1999 (9) TMI 979 - HC - Companies Law

Summary

Issues Involved:
1. Application for stay of the suit under section 10 of the Code of Civil Procedure, 1908.
2. Determination of whether the matters in issue in both suits are directly and substantially the same.
3. Examination of whether the decision in the previously instituted suit would operate as res judicata in the subsequently instituted suit.

Issue-wise Detailed Analysis:

1. Application for stay of the suit under section 10 of the Code of Civil Procedure, 1908:
The respondents filed an application seeking to stay the civil suit initiated by the petitioner, Canara Bank, for recovery of Rs. 1,32,41,767.50 plus interest. They argued that the previously instituted suit in the court of the Senior Sub-judge, Chandigarh, which involves the same parties and issues, should take precedence, thus necessitating the stay of the current suit under section 10 of the Code of Civil Procedure, 1908.

2. Determination of whether the matters in issue in both suits are directly and substantially the same:
The court examined section 10 of the Code of Civil Procedure, which mandates that for a stay to be granted, the matter in issue in the subsequent suit must be directly and substantially the same as in the previously instituted suit. The court referred to several precedents to elucidate this principle:
- Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal: The Supreme Court held that the provisions of section 10 are mandatory.
- Shaw Wallace and Co. Ltd. v. Bholanath Mandanlal Sherawala: The Calcutta High Court stated that mere identity of some issues is insufficient; the matter in issue must be directly and substantially the same.
- Fulchand Motilal v. Manhar Lall Jetha Lall Mehta: The Patna High Court emphasized that the decision in the prior suit must operate as res judicata in the subsequent suit.
- P. S. Kandasami Mudaliar v. T. N. Ranganathan: The Madras High Court reiterated that substantial identity between matters in dispute is required.
- C. L. Tandon v. Prem Pal Singh Rawat: The Delhi High Court confirmed that the decision in the earlier suit must operate as res judicata.
- Bishwanath Balkrishna v. Smt. Rampeyari Devi: The Calcutta High Court found that different causes of action in suits do not necessitate a stay.
- Jagan Nath Jagdish Lal v. Piara Mal Gobind Ram Sachdev: This court held that the decision in the prior suit should operate as res judicata to stay the subsequent suit.
- Jaswant Singh v. Surjant Singh: The court stated that different questions involved in suits do not warrant a stay.
- O.P. Steel Traders v. Steel Strips: The court held that the decision in the prior suit must operate as res judicata.
- R. Srinivasan v. Southern Petrochemical Industries Corporation Ltd.: The Madras High Court emphasized substantial identity between matters in dispute.

3. Examination of whether the decision in the previously instituted suit would operate as res judicata in the subsequently instituted suit:
The court analyzed the nature of the suits. The suit filed by Canara Bank was for recovery of a specific amount, while the suit filed by the respondents in Chandigarh sought a declaration that they stood discharged as sureties and an injunction against the financial institutions from invoking guarantees. The court concluded that even if the Chandigarh suit is decided, it would not operate as res judicata on all controversies in the Canara Bank's recovery suit. The issues in both suits were not substantially the same, and the decision in the previously instituted suit would not render the subsequent suit incompetent.

Conclusion:
The court found that section 10 of the Code of Civil Procedure was not applicable as the matters in issue were not directly and substantially the same in both suits. Consequently, the application for stay of the suit was dismissed. The case was listed for further proceedings on November 18, 1999.