M/S. Jagdamba Industries vs Sh. Krishan Pratap
2011 Latest Caselaw 3 Del

 *          IN THE HIGH COURT OF DELHI AT NEW DELHI
 +                      RFA No.603/1999


 %                                                 3rd January, 2011
M/S. JAGDAMBA INDUSTRIES                      ...... Appellant
                                   Through:   Mr. Sindhu Sinha,
                                              Advocate.

                       VERSUS

SH. KRISHAN PRATAP                            ...... Respondent

Through: Ms. Iti Sharma, Advocate.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest? Yes

VALMIKI J. MEHTA, J (ORAL)

1. The present first appeal under Section 96 of the Code of

Civil Procedure, 1908 (CPC) impugns the judgment and decree dated

31.3.1994 whereby the suit of the appellant/plaintiff for recovery has

been dismissed on an application filed by the respondent/defendant

under Order 7 Rule 11 CPC by treating the issue No.1 as a preliminary

issue and which issue was with regard to the bar to the suit under

Section 69 of the Indian Partnership Act, 1932. The impugned

judgment passed in the present case has resulted not only in stalling

the suit for recovery filed against the respondent/defendant with

respect to goods supplied, at the stage of a preliminary issue for about

21 years since the filing of the suit in the year 1989 but also in

negating the mandate of the Legislature brought about by amending

Order 14 Rule 2 of the Code of Civil Procedure, 1908 (CPC) in the year

1976 by Act 104 of 1996. The object of the amendment of 1976 was

that the Court should decide all issues together and there should not

be piecemeal decisions on separate issues, unless the issue is an issue

of law pertaining either to the suit being barred by law or lack of

jurisdiction of the Court. The issue to be tried as a preliminary issue

has been so mandated to be decided only if no evidence is required to

be led on the same and which becomes clear from the expression

"issue of law" as appearing in Order 14 Rule 2 of CPC.

2. Order 14 Rule 2 of CPC and which reads as under:-

" Order 14 Rule 2 CPC Court to pronounce judgment on all issues:- (1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues. (2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to-

      (a)    the jurisdiction of the Court, or
      (b)    a bar to the suit created by any law for the time being

in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue."

The Supreme Court in its recent decision reported as

Ramesh B. Desai v. Bipin Vadilal Mehta,(2006) 5 SCC 638, has

laid down that Order 14 Rule 2 of CPC confers no jurisdiction on a Court

to decide the mixed questions of fact and law as a preliminary issue. It

is clearly held in this judgment that where for a decision on an issue of

law (such as a suit being barred by a particular law) depends firstly

upon the decision of a disputed fact then the issue cannot be tried as a

preliminary issue. The Supreme Court has therefore made it clear that

once there are disputed questions of facts which require trial, the issue

cannot be decided as a preliminary issue. Paras 13, 15 and 16 of this

judgment are relevant and the same read as under:-

"13. Sub-rule (2) of Order 14 Rule 2 CPC lays down that where issues both of law and of fact arise in the same suit, and the court is of the opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to (a) the jurisdiction of the court, or (b) a bar to the suit created by any law for the time being in force. The provisions of this Rule came up for consideration before this Court in Major S.S. Khanna v. Brig. F.J. Dillon4 and it was held as under: (SCR p. 421) "Under Order 14 Rule 2, Code of Civil Procedure where issues both of law and of fact arise in the same suit, and the court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the court; not to do so, especially when the decision on issues even of law depend upon the decision of issues of fact, would result in a lopsided trial of the suit." Though there has been a slight amendment in the language of Order 14 Rule 2 CPC by the amending Act, 1976 but the

principle enunciated in the abovequoted decision still holds good and there can be no departure from the principle that the Code confers no jurisdiction upon the court to try a suit on mixed issues of law and fact as a preliminary issue and where the decision on issue of law depends upon decision of fact, it cannot be tried as a preliminary issue.

15. The principle underlying clause (d) of Order 7 Rule 11 is no different. We will refer here to a recent decision of this Court rendered in Popat and Kotecha Property v. State Bank of India Staff Assn.10 where it was held as under in para 10 of the report: (SCC p. 515) "10. Clause (d) of Order 7 Rule 7 speaks of suit, as appears from the statement in the plaint to be barred by any law. Disputed questions cannot be decided at the time of considering an application filed under Order 7 Rule 11 CPC. 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 in force."

