Prem Lala Nahata & AMP; ANR Vs. Chandi Prasad Sikaria [2007] INSC 96 (2 February 2007)
S.B. SINHA & P.K. BALASUBRAMANYAN
(Arising out of SLP(C) No.23272 of 2005) P.K. BALASUBRAMANYAN, J.
Leave granted.
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The appellants are the plaintiffs in C.S. No. 29 of 2003 filed on the
original side of the Calcutta High Court.
They are mother and daughter. They together sued the respondent, the
defendant, for recovery of sums allegedly due to them from him. Appellant No.1
sought recovery of a sum of Rs. 10,93,863/- with interest thereon and appellant
No. 2 sought recovery of a sum of Rs.10,90,849/- with interest. Their claims
were based on transactions they allegedly had with the respondent herein,
through Mahendra Kumar Nahata, the husband of appellant No.1 and father of
appellant No.2. In essence, the claim of appellant No. 1 was that a sum of Rs.
5 lakhs had been lent by her to the respondent and the same had not been repaid
and the same was liable to be repaid with interest and damages. The case of
appellant No. 2 was also that she had lent a sum of Rs. 5 lakhs to the
respondent and the same along with interest and damages was due to her. It was
their case that the transactions had been entered into through Mahendra Kumar
Nahata, and that through Nahata, they have had prior dealings with the
respondent. They had averred thus in paragraph 4 of the plaint:
"The said Nahata in his usual course of business was known to the
Defendant for many years and sometime in April, 2000 while acting on behalf of
the Plaintiffs, the said Nahata at the request of Defendant had duly arranged
for two loans of Rs.5,00,000/- to be lent and advanced by each of the
Plaintiffs to the Defendant and this Suit has been brought to recover the said
loans with interest and special damages arising from the Defendant's failure to
repay the said loans within the stipulated date therefor as is stated more-
fully hereinafter."
The respondent not having repaid the money and having repudiated their claim
by filing suits against them, the suit for recovery of the amounts was being
filed.
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The respondent had earlier filed two
suits for recovery of amounts allegedly due from the appellants.
Money Suit No. 585 of 2001 was instituted by the respondent against
appellant No. 2 herein claiming recovery of certain amounts after setting off
the amount of Rs. 5 lakhs taken from appellant No. 2. He had accepted that Rs.
5 lakhs had been paid by the appellant but pleaded that it was not a loan, but
it was as part of a business transaction set out in that plaint. The respondent
had also filed Money Suit No. 69 of 2002 against appellant No.1 herein for
recovery of certain amounts on the same basis and after setting off the sum of
Rs.5 lakhs alleged to have been paid by her. The suits were filed in the City
Civil Court at Calcutta. The said suits were pending when the appellants
together instituted their suit C.S. No. 29 of 2003. Their suit, as noticed, was
on the basis that the sums of Rs. 5,00,000/- each paid by them to the
respondent were by way of loans.
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The appellants moved A.L.P. No. 10 of 2003 on the original side of the
Calcutta High Court invoking clause 13 of the Letters Patent read with Section
24 of the Code of Civil Procedure (for short "the Code") seeking
withdrawal of Money Suit No. 585 of 2001 and Money Suit No. 69 of 2002 for
being tried with C.S. No. 29 of 2003 on the plea that common questions of fact
and law arise in the suits and it would be in the interests of justice to try
and dispose of the three suits together. Though the respondent resisted the
application, the court took the view that it would be appropriate in the
interests of justice to transfer the two suits pending in the City Civil Court
at Calcutta to the original side of the High Court for being tried and disposed
of along with C.S. No. 29 of 2003 filed by the appellants. The said order for
withdrawal and joint trial became final.
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While matters stood thus, the respondent herein, the defendant in C.S.
