Yogendra Kumar Modi vs M.K. Modi & Anr

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                   Date of decision: 23rd November, 2016.

+      CS(OS) 1585/2008 & IA No.2258/2016 (of D-2 u/O 7 R-11 CPC),
       OA No.49/2013 (against order dated 1st February, 2013 of JR), IA
       No.4853/2013 (of D-2 u/S 151 CPC) & OA No.401/2015 (of D-2
       against order dated 14th September, 2015 of JR)

       YOGENDRA KUMAR MODI                         ..... Plaintiff
                  Through: Mr. Darpan Wadhawa, Mr. Aseem
                           Chaturvedi, Ms. Ritika Ahuja and Mr.
                           Vipul Joshi, Advs.

                                Versus

       M.K. MODI & ANR                                     ..... Defendants
                    Through:           Mr. Rahul Gupta and Mr. Shekhar
                                       Gupta, Advs. for D-2.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.

On 6th September, 2016, when this suit was heard last, the following order was passed:

"1. The plaintiff has instituted this suit under Order XXXVII of Code of Civil Procedure, 1908 (CPC) for recovery of Rs.2,89,00,000/- with interest jointly and severally from the two defendants.

2. The two defendants applied separately for leave to defend. Both the defendants were granted conditional leave to defend i.e. subject to furnishing security in the sum of Rs.2,89,00,000/-.

3. The defendant No.2 purported to furnish security but which has not been accepted by the Registrar and the chamber appeals thereagainst are pending consideration.

4. The defendant No.1 failed to furnish security and vide order dated 2nd July, 2012, a decree in the sum of Rs.2,89,00,000/- with costs but without granting any interest was passed in favour of the plaintiff and against the defendant No.1.

5. It is informed that the defendant No.1 in pursuance to the said decree has paid the sum of Rs.2,89,00,000/- to the plaintiff, though in instalments.

6. The counsel for the plaintiff states that the claim of the plaintiff against the defendant No.2 for recovery of interest survives.

7. On enquiry, it is informed that the money claimed in the suit was under a family settlement whereunder though the defendants No.1&2 undertook the liability to have a guarantee furnished by the plaintiff discharged but failed to do so resulting in the plaintiff paying the sum of Rs.2,89,00,000/- to the Bank on 15th June, 2007. The claim for interest is thus with effect from 15th June, 2007 till the said sum of Rs.2,89,00,000/- was paid by the defendant No.1 to the plaintiff in instalments.

8. Admittedly, there is no agreement as to the rate of interest.

9. The contention of the counsel for the defendant No.2 who has also filed an application being IA No.2258/2016 under Order VII Rule 11 of CPC in this regard is that the Court in the order dated 2nd July, 2012 leading to the decree having refused to pass any decree for interest, the plaintiff cannot now have a claim for interest against the defendant No.2.

10. The counsel for the plaintiff, on enquiry, clarifies that the plaintiff is not claiming any amount from the defendant No.1 towards interest and is confining the claim for interest against the defendant No.2 only.

11. Attention of the counsels has been invited to Section 34 of CPC which appears to suggest that a decree for interest, if any, can be passed only when passing a decree for recovery of the principal amount and not separately.

12. The counsel for the defendant No.2 has also argued that if this Court does not agree with the contention of the defendant No.2, the matter be put to trial.

13. However, on enquiry, as to what evidence is to be led as to the rate of interest which is in the discretion of the Court, the counsel is unable to tell, as to for leading what evidence trial is sought.

14. The counsel for the defendant No.2 to also respond to the said aspect.

15. The counsels to also consider, whether not the claim for interest is barred by res judicata.

16. List on 27th October, 2016."

2. On 27th October, 2016, on request of the counsels, the hearing was adjourned to today.

3. The counsel for the plaintiff and the counsel for the defendant No.2 Dr. D.K. Modi have been heard.

4. It is not in dispute that as far as Chamber Appeals No.49/2013 & 401/2015 preferred by the defendant No.2 against the orders dated 1 st February, 2013 and 14th September, 2015 of the Joint Registrar not accepting the security furnished by the defendant No.2 are concerned, the same have become infructuous, as the security was ordered to be furnished for the principal amount of Rs.2,89,00,000/- only which has since been recovered by the plaintiff from the defendant No.1. The plaintiff having sought recovery jointly and severally from the two defendants, after having recovered the amount from one defendant cannot recover it all over again from the other defendant.

