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Sterling Investment Corporation Pvt. Ltd. Vs. Sm. Sushila Devi Rampuria and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 129 of 1962
Judge
Reported inAIR1966Cal1
AppellantSterling Investment Corporation Pvt. Ltd.
RespondentSm. Sushila Devi Rampuria and ors.
Appellant AdvocateSomnath Chatterjee, Adv.
Respondent AdvocateR.C. Deb, ;S. Sen and ;G. Mitter, Advs. (for No. 1) and ;M.L. Mehta, Adv. (for Nos. 3 and 4)
DispositionAppeal allowed
Cases ReferredSee Chittaranjan Mukherjee v. Barhoo Mahto
Excerpt:
- arun k. mukherjea, j.1. this appeal is from a judgment and order dated june 14, 1962 passed by ray, j. by which ray, j. dismissed an application of the appellant for revocation of leave under clause 12 of the letters patent which had been granted to the plaintiff in the instant suit. the facts of the case are briefly as follows.2. the appellant is u private limited company with its registered office at bombay and if* a producer of cinematographic films and motion pictures. the appellant produced u film called 'mughal-e-azam'. on or about june 19, 1959 there was an agreement in writing by and between the appellant and a firm named messrs. chitrabani by which the appellant appointed the said messrs, chitrabani as the sole distributor of the said film for a territory which is known to the.....
Judgment:

Arun K. Mukherjea, J.

1. This appeal is from a judgment and order dated June 14, 1962 passed by Ray, J. by which Ray, j. dismissed an application of the appellant for revocation of leave under Clause 12 of the Letters Patent which had been granted to the plaintiff in the instant suit. The facts of the case are briefly as follows.

2. The appellant is u private limited company with its registered office at Bombay and if* a producer of cinematographic films and motion pictures. The appellant produced u film called 'Mughal-E-Azam'. On or about June 19, 1959 there was an agreement in writing by and between the appellant and a firm named Messrs. Chitrabani by which the appellant appointed the said Messrs, Chitrabani as the sole distributor of the said film for a territory which is known to the film trade as Bombay circuit. Under that agreement the said Messrs. Chitrabani were given license for sole and exclusive exhibition, distribution and exploitation of the picture in the said Bombay circuit. Messrs. Chitrabani (described as 'distributors' in the said agreement) agreed to give to the appellant who has been described as 'principals' in the agreement. as and by way ol minimum guarantee of business on that picture, a sum of Rs. 16,00,000. Thai, sum was to be paid in Bombay in the following manner:

(a) Rs. 5 lacs was to be paid on or before the execution of the agreement;

(b) Rs. 2 lacs within 45 days of the signing of the agreement;

(c) Rs. 2 lacs within 7 days of the censor of the picture;

(d) Rs. 7 lacs against delivery in Bombay of certain prints of the picture in accordance with a schedule attached to the agreement. This sum was to be paid within 15 days from the date of call for the amount by the principals to the distributors at their Bombay address.

It was further agreed that payment in time of the aforesaid amounts and the delivery oi: prints mentioned in Schedule A to the agreement within six months from the date of the agreement were to be the essence of the agreement. It was further agreed that the distributors were to take delivery of the prints within 15 days from the date of a written intimation given to that: effect by the principals. In the event of the failure of the distributors to take delivery of the prints within the stipulated time the principals were to be at liberty to give the distribution, exploitation, and exhibition rights of the picture to other parties and in that event the principals were to be entitled to adjust monies paid to them by the same distributors to the extent of recouping the principals' losses and damages. The principals agreed to do pre-release publicity upto Rs. 2 lacs at their own cost. It was further agreed that the exploitation income derived by the distributors in the business done cm the aforesaid picture was to be utilised in the following manner:

(a) towards the recoupment of the payment of the minimum guarantee of Rs. 16 lacs;

(b) after recouping the aforesaid sum the distributors were to adjust a total commission of 15 per cent on the income received in respect of the minimum guarantee of Rs. 18 lacs, that is to say, the distributors were to appropriate a total sum of Rs. 1.6 lacs plus Rs. 2,70,000 as commission;

(c) after adjusting the aforesaid amount of Rs. 18,70,000 and the cost of any extra prints taken by the distributors over and above the stipulated prints free of cost, the balance of the income was to be shared at the rate of 25 per cent as their commission and 75 per cent was to be paid to the principals as their share of the income. This was to be held in trust by the distributors and paid on or before the 25th of every following calendar month.

