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  • Section 10, C.P.C
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  • Section 10, C.P.C
Smart Summary

Judgment Summary: P.K. Bahri, J. — Application under Section 10, C.P.C (Stay)

Factual and Procedural Background

This is an application under Section 10, C.P.C. seeking a stay of the present suit until final disposal of an earlier suit filed by the defendant and pending in the Court of District Judge, Bhilwara. The Court considers the pleadings of the present suit and the plaint of the suit pending in the District Court, Bhilwara.

According to the record before the Court: Shree Pipes Limited is the defendant in the present suit and an entity described as "Associates" is the plaintiff (the text identifies the plaintiff as the Consulting Engineer appointed for construction of an Asbestos Cement Pressure Pipe Factory). The plaintiff's duties included supervising construction work, certifying work quality and contractors' bills, preparing drawings (including drainage plans), and issuing certain certificates (e.g., cement consumption certificate).

The defendant's pleadings in the earlier-filed District Court suit allege that the plaintiff negligently and carelessly certified contractor bills, failed to properly supervise construction, allowed an improper extension of time, caused a double payment of Rs. 2,60,000/- appearing in the 9th running bill, failed to provide required drawings and certificates, and thereby caused heavy loss. The defendant terminated the plaintiff's contract by letter dated March 29, 1985 and filed suit in the District Court, Bhilwara claiming Rs. 1,00,864/- with 18% interest, reduction of the plaintiff's commission (alleging entitlement only to 1.15% instead of 2.30%), and possible deduction for expert expenditure (approximately Rs. 10,000/-).

In the present suit the plaintiff contends that it performed its contractual duties with ability, was burdened with extra work caused by defendant's indecision and failures (including delays in water, power, and raw materials), prepared various revised drawings and bills, and states that a final bill dated April 11, 1985 for Rs. 2,81,326/- remains unpaid, which is the subject of the present recovery suit.

Legal Issues Presented

  1. Whether the matters in issue in the present suit and the earlier suit pending in the District Court, Bhilwara are "substantially the same" such that Section 10, C.P.C. requires a stay of the present suit until the earlier suit is disposed of.
  2. Whether the central factual and legal questions—specifically whether the plaintiff was negligent in performing contractual obligations and whether the defendant rightly terminated the contract—are common to both suits and would operate as res judicata if decided in the earlier suit.

Arguments of the Parties

Plaintiff's Arguments (as advanced in this Court)

  • The learned counsel for the plaintiff argued that the present suit is based on work already done by the plaintiff and therefore has nothing to do with the issues raised in the suit pending in the District Court, Bhilwara; implying the matters are different and Section 10 should not apply.

Defendant's Position and Allegations (as presented in the earlier suit)

  • The defendant's plaint in the District Court alleges negligence and carelessness on the part of the plaintiff in supervising construction, certification of contractor bills (including alleged bogus bills), failure to prevent a double payment of Rs. 2,60,000/-, improper extension of time to the contractor, failure to submit required drawings and certificates, and consequent loss to the defendant.
  • On that basis the defendant claimed termination of the plaintiff's contract was justified, sought recovery of Rs. 1,00,864/- with 18% interest, sought reduction of the plaintiff's commission (alleged entitlement to only 1.15% rather than 2.30%), and asserted entitlement to deduct expert-expense costs (about Rs. 10,000/-).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Shah Wallace Co. Ltd. v. Bholanath Madanlal Sherwala and others; AIR 1975 Calcutta 411 The expression "the matter in issue" in Section 10 refers to the entire subject-matter in controversy between the parties; mere identity of some issues is not sufficient—decision in one suit must non-suit the other (operate as res judicata) before Section 10 will apply. The Court acknowledged this principle and treated it as part of the legal framework to test whether the matters in issue in the two suits are substantially the same; the Court nevertheless found that the crucial question (termination and negligence) would operate as res judicata.
Sagar Shamsher Jung Bahadur Rana & another v. Union of India & others; AIR 1979 Delhi 118 The words "matter in issue" mean all disputed material questions in the subsequent suit which are directly and substantially in question in the previous suit; the phrase does not necessarily mean the entire subject-matter of the two suits. The Court relied on this broader articulation to accept that complete identity of subject-matter is not required, and to support examining whether the disputed material questions (not necessarily the whole subject-matter) are directly and substantially common to both suits.
C.L. Tandon v. Prem Pal Singh Rawat; AIR 1978 Delhi 221 It is not required that matters in both suits be totally identical; they must be substantially the same for Section 10 to apply. The Court invoked this principle to conclude that substantial sameness—particularly with respect to the core issue of termination and negligence—was present between the two suits.
Adhish Chandra Sinha v. Hindustan Gas & Industrial Ltd. & another; AIR 1985 Calcutta 154 To attract Section 10, the subject-matter in issue in the subsequent suit must be identical (the subject-matter of the two suits must be identical); one common question alone is not sufficient. The Court noted this authoritative proposition and applied it alongside the other precedents, but on examining the facts concluded that the pivotal issues in both suits (negligence and validity of termination) were substantially the same and would operate as res judicata.

