M/S. Hanu Motel Pvt.
Ltd. & ANR. Vs. U.P. Financial Corpn. Ltd. & ANR.  INSC 1833 (24
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.6280-6281 OF 2008
ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.10554-55 OF 2003 M/S HANU
MOTEL PVT.LTD. & ANR. ... APPELLANTS VERSUS UTTAR PRADESH FINANCIAL WITH
CIVIL APPEAL NO. 6282 OF 2008 ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL)
NO.5593 OF 2007 M/S HANU MOTEL PVT.LTD. ... APPELLANTS VERSUS UTTAR PRADESH
C.K. THAKKER, J.
NOS.6280-6281 OF 2008 @ SPECIAL LEAVE PETITION (CIVIL) NO.10554-55 OF 2003 1.
2. Both these appeals
have been instituted by the appellants who are aggrieved and dissatisfied with
the order passed by the High Court of Uttranchal at Nainital dated May 06, 2003
in Appeal against Order No. 120 of 2002 and an order dated May 28, 2003 in
Civil Review Application No. 2796 of 2003 in Appeal against Order NO. 120 of
3. Facts in brief of
the case are that appellant No. 1 M/s Hanu Motel Pvt. Ltd. is a company
registered under the Companies Act, 1956 (`Company' for short) and is engaged
in the business of hotel and hospitality and having its Head Office at Lucknow.
Appellant No. 2 Avdesh Kumar is a Director of the appellant No. 1-Company.
Respondent No. 1, Uttar Pradesh Financial Corporation (`Corporation' for short)
is a Corporation constituted under the State Financial Corporations Act, 1956.
Respondent No. 2, Ram Raj Singh has been joined as contesting respondent who
was the Director of appellant 3 No.1-Company, but who had resigned from the
said position subsequently.
4. From the record it
appears that there was an agreement between appellant No.1- Company and
respondent No. 1-Corporation dated May 10, 1991 whereunder loan was given by
the Corporation to the Company for the purpose of its business. It was the case
of the Corporation that though substantial amount was paid by the Corporation,
the Company did not abide by the terms and conditions and the Corporation was
constrained to cancel agreement on October 31, 1991. The Corporation also
issued demand notice on August 29, 2000. Under the said notice, a demand was
made by the Corporation from the appellant No. 1-Company to pay an amount of
Rs.185.20 lakhs. The appellant No.1-Company, therefore, filed a suit being
Civil Suit No. 111 of 2001 in the Court of Civil Judge (Senior Division),
Haridwar on April 28, 2001. It was a suit for declaration that the recovery
sought by the Corporation was 4 barred by time since cause of action had
arisen in 1991 and proceedings were not initiated for a long time. It was also
the case of the Company that cancellation of loan agreement by the Corporation
was ex parte, unilateral and hence illegal.
5. It may be stated
that the suit was filed by two plaintiffs. Plaintiff No. 1 was the Company
(appellant No. 1 herein) and plaintiff No. 2 was Ram Raj Singh (respondent No.
2 herein) who is a practising Advocate. It was stated in the plaint that
plaintiff No. 1 was a Company and plaintiff No. 2 was a Director who was
authorized to file a suit on behalf of the Company-plaintiff No.1. On January
19, 2002 an application was filed by the plaintiffs under Order XXXIX, Rules 1
and 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as `the
Code') for interim injunction restraining the Corporation from selling hotel or
property of plaintiff no. 1-Company. On February 20, 2002, application 5 was
allowed and the defendants were restrained from selling the land and building
of the plaintiffs.
6. Being aggrieved by
the order of injunction passed by the trial Court, the Corporation preferred an
appeal being Appeal against Order No. 120 of 2002 under Order XLIII Rule 1 of
the Code on May 31, 2002. On June 01, 2002, the High Court after hearing the
parties directed the Company to deposit an amount of Rs. Fifty lakhs in the
Court within 45 days. The matter was ordered to be listed on July 26, 2002. The
company filed Miscellaneous Application No. 4347 of 2002 on July 10, 2002
contending that the appeal filed by the Corporation was barred by limitation.
The High Court
directed the Corporation to file reply.
