Hindustan Times Ltd. vs Compagnie International Pour Le ...
2007 Latest Caselaw 2213 Del

JUDGMENT

Anil Kumar, J.

Page 3114

IA No. -12300 of 2000

1. This is an application by the defendant No. 5, Mr. Vipin Malik, seeking dismissal of the plaint under Order I Rule 3, 6 and 9 of the Code of Civil Procedure on account of legal fatality of non-joinder of necessary parties and for rejection of plaint under Order VII Rule 11 on account of non disclosure of any cause of action against the applicant/defendant No. 5 and for passing a judgment against the plaintiffs in terms of Order XII Rule 6 of the Code of Civil Procedure dismissing the suit of the plaintiff on the basis of admissions made by the plaintiff in the suit. (After withdrawal of suit against Defendant Nos. 1 to 4, the defendant No. 5 has become defendant No. 1, however, he has been referred as defendant No. 5 in the present order as in the present order the effect of deletion of defendant Nos. 1 to 4 is considered.)

2. The plaintiff filed the above-noted suit against defendants contending that on 5th May, 1995, the consortium consisting of defendant Nos. 1 to 4 was formed in terms of a Joint Venture Agreement (hereinafter referred to as 'JVA') entered into by and between the parties and the purpose of JVA was to put in a bid pursuant to Tender No. II-28/94-MMT(TM) floated by the Department of Telecommunications, Government of India, for cellular telecommunication infrastructures and services in India in one or more of the States of Punjab, Haryana, Kerala and Karnataka. The bid was to be made through a company known as PROTEL in terms of the tender. Under the terms of the joint venture agreement, it was made clear that the Page 3115 first defendant which had the eligibility requirement for the project for which defendant No. 1 had to take and maintain a direct shareholding of at least 10% of Protel.

3. The plaintiff in the plaint contended that the Department of Telecommunication had clarified on 15th May, 1995 that the eligibility as regards the net-worth was to be made by the bidder company or the promoter company and the promoter company could not rely upon their affiliates/parent companies/subsidiaries for meeting the criteria of net-worth. In the circumstances, according to the plaintiff, it became clear to all the parties by the end of May 1995 that the entire bid would fail because of the inability of the first defendant to meet the criteria of minimum net-worth as was required under the tender. In these circumstances, plaintiff alleged that he was deceitfully tried to be roped in by defendant No. 1 to 3 and defendant No. 5 as a party to joint venture agreement so that the criteria of minimum net-worth could be met and bid could be made on 7th June, 1995.

4. The assertion of the plaintiff is that since defendant No. 5/applicant had a direct personal interest in ensuring that the bid does not fail, he approached Mrs. Shobna Bhartia over the telephone on 3rd June, 1995, however, it was made absolutely clear to him that only commitment of the plaintiff was to purchase/subscribe up to a maximum of 1000 equity shares in Protel and the plaintiffs were not to be made liable in any manner whatsoever under the joint-venture agreement. On 3rd June, 1995, the defendant No. 5/applicant committed the plaintiff for purchase of up to 1000 equity shares in Protel though he did not at the relevant time had any power or authority letter issued by plaintiff enabling or authorizing the applicant to commit the plaintiffs to the JVA or to amend the JVA so as to make the plaintiff, a party to the JVA. It has also been asserted by the plaintiff that plaintiff at any time thereafter has not ratified the conduct of the applicant nor any authority was orally conveyed to the applicant in Paris. Despite this, according to the plaintiff, defendant No. 5/applicant in an unauthorized manner acted as an authorized representative of plaintiff to enter into an agreement on behalf of plaintiff with defendant Nos. 1 to 4 and joint venture agreement dated 5th May, 1995 was amended and plaintiff was subjected to all the terms and conditions of joint-venture agreement as an initial investor.

5. In these circumstances, plaintiff filed the present suit seeking various declarations that the plaintiff being not a party to the joint-venture agreement dated 5th May, 1995 is not bound by the terms thereof including the arbitral agreement and that the amendment dated 3rd June, 1995 to the joint-venture agreement dated 5th May, 1995 being illegal and void ab initio and that defendant Nos. 1 to 3 being not entitled to initiate arbitration proceedings against the plaintiff or to proceed with the same before the ICC or at all. The plaintiff categorically sought the relief of declaration that the 5th defendant/applicant had no power or authority in face or in law to make the plaintiff a party to joint-venture agreement as illegally, deceitfully and unauthorisedly sought to be made a party by the applicant on 3rd June, 1995 Page 3116 acting in concert with defendant Nos. 1 to 3. The plaintiff also sought the relief of delivery of amended agreement dated 3rd June, 1995 so that the same may be cancelled and has also sought for a permanent injunction against defendant Nos. 1 to 3 from proceeding with the arbitration against the plaintiff before the ICC or at all besides cost etc.