Court's Reasoning and Analysis

The Court proceeded by comparing the pleadings of the present suit with the plaint of the earlier suit. It identified the core questions that would arise in both proceedings: whether the plaintiff had been negligent in performing contractual obligations and whether the defendant rightly terminated the plaintiff's contract.

The Court observed that the plaintiff's entitlement to recovery in the present suit depends on proof that the plaintiff properly performed its contractual duties. If it were shown that the plaintiff breached the contract (for example, by negligent supervision or improper certifications), the plaintiff's claim for payment could fail. That same factual determination (negligence and correctness of termination) is precisely what the defendant seeks to establish in the earlier suit.

The Court surveyed authorities on the meaning and scope of "matter in issue" under Section 10, C.P.C., noting differing formulations but accepting that the controlling test is whether the disputed material questions in the subsequent suit are directly and substantially the same as those in the previous suit such that a decision in the prior suit would operate as res judicata in the subsequent suit.

Applying that test to the present record, the Court concluded that the crucial questions—whether the plaintiff's contract was rightly rescinded and whether the plaintiff was negligent—are substantially common to both suits. A finding on these questions in the District Court suit would "go to the root" of the present suit and would operate as res judicata. On this basis the Court held that the matters in issue in the two suits are substantially the same and that it was therefore in the interest of justice to stay the present suit pending decision of the earlier suit.

Holding and Implications

HOLDING: The application is allowed and the present suit is stayed under Section 10, C.P.C. until the disposal of the suit pending in the Court of District Judge, Bhilwara. (Order dated January 23, 1989.)

Implications:

  • The direct effect is that proceedings in the present Court are suspended until the earlier suit in the District Court, Bhilwara is finally decided; any determination in that suit on negligence or validity of termination will operate as res judicata in relation to the claims before this Court.
  • The Court applied established authorities to reach this result; the opinion applies existing law rather than announcing a new legal principle. There is no indication in the opinion that a new precedent was laid down.

Judge: P.K. Bahri, J. — Order dated January 23, 1989. Application allowed.

    Mehta Gandhi & Associates v. Shree Pipes Ltd.

    P.K Bahri, J.:— This is an application filed under Section 10, C.P.C seeking stay of this suit till final disposal of the earlier filed suit by the defendant which is pending in the Court of District Judge, Bhilwara.

