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  • Courtney-Terrell, C.J
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Smart Summary

Structured Summary of the Opinion (Civil Revision concerning Order under O.14 R.2 CPC)

Factual and Procedural Background

Two trading firms were involved in competing suits and related arbitral proceedings. The Calcutta firm, "Janki Das Subhkaran", sued the Cuttack firm, "Ganesh Das Kalu Ram", in the High Court at Calcutta alleging a series of contracts (relating to betel nuts and paddy), breaches and a money claim. The Cuttack firm promptly commenced a suit in the Subordinate Judge's Court at Cuttack, setting out its own version of the contractual relationship, alleging breaches by the Calcutta firm and claiming money.

In the Calcutta suit the Cuttack firm filed a written statement which, in paragraph 9, asserted that the Calcutta firm was liable to the Cuttack firm and stated that the Cuttack firm had already begun proceedings in Cuttack on that liability. The parties agreed to arbitration and two arbitrators, appointed under the court's aegis, issued an award that neither party owed anything to the other. The Calcutta High Court referred the award back to the arbitrators for clarity; the arbitrators reiterated that neither party was liable.

The Cuttack firm objected before the Calcutta High Court on the ground that the award purported to touch on matters in dispute in the Cuttack suit (outside the Calcutta High Court's jurisdiction). The Calcutta High Court's judge (referred to as McNair, J.) gave a judgment considered clear by the revisional court, but some language in that judgment—specifically a passage suggesting the arbitrators had not dealt with the Cuttack suit and that the Calcutta suit "be dismissed"—gave rise to difficulty in the Cuttack proceedings.

Notwithstanding the Calcutta proceedings, the arbitrators issued an award in the Cuttack suit dismissing it. The plaintiffs in Cuttack applied to the Subordinate Judge to set aside that award on grounds of inadequate hearing; the Subordinate Judge set the award aside, and on revision this Court declined to interfere with that setting-aside.

In the Cuttack suit, issues were framed, and the Calcutta firm applied to the Subordinate Judge that a fresh issue—"Is the suit barred by the principles of res judicata"—be tried as a preliminary issue under Order 14, Rule 2 CPC, on the basis of the Calcutta award and the Calcutta judgment. The Subordinate Judge allowed the additional issue but was disinclined to try it as a preliminary issue, expressing concern about piecemeal trial. The Calcutta firm sought revisional relief, prompting the present opinion.

Legal Issues Presented

  1. Whether the Subordinate Judge erred in refusing (or in declining) to order that the additional issue—"Is the suit barred by the principles of res judicata"—be tried preliminarily under Order 14, Rule 2 of the Civil Procedure Code (CPC).
  2. Whether the High Court in revision should interfere with the Subordinate Judge's exercise of discretion in declining to try that preliminary issue (i.e., the extent to which revisional jurisdiction should be exercised where a lower court refuses a preliminary hearing under O.14 R.2 CPC).
  3. Whether, on the materials (pleadings, the arbitral award, the Calcutta judgment and the circumstances of the Cuttack stay), the question of res judicata can be readily decided as a point of law without traversing the full evidence of the case.

Arguments of the Parties

Calcutta Firm (applicant for preliminary trial)

  • Requested that the additional issue, "Is the suit barred by the principles of res judicata," be tried as a preliminary issue under O.14 R.2 CPC before entering on the lengthy factual inquiry regarding the contract, breaches and damages.
  • Relied on the pleadings in both suits, the arbitrators' award and the Calcutta judgment as sufficient materials to enable the court to decide the res judicata point as a matter of law.

Cuttack Firm (opposite party / defendant on the application)

  • Opposed a preliminary trial, urging the general principle that cases should not be tried piecemeal and that piecemeal trial may produce remand and late evidence-taking to the plaintiff's detriment.
  • Counsel for the Cuttack firm supported the Subordinate Judge's initial reluctance by reference to authorities in which limitation or other points decided by a lower court adversely to a plaintiff resulted in remand and delayed evidence-taking.
  • Earlier, before the Calcutta High Court, the Cuttack firm had contended that the arbitrators' award improperly dealt with matters outside the Calcutta Court's jurisdiction and should not be made an order of that Court.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
1934 All 986(1) Authority stating that where a Court below summarily rejects a prayer to try a preliminary issue on a point of law (without expressing an opinion whether that point would dispose of the case), the revisional jurisdiction should not ordinarily interfere because the lower Court has exercised its discretion. The Court acknowledged this authority but distinguished its approach: it explained that this Court's revisional jurisdiction should be exercised where refusal to try the preliminary issue would produce grave hardship and where the lower Court's discretion was not exercised according to proper judicial principles.
16 PLT 311(2) Expresses the attitude of this Court regarding revisional jurisdiction in such cases—permitting intervention when refusal to try a preliminary issue would cause grave hardship and where discretion was not exercised judicially. The Court relied on this position to justify interference by revision in the present case and to direct that the res judicata issue be tried preliminarily.
Judgment of McNair, J. (Calcutta High Court) The judgment interpreted the arbitrators' award as having taken into account matters placed before them in both suits (looking into accounts and concluding neither party owed anything), and included language that, as interpreted by the Calcutta judge, the award dismissed the Calcutta suit but did not deal with the Cuttack suit. The revisional Court considered the learned Judge's observations (and the subsequent interpretation) and concluded that the Subordinate Judge in Cuttack had misunderstood that judgment. The Court noted that the judge's reliance on that judgment did not justify refusing to try the res judicata issue preliminarily.