7. On August 02,
2002, according to the appellants, Board of Directors of Company passed a
resolution to remove respondent No. 2 - Ram Raj Singh as Director of the
Company. By 6 the same resolution, it authorized appellant No. 2 Avdesh Kumar
to prosecute the suit and other proceedings.
thereafter on August 05, 2002, respondent No. 2 Ram Raj Singh instituted
Miscellaneous Application No. 4839 of 2002 in Appeal against Order No. 120 of
2002 in the High Court of Uttranchal to delete his name from the array of
parties in the appeal alleging therein that he was not aware of any suit being
filed through him and he had not signed the plaint. It was alleged by him that
fraud was committed by showing him as plaintiff No. 2 and filing suit for and
on behalf of the Company. It was a case of impersonation. He, therefore, prayed
for deletion of his name and to take appropriate proceedings for unpardonable
fraud committed by the persons responsible.
9. On August 09,
2002, an impleadment application was made by appellant No. 2 Avdesh Kumar to be
joined as plaintiff in the suit.
7 Likewise, on
December 11, 2002, he made a similar application for impleadment in Appeal
against Order No. 120 of 2002 being Director of the Company as also guarantor for
payment of loan. The application was allowed on December 14, 2002 by the High
Court and he was ordered to be impleaded.
10. The High Court
then heard the Appeal against Order and by the impugned order dated May 06,
2003 disposed of the appeal after hearing the learned counsel for the
Corporation and the learned counsel for Ram Raj Singh. It observed that
according to Ram Raj Singh, he had not signed the plaint and yet he was shown
as plaintiff No.2. Thus, the suit was filed by resorting to impersonation. The
Court, therefore, held that since Ram Raj Singh did not sign the plaint, he
could not be said to be plaintiff No. 2. As such the plaint could not be said
to be signed by an Authorized Officer and suit by plaintiff No. 1-Company also
did not survive and was liable to be dismissed. The 8 High Court held that the
appeal was liable to be dismissed. Even the suit had become infructuous.
According to the High Court, no such suit could have been instituted.
11. The High Court
also observed that fraud had been played to abuse the process of law. Central
Bureau of Investigation (CBI) was, therefore, ordered to register a case
against the Company and its Directors and to investigate the matter as to who
had played fraud and to prosecute the persons as found guilty in investigation.
12. It was the case
of the Company that no hearing was afforded either to the Company or to Avdesh
Kumar who was already impleaded in the appeal. The order of the High Court was
in violation of principles of natural justice and fair play. Review application
was, therefore, filed by the appellants herein. The High Court, however,
dismissed the Review Application by the second impugned order dated May 28,
2003 inter alia observing that when the Court held 9 that no suit could have been
instituted by the Company-plaintiff No. 1 in view of the case of the plaintiff
No. 2 Ram Raj Singh that he had not signed the plaint and was never plaintiff
No. 2. There was thus no suit in the eye of law and the appeal also did not
survive. According to the Court, therefore, no order of impleadment of Avdesh
Kumar could have been passed on December 14, 2002. Hence, that order was also
set aside by the High Court dismissing review petition.
13. Both the above
orders of the High Court of Uttaranchal have been challenged by the appellant
in the present appeals.
14. Notice was issued
pursuant to which the parties appeared. Affidavits and further affidavits were
15. We have heard the
learned counsel for the parties.
16. The learned
counsel for the appellants strenuously contended that the orders passed by the
High Court are totally illegal, unlawful 1 and violative of basic principles
of natural justice. It was submitted that order dated May 06, 2003 was passed
without hearing the affected parties, i.e. appellant No. 1-Company and
appellant No. 2 Avdesh Kumar whose impleadment application was allowed as early
as in December, 2002. Though the impugned order was passed after about five
months of impleadment of appellant No.2, no hearing was afforded to any of the
appellants. It was also submitted that the High Court was wholly wrong in
recalling the order of impleadment of Avdesh Kumar passed in December, 2002. It
was submitted that when the Appeal against Order was heard and decided on May
06, 2003, Avdesh Kumar was very much a party-respondent and yet the High Court
did not think it fit to give an opportunity of hearing to him and decided the
appeal which had caused serious prejudice to the appellants. It was strenuously
urged that certain observations were made by the High Court only on the basis
of ipse dixit 1 allegations of Ram Raj Singh that fraud was committed against
him and he had not signed the plaint. The counsel submitted that CBI has
investigated the matter and has submitted the report wherein it was expressly
observed that Ram Raj Singh had signed the plaint and had filed a suit. It was,
therefore, submitted that the orders passed by the High Court deserve to be set
aside by remitting the matter for fresh disposal in accordance with law.
17. The learned
counsel for respondent No.
