1 IN THE HIGH COURT OF JUDICATURE AT MADRAS (ORDINARY ORIGINAL CIVIL JURISDICTION) TUESDAY, THE 13th DAY OF DECEMBER 2011 THE HON'BLE MR. JUSTICE VINOD K. SHARMA A. No.1629 of 2011 in C.S. No.773 of 2010 P.Changaiah, Proprietor, Ravi Prasad Unit, New No.18, Old No.2, Porur Somasundaram Street, North Usman Road, T.Nagar, Chennai-600 017. ... Plaintiff -Versus- S.Ramesh Babu, Proprietor of Kanaka Rathna Movies, No.39/6, Brindavan Apartments, Thanikachalam Road, T.Nagar, Chennai-600 017. ... Defendant A. No.1629 of 2011:- S.Ramesh Babu, Proprietor of Kanaka Rathna Movies, No.39/6, Brindavan Apartments, Thanikachalam Road, T.Nagar, Chennai-600 017. ... Applicant/Defendant -Versus- P.Changaiah, Proprietor, Ravi Prasad Unit, New No.18, Old No.2, Porur Somasundaram Street, North Usman Road, T.Nagar, Chennai-600 017. ... Respondent/Plaintiff Application praying that this Hon'ble Court be pleased to treat the suit in C.S. No.773 of 2010 as an ordinary suit, pending disposal of the suit. https://hcservices.ecourts.gov.in/hcservices/ 2 This APplication coming on this day before this court for hearing the court made the following order: The plaintiff / non applicant filed a suit under Order 7 Rule 1 of the Original Side Rules r/w Order 37 Rule 1 of the Code of Civil Procedure, for recovery of Rs.1,84,58,710/- (Rupees One Crore Eighty Four Lakhs Fifty Eight Thousand Seven Hundred and Ten only) along with interest at the rate of 18%p.a, from the date of the plaint till date of realization. 2. The case set up by the plaintiff was that the plaintiff was running and continues run the business of film shooting equipment suppliers (outdoor unit) and allied works. The plaintiff maintained a running account in the name of the defendant. The defendant paid a sum of Rs.30,00,000/- (Rupees Thirty Lakhs only) on 07.05.2007, which was credited to the account of defendant. Thereafter, further services of plaintiff were availed. The defendant again paid a sum of Rs.5,00,000/- (Rupees Five Lakhs only) on 01.10.2007, for which credit was given to the plaintiff. 3. It is the case of the plaintiff that the accounts were settled between the parties and the defendant agreed to pay a sum of Rs.1,50,00,000/- (Rupees One Crore Fifty Lakhs only) towards full and final settlement of dues. In discharge of the liability, the defendant issued three cheques for a sum of Rs.50,00,000/- (Rupees Fifty Lakhs https://hcservices.ecourts.gov.in/hcservices/ 3 only) each dated 25.12.2009, 04.01.2009 and 31.07.2010. It was also agreed that no interest would be charged for interregnum period. 4. The defendant thereafter requested the plaintiff to defer presentation of those cheques, but when the cheques were presented after waiting for sometime on request, were returned 'dishonored'. 5. The case of the plaintiff is that in order to avoid prosecution, the defendant issued 'stop payment' instruction to the bankers. The suit for recovery is filed to recover the amount under three dishonored cheques, by invoking the provisions of Order 37 Rule 1 & 2. 6. The plaintiff, along with the suit, also filed an original application under Order 39 Rule 1 & 2 for restraining the defendant from releasing, exhibiting and exploiting the Telugu picture Komaram Puli, which was produced by the defendant. 7. This Court, on the application, directed the defendant to execute a bank guarantee for the suit amount. Thereafter, on mentioning, this Court, on 25.08.2011 passed the following order: "This Court passed an order in O.A.No.956 of 2010 on 07.09.2010. At the instance of the learned counsel appearing for the plaintiff/applicant, this application has been posted before me once again "for being mentioned". 2. I have heard the learned counsel appearing for the plaintiff / applicant and the learned counsel appearing for the respondent. I have also https://hcservices.ecourts.gov.in/hcservices/ 4 gone through the documents including the order passed by this Court on 07.09.2010. 3. In this application, an order was passed on 07.09.2010 by me and the operative portion of the order is extracted below: "4. In the meantime, to secure the interest of the plaintiff, the defendant shall execute a Bank Guarantee for the suit claim of Rs.1,04,58,710/- in favour of the Registrar General, High Court, Madras immediately. It is also further undertaken to this Court by the learned counsel appearing on behalf of the respondent/defendant that in the event of some delay in executing the bank Guarantee, the picture shall not be released without executing the Bank Guarantee as stated above and an endorsement has also been made to that effect by the learned counsel for the respondent/defendant in application No.4972 of 2010. The respondent/defendant is present before this Court and he has also signed in the endorsement made by the learned counsel for the respondent/defendant. 5. On such execution of the Bank Guarantee, the learned counsel may make a mention before this court and thereafter post the matter for further orders to be passed. Since the suit is filed under Order 37 Rule 1 of C.P.C., the Registry may expedite the suit and post it for trial, if need be, on or before 19the January 2011." 