$~33
* IN THE HIGH COURT OF DELHI AT NEW DELHI
DECIDED ON: 25.08.2010
+ CS (OS) 683/1996
I.A. Nos.267-268/2005, 3042 & 7901/2006
M/S FILO INTERIOR DECORATIONS P.LTD. ..... Plaintiff
Through: Mr. V.N. Kaura with
Ms. Paramjit K. Benipal, Advocates.
versus
MR. L.K MODI AND ORS. AF+ ..... Defendants
Through: Mr. Jayant Bhushan, Sr. Advocate
with Ms. Rajeshwari Shukla, Ms. Mallika Joshi
and Mr. Rajan Narain, Advocates.
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
1.
Whether the Reporters of local papers YES
may be allowed to see the judgment?
2. To be referred to Reporter or not? YES
3. Whether the judgment should be YES
reported in the Digest?
MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)
% I.A. No. 7901/2006 (U/S 10 CPC)
This order will dispose of the application moved by the defendants under Section-10 of the Code of Civil Procedure (hereafter referred to as CPC) seeking stay of the present suit. The defendants had filed a previous application I.A. No.9738/1996, which was dismissed as pre- mature since the pleadings between the parties to the proceedings have not been completed. The defendants, therefore, subsequently moved the present application.
CS-683/96 Page 1
2. The facts necessary for deciding the application are that the plaintiff claims a money decree in the sum of `18,19,260/- towards consideration not paid. The plaintiff submits to have entered into a transaction with the defendants for supply of furniture and providing interior decoration work. It is submitted that the first defendant - Chairman of the other two defendant companies had directly entered into a transaction with the plaintiff which led to the contracts being performed. The plaintiff alleges that despite due discharge of the contractual terms by performance, it was not paid the agreed amounts under the contract. The plaintiff alleges that the beneficiaries of its services were the second and third defendants respectively.
3. The defendants, besides other pleas, contend in the written statement and also in the present application that the suit requires to be stayed. They submit to having filed another suit before the Bombay High Court being CS (OS) 2408/1994 prior in point of time. Pleadings in that suit have been produced; the second defendant (who is plaintiff in the Mumbai suit) claims damages to the tune of `15 Lakhs alleging that the present plaintiff (arrayed as defendant in those proceedings) did not perform the contract in the terms agreed upon and that as a consequence of alleged defective work, they suffered losses.
4. The defendants/applicants submit that since the issue in both the suits are common, i.e., whether the plaintiff in the present case performed its part of the bargain in terms of the agreement arrived at by the parties which, it is submitted, is also the subject matter of the present suit - necessitated later - the latter proceeding has to be stayed in terms of Section-10. The applicants/defendants rely upon two decisions of the Supreme Court reported as Gupte Cardiac Care Centre and Hospital v. Olympic Pharma Care (P) Ltd. (2004) 6 SCC 756 and Chitivalasa Jute Mills v. Jaypee Rewa Cement (2004) 3 SCC 85. It is submitted that since the real and substantial disputes between the parties are the subject matter of the previously instituted CS-683/96 Page 2 proceedings involving both the parties, the latter proceedings i.e. the present suit requires to be stayed.
5. The plaintiff resists the application and submits that the essential requirement for applicability of Section-10 is not fulfilled in this case. It is pointed out by learned counsel that the three essential conditions for attracting Section-10 are: identity as to (a) parties, (b) cause (s) of action; and (c) subject matter.
6. It is submitted that even there may be a slight overlapping in the subject matter, in that, a question as to whether the contract between the plaintiff and second defendant was performed in accordance with the agreement, might arise in both suits, what is of relevance for the Court (while considering a Section-10 application) is whether there is complete identity on all the three aspects. It is further submitted to conclude that the two suits are in respect of the same subject matter or involve trial of the same cause of action, the Court should be satisfied that in the event of one being decreed whether that would constitute res judicata in the other suit. The defendants place reliance upon the decision reported as National Institute of Mental Health & Neuro Sciences v. C. Parameshwara (2005) 2 SCC 256 and Harjeet Singh maini v. Paramjit Singh Maini 153 (2008) DLT 127.
7. Mr. V.N. Kaura, learned counsel for the plaintiff contends that the parties to the suit are entirely different and contends that the present suit involves three defendants which includes plaintiff in the Mumbai suit whereas in the latter proceedings, the other two parties i.e. defendant Nos.1&3 (in this case) have not been impleaded. It is lastly argued that the subject matter and cause of action in the two proceedings entirely differ from each other. In this regard it is contended that the Court has to enquire into plaintiff's claim - in the present case - and satisfy himself about the plaintiff's entitlement to amounts, if any, whereas the Mumbai suit, on the CS-683/96 Page 3 other hand, is confined to the question of due performance of the contract and the second defendant's entitlement to damages on the grounds alleged.
8. The Court has carefully considered the submissions. The three judgments cited by the counsel indicate the broad approach to be adopted by the Courts as and when an application under Section-10 is moved. Undoubtedly, the Court has to be satisfied that there is substantiality as to the subject matter and the cause of action so as to stay one proceeding or the other. However, this Court is also conscious of the circumstance that every Section-10 application is fueled by its own facts. In this case, the plaintiff urges that there is no identity as to the parties and points out that first and third defendant - in the present case - have not been impleaded in the Mumbai suit. As far as this aspect is concerned, facially, the argument is attractive. However, the plaintiff, in this case, has nowhere alleged in the written statement filed in the Mumbai proceedings that the said parties were necessary or proper parties, in the absence of whom, the claim of the second defendant (plaintiff in the Mumbai suit) could not proceed. The plaintiff here alleges about the transaction with the second and third defendants (through the first defendant); there is no dispute that the parties to the present case are talking about the same transaction or series of transactions. Although, the second defendant's Mumbai suit claims damages, there is or there cannot be any dispute that damages is in respect of the contract between that party and the plaintiff. The plaintiff too concedes to that aspect as is evident from the description in the present suit where the amounts are claimed on account of withholding of payments despite alleged due performance of this contract. As this Court perceives the facts, there is substantiality with regard to the cause of action, i.e., whether the contract between the parties was performed in accordance with the understanding arrived at by them. The further detail that the first and third defendants have been added as parties, in this Court's opinion, need CS-683/96 Page 4 not pose a challenge since it is the plaintiff's case that the contract or contracts as it were, were negotiated by the first defendant who happens to be the Chairman of the other two defendants. Applying the test indicated by the plaintiff, on finding that the contract was not performed in their Mumbai suit would bind the parties to this case also and would in all probability act as res judicata. In the circumstances, the Court is of the opinion that the present proceedings have to be stayed.
I.A. No.7901/2006 is allowed. The suit shall be stayed till final decision in CS (OS) 2408/1994, pending before the Bombay High Court.
S. RAVINDRA BHAT
(JUDGE)
AUGUST 25, 2010
/dh/
CS-683/96 Page 5