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R. Mcdill and Co. Pvt. Ltd. Vs. Gouri Shankar Sarda - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAppeal No. 211 of 1969 (Award No. 44 of 1966)
Judge
Reported inAIR1975Cal294
ActsCode of Civil Procedure (CPC) , 1908 - Order 23, Rule 1(1), 1(2) and 1(3); ;Arbitration Act - Section 34
AppellantR. Mcdill and Co. Pvt. Ltd.
RespondentGouri Shankar Sarda
Appellant AdvocateBhabra, Adv.
Respondent AdvocateTibrewal, Adv.
DispositionAppeal dismissed
Cases ReferredVallabh Das v. Dr. Madanlal
Excerpt:
- .....only as against the said petitioner.10. the question still remains, do these changes make the subject-matter of the previous application different from the subject-matter of the two subsequent applications within the meaning of order xxiii, rule 1, sub-rule (3) of the code?11. to consider the arguments advanced on behalf of the appellant it is necessary here to set out the provisions of rule 1 of order xxiii of the code which run as follows:'1. (1) at any time after the institution of a suit the plaintiff may, as against all or any of the defendants, withdraw his suit or abandon part of his claim. (2) where the court is satisfied- (a) that a suit must fail by reason of some formal defect, or (b) that there are other sufficient grounds for allowing the plaintiff to institute a fresh.....
Judgment:

R.M. Datta, J.

1. A short but an interesting point, though of a technical nature, is involved in this appeal. When the application for stay of the suit under Section 34 of the Arbitration Act, 1940 was moved, a technical point was taken on behalf of the respondent to the effect that the plaint, in connection with the suit which was sought tobe stayed, could not be looked into, because a copy thereof was not annexed to the said petition for utay. The Joint petitioners thereto who consisted of the present appellant and one Messrs. Misrilall Dharamchand Private Ltd. realised their difficulties in the matter and asked for leave to withdraw the said application with liberty to make fresh application. The Court thereupon ordered :

'Application withdrawn with liberty to make fresh application, cost to be paid by the applicants'.

2. Since the provisions of the Code of Civil Procedure have been made applicable to arbitration proceedings under the provisions of the Arbitration Act, 1940, no dispute was raised nor any argument was advanced challenging the applicability of the provisions of Order XXIII of the Code of Civil Procedure in making the said order. Accordingly, this matter is being considered on the basis that Order XXIII of the Code of Civil Procedure applies in an application for stay of the suit under Section 34 of the Arbitration Act, 1940.

3. The order, as passed, in the said application did not mention why liberty to make fresh application was so granted. In other words, neither any formal defect nor any sufficient ground for allowing such fresh application was indicated. In the subsequent application which was made in pursuance of such liberty, however, the petitioner itself in para. 26 thereof narrated the circumstances under which the aforesaid order was made granting such liberty. The said paragraph 26 of the petition ran as follows:

'The said application mentioned in the last preceding paragraph hereof was contested by the respondent No. 1 and (inter alia) various technical objections thereto were raised. The said application came up for hearing before the Hon'ble Mr. Justice A. N. Ray on the 25tb February 1966 whereupon it was contended on behalf of the respondent No. 1 by way of a preliminary objection that the applicants were not entitled to refer at all to the plaint in the said suit or place the same before the Learned Judge on the ground that a copy thereof had not been annexed to the said petition nor -was reference thereto craved therein. His Lordship the Hon'ble Mr. Justice Ray was pleased to uphold the said preliminary objection on behalf of the respondent No. 1. In the facts and circumstances of the case your petitioner and the respondent No, 2 were advised to pray for leave to withdraw the said application. His Lordship was thereupon pleased to pass the following order:

'Application withdrawn with liberty to make fresh application, cost to be paid by the applicant.'

4. In view of the aforesaid averments made in the petition, the facts, as to why and under what circumstances such leaveunder Order XXIII of the Code was granted became undisputed. In short, such leave was granted because the Court was satisfied that there was a format defect in the said application and the same might be cured by annexing a copy of the plaint along with the petition which was to be moved pursuant to such leave granted by the Court.

5. As stated above, the said previous application was moved on behalf of the said R. McDill & Co. (P) Ltd. and Missrilall Dharamchand (P) Ltd. jointly although the disputes in respect thereto arose out of their separate arbitration agreements contained in their respective separate contracts. It appears that after obtaining the said order, the said two companies were advised to split up the several causes of action or the bundle of facts which constituted the said previous petition and to move two separate and independent applications by each of the said companies respectively by limiting the scope thereof to the facts which concerned their contracts only. ' Accordingly, in respect of the disputes relating to R. McDill & Co. (P) Ltd. the said company filed the petition herein under its own agreement which contained the arbitration clause and likewise Missrilall Dharamchand (P) Ltd. made another application under their own agreement which contained a similar arbitration clause.