4. In view of the order passed in paragraph-5 as mentioned above, it is submitted that the defendant is taking a stand that this Court has directed the suit to be posted for trial and therefore the suit has been already converted from summary suit to an ordinary suit. 5. As this was sought to be resisted by the plaintiff, the matter was posted before me "for being mentioned", at the instance of the learned counsel appearing for the plaintiff, to clarify paragraph-5 of order dated 07.09.2010. 6. After hearing, the learned counsel appearing on either side, I am of the considered view that there is no scope for any clarification, https://hcservices.ecourts.gov.in/hcservices/ 5 as in paragraph-5 it has been clearly stated that the suit is filed under Order 37 Rule 1 of C.P.C. and only when the necessity arises it may be posted for trial. A summary suit will be posted for trial only when the defendant comes to Court with a triable issue and gets leave of the Court to defend the suit conditionally or unconditionally. At the time of passing the order, this Court has not gone into the question of triable issues and to grant leave to defend the suit either conditionally or unconditionally. Therefore, it is very clear that only when the defendant comes with the triable issues, the suit may be posted for trial, after getting leave to defend the suit. Without doing so, it is not open to the defendant to interpret and to contend that this Court has already granted leave to defend the suit, which is not correct. 7. My order to put the suit for trial is subject to complying with the provisions of Order 37 of C.P.C. and therefore I reiterate that no leave has been granted, after finding that there is a triable issue. It is open to the defendant to take out necessary steps under Order 37 Rule 1 of C.P.C. or any other remedy available under law. 8. Since the defendant has now taken out an application in A.No.1629 of 2011 under Order 7 Rule 7 of Original Side Rules to that this suit as an ordinary suit, arguments will have to be heard on this application. It is submitted that the counter has been filed by the learned counsel appearing for the plaintiff / respondent in this application. 9. Hence, post this application before the regular court for hearing." 8. The applicant / defendant has now moved this application to treat the suit filed by the plaintiff, as an ordinary suit by invoking the provisions of Order 7 Rule 7 of the Original Side Rules. https://hcservices.ecourts.gov.in/hcservices/ 6 9. Order 7 Rule 7 of the Original Side Rules reads as under: "R.7 - A suit which has been admitted or marked as a suit under this order may at any stage be directed to be treated as an ordinary suit or as commercial cause by the order of the Court upon the application of any party or of its own motion and upon such terms as to costs as the Court may deem fit." 10. It is pleaded case of the applicant / defendant that the plaintiff / non applicant filed the suit for recovery of Rs.1,84,58,710/- (Rupees One Crore Eighty Four Lakhs Fifty Eight Thousand Seven Hundred and Ten only) along with future interest. The applicant / defendant has denied liability. However, it is admitted in the affidavit that services of the plaintiff were utilized, but according to the defendant, the dues were settled immediately, and nothing more is due or payable. 11. It is pleaded by the applicant / defendant that payment for the services stood already paid to the plaintiff. It is denied that any running account is maintained between the parties. The stand taken is that cheques were issued as security for the equipment, which was taken with clear understanding, that the cheques to be returned on return of equipment. 12. It is further case of the applicant / defendant, that payment was to be made after completion of picture, but the plaintiff started claiming the amount in violation of settled term. https://hcservices.ecourts.gov.in/hcservices/ 7 13. It is also the case of the applicant, that the plaintiff claimed interim injunction, which was not granted. That it was defendant, who gave undertaking to furnish and also furnished the bank guarantee to secure the suit amount. That due to adverse publicity, the film collapsed, and the applicant in this process lost more than Rs.100 Crores. The applicant / defendant submits that he is entitled to damages from the plaintiff for his acts. 14. It is the case of the applicant / defendant that undertaking to pay the money was given so as to release the film, with the hope of making profit, but said admission of the applicant, cannot be taken to be admission of liability. That undertaking was supported by a Bank Guarantee, in favour of Registrar General and the suit amount is secured, which entitles the applicant to contest the suit as ordinary suit. Furthermore, in view of the order passed by this