The distributors agreed not to sell the picture in any part or parts of the contracted territory without the prior written consent of the principals. The distributors also undertook not to exhibit or exploit the said picture directly or indirectly outside the contracted territory and it was agreed that in the event of breach in this connection the distributors were to be liable to damages and the agreement liable to cancellation at the exclusive option of the principals. Under the agreement the distributors were to keep and maintain separate and regular up-to-date books of accounts of the distribution, exhibition and exploitation of the said picture and publicity thereof. The books and records were to remain open to inspection of the principals on presentation of a written notice. The agreement also provided for various other arrangements for the practical implementation of the agreement. Finally the agreement contained a clause in the following terms:

'That the agreement having been entered into in Bombay, and as all payments have to be made at Bombay and the delivery of the prints and the papers, censor certificates having to be delivered at Bombay, it is actually agreed between the parties that this agreement shall be construed and interpreted as pertaining to the laws of the Bombay State and the greater Bombay courts alone will have jurisdiction in the event of any dispute between the parties hereto arising out: of this agreement.'

3. The appellant alleges that the defendant 1, that is to say, Messrs. Chitrabani, the distributors, committed diverse breaches of the agreement dated June 19, 1959 as a result whereof the appellant by a letter dated August 10, 1961 addressed to Messrs. Chitrabani by its solicitor terminated that agreement and called upon Messrs. Chitrabani to return the prints and publicity materials in respect of the said film, to cease exhibiting, distributing and exploiting the said picture any further, to give complete account: of the exhibition of the picture by the defendant No. 1 and to pay to the appellant the amount due as its share of realisations already made by Messrs. Chitrabani. Messrs Chitrabani denied their liabilities and obligations to the appellant under the contract dated June 19, 1959 ana refused to comply with the requisitions contained in the letter of August 10, 1961. Immediately after this, there were certain negotiations for amicable settlement of the disputes between the parties. These negotiations, however, failed. The negotiations for settlement took place in Bombay in which it appears one Sm. Sushila Debi Rampuria who is the plaintiff in the instant suit took a prominent part. Sm. Sushila Debi Rampuria is alleged to be the sister of Madanlal Kothari, a partner of Merrs. Chitrabani. When the negotiations failed Messrs. Chitrabani instituted a suit in the Bombay High Court against the appellant as well as against Messrs. Cine Enterprises and Golcha Properties Private Ltd. which is a Bombay company and which happens to be the lessee in respect of a picture theatre at Maratha Mandir where the film 'Mughal-E-Azam' had been released for exhibition. In this suit filed in Bombay, being suit No. 16 of 1962 (Messrs. Chitrabani v. Sterling Investment Corporation Private Ltd.) Messrs. Chitrabani asked for a declaration that it was entitled to all the rights under the agreement dated June 19, 1959 and was entitled to keep, maintain and exploit the prints and publicity materials of the said picture. By an interim order made in that suit by the Bombay High Court the appellant was restrained from interfering with the rights of Messrs. Chitrabani under the agreement dated June 19, 1959.

4. On or about February 10, 1962 the petitioner also filed a suit in the Bombay High Court against Messrs. Chitrabani. This suit was suit No. 59 of 1962. In that suit the petitioner claimed inter alia for a declaration that the said agreement dated June 19, 1959 and the agencyof Messrs. Chitrabani under the said agreement had been terminated and for a further declaration that Messrs. Chitrabani had no right, title or interest in or to the said picture 'Mughal-E-Azam' and/or its exhibition, distribution or exploitation and for certain other reliefs. By an interim order made in that suit Messrs. Chitrabani were also restrained from exhibiting, exploiting and distributing the said picture until the disposal of the application made by the appellant in that suit,