16. It was emphasised in para 25 of the report that the statement in the plaint without addition or subtraction must show that it is barred by any law to attract application of Order 7 Rule 11 CPC. The principle is, therefore, well settled that in order to examine whether the plaint is barred by any law, as contemplated by clause (d) of Order 7 Rule 11 CPC, the averments made in the plaint alone have to be seen and they have to be assumed to be correct. It is not permissible to look into the pleas raised in the written statement or to any piece of evidence. Applying the said principle, the plea raised by the contesting respondents that the company petition was barred by limitation has to be examined by looking into the averments made in the company petition alone and any affidavit filed in reply to the company petition or the contents of the affidavit filed in support of Company Application No. 113 of 1995 filed by the respondents seeking dismissal of the company petition cannot at all be looked into." (Emphasis added)

3. Keeping in mind the aforesaid settled legal position let us

turn to the facts of the present case. The appellant/plaintiff filed

against the respondent/defendant on 22.7.1989 a suit for recovery of

Rs.98,000/- for goods (chemicals) supplied by the appellant/plaintiff to

the respondent/defendant. In this suit, the appellant/plaintiff in para 1

stated that plaintiff is a registered partnership firm under the Indian

Partnership Act, 1932. In the written statement, the defendant denied

the factum of plaintiff being registered as a partnership under the

Indian Partnership Act, 1932. After pleadings were complete, the trial

Court framed the following issues:-

"1. Is the plaintiff firm registered and the suit has been filed by a competent person, if so to what effect? OPP

2. Whether the plaintiff has supplied the goods mentioned in para 4 of the plaint? And is there privity of contract? OPP

3. Whether the defendant made any payment of Rs.12107 in account if so to what effect? OPP

4. Is the plaintiff entitled to any interest, if so on what amount and at what rate? OPP

5. Relief."

4. Clearly, the issue No.1 was a factual issue in view of the

fact that the plaintiff in the plaint asserted existence of a registered

partnership under the Indian Partnership Act, 1932 and the defendant

denied the same. The defendant, however, subsequently filed an

application on 3.4.1992 under Order 7 Rule 11 CPC on a totally new

ground praying that the issue no.1 be treated as a preliminary issue

and the suit be dismissed being barred by Section 69 of the Indian

Partnership Act, 1932 not because the partnership firm is not

registered but because Rajender Kumar who has signed the plaint was

not shown to be a partner of the firm in the Registrar of firms on the

date of filing of the suit on 22.7.1989 and he was shown as a partner

only on 1.4.1990. Paras 1 to 4 of this application and the replies

thereto on behalf of the appellant/plaintiff are relevant and the same

read as under:-

PARAS OF APPLICATION

"1. That the captioned suit for recovery etc., instituted by the plaintiff firm M/s Jagdamba Industries is pending adjudication in the Hon‟ble Court.

2. The plaintiff firm on its own showings claims to be a duly registered firm. The plaintiff firm has also averred that Shri Rajinder Kumar is one of its registered partners and is thus competent to sign and verify the plaint for and on behalf of the plaintiff firm.

In support of its claim, the plaintiff firm has produced on record certain documents.

3. That on the plaintiffs own allegations and documents, it is apparent that Shri Rajinder Kumar has been registered as a partner of the plaintiff firm only w.e.f. 1.4.1990.

This record bears out that this suit has been instituted on 22.7.1989.

4. Thus, on the plaintiffs own showings, it is apparent that the said Shri Rajinder Kumar was not a duly registered partner of the plaintiff firm on the day this suit was instituted."

PARAS OF REPLY

"1. Para 1 of the application except the matter of court record is wrong and is denied.

2. Para 2 of the application except the matter of

court record is wrong and is denied.

3. Para 3 of the application is wrong and is denied. It is submitted that in Form „A‟, is issued by Registrar of Firms under Indian Partnership Act, Sh. Rajinder Kumar has been shown to have joined the plaintiff/firm on 1-4- 89, and form „C‟ has also been issued to this effect by the Registrar of Firms. The said documents are on court‟s record. It is denied that Sh. Rajinder Kumar has been registered as partner in the firm w.e.f. 1-4-1990 as alleged.

4. Para 4 of the application is wrong and is denied. It is denied that Sh. Rajinder Kumar was not duly registered partner of plaintiff firm on the day of filing of the present suit as alleged. Rajinder Kumar is the partner and duly registered under Indian Partnership Act with Registrar of Firms since 1-4-1984."

Clearly therefore there was a disputed question of fact

because the averments of the respondent/defendant in his application

were denied by the appellant/plaintiff.

5. Be that as it may, this plea of Rajender Kumar being not

shown as a registered partner in the Registrar of firms on the date of

filing of the suit was a plea conspicuous by its absence in the written

statement and was taken up only for the first time in the application

filed by the respondent/defendant under Order 7 Rule 11 CPC and

which application was filed after completion of pleadings and framing

of issues. A reference to Order 6 Rule 7 of the CPC shows that no

pleading shall, except by way of amendment, raise any new ground of

claim or contain any fact inconsistent with the previous pleading of the

party pleading the same. Order 6 CPC pertains to pleadings generally

i.e. to pleadings of both the plaintiff and the defendant i.e. to both the

plaint as also the written statement. The new ground of claim which

was raised in the application under Order 7 Rule 11 CPC of Rajender

Kumar not being shown in the Registrar of firms as a partner of the

firm on the date of filing of the suit being clearly a new ground of claim

for dismissing the suit, the same was wholly impermissible in view of

Order 6 Rule 7 CPC. If the defendant/respondent wanted to raise such

a plea he was bound to have applied for an amendment of its written

statement to raise such a plea and admittedly the written statement

was never applied for being amended to include the plea that

Rajender Kumar was not shown as a partner of the firm in the Registrar

of firms on the date of filing of the suit.

