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PETITIONER: INDIAN OVERSEAS BANK, MADRAS

       Vs.

RESPONDENT: CHEMICAL CONSTRUCTION COMPANY & ORS.

DATE OF JUDGMENT03/05/1979

BENCH: SARKARIA, RANJIT SINGH BENCH: SARKARIA, RANJIT SINGH DESAI, D.A.

CITATION:  1979 AIR 1514            1979 SCR  (3) 920  1979 SCC  (4) 358

ACT:      Code of Civil Procedure, 1908-S. 25 as amended in 1976- Scope of-Jurisdiction  of Supreme  Court to  transfer a suit from one court to another-Explained.

HEADNOTE:      The first  respondent entered  into a contract with the second respondent  for the  erection of a factory in a place named Seoni  in Madhya  Pradesh. Under  the Scheme  for  re- discounting of  bills, the  first respondent discounted with its Banker (petitioner), the Bills of Exchange in respect of sale of  machinery. When  the second  respondent  failed  to honour the  Bills, the  drawees of the Bills filed a suit in the District  Court, Seoni  against the  petitioner Bank and others seeking  certain reliefs.  The petitioner-Bank on the other hand filed a suit in the Madras High Court against the first respondent  and others.  In a  petition under s. 25 of the Code  of Civil  Procedure, 1908 (as amended in 1976) the petitioner sought transfer of the suit filed in Seoni to the file of the Madras High Court.      Allowing the petition, ^      HELD: 1.  Section 25  of the Code of Civil Procedure as amended in  1976 empowers  the Supreme  Court to direct that any suit,  appeal or  other proceeding be transferred from a High Court or other Civil Court in one State to a High Court or other  Civil Court in any other State, if it is satisfied that such  an order  is expedient  in the  ends of  justice. [925A]      2.  The   principle  governing  the  general  power  of transfer and  withdrawal under s. 24 of the Code is that the plaintiff is  the dominus  litis and  as  such  entitled  to institute his  suit in  any forum  which the law allows him. The Court  should not  lightly change  that forum and compel him to  go to  another Court  with  consequent  increase  in inconvenience and  expense of prosecuting his suit. The mere balance of  convenience in  favour of proceedings in another Court albeit  a material  consideration, may not always be a true  criterion   justifying  the  transfer.  The  power  of transfer of  a civil  proceeding to  another Court conferred under the  new Section 25 C.P.C. on the Supreme Court is far wider and  so is  the amplitude of the expression "expedient

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in the  interests of  justice"  which  furnishes  a  general guideline for the exercise of the power. [925E-F]      3. One  of  the  broad  propositions  as  to  what  may constitute a  ground for  transfer of  a civil suit from one court to  another is  that where  two suits  raising  common questions of  facts and  law between parties, common to both the suits  are  pending  in  two  different  Courts,  it  is generally in  the interests  of justice  to transfer  one of these suits to the other forum to be tried by the same Court with consequent  avoidance of  multiplicity in  the trial of the same  issues  and  the  risk  of  conflicting  decisions thereon. [925H] 921      4. In  the instant  case, a  comparative study  of  the issues framed  in the  two suits  shows that  the  principal common question  arising in  each of  these suits is whether the second  respondent and  the fourth respondent were bound to make  payments. The receiving party in both the suits was the  petitioner.   According  to   the  allegations  in  the petition, the  Bills of  Exchange were  drawn in  Madras  an ddiscounted  in   Madras  and  also  rediscounted  with  the Industrial Bank  and payments  were to  be made expressly in Madras. Both  the parties  were the  same and  the  material issues in  both of  them were  common or inter-dependent. If the two  suits are  allowed to  continue in  their  original forums, there  is a  possibility of  conflicting findings on the question  of liability.  The evidence  in both the suits would mostly  be common  and is locally available at Madras. Transfer of  the Seoni  suit to  the Madras  High Court will avoid multiplicity  in the  Trial of  the common  issues and obviate  the   risk  of   conflicting  decisions.   In   the circumstances it  is manifestly  expedient, in the interests of justice that both the suits should be tried by the Madras High Court on its original side by the same Judge or Judges. [926C-F]      5.  The   second  respondent’s  apprehension  that  the transfer of the Seoni suit to Madras would cause an increase in expenses  of litigation  and inconvenience to them is not well founded.  Both the  suits are  more or less at the same stage. Common evidence is to be found locally in Madras. The fourth respondents who were the guarantors, had no objection to the  transfe of  the Seoni suit to Madras. The balance of convenience is  also in  favour  of  the  Seoni  suit  being transferred to  the Madras  High Court  which is  a superior forum than the District Court at Seoni. [927C-D]