2 Ram Raj Singh
stated that the High Court had passed the order and there is no infirmity
18. The learned
counsel for the Corporation submitted that substantial amount is due and
payable by the Company and in the fight between two groups, the Corporation is
deprived of its legitimate dues.
19. Having heard the
learned counsel for the parties, in our opinion, the orders passed by the High
Court cannot be sustained. It is 1 clear that the suit was filed by two
plaintiffs as early as in April, 2001. Plaintiff No. 1 was the Company and
plaintiff No. 2 - Ram Raj Singh was shown to be a Director. An application
under Order XXXIX of the Code was filed wherein interim relief was granted.
Appeal against Order
was filed by the Corporation and only in August, 2002, a Miscellaneous
Application was filed by Ram Raj Singh to delete his name alleging that he had
not singed the plaint and he was fraudulently described and shown as plaintiff
No. 2 in the suit. It is unfortunate that the High Court decided the matter
without hearing the present appellants, i.e. appellant No. 1-Company and
appellant No. 2-Avdesh Kumar whose impleadment application was allowed on
December 14, 2002 by the High Court and the High Court was, therefore, aware
that he was very much on record. The learned counsel for the appellants is also
right in contending that the High Court virtually decided the matter on the
basis of 1 one sided version of Ram Raj Singh who had alleged that fraud was
committed against him.
This is clear from
what is stated by the High Court.
20. The High Court
while disposing of the appeal inter alia observed;
No.2 in the suit is practicing advocate of the Lucknow Courts and is present in
the Court. He made statement at Bar that he did not file any suit. The suit was
filed by resorting to impersonation. He did not make signatures on the plaint
and the affidavit. The plaintiff No.1 has not been arrayed through any of its
Directors. The plaintiff No.2 has also not been mentioned in the array of
parties to be the Director of the Company. In view of the statement made by Sri
Ram Raj that he ha snot filed the suit in question and he is not prosecuting
the suit, the suit is liable to be dismissed on behalf of plaintiff No.2 and
the suit also cannot proceed on behalf of plaintiff No.1, as the Company ha
snot been arrayed as party through any Director.
Therefore, the suit
is liable to be dismissed. Consequently the impugned order has merged in the
order of dismissal of suit, which has rendered the appeal as infructuous. The
appeal is dismissed accordingly as having become infructuous".
21. Granting liberty
to Ram Raj Singh to take legal recourse against those persons who had played
fraud upon him, the Court proceeded to state;
Ram Raj, advocate is at liberty to take legal recourse against those persons
who have played fraud upon him. Sri Ram Raj, advocate and learned counsel for
the appellant have submitted that a fraud has been played to abuse the process
of law, therefore, this Court may order the CBI to register a case against
company and its Directors and investigate as to who has played fraud. Having
regard to the seriousness of the fraud played, we direct the S.P., CBI to investigate
the matter personally and prosecute the person who is found guilty in
investigation. Record of the Civil Suit No.111 of 2001 shall be kept in sealed
cover and shall be handed over during the course of investigation to S.P.,
22. The counsel submitted
that had an opportunity been afforded to the appellants, they could have shown
that it was not correct that Ram Raj Singh had not signed the plaint or fraud
had been committed by the Company or any officer of the Company. According to
the learned counsel, on the contrary, CBI made the 1 inquiry and submitted the
report wherein it was specifically observed that Ram Raj Singh was not right
when he asserted that he had not singed the plaint and that fraud was
According to CBI, it
was Ram Raj Singh who had filed the suit, was shown as plaintiff No. 2 and it
was his signature in the proceedings.
23. In our opinion,
the learned counsel for the appellants is also right in contending that when
present appellant No. 2 Avdesh Kumar was impleaded in December, 2002 as party
and was very much on record in Appeal against Order, opportunity ought to have
been afforded to him as to whether the Appeal from Order had become infructuous
and whether the suit would not survive. To us, it appears that the High Court
followed an easy path unknown to law when it rejected Review Petition on May
28, 2003 by recalling the order passed on December 11, 2002 virtually
rectifying the order passed on May 6, 2003. In our considered opinion, the High
Court ought to have extended an opportunity of 1 hearing before passing order
dated May 6, 2003 as also dated May 28, 2003 to appellant No.1- Company as well
as to appellant No.2-Avdesh Kumar.
24. As to the report
of CBI and prima facie case found against Ram Raj Singh in the investigation
undertaken, it would not be appropriate to state anything one way or the other.