    2. I have heard the arguments and have gone through the documents particularly the pleadings of the present suit and the copy of the plaint of the suit pending in the Court of District Judge, Bhilwara.
    3. The facts, in brief, are that Shree Pipes Limited (defendant in the present suit, hereinafter to be called “defendant”) Associates (plaintiff in the present suit) by virtue of which plaintiff was appointed as Consulting Engineer for Asbestos Cement Pressure Pipe Factory building of the defendant where machine foundations water supply, sanitary works, roads, compound wall, residential building, water tank, safety tank, sockpits, store water drains, effluent drains and other side development works etc. were to be executed. The job of the plaintiff was to see that the factory building to be constructed is an appropriate building according to time tested standards standardised for economy and there were no short comings in the site plan and plant and machinery foundations are done according to specifications by the Contractors. The plaintiff was to make report regarding the quality of the work being done at the spot and also to certify the construction being done and was to work efficiently as an Engineering specialist. It was alleged that due to lack of proper supervision and because of non-appointment of any person who had knowledge of the job on the site by the plaintiff and because of lack of continues appropriate and proper supervision at the time of submission of fourth running bill by the contractor, the defendant-company started realising that the plaintiff had no supervision on the construction work and the same was not being looked after properly which resulted in the construction job being done in an unsatisfactory manner. It is pleaded that the plaintiff had been negligent and careless in as much as it certified the bogus bills of the contractor and had not checked the contractor when the building was being constructed in an improper manner and no proper directions had been given by the plaintiff and plaintiff also did not check that a double payment of Rs. 2,60,000/- has been made to the contractor which lapse was located in the 9th running bill. It was pleaded that from the very beginning the plaintiff used to wrongly certify the works improperly done by the contractor due to negligence and carelessness of the plaintiff the defendant-company suffered a heavy loss. It was pleaded that the works had to be completed by the contractor by certain time and thus time could not be extending except due to some force majure exceptionally bad weather but plaintiff caused grave loss to the defendant by extending the time of construction without any shyme or reason. Then it was pleaded that plaintiff who was to give a plan of drainage but the plaintiff failed to give the same and also was to give reproduceables of all the drawings but plaintiff did not give them and also refused to given cement consumption certificate which plaintiff was found to supply to the defendant-company. So it is stated that due to all these lapses of the plaintiff the defendant-company terminated the contract of the plaintiff vide letter dated March 29, 1985. The defendant-company filed suit in the District Court, Bhilwara claiming a sum of Rs. 1,00,864/- from the plaintiff and 18 per cent interest over the said amount. It was pleaded that plaintiff was not entitled to 2.30 per cent Commission but was entitled to only 1.15 per cent Commission in as much as the plaintiff was to receive his full fee on drawing estimates, supervision and certification of bills by contractors but the plaintiff did not do these things and thus the plaintiff was entitled to only 50 per cent of his fee but he had received fee at the rate of 2.30 per cent and therefore was liable to refund the over paid fee. Then the plea was taken that defendant-company may take to incur expert expenditure by appointing a new architect which may be amounting to Rs. 10,000/- which the defendants is entitled to deduct from the fee of the plaintiff.
    4. The plaintiff in the present suit has pleaded that plaintiff has been doing his job in accordance with the contract with fullest ability and he was put to excessive work and labour which was beyond the service agreement and plaintiff had to modify a number of their drawings due to certain lapses on the part of the defendant in as much as there was indecision on the part of the defendant on matters. The progress of the work was also hampered on account of the failure of the defendant to fulfil its contractual obligations with the contractors in providing necessary water supply, electrical power and raw materials in time. It was pleaded that some of the revised drawings were prepared by the plaintiff which were sent to the defendant in June 1984 and plaintiff was also asked to prepare a large number of alternatives and thus a large number of distinguished to be prepared for residential buildings, Gate Office, Compound Walls, main gates etc.; that these buildings also could not be constructed on account of financial difficulties of the defendants. It was also pleaded that plaintiff had prepared a drawing for over-head tank but defendant had sent a telegram that the said tank should have a capacity of one lac gallons instead of 50,000 gallons. So, according to the plaintiff in this suit the plaintiff had raised bills of which details are given in Para 17 of the plaint claiming the amount from the defendant for the work done by the plaintiff. It was also pleaded that plaintiff had prepared the final bill dated April 11, 1985 in the sum of Rs. 2,81,326/- which amount had not been paid by the defendant and thus the present suit has been filed for recovery of the said amount.