Court's Reasoning and Analysis

The Court proceeded by first identifying the legal and factual matrix: both suits arose out of the same series of transactions and there were competing claims about the existence, nature and breaches of contract and cross-liability between the parties. The Court recognized the general judicial preference against piecemeal trials, but emphasized that this general rule must be balanced against the specific and "wholesome" provision of Order 14, Rule 2 of the CPC, which exists to avoid unnecessary and burdensome fact-finding when a point of law alone can dispose of the suit.

The Court analysed the Subordinate Judge's exercise of discretion and found two principal errors:

  • The Subordinate Judge had not properly formed or expressly recorded an opinion, based on reasonable materials, as O.14 R.2 requires. Where O.14 R.2 is invoked the judge's task is to form and express an opinion whether the case can be disposed of on the proposed issue of law alone.
  • The Subordinate Judge appeared to have misunderstood the Calcutta High Court judgment of McNair, J., and, in attempting to justify his original reluctance, relied on that misunderstanding rather than on a judicial assessment of the pleadings, the arbitrators' award and the surrounding circumstances.

The Court observed that the res judicata question in the Cuttack suit could be decided as a preliminary issue by reference to the pleadings in both suits, the arbitrators' award, the Calcutta judgment and the fact that the Cuttack suit had been stayed while arbitration proceeded. The Court concluded that deciding the res judicata point would likely render unnecessary a lengthy inquiry into the facts and that the lower court had no proper reason, on the materials before it, to refuse a preliminary trial.

Addressing whether revision was an appropriate remedy, the Court considered the contrasting authority from the Allahabad High Court (1934 All 986(1)) which favored non-interference and contrasted it with this Court's established approach (16 PLT 311(2)) that intervention by revision is warranted where refusal to try a preliminary issue would cause grave hardship or where the discretion has not been exercised according to judicial principles. Applying that approach, the Court found the present circumstances justified revisional interference.

Holding and Implications

Core Ruling: Application allowed; the additional issue "Is the suit barred by the principles of res judicata" is to be tried preliminarily before the other issues in the Cuttack suit.

Direct consequences for the parties:

  • The Subordinate Court at Cuttack is directed to try the additional issue—whether the suit is barred by res judicata—as a preliminary issue before proceeding to the merits (i.e., before entering into the longer factual inquiry about the nature of the contract, breaches and damages).
  • The Court assessed costs of the application in favour of the applicant at three gold mohurs.

Broader implications (as discussed by the Court):

  • The decision reiterates that Order 14, Rule 2 CPC imposes a mandatory duty on the court to form and express an opinion on whether a case can be disposed of on a point of law alone, and that discretion to refuse a preliminary trial must be exercised judicially and on reasonable materials.
  • The revisional jurisdiction of this Court may be invoked to correct a lower court's refusal to try a preliminary issue where that refusal is not founded on proper judicial principles and where its consequences may cause grave hardship; thus such refusals are not invariably immune from revision.

The opinion does not purport to set out or establish any new rule of law beyond the immediate direction and the statements of principle summarized above.

Decision: Application allowed.

Costs: three gold mohurs.

Show full summary ...