6. In the affidavit-in-opposition the respondent also stated that at the hearing of the previous application it was pointed out on his behalf that a copy of the plaint had not been annexed to the petition nor was the plaint anywhere referred to therein. It was also stated that the learned Judge was inclined to dismiss the said application whereupon on the prayer of the petitioners liberty was given as stated above. In paragraph 4 of the said affidavit-in-opposition it was stated that the present application was not in terms of the leave granted to the petitioner because no leave was granted to the petitioner alone nor any leave was granted to make two separate applications. Accordingly, the point was taken that the present application was misconceived and not maintainable. In answer to the said averments, the managing director of the petitioner in the affidavit-in-reply stated that in the affidavit-in-opposition filed by the respondent in the previous application it was stated that the arbitration agreements referred to in the petition filed on behalf of the applicant Misrilal Dharamchand (P) Ltd. and R. McDill & Co. (P) Ltd. were separate and independent and the joint application was incompetent. Accordingly, the deponent stated that pursuant to the leave given by the learned Judge, the said Messrs. R. McDill & Co. (P) Ltd. and Messrs. Misrilal Dharamchand (P) Ltd. were competent to make two separate applications. It was further stated in the said affidavit-in-reply that according to the leave granted by the learned Judge both the petitioners chose to make separate applications.

7. The said two applications came up for hearing before Sushil Kumar Datta, J. and the learned Judge upheld the contention of the respondent and dismissed both the applications for stay, on the said technical point.

8. The question before this Court is whether under the provisions of Order XXIII of the Code of Civil Procedure the said two applications could be made in the place of the previous application, pursuant to such leave or whether the petitioners were not competent to cure any other defect or defects without further leave of the Court.

9. It is contended that the changes that were made in the subsequent applications were of substantial nature. The previous application was made jointly by the two companies viz., the present petitioner Messrs. R. McDill & Co. (P) Ltd. and the petitioner in the next application, Messrs. Misrilal Dharamchand (P) Ltd. The previous application for stay of the suit filed in this Court contained averments which related to both the said companies in respect of the various causes of action. It is difficult to guess how and in what manner the said causes of action were split up and mentioned in the subsequent two petitions because the previous petition has not been made available before this Court nor made a part of the records herein; but it is undisputed that the previous application was made by the said two companies jointly whereas the present application has been made only by the petitioner Messrs. R. McDill & Co. (P) Ltd. and that Misrilal Jain has been made respondent herein along with the main respondem Gouri Shankar Sarda. Again, the previous application was in respect of the two arbitration agreements contained in two separate contracts both dated May 28, 1959, the one between R. McDill & Co. (P) Ltd. and Gouri Shankar Sarda and the other between Misrilal Dharamchand (P) Ltd. and Gouri Shankar Sarda but in the present application only one such arbitration clause has been relied on and on the basis thereof the present application has been moved asking for stay of the suit, only as against the said petitioner.

10. The question still remains, do these changes make the subject-matter of the previous application different from the subject-matter of the two subsequent applications within the meaning of Order XXIII, Rule 1, Sub-rule (3) of the Code?

11. To consider the arguments advanced on behalf of the appellant it is necessary here to set out the provisions of Rule 1 of Order XXIII of the Code which run as follows:

'1. (1) At any time after the institution of a suit the plaintiff may, as against all or any of the defendants, withdraw his suit or abandon part of his claim.

(2) Where the Court is satisfied- (a) that a suit must fail by reason of some formal defect, or

(b) that there are other sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim,

it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or abandon such part of a claim with Liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of a claim.

(3) Where the plaintiff withdraws from a suit, or abandons part of a claim, without the permission referred to in Sub-rule (2), he shall be liable for such costs as the Court may award and shall be precluded from Instituting any fresh suit in respect of such subject-matter or such part of the claim.

(4) Nothing in this rule shall be deemed to authorise the Court to permit one of several plaintiffs to withdraw without the consent of the others.'

