Bansal Commodities And Ors. vs Rakesh Kumar Aggarwal And Anr.
2006 Latest Caselaw 652 Del

JUDGMENT

Anil Kumar, J.

Page 1564

IA No. 7752/2004

1. This is an application by the plaintiff under Section 80(2) of the Code of Civil Procedure. The plaintiff/applicant contended that defendant No. 2 is the Income Tax authority and for the purpose of filing the suit a notice under Section 80 of the Code of Civil Procedure is required to be served. The applicant contended that by order dated 20.5.2004 plaintiff was granted time to file the present suit and was also granted stay for the said period of eight weeks from the date of said order. As the period of eight weeks was expiring on 15th /16th July, 2004 and the plaintiff had to obtain the injunction that amounts lying with the Income Tax Authorities be not paid to defendant No. 1, the plaintiff filed the suit without giving notice under Section 80 of the Code of Civil Procedure.

2. The plaintiff/applicant in the circumstances has prayed for exemption from serving the notice under Section 80 of the Code of Civil Procedure on defendant No. 2 before filing the present suit.

3. The defendant No. 2/non-applicant has contended that no suit is maintainable in a Civil Court under Section 293 of the Income Tax Act and, therefore, the plaintiff/applicant is not entitled for exemption under Section 80(2) of the Code of Civil Procedure. The application is also opposed on the ground that no urgent and immediate relief need be granted to the plaintiff. Whether any amount is refundable to Mr. R.K. Agarwal or he is liable to pay Rs. 1,39,91,585 as per revised order of settlement Commissioner dated 26th March, 2004 The defendant No. 2 in reply to another application had also contended that as far as the position of the defendant No. 2 is concerned, its position in the civil proceedings is basically that of a garnishee and the only substantial question/issue is Page 1565 whether refund, if any, should be given to Mr. R.K. Agarwal or whether M/s Bansal Commodities was entitled to get a direction that refund should be made to them as Mr. R.K. Agarwal was indebted/liable to pay Rs. 49.03 lacs.

4. There has been protracted litigation between the plaintiff and defendant No. 1 pursuant to seizure of the drafts given by defendant No. 1 to plaintiff in discharge of its alleged liability. Diverse orders have been passed from time to time. Ultimately in a writ petition where the Income Tax department, defendant No. 2 was also a party it was held that since the disputes between the defendant No. 1 and the plaintiff involves various disputed questions of facts, therefore, the disputes be decided by a Civil Court and liberty was granted to the plaintiff to file the suit.

5. The disputes are between the plaintiff and defendant No. 1 as to who is entitled for the amounts of drafts which were seized by the Income Tax Department in a raid on defendant No. 1, which amounts were subsequently realized from the bank. The dispute now is as to who is entitled to the said amount from the Income Tax Department. No relief as such is claimed against the Income Tax Authorities.

6. Probably for this reason the defendant No. 2 in the writ petition did not raise any objection that the disputed questions of facts between the plaintiff and the defendant No. 1 be decided by a Civil Court. Nothing has been claimed against the Income Tax Authorities except as to who will be entitled to the amount of seized drafts lying with the Income Tax Authorities. Section 293 of the Income Tax Act is reproduced for reference:-

No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act; and no prosecution, suit or other proceeding shall lie against the Government or any officer of the Government for anything in good faith done or intended to be done under this Act.

7. Thus dispute raised in the present application is only whether the plaintiff is entitled for exemption under Section 80 of the Code of Civil Procedure in the facts and circumstances. As the main dispute is between the plaintiff and the defendant No. 1 as to who would be entitled for the amount lying with the Income Tax Authorities, who has to comply with the adjudication to be done by the Court, it will be appropriate to grant the plaintiff exemption under Section 80(2) of the Code of Civil Procedure in the facts and circumstances of the case.

8. Therefore, the application is allowed and the plaintiff is granted exemption as prayed for.

IA No. 7753/2004

9. This is an application under Section 14 of the Indian Limitation Act contending that by order dated 20.5.2004 a Division Bench had specifically ordered that the question of limitation would not arise in filing the present suit by the plaintiff, however, the plaintiff has filed the application under Section 14 of the Limitation Act seeking exclusion of the period spent in the litigation between the plaintiff and defendant Nos. 1 and 2 and especially Page 1566 in view of order dated 20.5.2004 in Civil Writ Petition No. 3738/1994 titled Bansal Commodities v. Commissioner of Income Tax.

10. The applicant contended that he had been conducting various proceedings before defendant No. 2 and in the Hon'ble Court and before the Supreme Court of India with due diligence and there was no negligence and the proceedings on the part of the plaintiff were initiated in good faith and therefore, he is entitled to avail the exclusion of time spent in litigation under Section 14 of the Indian Limitation Act.

