'issues', 'framing of issues' and 'settlement of issues' in CPC.

A person never fight unless their is a 'issue'.  In other sense  you won't punch a man without reason unless he has done something that disturbed the stability/equilibrium either mentally or physically and apprehend in some way that, for which reason you have to take the step of punching that man. Similarly in civil suit their is always an issue between the parties and it is upon the court as well as the litigants to distinguish what the issues arising between the parties. The Civil Court rest the finality of which it decides upon the issues and do by adjudicating  properly.

An Issue is a disputed question between the parties on which they take the adjudication of the Court. O.14 of CPC 'Settlement of Issues and Determination of Suit on Issues of Law or on Issues agreed upon' under which Rule 1. states the Framing of Issues, in which issues arises when a material proposition of fact or law is affirmed by the one part and denied by other. In this instant definition a material proposition means fact or matter in dispute arising from the Plaint. Similarly different material proposition arises from the Written statement, Set-off or Counter-claim produced by the defendant.

These material proposition dispute a fact or a law as parties in the suit comes up in the court. Material proposition are those propositions of law or fact which a plaintiff must allege in order to show a right to sue and a defendant must allege in order to constitute his defense.

In Ganga Vinayagar Temple v. Meenakshi Ammal [2009 (12) SCALE 215] a issue is a disputed question upon which the parties are at variance and it is the duty of the Court to ascertain that, vide, Rule 1(5), Order 14 od the Code. Therefore, issues are those disputed question on which the parties are desirous of obtaining the decision of the Court.

Framing of Issues and Settlement of Issue:
It is the duty of the Court to frame issues as under clause (2) of O.14 R.1, Each material proposition of law or fact which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute his defense and in clause (3) each material proposition affirmed by one party and denied by the other shall be the subject of a distinct issue. Also in clause (5) which specifically says the Court shall, after reading the plaint and the written statements and hearing the parties or their pleader ascertain material propositions of fact or of law the parties are at variance. Which means issues comes out of three things :
1. Plaintiff allegations and from plaint
2. Defendants defence and form written statement
3. Hearing the parties and their pleaders.
And each of  the allegation and defence shall be a distinct issues. For example in a suit for specific performance of contract, it is alleged by plaintiff that the agreement was made in the jurisdiction of the Civil Court and the defendant in his defence that, certain jurisdiction cannot be maintain because the agreement was signed in other courts jurisdiction, in this situation the Court will make a issue regarding jurisdiction of Whether such dispute comes under his jurisdiction ?

There are two types of Issues as per clause (3) issues of fact and issues of law.

Regarding this, a leading judgement of Supreme Court on what should be in the mind of Civil Court in framing of issues in Sardul Singh v. Pritam Singh [AIR 1999 SC 1704] laid down following reasons why an issue is important in a civil suit :

1. It is the issues framed and not the pleadings that guide the parties in the matter of leading evidence.
2. The Court cannot refuse to decide  the point on which an issue has been framed and evidence led by the part is, even if the point involved is not mentioned in the pleadings. Issues are to be determined taking into consideration the changed circumstances.
3. The Court should not frame an issue which does not arise in the pleadings.
4. The issues must be confined to the material questions of fact or law (facta probanda) and not on subordinate facts or evidence by which material questions of fact or law are proved or disproved (facta probantia).
5. One issue should cover only one fact or law in dispute between the parties.
6. If the case goes in appeal, it must be dealt with by the Appellate Court on the issues settled for trial. 

Court to pronounce judgement on all Issues [O.14 R.2]
The court shall pronounce judgment on all issues even disposal of preliminary issues. Now, Preliminary issues are issues which at the option of the Court to be decide first, these issues are related to :-

1. the jurisdiction of the Court.
2. a bar to the suit created by any law for the time being in force.

The court may postpone the settlement of other issues until after preliminary issues has been determined and deal with the suit in accordance with the decision on that issues.

