State Industrial Development Corporation Vs. M/S. Cork Manufacturing Co  Insc
867 (27 August 2007)
Chatterjee & P.K. Balasubramanyan
APPEAL NO. 3940 OF 2007 [Arising out of SLP [C] No. 11683 of 2006] TARUN
This appeal is directed against the judgment and order dated 20th January, 2006
of the Punjab and Haryana High Court at Chandigarh whereby the High Court
affirmed the concurrent judgments of the courts below decreeing the suit of the
plaintiff/respondent (for short the respondent') and declaring the resumption
of plot allotted to the respondent by the defendant/appellant (for short 'the
appellant') as illegal.
appellant allotted an industrial plot bearing PlotNo.259, Udyog Vihar, Phase
IV, Gurgaon to the respondent vide its allotment letter dated 24th November, 1987. Pursuant to the allotment letter
dated aforesaid, the appellant entered into an agreement on 12th February, 1988
with the respondent Clause 8 of which provides that the respondent shall start
construction on the plot for setting up of an industry within a period of three
months and complete the construction thereof within one and a half years from
the date of issuance of the allotment letter and further, the respondent shall
complete the erection and installation of machinery and commence production
within a period of two years from the date of allotment of plot failing which
the plot shall be liable to be resumed and the security amount equivalent to
ten per cent of the cost of the plot deposited by the respondent at the time of
allotment shall stand forfeited. Clause 28 of the agreement provides that in
case of breach of any of the terms and conditions of the agreement including
Clause 8, the appellant reserves the right to exercise its right of resumption
of the plot. The appellant, when found that the respondent had violated Clause
8 of the agreement, issued a show cause notice to it as to why the suit plot
should not be resumed and the possession not be taken back. On 13th September,
1991, the appellant issued a resumption order for non compliance of Clause 8 of
the agreement by the respondent stating that the respondent had contravened the
terms and conditions of the allotment order. According to the appellant,
possession of the suit plot was taken back from the respondent on 20th September, 1991.
respondent filed a Civil Suit before the Addl. Civil Judge (Senior Division), Gurgaon
in 1995 more precisely on 5th October, 1995 praying for a decree of permanent
injunction restraining the appellant from interfering and/or disturbing in any
manner the possession of the suit plot and further restraining the appellant
from re- allotting the plot to any other person on the basis of resumption
order, if any. In the plaint, it was alleged that it was not possible for the
respondent to comply with Clause 8 of the agreement because of high tension
wires existing over the suit plot and until and unless the said high tension
wires were removed from the suit plot, the respondent was not in a position to
raise construction on the same within the time specified in Clause 8 of the
agreement. For the reasons aforesaid, the appellant had no right to disturb
possession of the suit plot or initiate any proceeding against them. Inspite of
several letters written by the respondent to the appellant for removing high
tension electric wires and electric pole, the appellant did not remove the same
till in the year 1995, when suit was already pending, but instead the appellant
sought to resume the suit plot for non compliance of Clause 8 of the agreement.
a decree for permanent injunction restraining the appellant from interfering
and/or disturbing the possession of the respondent in respect of the suit plot
and other reliefs as noted herein above was prayed for.
After appearance in the suit, the appellant filed a written statement in which
the appellant alleged that a resumption order was passed by it on 13th September, 1991 and possession of the suit plot was
resumed on 20th September,
1991 for alleged
violation of Clause 8 of the agreement. The plea of limitation was also raised
saying that since the suit plot was resumed on 13th September, 1991 by the appellant and the suit was filed on 5th October, 1995, the suit must be held to be barred
by limitation. In the written statement, it was also alleged by the appellant
that the respondent had suppressed the fact regarding knowledge of the
resumption order and also regarding taking over of the possession of the suit
plot. Accordingly, the appellant had prayed for dismissal of the suit.
following issues were framed by the trial court :
Whether the order dated 13.9.91, if any, is illegal, null and void and not
binding upon the plaintiff ?
Whether the plaintiff is in possession over the plot in question ?
Whether the plaintiff has got no locus-standi to file the present suit ?
Whether the suit is barred by limitation ?
Whether the plaintiff is estopped from filing the present suit by his own act
and conduct ?