12. On behalf of the appellant Mr. Bhabra argues that Ray, J. (as he then was, now in the Supreme Court Bench), in making the order was satisfied that there was a formal defect of procedure in not annexing the plaint along with the petition. On that basis leave had been granted. Before making the application his client has been advised that if the very same application would be made then the same would suffer from another formal defect. The petitioner herein was not a party to the other arbitration agreement and similarly the petitioner in the next matter was not a party to the arbitration agreement of R. McDill & Co. (P) Ltd. Accordingly, it is argued that a joint petition by the original petitioners if repeated might suffer from a formal defect and knowing the .same to be defective, it would be futile to move such a defective application. It is also argued that since the order of the learned Judge did not mention the nature of the formal defect for which such liberty was granted, the subsequent application could be re-framed by curing all the defects.

13. Mr. Bhabra elaborates the point by contending that such liberty was given to both the petitioners and no condition was put in giving such liberty. As such there was no restriction in making two separate applications pursuant to such liberty. Assuming that the formal defect was in respect of misjoinder of the two plaintiffs then in such a case they could file two separate suits. Unless the Court would find that only one application was intended, no restriction should be considered to have been imposed on the parties to make two separate applications. Lastly, it is argued that assuming these two applications were not made pursuant to such leave, then the Court should consider these applications as new applications because the subject-matter of the subsequent two applications were different from the subject-matter of the previous joint application.

14. To consider the above arguments, it is necessary to examine the scope of the] provisions of Rule 1 of Order XXIII of the Code. Sub-rule (1) thereof has to be read along with Sub-rule (3). If the plaintiff would think of withdrawing his suit he would not only be Liable to pay the costs thereof as would be awarded against him hut the further restriction upon him would be that he would be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim. This is a very vital restriction put on the plaintiff in the matter of withdrawal of a suit. Once he files the suit, his right to file subsequent suits, has been restricted by Sub-rule (3) thereof, with the result, that if he would have in his mind to file a fresh suit on such subject-matter, the same has to be with the leave of the Court which could be granted under Sub-rule (2). At this stage if the plaintiff would intend to file a fresh suit on the same subject-matter or such part of the claim, the plaintiff has to satisfy the Court and the Court has to be satisfied about the nature of the formal defect or that there are other sufficient grounds for granting such liberty. In other words, the Court has to apply its mind and on the basis thereof the order has to be made. It necessarily follows that if a formal defect is cured by the plaintiff without the Court being satisfied about the same then such act on the part of the plaintiff would not be compliance with the provisions of Order XXIII of the Code.

15. We are here concerned with formal defects alone because on the basis thereof liberty has been granted by Ray, J. Had the petitioner not made it clear in the petition itself, as set out above, as to the reasons why such order was made and as to the nature of the formal defect, Mr. Bhabra's contention might have some force behind it, but we have got to restrict ourselves to the said formal defect viz., for not annexing the copy of the plaint along with the petition because it is only for that formal defect such liberty was granted. Accordingly, there is no scope for any argument that the Court has only to look into the order and not to the grounds for which such order was made.

16. To my mind, the two applications relate to the same subject-matter which was the subject-matter of the previous one. Each of them constitute a part of the claim or a part of the disputes which were involved in the previous application. The manner in which the two subsequent applications have been made, to my mind, are not in compliance with the order of Ray, J. The two petitioners in effect have adopted a procedure which is not provided in the Code. The effect of making the said two applications is firstly, that the Court was never called upon to be satisfied nor was it ever satisfied, at any point of time, that it could have been a formal defect had the joint application been made as was made before; secondly, thetwo petitioners by taking advantage of the said order have in effect sought to amend their petition in their own way and without any order for amendment to that effect; thirdly, in respect of the same subject-matter the two applications have been made and to each of them a part of the claim or a part of the disputes between the parties have been sought to be raised without leave being obtained for doing the same.

17. What is argued as a formal defect in joining the two petitioners in the previous application might or might not have been accepted by the Court as a formal defect if the same was argued before the Court in applying for such leave. Accordingly, even though the Court is not called upon to be satisfied that there was some formal defect of the nature that is discussed herein, yet the two applications are made by splitting up the original claim or dispute. To my mind, the petitioner in making this separate application and by splitting up the subject-matter of the previous petition has not acted in compliance with the order of Ray. J.

18. Order XXIII, Rule 1 of the Code has to be strictly applied. Unless the formal defect is brought to the notice of the Court and the Code is satisfied in respect thereto, the same cannot be cured in the subsequent suit or a proceeding, such as the present one before this Court, because under Sub-rule (1) and Sub-rule (3) thereof the plaintiff will lose his right, which he ordinarily enjoys, to bring a fresh suit either for the subject-matter or for the claim. In a case of this nature the petitioner will lose his right to bring fresh application for stay of suit in respect of the same dispute or part thereof.