11. The application is opposed by defendant Nos. 1 and 2. The defendant No. 1 non applicant contended that he was not a party to the said proceedings and, therefore, plaintiff cannot take benefit of Section 14 of the Limitation Act and the suit being apparently barred by time is not maintainable.

12. The defendant No. 1/non-applicant contended that an application being CM No. 554/2001 on 12.1.2001 was filed to imp leaded him as respondent in writ petition, however, the application was opposed by the plaintiff on the ground that defendant No. 1 was neither a necessary nor a proper party and in view of the opposition by the plaintiff no orders were passed by the High Court and the order dated 20.5.2004 in CWP No. 3738/1994 was passed on the consent of the plaintiff and defendant No. 2. The defendant No. 1/non-applicant in the circumstances contended that the intention of the plaintiff was malafide and in the circumstances it cannot be said that the plaintiff had acting in good faith within the meaning of Section 14 of the Limitation Act and consequently the plaintiff will not be entitled for exclusion of time under Section 14 of the Limitation Act and the suit will be prima facie barred by time. The defendant No. 1/non-applicant also contended that the plaintiff failed to exercise due care and attention and consequently the application under Section 14 for condensation is not maintainable and is liable to be dismissed.

13. I have heard the learned Counsel for the parties. There seems to be a protracted litigation between the parties. The plaintiff is a partnership firm with Puran Mal and Suresh Bansal as partners which firm deals in ferrous and non ferrous alloys and has been an income tax assessed since 1984-85. In an oral agreement between the plaintiff and defendant No. 1, 58 metric tonnes of copper alloys was to be supplied within 30 days, for which plaintiff paid a sum of Rs. 49.03 lakhs by pay order cheques in January, 1989. On failure to supply the goods within the time agreed, an interest of 18% per annum on the amount paid was to be given. It was contended that statements of accounts were given detailing the outstanding as on 1.4.1989 which was allegedly confirmed and signed and seven pay orders amounting to a total sum of Rs. 50.40 lakhs were issued in favor of Hindustan Copper Limited and drawn on a bank in an account maintained by defendant No. 1 in the name of Surinder Kumar with Punjab National Bank, Mall Road. The seven pay orders dated 25.4.1989 with various letters of authorization were handed over to plaintiff to pay the orders to Hindustan Copper Limited for claiming the copper alloy which had to be supplied under the agreement. Before the pay orders could be submitted to Hindustan Copper Limited searches were conducted in various premises belonging to defendant Page 1567 No. 1 and under the provisions of the Income Tax Act on account of deemed seizure the order was passed in respect of drafts also which were given to the plaintiff. Pursuant to orders the pay orders were taken by the Income Tax authorities and an amount of Rs. 50.40 lakhs covering the said seven pay orders was assessed as income of defendant No. 1 by Assistant Commissioner of Income Tax Investigation. On an application of plaintiff claiming to be beneficial owner of the said seven pay orders, the order of seizure under Section 132(1) passed under the Income Tax Act was vacated and upon completion of assessment proceedings the previous orders were reviewed in favor of plaintiff. However, in first appeal the order of assessment was set aside and ultimately the Supreme Court set aside the orders disposing of the application of the plaintiff under Section 132 and directed the Commissioner of Income Tax to decide the application afresh under Section 132(1) of the Income Tax Act.

14. On fresh consideration plaintiffs applications were dismissed by Commissioner of Income Tax and Punjab National Bank paid Rs. 50.40 lakhs covering the seven pay orders to the Income Tax department. The order dismissing the application of the plaintiffs was impugned in CWP No. 3738/1994 before the Delhi High Court.

15. In the meanwhile in another petition of defendant No. 1 the settlement Commissioner had held that the plaintiffs are entitled to amount covering the said seven pay orders by its order dated 29.6.1999.

16. The writ petition filed by the plaintiff being CWP No. 3738/1994 was disposed of holding that the matter should be agitated before the Civil Court. The relevant portion of the order dated 20.5.2004 is as under:-

After hearing the matter at some length, the counsel for the petitioner as well as the Revenue has fairly stated that the Court need not express any opinion on the merits of the case and the parties be relegated to the Civil Court to sort out their disputes. A request was also made that the amount which is lying with the Income Tax Department may not be released for a period of eight weeks.

On behalf of the original assessed, it was contended that the writ petition should be dismissed.

Since we are not expressing any opinion and we are relegating the petitioner to the Civil Court, in the subject matter before us, we dispose of this petition with a direction to the Revenue not to disburse the amount for a period of eight weeks. It goes without saying that the party was agitating the cause before this Court under a bona fide belief that the Court will pass an appropriate relief but as the parties are now being relegated to the Civil Court, the question of limitation should not arise. It goes without saying that, if the petitioner approaches the Civil Court, the observations made by the Income Tax Department or the Settlement Commission with regard to the title over the said seven pay orders will not bind the parties and will be decided by the Civil Court independently.