No. 29 of 2003, made an application G.A. No. 4458 of 2003 praying that the
plaint in C.S. No. 29 of 2003 be rejected under Order VII Rule 11 of the Code
on the ground that the cause of action of each of the appellants, the
plaintiffs in that suit, did not emanate from any common source and there was
no interdependence or nexus between the causes of action put forward by the
respective plaintiffs in the suit and that there was no common foundation for
the right to relief claimed by them. It was pleaded that the appellants, the
plaintiffs could not have joined as plaintiffs in one suit in terms of Order I
Rule 1 of the Code and could not have united their independent causes of action
in the same suit in terms of Order II Rule 3 of the Code. It was submitted that
there was not only misjoinder of parties but there was also misjoinder of
causes of action. It was on this basis that the prayer for rejection of the
plaint under Order VII Rule 11(d) of the Code was made. The appellants, the
plaintiffs, resisted the application. They contended that the claim of the
plaintiffs emanated from the dealings at the instance of Nahata, husband of
plaintiff No.1 and father of plaintiff No.2 with the defendant and that there
was no defect of misjoinder of causes of action in the suit.
They submitted that the plaint was not liable to be rejected under Order VII
Rule 11(d) of the Code.
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The trial judge on the original side, considered the question whether the
plaint filed by the appellants was liable to be rejected under Order VII Rule
11(d) of the Code on the basis that the suit appeared from the statements in
the plaint to be barred by any law. The learned Judge took the view that there
was no law barring a suit in which there was misjoinder of parties or a
misjoinder of causes of action, though, of course, for the purposes of
convenience, a court would avoid the misjoinder of causes of action or
misjoinder of parties. But on the basis of such a defect, the plaint could not
be rejected by invoking Order VII Rule 11(d) of the Code since it could not be
held that a suit which suffers from the defect either of misjoinder of parties
or misjoinder of causes of action or both, is barred by any law. Thus, the
application filed by the respondent herein, the defendant in C.S. No. 29 of
2003, was dismissed.
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The respondent purported to file an appeal challenging that order under
clause 15 of the Letters Patent. The Division Bench held that the suit was bad
for misjoinder of causes of action and hence the trial court was not justified
in not invoking Order VII Rule 11(d) of the Code and in not rejecting the
plaint. The Division Bench, did not reject the plaint, but, gave the appellants
an opportunity to elect to proceed with the present suit at the instance of one
of them and thus confine the plaint claim to one of them and the transaction
relied on by that plaintiff. Aggrieved by this decision of the Division Bench
this appeal has been filed by the plaintiffs.
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Though arguments were addressed on the maintainability of the appeal
filed by the respondent before the Division Bench under clause 15 of the
Letters Patent, (in which one of us, Balasubramanyan, J. finds considerable
force) counsel for the appellant fairly brought to our notice the decision in
Liverpool & London S.P. & I (2004 (9) SCC 512) to which one of us
(Sinha J.) was a party, which has taken the view that an appeal under clause 15
of the Letters Patent lies even in a case where the trial judge refuses to
accede to the prayer of a defendant to reject a plaint under Order VII Rule 11
of the Code. Of course, that was a case where the rejection was sought under
Order VII Rule 11 (a) of the Code on the basis that the plaint did not disclose
a cause of action.
For the purpose of this case, we accept the position enunciated therein. We
also do not think it necessary to consider whether there is any distinction between
prayers for rejection sought under clause (a) of Rule 11 of Order VII of the
Code and clause (d) of Rule 11 of Order VII of the Code and we proceed on the
basis that the Letters Patent Appeal under clause 15 filed by the respondent
herein was maintainable.
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But it is a different question whether a suit which may be bad for misjoinder of parties or misjoinder of causes of action, is a suit barred by
law in terms of Order VII Rule 11(d) of the Code. The Code of Civil Procedure
as its preamble indicates, is an Act to consolidate and amend the laws relating
to the procedure of the Courts of Civil Judicature. No doubt it also deals with
certain substantive rights. But as the preamble vouchsafes, the object
essentially is to consolidate the law relating to Civil Procedure. The very
object of consolidation is to collect the law bearing upon the particular
subject and in bringing it upto date. A consolidating Act is to be construed by
examining the language of such a statute and by giving it its natural meaning
uninfluenced by considerations derived from the previous state of the law.
