Indian Bank vs Maharasthra State Co-Operative Marketing Federation Ltd.

, AIR 1998 SC 1952

J U D G M E N T The following Judgment of the Court was delivered: NANAVATI. 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 10 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.

On 5.6.1989: The respondent Federation applied to the appellant bank to open Irrevocable Letter of Credit
for a sum of Rs.3,78,90,000/- in favour of M/s. Shankar Rice Mills.

On 6.6.1989: Pursuant to that request the Bank opened an Irrevocable Letter of Credit.

The agreed arrangement was that the documents drawn under the said Letter of Credit when tendered to
the Appellant Bank were to be forwarded to the Federation for their acceptance and thereafter the Bank had
to make payments to M/s 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 of Rs. 4,96,58,160 alleging that the said amount has
become recoverable under the said Letter of Credit. The Bank took out summons for judgment.

The Federation appeared before the Court and took out Notice of Motion seeking stay of 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 prior to the filing of Summary Suit.

A learned Single Judge of the Bombay High Court who heard the summons for judgment and Notice of
Motion, held that the concept of trial as contained in section 10 of the Code is applicable only to
regular/ordinary suit and not to a summary suit filed under Order 37 of the Code and therefore, further
proceedings under Summary Suit were not 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 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.

Appeal against the Order of the Single Judge: 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.954 of 1994.

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 10 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 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
the Federation.

& Hence this appeal before the Supreme Court

Contentions of the Appellant: 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 a separate provision for summary suits will be frustrated.

Submission of the Respondent:The learned counsel for the respondent, on the other hand, supported the
view taken by the Division Bench.

Decision of the Court: 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
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 law involved in an issue in order to determine that
issue. According to Stroud's Judicial Dictionary (5th Edition), 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' 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 10 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 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 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 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 10 is not to
proceed with the 'trial' of the suit but that does not mean that it 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 used in its widest sense.

 The provision 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
proceedings 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 trial of subsequently instituted suit contained in section 10 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. Thus in classes of suits where adopting
summary procedure for deciding them is permissible the defendant has to file an appearance within 10
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 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 37 of the Code.

Most important paras: Considering the objects of both the provisions, i.e., Section 10 and Order 37 wider
interpretation of the word 'trial' is not called for. We are of the opinion that the word 'trial' in section 10, 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 proceed up to the stage of hearing the summons for judgment and passing the judgment
in favour of the plaintiff if (a) the defendant has not applied for 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 in Harish Chandra vs.Triloki
Singh. 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 10 in the context of Order 37 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.