2001 (9) TMI 995 - HC - Companies Law

Summary

Issues Involved:
1. Application of Section 10 of the Code of Civil Procedure, 1908.
2. Whether the matter in issue in both suits is directly and substantially the same.
3. Whether the subsequent suit should be stayed or both suits should be tried together.
4. Inherent powers of the court under Section 151 of the Code of Civil Procedure.

Detailed Analysis:

1. Application of Section 10 of the Code of Civil Procedure, 1908:
Section 10 of the Code of Civil Procedure, 1908, stipulates that no court shall proceed with the trial of any suit in which the matter in issue is directly and substantially in issue in a previously instituted suit between the same parties. The ingredients of Section 10 have been elucidated in the case of C.L. Tandon v. Prem Pal Singh AIR 1978 Delhi 221, which requires that:
- The matter in issue should be substantially the same in both suits.
- The previously instituted suit should be pending in the same or another court in India having jurisdiction.
- The two suits should be between the same parties or their representatives litigating under the same title.

2. Whether the Matter in Issue in Both Suits is Directly and Substantially the Same:
The plaintiff filed a civil suit for a declaration and permanent injunction against the defendants, alleging that their actions, including the issuance of a circular and a letter, interfered with the plaintiff's rights. The defendants filed a subsequent suit seeking a permanent and mandatory injunction and a declaration regarding the entitlement to certain shares and the issuance of duplicate share certificates. The core issue in both suits revolves around the same shares and the same circular, although the reliefs sought and some parties differ.

3. Whether the Subsequent Suit Should be Stayed or Both Suits Should be Tried Together:
The court examined the difference between Section 10 and Section 11 of the Code. Under Section 10, the matter in issue in the earlier and subsequent suits should be directly and substantially the same. The court referred to several precedents, including Mohinder Singh Jubbal v. Grindlays Bank Ltd. AIR 1982 Punj. & Har. 295 and Shaw Wallace & Co. Ltd. v. Bholanath Madanlal Sherawala AIR 1975 Cal. 411, to elucidate that a mere identity of some issues is insufficient; the decision in one suit must operate as res judicata in the other. The court concluded that the main controversy in both suits pertains to the same shares and the same circular, and thus Section 10 applies.

4. Inherent Powers of the Court under Section 151 of the Code of Civil Procedure:
The defendants argued that both suits should be tried together rather than staying the subsequent suit. The plaintiff opposed this, citing Supreme Court decisions in Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahmad AIR 1954 SC 349 and Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal AIR 1962 SC 527, which held that inherent powers cannot circumvent mandatory provisions. However, the court found that these decisions do not preclude the consolidation of suits if it serves the interest of justice. The court referred to several other decisions, including Bokaro & Ramgur Ltd. v. State of Bihar AIR 1973 Pat. 340 and Vijay Kumar v. Manohar Lal AIR 1979 Delhi 1, which supported the consolidation of suits to avoid multiplicity and conflicting decisions.

Conclusion:
The court concluded that both suits involve the same core issues and parties, although some reliefs and parties differ. It is in the interest of justice to try both suits together rather than staying the subsequent suit. Accordingly, the court directed that both suits be tried together, with the earlier instituted suit taken as the main suit. The evidence will be recorded in the suit filed by the plaintiff. The matter was listed for further proceedings on 20-2-2002.