Important Judgment on CPC Part 3

Important Judgment on CPC Part 3

Important Judgment on CPC Part 3

REJECTION OF PLAINT (O.VII, RULE 11)

  • Bhanu Kumar Jain v. Archana Kumar, AIR 2005 SC 626- IMPORTANT JUDGMENTS ON CPC

Issue- The remedies available to a defendant in the event of an ex parte decree being passed against him in terms of O9 Rule 13 and the extent and limitation thereof is in question.

Observations: When an application under O.9 Rule 13 is dismissed the defendant can only avail a remedy available there against viz. to prefer an appeal in terms of O.43 Rule 1 of the Code. Once such an appeal dismissed, the appellant cannot raise the same contention in the first appeal. If it be held that such a contention can be raised both in the first appeal as also in the proceedings arising from an application under O 9 Rule 13, it may lead to conflict of decisions which is not contemplated in law.

Decision- The impugned order is set aside and the case remitted to the High Court for consideration of the case of the parties on merit of the matter.

SUMMARY PROCEDURE (O.37, RULES 1-4)

  • Santosh Kumar v. Bhai Mool Singh, AIR 1958 SC 321- 37

Issue-The issue in this case related to leave to defend the suit under O.37, R.3, C.P.C.

Observations: The test is to see whether the defence raises a real issue and not a sham one, if the facts allegedly by the defendants are established, there would be a good or even a plausible defence on those facts.

  • M/s Mechalec Engineers and Manufatu rers v. Basic Equipmen t Corporati on, AIR 1977 SC 577 “Priciples were laid down in this case for granting leave to defend. 37

Facts of the case- The Plaintiff, a partnership firm, filed a suit for the recovery of certain amount on the strength of a cheque drawn by the defendant which in presentation, was dishonoured. The suit was filed under O.37 so that the defendant had to apply for leave to defend. This leave was granted unconditionally by the trial court. However the HC found that defences were not bona fide and thus set aside the order of the trial court. Now matter came before SC.

Decision- The SC held that the order passed by the trial court was correct and the high court wrongly interfered with it. In other words, an unconditional leave to defend to be granted to the defendant.

  • ONGC Ltd. V. State Bank of India, AIR 2000 SC 2548- 37

Facts of the case-The appellant entered into a contract with a consortium of M/s. Saipem SPA/Snamprogetti of Italy for construction of a system of undersea pipelines. The contract provided for liquidated damages if the contractor failed to complete the entire works or any part thereof before the respective scheduled completion date. The contractor was obliged to furnish a ‘bank guarantee to cover liquidated damages.’ In case the contracture fails to provide the guarantee for liquidated damages within the time stipulated therein, the appellants shall be entitled to encash the performance guarantee. In compliance with this requirement, the contractor had furnished a bank guarantee from the State Bank of India (SBI), Overseas Branch, Bombay, to cover the liquidated damages claim. Contractor as well as the Bank not having honoured the bank guarantee, the appellant asked the respondent bank to verdict the said guarantee along with the interest. On Dec 3, 1993 the respondent Bank stated that they have issued the guarantee in favour of ONGC against the ‘counter guarantee’ of the Italian Bank Credito, Milan and the contractor obtained an order of injunction from an Italian Court restraining Credito italiano from making any payment to the respondent Bank under the counter guarantee. The high court by order granted unconditional leave to defend the suit.

Issue- Whether leave to defend unconditionally was to be granted to the defendant or not?

Observations: In the absence of a plea relating to fraud, much less of a finding thereto, we find that the High Court could not have stated that the defence raised by the respondent Bank on the grounds set forth earlier is sufficient to hold that unconditional leave should be granted to defend the suit.

Decision- When, in fact, there is no defence for suit filed, merely to rely upon an injunction granted or obtained in their favour does not carry the case of the respondent Bank any further. Therefore, in our view, the High Court plainly erred in having granted leave to                defend unconditionally.