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Based on this understanding, we can consider the respective positions of
Order I and Order II in the scheme of things. Order I deals with parties to a
suit and provides who may be joined as plaintiffs and who may be joined as
defendants. It also deals with the power of the Court to direct the plaintiffs
either to elect with reference to a particular plaintiff or a particular
defendant or to order separate trials in respect of the parties misjoined as
plaintiffs or defendants. It also gives power to the Court to pronounce
judgment for or against one of the parties from among the parties who have
joined together or who are sued together. The order also specifies that a suit
shall not be defeated by reason of the misjoinder or non-joinder of parties, so
along as in the case of non-joinder, the non- joinder is not of a necessary
party. The Code also gives power to the Court to substitute the correct person
as a plaintiff or add parties or strike out parties as plaintiffs or
defendants, at any stage, if it is found necessary.
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Order II deals with frame of suits.
It provides that every suit shall be framed as far as practicable so as to
afford ground for final decision upon the subjects in dispute and to prevent
further litigation concerning them.
It is also insisted that every suit shall include the whole of the claim
that a plaintiff is entitled to make in respect of its subject matter. There is
a further provision that the plaintiff may unite in the same suit several
causes of action against the same defendant and plaintiffs having causes of
action in which they are jointly interested against the same defendant, may
unite such causes of action in the same suit. It provides that objection on the
ground of misjoinder of causes of action should be taken at the earliest
opportunity. It also enables the Court, where it appears to the Court that the
joinder of causes of action may embarrass or delay the trial or otherwise cause
inconvenience, to order separate trials or to make such other order as may be
expedient in the interests of justice.
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Thus, in a case where a plaint suffers from the defect of misjoinder of
parties or misjoinder of causes of action either in terms of Order I Rule 1 and
Order I Rule 3 on the one hand, or Order II Rule 3 on the other, the Code
itself indicates that the perceived defect does not make the suit one barred by
law or liable to rejection. This is clear from Rules 3A, 4 and 5 of Order I of
the Code, and this is emphasised by Rule 9 of Order I of the Code which
provides that no suit shall be defeated by reason of non- joinder or misjoinder
of parties and the court may in either case deal with the matter in controversy
so far as it regards the rights and interests of the parties actually before
it. This is further emphasised by Rule 10 of Order I which enables the court in
appropriate circumstances to substitute or add any person as a plaintiff in a
suit.
Order II deals with the framing of a suit and Rule 3 provides that save as
otherwise provided, a plaintiff may unite in the same suit several causes of
actions against the same defendant and any plaintiffs having causes of actions
in which they are jointly interested against the same defendant may unite such
causes of action in the same suit. Rule 6 enables the Court to order separate
trials even in a case of misjoinder of causes of action in a plaint filed.
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After the amendment of Order XVI Rule 1 in England, it was held by the
Court of Appeal in England in "Whatever the law may have been at the time
when (1894) A C 494 was decided, joinder of parties and joinder of causes of
action are discretionary in this sense, that if they are joined there is no
absolute right to have them struck out, but it is discretionary in the Court to
do so if it thinks right."
Chaudhary Lachmi Narain [A.I.R. 1937 Privy Council 42] pointed out:
"It is desirable to point out that under the rules as they now stand,
the mere fact of misjoinder is not by itself sufficient to entitle the
defendant to have the proceedings set aside or action dismissed."
Of course, their Lordships were speaking in the context of Section 99 of the
Code. Their Lordships referred to the above quoted observation of the Court of
Appeal in clear that a suit that may be bad for misjoinder of causes of action
is not one that could be got struck out or rejected by a defendant as a matter
of right and the discretion vests with the court either to proceed with the
suit or to direct the plaintiff to take steps to rectify the defect. In fact,
the Privy Council in that case noticed that the suit was bad for misjoinder of
causes of action. It further noticed that the trial judge had in spite of the
complications created thereby, tried and disposed of the suit satisfactorily.
