K.D. Menon and Sunil Pictures (P) Ltd. vs Panchitra

A.S. Venkatachalamoorthy, J.—Plaintiffs in O.S. No. 9574 of 1976 on the file of XVII Assistant Judge, City Civil Court, Madras are the

appellants herein.

The plaintiffs filed the suit contending that the first defendant firm is the producer of Malayalam talkie picture called ""Puthra Kameshti"" and in

respect of the distribution, exhibition and exploitation of the picture in the state of Kerala, the first defendant represented by its partners, entered

into an agreement dated 1.9.1972 with the first plaintiff, who was the promoter of second plaintiff company, whereby the first defendant firm was

advanced a sum of Rs.1,50,000/- by way of loan, in consideration of which the first plaintiff was entitled to the sole, absolute and exclusive rights

of distribution, exhibition and exploitation of the picture for the said area for a period of seven years from the date of first release of the picture in

the said area. According to the plaintiffs, the first plaintiff was also authorised to spend a sum of Rs.60,000/- towards publicity expenses and the

amount so spent by the first plaintiff together with the distribution commission was to be adjusted from out of the net realisations of the picture. It is

the case of the plaintiffs that as per the agreement, in the event of first plaintiff not realising in full, all the amounts due to the first plaintiff, should be

repaid by the defendants. Further plea of the plaintiffs is that as per the agreement, plaintiffs advanced all the amount and the picture was first

released on 10.11.1972 and the total amounts advanced by the plaintiffs came to Rs.1,80,017.20 as per the statement of account. Plaintiff would

also claim from the defendants a total sum of Rs.63,746.40 towards publicity expenses as per the statement of account. The amounts due to the

plaintiffs have been tried to be adjusted from out of the net realisations of the picture, but as on 1.10.1976, there was a balance of Rs.35,046.81

due and payable by the defendants and that the said amount will also fetch interest at the rate of 15% per annum. Thus a total sum of

Rs.54,595.87 is due and payable by the defendants to the plaintiffs as on 1.10.1976. Plaintiffs would further plead that the defendants neglected to

pay the amounts due to them in spite of repeated demands, but on the contrary filed a suit for damages against the plaintiffs in O.S.9877 of 1974

on the file of II Assistant Judge, City Civil Court, Madras. The case of the plaintiffs is that the defendants are liable to pay a sum of Rs.35,046.81

together with interest at the rate of 15% per annum amounting to Rs.18,549.06, thus totaling Rs.54,595.87. The first defendant firm, the second

and third defendants as partners of first defendant firm are jointly and severally liable to pay the said amount.

Defendants 1 and 2 filed a common written statement. It is contended therein that the suit is not maintainable in law and the present suit has been

filed by the plaintiffs only as a counter blast to the earlier suit filed by the defendants - O.S.9877 of 1974 on the file of II Assistant Judge, City Civil

Court, Madras, wherein a decree has already been passed directing the plaintiffs to pay a sum of Rs.1,40,000/- and odd. The present suit is also

barred by res judicata in view of the decision in O.S.9877 of 1974. The defendants would contend that only after verifying plaintiffs'' account, suit

O.S.9877 of 1974 was filed and in the plaint in that suit, defendants have specifically pointed out, how the plaintiffs were making false entries in the

books of account and that several entries do not bear any vouchers. A specific plea is taken in the written statement that the expenses debited

were large and the defendants never authorised the plaintiffs to enter into any such contract. The Court tried O.S.9877 of 1974 and only after

looking into the accounts filed by the defendants in that suit, a decree for Rs.1,40,000/- and odd came to be passed. The allegation therefore made

in the plaint that O.S.9877 of 1974 is still pending is false to the knowledge of the plaintiffs. In fact, only after the disposal of O.S.9877 of 1974

the petition for restoration was filed in the above suit though the suit was dismissed long ago as early as on 30.11.1979. Defendants 1 and 2 would

further contend that the plaintiffs are not entitled to the amount claimed and that the plaintiffs are bound to exploit the picture for the full period of

the agreement. Plaintiffs have realised large sums of money, which they have omitted to give credit to.

The third defendant filed a separate written statement denying various allegations contained in the plaint. This defendant has stated that the

agreement dated 1.9.1972 was entered into with the first plaintiff and not with the second plaintiff. Second defendant representing the first

defendant firm was in exclusive management and in charge of the business and that the third defendant did not take any active part in the business

and he has not received any amount from the first plaintiff. Entire amount was received by the second defendant and the amounts were spent

exclusively by him. The third defendant also passed on a letter dated 22.10.1974 to the second defendant that he had nothing to do with the

business of the firm and he has no claim with regard to any account with first or second plaintiff. On the strength of the said letter, second

defendant filed O.S.9877 of 1974 claiming damages and for accounts. The third defendant would further claim that even though the agreement

dated 1.9.1972 was signed by him, he did not read the contents since everything was done by the second defendant at his sole risk and

responsibility. The second defendant was enjoying all the amounts and the accounts were maintained by him and as such third defendant is not

liable to render any accounts or liable to the suit claim as alleged. No statement of account was furnished to the third defendant and he is not aware

of the advance of the amounts from time to time as alleged by the plaintiffs in paragraph 5 of the plaint. It is further averred in the written statement

of the third defendant that he is not in any way liable or responsible for the amounts spent by the plaintiff towards publicity expenses. The third

defendant would further plead that he is an unnecessary party in the suit and that he is not in any way liable to pay the suit claim.