Canara Bank vs Canara Sales Corporation & Ors

Citations: 1987 AIR 1603

Case Summary :

1. The case comes with a broad meaning in defining the relationship in the law of equity between the banker and its customer about each others duty and point out the negligence in performing the duty. This case describes actions to be played by both the parties in matter of fraud and whom to blame for negligence. This could be understood from the facts of the case below.
2. In this case the respondent company had a current account in the appealant bank. The Managing Director of the company and the General Manager of a sister concern of the company had been authorised to operate the said current account and the second defendant had the responsibility to maintain the accounts of the respondent company and was also the holder of the cheque book of the said company. It was later noticed that the company accounts had some irregularities and on verification it was found out that cheques purporting to bear the signature of the Managing Director were encashed, though they did not bear his signature. A complaint was lodged by the respondent Company with the police and a special audit of the company's accounts for the years 1957-58 to 1960-61 by a firm of Chartered Accountants disclosed that the second defendant had withdrawn a sum of Rs.3,26.047.92 (approx 4500 $) under 42 cheques. A suit was filed for the recovery of the amount on the plea that the amounts as per the forged cheques were not utilised for the purpose of the respondent company. The respondent also contended they were unaware of the fraud happening until discovered by the new accountant.
3. The bank approaced in with three important defense : (i) That the cheques were not forged ones (ii) that even if they were forged ones. the company was not entitled to recover the amount on account of its own negligence (3) that there was settlement of accounts between the parties from time to time and as such. the company was not entitled to reopen the same and claim the sums paidunder the cheques. The second defendant Y.V Bhat  pleaded that the cheques were utilised for the purpose of the company. The trial Court negatived the contentions of the bank and passed adecree for the sum claimed with interest at 6%. The case then further taken to the Division Bench of High Court but the decision of the trail court was upheld with a certification of appeal to Supreme Court.
4. In the first aspect it was identified by the court that the signature on the cheques were forged one when presented as evidence and the plea of second defendant was defeated. The second aspect of the case is with 'the settled account of the appellant with the company'. In this context the appellant pleaded that 42 forged cheques were presented within various dates from year 1957 to 1961 and these the bank used to send its credit and debit statements to the company every month and during the half year period that is on June 30th and Dec 31st. Till March. 1961 the correctness of the entries was not questioned by the plaintiff. So if their is a misappropriation in the accounts it would have detected by the charted accountants of the company.  The Managing Director of the plaintiff-company himself admitted that he had received the periodical statements and that he did not at any time intimate the Bank about the incorrect- ness. At this the principle of estoppel is operated against the plantiff from claiming from the settled accounts as the bank described.
5. It is a act of negligence of the respondent in reviewing the statement letters and if considerable awareness would be used the mischief could be came early to knowledge of the company. But the court in explaining the above fact that is avoiding the negligence of the respondent it stressed more upon the relationship of the banker and customer. This relationship is like a creditor and debtor. When a cheque which presented for encashment contains a forged signature the bank has no authority honor such payment. It would be illegal act in honor such cheques. An honour cheque is such that a customer having an account with the bank and  there is a mandate on the bank to pay the amount covered by the cheque. However. if the signature on the cheque is not genuine. there is no mandate on the bank to pay. The bank, when it makes payment on such a cheque, cannot resist the claim of the customer with the defence of negligence on his part such as leaving the cheque book carelessly so that third parties would easily get hold of it. 
6. Banks had their own benefits in business as well as the customer affiliated with the bank. They have mutual relationship of trust with each other. So an entry in the pass book or the statement of letter would not deviate the trust that comes when the customer negligently misses some errors in his account. The banks business depends upon this trust. 
7. The fact that the "settled account" by the bank is appropriate in describing the negligence in the action of the customer in reviewing their accounts and if the such forged cheques were presented the knowledge of such would have prevented from such mischief. So such accounts though held up by the negligence of a party can be considered as a fact for Estoppel ?.
8. To know about negligence which is derived from a duty in between two or more person and one knowing of such duty neglects to act upon the action it would have taken in performing of such duty. But the duty of the banker is to dishonor such presentation of forged check consequently comprise the act of negligence of the Bank though how negligently the customer has in reviewing his pass book statements, it is well known fact under the law the bank has the duty to check the presentation of such instruments. So mere negligence would not prevent a customer from suing a bank for recovery of amount.
9. So the contention made under this appeal is defeated and the court under this case upheld the view of the High Court and Trial Court in this case. The case was then dismissed.