JUDGMENT:      ORIGINAL JURISDICTION  : Transfer  Petition No.  26  of 1978.      S. T.  Desai,  K.  Jayaram  and  K.  Ramkumar  for  the Petitioner.      T.  S.  Vishwanatha  Rao  and  A.  T.  M.  Sampath  for Respondent No. 1      B. D. Bal and Mrs. Jayashree Wad for Respondent No. 2      The Judgment of the Court was delivered by      SARKARIA, J.-This is a petition under Section 25 of the Civil Procedure Code 1908, as amended by Act 104 of 1976 for transfer of  suit IB  of 1972  instituted in  the  Court  of District  Judge,   Senoi,  Madhya   Pradesh  by  the  second respondent herein, against the petitioner and respondents 1, 3 &  4 to  the file  of the  High Court  of Madras (Original Side). The facts material to this petition are as under      The  first   respondent,  M/s.   Chemical  Construction

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Company, is  a registered  partnership having its registered office at No. 14, Milestone Mathura Road, Faridabad, Haryana and Head Offise at Madras. It is represented by its partners Shri T.  V. P.  Nambiar, Shri  O. P.  Nambiar,  Shri  O.  V. Nambiar, Smt. Leela Nambiar and Smt. Nirmala Nambiar. 922      The second respondent, Rajadhiraj Industries Pvt. Ltd., has its  registered office  at Seoni,  Madhya Pradesh. It is represented by  its Managing  Director,  Shri  Harishchandra Singhania.      The third  respondent, Industrial  Development Bank  of India Ltd.  has its  registered office  at Bombay and branch offices at other places, including one at Madras.      The  fourth  respondent  is  Madhya  Pradesh  Financial Corporation,  incorporated   under   the   State   Financial Corporation Act,  1957,  having  its  registered  office  in Indore, Madhya Pradesh.      The first  respondent  (manufacturer)  entered  into  a contract on  November 11, 1969 with the second respondent to erect a plant for manufacture of hydrogenated vegetable oil. There was  a supplementary agreement between them on January 24, 1970.  The cost  of the  plant was  Rs. 25,00,000/-. The third respondent  (for short  called the  Industrial  Bank), agreed to  finance the manufacturer (first respondent) under a Scheme called the "Bills Rediscounting Scheme". Under that Scheme the  manufacturer would obtain in convenient mutually agreed instalments  the  value  of  the  machinery  supplied within a  few days  of its  delivery by discounting with his banker the  bills of exchange arising out of the sale of the machinery, either  before or  after acceptance by the second respondent    (purchaser).     The    bankers     of     the manufacturer/seller would  take up  the discounted bills and get them rediscounted by the Industrial Bank, prior to their due dates, thus reimbursing themselves with the amounts paid to the manufacturer. The discounting bank would be liable to pay to  the Industrial  Bank the  amounts under the bills on their due dates.      The discounting bank would normally requires the second respondent to  accept the  bills/promissory notes, after the payment had  been guaranteed  on his behalf by its banker or the fourth respondent (the State Financial Corporation) etc.      The petitioners,  it is  alleged, acted  as discounting bank under  the Scheme.  The first respondent and the second respondent took  advantage of the Scheme, and pursuant to an agreement for  supply of  materials between  the  first  and second  respondents,   the  fourth  respondent  executed  an irrevocable  guarantee   on   November   3,   1970   and   a supplementary guarantee  on February  18, 1971  in favour of the petitioner on behalf of second respondent.      It  is   further  alleged  that  in  pursuance  of  the independent agreement, the petitioner had discounted a total of 9  Usance Bills to the extent of Rs. 9.42 lacs which were drawn by the first respondent and 923 accepted by  the second respondent. The first eight of these bills were  rediscounted by  the petitioner  with the  third respondent (the Industrial Bank) for a total sum of Rs. 6.99 lacs, which  amount was  subsequently paid over to the third respondent by  the petitioner  but none of these eight bills was paid  by the second respondent to the petitioners on the due dates.  The remaining  bill for  Rs. 2,43,376/-  was not rediscounted by the petitioner with the third respondent.      In September  1972, the  drawees of  the bills  (second respondent) filed  suit No.  IB/1972 in  the District Court, Seoni against  the etitioner  and the  respondents 1, 3 & 4,

