1 pps IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 311 OF 2010 State Bank of Hyderabad having its head office at Gun Foundry, Hyderabad and its Branch Office at Laxmi Road, Opp. Gokhale Hall, Pune 411 030 ...Appellant/Applicant Versus Shri Vidyadhar Purshottam Shintre Age: Adult, Occ: Profession, having office at “Namaskar” 1204/13, Shivaji Nagar, Off Ghole Road, Lane Opp.ICICI Bank, Pune 411 004 ...Respondent Ms.Kiran Bhogaliya i/b. Mr.Krishna Kelkar for the Appellant/Applicant Mr.S.S.Kanetkar for the Respondent CORAM:- A.V.NIRGUDE J. DATED:- 28th NOVEMBER, 2011. ORAL JUDGMENT. 1. The appellant-defendant filed this appeal against the judgment and decree dated 21.8.2009 passed by the learned Joint Civil Judge, Senior Division, Pune in Special Civil Suit No.326 of 2005 filed by the respondent. The respondent filed the suit for following cause of action. The respondent is a practicing Advocate and appeared as an 2 Advocate of the appellant bank in number of cases. In 1997, the appellant bank entrusted the work of filing of a suit against a party by name "Walvekar Farms Pvt. Ltd." for recovery of over Rs.6 crore. The respondent requested the appellant bank to pay the sum of Rs. 2,90,000/- as advance which included part of his professional fee and court expenses such as court fee etc. The bank readily paid this amount to the respondent. The respondent thus received Rs. 2,00,000/- as part of his professional fee payable for conducting the case. The respondent then filed the suit and the defendant Walvekar Farms Pvt. Ltd. contested it by filing written statement and also a counter claim of Rs.16 crore. The respondent prepared and filed written statement to the counter claim also. The suit thereafter was transferred to the Debts Recovery Tribunal. On 4.7.2002 the Debts Recovery Tribunal, Pune decreed the suit of the appellant bank and dismissed the counter claim of Walvekar Farms Pvt. Ltd. 2. On 17.7.2002 the respondent informed this fact to the appellant bank and sent his bill of remaining professional fees. It was his case then that the bank owed him balance amount of Rs.2,19,100/-. The bank, however, refused to pay the said sum although there occurred some correspondence between the parties. So, ultimately, the respondent filed this suit for recovery of his remaining professional fees. The respondent asserted that there was an agreement between him and the bank that the bank would pay him professional fees as per the schedule annexed to the Civil Manual issued by the High Court of Bombay. On the other hand, the appellant bank contested the case saying that there was no such agreement between the parties and that 3 since the respondent was a panel advocate of the bank, the bank was under obligation to pay him professional fees as per the schedule annexed to the Civil Manual issued by the High Court of Bombay. On the other hand, the appellant bank contested the case saying that there was no such agreement between the parties and that since the respondent was the panel advocate of the bank, they would pay him fee as per a schedule prepared by the bank (which prescribed lesser amount). The bank further asserted that as per the schedule of the bank the fee payable to the respondent would be far too less than what ever was paid to him at the initial stage and so he should refund Rs.90,000/-. The bank filed the counter claim on this assertion. In view of this controversy, the learned Judge framed certain issues and after recording evidence of the parties, and decreed the suit. 3. Following questions arise for my consideration: i) Whether there was an agreement between the parties that the bank would pay the respondent, fees as per the schedule provided in the Civil Manual.? ii) If the answer is in affirmative whether the suit between the bank and Walvekar Farms Pvt. Ltd. decided on merits the real dispute between the parties? If the answer to point no.2 is in the negative, what amount of fee the bank is liable to pay to the respondent? 