6. The suit was contested by defendants including defendant No. 5/applicant. However, an application being IA No. 11932/2000 was filed by the plaintiff whereby plaintiff sought withdrawal of suit unconditionally against defendant Nos. 1 to 4 and 6.

7. The said application was disposed of by order dated 17th November, 2000 which is as under:

17.11.2000

Present: Mr. Rajiv Nayyar, Sr. Advocate with Mr. Sanjiv Mittal, Advocate for the plaintiff.

Mr. V.P. Singh, Sr. Advocate with Ms. Anju Bhattacharya for the defendant Nos. 1 to 3.

Mr. R.S. Suri, Sr. Advocate with Mr. Rohit Aggarwal for the defendant No. 4.

IA No. 4885/2000 in S. No. 2208/1995

Learned Counsel for the plaintiff seeks leave to withdraw the application.

The application is dismissed as withdrawn.

IA No. 11932/2000

This is an application filed under Order XXIII Rule 1 for the unconditional withdrawal of the suit in respect of Defendant Nos. 1 to 4 and 6. Mr. Suri, learned senior counsel appearing for the sole surviving defendant No. 5, seeks an opportunity to file a reply. It is his contention that the suit was filed with a view to thwart the ICC proceedings and that a settlement involving foreign exchange has unaccountedly left the country. He further submits that the plaintiff has dropped the claims against alleged "co-conspirators" of defendant No. 5 but is continuing the action against defendant No. 5 only to harass him.

In my considered opinion these are objections that would properly be taken by way of defense to the present suit. If necessary parties have been deleted from the array of defendants, this may be a ground for the rejection of the suit but would not be an impediment in the way of allowing this application. Learned Counsel for defendant No. 5 is unable to disclose any reason indicative of this Defendant having been placed at a disadvantage in the conduct of his defense. For these reasons I have not considered it necessary to grant time to defendant No. 5 to file a reply in opposition to the present application. I am unable to discern any prejudice that would be caused to defendant No. 5 by the withdrawal of the suit against the other defendants.

Page 3117

Mr. V.P. Singh, learned senior counsel appearing for defendant Nos. 1 to 3 has no objection to the application being allowed. Mr. Vipin Malik, who had earlier filed the written statement on behalf of defendant No. 6 states that he objects to the withdrawal as against defendant No. 6. He submits that no consent terms have been arrived at between the plaintiff and defendant No. 6.

In these circumstances the suit, as against defendant Nos. 1 to 4 is dismissed as withdrawn unconditionally. Amended Memorandum of parties be filed within four weeks.

Suit No. 2208/1995

Renotify on 14th May, 2001.

November 17th, 2000

sd/-

8. Pursuant to the application being allowed by order dated 17th November, 2000, the suit was withdrawn unconditionally against defendant Nos. 1 to 4 and the plaintiff was directed to file amended memo of parties where after the present application for rejection of the plaint and dismissal of the suit has been filed by the applicant/defendant No. 5 mainly on the ground that defendant Nos. 1 to 4 are necessary parties to the suit and, therefore, the suit could not be withdrawn against them as withdrawal of the suit against defendant Nos. 1 to 4 prejudicially affects the interest of defendant No. 5 and it is a fraud being played by plaintiff, upon the court as well as defendant No. 5. The applicant also contended that the plaintiff has dropped the claim against the alleged co-conspirators of defendant No. 5/applicant and the lis is being continued against defendant No. 5 only to harass him. The dismissal of the suit is claimed on the ground that the suit is bad for non-joinder of parties as it is clearly provided, according to the defendant No. 5/applicant, that all persons may be joined in one suit as defendants where any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist against such persons, whether jointly, severally or in the alternative and if separate suits are brought against such persons, any common question of law or fact would arise.

9. According to applicant from the averments made in the plaint, it is apparent that the allegations of the plaintiff are that defendant Nos. 1 to 3 acted in concert with defendant No. 5/applicant and, therefore, defendant Nos. 1 to 3 and the applicants are necessary parties to the suit more so because defendant Nos. 1 to 4 and defendant No. 6 were the part of consortium and the applicant was merely a consultant to the consortium.