Therefore, there was no occasion for the court to dismiss the suit on the
ground of misjoinder of causes of action at the appellate stage.
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It is well understood that procedure is the handmaid of justice and not
its mistress. The Scheme of Order I and Order II clearly shows that the
prescriptions therein are in the realm of procedure and not in the realm of
substantive law or rights. That the Code considers objections regarding the
frame of suit or joinder of parties only as procedural, is further clear from
Section 99 of the Code which specifically provides that no decree shall be
reversed in appeal on account of any misjoinder of parties or causes of action
or non-joinder of parties unless a Court finds that the non-joinder is of a
necessary party.
This is on the same principle as of Section 21 of the Code which shows that
even an objection to territorial jurisdiction of the Court in which the suit is
instituted, could not be raised successfully for the first time in an appeal
against the decree unless the appellant is also able to show consequent failure
of justice. The Suits Valuation Act similarly indicates that absence of
pecuniary jurisdiction in the Court that tried the cause without objection also
stands on the same footing. The amendment to Section 24 of the Code in the year
1976 confers power on the Court even to transfer a suit filed in a Court having
no jurisdiction, to a Court having jurisdiction to try it. In the context of
these provisions with particular reference to the Rules in Order I and Order II
of the Code, it is clear that an objection of misjoinder of plaintiffs or
misjoinder of causes of action, is a procedural objection and it is not a bar
to the entertaining of the suit or the trial and final disposal of the suit. The
Court has the liberty even to treat the plaint in such a case as relating to
two suits and try and dispose them off on that basis.
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Order VII Rule 11 (d) speaks of the
suit being "barred by any law". According to the Black's Law Dictionary, bar
means, a plea arresting a law suit or legal claim. It means as a verb, to
prevent by legal objection.
According to Ramanatha Aiyar's Law Lexicon, 'bar' is that which obstructs
entry or egress; to exclude from consideration. It is therefore necessary to
see whether a suit bad for misjoinder of parties or of causes of action is
excluded from consideration or is barred entry for adjudication. As pointed out
already, on the scheme of the Code, there is no such prohibition or a
prevention at the entry of a suit defective for misjoinder of parties or of
causes of action. The court is still competent to try and decide the suit,
though the court may also be competent to tell the plaintiffs either to elect
to proceed at the instance of one of the plaintiffs or to proceed with one of
the causes of action. On the scheme of the Code of Civil Procedure, it cannot
therefore be held that a suit barred for misjoinder of parties or of causes of
action is barred by a law, here the Code. This may be contrasted with the
failure to comply with Section 80 of the Code. In a case not covered by
sub-section (2) of Section 80, it is provided in sub-section (1) of Section 80
that "no suit shall be instituted". This is therefore a bar to the
institution of the suit and that is why courts have taken the view that in a
case where notice under Section 80 of the Code is mandatory, if the averments
in the plaint indicate the absence of a notice, the plaint is liable to be
rejected. For, in that case, the entertaining of the suit would be barred by Section
80 of the Code. The same would be the position when a suit hit by Section 86 of
the Code is filed without pleading the obtaining of consent of the Central
Government if the suit is not for rent from a tenant. Not only are there no
words of such import in Order I or Order II but on the other hand, Rule 9 of
Order I, Rules 1 and 3 of Order I, and Rules 3 and 6 of Order II clearly
suggest that it is open to the court to proceed with the suit notwithstanding
the defect of misjoinder of parties or misjoinder of causes of action and if
the suit results in a decision, the same could not be set aside in appeal,
merely on that ground, in view of Section 99 of the Code, unless the conditions
of Section 99 are satisfied. Therefore, by no stretch of imagination, can a
suit bad for misjoinder of parties or misjoinder of causes of action be held to
be barred by any law within the meaning of Order VII Rule 11(d) of the Code.