5. On or about April 3, 1962 the present suit was filed by Sm. Sushila Debi Rampuria in this Court and on the application of the plaintiff an interim order was passed by this Court by which the appellant has been restrained from receiving and/or taking any steps to receive a sum of Rs. 2,94,000 alleged to be lying with Messrs. Cine Enterprises and Messrs. Golcha Properties Private Ltd., defendants Nos. 3 and 4 in file said suit. By the same order the defendants Nos. 3 and 4 have also been restrained from paying that sum to the appellant. The appellant states that there had been no dealing or transaction between Sm. Sushila Debi Rampuria, the plaintiff in the present suit and the appellant except that the plaintiff took some part in the negotiations for settlement of the disputes between the appellant and Messrs. Chitrabani.

6. On April 10, 1962 the plaintiffs application appeared as a new motion and directions were given for filing of affidavits and the matter was adjourned till 4th May 1962. It was further directed that the ad interim order which had already been passed on April 3, 1962 was to continue till the disposal of the application. The appellant thereafter filed an affidavit-in-opposition to the application of Sm. Sushila Debi Rampuria without prejudice to the appellant's contention that this Court has no jurisdiction to entertain or try the suit.

7. On 4th June, 1962 the appellant took out a summons through his solicitor B.M. Bagaria for an application io which the appellant asked for an order that the leave granted under Clause 12 of the Letters Patent to the plaintiff to institute the present suit as against the appellant should be revoked and/or cancelled. The summons was served only upon the plaintiff and the affidavits were Bled in due course in connection with that application.

8. In the meantime, however, on 5th June, 1962 the plaintiff's application in which the plaintiff had already obtained an interim injunction against the defendants came up for hearing before Ray, J. when Ray, J. disposed of the application by the following order:

'Interim injunction to continue. Mr. Mehta on behalf of the defendants Nos. 3 and 4 submitted that no money was due or payable to defendant No. 2 from defendants Nos. 3 and 4. Defendants to file their written statement within a fortnight. Cross orders for discovery within a week thereafter. Inspection forthwith thereafter and the suit to appear in my peremptory list a month hence. Costs costs in the cause, Mr. Dey's client will not be entitled to argue that the filing of the written statement and taking stepsin the suit onwards will in any manner affect the right of the defendant No. 2 in respect of the application made on behalf of the defendant No. 2 for revocation of the leave under Clause 12 of the Letters Patent,'

9. Thereafter the appellant's application for revocation of leave under Clause 12 of the Letters Patent came up for hearing before Ray, J. and was dismissed by Ray, J. on 14th June, 1962. When the application came up for hearing the appellant's counsel made a prayer for adjournment in order that the appellant could have an opportunity to serve the summons on other parties. This was presumably in answer to an objection raised by the plaintiff in the plaintiffs affidavit-in-opposition to the application that the application was not maintainable in the absence of the other parties to the suit. The learned Judge refused to grant an adjournment but indicated to the appellant's counsel that if the appellant were so advised a fresh summons could be taken out. The learned Judge observes in his judgment that counsel for the appellant did not ask for permission to take out a fresh summons. Thereafter the application was heard and the learned Judge dismissed the application. The application was dismissed on two grounds: first, on the ground that all the parties to the suit not having been served with the summons, the application was defective and no order could be passed on the application and secondly that the application had no merits,

10. The appellant has now come up on appeal against that judgment and order of Ray, J. The notice of the appeal and this application has been served on the other defendants, though their names do not and cannot appear as respondents in the appeal. The appellant's contentions are three-fold. First, the appellant contends that the learned Judge should have adjourned the application and allowed the appellant to cure the defect, if any, in the summons by serving it on the other defendants. Secondly, the appellant contends that no part of the cause of action of the plaintiff's suit so far as the present appellant is concerned took place within the jurisdiction of this Court so that this Court cannot try the suit even with leave under Clause 12 of the Letters Patent. Thirdly, the appellant further contends that the balance of convenience is so overwhelmingly in favour of the suit being tried at Bombay that no leave under Clause 12 of the Letters Patent should have been granted and the leave so granted should in any event be now revoked. Before dealing with the first point, we would for the sake of convenience deaf with the second and third points raised by the appellant.