At the trial, on behalf of the plaintiffs, one of the Director of the second plaintiff by name Manokaran was examined and Exs.A-1 to A-59 were

marked. On behalf of the defendants, one of the partner of the first defendant by name Srinivasalu Chetty was examined and documents Exs.B-1

to B-20 were marked. The trial Court framed as many as five issues for consideration. The trial Court held that the judgment in the previous suit in

O.S.9877 of 1974 on the file of II Assistant Judge, City Civil Court, Madras shall operate as res judicata and that further plaintiffs would not be

entitled for the amounts as claimed.

Before this Court, the learned counsel appearing for the appellants made two fold submissions. Firstly, that the Judgment in O.S.9877 of 1974

on the file of II Assistant Judge, City Civil Court, Madras will not operate as res judicata inasmuch as the decree that was passed in that suit was

an ex-parte decree, since Section 11 of the CPC contemplates passing of decree only after hearing. Secondly it is contended that the plaintiffs

incurred expenses under three heads viz., (1) Amount paid to the Kerala Government; (2) Bonus paid to the staff; and (3) Payment made to

Kavitha Theatre, and that all these payments are as per the terms and conditions of the agreement entered into between them.

That the earlier suit O.S.9877 of 1974 was between the same parties and in respect of the same agreement, is not in dispute. The defendants in

this suit filed the above said suit in November, 1974 against the plaintiffs in the present suit and the decree came to be passed on 11.7.1977

declaring that the defendants in this suit would be entitled to a sum of Rs.1,40,000/- and odd. Admittedly, plaintiffs in the suit did not appear and

the decree came to be passed ex-parte. Now, what is contended is that inasmuch as the decree was passed ex-parte, it would not satisfy the

ingredients found in Section 11 of CPC viz., that the Court has not passed the decree after hearing.

The doctrine of res judicata conceived in the larger public interest, which requires that all the litigation must, sooner than later, come to an end.

The principle is also founded on equity, justice and good conscience, which require that a party who has once succeeded on an issue should not be

permitted to be harassed by a multiplicity of proceedings involving determination of the same issue. The expression ""heard and finally decided

occurring in Section 11 means, a matter on which the Court has exercised judicial mind and after argument and consideration of the materials

before it arrived at a decision and passed a decree. Or in other words, the said words would mean that on the issue in question, there has been an

application of mind and final adjudication by a competent Court. The applicability of res judicata does not depend on the decision being ex-parte

or bi-parte. The Supreme Court and this Court have repeatedly held that a party is as much bound by an ex-parte decree as by a contested one.

Only difference between an ex-parte decree and bi-parte decree is, whereas in the former defendant was not present in the proceedings, in the

latter, he was present. In order that in an ex-parte decree might be res judicata, all that is necessary is that the defendant should have express

notice of the pleadings and the prayer that a particular issue or matter would be decided.

(Refer: (a) Raj Lakshmi Dasi and Others Vs. Banamali Sen and Others, : (b) Ram Gobinda Dawan and Others Vs. Smt. Bhaktabala, : (c)

Pandurang Ramchandra Mandlik (Since Deceased) by his Lrs. and Another Vs. Shantibai Ramchandra Ghatge and Others, : (d) Akkali

Thiruvengadam Mammad Vs. Chathamkara Ammad and Others, : The Commissioner, Hindu Religious and Charitable Endowments, Madras Vs.

V. Krishnaswami and Another, :

That being so, there is no substance in the plea of the plaintiffs that since earlier decree was one of ex-parte, the same would not operate as res

judicata.

Even otherwise, on merits, for two reasons the claims of the plaintiffs have to be negatived. Firstly, it is the case of the plaintiffs that certain

payments made to (1) Kerala Government, (2) Bonus paid to staff, and (3) Payment made to Kavitha Theatre, should be reimbursed. It could be

seen, plaintiffs were not authorised to make those payments under the agreement. Even assuming that they were authorised to make such

payments, those payments were made prior to November, 1974, when the first suit came to be filed. Plaintiffs having failed to appear before the

Court in the earlier suit and put forth this demand, cannot now in this suit, claim those amounts.

The second reasoning is that the plaintiffs rely on certain accounts produced by them. At least on three occasions defendants wrote letters (as

evidenced under Exs.B-6, B-10 and B-12) to the plaintiffs to the effect that it is only the plaintiffs who have to pay amounts to them. But however,

there was no reply for those three letters. On the contrary, plaintiffs have now filed their accounts in this suit claiming amounts from the defendants.

Certainly if the plaintiffs had in their possession these account books, they would have appeared in the earlier suit and produced all the accounts to

substantiate their case. For these reasons it is evident, as rightly pointed out by the trial Court that the account books filed in this suit have been

made ready only to substantiate their case and not reflecting true accounts. The trial Court is right in rejecting the case of the plaintiffs and in

dismissing the suit.

In this view of the matter, there are no merits in the appeal and the same is dismissed. No costs.