With these directions, the writ petition is disposed of.

17. The defendant No. 1 had filed Special Leave Petition against the order dated 20.5.2004 in CWP No. 3738/1994. By order dated 18.8.2005 Page 1568 the special leave petition was dismissed holding that the order does not effect the rights of the defendant No. 1 as he was not made a party. The order of Apex Court dated 18.8.2005 is as under:-

Since the petitioner was not made a party to the proceedings before the impugned order was passed, we do not entertain this petition as the order does not affect his rights. The special leave petition is dismissed.

18. The learned Counsel for the defendant No. 1 has relied on , Deena (Dead) through LRs v. Bharat Singh (Dead) through LRs and Ors. to contend that since defendant No. 1 was not imp leaded as a party to the writ petition the action of the plaintiff was not in good faith and the plaintiff is not entitled for exclusion of time under Section 14(3) of the Limitation Act, 1963.

19. I have heard the learned Counsel for the parties at length and have also perused the pleadings and the applications and the replies.

20. Under Section 14 a plaintiff is entitled for exclusion of the time in prosecuting any other suit and another civil proceeding relating to same matter in issue with due diligence and in case the suit and another civil proceeding in another Court was prosecuted in good faith which for the defect of jurisdiction or other cause of action of a like nature was not entertained. Under Sub-section (3)(c) of Section 14 mis-joinder of parties or causes of action is deemed to be a cause of like nature as of defect of jurisdiction.

21. Whether the plaintiff has acted with due diligence and in good faith in prosecuting various proceedings will be a question of fact. The main factor which influences in extending the benefit of Section 14(2) to a litigant is whether the prior proceedings had been prosecuted with due diligence and in good faith.

22. The finding as to good faith or the absence of it is a finding of fact. The other expression relevant to be construed in this regard, defect of jurisdiction? and 'or other cause of like nature' are also such aspects which require determination and cannot be inferred conclusively merely on the basis of some of the previous orders and the pleadings filed by the parties.

23. In Deena (Dead) through LRs (Supra) relied on by the defendant No. 1, the defendant had objected to grant of exclusion of time on account of lack of good faith since in the writ petition itself it was specifically stated that the suit was bad for mis-joinder of necessary parties which were imp leaded in the proceedings before the Collector as one of the mortgagor was not a party. The plaintiff in that suit despite fully aware of the objection continued the matter and the suit was decreed and the order of the trial court was challenged in appeal. During the pendency of the appeal on the prayer of the plaintiffs seeking leave to withdraw the suit with permission to file the fresh suit, the Court granted the prayer and the suit was withdrawn. In the circumstances it was contended on behalf of defendant that plaintiff is not entitled for exclusion of the period sought under Section 14 of the Limitation Act. Since despite the specific objection by the defendant that one of the mortgagor was not imp leaded as a party, plaintiffs did not prosecute the previous suit in good faith and consequently exclusion of time under Section 14 was not granted.

Page 1569

24. However, in the present case there have been orders in favor of plaintiffs to get the money from the Income Tax department which have been set aside or modified. There have been cross proceedings between the parties and ultimately in a writ petition being 3738/1994, it was held that the parties were agitating the cause before the Writ Court under a bona fide belief that the Court will pass an appropriate relief, however considering various factors, the parties were relegated to the Civil Court and it was held that the question of limitation will not arise in the suit to be filed by the plaintiff.

25. Despite the observation by the Division Bench in Writ petition No. 3738/1994 in order dated 20.5.2004 that the question of limitation should not arise, whether the plaintiff is still entitled to seek exemption for the period during which various proceedings were prosecuted before the Income Tax department or the High Court or the Supreme Court and whether these proceedings were initiated in good faith or not, will be a mixed question of fact and law. To avail the benefit under Section 14 the plaintiffs will have to establish various facts which cannot be inferred conclusively on the basis of the pleadings of the parties and some of the orders filed by the parties. Consequently, the application is disposed of with the observation that whether the suit of the plaintiff will be barred by time or whether the plaintiff will be entitled for exclusion of time in prosecuting the cases before the High Court and Supreme Court will be decided on the basis of the facts to be established by the parties on leading evidence.

26. With these observations the application is disposed of.

IA No. 6704/2004

27. This is an application by the defendant No. 1/applicant for rejection of the plaint on the ground that the plaintiffs have claimed various relief for declaration and consequential relief and the ad-valorem Court fees is liable to be paid whereas the plaintiff has paid only Rs. 20/- as a fixed Court fees. The applicant has also sought rejection of the plaint on the ground that the plaintiff has claimed a decree of damages of Rs. 50 lakhs and a Court fees of Rs. 20/- only has been paid thereon whereas under the relief for recovery in prayers (k) and (l) the plaintiff has sought a recovery of Rs. 1,88,54,295/- separately and ad-valorem Court fees has not been paid.