Whether the suit is bad for non- joinder of the necessary parties ? 7. Relief.
trial court, after the parties had adduced evidence, both oral and documentary,
in support of their respective claims, decreed the suit of the respondent inter
alia on the following findings of fact :-
the high tension line and an electric pole which existed, was removed on 30th
November, 1995 when the suit was already pending, the Construction in
compliance with Clause 8 of the agreement could not be raised on the suit plot.
Other allottees in the same area were granted extension of time to raise
construction on identical facts and accordingly it was the duty of the
appellant to extend the time for the respondent also after removing the
electric wire and pole which existed on the suit plot.
Even if the appellant had resumed the suit plot on 13th September, 1991, the same was so done without giving any opportunity
of hearing to the respondent.
No show cause notice was served by the appellant on the respondent and no
procedure was followed to resume the suit plot.
above findings of fact arrived at by the trial court on appreciation of the
evidence, oral and documentary on record, the following conclusions were drawn
order of resumption passed by the appellant dated 13th September, 1991 whereby
the suit plot was allegedly resumed, was illegal and against the principles of
natural justice and therefore liable to be set aside.
suit was not barred by limitation as the respondent was in possession of the
suit plot and resumption order of the appellant was not served upon the
respondent had by cogent evidence proved his possession over the suit plot and
accordingly the respondent was entitled to a decree of permanent injunction as
Feeling aggrieved, the appellant preferred an appeal by which the decree of the
trial court was affirmed. The appellate court also echoed the finding of the
trial court and held that the appellant instead of removing the high tension
wire and electric pole from the suit plot resumed the plot in question on 13th
September, 1991 without affording the respondent any opportunity of being heard
and, therefore, held that the resumption order was ineffective and not binding
on the respondent.
appellate court also held that the suit was not barred by limitation because no
cogent evidence was produced by the appellant to show that the respondent was
served with the copy of the resumption order at all or that the respondent had
any prior knowledge of the resumption order.
second appeal was, thereafter, filed by the appellant before the High Court and
in the second appeal, the appellant filed an application under Order 41 Rule 27
read with Section 151 of the CPC for acceptance of an additional evidence which
was nothing but a legal notice dated 8th October, 1991 sent by the counsel for
the respondent wherein the respondent had acknowledged the receipt of
resumption order of the appellant dated 13th September, 1991. The appeal as
well as the application for acceptance of additional evidence under Order 41
Rule 27 of the CPC was taken up for final hearing and by the impugned judgment,
the High Court rejected the said application filed under Order 41 Rule 27 of
the CPC and also the appeal of the appellant.
the High Court in second appeal, the main thrust of the argument of the learned
counsel for the appellant was that the legal notice allegedly served by the
respondent on the appellant should be permitted to be produced on record as
additional evidence in the exercise of its power under Order 41 Rule 27 of the
CPC to show that the suit filed in 1995 was barred by limitation. On the merits
of the second appeal, the High Court recorded the following :- "Nothing
has been shown that the findings recorded by both the courts below suffer from
any infirmity or are contrary to the record. No question of law, much less any
substantial question of law arises in the present appeal."
Feeling aggrieved by the judgment of the High Court, the instant special leave
petition has been filed in respect of which leave has already been granted.
behalf of the appellant, Mr. R. Mohan, Additional Solicitor General submitted
at the first instance that the High Court was not justified in rejecting the
application for acceptance of additional evidence filed under Order 41, Rule 27
of the CPC. By the application under Order 41, Rule 27 of the CPC, a legal
notice alleged to have been served by the counsel for the respondent on the appellant
was in fact sought to be admitted in evidence to prove that the respondent had
clear knowledge of the resumption order passed on 13th September, 1991 and if
such fact was accepted, the suit filed in the year 1995 was clearly barred by
limitation. The High Court, however, while rejecting the application for
acceptance of additional evidence, held that the legal notice which was alleged
to have been served on the appellant was per se not admissible in evidence nor
was it proved that the legal notice was issued by the respondent.
High Court also held that even if the same was issued, such a legal notice did
not advance the case of the appellant.
Before we deal with the aforesaid submission of Mr.Mohan, we may remind
ourselves of the provisions of Order 41 Rule 27 of the CPC which are as
Production of additional evidence in Appellate Court
parties to an appeal shall not be entitled to produce additional evidence,
whether oral or documentary, in Appellate Court. But if-
the court from whose decree the appeal is preferred has refused to admit
evidence which ought to have been admitted, or
the party seeking to produce additional evidence, establishes that
notwithstanding the exercise of due diligence, such evidence was not within his
knowledge or could not, after the exercise of due diligence, be produced by him
at the time when the decree appealed against was passed, or
the Appellate Court requires any document to be produced or any witness to be
examined to enable it to pronounce judgment, or for any other substantial
cause, the Appellate Court may allow such evidence or document to be produced,
or witness to be examined.
