Kirloskar Electric Company Ltd. ... vs Utkal Solvent Extractions (P) ...
2003 Latest Caselaw 509 Del

JUDGMENT

Dalveer Bhandari, J.

1. This petition is directed against the order passed by the Monopolies and Restrictive Trade Practices Commission (the Commission) vide its order dated 16.3.2000. The short but interesting controversy involved in this petition is whether the petitioners are proper or formal parties in a complaint filed by respondent No.1, M/s Utkal Solvent Extractions (P) Ltd.

2. Brief admitted facts necessary to dispose of this petition are recapitulated as under.

Respondent Nos. 2 & 3, M/s Greaves Ltd supplied Diesel Generating Set (DG Set) to respondent No.1, M/s Utkal Solvent Extractions (P) Ltd. The DG Set comprised mainly of two important components. Its engine and alternator. The engine was manufactured by M/s Greaves Ltd and the alternator was manufactured by petitioner No.1, M/s Kirloskar Electric Company Ltd. Respondent No.1, M/s Utkal Solvent Extractions (P) Ltd received the DG Set along with a separate certificate issued by M/s Kirloskar Electric Company Ltd highlighting important qualities and features of alternator which was an integral part of the DG Set.

3. It may be pertinent to mention that as per the booklet enclosed along with the agreement it was mentioned that the alternator had a frame No. 4AB 280/6, but respondent No.1 received the alternator in which frame number was 4AB 280/E which was not as per the specification supplied at the time of finalising the agreement. Respondent No.2, M/s Greaves Ltd vide letter dated 21.2.1994 confirmed to respondent No.1 that the alternator fitted with DG set is that of a capacity of 200 KVA, model No. 4AB 280/6, though the actual model of alternator was 4AB 280/E, which has also been admitted by the service engineer at a later stage.

4. The DG Set started giving various problems right from its inception to the respondent claimant. The difficulties were pointed out to respondent No.2 vide letter dated 26.4.1994. Respondent No.2 had undertaken to rectify the defects immediately. The inherent defects of alternator could not be rectified despite the fact that respondent No.2 had sent Service Engineer to respondent No.1 for repairing the same. Time and again it was mentioned by respondent No.1, M/s Utkal Solvents Extractions (P) Ltd that they were badly suffering because of the breakdown of the DG Set. In the DG Set respondent No.1, M/s Utkal Solvents Extractions (P) Ltd primarily had problems with the alternator. Number of letters and telegrammes were exchanged. Respondent No.2, M/s Greaves Ltd also got in touch with petitioner No.1 company and mentioned about the complaint of respondent No.1, M/s Utkal Solvents Extractions (P) Ltd. Despite the long line of correspondence with respondent No.2, the DG Set could not be rectified. According to respondent No.1, M/s Utkal Solvents Extractions (P) Ltd, the petitioners had not taken due care and service responsibility even during the warranty period. Respondent No.1, M/s Utkal Solvents Extractions (P) Ltd ultimately filed an application under Section 12-B of the MRTP Act charging respondent No. 2 to 5 for adoption of and indulgence in unfair trade practice qua supply of DG Set and claimed compensation to the tune of Rs. 21.61 lakhs from M/s Greaves Ltd with interest at the rate of 25% per annum till the date of payment. M/s Greaves Ltd resisted the compensation application on several grounds. The petitioners M/s Kirloskar Electric Company Ltd resisted the compensation application on several grounds. The petitioner contended that the compensation application is not maintainable against it for want of any privity of contract between the parties.

5. The Commission was called upon to decide the question of maintainability of compensation application. In the impugned order the Commission held that no relief is claimed against M/s Kirloskar Electric Company Ltd in the present proceeding and in that view of the matter it is not a necessary party. However, it is an admitted fact on record that the alternator was an integral part of the DG set and the same was supplied by M/s Kirloskar Electric Company Ltd. In that view of the matter, though no relief is claimed against the petitioners M/s Kirloskar Electric Company Ltd, they can be said to be proper or formal parties and their presence would be necessary for effective adjudication of the controversies involved in these proceedings. The Commission observed that even if two separate proceedings were filed against M/s Greaves Limited and M/s Kirloskar Electric Company Ltd, the question in that regard would be common to both the proceedings. In that view of the matter, instead of filing two separate proceedings, it would be open to the complainant to file one proceeding against all the respondents as the cause of action is the same. In the impugned order it is also observed that in case an order of compensation is passed against M/s Greaves Ltd for supply of DG Set with defective alternator, they in turn might have to file proceedings against M/s Kirloskar Electric Company Ltd. That would give rise to multiplicity of proceedings. In order to avoid such multiplicity of proceedings, it would be desirable that M/s Kirloskar Electric Company Ltd is retained as a party respondent in these proceedings. The Commission held that the compensation application filed by M/s Utkal Solvent Extractions (P) Ltd is maintainable against the petitioners, M/s Kirloskar Electric Company Ltd.

