Court’s Decision:
The Calcutta High Court, Commercial Division, dismissed the plaintiff’s application seeking summary judgment under Order XIIIA of the Code of Civil Procedure, 1908. The plaintiff had sought a decree for USD 182,176 (₹1.25 crore approx.) as unpaid commission under an agreement dated 21 July 2005. The Court held that the case raised substantial triable issues—particularly concerning whether the agreement was modified and/or terminated—and could not be resolved without oral evidence. “This Court finds that the defendant has raised triable issue which can be decided only after the evidence of the parties,” Justice Krishna Rao observed while rejecting the application.
Facts:
The plaintiff, a German national, entered into an agency agreement with the defendant, an Indian garment exporter operating under the name “N.M. Exports”, on 21 July 2005. Under the agreement, the plaintiff was to act as a trade agent in the European market and was entitled to 3% commission on all FOB shipments executed and paid by customers. Though initially for one year, the contract auto-renewed annually unless cancelled with two months’ prior notice.
The plaintiff claimed that only USD 54,207 was paid out of a total due commission of USD 121,283, and hence sought recovery of USD 67,076 as principal, plus interest of USD 115,100, totalling USD 182,176.
The defendant, however, disputed this by asserting that the commission rate was mutually revised to 1.25%, that all invoices reflected the revised rate, and that the agreement had been mutually terminated in 2016 after a meeting in Germany. Moreover, a prior suit filed by the defendant in Sealdah Court for declaratory relief added complexity to the matter.
Issues:
- Whether the plaintiff is entitled to a summary judgment under Order XIIIA of CPC.
- Whether the agreement dated 21 July 2005 was modified or terminated by mutual consent.
- Whether the plaintiff’s claim is barred by res judicata or estoppel due to prior litigation.
- Whether the calculation of USD 67,076 as commission due was substantiated.
Petitioner’s Arguments:
The plaintiff, through Senior Counsel, argued that the agreement entitled him to a 3% commission, and this was not denied by the defendant. He contended that the dispute raised by the defendant had already been adjudicated in earlier proceedings before the Calcutta High Court in a Civil Revision Petition where certain reliefs sought by the defendant in the Sealdah suit were held to be untenable under Section 41 of the Specific Relief Act. Relying on the doctrine of issue estoppel and the judgment in Bhanu Kumar Jain v. Archana Kumar (2005) 1 SCC 787, the plaintiff argued that the defendant could not now raise the same contentions.
He also submitted that if the Court finds any arguable defence, the suit may proceed upon furnishing of security by the defendant, as permitted under B.L. Kashyap and Sons Ltd. v. JMS Steels (2022) 3 SCC 294 and A2 Interiors v. Rahul Bhandari, 2022 SCC OnLine Del 2862.
Respondent’s Arguments:
The defendant’s counsel argued that the original 3% commission was later modified to 1.25% through mutual consent, with the plaintiff accepting payments on this basis without objection. Emails and invoices were relied upon to demonstrate this revision and acceptance. A February 2016 meeting in Cologne, Germany allegedly led to termination of the agreement by mutual consent.
The defendant further submitted that all invoices raised by the plaintiff were paid by 2015 and that no documents substantiated the plaintiff’s calculation of dues. The e-mails relied upon by the plaintiff did not reflect any unequivocal demand. The pending Sealdah suit was cited to show that the dispute was sub judice and that no res judicata applied since the issues were yet to be decided.
Analysis of the Law:
Order XIIIA of CPC allows courts to dispose of commercial claims without oral evidence when the defendant has no real prospect of defence. However, for this to apply, the claim must be based on admitted or undisputed facts. In this case, there was a serious contest regarding the subsistence of the agreement, the revision of commission rate, and the calculation of dues. The Court emphasized that summary judgment is an exceptional remedy and not to be granted where real triable issues exist.
Precedent Analysis:
- Bhanu Kumar Jain v. Archana Kumar (2005) 1 SCC 787: Cited by the plaintiff to argue issue estoppel due to prior rejection of reliefs sought by the defendant.
- B.L. Kashyap and Sons Ltd. v. JMS Steels (2022) 3 SCC 294: Relied upon to argue that even in the presence of a defence, a conditional order for security can be passed.
- A2 Interiors v. Rahul Bhandari, 2022 SCC OnLine Del 2862: Used to argue in favour of ordering the defendant to furnish security.
The Court distinguished the above precedents, holding that the factual disputes surrounding mutual modification and termination of contract were not resolved previously and therefore no estoppel or res judicata applied.
Court’s Reasoning:
Justice Krishna Rao held that the contract and commission rate were disputed, and that the defendant had furnished invoices supporting payment at the revised rate. The plaintiff had accepted payments without protest and failed to clearly explain the computation of his claim. Additionally, the revisional order in earlier litigation had not finally adjudicated on the claim of entitlement to commission. Thus, the defendant’s written statement raised substantial questions that necessitated trial.
As observed by the Court:
“The defendant has raised triable issue which can be decided only after the evidence of the parties and no summary judgment can be passed as prayed for by the plaintiff.”
Conclusion:
The Court dismissed the summary judgment application, holding that the matter could not be resolved without oral evidence. The plaintiff’s entitlement to 3% commission, and the claim for USD 67,076 plus interest, required factual adjudication.
Implications:
This judgment underscores the judiciary’s cautious approach towards granting summary judgments in commercial suits. Where factual disputes and triable issues are evident, courts are unlikely to bypass the standard trial process. The decision also clarifies that prior litigation which only addresses preliminary reliefs does not bar substantive defences in subsequent suits unless fully adjudicated.
Cases Referred:
- Bhanu Kumar Jain v. Archana Kumar, (2005) 1 SCC 787 – on issue estoppel.
- B.L. Kashyap and Sons Ltd. v. JMS Steels, (2022) 3 SCC 294 – on conditional leave to defend and security.
- A2 Interiors Products Pvt. Ltd. v. Rahul Bhandari, 2022 SCC OnLine Del 2862 – on allowing defence with conditions.
- AIR 1983 SC 1272 – relied upon by the earlier Coordinate Bench to reject injunctive relief as contrary to Section 41 of Specific Relief Act.
FAQs
1. Can a party seek summary judgment if the contract terms are disputed?
No. If there are factual disputes, especially regarding modification or termination of contract terms, courts will not grant summary judgment and will require trial and oral evidence.
2. Does a prior civil revision dismissing certain reliefs operate as res judicata?
Only if the issue was finally adjudicated. If the prior order only found a modicum of cause of action and permitted further proceedings, it does not bar defences in a subsequent suit.
3. Can acceptance of lower payments without protest imply contract modification?
Yes, courts may treat such conduct as acquiescence or mutual modification, especially when invoices and correspondence reflect consistent acceptance of revised terms.
