Calcutta High Court (Appellete Side)
Nantu Lal Das vs Anjali Estates And Developers & ... on 18 May, 2022
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL APPELLATE JURISDICTION
APPELLATE SIDE
Before:
The Hon'ble Justice T. S. Sivagnanam
and
The Hon'ble Justice Hiranmay Bhattacharyya
FA 32 of 2022
Nantu Lal Das.
Vs.
Anjali Estates and Developers & anr.
For the Appellant : Mr. Debdutta Sen,
Ms. Suchismita Chatterjee,
Mr. Malay Kr. Seal .......... Advocates
For the Respondent No. 2 : Mr. Ashoke Kr. Banerjee, ... Sr.Advocate
Mr. Debanjan Mukherjee,
Mr. Subhojit Roy,
Ms. Atasi Saha .......Advocates
Heard on : 12.04.2022
Judgment on : 18.05.2022
Hiranmay Bhattacharyya, J.:-
1. This appeal is at the instance of the plaintiff and is directed
against the deemed decree dated April 16, 2021 passed by the
Page 1 of 18
learned judge, Commercial Court at Alipore in Money Suit no.
11 of 2020.
2. By the impugned judgment and deemed decree, the
application filed by the defendant no. 2/respondent no. 2
herein was allowed thereby rejecting the plaint as against the
defendant no. 2 with a direction to delete the name of the
defendant no. 2 from the cause title of the plaint.
3. The case made out in the plaint is summarized hereunder as
follows-
a) Plaintiff is a civil contractor carrying on business in the name
of M/s. N.S. Enterprise.
b) The Defendant no. 1 is a partnership firm represented by
Ananya Chowdhury and Anargha Chowdhury.
c) The Defendant no. 2 is a company substantially related to
Smt. Ananya Chowdhury and Shri Anargha Chowdhury and
Ananya Chowdury is a livewire of both the defendants vis a vis
controlling authority and responsible for the day to day affairs
of both the defendants.
d) Ananya Chowdhury entrusted the plaintiff with the work of a
project of the defendant no. 2 at 6A, Diamond Harbour Road,
Kolkata- 700 008 (for short "the Seal Para project"). Plaintiff
completed the work of Seal Para project to the satisfaction of
the defendant and a cordial business relationship developed
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between the parties though three bills in respect of the Seal
Para project remained outstanding.
e) On the promises and assurances of payment of the pending
bills, the plaintiff was offered to undertake the Arambagh
project of the defendant no. 1 and entrusted the plaintiff with
the job of piling at the site at Arambagh.
f) Being satisfied with the piling work at Arambagh the
defendants entrusted the plaintiff with the work of
construction of the G+4 storied building as a whole at
Arambagh and issued work order therefore.
g) During continuance of the project at Arambagh, the plaintiff
raised bills from time to time and was paid the amount as
certified at the instance of the defendants but whenever the
plaintiff raised the issue of payment of the bills pending in
connection with Seal Para project, the plaintiff was assured by
the defendants that the same would be paid along with the
payment of the bills of the Arambagh project and the plaintiff
did not have any option but to accept such assurance from
time to time.
h) The plaintiff completed the construction from plinth area to
ground floor roof level but the bill amount was not paid by the
defendants.
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i) Since the defendants were delaying in payment of bills in spite
of requests made by the plaintiff and/ or assurances given on
part of the defendant from time to time, plaintiff suffered huge
financial damages and thereafter pandemic started which also
caused serious suffering to the plaintiff.
j) One Sukdeb Banerjee representing himself as new contractor
appointed by the defendants visited the site at Arambagh in or
around May, 2020 and communicated to the plaintiff that he
has been appointed by the defendant as a contractor to carry
on the construction work at the Arambagh site.
k) The parties exchanged their stand by way of letters issued by
their respective advocates and a meeting took place at the
office of the learned advocates for the plaintiff wherein
Anargha Chowdhury and ors. were present along with their
learned advocate and the matter was amicably discussed and
the parties agreed to have comprehensive settlements of all the
issues relating to Seal Para and Arambagh sites.
l) On or about 25.11.2020, plaintiff received an information from
Arambagh that the construction at the site has been started
by the defendants through someone else without any
information given to the plaintiff. The plaintiff claims that he is
entitled to a decree for recovery of money on account of the
bills raised by the plaintiff for both the sites. The instant suit
was filed claiming a sum of Rs. 34,07,617 together with
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interest at the rate of 18% in respect of Seal Para project and a
further sum of Rs. 1, 87, 06 973 together with interest in
respect of Arambagh project. The plaintiff also prayed for a
decree for permanent injunction restraining the defendants,
their men and agents from carrying out any construction at
the Seal Para project.
