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HIGH COURT OF CALCUTTA
B. C. MITRA, S. K. MUKHERJEE
ARUN GENERAL INDUSTRIES LTD. - Appellant
Versus
RISHABH MANUFACTURERS PRIVATE LTD. - Respondent
Appeal 58 Of 1969 And Suit No. 2695 Of 1967
Decided On : SEPTEMBER 01, 1971
CIVIL PROCEDURE CODE, 1908 - Section 10 - Stay of suit - Same subject matter - Same parties - Matter in issue directly and substantially in issue in both suits - Identity of subject matter and field of controversy - Substantial identity of issues - Contract for transfer of leasehold interest - Allegations of false representations and assurances - Claim for balance of consideration - Suit for refund of money paid and damages - Held, matter in issue in both suits substantially the same - Stay of suit granted.
Fact of the Case:
The appellant and the respondent No. 7 entered into an agreement for transfer of leasehold interest. The appellant agreed to transfer its right, title and interest in the lease which it had previously obtained from the Government of Madhya Pradesh. The consideration for the transfer was Rs. 1,25,000/- out of which the respondent No. 7 was to pay Rs. 25,000/- at the time of the agreement, another Rs. 25,000/- within sixty days after the issue of no objection certificate by the Government of Madhya Pradesh and the balance of Rs. 75,000/-in several stated instalments. The respondent No. 7 paid to the appellant Rs. 25,000/- on August 10, 1964, and he also nominated the respondent No. 1 as his nominee in whose name the lease was to be transferred. The respondent No. 2 agreed to guarantee the due payment of the consideration money mentioned above. The appellant made over possession of the undertaking and the establishment to the respondent No. 1. The appellant received from the Madhya Pradesh Government the no objection certificate in 1964 for the transfer of the lease to the respondent No. 1. The respondent No. 1 did not pay the balance of consideration money namely Rs. 1 lac and it is contending that the no objection certificate has not been issued by the Madhya Pradesh Government. The appellant filed a suit in the Court of the District Judge, Jabalpur against the respondents Nos. 1, 2 and 7 claiming a permanent injunction prohibiting these respondents from working the plant known as "arun Board and Paper Mills" or any part thereof, for a decree for Rs. 1 lac with interest, a decree directing the said respondents to account for the profits received by them from the undertaking from the date of their taking possession, and in the alternative for a decree for payment of the balance consideration money with interest. The respondents Nos. 1 and 2 filed a suit in the Calcutta High Court against the appellant and the respondents Nos. 3, 4, 5 and 7. The claim in the Calcutta suit is that the appellant failed to fulfil its contract for transfer of the undertaking in terms of the agreement mentioned above, that the respondent No. 1 was always ready and willing to pay the balance of the consideration money, but the appellant failed to obtain the no objection certificate. It is alleged that for these reasons the consideration for the agreement for transfer wholly failed and the respondent No. 1 is entitled to refund of the sum of Rs. 25,000/- together with all benefits. There is a further claim of Rs. 3,33,690. 44 by the respondent No. 1 in electrification work, purchase of modern machinery, additions and alterations to the same and also to buildings, sheds and structures. A sum of Rs. 1,00,000/- per annum is claimed on account of loss of profit and Rupees 49,500/- is claimed as representing the amount which the respondent No. 1 is liable to pay to the State Electricity Board for supply of electrical energy. There are other prayers for declaration that the guarantee is now void and cancellation of the same and other incidental reliefs. The appellant made an application for stay of the Calcutta suit under Section 10 of the Civil Procedure Code, on the ground that the subject-matter in the earlier instituted Jabalpur suit is same and/or substantially the same as in the later instituted Calcutta suit, and that the matters in issue in the Jabalpur suit are directly and substantially in issue of the Calcutta suit.
Finding of the Court:
The court held that the matter in issue in both suits was substantially the same and that the stay of the Calcutta suit was granted.
Issues: Whether the matter in issue in both suits was substantially the same.