11. We do not think that there is any substance in the contention that no part of the cause of action of the plaintiff's suit has arisen within the jurisdiction of this Court. It was argued on behalf of the appellant that the only paragraphs on the basis of which leave under Clause 12 of the Letters Patent has been obtained are paragraphs 3, 3(j), 7 and 9 of the plaint. Paragraph 3 deals with an alleged agreement between the plaintiff and the defendant No. 1 which is stated to have been entered into at Calcutta. That agreement,the plaintiff argues, does not concern the defendant No. 2, that, is, the appellant in any manner whatsoever. The agreement, even if true, relates to a loan which the plaintiff agreed to make to the defendant No. 1. Even though the alleged purpose of the loan was to enable the defendant No. 1 to make a payment to the appellant there is no privity us between the defendant No. 2 and the plaintiff. Paragraph 5(j) of the plaint similarly relates to an alleged term contained in the contract between the defendant No. I and the plaintiff which requires the defendant No. 1 to repay the sum to the plaintiff, at Calcutta within the jurisdiction of this Court. This also does not in any way concern the defendant No. 2, Paragraph 7 of the plaint refers to a deed alleged to have been executed by the plaintiff and the defendant No. 1 by which the defendant No. 1 charged, mortgaged, and hypothecated all its right, property and claims in respect of and in relation to the film 'Mughal-E-Azam' including all the sums which had or would become due and payable to the defendant No. 1 in connection with the exploitation of the said film, This paragraph does not concern defendant No. 2 either. It deals with matters which concern only the plaintiff and the defendant No. 1. Paragraph 9 of the plaint states that in pursuance of the agreement between the defendant No. 1 and the plaintiff and referred to in paragraphs a and 7 of the plaint, the plaintiff actually lent and advanced certain sums of money to the defendant No. 1 by directly paying those sums to the defendant No. 2. These sums were ao doubt paid to the defendant No. 2 but they were paid at the instance of the defendant No. 1 and on behalf of the defendant No. 1. The checmes were drawn upon the plaintiff's bankers at Calcutta. The appellant says that even these sums were paid at Bombay and the payments do not really constitute transactions between the plaintiff and the appellant. Those transactions are really transactions between the defendant NO. 1 and the defendant No. 2 and the plaintiff merely acted as agent. The appellant's contention is that these averments do not constitute any cause of action as against the appellant. After carefully considering this argument of the appellant's counsel we cannot persuade ourselves to accept it. It is true that there has been no transaction between the plaintiff and the appellant directly and the plaintiff cannot possibly have any complaint or grievance against the appellant, But when dealing with the question of jurisdiction we do not take cause of action to mean merely the complaint or the grievance which forms the foundation of the plaintiff's case against the defendants, The expression 'cause of action' is taken in a much broader sense. It is taken to mean the entire bundle of facts which the plaintiff will have to prove if the plaintiff has to succeed in his case against the defendants. There can be no question that the plaintiff cannot possibly succeed in this suit unless the plaintiff proves the agreement that is alleged to have been executed by the defendant No. I at Calcutta. Therefore a part of the cause of action of the plaintiffs suit did certainly take place within the jurisdiction of this Court. The question whether the plaintiff shouldbe allowed to file a suit in which other parties not directly concerned in the transaction have been impleaded as party-defendants is not strictly a question of jurisdiction. That question will come up presently when we deal with the question of balance of convenience. So far as the present argument is concerned it is not possible to contend that the plaintiff can do without proving the transaction which is alleged to have taken place at Calcutta between the plaintiff and the defendant No. 1 however small and unimportant that may be in the context of the entire background of this case. To that extent it is indisputable that a part of the cause of action of the plaintiff did arise within the jurisdiction of this Court. In this view of the matter we are of the opinion that the second contention of the appellant fails.