6. The learned counsel appearing for the petitioners, Mr. Pramod B. Agarwala, submitted before this Court that the impugned order is entirely untenable and illegal and has to be set aside. He submitted that the petitioners are neither proper nor formal parties because the petitioners had no privity of contract with M/s Utkal Solvent Extractions (P) Ltd. The DG Set was provided to M/s Utkal Solvent Extractions (P) Ltd by M/s Greaves Ltd and the petitioners are in no manner a party to that agreement and no proceedings can be initiated against the petitioners.

7. This Court issued show cause notice and in reply to the show cause notice a counter affidavit has been filed by M/s Greaves Ltd. The respondent M/s Greaves Ltd has supported the judgment of the Commission and submitted that the Commission has rightly held that the petitioners are formal parties and their presence was necessary in order to adjudicate upon the compensation application. The complaint of M/s Utkal Solvent Extractions (P) Ltd was primarily lodged because of the faulty working of alternator in the DG Set and for proper adjudication, the presence of the petitioners is imperative and the petitioners cannot be deleted from the array of parties. In the counter affidavit it is mentioned that the compensation application is maintainable against the petitioners as it is the petitioners who had supplied the alternator to the DG Set in question and,therefore, the petitioners cannot shy away from their responsibilities even if there is no privity of contract between the petitioners and respondent No.1, M/s Utkal Solvent Extractions (P) Ltd. It is also mentioned in the reply that when admittedly the petitioners had supplied the alternator, the petitioners cannot claim not to be necessary parties, and in any event, as proper parties before the Commission. It is also mentioned that separate proceedings would lead to multiplicity of litigation.

8. Mr. C.Mukhopadhyaya, learned counsel for respondents 2 & 3 submitted that though in para 8 of the petition the petitioners have given an impression that they have not filed any other writ petition or proceedings before this Court, but this is factually wrong and misleading. He also placed a copy of the judgment delivered in Writ Petition No. 4122 of 1995 preferred by the petitioners against the same respondents including M/s Utkal Solvent Extractions (P) Ltd. That writ petition was dismissed by a detailed judgment on 10.7.1998 by a Division Bench of this Court in which it has been specifically mentioned that apart from other grounds, the petitioners had stated in reply that there was no privity of contract between the petitioners and the claimant M/s Utkal Solvent Extractions (P) Ltd and,therefore, the petitioners could not be proceeded against. It is unfortunate that the petitioners have deliberately concealed this material fact from this Court.

9. The learned counsel for respondents 2 & 3 submitted that the petitioners had not approached this Court with clean hands and because of material concealment of relevant facts, this petition deserves to be dismissed with exemplary costs. The Courts have consistently taken the view that all those who approach the Court must come to the Court with clean hands. The petitioners are guilty of concealment of material facts and do not deserve any indulgence and consequently this petition is liable to the dismissed only on this short ground of suppression of material facts with exemplary costs.

10. In Rajabhai Vs. Vasudev , their Lordships of the Supreme Court observed that a party who approaches the Court knowing or having reason to believe that if the true facts were brought to its notice this Court would not grant special leave, and persuades this Court to grant leave to appeal is guilty of conduct, forfeiting all claims to the exercise of discretion in his favor. It is his duty to state the facts which may reasonably have a bearing on the exercise of the discretionary powers of this Court. Any attempt to withhold material information would result in revocation of the order, obtained from this Court.

11. In Har Narain Vs. Badri Das , their Lordships of the Supreme Court observed that it is of utmost importance that in making material statements and setting forth grounds in applications for special leave, care must be taken not to make any statements which are inaccurate, untrue or misleading. The special leave granted by the Supreme Court in this case was revoked and the appeal was, without dealing with the merits of the case dismissed.

12. In Asiatic Engineering Co. Vs. Achhru Ram, (Full Bench), the court observed that no relief can be granted in a writ petition which is based on mis-statement or suppression of material facts.

13. Similar principles have been enunciated in English cases. The King v. Williams (1914) 1 KB 608 and Rex vs. Kensington Income Tax Commissioners (1917) 1 KB 486, which were considered with approval by the Supreme Court in number of judgments. Their Lordships of the Supreme Court also relied on these cases.

14. In Udai Chand v. Shankar Lal, the court revoked the special leave petition and vacated the stay order. The court while following the ratio of the aforementioned cases observed that the Supreme Court would be justified in revoking the leave to appeal if the same was obtained by making mis-statement of a material fact. The special leave already granted was revoked and consequently the appeal was dismissed. This principle has been consistently followed in a number of other cases by various courts.

15. Mr. Mukhopadhyaya, learned counsel for respondents 2 & 3 further submitted that even on merits the petitioners have no case. He supported the judgment of the Commission and submitted that the alternator supplied by the petitioners was integral part of the DG Set. The main grievance of the complainant was regarding the functioning of the alternator. At the time of supply of the DG Set a separate test certificate has also been issued by the petitioners which is annexed with the petition at page 36. The relevant portion of the certificate reads as under:-

"Certified that the machine has been run and found to be electrically and mechanically sound and in working order in all particulars.