28. The application is contested by the plaintiff contending inter-alia that for the recovery of Rs. 1,88,54,295/- an ad-valorem Court fees of Rs. 1,86,410/- has been paid and other relief have been valued for the purpose of Court fees and jurisdiction according to the provisions of Court fees Act and Suits Valuation Act.

29. Perusal of the plaint reflects that the plaintiff has sought various declarations which will ultimately entitle him for recovery of Rs. 1,88,54,295/-.

30. On those reliefs of declarations a fixed Court fees of Rs. 20/- has been paid, however, for the recovery of Rs. 1,88,54,295/- the suit has been valued for purpose of jurisdiction and Court fees at Rs. 1,88,54,295 and ad-valorem Court fees of Rs. 1,86,410/- has been paid.

31. The learned Counsel for the defendants contended that the decree for Rs. 1,88,54,295/- has been prayed against defendant Nos. 1 and 2 separately in Page 1570 prayers (k) and (l). According to the learned Counsel since decrees are prayed separately against defendant No. 1 and defendant No. 2, therefore, the plaintiff is liable to pay double the Court fees for the recovery of said amount separately from defendant Nos. 1 and 2.

32. In ascertaining whether the plaint shows a cause of action, the court is not required to make an elaborate enquiry into doubtful or complicated questions of law or fact. By the statute the jurisdiction of the court is restricted to ascertaining whether on the allegations a cause of action is shown. In Vijai Pratap Singh v. Dukh Haran Nath Singh AIR 1962 SC 941 the Apex Court held:

By the express terms of Rule 5 Clause (d), the court is concerned to ascertain whether the allegations made in the petition show a cause of action. The court has not to see whether the claim made by the petitioner is likely to succeed: it has merely to satisfy itself that the allegations made in the petition, if accepted as true, would entitle the petitioner to the relief he claims. If accepting those allegations as true no case is made out for granting relief no cause of action would be shown and the petition must be rejected. But in ascertaining whether the petition shows a cause of action the court does not enter upon a trial of the issues affecting the merits of the claim made by the petitioner. It cannot take into consideration the defenses which the defendant may raise upon the merits; nor is the court competent to make an elaborate enquiry into doubtful or complicated questions of law or fact. If the allegations in the petition, prima facie, show a cause of action, the court cannot embark upon an enquiry whether the allegations are true in fact, or whether the petitioner will succeed in the claims made by him.

33. So long as the claim discloses some cause of action or raises some questions fit to be decided by a judge, the mere fact that the case is weak and not likely to succeed is no ground for striking it out. The purported failure of the pleadings to disclose a cause of action is distinct from the absence of full particulars. The court has not to see whether the claim made by the plaintiff is likely to succeed: it has merely to satisfy itself that the allegations made in the plaint, if accepted as true, would entitle the plaintiff to the relief he claims. If accepting those allegations as true, no case is made out for granting relief, no cause of action would be shown and the plaint must be rejected. But in ascertaining whether the plaint shows a cause of action the court does not enter upon a trial of the issues affecting the merits of the claim made by the plaintiff. It cannot take into consideration the defenses which the defendant may raise upon the merits; nor is the court competent to make an elaborate enquiry into doubtful or complicated questions of law or fact. Rejection of a plaint is a serious matter as it non suits the plaintiff and kills the cause of action. It cannot be ordered cursorily without satisfying the requirement of the said provision. It is no more res integra that to decide under Order VII Rule 11 of the Code of Civil Procedure, averments in the plaint have to be read without looking at the defense and thereupon it has to be seen whether on the averments made in the plaint, Order VII Rule 11 get attracted or not and Page 1571 from the averments made in the plaint it has to be seen whether the jurisdiction of the Court is made out or not and whether the suit is barred by any law. No provision has been pointed out by the defendant Nos. 1 and 2 under the Court fees Act and Suits Valuation Act that if a particular amount is claimed against a number of defendants separate Court fees shall be payable by the plaintiff.

34. The plea raised by the defendants in defense is not to be considered for the rejection of the plaint. What is to be seen is whether the cause of action is made out from the averments made in the plaint. The suit has been valued for the purpose of jurisdiction and Court fees at Rs. 1,88,54,295/- against defendant Nos. 1 and 2 and ad-valorem Court fees has been paid. For rejection of plaint, the plea of the defendants that two separate court fees has to be paid, is not to be adjudicate at this stage. From the perusal of the plaint, it appears that the plaintiff has claimed the same amount from the defendant No. 1 and defendant No. 2. The plaint is not to be rejected on this ground. In the circumstances on the basis of defense raised by the defendants and on their plea, the plaint is not liable to be rejected.

35. Therefore, the application is without any merit and the application for rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure is dismissed.