10. Since the main relief in the suit was against the consortium and defendant Nos. 1 to 4, the relief against the applicant was only a consequential relief merely on the ground that the applicant was not authorized to sign joint-venture agreement on behalf of plaintiff.

11. The applicant/defendant No. 5 contended that since the role attributable to defendant Nos. 1 to 4 is taken away nothing remains as against Page 3118 defendant No. 5/applicant and nothing survives against the applicant after withdrawal of the suit against defendant Nos. 1 to 4.

12. The applicant further contended that it is clear that the plaintiff has made unequivocal admissions in the plaint and documents that it authorized the defendant No. 5 to purchase 1000 shares of the 6th defendant with a view to bail out the consortium from the emergency situation which occurred due to the failure of the consortium in meeting the mandatory condition of the net-worth criteria for biddings for the tender issued by the Department of Telecommunications and in the circumstances the plaintiff cannot be allowed to resile from his express undertakings and in the circumstances no declaration can be sought by the plaintiff only against defendant No. 5/applicant that the joint-venture agreement was illegal, ineffective or void ab initio or that the plaintiff was not a party to JVA or that applicant had no authority or power in fact or in law to make the plaintiff a party to JVA. The defendant Nos. 1 to 4 had been deleted as parties and the claims against them have been withdrawn pursuant to the order dated 17th November, 2000. The claim which survives against defendant No. 5 in the plaint is a declaratory decree that the defendant No. 5/applicant had no power or authority in fact or in law to make the plaintiff a party to the joint venture agreement as illegally, deceitfully and unauthorisedly has been sought to be done by the applicant on 3rd June, 1995 acting in concert with defendant Nos. 1 to 3 and the same can not be granted in absence of other alleged co-conspirators who have been deleted as parties to the suit.

13. While allowing the plaintiff to withdraw the suit against defendant Nos. 1 to 4, direction was given to amend the memo of parties but no directions were given to carry out the consequential amendment to the plaint on account of withdrawal of the suit against defendant Nos. 1 to 4. A application for amendment of plaint on account of withdrawal of the suit against the defendant Nos. 1 to 4 is also pending, however, the learned Counsel for defendant No. 5/applicant has insisted that first the application for rejection of the plaint be decided as on withdrawal of the suit against co-conspirators, the suit has become non maintainable which right can not be denied by incorporating amendment to the plaint.

14. The main plank of the submission of the applicant is that the defendant Nos. 1 to 3 were co-conspirators and if they have been deleted as a party, i.e., the suit has been withdrawn against them, the suit cannot be proceeded against defendant No. 5/applicant. Whether the defendant Nos. 1 to 4 against whom the suit has been withdrawn are necessary parties is to be decided on the basis of the facts and law and it is one of the defense of the applicant. Had this suit been filed by the plaintiff only against the defendant No. 5 alleging that the defendant Nos. 1 to 3 also colluded with the applicant, the plaint could not be rejected on the defense being raised by the applicant that the suit is bad for non-joinder of parties.

15. It is no more res integra that for rejection of the plaint, pleas and allegations raised in the plaint only have to be considered. From the perusal Page 3119 of the plaint, it is apparent that there have been various assertions against the applicant that there was no authorization orally or otherwise to enter into joint-venture agreement on behalf of plaintiff. Some of the specific allegations made in the plaint against defendant No. 5 are in paragraph 7, 8 and 10

16. 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 gets attracted or not and 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 or plaint does not disclose any cause of action. 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. Reliance for this proposition can be placed on 2005 (4) AD (Delhi) 541, Kanwal Kishore Manchanda v. S.D. Technical Services Pvt. Ltd.; 2005 (2) AD (Delhi) 430, Arvinda Kumar Singh v. Hardayal Kaur; , Asha Bhatia v. V.L. Bhatia; 2003 (5) AD (Delhi) 370, Punam Laroia v. Sanjeev Laroia , Condour Power Products Pvt. Ltd. v. Sandeep Rohtagi. A cause of action is a bundle of facts which are required to be pleaded and proved for the purpose of obtaining relief claimed in the suit. For the aforementioned purpose, the material facts are required to be stated but not the evidence except in certain cases where the pleading relies on any misrepresentation, fraud, breach of trust, willful default, or undue influence. Whether a plaint discloses a cause of action or not is essentially a question of fact. But whether it does or does not must be found out from reading the plaint itself. For the said purpose the averments made in the plaint in their entirety must be held to be correct. The test is, if the averments made in the plaint are taken to be correct in their entirety, a decree would be passed or not. 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 the Supreme Court held: (AIR pp. 943-44, para 9) 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 Page 3120 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.