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seeking a decree for (a) one lac of rupees against the first respondent on account of damages for breach of contract; (b) directing  the   petitioners  (Indian   Overseas  Bank)  and respondents 1  & 3  jointly and  severally to deliver up the guarantee deeds dated November 3, 1970 and February 18, 1971 and the  9 Usance  Bills and for cancellation of the same by the  Court;   (c)  permanent   injunction  restraining   the petitioner Bank  and respondents  1 &  3 from  enforcing the aforesaid guarantee  and the 9 Usance Bills; (d) permanently restraining   the   guarantor   (fourth   respondent)   from discharging any  liability under  the aforesaid  guarantees, dated November 3, 1970 and February 18, 1971. It was alleged in the  plaint by  the second  respondent that acceptance of the bills  was vitiated  by false representation made by the agent of  the petitioner  Bank. The  defendants in the Seoni suit  (petitioner  and  respondent  1  herein)  filed  their written statements denying the allegations and claim made in the plaint.  In March 1978, the District Judge, Seoni framed issues in that suit.      In the  Seoni  Suit,  the  second  respondent  made  an application   for   interim   injunction   restraining   the petitioner from  enforcing the  rights  in  respect  of  the Usance Bills accepted by the second respondent and regarding the guarantees  furnished  by  the  fourth  respondent.  The District Judge  dismissed that  application; but  on appeal, the  High  Court  of  Madhya  Pradesh  granted  the  interim injunction as  prayed for. On appeal by the petitioner, this Court by its order, dated March 20, 1974, set aside the High Court’s order  and vacated the interim injunction as regards the petitioner  and the  fourth respondent  subject  to  the petitioner undertaking to reimburse the fourth respondent in accordance with  the directions  of the Court depending upon the result  of the Seoni Suit. As a result the impediment in the way  of the  petitioner for  enforcing  its  rights  was removed.      The petitioner  bank filed  suit C.S. No. 143/75 in the High Court  of Madras  against respondents  1 & 4 herein (as also five other defen- 924 dants, who  are partners of the first respondent two of whom had furnished  collateral securities  by  way  of  equitable mortgages. In  this Madras  suit, the petitioner herein, has prayed for the following reliefs:      (i)  Directing   the   respondents,   herein,   (except respondent  3),   jointly  and   severally  to  pay  to  the plaintiff-petitioner the  sum of  Rs. 10,62,364.57 under the Bills Purchase  Account together  with interest  on the said nine Usance Bills.      (ii) Directing  the first  respondent herein, and their partners to  pay to  the plaintiff-petitioner the sum of Rs. 1,28,154.57  under   the  overdraft  account  of  the  first defendant firm together with interest. Passing of a mortgage preliminary decree  against defendants 5 and 6 therein, (two of the partners of the first respondent, herein).      It is  note-worthy that  respondents 1, 2 and 4 herein, have filed  their written statements in that suit before the Madras High  Court, which  on November  2, 1977,  framed  12 issues. Issues 1 and 6 run as follows:      (1) Whether the defendant (first respondent, herein) is liable pay the suit claim under the Bills purchase account ?      (6) Whether  the defendant  (second respondent, herein) is not  liable for  the suit  claim as an acceptor under the Bills Purchase Account.      A comparative  study of  the issues  framed in  the two suits, one  at Seoni and the other at Madras, shows that the