TEMPORARY INJUNCTIONS AND INTERLOCUTOR RY ORDERS (O.39, RULES 1-5)
  • Manohar Lal v. Seth Hira Lal AIR 1962 SC 527- 39

Issue- Whether the Court could not exercise its inherent powers when there were specific provisions in the C.P.C for issuance of injunctions viz. Sec. 94 and Order 39.

Observations: The SC observed as follows:

1) It is well settled that the provisions of code are not exhaustive.

2) No party has a right to insist on the court’s exercising inherent jurisdiction and the court exercises it only when it consider it absolutely necessary for the ends of justice. The powers are to be exercised in exceptional circumstances for which the code lays down no procedure.

3) There is no such expression in Sec.94 which expressly prohibits the issue of temporary injunction in circumstances not covered by O.39.

4) S.151 does not control or limit the inherent power of the court.

Decision- The SC held that it can grant temporary injunction in circumstances not covered under O.39.

  • Dalpat Kaur v. Prahlad Singh, AIR 1993 SC 276- 39

Facts of the case-The appellant had entered into an agreement with the respondent to purchase the house of respondent and also paid some advance but he could not get the possession. Then appellant filed a suit for specific performance which was decreed ex-parte and sale deed was executed by the court. Subsequently, respondent’s wife filed a suit against appellant and sought temporary injunction against dispossession. This was rejected by the court.

This order of lower court was confirmed by HC. Then appellant filed an execution petition which was allowed by the court despite opposition by respondent. Then, sons of petitioner filed suit against this as they called this property as joint property and asked for division of the property and requested for interim injunction, which was rejected by both lower court and HC. Now the respondent filed fourth suit stating that appellant was his counsel and he had played fraud with him and sought interim injunction from dispossession. The trial court rejected the application but HC allowed the application and granted interim injunction restraining the appellants from taking possession. So, this appeal in SC.

Issue-Whether HC was right in granting ad- interim injunction to the respondent ? Order 39 rule 1(c) –Injunction may be granted where in a suit, it is proved by the affidavit or otherwise that the defendant threatens to dispossess the plaintiff or otherwise cause injury to plaintiff in relation to any property in the suit.

Observations: The SC observed that grant of injunction is a discretionary relief. One has to satisfy the court for getting it on following points:-

(1)There is serious disputed question to be tried in the suit and that on facts before the court, there is probability of his being entitled to the relief asked for by the plaintiff/defendant.

(2)Court’s interference is necessary to protect the party from the species of injury or damage would ensue before the legal rights are established at trial

(3)That the comparative hardship/mischief/inconvenienc e which is likely to occur will be more if injunction is not granted rather than on being granted. Therefore, the plaintiff will have to prove that there is a prima-facie case in his favour which needs adjudication at trial for getting injunction. But court will have to be made satisfied that non interference by the court will result in irreparable injury to the party seeking relief and there is no other way remedy available to the party except one to grant injunction and he needs protection of the court against dispossession. Besides, Prima facie case is not to confused with prima-facie title, which has to be established on evidence in trial.

The irreparable loss, that is likely to be caused to be such that it can’t be compensated by way of damages. The other condition that is to be satisfied that “the balance of convenience” must be in favour of granting injunction. The court must exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties. The phrases “prima-facie case”, “balance of convenience” and “irreparable loss” are words of substantial width and elasticity to meet the various situations and circumstances but here discretion is to be exercised very judiciously to meet the ends of justice. Injunction can be granted If it’s shown that fraud has been perpetrated even if the matter has been decreed otherwise also but before granting the injunction court will have to be very circumspect and must look to the conduct of the party and whether plaintiff can be adequately compensated if injunction is refused.

Decision- However, SC observed that HC without averting to any material evidence like any act of damage, any alienation made etc held that balance of convenience lies in favour of granting injunction , was totally wrong. So appeal was allowed and order of HC was set aside and that of trial court was confirmed.

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Also Read:IMPORTANT JUDGMENTS ON CPC PART-2

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Bhupendra Sharma

"Bhupendra Sharma is a practicing lawyer at Rajasthan High Court who completed his graduation from the University of Rajasthan. He has pursued his LLM from Acharya Nagarjuna University. He is also a degree holder in Master of Education and Master of Business Administration."