4. After going through the entire evidence and the documents that are filed before the Lower Court, there is no doubt in my mind that there was an agreement between the parties that the bank would pay to the respondent professional fees as per the Schedule annexed to the Civil Manual. Exhibit 43 is a letter dated 20.8.1987. The respondent addressed this letter to the Bank demanding "part" of his professional 4 fees and court expenses before the suit. In this letter he specifically mentioned that the bank should pay him Rs.2 lakh as his part of professional charges, and made it further clear that the professional charges would be as per "the schedule of Advocates fees". Although this letter does not specifically mention that the Schedule of Advocates fees is the Schedule annexed to the Civil Manual, but the bank did not produce on record what they called as Schedule prepared by the bank for payment of advocates fees. It is an admitted fact that the bank paid to the respondent a sum of Rs.2 lakh as "part" of his professional fee. If one goes through the schedule annexed to the Civil Manual, the Advocate’s fee payable to the respondent in that case would be more than Rs.4 lakh. So, in all probabilities, the bank paid almost 50% of the advocate's fees to the respondent before filing of the suit. This conclusion is irresistible also because the bank did not examine the officer who had engaged the respondent for filing the suit against Walvekar Farms Pvt. Ltd., in 1997. Only he could have stated as what had transpired between and him the the respondent. Thus there is no evidence in support of the Bank's case that they had agreed to pay fee as per any other schedule or any other contract. I am therefore of the view that this controversy should be concluded with a finding that the bank had agreed to pay the respondent his professional fees as per the schedule annexed to the Civil Manual. As said above, the schedule annexed to the Civil Manual would require the bank to pay to the respondent the sum of Rs.4 lakh as professional fees. Point No.ii) 5 This point, in my view is the most crucial point between the parties and apparently the learned Judge of the trial court did not realize its importance. He did not deal with this question properly, though he made feeble attempt to do so in para 24 of his judgment. The schedule annexed to the Civil Manual is relating to paragraph no.640 of the Civil Manual. The relevant part of Schedule A reads as under: Rules for Computing the Advocates fees. 1.(a) In suits which decide on merits the real dispute between the parties. (b) In appeals from decree (including preliminary decrees) other than appeals from execution proceedings which decide on the merits the real dispute between the parties. (c) In application proceedings or appeals which decide on the merits the real dispute between the parties under the i) Indian Succession Act, XXXIX of 1925, excepting applications of appeals falling under sub-clauses (ii) and (iii) of clause (c) of Rule VI; ii) Land Acquisition Act, 1 of 1894, the amount of the Advocate’s fee shall be computed on the amount or value of the subject-matter in dispute in the suit, appeal, application or proceeding at the rates specified below: If the amount or the value of the subject matter in dispute does not exceed Rs.2,000 at 7-1/2 per cent. .... If such amount or value exceeds Rs.2,000 but does not exceed Rs.5,000: on Rs. 2,000 as above and on the reminder at 5 percent. If such amount or value exceeds Rs.5,000 6 but does not exceed Rs.10,000: on Rs.5,000 as above and on the reminder at 2 percent. If such amount or value exceeds Rs.10,000 but does not exceed Rs.20,000: on Rs.10,000 as above and on the reminder at 1 percent. If such an amount or value exceeds Rs.20,000 on Rs.20,000 as above and on the remainder at ½ percent. 2c) In all other cases not otherwise provided for, the amount of the Advocate’s fees to be allowed shall be 1/4 of that payable according to the rates specified in Rule 1. Paragraph no.1(a) and 2(c) are required to be read together for computing the Advocate’s fees in suits. Paragraph 1(a) clearly lays down rule that entire fee as per the schedule would be payable to the Advocate only in such suits, which decide on merits real dispute between the parties. Paragraph 2(c) lays down rule that in all other cases the amount of the Advocates fees should be 1/4 of the fee payable as per the Schedule. The bank, inter alia took a defence in this case that though on 4.7.2002 the suit between the bank and Walvekar Farms Pvt. Ltd. was finally disposed of, the same was not decided on merits, but it was decided ex-parte and so the respondents fee would be payable as per paragraph no.2(c). The said suit did not decide on merits the real dispute/s between the bank and Walvekar Farms Pvt. Ltd. The learned Judge of DRT who decided the said case wrote the judgment giving reasons. He even mentioned issues that had arisen between the parties, but admittedly the judgment could be concluded with brief discussion because Walvekar Farms Pvt. Ltd. virtually did not 7 contest the case. As said above, though they had filed written statement and counter claim, they did not press the counter claim on merits nor they contested the banks claim by filing an affidavit of claim etc. The respondent, during his cross