M/S Filo Interior Decorations ... vs Mr. L.K Modi And Ors.
2010 Latest Caselaw 3938 Del

$~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/




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