4. The defendant no. 2 filed an application under Order 7 Rule
11 read with Section 151 of the Code of Civil Procedure (for
short "CPC") praying for rejection of the plaint. It was
specifically stated in the said application that the plaintiff does
not have any cause of action as against the defendant no. 1
and the plaint discloses no cause of action against the said
defendant. It was further stated therein that two legal entities
have allegedly entered into separate, independent and different
contracts with the plaintiff. Thus, the plaintiff could not have
joined both the defendants in the same suit and also could not
have joined the disputes alleged to have arise out of two
separate contracts in the same suit. In other words, according
to the defendant no. 2, the suit is liable to be dismissed on the
ground of misjoinder of parties and causes of action. Thus, on
the aforesaid grounds the defendant no. 2 prayed for rejection
of plaint.
5. Appellant contested the application for rejection of plaint by
filing a written objection denying the material allegations
contained in the said application.
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6. The learned trial judge, by the impugned judgment and
deemed decree, allowed the application for rejection of plaint
thereby rejecting the plaint as against the defendant no. 2 with
a direction to delete the name of the defendant no. 2 from the
cause title of the plaint. Being aggrieved the plaintiff has
preferred this appeal.
7. Mr. Sen, the learned counsel for the appellant took this court
through the plaint and contended that the partners of the
defendant no. 1/ partnership firm have controlling authority
over the defendant no. 2 company. He further contended that
on assurance of payment of pending bills of the Seal Para
project by the defendants, the plaintiff was offered by the
defendants to undertake the work of the Arambagh project of
the defendant no. 1, the instant suit cannot be said to be hit
either by the principles of misjoinder of causes of action or of
parties. He, further, submitted that defect of misjoinder of
parties and causes of action cannot be a ground for rejection
of plaint. In support of such contention, Mr. Sen, placed
reliance on a decision of the Hon'ble Supreme Court of India in
the case of Prem Lala Nahata and Anr. vs. Chandi Prasad
Sikaria reported at AIR 2007(SC) 1247. He further submitted
that the plaint discloses cause of action against both the
defendants, as would appear from the averments made in the
plaint and the learned trial judge erred in law by rejecting the
plaint. He referred to the decision of the Hon'ble Supreme
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Court of India in the case of Mayar (H.K.) Ltd. and Ors. vs.
Owners & Parties, Vessel M.V. Fortune Express and Ors.
reported at (2006) 3 SCC 100, in the case of Kuldeep Singh
Pathania vs. Bikram Singh Jaryal reported at (2017) 5 SCC
345 and in the case of Popat and Kotecha Property vs. State
Bank of India Staff Association reported at (2005)7 SCC 510 in
order to highlight the scope of enquiry under Order 7 Rule 11
of CPC. He also referred to the decision of the Hon'ble
Supreme Court in the case of Sukanya Holdings (P) Ltd. vs.
Jayesh H. Pandya and Another reported at (2003) 5 SCC 531
in support of his contention that though there exists an
arbitration agreement in respect of one of the contracts
between the parties the dispute involved in the instant suit
cannot be referred to arbitration as there is no provision in the
Arbitration and Conciliation Act, 1996 for splitting the cause
or parties and referring the subject matter of the suit to the
arbitrators. He also referred to a decision of the Hon'ble
Supreme Court in the case of Vidya Drolia and Ors. vs. Durga
Trading Corporation reported at (2021) 2 SCC 1 in support of
his contention that an arbitration agreement as an alternative
public fora should not be enforced when it is futile, ineffective
and would be a no result exercise. Mr. Sen also referred to a
decision of the Hon'ble Supreme Court in the case of Delhi
Development Authority vs. Skipper Construction Company (P)
Ltd. and another reported at AIR 1996(SC) 2005 in support of
his contention that when the corporate character is employed
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for the purpose of committing illegality or for defrauding
others, the court would ignore the corporate character and will
look at the reality behind the corporate veil so as to do justice
between the parties.