examination admitted that even at final stage the Advocate of Walvekar Farms Pvt. Ltd., did not make his submission on merits. The copy of the judgment dated 4.7.2002 has come on this courts record by consent of the parties and on perusal of the same, it is seen that at many places the learned Judge of the DRT categorically observed that the defendant Walvekar Farms Pvt. Ltd., did not contest the case at all. One of the question between the bank in that case revolved around the allegation made by Walvekar Farms Pvt. Ltd., that the bank had flouted the norms of the Reserve Bank of India and State Bank of India and thereby caused loss to them. Had this question been contested, the learned Judge could have certainly recorded reasons for the same. Had the defendant Walvekar Farms Pvt. Ltd. succeeded in proving this allegation, probably the suit of the bank would have been dismissed and the counter claim would have been decreed. However, this important aspect of the case was concluded in only two lines in the judgment dated 4.7.2011. The learned Judge observed that since there is no affidavit on record of Walvekar Farms Pvt. Ltd., and since no evidence was led to prove the allegation, the claim would not be accepted. Walverkar Farms had also contended that their written statement that the bank did not supply funds to them and that due to such failure, they suffered heavy losses etc. Even this aspect of the case went uncontested because Walvekar Farms Pvt. Ltd., did not 8 lead any evidence. Even after recording evidence of the bank, when arguments were heard finally, learned Judge clearly observed in the judgment that Walvekar Farms did not make their submissions at that time. Thus, the learned Judge of the Debt Recovery Tribunal, Pune could not decide the real disputes between the parties on merits. Learned Counsel appearing for the respondent asserted that the judgment of the Debt Recovery Tribunal none the less was a full fledged decree on merits. Indeed, this cannot be denied. The learned Judge after appreciating the case of the bank decreed their claim against Walvekar Farms and even if such a decree can be said to be ex-parte decree the same had enforcibility. The learned Counsel appearing for the respondent placed reliance on the judgment of Supreme Court in the case of Saroja V/s. Chinnusamy (Dead) by L.Rs & Anr. reported in 2007 (a) AIR SC page 3067 to assert that even a decree passed without contest is binding as res-judicata. There is no dispute about the principal laid down by the Supreme Court in the said Judgment. But this Judgment will not help him. In this case, I am deciding as to 'whether the judgment of the Debt Recovery Tribunal decided the real disputes between the parties on merits' as contemplated by the above quoted rule of the Civil Manual, and this judgment does not throw any light on such question. The respondent, therefore, cannot take any advantage of the above impugned judgment of the Supreme Court. 5. It has come on record further that after the Debt Recovery Tribunal passed judgment on 4th July, 2002, Walvekar Farms Pvt. Ltd. appeared before the Debt Recovery Tribunal and sought setting aside 9 the ex-parte decree. The same was set aside. The case was again contested between the parties and ultimately, it was decided in 2005. This factual aspect of the case supports my view that the judgment of the Debt Recovery Tribunal of 4.7.2002 did not decide the real dispute between the parties. In any case, even otherwise, it can certainly be said for the reasons mentioned above that the judgment of Debt Recovery Tribunal dated 4.7.2002 did not decide the real dispute between the parties. In other words, the respondent in any case was not entitled to more than 1/4th of the fees payable as per the schedule. 6. The other aspect of this appeal is whether the counter claim of the bank was viable and within limitation. The learned Judge rightly held that it was barred by limitation. The reasons mentioned in the judgment are quite cogent. As mentioned above, the respondents suit was filed in 2005 and thereafter the counter claim was filed in 2006. The cause of action for recovery of excess amount paid to the respondent arose on the day when the Debt Recovery Tribunal delivered its judgment on 4.7.2002. The bank admittedly did not file their counter claim within three years from such event and so the learned Judge rightly held that the counter claim was not within time. In view of this, the appeal should succeed partly. The suit of the respondent stands dismissed. 7. The amount deposited by the bank shall be refunded forthwith. 8. Application for stay is rejected. (A.V.NIRGUDE, J.)