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principal common  question arising  in  each  of  these  two suits, is  : whether  the second  respondent and  the fourth respondent, herein,  are bound  to make  payment, the second respondent as  acceptor of  the bills  of exchange  and  the fourth respondent  as guarantors for due payment thereunder. The receiving  party in  both the  suits is  the petitioner, herein.  According   to  the   allegations  in  the  present petition, the  bills of  exchange were  drawn in  Madras and discounted  in   Madras  and   also  rediscounted  with  the Industrial Bank  and payments  were to  be made expressly in Madras. Under an interim order dated April 9, 1976 passed by the High  Court of  Madras in  the  said  suit,  the  fourth respondent has  deposited with  the petitioner herein, a sum of Rs.  10 lacs as and by way of deposit. Apart from a claim for damages  of Rs.  1  lac  against  the  first  respondent herein, (the  manufacturers), no  money claim  has been made against the  petitioner in  the  Seoni  Suit.  Nor  has  the petitioner made any counter-claim in the Senoi Suit. 925      We are  of opinion, this petition must succeed. Section 25 of  the Code  of Civil  Procedure as  substituted for the former section  by the  Code of  Civil Procedure (Amendment) Act, 1976,  empowers this  Court to  direct that  any  suit, appeal or  other proceeding be transferred from a High Court or other  Civil Court  in one State to a High Court or other Civil Court in any other State, if it is satisfied that such an order  is "expedient  in the ends of justice". The former Section 25  empowered the  State Government  to transfer, on receiving a  report from  the Judge  concerned of  the  High Court  to   transfer  suits   or  proceedings   in   certain circumstances from one High Court to another High Court. The scope of  the former  Section  was  very  restricted  as  it provided only  for transfer  of any  proceeding pending in a High Court  presided by  a Single Judge. It was thought that the State  Government was  not the  appropriate  agency  for exercising this  power of  transfer, obviously  because such exercise is  a judicial function. For these reasons, the new Section 25  which has  been substituted  for the former one, confers on this Court very wide powers of transfer which are as extensive  as its powers under Section 406 of the Code of Criminal Procedure, 1973.      The principle  governing the  general power of transfer and withdrawal  under Section  24 of  the Code  is that  the plaintiff is  the dominus  litis and,  as such,  entitled to institute his  suit in  any forum  which the law allows him. The Court  should not  lightly change  that forum and compel him to  go to  another Court,  with consequent  increase  in inconvenience and  expense of  prosecuting his  suit. A mere balance of  convenience in  favour of proceedings in another Court, albeit  a material  consideration may not always be a sure criterion justifying transfer.      As compared with Section 24, the power of transfer of a civil proceeding  to another  Court, conferred under the new Section 25  on the  Supreme Court,  is far wider. And, so is the amplitude  of the expression, "expedient in the interest of justice"  which furnishes  a general  guideline  for  the exercise of  the power. Whether it is expedient or desirable in the  interest of  justice to  transfer  a  proceeding  to another  Court   is  a   question  which   depends  on   the circumstances of the particular case.      Although the  exercise of  this discretionary power can not be  imprisoned within  them straight  jacket of any cast iron formula  uniformly applicable  to all  situations, yet, certain broad  propositions as  to  what  may  constitute  a ground for  transfer can be deduced from judicial decisions.