8. Mr. Banerjee, learned Senior Counsel for the defendant no. 2/
respondent no. 2 herein submitted that no cause of action has
been pleaded in so far as the defendant no. 2 is concerned. He
submitted that the plaintiff, by way of clever drafting tried to
create illusions of cause of action and there is no real cause of
action in the plaint insofar as the defendant no. 2 is
concerned. In support of his contention that a plaint should be
rejected when no real cause of action is pleaded, Mr. Banerjee
relied upon a decision of the Hon'ble Supreme Court of India
in the case of I.T.C. Limited vs. Debts Recovery Appellate
Tribunal and Others reported at (1998) 2 SCC 70. Thus, he
submitted that the learned trial judge was perfectly justified in
rejecting the plaint against the defendant no. 2. He further
contended that the instant suit is also barred by law as the
same is hit by the principles of misjoinder of causes of action
as well as parties as the plaintiff, has united two causes of
action- one in respect of Seal Para project and the other in
respect of Arambagh project in this suit when two separate
contracts were entered into by the plaintiff against two
different legal entities.
Page 8 of 18
9. Mr. Banerjee also referred to a decision of the Hon'ble Supreme
Court in the case of State of Rajasthan vs. Ganeshi Lal
reported at AIR 2008 (SC) 690 in support of his contention that
one additional or different fact may make a world of difference
between conclusions in two cases and disposal of cases by
blindly placing reliance on a decision in not appropriate.
According to Mr. Banerjee, the facts of the case on hand is
clearly distinguishable from the facts of the cases cited by Mr.
Sen and as such the decision relied upon by Mr. Sen are not
applicable to the case on hand.
10. Heard the learned advocates for the parties. This court has
perused the plaint, the application filed under Order 7 Rule 11
as well as the written objection filed thereto. On a meaningful
reading of the plaint, this court finds that the case of the
plaintiff is that Smt. Ananya Chowdhury and Shri Anargha
Chowdhury who are the partners of the defendant no. 1 firm
also have controlling authority in respect of the defendant no. 2
company. Both of them are responsible for the day to day
affairs of the defendant no. 1 firm as well as the defendant no.
2 company. It is the case of the plaintiff that Ananya Chowdury
who is substantially related to the defendant no. 2 company
entrusted the plaintiff with the Seal Para project. The
assurance of payment of the pending bills of Seal Para project
by the defendant led the plaintiff to accept the offer of the
defendant to undertake the Arambagh project of the defendant
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no. 1 and he was ultimately entrusted with the construction
work of Arambagh project. It has been averred in the plaint
that, from the exchange of correspondence between the parties
it will be evident that the offer for payment of the dues of the
plaintiff by the defendant has been admitted. Thus, upon
reading the plaint as a whole this court is of the considered
view that the persons who have controlling authority and
responsible for day to day affairs of the defendant no. 1 firm
and the defendant no. 2 company entrusted the work of
construction to the plaintiff in respect of two projects and the
assurance given by the persons substantially related to both
the entities for payment of the outstanding dues in respect of
the Seal Para project was the reason behind the plaintiff
accepting the offer of the defendant to enter into the contract in
respect of the Arambagh project. Though defendant no. 1 firm
entered into the contract of Arambagh site and the defendant
no. 2 company entered into the contract of Seal Para project,
but the case made out in the plaint is that the persons who are
controlling the affairs of both the entities are same. Thus, it
cannot be said that the plaint fails to disclose any cause of
action against the defendant no. 2 or that the instant suit is hit
by the principles of misjoinder of causes of action or parties as
contended by the learned senior counsel respondent no. 2
herein.
Page 10 of 18
11. At the time of considering an application for rejection of plaint,
Court has to confine itself only to the averments made therein.