.

Satishkumar Jain vs Krishnagopal Sarda

Citations: (1993) 95 BOMLR 869, 1994 CriLJ 887

Case Summary :

1. This revision application under section 397 of the Code of Criminal Procedure is for setting aside the order passed by the learned Judicial Magistrate, First Class rejecting  the application filed by the applicant challenging the maintainability of the criminal complaint filed by the non-applicant or for quashing the criminal proceedings initiated by the non-applicant.

2. The main question that arises for my consideration in this revision application is if the cheque bounces on presentation for the second time, can a criminal complaint under S. 138 of the Negotiable Instruments Act, 1881 is maintainable. In other words, whether the complainant under S. 138 of the Act can have second cause of action on the same cheque when no complaint was filed by him on bouncing of the cheque for the first time which furnishes him first cause of action.

4. This second cause of action can be explained by the facts of this case. The applicant issued three cheques in favour of the non-applicant. All the cheques came to be dishonoured by the banker on presentation. In a written reply of the notice sent by the non-applicant to the applicant directing to present the cheques again. Therefore, the cheques were presented by the non-applicant for the second time. However, they were again dishonoured. Hence, the non-applicant again a issued notice to the applicant . The non-applicant thereupon waited for 15 days and filed the complaint. The same came to be registered as Criminal Case No. 136 of 1990.

5. The applicant contented that the criminal complaint cannot fall within the purview of S.138 read with S.142 of the Negotiable Instruments Act,1881 because the presentation of the cheques for the second time and dishonour thereof cannot furnish any cause of action for the non-applicant to file the present case. 

6. Two points of question raised each from the applicant and the non-applicant in the matter in issue :

1. By the Kerala High Court in Kumarsan v. Ameerappa hold that the Negotiable Instruments Act does not lay down any limitation on number of times that the cheque may be presented for encashment within a period of six moths or the validity thereof, whichever is earlier, complaint can be filed even after bouncing of the cheque for the second time.
2. The complaint filed by the non-applicant was beyond limitation in view of S. 138 and S.142 of the Act since the dishonour of the cheque for the second time cannot furnish a cause for the non-applicant to file the criminal complaint. In support of this argument the applicant quoted from Kumarsan v Ameerappa : 
   "Chapter XVII of the Act two features loom large. First is that more than one cause of action on the same cheque is not contemplated or envisaged. Second is, institution of prosecution cannot be made after one month of the cause of action. If more than one cause of action on the same cheque can be created, its consequence would be that the same drawer of the cheque can be prosecuted and even convicted again and again on the strength of the same cheque. Legislature cannot be imputed with the intention to subject a drawer of cheque to repeated prosecutions and convictions on the strength of one cheque".

7. The court accepted the argument that S.138  does not prohibit or forbid presentation of the cheque to the bank more than once for payment. Under S.138(a) the cheque must be presented to the bank within a period of six months or within the period of its validity, whichever is earlier. So on such dishonour of the cheque after they had been presented for payment within the period of six months from the dates when they were drawn, a fresh right accrued in favour of the payee that he can certainly enforce that right under section 138 of the Act.

8. In view of the above issues the court set a narrow interpretation of S.138 and S.142 of the Act. The applicant in this case requested the non-applicant to present the cheque to the banker for the second time when the non-applicant issued notice to him pointing out the dishonour of the cheque for the first time. The non-applicant presented the cheque withing the guidance of the applicant for the second time. It is clear that he has presented it for the second time because of hope created for him by the applicant himself that it will be encased. The court gave prominence in business practice. For a businessman under some consequences may faces small difficulties by which the cheque gets bounced. So a payee can after getting suitable reply from the drawer can wait for some time and can proceed with presentation of the cheque second time.