Ratio Decidendi: The court held that the matter in issue in both suits was substantially the same. The court observed that the field of controversy between the parties in the two suits was substantially the same, if not completely identical. The matter in issue in the two suits was the appellant's right to recover the balance of consideration and the respondents' claim to repudiate the contract and avoid liability under the same on the ground of fraudulent misrepresentation and false assurances.
Final Decision: The appeal was allowed. The judgment and order of the court below were set aside. There was an order for stay of Suit No. 2965 of 1965 of this Court (Rishabh Manufacturers Private Limited v. Arun General Industries Limited) and all proceedings thereunder till the disposal of the suit pending in the Jabalpur Court. The appellant was entitled to the costs of this appeal.
( 1 ) THE appellant carried on a business and undertaking at Umaria, Madhya Pradesh, known as Arun Board and Paper Mills. On August 6, 1964, the respondent No. 7 entered into an agreement with the appellant under the terms of which the latter agreed to transfer its right, title and interest in the lease which the appellant had previously obtained from the Government of Madhya Pradesh on April 21, 1961. The consideration for the transfer was Rs. 1,25,000/- out of which the respondent No. 7 was to pay Rs. 25,000/- at the time of the agreement, another Rs. 25,000/- within sixty days after the issue of no objection certificate by the Government of Madhya Pradesh and the balance of Rs. 75,000/-in several stated instalments. In terms of this agreement the respondent No. 7 paid to the appellant Rs. 25,000/- on August 10, 1964, and he also nominated the respondent No. 1 as his nominee in whose name the lease was to be transferred. The respondent No. 2 agreed to guarantee the due payment of the consideration money mentioned above. The appellant made over possession of the undertaking and the establishment to the respondent No. 1. According to the appellant it received from the Madhya Pradesh Government the no objection certificate in 1964 for the transfer of the lease to the respondent No. 1. The respondent No. 1 did not pay the balance of consideration money namely Rs. 1 lac and it is contending that the no objection certificate has not been issued by the Madhya Pradesh Government.
( 2 ) ON October 9, 1967, the appellant filed a suit in the Court of the District Judge, Jabalpur against the respondents Nos. 1, 2 and 7 claiming a permanent injunction prohibiting these respondents from working the plant known as "arun Board and Paper Mills" or any part thereof, for a decree for Rs. 1 lac with interest, a decree directing the said respondents to account for the profits received by them from the undertaking from the date of their taking possession, and in the alternative for a decree for payment of the balance consideration money with interest.
( 3 ) ON December 1, 1967, the respondents Nos. 1 and 2 filed a suit in this Court against the appellant and the respondents Nos. 3, 4, 5 and 7. The claim in the Calcutta suit is that the appellant failed to fulfil its contract for transfer of the undertaking in terms of the agreement mentioned above, that the respondent No. 1 was always ready and willing to pay the balance of the consideration money, but the appellant failed to obtain the no objection certificate. It is alleged that for these reasons the consideration for the agreement for transfer wholly failed and the respondent No. 1 is entitled to refund of the sum of Rs. 25,000/- together with all benefits. There is a further claim of Rs. 3,33,690. 44 by the respondent No. 1 in electrification work, purchase of modern machinery, additions and alterations to the same and also to buildings, sheds and structures. A sum of Rs. 1,00,000/- per annum is claimed on account of loss of profit and Rupees 49,500/- is claimed as representing the amount which the respondent No. 1 is liable to pay to the State Electricity Board for supply of electrical energy. There are other prayers for declaration that the guarantee is now void and cancellation of the same and other incidental reliefs. The writ of summons in this suit was served upon the appellant on or about January 17, 1968, and on February 23, 1968, the appellant made an application for stay of the Calcutta suit under Section 10 of the Civil Procedure Code, on the ground that the subject-matter in the earlier instituted Jabalpur suit is same and/or substantially the same as in the later instituted Calcutta suit, and that the matters in issue in the Jabalpur suit are directly and substantially in issue of the Calcutta suit. On this application an order was made on April 29, 1968, staying the Calcutta suit for two years from the date of the order and also directing that the stay order w
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