19. In the case before me the previous application was for stay of the whole of the suit on the basis of the two arbitration agreements which were entered into in respect of the two different petitions. In the present application I do not see any difference in respect of the grounds for stay of the suit except that the present application only relates to a part of the subject-matter of the suit which is covered by the arbitration clause entered into by and between Sarda and R. McDill & Co. Pvt. Ltd. Similarly in the other application also Misrilal Dharamchand (P) Ltd. has sought to stay the suit in so far as the subject-matter thereof related to the arbitration agreement which was entered into by and between the said two parties on the ground that the said part of the subject-matter of the suit and not the whole thereof is covered by the said arbitration clause entered into by and between the said two parties. It follows that each of these two applications separately cannot stand. Each is no doubt a part of the previous application but to make the subsequent application the petitioner R. McDill & Co. (P) Ltd. must have prior liberty from the Court to institute this proceeding in this manner after satisfying the Court.

20. Mr. Bhabra next argues that the subject-matter of the present application is not the same as that of the previous one because the subject-matter of the previous one related to both the petitioners and their separate disputes but the subject-matter of the present application relates only to this petitioner viz. R. McDill & Co. (P) Ltd. and accordingly in the alternative, Mr. Bhabra argues that the provision of Order XXIII has no application and that this Court ought to treat it as an application which is independent of the previous application in respect whereof leave was so obtained to cure the formal defect.

21. Reliance has been placed on the case of Vallabh Das v. Dr. Madanlal, reported in : [1977]1SCR211 where the Supreme Court in dealing with the meaning of the expression 'same subject-matter' under Order XXIII, Rule 1 observed that mere identity of some of the issues in the two suits would not bring about an identity of the subject-matter in the two suits.

22. In my opinion, in the facts and circumstances of the case before me, not only the subject-matter but also the relief claimed herein were identical in nature as those of the previously instituted proceeding except that the present application which is the subject-matter of the appeal herein constitutes a part of the previous application. In the case before the Supreme Court factually the subject-matter in the two suits were not the same although there were identity of some of the issues in the two suits. It was observed that the expression 'subject-matter' meant the bundle of facts which were to be proved in order to entitle the plaintiff to the relief claimed by him.

23. In my opinion, the fact that two applications have been made instead of one application will not alter the subject-matter of the previously instituted application. Obviously, the same parties are parties herein and part of the subject-matter in the previously instituted application has been made the ground of this application herein. The present application by itself may not cover the entire subject-matter of the suit and as such may not entitle the petitioner herein to ask for the stay of the entire suit but yet within the meaning of Order XXIII, Rule 1 of the Code, the subject-matter of the present application is in no way different from the subject-matter of the previous application.

24. Mr. Tibrewal appearing on behalf of the respondent has drawn our attention to the order of A. N. Ray, J. (as he then was now in the Supreme Court Bench), as drawn up herein, the relevant portion whereof provides :

'It is ordered that the said applicants be at liberty to withdraw this application and the same be deemed to have been so withdrawn with liberty to them to make a fresh application.'

25. Mr. Tibrewal has put emphasis on the fact that one application was ordered and there cannot be any controversy as to that because the order as drawn up shows the correct position. It is contended that the trial Judge also construed it as liberty given to make one fresh application and not more than one. The finding of the learned Judge should not be disturbed because the order itself does not give liberty to make more than one application. It is contended that the order was correctly interpreted by the learned Judge specially because the question of making two separate applications did not arise at that time at all.

26. In any event, as indicated above, from the petition itself it appears that on the basis of a formal defect, as stated above, such liberty was granted to the petitioners jointly to make one application so that the formal defect on which the Court was satisfied could be cured and the application could proceed.

27. In my opinion, from the averments made in paragraph 26 of the petition herein, it is clear that such liberty was granted by Ray, J. on the basis of the formal defect viz., that the copy of Ihe plaint was not annexed to the petition in which stay was asked for and that order was made in accordance with Order XXIII, Rule 1, Sub-rule (2), clause (a) thereof and not under clause (b) thereof. In view of the said position there is hardly any scope for the argument that the other defects, if any, could also be cured by reason of the language used in clause (b) by virtue of the liberty to make fresh application given by Ray, J.

28. That being the position, in my opinion, the learned trial Judge was right in refusing to stay the suit and in making the order for dismissal of the application with costs. Accordingly, this appeal is bound to fail and the same be and is hereby dismissed with costs. Certified for two counsel.

Deb, J.

29. I agree.


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