9. But in this case after the reply of the notice and the presentation of the cheque by the applicant for the second time and bounce thereafter, the criminal complaint was filed to the court. In view of this, the applicant is also estopped from raising this contention. Thus, the revision application was rejected.

Texmaco Ltd. vs State Bank Of India And Ors

 Citation : AIR 1979 Cal 44, (1981) 1 CompLJ 356 Cal

1. This case very much describes the system of bank guarantee in India under which no bank or party can escape from liability in guarantee issued by it.

2. Texmaco Ltd.(petitioner) asked for an injunction against the State Bank of India, State Trading Corporation of India and the Projects and Equipment Corporation of India Ltd. restraining the State Bank of India from making any payments to the State Trading Corporation of India and the Projects and Equipment Corporation of India Ltd. under or in respect of the performance Guarantee issued by the State Bank of India.

3. the Community of the Yugoslav Railways and the State Trading Corporation of India Ltd. briefly referred to hereinafter as S. T. C. for manufacture in India and supply in Yugoslavia for different railways, known as ZTPs 1300 Gas type and 2300 EAS type wagons.

4. Back to back contract was done between the parities. Then, pursuant to the back to back contract, the State Bank of India, on or about 26th Feb. 1973 at the instance of the plaintiff gave a Bank guarantee in favour of S.T.C. for a sum of Rs. 49,50,570/- being 5 per cent of the price of the wagons for due performance by the plaintiff in an orderly manner their contractual obligations under the back to back contract.

5. In future events the back to back contracts are amended and some new contracts in order of other 433 G.A.S types wagons are made between the parties with its valid bank guarantee.  On 11th March 1977, the State Bank of India wrote to the defendant No. 3, the Project and Equipment Corporation of India Ltd. informing that the bank had received a cable from the foreign bankers of the ZTP claiming full payment of the Bank guarantee on the allegation that STC had failed to perform in orderly manner their obligations under the contract. Notwithstanding the foregoing STC maintains that TEXMACO failed to perform in an orderly manner its obligations under the aforesaid Back to Back contract. In view of the foregoing STC hereby calls upon to make full payment to it of the whole of the guaranteed amount of Rs. 21,51,875/-  under your aforesaid performance guarantee. Thereby, STC invoked the Bank guarantee and asked for full payment. Thereafter the suit was filed and interim injunction was obtained in this suit.

6. The question, is, whether the plaintiff petitioner is entitled to the injunction, as asked for restraining the State Bank of India from making any payment pursuant to the performance guarantee. The question was raised whether it is a Bank guarantee or a irrevocable letter of credit.  It was examined by the judgment in the case of State Bank of India v. Economic Trading Corporation & Minerals and Metals Trading Corporation of India v. Suryaballav Seth (1970) 74 Cal WN 991.  These cases, drew the distinction between the irrevocable letter of credit and the bank guarantee. So a payment under a bank guarantee is like payment under letter of credit become due only on compliance with the terms on which the bank was to pay under the respective documents.

 7. In the instant case before us, counsel for the State Bank of India, placed reliance on the use of the expression 'we indemnify you'. In this context indemnity is dealt under the provisions of S. 124 of the Indian Contract At which provides as follows :

'A contract by which one party promises to save the other from the loss caused to him by the conduct of the promisor himself or by the conduct of any other person, is called a contract of indemnity.'The section, in its terms is dependent upon the obligation which arises on the loss caused to the party to be indemnified.

8. The law states that if the bank is obliged to pay and pay on terms it must depend upon the manner in which the document is written which frame it as a bank guarantee or a letter of credit as per the document. It is immaterial whether to contest the question of the performance guarantee similar to that letter of credit but the court of appeal says the bank must pay according to the guarantee on demand, if so stipulated. It further stipulated, that the decision of STC as to the liability of the bank under the guarantee and the amounts payable thereunder shall be final and binding on the bank. It has further stipulated that the bank should forthwith pay the amount due "notwithstanding any dispute between STC and Texmaco."  In the view the plaintiff is not entitled to an injunction in this application and was dismissed.