17. Therefore, if the plaint discloses some cause of action or raises some questions which require to be adjudicated or decided by the 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. 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.

18. In D. Ramachandran v. R.V. Janakiraman and Ors. the Apex Court had held that effect of dismissal of a suit is altogether different and distinct from the effect of rejection of the plaint. For consideration whether the plaint discloses cause of action or not the pleas and documents of the defendants are not to be considered. The Apex Court had held as under:

Learned Single Judge fell in error in placing reliance upon the material supplied by the defendant, which alone is sufficient to set aside the impugned order. Learned Single Judge instead of proceeding to reject the plaint dismissed the suit, which approach is also erroneous. The effect of dismissal of suit is altogether different and distinct from the effect of rejection of the plaint. In case plaint is rejected under Order 7 Rule 11, CPC, filing of a fresh plaint in respect of the same cause of action is specifically, permitted under Rule 13 of Order 7, CPC. Altogether different consequence follows in the event of dismissal of suit, which has the effect of precluding the plaintiff to file a fresh suit on the same cause of action. Rejection of plaint takes away the very basis of the suit rendering as if there was no suit at all or that no suit was instituted. Order of dismissal of suit while recognising the existence of a suit indicates its termination. While deciding the application under Order 7 Rule 11, CPC, learned Single Judge ought not and could not have dismissed the suit. Even in the decision of the Supreme Court in T. Arvindandam's case (Supra), relied upon by learned Counsel for the appellant, it was held that if on a meaningful-not formal-reading of the plaint it is manifestly vexatious and merit-less, in the sense of not Page 3121 disclosing a clear right to sue, the Trial Court should exercise his power under Order 7 Rule 11, CPC taking care to see that the ground mentioned therein is fulfillled. In order to fulfilll that ground bare allegation made in the plaint and documents filed therewith were required to be looked into, which in the instant case clearly disclosed at least a cause of action against the defendant that defendant was liable for damages for its acts of omission and commission. It would be an altogether different situation that the plaintiff might not ultimately succeed in obtaining a decree against the defendant or that Court might come to the conclusion that suit would not be maintainable against the defendant and that plaintiff had a cause of action only against defendant's principal and its parent until in Hong Kong, but such aspect could not have been gone into at this stage. Three paragraphs of the plaint quoted above in our view do clearly disclose cause of action for the plaintiff to claim damages.

19. Learned Counsel for the applicant has relied on , Sudhir G. Angur and Ors. v. M. Sanjeev and Ors. to contend that the plaint is liable to be rejected. In the case relied on by the applicant, the suit filed under Section 92 of the Code of Civil Procedure and the leave was granted to the plaintiff in the suit to institute the suit under Section 92 of the Code of Civil Procedure. In these circumstances, it was held that once the leave was granted, the question of rejecting the plaint under Order VII Rule 11 will not arise and such an application for rejection of the plaint should have been made prior to the leave having been granted or at the time when the grant of leave was opposed. After losing the opposition to the grant of leave, it was not open to the applicant to rely under Order VII Rule 11 for rejection of the plaint. Apparently, the ratio of the case is clearly distinguishable from the present facts and circumstances.

20. In Ambica Quarry Works v. State of Gujarat and Ors. the Supreme Court observed:

The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and not what logically follows from it.

Similarly in Bhavnagar University v. Palitana Sugar Mills Pvt. Ltd. , the Supreme observed:

It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.

In Bharat Petroleum Corporation Ltd. and Anr. v. N.R. Vairamani and Anr. AIR 2004 SC 778, it was held that a decision cannot be relied on without disclosing the factual situation. The Apex Court had also observed:

Page 3122 Court should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes.