Court, the suit deserves to be tried as ordinary suit. 15. This application is opposed by filing counter, wherein averments made in the affidavit are denied. A specific stand has been taken that undertaking by defendant / applicant is admission of liability, and it was given after negotiated compromise. It is prayed that the application be dismissed, as not competent. https://hcservices.ecourts.gov.in/hcservices/ 8 16. Learned counsel for the applicant / defendant vehemently contended that the suit filed by the plaintiff / non applicant was not under Order 37 Rule 1 & 2 of the Code of Civil Procedure, as no notice in terms of the provisions of the CPC was served rather suit filed by the plaintiff was the one under Order 7 of the Original Side Rules. 17. The contention of the learned counsel for the applicant, therefore, was that once bank guarantee stand issued to secure the suit amount, and that defendant / applicant has raised trivial issues, this Court has the jurisdiction under Order 7 Rule 7 of the Original Side Rules to treat the suit as an ordinary suit, at any stage of proceedings. 18. Learned counsel for the applicant / defendant is right in contending that the suit filed by the plaintiff is under Order 7 of the O.S.Rules, framed under the Letters Patent, as it gives overriding effect to the provisions of Order 37 Rule 1 & 2 of the Code of Civil Procedure, as the provisions of CPC have to give way to the Original Side Rules. 19. Learned counsel for the plaintiff / non applicant however submitted that under Order 7 of the Original Side Rules, it is not open to the defendant to defend the suit unless he obtains leave to defend. The rules under Order 7 of O.S.Rules provide that in default of defendant obtaining such leave, or if he fails to defend in pursuance to such https://hcservices.ecourts.gov.in/hcservices/ 9 leave, allegations in the plaint shall be deemed to be admitted and that the plaintiff is entitled to decree for the sum claimed in the plaint along with interest etc. 20. The learned counsel for plaintiff / non applicant contended that the application to the Master was required to be made for leave to defend unconditionally or subject to such terms and direction, as the Master thinks fit. Learned Master could also pass a decree for the suit amount with costs. 21. It is also the contention of the learned counsel for the plaintiff, that this application is not competent, in view of Order 14 Rule 8 of the Original Side Rules, which stipulate that it is only the applications, not covered under Rule 10 of Order 14, which be entertained by the Hon'ble Judge. Whereas the application covered under Rule 10 has to be filed before the learned Master. 22. Order 14 Rule 10(21) of the Original Side Rules reads as under: "R.(xxi) – Applications for summary suits filed under Order VII of these rules being treated as ordinary suits." 23. Learned counsel for the applicant on the other hand contended that the reading of rules under Order 7 of the Original Side Rules show, that the rules under Order 7 of O.S.Rules are subject to provisions of Rule 7, which has overriding effect, which give absolute power to the Court https://hcservices.ecourts.gov.in/hcservices/ 10 to convert the suit under this order as an ordinary suit or commercial cause at any stage of the suit, either in exercise of suo motu power or on application made by the applicant. 24. There can be no dispute that this Court in exceptional cases can convert the suit without referring the matter to the learned Master. However, this Court cannot lose sight of the fact that specific provisions have been made under Order 14 Rule 10(21) for dealing with such applications. The Master also exercises the power of the Court, and therefore word Master can be read in the word Court used under Order VII Rule 7 of O.S.Rules. 25. The applicant was required to move application before the learned Master, but at the same time, this Court also has the jurisdiction under Order 7 Rule 7 to convert any suit as an ordinary suit or commercial suit in the given circumstances at any stage of proceedings. 26. The averments made in the affidavit do not make out any ground to treat it as an ordinary suit, as remedy with the applicant / defendant was to seek for leave to defend under Rule 6 of the Order 7. It was during the trial that this Court can convert the suit to ordinary suit. The applicant in this case has not filed leave to defend. In this case even in the affidavit filed, the defendant / applicant has admitted issuance of cheques and also the fact of admission of liability. The grounds raised in the https://hcservices.ecourts.gov.in/hcservices/ 11 affidavit do not make out a case to treat the case as ordinary suit. 27.No merits. Dismissed. No costs. Sd/-V.K.S.J 13.12.2011 //Certified to be a true copy// Dated this the day of 2012. R.s/30.01.2012 COURT OFFICER From 25.09.2008 the Registry is issuing certified copies of the Order/Judgment Decree in this format. https://hcservices.ecourts.gov.in/hcservices/