Whether the plaintiff will succeed or not is a matter of trial and
not the subject matter of enquiry under Order 7 Rule 11 CPC.
12. Moreover, even if the argument of Mr. Banerjee is accepted
that two causes of action namely one in respect of Seal Para
project and the other of Arambagh project are separate and
could not have been united in the same suit or that the
defendant no. 1 firm and the defendant no. 2 company could
not have been joined together in one suit, the plaint could not
have been rejected on such ground as it is well settled that the
same cannot be a ground for rejection of a plaint under Order 7
Rule 11 of the Code of Civil Procedure. The Hon'ble Supreme
Court in the case of Prem Lala Nahata (supra) held thus-
"14. The Privy Council in Mahant Ramdhan
Puri v. Chaudhury Lachmi Narain [AIR 1937 PC 42 : 1937
All LJ 556] pointed out : (AIR p. 45)
"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."
*******************************
15. It is well understood that procedure is the
handmaid of justice and not its mistress. The scheme of
Order 1 and Order 2 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 1 and Order 2 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 of on that basis."
13. The Hon'ble Supreme Court in Prem Lala Nahata (supra) has
held that the objection of misjoinder of parties or misjoinder of
causes of action is only a procedural objection and it is not a
bar to the entertaining of suit or the trial and final disposal of
suit. Thus, this court is of the considered view that the learned
trial judge erred in law by rejecting the plaint upon holding
that there is no scope to club different causes of action in the
same suit.
14. The learned trial judge held that the plea of involvement of
promise and assurance of Smt. Ananya Chowdhury and Shri
Anargha Chowdhury is not established in any documents. The
learned trial judge, in our considered view, failed to take note of
the provision laid down in Order 6 Rule 2 of the CPC which lays
down that every pleading shall contain, and contain only, the
statement in a concise form of the material facts on which the
party pleading relies for his claim or defense as the case may be
but not the evidence by which they are to be proved. Thus,
according to the rules of pleading, evidence by which the
material facts pleaded are to be proved need not be stated in the
plaint and the same is a matter of trial.
15. It is well settled that the court while deciding an application
under Order 7 Rule 11 of CPC is to accept the averments made
in the plaint to be true. The Hon'ble Supreme Court in the case
of Kuldeep Singh Pathania (supra) held as follows:-
"12. From the aforesaid, it is apparent that the plaint
cannot be rejected on the basis of the allegations made by
the defendant in his written statement or in an application
for rejection of the plaint. The court has to read the entire
plaint as a whole to find out whether it discloses a cause
of action and if it does, then the plaint cannot be rejected
by the court exercising the powers under Order 7 Rule 11
of the Code. Essentially, whether the plaint discloses a
cause of action, is a question of fact which has to be
gathered on the basis of the averments made in the plaint
in its entirety taking those averments to be correct.
*************************"
16. The Hon'ble Supreme Court in Kuldeep Singh Pathania
(supra) further held that the correctness of the allegations and
evidence in support of the allegations can be considered only at
the stage of trial.
17. Thus, this court is of the considered view that the learned
trial judge erred in law by embarking upon the merits of the case
at the stage of deciding the application under Order 7 Rule 11 of
CPC by holding that the averments in the plaint is not supported
by any evidence in that regard. The learned trial judge also
overlooked the aforesaid well settled proposition of law laid down
by the Hon'ble Supreme Court on the scope of enquiry under
Order 7 Rule 11 CPC.
18. In ITC Ltd. (supra) it was held that the basic question to be
decided while dealing with an application filed under Order 7
Rule 11 of the Code is whether a real cause of action has been
set out in the plaint or something purely illusory has been stated
with a view to get out of Order 7 Rule 11 of CPC.