5. Thus, the only question which remains to be adjudicated is the entitlement, if any of the plaintiff to recover from the defendant no.2 the pre-

suit and pendente lite interest till the date of recovery of the principal amount of Rs.2,89,00,000/- from the defendant No.1.

6. The counsel for the plaintiff under instructions states that the plaintiff is willing to give up the claim for pre-suit interest and is asserting his right now only to interest pendente lite.

7. The counsel for the defendant No.2 has contended that under Section 34 of the Code of Civil Procedure, 1908 a decree for interest can be passed only along with a decree for principal amount and since no decree for principal amount is to be passed against the defendant No.2 owing to the plaintiff having recovered the amount from the defendant No.1, no decree for interest even can be passed against the defendant No.2.

8. I am unable to agree with the aforesaid contention of the counsel for the defendant No.2. In fact, the counsel for the plaintiff in his arguments had referred to Kamlesh Kohli Vs. Escotrac Finance & Investment Ltd. (2000) 1 SCC 324 laying down that when the decree sought is joint and several, decrees can be separately passed against the defendants though clubbed together in the suit.

9. The counsel for the defendant No.2 has referred to Babulal Rana Vs. State of West Bengal AIR 2013 Calcutta 41 but which is found to be with respect to a subsequent suit for interest and would not be applicable to the present as the claim for interest of the plaintiff herein is in the same suit.

10. The counsel for the defendant No.2 has also referred to Associated Construction and Engineering Company Vs. Dhanlaxmiben AIR 1997 Gujarat 39 but which again is with respect to the interest pendente lite being discretionary.

11. I am of the view that if this Court were to exercise the discretion, then CS(OS) No.1585/2008 Page 4 of 11 the discretion has to be exercised in favour of the plaintiff inasmuch as the plaintiff, insofar as against the defendant No.1, has been found entitled to the monies claimed in the suit and should, in the ordinary course, have been entitled to interest. Even though plaintiff was held not entitled to interest from defendant No.1, the monies due to plaintiff having been withheld, the plaintiff, if entitled to in law, would certainly be entitled to interest from defendant No.2.

12. No merit is found in the contention of the counsel for the defendant No.2 first above noticed of the decree for interest being required to be only along with the decree for principal amount. It is quite possible in a case, of a decree for a principal amount being passed on admission and a separate decree being passed for interest. Even otherwise, if there was to be merit in the said contention, a decree for principal amount can also be passed against the defendant No.2, making the same inexecutable since the amount has been recovered from the defendant No.1.

13. The only question which according to me arises for adjudication is whether in view of para 4 of the order dated 2nd July, 2012, whereby decree against the defendant No.1 was passed, the plaintiff today can be held to be entitled to interest from the defendant No.2. The said paragraph is as under:

"4. In view of the fact that conditional leave to defend was granted to the defendant No.1 in terms of order dated 16.02.2012 and he has not furnished the security even within the extended time, this Court has no option but to decree this suit qua defendant No.1 to the extent of the principal amount of Rs.2,89,00,000/- with costs but without granting any interest on the said amount as the counsel for the plaintiff concedes that there is no contract governing the parties with regard to the claim of the interest component."

14. Though the counsel for the plaintiff has contended that the principle of res judicata, as was enquired from the counsel for the plaintiff on 6 th September, 2016, does not arise since it is the same suit and not a subsequent suit but I have drawn attention of the counsel to the principle of issue res judicata and to:

