calcutta suit, and the learned Judge was equally right in refusing to stay the Bombay suit on the application of the defendants.

11. The result is that both the appeals must fail and are dismissed with costs.

Shah, J.

12. I agree.

13. Clause 12 of the contract between the parties which gives rise to the two suits, one in this Court and the other in the Calcutta High Court, provides that 'the contract is made subject to the-Bombay jurisdiction.' This is a commercial contract between the parties, presumably not drawn up by lawyers, and the expression 'subject to the Bombay jurisdiction' can, if it lias to have any meaning, any mean that it any dispute arises between the parties thereto it will be submitted to the Courts which are functioning within the city of Bombay and it will not be submitted to Courts outside the city of Bombay. The appellants in this case have filed a suit in the Calcutta High Court in violation of an obligation undertaken by them under Clause 12. The suit filed by tne respondents in both the appeals is a suit filed consistently with the obligation imposed upon them by the terms of Clause 12.

The appellants now claim that even though they may have committed a breach of the obligation imposed upon them ay the terms of Clause 12 their suit should be allowed to be proceeded with and the suit which has been, filed in the Bombay High Court by the respondents consistently with that obligation must be stayed under tne provisions of Section 10 of the Civil Procedure Code. It is well settled that this Court as a Charatered High Court has, jn the exercise of its inherent jurisdiction, power to restrain a party whether he be within the limits of the original or the appellate jurisdiction or even outside, from proceeding with a suit by him in another Court, which is vexatious or frivolous, or the institution of which amounts to an abuse of the process of Court.

Equally, this Court has in the exercise of that jurisdiction power to prevent breach of a contractual obligation undertaken by a party, whereby he has agreed to resort in case of a dispute to one of several Courts which has jurisdiction to entertain a suit relating to that dispute. If that jurisdiction is granted, is there anything in the provisions of the Civil Procedure Code which prevents this Court from issuing an injunction restraining the appellants from continuing the suit filed by them in the Calcutta High Court, which, 'ex facie', is in violation of the obligation undertaken by them under the contract?

It is suggested on behalf of the appellants that Section 10 of the Civil Procedure Code limits the exercise of that jurisdiction. It is true that by reason of Section 10 of the Civil Procedure Code a Court is prohibited from proceeding 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, provided, that the parties are litigating under the same title in both the suits and the suit previously instituted is pending in another Court in India which has jurisdiction to grant the relief claimed in the subsequent suit. It is true that the suit filed in the Calcutta High Court on the allegations made in the plaint therein is one which could be entertained by that Court.

It is a previously instituted suit and is between the same parties. It is also undisputed that the matter in issue between the two parties in both the suits is the same, and the parties are litigating under the same title. 'Prima facie' the provisions of Section 10 may, therefore, be regarded as applicable to the suit pending in this Court. But in my judgment Section 10 cannot be read as incorporating an absolute direction to this Court requiring it to stay a suit pending before it, when a previously instituted suit in respect of the same matter in issue- is pending in another Court between the same parties.

The jurisdiction of this Court to issue injunction to prevent abuse of the process of Court, or to restrain prosecution of vexatious or frivolous suit or suits filed in breach of obligations undertaken by parties before it, is not rendered infructuous by Section 10. If by resort to a rule of procedure a party is seeking to abuse the process of Court, or to enable it to commit a breach of obligations undertaken by it, the Court will not make itself an instrument of that design.

14. Section 151 of the Civil Procedure Code, which enunciates the inherent powers of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of Court, enables the Court to pass such orders as may be necessary for preventing injustice being done, or, in other words, to pass orders 'ex debito justitiae' for the effective administration of justice for doing which alone the Court exists. It is possible that a party may by making untrue averments file a suit in a Court and induce that Court to entertain his suit, and thereby may be able to hold up proceedings in another suit instituted bona fide in respect of the same matter in dispute in another Court by the opposite party, and may compel that opposite party to defend the previously instituted suit, and thereby involve him in expense and cause him harassment.

If the effect of Section 10 of the Civil Procedure Code is that once a suit has been instituted all other suits subsequently instituted in other Courts between the same parties where the matter in issue is the same must be stayed even though the institution of the suit is in violation of solemn obligations undertaken by that party, or the institution of the suit amounts to abuse of the process of Court, the Court would be giving Section 10 an effect not contemplated thereby and inconsistent with the plain intendment of Section 151 of the Civil Procedure Code.

In my view, the provisions of Section 10 and Section 151 of the Civil Procedure Code must be read together, and if the Court which is asked to stay a suit comes to the conclusion that by staying the suit before it, it would perpetrate an abuse of the process of Court, or would enable the other party to obtain a benefit to which in view of his conduct he is not legitimately entitled, then, notwithstanding the provision of Section 10, the Court would be justified in refusing to stay the suit before it, even though that suit is a subsequently instituted suit.

In the present case, the appellants have undertaken under a contract to institute a suit in the Bombay Court for enforcement of a right which, it is claimed, arises by reason of a breach of the covenants contained therein, and any attempt on their part to institute a suit in a Court other than this Court must be regarded as a violation of a solemn obligation binding upon them, and which amounts to an abuse of the process of Court, and, therefore, in my judgment, notwithstanding the provisions of Section 10 of the Civil Procedure Code, this Court in the exercise of its inherent jurisdiction and in exercise of the powers conferred upon it by Section 151 would be justified in refusing to stay the suit and in issuing an injunction against the appellants restraining them from proceeding with the suit instituted by them in the Calcutta High Court.

15. Per CURIAM. Liberty to the respondents' attorneys in both the appeals to withdraw the sums deposited by them for security for costs and apply the same towards the decree for costs passed herein.

16. Appeals dismissed.


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