    5. The question which arises for decision is whether the matters in issue in both the suits are substantially the same or not. In the suit pending in the Court of District Judge, Bhilwara the question which had to be decided is whether the plaintiff had been negligent and careless in performing his job and defendant was right in cancelling the contract and whether the plaintiff had been overpaid his Commission and for deciding that question it is to be established by the defendant in that suit that plaintiff did not properly supervise the construction and granted extension to the contractor without any basis and that plaintiff did not submit the drawings as mentioned in the plaint and whether the contract of the plaintiff has been rightly terminated. In the present suit in this Court the same question would arise for decision as to whether the contract of the plaintiff has been rightly terminated by the defendant and whether the plaintiff has been negligent is performing his part of the contract. So, it cannot be said that the matters in issue in both the suits are different. The learned counsel for the plaintiff has vehemently argued that the present suit is based on the work already done by the plaintiff which has nothing to do with the issues arising in the suit pending in the Court of District Judge, Bhilwara. I do not agree. After all the plaintiff can succeed in this suit only if plaintiff is able to prove that he has been not negligent in performing his part of the contract and has, carried out the job in accordance with the contract. If it is shown that plaintiff has committed the breach of the contract then obviously the plaintiff may not be entitled to the amount claimed in this suit. Same questions arise for decision in the suit pending in the Court of District Judge, Bhilwara. In that suit also it is to be proved whether the plaintiff has been negligent in performing his part of the contract and his contract has been rightly rescinded by the defendant. Any decision given in the said suit on these points would obviously operate judicata in the present suit. The learned counsel for the plaintiff has cited Shah Wallace Co. Ltd. versus Bholanath Madanlal Sherwala and others; AIR 1975 Calcutta 411(1) Wherein it is held that the expressions “the matter in issue” in Section 10 has reference to the entire subject-matter in controversy between the parties and a mere identity of some of the issues in both the suits is not sufficient to attract Section 10 and unless the decision of the suit operates as resjudicata in the other suit it cannot be said that the matter in issue is directly and subsequentially the same in both the suits that is to say that the decision in one suit must non-suit the other suit before it can be said that the matter in both the suits is directly and substantially the same. In Sagar Shamsher Jung Bahadur Rana and another versus The Union of India and others; AIR 1979 Delhi 118(2) it was held that the words “matter in issue” in Section 10 means all disputed material questions in the subsequent suit which are directly and substaintially in question in the previous suit, the words “matter in issue” do not mean entire subject-matter in issue in the two suits. In C.L Tandon versus Prem Pal Singh Rawat: AIR 1978 Delhi 221(3) it was observed that it is not the requirement of the law that the matters or the issues involved in the two suits should be totally identical but they must be substantially the same. It was observed that where on a comparative study of the plaints in the Delhi suit an the Patna suit the issues involved in the two suits were found not substantially the same, the mere fact that one of the major issues is common to both the suits will not by itself serve the applicants purpose. Lastly in Adhish Chandra Sinha versus Hindustan Gas & Industrial Ltd. and another; AIR 1985 Calcutta 154(4) it was held that in order to attract Section 10, the subject-matter in issue in the subsequent suit i.e in the way the subject matter of two suits must be identical and merely because one of the questions in issue is the same as in the other suit would not make the subject-matter identical. There is no dispute about the propositions of law laid down in the aforesaid judgments. What has to be seen obviously is whether substantially the matters in issue in both the suits are identical or not to show that decision on such a point may operate as res judicata in the said suit. Examining the facts of the present case I find that the matters in issue in both the suits are substantially the same because the crucial question which would arise for decision in both the suits is whether the contract of the plaintiff has been rightly or wrongly terminated and once a finding is given on this crucial question the same would be res judicata in the subsequent suit. Moreover, it is also to be proved in both the suits whether the plaintiff has been negligent or not in performing his part of the contract and if the plaintiff is shown to be negligent in performing his part of the contract, obviously such a finding would go to the root of the case in the second suit. Hence, I hold that substantially the questions in issue arising in the two suits are same and therefore it is in the interest of justice that the present suit is stayed till the disposal of the suit pending in the Court of District Judge, Bhilwara. Hence, I allow this application and stay the suit under Section 10 C.P.C as prayed in the application.
    M.B.L
    January 23, 1989. Application allowed.
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    Comments

    Mehta Gandhi & Associates v. Shree Pipes Ltd.
    (Jan 24, 1989)