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Thus, when one considers Order VII Rule 11 of the Code with particular
reference to Clause (d), it is difficult to say that a suit which is bad for misjoinder of parties or misjoinder of causes of action, is a suit barred by
any law. A procedural objection to the impleading of parties or to the joinder
of causes of action or the frame of the suit, could be successfully urged only
as a procedural objection which may enable the Court either to permit the
continuance of the suit as it is or to direct the plaintiff or plaintiffs to
elect to proceed with a part of the suit or even to try the causes of action
joined in the suit as separate suits.
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It cannot be disputed that the court has power to consolidate suits in
appropriate cases. Consolidation is a process by which two or more causes or
matters are by order of the Court combined or united and treated as one cause
or matter. The main purpose of consolidation is therefore to save costs, time
and effort and to make the conduct of several actions more convenient by
treating them as one action. The jurisdiction to consolidate arises where there
are two or more matters or causes pending in the court and it appears to the
court that some common question of law or fact arises in both or all the suits
or that the rights to relief claimed in the suits are in respect of or arise
out of the same transaction or series of transactions; or that for some other
reason it is desirable to make an order consolidating the suits. (See Halsbury's Laws of England, Volume 37, paragraph 69). If there is power in the
court to consolidate different suits on the basis that it should be desirable
to make an order consolidating them or on the basis that some common questions
of law or fact arise for decision in them, it cannot certainly be postulated
that the trying of a suit defective for misjoinder of parties or causes of action
is something that is barred by law. The power to consolidate recognised in the
court obviously gives rise to the position that mere misjoinder of parties or
causes of action is not something that creates an obstruction even at the
threshold for the entertaining of the suit.
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It is recognised that the court has wide discretionary power to control
the conduct of proceedings where there has been a joinder of causes of action
or of parties which may embarrass or delay the trial or is otherwise inconvenient.
In that situation, the court may exercise the power either by ordering separate
trials of the claims in respect of two or more causes of action included in the
same action or by confining the action to some of the causes of action and
excluding the others or by ordering the plaintiff or plaintiffs to elect which
cause of action is to be proceeded with or which plaintiff should proceed and
which should not or by making such other order as may be expedient. (See
Halsbury's Laws of England, Vol. 37, paragraph 73). Surely, when the matter
rests with the discretion of the court, it could not be postulated that a suit
suffering from such a defect is something that is barred by law. After all, it
is the convenience of the trial that is relevant and as the Privy Council has
observed in the decision noted earlier, the defendant may not even have an
absolute right to contend that such a suit should not be proceeded with.
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The Division Bench has mainly relied on an unreported decision of a
learned Single Judge of the same High Court in Margo Trading & Six others
vs. Om Credit Private Limited, a copy of which was provided for our perusal. On
going through that decision it is seen that the learned Judge has not adverted
to or considered Rule 9 of Order I or its effect on the aspect of misjoinder of
parties and has also not given due importance to the effect of the other
provisions in that Order. Nor has the learned judge given due importance to the
effect of the rules in Order II and in particular to Rule 6. We find that there
have been very many decisions of the same High Court on the aspect of
misjoinder of parties or of causes of action. But it is difficult to say that
any of those decisions has taken the view that a plaint was liable to be
rejected under Order VII Rule 11(d) of the Code on such a defect being pointed
out.
[A.I.R. 1928 Calcutta 199] the Division Bench quoted from K.B. 1], the
following passage:
"Broadly speaking, where claims by or against different parties involve
or may involve a common question of law or fact bearing sufficient importance
in proportion to the rest of the action to render it desirable that the whole
of the matters should be disposed of at the same time the Court will allow the
joinder of plaintiffs or defendants, subject to its discretion as to how the
action should be tried."
and continued:
"This is a good working rule for practical purposes and, applying it to
the present case, it seems to us clear that the action as framed is justified
by O.1, Rr.1 and 3, Civil P.C. Looking at the matter, however, from the point
of view of O.1, R.2, we are of opinion that the trial of the suit as laid is
likely to be somewhat embarrassing, especially as some of the questions that
will arise so far as property A is concerned, will have no bearing upon the
claim as regards properties B, C, D and E and also because the question of
costs, in so far as the deity is concerned will arise, which, if possible, must
be kept separate from these which the plaintiff will incur or be entitled to
recover in his personal capacity.
