Indian Bank v. Maharashtra State Marketing Federation Ltd Case Summary 1998

Indian Bank v. Maharashtra State Marketing Federation Ltd 1998

Indian Bank v. Maharashtra State Marketing Federation Ltd case dealt with whether the bar to proceed with the trial of a subsequently instituted suit, contained in Section 10, applies to a summary suit filed under Order 37 of the Code.

Appeal before the Supreme Court through Special Leave Petition under Article 136 of the Constitution. Leave was granted.

Facts:

  • Appellant Indian Bank has given the credit of around 4 crores at the request of the Respondent Federation.
  • To recover the loan amount, the Bank filed a Summary Suit Under Order 37, CPC, before the trial court. The Federation contested the suit by saying that it had already filed a civil suit against the bank before the filing of the summary suit by the bank over the same subject matter. Therefore, Section 10 of CPC should be applied and the summary suit should have stayed.
  • The trial court held that Section 10 CPC does not apply to summary suits, as the “trial” in summary suits begins only after the leave to defend is granted. Only after leave to defend is granted, is the summary suit proceeds as a regular suit and CPC becomes applicable to it. But before that, the provisions of CPC are not applicable to summary suits.
  • The High Court reversed the decision of the trial court.
  • Hence this appeal before the Supreme Court.

Legal Issue:

Whether the bar to proceed with the trial of a subsequently instituted suit, contained in Section 10, applies to a summary suit filed under Order 37 of the Code?

The decision of the Supreme Court:

  • The SC quashed the decision of the High Court and upheld the decision of the trial Court.
  • It held that the bar to proceed with the trial of a subsequently instituted suit, contained in Section 10, is not applicable to a summary suit filed under Order 37 of the CPC.

Important paragraphs from the judgment:

  • Section 10 of the Code prohibits the Court from proceeding with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit, provided other conditions mentioned in the section are also satisfied.
  • The word ‘trial’ in legal parlance means a judicial examination and determination of the issue in the civil or criminal Court by a competent tribunal. According to Webster Comprehensive Dictionary, International Edition, it means the examination, before a tribunal having assigned jurisdiction, of the facts or law involved in an issue in order to determine that issue. According to Stroud’s Judicial Dictionary (5th Edition), a ‘trial’ is the conclusion, by a competent tribunal, of questions in issue in legal proceedings, whether civil or criminal. Thus, in its widest sense, it would include all the proceedings right from the stage of the institution of a plant in a civil case to the stage of the final determination by a judgment and decree of the Court.
  • Whether the widest meaning should be given to the word ‘trial’ or that it should be construed narrowly must necessarily depend upon the nature and object of the provision and the context in which it is used.
  • Therefore, the word “trial” in Section 10 will have to be interpreted and construed keeping in mind the object and nature of that provision and the prohibition to ‘proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit.’ The object of the prohibition contained in Section 10 is to prevent the Courts of concurrent jurisdiction from simultaneously trying two parallel suits and also to avoid inconsistent findings on the matters in issue. The provision is in the nature of a rule of procedure and does not affect the jurisdiction of the Court to entertain and deal with the latter suit, nor does it create any substantive right in the matters. It is not a bar for the institution of a suit. The Courts have construed it as not a bar of the passing of interlocutory orders such as an order for consolidation of the later suit with the earlier suit, or appointment of a receiver, or an injunction or attachment before judgment.
  • The course of action that the Court has to follow according to Section 10 is not to proceed with the ‘trial’ of the suit, but that does not mean that it cannot deal with the subsequent suit anymore or for any other purpose. In view of the object and nature of the provision and the fairly settled legal position regarding the passing of interlocutory orders, it has to be stated that the word ‘trial’ in Section 10 is not used in its widest sense.
  • The provision in Section 10 is a general provision applicable to all categories of cases. The provision in Order 37 applies to certain clauses of suits. One provides a bar against proceeding with the trial of a suit, the other provides for granting quick relief.
  • Both these provisions have to be interpreted harmoniously so that the objects of both are not frustrated. This is the correct approach and the question that has arisen for consideration in this appeal is whether the bar to proceed with the trial of the subsequently instituted suit in Section 10 of the Code applies to a summary suit filed under Order 37 of the Code, the words ‘trial of any suit’ will have to be construed in the context of the provisions of Order 37 of the Code.
  • Rule 2 of Order 37 enables the plaintiff to institute a summary suit in certain cases. On such a suit being filed, the defendant is required to be served with a copy of the plaint and summons in the prescribed form. Within 10 days of service, the defendant has to enter an appearance. Within the prescribed time, the defendant has to apply for leave to defend the suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just. If the defendant has not applied for leave to defend, or if such an application has been made and refused, the plaintiff becomes entitled to judgment forthwith. If the conditions on which leave was granted are not complied with by the defendant, then also the plaintiff becomes entitled to judgment forthwith.
  • Thus, in classes of suits, where adopting a summary procedure for deciding them is permissible, the defendant has to file an appearance within 10 days of the service of the summons and apply for leave to defend the suit. If the defendant does not enter his appearance as required or cannot obtain leave, the allegations in the plaint are deemed to be admitted and straightaway a decree can be passed in favor of the plaintiff.
  • The stage of determination of the matter in issue will arise in a summary suit only after the defendant obtains leave. The trial would really begin only after leave was granted to the defendant. This clearly appears to be the scheme of summary procedure as provided by Order 37 of the Code.
  • Considering the objects of both the provisions, i.e. Section 10 and Order 37, a wider interpretation of the word “trial” is not called for. We think the word ‘trial’ in Section 10 in a summary suit cannot be interpreted to mean the entire proceedings, starting with the institution of the suit by lodging a plaint. In a summary suit, the ‘trial’ really begins after the Court or the Judge grants leave to the defendant to contest the suit. Therefore, the Court or the Judge dealing with the summary suit can proceed up to the stage of hearing the summons for judgment and passing the judgment in favor of the plaintiff if (a) the defendant has not applied for leave to defend or if such application has been made and refused or if (b) the defendant who is permitted to defend cannot comply with the conditions on which leave to defend is granted.
  • We, therefore, allow these appeals, set aside the impugned judgment of the Division Bench of the High Court, and restore the order passed by the learned Single Judge.

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Om Ram

Om Ram

Om Ram is currently a 2nd-year LL.B. student at Campus Law Centre, Delhi University. Previously he did Life Sciences from SVC, Delhi University. He shows his life journey by making Legal Vlogs on a YouTube channel named 'Om Ram'. He has interests in Law, Science & Film making. Some of his notable work related to photography and other interests can be seen on his Instagram. He also has a channel named 'Law Planet' where he along with his sister makes videos to make people aware of laws and their rights.
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