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One of them is that where two suits raising common ques- 926 tions of  facts and  laws between parties common to both the suits are  pending in  two different courts, it is generally in the interest of justice to transfer one of those suits to the other  forum  to  be  tried  by  the  same  Court,  with consequent avoidance  of multiplicity  in the  trial of  the same issues  and the  risk of conflicting decisions thereon. The instant case falls squarely within this category.      Here, in  the two  suits, one  in the  District  Court, Seoni, Madhya Pradesh, and the other filed by the petitioner in the High Court of Madras, the parties are the same except that in  the Madras  suit five other persons who are alleged to be  partners of  the first  respondent, herein and two of whom furnished  collateral securities, have also been joined as defendants.  Further, the  material issues  in  both  the suits are  common or interdependent. For instance, issue No. 14 in  the Seoni Suit is substantially the same as issue No. 7 framed by the Madras High Court in the suit filed there by the petitioner.  The  questions  involved,  inter  alia,  in issues 9,  10, 12,  18, 19  and 20  in the Seoni Suit have a substantial bearing  on the decision of issues 1, 2, 6, 8, 9 and 10  framed  in  the  Madras  Suit.  The  basic  question commonly arising  in each  of the  two  suits  concerns  the liability of the second respondent and the fourth respondent to make payment as the acceptor of the bills of exchange and the guarantors,  respectively, for  due payment  under those bills. If  the two  suits are  allowed to  continue in their original  forums  there  is  a  possibility  of  conflicting findings on the question of liability under the Usance Bills and under  the guarantees.  It is not disputed (we are told) that the  payment of  the bills  were  to  be  made  to  the petitioner bank  at Madras.  The evidence  in both the suits would mostly  be common  and locally  available  at  Madras. Transfer of  the Seoni  suit to Madras High Court will avoid multiplicity in  the trial  of the common issues and obviate the risk  of conflicting decisions. Under the circumstances, it is manifestly "expedient in the interest of justice" that both the  suits should  be tried by the Madras High Court on its Original Side by the same Judge/Judges.      Mr. Bal  appearing for  the second  respondent, opposed this petition  for transfer.  Learned counsel submitted that for a  small company  like respondent  2 it  will simply  be impossible to  fight the litigation at Madras, and the extra expenditure that  will have to be incurred by his clients in undertaking frequent  visits to  Madras which  is about 1000 miles from Seoni, may prove too heavy a financial burden for it. Another  apprehension expressed  by the counsel was that the objection  as to want of territorial jurisdiction in the Madras Court 927 taken by the second respondent, will, in effect, be rendered sterile the  proposed transfer  of  Seoni  suit  to  Madras. Counsel  suggested   the  proper   course  is  to  stay  the subsequenty instituted  suit at Made under Section 10 of the Code of  Civil Procedure till the disposal the suit at Seoni by the District Judge.      We are  unable to  accept any  of these arguments. Both the suits  at Madras  and Seoni are more or less at the same stage. Evidence  has not  yet commenced  in  either  of  the suits. The  defendants in  both the  suits have  filed their written statements.  The second  respondent has  appeared in the Madras  High Court and joined issue with the petitioner- plaintiff there.  It seems  that the  common evidence, which will mostly  be documentary,  is  to  be  found  locally  at

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Madras. The  fourth respondents who are the guarantors, have no objection  to the  transfer of  the Seoni suit to Madras. The second  respondents’ apprehensions, therefore, about the transfer  causing  extraordinary  increase  in  expenses  of litigation  and   inconvenience  to   them,  are   much  too exaggerated. Rather, the balance of convenience is in favour of the Seoni suit being transferred to the Madras High Court which is a superior forum than the District Court, Seoni.      As regards the second submission of Mr. Bal, we make it clear that  the transfer of the Seoni suit to Madras will be without prejudice  to the  objection raised  by  the  second respondent,  herein,   as  to   the  Madras   High   Court’s jurisdiction to  try the  suit, already  instituted there by the petitioner.      Mr. Bal’s argument founded on Section 10 of the Code of Civil Procedure  does not  arise in  this transfer petition, and we express no opinion on it.      For the  foregoing reasons  we allow  this petition and transfer suit  No. IB of 1972 filed by the second respondent herein in  the Court  of the  District Judge,  Seoni, Madhya Pradesh, to  the file  of the  High Court  of judicature  at Madras (Original Side).                   P.B.R. Petition allowed. 928