Whenever additional evidence is allowed to be produced by an Appellate Court,
the Court shall record the reason for its admission."
have carefully examined the provisions made under Order 41 Rule 27 of the CPC.
The parties to an appeal shall not be entitled to produce additional evidence,
oral or documentary, before the appellate court except on the grounds
enumerated in Clause (a), (aa) and (b) of Order 41 Rule 27(1) of the CPC. The
court may permit additional evidence to be produced only when it is satisfied
with the three grounds namely,
the Court from whose decree the appeal is preferred has refused to admit
evidence which ought to have been admitted;
party seeking to produce additional evidence establishes that notwithstanding
the exercise of due diligence, such evidence was not within his knowledge or
could not, after the exercise of due diligence, be produced by him at the time
when the decree appealed against was passed; and
the appellate court requires any document to be produced or any witness to be
examined to enable it to pronounce judgment; or for any other substantial
Municipal Corporation For Greater (1) SCR 542], this Court held that power
under Order 41 Rule 27 of the CPC could not be used for removing a lacuna in
the evidence and did not entitle the appellate court to let in fresh evidence
at the appellate stage when even without such evidence it could pronounce
judgment in the case. Following the aforesaid decision in Municipal Corporation
For Greater (1) SCR 542], this Court again in State of Parshottambhai Desai [Dead] by LRs [(2006) 9 SCC 772] in
para 10 page 775 observed as follows:
Though the appellate court has the power to allow a document to be produced or
a witness to be examined under Order 41 Rule 27, the requirement of the said
Court must be limited to those cases where it found it necessary to obtain such
evidence for enabling it to pronounce judgment.
provision did not entitle the appellate court to let in fresh evidence at the
appellant stage where even without such evidence it can pronounce judgment in
the case. It does not entitle the appellate court to let in fresh evidence only
for the purposes of pronouncement of judgment in a particular way. The High
Court referred to the earlier proceedings before various authorities and came
to the conclusion that though the appellants had sufficient opportunity to
bring the evidence on record, for reasons best known to it, the State did not
produce the entire evidence before the trial court and it was only 8 years
after the dismissal of the suit that the applications were filed for adducing
additional evidence in the appeal." (Emphasis supplied) Prakash Bhatia and
Ors. [(1980) 1 SCC 412], it has been held that the High Court was not
unjustified in refusing to admit the additional evidence under Order 41 Rule 27
of the CPC when such additional evidence purported to defeat the claim of one
of the parties and such additional evidence was sought to be laid many years
after filing of the suit. In that circumstance, this Court has held in the
aforesaid decision that the discretion used by the appellate court in refusing
to receive additional evidence at the late stage cannot be interfered with.
a recent decision of this court in the of India and Ors. [ (2004) 10 SCC 779], this Court has again clearly laid down
the principles for acceptance or refusal of additional evidence at the
appellate stage observing that the scope of Order 41 Rule 27 of the CPC is very
clear to the effect that the parties to an appeal shall not be entitled to
produce additional evidence, whether oral or documentary, unless they have
shown that in spite of due diligence, they could not produce such documents and
that such documents are required to enable the court to pronounce a proper
Keeping the aforesaid principles in mind and applying the same on the facts and
circumstances of this case, we are unable to accept the contention of the
learned Additional Solicitor General appearing for the appellant that the legal
notice dated 8th October, 1991 could not be produced in evidence before the
trial court or before the first appellate court due to inadvertence and lack of
proper legal advice. For this purpose, we have examined the pleadings made in
the application for acceptance of additional evidence closely and in detail.