12. Coming to the third contention of the appellant that the balance of convenience requires that the leave under Clause 12 of the Letters Patent should not have been granted to the plaintiff, we must say that this particular plea of the appellant seems to be, at least prima facie, of considerable substance. By and large, all the facts and all the transactions which will have to be proved in this suit took place outside the jurisdiction of this Court at Bombay where two-suits have already been filed by the defendant No. 1 and the defendant No. 2. When one goes through the plaint one finds it difficult to resist the impression that the real dispute is between the defendant No. 1 and the defendant No. 2 and that the plaintiff comes rather indirectly into the picture. It is also impossible to deny that only a microscopic part of the evidence in the instant suit will relate to what took place within the jurisdiction of this Court. Even assuming the plaintiffs case to be true, the evidence which will have to be recorded in this suit on behalf of all the parties concerned will all be in relation to facts and incidents which took place in Bombay or in places near Bombay. It also seems to be clear that both the oral evidence and the documentary evidence on all these things will be available easily and readily at Bombay. For the present we are bound to ignore the appellant's suggestion that the whole suit is a manoeuvre on behalf of the defendant No. 1 to harass the defendant No. 2, i.e., the appellant and is really a device to defeat the claims of the appellant and that it is the defendant No. 1 who has engineered this suit with the good offices of the plaintiff who is the sister of one of its partners. We shall assume the bona fide of the plaintiff but even on that assumption we cannot deny that the balance of convenience as regards trial of the suit is overwhelmingly in favour of its being held in Bombay. Mr. Somnath Chatterjee, appearing for the appellant, gave us a formidable list of facts which happened in Bombay and which have to be proved by the defendant at the trial. As against this, only two incidents took place in Calcutta even according to the plaintiffs story. It is significant that Mr. Deb and Mr. Gouri Milter who were appearing for the respondents could suggest aw reply to this contention of Mr. Chatterjee. They tried to circumvent the difficulty by saying that since all the parties were not before the Courtit was unnecessary for them to deal with the merits of the case. We must say that we are not impressed by this attitude of the plaintiff. We should have thought that the question as to whether there is any merit in the appellant's case is one which at least prima facie ought to be gone into even at this stage. For even assuming that we find ourselves in favour of the appellant's first contention it would be open for us to find out and in fact it must be proper for us to consider as to whether any purpose would be served by allowing the appeal and sending back the application on remand for re-hearing by the trial Judge after such amendment of the summons as the defendant No. 2 may be advised to make. Tin's we are not in a position to do unless we consider whether the appellant has at least a prima facie case to make out on merits. We are quite alive to the fact that we cannot make up our mind finally or record a verdict finally on the merits of the case if the application has to be sent to remand but that does not absolve us from the responsibility of deciding at least tentatively whether the appellant had a prima facie case. On the materials present before us we are satisfied that the appellant has made out a very strong prima facie case. In our view it was necessary and important for the plaintiff to meet the prima facie case made out by the appellant. This the plaintiff's counsel refused to do on a ground which is completely unacceptable to us. We must therefore presume that the plaintiff has no argument to advance in reply to the appellant's contention on this point. In these circumstances we are of the opinion that the appellant has a substantial case to argue on the question of revocation of leave and it is fair and just that he should be given a reasonable opportunity to make out his case on that point. We have therefore to consider whether the learned Judge was right in denying such an opportunity to the appellant by refusing the adjournment. This brings us to the first contention of the appellant.