(A) Satyadhyan Ghosal Vs. Deorajin Debi AIR 1960 SC 941 laying down that the principle of res judicata applies also as between two stages in the same litigation to the extent that a Court, whether the Trial Court or a higher Court, having at an earlier stage decided a matter in one way will not allow the parties to re-agitate again at a subsequent stage of the same proceedings. (B) Arjun Singh Vs. Mohindra Kumar AIR 1964 SC 993 laying down that the scope of principle of res judicata is not confined to what is contained in Section 11 of CPC but is of more general application and res judicata could be as much applicable to different stages of the same suit as to the findings on issues in different suits. It was further held that the principle of res judicata is based on the need of giving a finality to judicial decisions and what it says is that once res judicata, it shall not be adjudged again. (C) Y.B. Patil Vs. Y.L. Patil (1976) 4 SCC 66 laying down that principles of res judicata can be invoked not only in separate subsequent proceedings but also get attracted in subsequent stage of the same proceedings. It was held that once an order made in the course of a proceeding becomes final, it would be binding on the subsequent stage of that proceeding.

(D) Ram Gopal Vs. Ram Charan 2015 SCC OnLine Del 8198 and CS(OS) No.1585/2008 Page 6 of 11 Prime Time India Ltd. Vs. Ashok Kapoor 2016 SCC OnLine Del 4078, where the principles aforesaid were applied.

15. This Court on 2nd July, 2012, while considering the claim of the plaintiff for a decree, claimed in the plaint jointly and severally against the two defendants, held that no interest is payable reasoning that "the plaintiff concedes that there is no contract governing the parties with regard to the claim of the interest component".

16. The counsel for the plaintiff has argued that a suit against more than one defendant, even if the claim is joint and several, is to be treated as parallel suits against each of the defendants with each being governed on its own merit. It is further contended that it is not as if the decree passed by this Court on 2nd July, 2012 was binding on the defendant No.2; once that decree is not binding on the defendant No.2, the aforesaid observation should also not be binding on the defendant No.2. It is yet further contended that the two defendants had filed their separate defences and once it is so, the non-grant of interest against the defendant No.1 should not come in the way of the plaintiff being granted interest against the defendant No.2.

17. I am however of the view that once the claim of the plaintiff against more than one defendant is on the same footing and basis and it is not the case of the plaintiff that the cause of action against the two defendants is different, the reason given on 2nd July, 2012, especially when it was attributable to the concession of the plaintiff, for non-grant of interest against the defendant No.1, would bind the plaintiff qua the claim for interest against defendant No.2 as well.

18. It would have been a different matter had the claim of the plaintiff for CS(OS) No.1585/2008 Page 7 of 11 interest against the defendant no.1 had been declined for reasons peculiar to the defendant no.1 and not applicable to the defendant no.2 and in which case the plaintiff could have perhaps urged that denial of interest against defendant no.1 would not come in the way of the claim of the plaintiff for interest against the defendant no.2. However, here the plaintiff has been denied interest against defendant no.1 for the reason that the contract governing the parties had no component of interest. It is the plaintiff‟s own case that the defendants no.1&2 had jointly and severally contracted to pay the suit amount to the plaintiff. Once the contract between the plaintiff on the one hand and the defendants no.1&2 on the other hand has been held to have no component of interest and the plaintiff for this reason held not entitled to any interest from the defendant no.1, in my view the plaintiff cannot be granted interest against the defendant no.2 also.

19. The plaintiff in the plaint pleaded a singular cause of action and a singular debt owed by the defendants jointly and severally to the plaintiff. I fail to see as to how a singular cause of action jointly and severally against the defendants can survive a judgment against one of the defendants. A Division Bench of the High Court of Bombay in The Municipal Corporation of City of Bombay Vs. Vasantlal Fulchand AIR 1938 Bom 360 held that where there is joint liability, judgment against one joint debtor operates as a bar to a subsequent claim against the other joint debtor, the principle being that there is only one debt and only one cause of action and the debt being merged in the judgment, there is no remaining cause of action against the other judgment-debtors. In holding so, reliance was placed on Henry J.B. Kendall Vs. Peter Hamilton (1879) L.R. 4 A.C. 504 laying down that an action and a judgement against two persons who had borrowed CS(OS) No.1585/2008 Page 8 of 11 money from the plaintiff constitutes a bar to another action brought by the same plaintiff against a third person, who is afterwards discovered to have been really interested, as a partner, with the two debtors in the business for the purposes of which the money had been borrowed even if the earlier judgment is unsatisfied. Pollock and Mulla in their Commentary on the Indian Contract and Specific Relief Acts, 13th Edition, Reprint (2010) under Section 43 of Contract Act notice the difference of opinion amongst the High Courts on whether a decree obtained against one of the several joint promisors is a bar to subsequent suit against others. However I am here not concerned with „a subsequent suit‟ and the difference of opinions in the High Courts is immaterial. The principle as enunciated in Vasantlal Fulchand supra, de hors the said difference in opinion would apply to the present case of both the defendants being sued in one suit and not one after another.

