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TMI Blog1999 (9) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial institutions, namely, respondents Nos. 5 to 7 and also consortium of banks, i.e., State Bank of Patiala. The petitioner-bank was the lead bank. In terms of the agreement dated November 2, 1994, it was stipulated that B. S. G. Associates will get the ratification of the change in the management and control to Raunaq group from the financial institutions. The said approval was drafted by the Punjab State Industrial Development Corporation on November 17, 1994, and by the Industrial Finance Corporation of India respondent No. 7 on January 31, 1995. A formal letter in this regard was issued by the Industrial Finance Corporation of India. The consortium of banks with the petitioner-bank as lead bank granted their necessary approval and consent for transfer of the control and management of respondent No. 1, Scanomax India Ltd., in favour of the Raunaq group. 3. There were communications interaction and dealing with the financial institutions, the consortium of banks on the one hand and the Raunaq group on the other. In pursuance of the interaction and deliberation between the parties, it was agreed that the project for the manufacturing of Ibuprofen, Ampicillin, Trihydrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed in the court of the Senior Sub-judge, Chandigarh is a previously instituted suit. The parties are identical and, therefore, it was prayed that the said civil suit be stayed under section 10 of the Code of Civil Procedure, 1908. 6. Contest has been offered by the Canara Bank. It was pointed in the reply that there is no intimation to Canara Bank with respect to the alleged change of the management or agreement dated November 2, 1994. It is not disputed that respondents Nos. 2 to 4 had preferred the civil suit before the learned Senior Sub-judge, Chandigarh, but it has been pointed that it is on a different perspective altogether. The Raunaq group is not a necessary party in the civil suit filed by the Canara Bank. A winding up order had been passed against the company besides the borrower of the company. There were none other than the guarantors who are necessary parties to the civil suit. The questions involved are stated to be different. Learned counsel for the applicants-respondents Nos. 2 to 4 while pressing for stay of the civil suit pending, urged that the questions involved in the present civil suit filed by the Canara Bank and the one filed by respondents Nos. 2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the precedents in this regard can conveniently be made. In the case of Shaw Wallace and Co. Ltd. v. Bholanath Mandanlal Sherawala, AIR 1975 Cal 411, an appointment was made to the person to sell goods at Farrukhabad. Dealership agreement was executed. The alleged dealer had put up the claim that the agreement was cancelled by mutual consent. He filed a suit at Farrukhabad to recover the amount out of the transactions. The said person also filed a suit claiming damages for wrongful repudiation of the agreement. At Calcutta an application was filed that the suit at Farrukhabad was previously instituted. Section 10 of the Code of Civil Procedure was pressed into service. The Calcutta High Court held that mere identity of some of the issues is not sufficient to attract section 10 of the Code of Civil Procedure. It was concluded (page 412) : "One of the most essential conditions of section 10 is that the matter in issue in the later suit which is sought to be stayed must be directly and substantially in issue in the earlier suit which is pending in the same or in any other court of concurrent jurisdiction. A mere identity of some of the issues in both the suits is not sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of action in the two suits should be identical. In the present case, there is substantial identity between the matters in dispute in the earlier and the later suit." 13. In the matter of C. L. Tandon v. Prem Pal Singh Rawat, AIR 1978 Delhi 221, the same test that the decision in the earlier suit must operate as res judicata to attract the rigours of section 10 was reiterated in the following words (page 226) : "One valuable touchstone for determining whether the matters in issue are directly and substantially the same is whether the decision in the prior suit will bring the principle of res judicata into operation in the subsequent suit. Because the removal of Prem Pal Singh Rawat by Mataji and the nomination in his place of Satya Pal Singh Rawat and the competence of Mataji to do the same, issues of utmost importance, are alien to the Patna suit, the disposal of the suit at Patna will not stand in the way of the trial of the said issues by the appropriate courts." 14. A Division Bench of the Calcutta High Court in Bishwanath Balkrishna v. Smt. Rampeyari Devi, AIR 1979 Patna 159, was concerned with a situation where a first suit for eviction was filed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit filed by the petitioner-firm at Ludhiana, therefore, the trial court was bound to stay the proceedings of the suit of the petitioner-firm under section 10 read with section 151 of the Code of Civil Procedure." 17. The Madras High Court in R. Srinivasan v. Southern Petrochemical Industries Corporation Ltd., AIR 1992 Mad 363, concluded that the key words in section 10 of the Code of Civil Procedure are that the matter in issue should be directly and substantially the same. There has to be identity of the matter in issue in both the suits. The test in this regard drawn was the same and in the words of the Hon'ble judge of that court it was held (page 366) : "One test of the applicability of section 10 to a particular case is whether on the final decision being reached in the previous suit such decision would operate as res judicata in the subsequent suit. What is essential is that there must be substantial identity between the matters in dispute and parties in the earlier and later suits." 18. It is abundantly clear from the aforesaid that the matters in question substantially should be the same in both the suits and that the decision in the earlier suit sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly clear from the aforesaid that while the civil suit has been filed for recovery of a specific amount with respondents Nos. 2 to 4 being the guarantors also, the civil suit filed by Dr. B. S. Grewal and others in the court of the Senior Sub-judge, Chandigarh is only for a declaration that the plaintiffs in that suit stood discharged as sureties against the term loan and instead some of the other defendants in that suit are liable. They prayed for a permanent injunction that the Industrial Finance Corporation, the Canara Bank and certain other financial institutions are not entitled to invoke the guarantees against them and further that they should be restrained from initiating recovery proceedings. 21. As already pointed out above, the questions involved in the subsequently instituted suit and previously instituted suit should be substantially the same. As one glances through the pleadings of both the suits, it is clear that one is a civil suit for recovery of a specific amount. The said suit is pending in this court. Even if the civil suit pending before the learned Senior Sub-judge, Chandigarh is decided, it will not operate as res judicata on all the controversies between the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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