21. In the present facts and circumstances, whether the defendant Nos. 1 to 4 were co-conspirators and necessary parties will be a question of fact and law which can be decided only after trial of respective pleas and contentions of the parties. In view of the allegations of the plaintiff which will survive even after the withdrawal of the suit against defendant Nos. 1 to 4, the applicant cannot assert that since the defendant Nos. 1 to 4 were co-conspirators, the plaint should be rejected. Learned Counsel for the applicant is unable to show any statutory provisions which make the co-conspirators a necessary party in a suit for declaration. The applicant cannot deny his role, however, the defense of the applicant is that he was authorized which fact has been denied by the plaintiff. Whatsoever was the role of the defendant No. 5/applicant and whether the same was justified or not and whether the plaintiff shall be entitled for a decree of declaration as claimed by the plaintiff has to be adjudicated. It will not be appropriate to take into consideration the defense which has been raised by the applicant that the plaint is liable to be rejected on account of non-joinder of parties. In case, the suit is bad for non-joinder of parties, after trial, the suit may be dismissed and in a case where the damages are claimed, it may result into mitigation of damages to be awarded against one of the co-conspirators. In absence of other alleged co-conspirators, defendant Nos. 1 to 4 who have been deleted, the case of the plaintiff may become weak but on the basis of this defense raised by the applicant, plaint is not to be rejected.

22. The suit of the plaintiff also cannot be dismissed on the basis of alleged admissions of the plaintiff under Order XII Rule 6 in the plaint and the documents. Perusal of the plaint reflects that it has been specifically averred that there was no authorization to defendant No. 5/applicant even orally to make the plaintiff a party to the joint-venture agreement. For passing any judgment or decree on the basis of the admissions made by a party, the same should be clear and specific. In the plaint, the averments of the plaintiff are rather contrary and there are no such admissions on the basis of which any judgment against the plaintiff can be passed.

23. The admissions made in the pleadings have to be taken as a whole and not in part. The provisions of Order XII Rule 6 are discretionary and not Page 3123 mandatory and it is not incumbent on the courts in all cases to pass a judgment upon admission especially, if a case involves questions which cannot conveniently be disposed of. In an application under this rule, if the case is such that it is not safe to pass a judgment on admission, the court may in exercise of its discretion refuse the motion. It is no more res integra that before a court can act under Order XII Rule 6, admissions must be clear and unambiguous. When the admission is not clear and unequivocal and the pleadings of the parties raise serious preliminary pleas which are likely to non-suit a party, a court in its discretion can refuse to pass a decree. It can also be not disputed that the court is vest with discretion to ask for independent corroboration of a fact not specifically denied in the pleadings considering the peculiar nature of the facts and circumstances of the case. At the same time, the court can suo moto pass judgment under Order XII Rule 6 where the parties have conceded the rights of other parties.

24. In , Dudh Nath Pandey v. Suresh Chandra Bhattasali the Apex Court had held that the admission must be taken as a whole and it is not permissible to rely on a part of admission ignoring the other. In this matter, the appellate court had given a finding that the plaintiff's claim was barred by limitation and had dismissed the suit and plaintiff feeling aggrieved took up the matter to the High Court. This finding was, however, reversed by the High Court relying on an admission of the defendant in the written statement and the evidence of the witnesses produced on behalf of defendant. The Supreme Court on merits had held that High Court was not right in relying upon the alleged admission as the admission ought to have been taken as a whole and it was not permissible to rely on a part of the admission. In , Chikkam Koteswara Rao v. Chikkam Subbarao and Ors. the Apex Court had held that the admissions must be clear in their meaning holding that before right of a party can be considered to have been defeated on the basis of an alleged admission by him, the implication of the statement made by him must be clear cut and conclusive. In 1997 (V) AD (Delhi) 627, Madhav Leasing Finance (P) Ltd. v. Erose Educational Infotech Pvt. Ltd. a single Judge of this Court had held that a decree under Order XII Rule 6 cannot be passed unless the admission made is clear cut and unambiguous.

25. There are no such admission on behalf of the plaintiff which will entail dismissal of his suit for declaration against defendant No. 5/applicant in the facts and circumstances. The application in the facts and circumstances, is without any merit and, therefore, it is dismissed.

IA No. 4905/2004

Learned Counsel for the applicant, on instructions, does not press the application.

Page 3124

The application is dismissed as not pressed.

IA No. 7486/2005

Issue notice to the non-applicant. Mr. Mittal accepts notice on behalf of plaintiff and seeks time to file the reply. Reply be filed within four weeks. Rejoinder, if any, be filed before the next date of hearing.

List on May 13, 2008.

IA No. 10590/2001

After some arguments, learned Counsel for the applicant seeks to withdraw the application with liberty to file a fresh application for amendment.

The application is dismissed as withdrawn with the liberty as prayed for without prejudice to the rights and contention of defendants.