20. Mention may also be made of Shivlal Motilal Vs. Birdichand Jivraj AIR 1917 Bombay 268. It was held that the real effect of Section 43 of the Indian Contract Act, 1872 is to deprive a co-contractor sued alone of his right to have his co-contractor joined with him in the action and it enabled the plaintiff to get a decree against the one if he did not wish to or would not join the other; it did not enable him to file separate actions against both. It was further held that the effect of Section 43 could not have been intended to deprive the second co-contractor of his right to plead the previous judgment or to split up one cause of action into as many causes of action as there were joined contractors.

21. I respectfully concur; though owing to Section 43 of the Contract Act the plaintiff herein was not required to sue both the defendants for the joint CS(OS) No.1585/2008 Page 9 of 11 and several liability undertaken by them to the plaintiff but having done so and having obtained judgment against one of them holding that the plaintiff under the contract is liable only to the principal amount and not to interest and having allowed such a judgment to attain finality, cannot now urge that he is entitled to interest though not against defendant no.1 but against defendant no.2.

22. The same if permitted can lead to incongruous results. Section 43 also entitles each of the two or more joint promisors to compel every other joint promisor to contribute equally with himself to the performance of the promise unless a contrary intention appears from the contract. If after holding that the plaintiff is not entitled to interest, it is now held that the plaintiff is, the defendant no.2 if makes a claim against the defendant no.1 for the defendant no.1‟s share of amount due towards interest, would be faced with a defence of the Court having held in the judgment and decree against the defendant no.1 that the contract does not have a component of interest, depriving the defendant no.2 of his right under Section 43 of the Act.

23. No merit is also found in the contention of the counsel for the plaintiff that the said concession was qua pre-suit interest only. The decree against the defendant No.1 ultimately passed was admittedly not for interest pendente lite also and the said decree has attained finality and there has been no challenge thereto. Once the plaintiff has allowed a decree, negating the claim of the plaintiff for interest not for reasons particular to the defendant No.1 but for reasons which are applicable to both the defendants, law prevents me from now at this stage holding the plaintiff to be entitled to interest, even though I hold an opinion that the plaintiff once had been found CS(OS) No.1585/2008 Page 10 of 11 entitled to the principal amount should have been held entitled to at least pendente lite interest. However merely because of change of roster, the judgments and orders which have attained finality cannot be permitted to be changed.

24. For the sake of completeness, I may only record that on enquiry from the counsel for the defendant No.2, whether the defendant No.1 has claimed the share of the defendant No.2 of the amount paid by the defendant No.1 to the plaintiff, the counsel for the defendant No.2 replies in the negative; though he states that the defendant No.1 can claim the same at any time but the said claim may be barred by time. However, on further enquiry, it is informed that the defendant No.1 has paid the decretal amount in instalments, with the last instalment having been paid only on 31st July, 2016.

25. For the aforesaid reasons, the surviving claim of the plaintiff against the defendant No.2 for interest cannot be allowed.

26. The suit of the plaintiff against the defendant No.2 is disposed of recording that the claim of the plaintiff against the defendant No.2 for the principal amount does not survive, for the reason of the plaintiff having recovered the principal amount from the defendant No.1 and by dismissing the claim of the plaintiff against the defendant No.2 for interest. The plaintiff shall however be entitled to costs of this suit from the defendant No.2. Counsel‟s fee assessed at Rs.1 lakh.

Decree sheet be prepared.

RAJIV SAHAI ENDLAW, J.

NOVEMBER 23, 2016/bs/gsr (corrected & released on 17th December, 2016) CS(OS) No.1585/2008 Page 11 of 11