Certified that it has passed the appropriate high voltage tests and generally complies with the requirements of Indian Standard Specifications: 4722/1992.

The band of regulated voltage is +/- 1.0 % of rated voltage. Type tests have been carried out on machine number 9142PAC-01."

For KIRLOSKAR ELECTRIC CO LTD.

16. The learned counsel for respondents 2 & 3 submitted that the petitioners cannot be necessary parties, but it cannot be denied that the petitioners are proper or formal parties to the complaint and their presence would be necessary for effective adjudication of the controversy involved in the complaint. Mr. Mukhopadhyaya submitted that the Commission has correctly observed that to avoid multiple proceedings, it would be desirable to retain the petitioners as parties to the proceedings. In support of his submission, Mr. Mukhopadhyaya also placed reliance on the judgment of the Apex Court in Aliji Momonji & Co vs. Lalji Mavji and Others . It is observed in this judgment that where the presence of the respondent is necessary for complete and effectual adjudication of the dispute, though no relief is sought, he is a proper party. In the facts of this case certain portion of the building which was unauthorised was sought to be demolished. The Court observed that "The landlord has a direct and substantial interest in the demised building before the demolition of which notice under Section 351 was issued. In the event of its demolition, his rights would be materially affected. His right, title and interest in the property demised to be tenant or licensee would be in jeopardy. It may be that the construction which is sought to be demolished by the Municipal Corporation was made with or without the consent of the landlord or the Lesser. But the demolition would undoubtedly materially affect the right, title and interest in the property of the landlord. Under those circumstances, the landlord necessarily is a proper party, though the relief is sought for against the Municipal Corporation for perpetual injunction restraining the Municipal Corporation from demolition of the building. In this context the question whether the respondent-landlord had only commercial interest in the property would not arise." Mr. Mukhopadhyaya also submitted that on the parity of reasoning if the Commission is satisfied that the grievance of the respondent-claimant and decides to grant compensation, in that event the presence of the petitioners would be absolutely imperative for effective adjudication of the controversy involved in the case.

17. Mr. Mukhopadhyaya also placed reliance on Ramesh Hirachand Kundanmal vs. Municipal Corporation of Greater Bombay and Others wherein the Apex Court observed that a necessary party is one without whom no order can be made effectively and a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding.

18. In Rambuddi Veeraswamy vs. Rambuddi Jangammayya and others the Court observed that although a person may not be a necessary party to a suit, he may still be a proper party.

19. In Bhagwanti vs. Custodian and Another (AIR 1976 Jammu & Kashmir 29) the Court observed that a necessary party is one without whom no order can be made effectively and a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding.

20. We have carefully considered the rival contentions of the parties. The Courts in a series of judgments have recognised the essential distinction between a 'necessary party' and a 'proper party'. Necessary parties are parties necessary to the constitution of the suit and without whom no decree at all can be passed. Proper parties are those whose presence enables the Court to adjudicate more effectually and completely the questions raised in the suit. When this ratio is applied in the facts and circumstances of this case, then the Commission has rightly come to the conclusion that the petitioners are proper parties, particularly, when alternators which are integral part of the DG sets were supplied by the petitioners. A separate certificate was issued by the petitioners regarding the features of the alternators at the time of supply of the DG Set to the respondent-claimant,. The respondent claimant has filed the complaint primarily on the ground of functioning of the alternator. In our considered opinion, the Commission was not wrong when it observed that the petitioners may not be necessary parties, but it cannot be denied that they are proper parties or formal parties and their presence would be necessary for effective adjudication of the controversies arising from the proceedings. The Commission was also justified in observing that in any event to avoid multiple proceedings, it would be desirable to retain the petitioners as parties to these proceedings (compensation proceedings). The petitioners in their own interest must come forward and defend their reputation which is at stake instead of taking hyper technical pleas. Even on merit, in our view, no interference is called for in the order passed by the Commission.

21. The petitioners are guilty of suppressing material facts from this Court that earlier Writ Petition No. 4122 of 1998 filed by the petitioners was rejected by a Division Bench of this Court vide judgment dated 10.7.1998 and in that judgment the Division Bench noted and relevant portion reads as under:-

"That there was no privity of contract between the petitioner and the applicant/claimant as the equipment in question was to be supplied by respondent No.3 M/s Greaves Limited and,therefore, the petitioner could not be proceeded against in the application by the claimant."

 22. This precisely is the main ground on which this petition has been filed before this Court.  The petitioners do not deserve any indulgence from this Court and the petition is liable to be dismissed with costs of Rs. 15,000/-.  Ordered accordingly.    C.M.No. 5173/2000 also stands disposed of.