Since we are of the view that both the orders passed by the High Court are
liable to be set aside only on the ground of non- observance of natural
justice, the matter should be remanded to the High Court for fresh disposal in
accordance with law. Observations made by this Court may adversely affect one
or the other party and it is not appropriate to express any such opinion. We
are, however, convinced that both the orders dated May 06, 2003 and May 28,
2003 passed by the High Court are liable to be set aside.
25. In the result,
both the appeals are allowed. Orders dated May 06, 2003 and May 28, 1 2003 are
hereby set aside. The matters are remanded to the High Court for fresh decision
in accordance with law after giving opportunity of hearing to all the parties.
26. Before parting
with the matter, we may clarify that we may not be understood to have expressed
any opinion on the merits of the matter, one way or the other. As and when the
matter will be placed before the High Court, it will be decided on its own
merits without being influenced by any observations made by it in the impugned
orders or by us in this judgment.
accordingly. On the facts and in the circumstances of the case, there shall be
no order as to costs.
CIVIL APPEAL NO. 6282
OF 2008 @ SPECIAL LEAVE PETITION (CIVIL) NO.5593 OF 2007 28. Leave granted.
29. The present
appeal is an offshoot of appeals arising out of Special Leave Petition (Civil)
Nos. 10554-55 of 2002 titled M/s Hanu 1 Motels Pvt. Ltd. v. U.P. Financial
Corporation Ltd. & Anr.
30. So far as the
facts of the case are concerned, we have stated them in detail in the above
appeals and it is not necessary to reiterate them here. It may, however, be
stated that in the light of the directions issued by the High Court in the
order dated May 06, 2003 in Appeal against Order No. 120 of 2002 that the
Central Bureau of Investigation (CBI) should take appropriate steps against the
persons who had played serious fraud by investigating the matter and by
prosecuting the persons found guilty in investigation that CBI made the inquiry
and submitted the report.
31. In the report,
CBI collected documentary and oral evidence which established that Ram Raj
Singh had filed Declaratory Suit No. 111 of 2001 in the Court of Civil Judge
(Senior Division), Haridwar. He signed the plaint, vakalatnama and affidavit in
Oral and documentary
evidence collected by CBI 1 also revealed and the investigation established
that Ram Raj Singh was a Director of M/s Hanu Motels Pvt. Ltd.
32. In the light of
the findings of CBI, the Registrar General of the High Court filed a Complaint
No. 297 of 2005 against Ram Raj Singh that he intentionally and deliberately
made a false statement before the High Court to the effect that he did not file
any suit in the Court of Civil Judge (Senior Division), Haridwar, he did not
put signatures on plaint and affidavit and was not prosecuting a suit nor he
had been a Director of M/s Hanu Motel Pvt. Ltd. and the suit was filed by
resorting to impersonation. According to Registrar General by doing so, Ram Raj
Singh had committed an offence punishable under Section 193, Indian Penal Code,
1860. He, therefore, prayed that accused Ram Raj Singh be summoned and tried in
accordance with law.
33. Accused Ram Raj
Singh in view of the complaint filed by Registrar General of the High Court
made an Application for Direction No. 11659 of 2006 in Appeal against Order No.
120 of 2002 praying therein that no cognizance should be taken of the
investigation by Inspector, CBI and for quashing of proceedings.
34. The High Court by
the impugned order dated December 22, 2006 quashed the proceedings inter alia
observing that proceedings initiated by the Registrar General were without
jurisdiction and not maintainable. They were, therefore, liable to be quashed.
Accordingly, the proceedings were quashed by the High Court by granting liberty
to pass fresh order in accordance with law.
35. Since we have
allowed the appeals filed by the appellants in the connected matters and set
aside the order passed by the High Court by remitting the matter to the High
Court for fresh disposal in accordance with law after affording opportunity of
hearing to all the parties, in our opinion, this order also is liable to be set
aside. Since the High Court 2 will consider the entire material on record
including report of CBI, it is obvious that the High Court will pass
appropriate order in the light of materials placed before the Court.
36. For the foregoing
reasons, the appeal deserves to be allowed and is accordingly allowed. The
order dated December 22, 2006 passed by the High Court in Application for
Direction No. 11659 of 2006 in Appeal against Order No. 120 of 2002 is set
aside and the matter is remitted to the High Court for fresh decision in
accordance with law after affording opportunity of hearing to all the parties.
accordingly. On the facts and in the circumstances of the case, there shall be
no order as to costs.