We, accordingly, set aside the orders passed by both the Courts below and
direct that the plaint be treated as comprising two suits: one at the instance
of the plaintiff as shebait of the deity Nandadulal Thakur in respect of property
A and the other at the instance of the plaintiff in his personal capacity in
respect of the properties B, C, D, and E, and the two suits be separately
tried."
The legal position in an identical situation as ours has been considered by
a learned judge of that Court in (4) Calcutta High Court Notes 360]. The
learned judge has held that a defect of misjoinder of parties and causes of
action is a defect that can be waived and it is not such a one as to lead to
the rejection of the plaint under Order VII Rule 11(d) of the Code. As we see
it, the said decision reflects the correct legal position. The decision in
Margo Trading (supra) does not lay down the correct law. The Owners &
Parties, Vessel M.V. Fortune Express & Ors.
[(2006) 3 S.C.C. 100] does not touch on this aspect and is concerned with a
case of suppression of material facts in a plaint.
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In the case on hand, we have also to reckon with the fact that the suits
filed by the respondent against the respective appellants based on the
transactions combined together by the appellants, have already been withdrawn
for a joint trial with the present suit, C.S. No. 29 of 2003.
In those two suits, the nature of the transaction the respective appellants
had with the respondent have to be decided after trial. In the present suit,
the appellants are claiming the payments which also form the basis of the claim
of the respondent against the respective appellants in his two suits. In the
present suit, C.S. No. 29 of 2003, all that the appellants have done is to
combine their respective claims which are in the nature of counter claims or
cross suits to the suits filed by the respondent.
The ultimate question for decision in all the suits is the nature of the
transactions that was entered into by the respondent with each of the
appellants and the evidence that has to be led, in both the suits, is regarding
the nature of the respective transactions entered into by the respondent with
each of the appellants. To a great extent, the evidence would be common and there
will be no embarrassment if the causes of action put forward by the appellants
in the present suit are tried together especially in the context of the two
suits filed by the respondent against them and withdrawn for a joint trial. In
the case on hand, therefore, even assuming that there was a defect of
misjoinder of causes of action in the plaint filed by the appellants, it is not
a case where convenience of trial warrants separating of the causes of action
by trying them separately. The three suits have to be jointly tried and since
the evidence, according to us, would be common in any event, the Division Bench
was in error in directing the appellants to elect to proceed with one of the
plaintiffs and one of the claims. We do not think that on the facts and in the
circumstances of the case one of the appellants should be asked to file a fresh
plaint so as to put forward her claim. Even if such a plaint were to be filed,
it will be a clear case for a joint trial of that plaint with the present suit
and the two suits filed by the respondent. In any event, therefore, the
Division Bench was not correct in interfering with the decision of the learned
single judge.
The effect of withdrawal of the two suits filed by the respondent against
the appellants for a joint trial has not been properly appreciated by the
Division Bench. So, on the facts of this case, the decision of the Division
Bench is found to be unsustainable and the course adopted by it unwarranted.
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We are of the view that on the facts
and in the circumstances of the case and the nature of the pleadings in the
three suits that are now before the Original Side of the Calcutta High Court, it
would be just and proper to try them together and dispose them of in accordance
with law for which an order has already been made. A joint trial of the three
suits based on the evidence to be taken, in our view, would be the proper course
under the circumstances.
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We therefore allow this appeal and
reversing the decision of the Division Bench restore the decision of the learned
single judge. We request the learned single judge of the High Court to try and
dispose off the three suits expeditiously in accordance with law.
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