13. The appellant contended that Ray, J. should have granted the appellant an opportunity to amend its summons and to serve it on the other defendants on 14th June, 1962 when the application came up for hearing and the appellant petitioner's counsel made a prayer to that effect. Ray, J. refused to adjourn the hearing of the application for giving this opportunity to the appellant-petitioner. Ray, J., however, says in his judgment that his Lordship indicated to the counsel for the petitioner that if the petitioner were so advised, a fresh summons could be taken out. Since the petitioner's counsel did not choose to adopt this procedure, his Lordship refused the prayer for adjournment so that the defect in the summons could not be cured. Thereafter Ray, J. dismissed the application on the ground inter alia that the summons was defective in so far as it had not been served on all the parties. Ordinarily the question of adjournment is a matter of discretion and the Appellate Court should not interfere with the exercise of discretion by a Judge in the matter of granting or refusing an adjournment. But it was contended on behalf of the appellant that in view of certain peculiar circumstances in this case weshould examine whether the discretion exercised by the learned Judge was exercised judicially. It was submitted on behalf of the appellant that ordinarily if a summons or an application is defective the procedure that is followed is to have it amended and in suitable cases the party asking for amendment is mulcted with costs. In this particular case the appellant-petitioner was not asking for any substantial amendment. The petitioner merely asked for an opportunity to serve the summons on the other defendants who had not been served with the summons and who, the petitioner had thought, would not be interested in the application. Even if non-service of summons on those defendants would be a defect, it would be a technical defect and the ordinary procedure would be to have the summons served on those parties and if for such services a slight amendment of the summons was necessary it could be easily done by merely adding the names of the parties who were to be served with it. The appellant contended that the procedure indicated by the learned Judge would not only have been much more expensive and much less expeditious but would have seriously prejudiced the petitioner's case. It is well known that when a defendant applies for revocation of leave under Clause 12 of the Letters Patent, one of the essential conditions that he must satisfy is to show that he asked for such revocation at the earliest possible opportunity and that he had asked for all proceedings to be stayed until that question was settled. See Chittaranjan Mukherjee v. Barhoo Mahto : AIR1953SC472 . If the defendant allows the suit and the proceedings in the suit to progress it would not be open to him to ask for revocation of leave. In the present application the petitioner no doubt took out a summons and asked for revocation of leave under clause 12 of the Letters Patent: at a fairly early stage of the proceedings. The petitioner had also asked that all proceedings relating to the suit be stayed till the final disposal of the application. On 5th June, 1962, however, in the plaintiff's application in this suit Ray, J. had passed an order asking the parties to file the written statement and to disclose their documents and to take further steps to get the suit ready for hearing immediately. In that application the present appellant must have submitted to Ray, J. that their application for revocation of leave was still pending and that the appellant could not, therefore, take any steps in the suit without prejudicing the appellant's case in the application for revocation of leave. We say this because it appears from the judgment of Ray, J. that his Lordship protected the appellant-petitioner by saying that taking of such steps by the appellant would not

'in any manner affect the right of the defendant No. 2 in respect of the application made on behalf of the defendant No. 2 for revocation of the leave under Clause 12 of the Letters Patent'.

It was clear, therefore, that the learned Judge had protected the application that had already been made by the defendant No. 2 for revocation of leave against any prejudice on account of taking of steps in the suit. The protectionwas clearly confined to the application which had already been made by the petitioner. If the petitioner had abandoned its application or had withdrawn that application and then taken out a fresh summons, the petitioner would have at once deprived himself of the protection contained in the learned Judge's order of 4th June, 1962. The fresh application of the petitioner would have been open to the fatal objection that the petitioner had taken steps in the suit or allowed the suit to progress beyond the initial stages. We have carefully considered all the facts and circumstances of this case and we are of the opinion that the apprehension of this appellant in this regard is not without substance. We cannot therefore uphold the decision of Ray, J. when he refused an adjournment to the petitioner for the sake of giving it an opportunity to serve the summons on the other defendants.

14. In this view of the matter, we think it fit and proper that the appellant-petitioner should be given an opportunity to move its application for revocation of leave and also to cure the defect in the summons by such amendment as it may be advised to make for the purpose of serving it on the other defendants. We, therefore, allow the appeal and set aside the judgment and order of Ray, J., dated 14th June, 1962. We remand the application for further hearing to the learned Judge who is now taking interlocutory matters with this direction that the appellant-petitioner should be given an opportunity to amend the summons and serve the summons upon the other defendants. In order to save time, however, we direct that the summons be amended straightway by addition of the names of the defendants on whom the appellant wants to serve the summons. The appellant is given liberty to effect service by serving a copy of the summons instead of the original filed in Court. Thereafter, the application will be heard and disposed of by the court taking interlocutory matters. The appellant's solicitor undertakes to Court to have the summons amended within three weeks from date. We make it quite clear that none of our observations in this judgment will be taken as final or definitive or as binding in any way upon the Court below at the time of hearing of this application.

15. The costs of this appeal and the costs already incurred iu connection with this application in the Court below will be costs in the application which is to be heard by the Court below.

16. All parties concerned will act on a signed copy of the minutes.

Sinha, J.

17. I agree.


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