1988 Supreme(Cal) 207

High Court Of Calcutta
R. N. PYNE, U. C. Banerjee
STATE BANK OF INDIA - Appellant
Versus
MOHURAGANG GULMA TEA ESTATE - Respondent
A. S.  16  Of  1988
Decided On : 05/17/1988

An originating summons under Chapter XIII of the Original Side Rules, Calcutta High Court, is not maintainable in a case where the dispute involves issues of fact that cannot be conveniently resolved through affidavit evidence.

Headnote:

ORIGINATING SUMMONS - MAINTAINABILITY - CHAPTER XIII OF ORIGINAL SIDE RULES, CALCUTTA HIGH COURT - CONSTRUCTION AND INTERPRETATION OF INSTRUMENTS - QUESTIONS OF FACT - JURISDICTION - INTERLOCUTORY RELIEF - INJUNCTION - BANK GUARANTEES - INTEREST ON INTEREST - TRADE USAGE - BANKER'S RIGHT TO CHARGE INTEREST.

Fact of the Case:

The plaintiff entered into an agreement with a foreign seller for the purchase of a second-hand motor vessel, and the plaintiff deposited 10% of the purchase price with the defendant bank in the joint names of the plaintiff and the foreign seller. For payment of the balance 90% of the purchase price payable to the foreign seller, the plaintiff and the defendant entered into an agreement in writing, dated 24th March 1977, whereby the defendant agreed to advance to the plaintiff the said amount from its Nassau Branch on the terms and conditions mentioned therein. The plaintiff caused a guarantee to be furnished in favor of the defendant. The plaintiff also created a second statutory mortgage of the said vessel in favor of the appellant subject to the first mortgage in favor of the United Industrial Bank Ltd. The defendant thereafter duly disbursed and paid to the foreign seller U.S. $ 373500 in terms of the agreement noted above. The plaintiff arranged for modification to the vessel so as to make it suitable for plying in the tropical conditions and in India-Gulf route by reason of which required a further advance to the extent of U.S. $ 89,051.40 therefore which the appellant agreed to advance and in fact disbursed and paid the same to the plaintiff on terms and conditions contained in a further agreement in writing dated December 13, 1978. The plaintiff caused a guarantee to be furnished in favor of the appellant. According to the plaintiff, the latter duly repaid the entire amount of the principal and interest in terms of the above noted two agreements and nothing remained due and payable, indeed it was contended that the plaintiff had over paid the appellant to the extent of U.S. $11410.78 and requested the appellant to release the two guarantees being No. 38/42 and 39/145 furnished by the United Industrial Bank to release the said vessel M.V. Gulma from the mortgage created by the plaintiff as noted above. The defendant on the contrary, however, claimed a further sum of U.S. $ 60,488.22 as interest by reason of non-payment on due dates. The plaintiff stated that the following questions arise for determination by this Court under Chapter XIII of the rules of the Original Side: Whether in the facts and circumstances of the case and upon the true construction of the agreements, dated March 24, 1977 and December 13, 1978 the plaintiff is entitled to the release and discharge of the guarantees being Nos. 38/42 and 39/145 respectively, dated March 24, 1917 and December 13, 1978 issued by the defendant No. 2 in favor of the defendant No. 1. redemption of the second mortgage in respect of the motor vessel "gulma". Whether upon true construction of the said agreements the defendant No. 1 is entitled to claim interest upon interest from the plaintiff for the delayed payment, if any, of the installments payable thereunder. Whether upon construction of the said agreements payment by the plaintiff to the defendant No. 1 at its said designated office amounted to payment in terms thereof. Whether upon the true construction of the said agreements the defendant No. 1 is entitled to claim interest for delayed remittance by it from its said designated office to its said Nassau branch and by reason of delay by its said branch to credit the account of the plaintiff even after the receipt of the said amounts. To what relief the plaintiff is entitled. The plaintiff also prayed for an order of injunction as an interlocutory relief restraining the appellant from enforcing the two Bank guarantees bearing No. 38/42 and 39/145, dated March 24, 1977 and December 13, 1978 respectively furnished by the United Industrial Bank in favor of the appellant.

Finding of the Court:

The Court held that the originating summons was not maintainable in the present case as the dispute could not be adjudicated only upon interpretation and construction of the deed of mortgage or the deed of guarantee. The plea of trade usage and Banker's right to charge interest on interest which are obviously matters of fact ought to be dealt with, and the English decisions cited by Mr. Bachawat in that respect, do not lend any assistance. The view expressed above find support from Daniel's Chancery Practice (8th Edition Vol. I) wherein it has been categorically stated that the object of the order is to enable the Court to decide question of construction where the decision will settle the litigation between the parties not questions which if decided one way only will do so. It has been further stated that if no question of construction arises, the Court even if it has the jurisdiction, will not give partial relief by making of declaration of rights of the person interested.

Issues: 1. Whether an originating summons under Chapter XIII of the Original Side Rules, Calcutta High Court, is maintainable in a case where the dispute cannot be adjudicated only upon interpretation and construction of the deed of mortgage or the deed of guarantee, but also involves issues of fact such as trade usage and Banker's right to charge interest on interest? 2. Whether the Court has jurisdiction to grant an interlocutory injunction in an originating summons proceeding under Chapter XIII of the Original Side Rules, Calcutta High Court?

Ratio Decidendi: 1. An originating summons under Chapter XIII of the Original Side Rules, Calcutta High Court, is not maintainable in a case where the dispute cannot be adjudicated only upon interpretation and construction of the deed of mortgage or the deed of guarantee, but also involves issues of fact such as trade usage and Banker's right to charge interest on interest. 2. The Court does not have jurisdiction to grant an interlocutory injunction in an originating summons proceeding under Chapter XIII of the Original Side Rules, Calcutta High Court, where the dispute involves issues of fact that cannot be conveniently resolved through affidavit evidence.

Final Decision: The appeal was allowed, the order of the learned trial Judge was set aside and quashed, and the originating summons was dismissed. The plaintiff/respondent was granted liberty to agitate the issues in a properly constituted suit, and the operation of the order was stayed for a period of two weeks from the date of reopening of the Court after summer holidays.