    Janki Das v. Kalu Ram

    1. This is a petition for the civil revision of an order by the Subordinate Judge of Cuttack declining to act under O. 14, R. 2 of the CPC, and to direct the preliminary hearing of a certain issue in a suit. The facts which have given rise to the suit and the matter now before me may be shortly stated as follows: A firm called ‘Janki Das Subhkaran’ carries on business in Calcutta and another firm called ‘Ganesh Das Kalu Ram’ carries on business in Cuttack. They had a series of dealings in merchandise between them. The Calcutta firm sued the Cuttack firm in the High Court in Calcutta alleging that a certain series of contracts had been entered into between them and the Cuttack firm in relation to betel nuts and paddy, that the defendants had broken the contract and that the plaintiffs bad a claim against the defendants for a sum of money. The defendants very shortly afterwards began a suit in the Court of the Subordinate Judge at Cuttack against the Calcutta firm setting forth that they had been in business relationship with the Calcutta firm, alleging the Cuttack firm's version of the nature of the contract, alleging breaches by the Calcutta firm of the alleged contract, and claiming from the Calcutta firm payment of a sum of money. The Cuttack firm then put in a written statement in answer to the suit in Calcutta against them by the Calcutta firm and in para. 9 of that written statement the defendants alleged that far from it being the case that the Cuttack firm was indebted to the Calcutta firm for the alleged breaches of the alleged contract, the contract was of a very different nature, that the plaintiffs (the Calcutta firm) had broken the contract and there was a liability on the part of the Calcutta firm to the Cuttack firm, further stating specifically that in respect of that liability of the Calcutta firm to the Cuttack firm the latter had already begun a suit in the Subordinate Judge's Court at Cuttack against the Calcutta firm.

    2. It is clear therefore that the issues in the Calcutta case which would ultimately have to be settled between the parties were as to what was the nature if any, of the contract of dealing between the plaintiffs and the defendants of the suit, whether there had been breaches of the alleged contract, whether the defendant-firm owed the plaintiff-firm money or whether it was just the other way. It is true that in the suit in Calcutta the Cuttack firm did not raise a formal counterclaim in respect of the indebtedness which they alleged had been incurred by the Calcutta firm, but they set up that indebtedness as a defence to the suit and said that the same matter of indebtedness was the subject of the suit by the Cuttack firm against the Calcutta firm in the Duttack Court. The parties were brought by mutual friends into a state of mind that they thought it might be well to refer the matter to arbitration and accordingly under the aegis of the Court two arbitrators were appointed to enter into the merits of the dispute, who stated in their award that neither party owed anything to the other. It was about the time of entering into this arbitration that an application was made in the Cuttack Court to stay the further hearing of the suit brought by the Cuttack firm on the ground that the matter was to receive the attention of the arbitrators, and an order was made on that application staying the further hearing of the suit. The form of the award made by the arbitrators was the subject of some discussion before the Court and the High Court at Calcutta referred the award back to the arbitrators for further consideration with the order that the award might be made more explicit. The arbitrators proceeded to comply with that order and reiterated the statement that in respect of the respective claims by each party against the other, neither was under any liability to the other. The Cuttack firm then objected to the award before the learned Judge of the High Court in Calcutta on the ground that the award purported to deal with matters in dispute other than the litigation before that Court and they said that the award should not be made an order of Court because it purported to deal with the Cuttack suit which was outside the jurisdiction of the Calcutta High Court which had no power to dismiss a suit brought in Cuttack. The learned Judge dealt with that objection and delivered a judgment which I think is perfectly clear, but which seems to have been misunderstood by the learned Subordinate Judge in the Court below.

    3. The learned Judge stated that the written statement in the Calcutta suit set forth the matter of the alleged liability of the plaintiffs to the defendants and the version of the contract as put forward by the defendants as a basis for their allegation of the plaintiffs' liability, and that matter, viz., the question of the alleged liability of the plaintiffs to the defendants, was, it is true, made the subject of the award but, on the other hand, the arbitrators did not purport in form to deal with the suit that was brought in Cuttack. I may quote a few sentences of the learned Judge's observations which to my mind put the meaning of his order beyond dispute. He Bays:

    It seems to me that what they have done is to say that they have taken into account all the matters that have been placed before them in both suits. The matters in dispute all arose out of the same series of transactions and it is urged on behalf of the Calcutta firm who are opposing this application that it is essential in coming to a conclusion in either this suit or the other to take an account of the various transactions between the parties. All that the arbitrators have done, they say, is to take an account, and in that account they are bound to know what claims have been made against either party, what are the debits and what are the credits; on looking into that account the arbitrators have come to the conclusion that neither party should have anything debited or credited against it.

    4. The difficulty in the Cuttack suit has however arisen by reason of the ultimate sentences in the learned Judge's decision. That passage runs:

    They have only purported in their award to deal with matters which have come before them in examining the various transactions between the parties and their award is only as I interpret it to the effect that this suit, namely the Calcutta Suit No. 15 of 1982, be dismissed and it must be concluded that they have not dealt with the claim in the Cuttack suit which no doubt they will deal with separately.