19. After taking note of the decision of the Hon'ble Supreme Court
in the case of ITC Ltd. (supra), the Hon'ble Supreme Court in
Mayar (H.K.) Ltd. (supra) held that so long as the plaint
discloses some cause of action which requires determination by
the court, the mere fact that in the opinion of the judge the
plaintiff may not succeed cannot be a ground for rejection of
plaint. The Hon'ble Supreme Court further held that Order 7
Rule 11 of the Code does not justify the rejection of any
particular portion of a plaint. The Hon'ble Supreme Court held
thus-
"11. ...............In Roop Lal Sathi v. Nachhattar Singh
Gill [(1982) 3 SCC 487] this Court has held that where
the plaint discloses no cause of action, it is obligatory
upon the court to reject the plaint as a whole under
Order 7 Rule 11 of the Code, but the rule does not
justify the rejection of any particular portion of a
plaint. Therefore, the High Court therein could not act
under Order 7 Rule 11(a) of the Code for striking down
certain paragraphs nor the High Court could act under
Order 6 Rule 16 to strike out the paragraphs in the
absence of anything to show that the averments in
those paragraphs are either unnecessary, frivolous or
vexatious, or that they are such as may tend to
prejudice, embarrass or delay the fair trial of the case,
or constitute an abuse of the process of the court."
20. The learned trial judge, by the impugned deemed decree
rejected the plaint as against the defendant no. 2. It necessarily
implies striking off the averments in the plaint insofar as it is
directed against the defendant no. 2 which is not permissible
under Order 7 Rule 11 CPC as held by the Hon'ble Supreme
Court in Mayar (H.K.) Ltd.(supra).
21. For the reasons as aforesaid, this court is of the considered
view that the impugned judgment and deemed decree rejecting
the plaint as against the defendant no. 2 is liable to be set aside.
22. It is well settled that disputed questions cannot be decided at
the time of considering an application filed under Order 7 Rule
11 of the Code. The Hon'ble Supreme Court in Popat and
Kotecha Property (supra) held that Clause (d) of Rule 11 of Order
7 applies in those cases only where the statement made by the
plaintiff in the plaint, without any doubt or dispute shows that
the suit is barred by any law for the time being in force.
23. From the statement made in the plaint it does not appear that
the instant suit is barred by any law. This Court is also of the
considered view that the cause of action pleaded in the plaint
requires determination by the Court. The cause of action
pleaded is a real one and cannot be said to be illusory, as
contended by the learned Senior Counsel for the respondent no.
2.
24. There is, however, no quarrel to the proposition of law laid
down in Ganeshi Lal (supra) that a decision is a precedent on its
own facts and the only thing in a judge's decision binding a
party is the principle upon which the case is decided. What is of
essence in a decision is its ratio and not every observation
found therein nor what logically flows from the various
observations made in the judgment. However, the said decision
is of no assistance to the respondent no. 2 in the instant case
as the ratio of the decisions of the Hon'ble Supreme Court has
been applied by this court and not what may logically flow from
the observations made in the judgment.
25. The decision of the Hon'ble Supreme Court in the case of
Sukanya Holdings (supra) and Vidya Drolia (supra) are not
relevant for the purpose of deciding the issue involved in the
instant appeal and may be relevant at a later stage and as such
those decisions are not dealt with by this court in details.
26. In Delhi Development Authorities (supra) the Hon'ble Supreme
Court held that when the corporate character is employed for
the purpose of defrauding others, the court would ignore the
corporate character and will look at the reality behind the
corporate veil so as to enable it to pass appropriate orders to do
justice between the parties concerned. Since this court has
already held that the plaint of the instant suit is not liable to be
rejected for the reasons as stated hereinbefore, this court do not
wish to make any comment on the applicability of the said
decision at this stage.
27. For the reasons as aforesaid the impugned judgment and
deemed decree dated April 16, 2021 is set aside and quashed.
The instant appeal, thus, stands allowed without, however, any
order as to costs. Since this suit is for recovery of money arising
out of a commercial dispute, the same should be disposed of
expeditiously. The learned judge, Commercial Court at Alipore is
requested to dispose of Money Suit no. 11 of 2020 as
expeditiously as possible without granting any unnecessary
adjournments to either of the parties.
28. Urgent photostat certified copies, if applied for, be supplied to
the parties upon compliance of all formalities.
I agree.
(T.S. Sivagnanam, J.) (Hiranmay Bhattacharyya, J.)
(P.A.- Sanchita)