Admittedly, the legal notice issued by the counsel for the respondent to the
appellant which was sought to be admitted as additional evidence at the second
appellate stage was lying with the appellant during the pendency of the suit
and also during the pendency of the first appeal.
appellant in its written statement had categorically taken the plea of
limitation which was also one of the main issues in the suit. It is therefore
difficult for us to conceive that the said notice issued by the lawyer of the
respondent could not either be produced before the trial court or before the
first appellate court due to lack of proper legal advice. It cannot also be
imagined that the appellant having taken a specific plea in the written
statement regarding limitation of the suit could not produce the same due to
inadvertence. In any view of the matter, Order 41 Rrule 27 of the CPC also does
not empower an appellate court to accept additional evidence on the ground that
such evidence could not be produced or filed either before the trial court or
before the first appellate court due to inadvertence or lack of proper legal
Mohan, learned Additional Solicitor General however sought to argue that the
pleadings made in the application for acceptance of additional evidence would
come within the meaning of "substantial cause" under Order 41 Rule 27
(1)(b) of the CPC which would require the appellate court to accept the legal
notice in order to pronounce its judgment. We are unable to accept this
submission of Mr. Mohan. In our view, lack of proper legal advice or
inadvertence to produce the legal notice in evidence is not a ground to hold
that there was substantial cause for acceptance of the additional evidence. Mr.
Mohan, Learned Additional Solicitor General further sought to argue that the
importance of the legal notice was not realized and it was due to inadvertence
and lack of proper legal advice that the same could not be produced before the
view, we do not think that non realization of the importance of the documents
due to inadvertence or lack of proper legal advice as noted hereinabove also
would bring the case within the expression "other substantial cause"
in Order 41 Rule 27 of the CPC. In this connection, reference can be made to a
decision of this court in the case of Ltd. [(AIR) 1968 SC 406]. In any view of
the matter, we do not find that the legal notice was required by the appellate
court to pronounce a proper judgment in the appeal. It was open for the High
Court to decide the second appeal on merits with the documents and evidence
already on record. Therefore, we are in agreement with the High Court that the
additional evidence namely the legal notice issued by the counsel for the
respondent to the appellant ought not to have been admitted at the stage of the
second appeal. As noted hereinabove, the suit was filed by the respondent on 5th October 1995. The Trial Court decreed the suit
about nine years thereafter more precisely on 12th March 2004. An appeal was carried against the aforesaid judgment of
the trial court which was disposed of on 31st January 2005. The appellant had failed to
satisfy the High Court as to why the legal notice which was admittedly lying
with them could not be produced during all these years i.e. from 5th October 1995 till 31st January 2005. Such being the position and in view of the discussions
made herein above, we are unable to hold that the High Court was not justified
in rejecting the application for acceptance of additional evidence at the
second appellate stage.
Let us now consider whether the three courts below were justified in decreeing
the suit of the respondent. Before we consider the findings of the courts
below, it may be kept on record that in the second appeal, the High Court held
that no question of law much less any substantial question of law arose in the
same. On a perusal of the judgment of the High Court in the second appeal, we
also do not find that any substantial question of law, as enumerated in Section
100 of the CPC was in fact raised before the High Court. So far as the trial
court is concerned, it came to a finding of fact that the respondent was found
to be in possession of the suit plot in spite of resumption notice having been
issued by the appellant. The trial court also came to a finding of fact that it
was due to inaction on the part of appellant to remove the electric wires and
poles from the suit plot and the explanation given by the respondent for not
being able to take any step to raise construction in compliance with Clause 8
of the agreement must be accepted and therefore a decree for permanent
injunction should be granted in favour of the respondent. These findings of
fact were echoed by the appellate court as well. It is well settled that in a
second appeal, High Court is not permitted to set aside the findings of fact
arrived at by the two courts below until and unless it is shown that such
findings of fact are either perverse or arbitrary in nature. Mr. Mohan learned
Additional Solicitor General, however, could not satisfy us that the findings
of the courts below which were also accepted by the High Court in the second
appeal were either perverse or arbitrary. Accepting this position, the High
Court in second appeal found that the appellant had failed to satisfy it that the
findings recorded by the courts below suffered from any infirmity or that they
were contrary to the record. The High Court also concluded that there was no
question of law much less any substantial question of law which arose in the
second appeal. Before we part with this judgment, we keep on record that Mr.
Mohan appearing for the appellant substantially argued before us on the issue
that the High Court was not justified in rejecting the application for
acceptance of additional evidence. We have already discussed this aspect of the
matter herein before and after such discussion, we have already held that there
was no infirmity in that part of the judgment by which the High Court had
rejected the application for acceptance of additional evidence.
the reasons aforesaid, we do not find any ground for which interference with
the judgment of the courts below can be called for.
the appeal requires to be dismissed and is dismissed as such. There will be no
order as to costs.