    5. Now, as a matter of fact, the arbitrators did issue an award in the Cuttack suit that the suit must be dismissed. An application was made to the Subordinate Judge at Cuttack to set aside the award. This application was made by the plaintiffs (the Cuttack firm) alleging that the award was made without hearing adequately the applicants. The Subordinate Judge acceded to that request and set aside the award and this Court on an application under revision declined to interfere with the decision. Now in the Cuttack suit the issues had been framed and the Calcutta firm (the defendants) made an application to the learned Subordinate Judge that he should first decide the issue as to whether or not the matters in dispute in the suit have already been a matter of res judicata in view of the award of the arbitrators in the Calcutta suit and the judgment of McNair, J., making that award an order of the Court. The learned Subordinate Judge allowed a fresh issue to be added to the effect “Is the suit barred by the principles of res judicata,” but was disinclined to have this tried as a preliminary issue. The Calcutta firm, however, requested him to put this down as a preliminary issue and have it decided before entering upon the somewhat lengthy inquiry as to the nature of the contract between the parties and whether there had been a breach or not of such contract and whether the plaintiffs had suffered the alleged or any damage. When the matter came before him on the first occasion the learned Judge contented himself with the statement that it was undesirable to try cases piecemeal as such a course might result in a remand and the ultimate taking of evidence at a very much later stage; and the learned Advocate on behalf of the opposite party (the Cuttack firm) has endeavoured to support that decision by the general proposition that cases should not be tried piecemeal and has referred to that series of authorities in which limitation points have sometimes been, decided by a lower Court to the disadvantage of the plaintiff resulting in remand by the High Court and the taking of evidence long after, and to the statements of learned Judges as to the undesirable nature of this practice.

    6. The fact is that some harmony has to be observed between the general principle that it is undesirable to try cases piecemeal and the specific and wholesome provision of O. 14, R. 2 of the CPC, which is for the purpose of preventing the injustice of a party being able to force his opponent to go at great length into evidence when the simple decision on a point of law might render the investigation of the facts unnecessary. The learned Subordinate Judge had the matter of this application before him on a second occasion and he then delivered an extremely lengthy judgment frankly stating that his original decision was couched in terms which were inadequate to justify the order and endeavouring to justify the order by reference to the judgment of McNair, J., which, in my opinion, he misunderstood. He has nowhere definitely expressed the opinion that the case could not be disposed of on the issue of law only nor is there any ground in this case for supposing that the question of res judicata cannot be easily decided as a preliminary issue. It is only necessary for the decision of that question to look at the pleadings in the Cuttack case and in the Calcutta case, to examine the award of the arbitrators, to refer to the judgment of McNair, J., and to the circum; stances in which the Cuttack case was stayed and then to arrive at a decision as to whether or not the matter in issue is or is not a matter of res judicata by reason of the earlier Calcutta decision.

    7. A further point arises as to whether or not this is a matter which can properly be dealt with by this Court in revision and my attention has been called to a decision of the Allahabad High Court in 1934 All 986(1). In that case the learned Chief Justice and Rachhpal, J., laid down that even where the Court below summarily rejected the prayer to try a preliminary issue on a point of law and in its summary rejection had not even expressed any opinion whether the question of law would be sufficient to dispose of the case that the jurisdiction had been exercised and should not be interfered with by the High Court. No doubt the learned Judges of the Allahabad High Court have been very sparing in their exercise of revisional jurisdiction. The attitude of this Court, however, is set forth in the case of 16 PLT 311(2). To refuse to exercise the revisional jurisdiction in a case of this kind might give rise to the gravest hardship. The party injured has no right of appeal and a refusal to exercise jurisdiction would mean that the Subordinate Judge's unfettered decision might put the injured party to an enormous expense in going into issues which were unnecessary on the mere contention that the ultimate decision would be open to appeal. Interlocutory orders are certainly matters of discretion of the lower Court, but that discretion must be exercised according to the proper principle of justice and with regard to the proper interpretation of the rules in question, and I conceive it the duty of this Court to interfere when the discretion has not been exercised according to judicial principles. O. 14, R. 2 of the Code is mandatory; the only thing left open to the Court is to form and express an opinion of whether the case can be disposed of on the proposed issue of law only, but the opinion, even if expressed, must be expressed upon some reasonable, materials. In this case first of all the Court has not properly expressed its opinion, and secondly to express an opinion that the case cannot be disposed of on the question of law would be on the materials erroneous.

    8. I direct therefore that the additional issue in the case, “Is the suit barred by the principles of res judicata,” be tried preliminary to the other issues before the Court. The application is therefore allowed.

    9. As the matter was of some importance and, the parties were heard at length I assess the cost at three gold mohurs.

    R.M/R.K

    10. Application allowed.

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    Comments

    Janki Das v. Kalu Ram
    (Jan 20, 1936)