6. A reading of the impugned judgment shows that the trial

Court has decided the preliminary issue not by taking the averments in

the plaint as correct but the judgment has been passed by reference to

the documents filed by the respective parties i.e. with reference to

documentary evidence. It appears that pursuant to the application

under Order 7 Rule 11 being filed by the respondent/defendant, the

appellant/plaintiff sought to file documents to justify the filing of the

suit by Sh. Rajender Kumar as Rajender Kumar was claimed to be a

registered partner of the firm on the date of filing of the suit. Thus the

impugned judgment has for the purpose of deciding the application

under Order 7 Rule 11 CPC referred to and relied upon documentary

evidence to allow the application under Order 7 Rule 11 CPC though

the settled legal position is that for deciding either a preliminary issue

under Order 14 Rule 2 CPC or an application under Order 7 Rule 11

CPC only the averments in the plaint can be looked into and disputed

questions of facts cannot be decided by reference to documentary

evidence. Surely a disputed question of fact cannot be decided in a

summary manner by reference to documentary evidence without

allowing parties to lead complete evidence of all its witnesses, and,

disputed questions of facts cannot be the subject matter of a

preliminary issue as held by the Supreme Court in the case of Ramesh

B. Desai (supra).

7. Before this Court, the learned counsel for the

respondent/defendant, and which defendant has successfully

prolonged the suit for recovery till date for over two decades has

argued three points for dismissing the appeal. The first point is that

under Order 14 Rule 2 CPC, a bar of law can be tried as a preliminary

issue and the bar of a suit under Section 69 of the Partnership Act,

1932 was a bar of law and hence such a plea could form the basis for

seeking decision on the same as a preliminary issue. The second point

which was argued was that in the application under Order 7 Rule 11

when this plea of Rajender Kumar being not a partner as shown in the

Registrar of firms on the date of filing the suit, this aspect was not

denied in the reply filed to the application. Thirdly, it is argued that

the appellant has been endeavouring to manipulate the record of the

Registrar of firms after filing of the application under Order 7 Rule 11

CPC by the respondent/defendant so as to show that Rajender Kumar

was a partner of the appellant/defendant firm on the date of the suit.

8. In my opinion, the first and third arguments are inter-

related and can be dealt with together. The third argument pertains to

the alleged manipulation of record on behalf of the appellant/plaintiff

for showing Rajender Kumar as partner of the firm in the Registrar of

firms on the date of the suit was filed which is a question of fact. The

argument No.1 with respect to bar of law under Section 69 being

capable of being decided as a preliminary issue also has to be decided

keeping in mind that questions of facts cannot be decided by a

preliminary issue. I have already referred to the decision of the

Supreme Court in the case of Ramesh B. Desai (supra) and which

clearly lays down that an issue of fact cannot be the subject matter of

a preliminary issue under Order 14 Rule 2 CPC. Once it is a disputed

question of fact whether Rajender Kumar was or was not a partner of

the appellant/plaintiff partnership firm on the date of filing of the suit

surely the issue could not have been decided as a preliminary issue,

because for deciding the alleged bar to the suit by virtue of Section 69

of the Indian Partnership Act, 1932 first the question of fact will have to

be decided whether Rajender Kumar was or was not the partner of the

firm shown in the Registrar of firms when the suit was instituted. Thus

the issue is not a „question of law‟ simplicitor but it is a mixed question

of fact and law. We also cannot lose sight of the fact that the issue

was raised for the first time independently by means of an application

under Order 7 Rule 11 CPC after pleadings were complete and which

defence was not found in the written statement that Rajender Kumar

was not a partner shown in the Registrar of firms as a registered

partner on the date of the filing of the suit.

9. That takes me to the second argument which was

advanced that in the reply to the application under Order 7 Rule 11

CPC it was not disputed by the appellant/plaintiff that Rajender Kumar

was not a registered partner of the appellant partnership firm on the

date of filing of the suit. Firstly, this argument is not correct as I have

already reproduced above the replies of the appellant/plaintiff to paras

1 to 4 of the application under Order 7 Rule 11 CPC and in which it is

denied that Rajender Kumar was not the registered partner of the firm

on the date of institution of the suit. Secondly this sort of piecemeal

filing of documents/evidence on an issue and piecemeal decision of a

suit by deciding of an issue on the basis of certain documents filed,

without complete evidence being led on all issues, is exactly the

situation which was sought to be prevented by the amendment to

Order 14 Rule 2 CPC by Act 104 of 1976. Unfortunately, the trial Court

has failed to consider this vital aspect while passing the impugned

judgment and decree dismissing the suit on the basis of an application

under Order 7 Rule 11 CPC by holding that Rajender Kumar was not

shown to be a registered partner of the firm in the Registrar of firms on

the date of filing of the suit.

10. On the basis of the above discussion the following

conclusions emerge:-

(i) A disputed question of fact cannot be a question of law and

such a question of law which before the same can be decided requires

decision upon a disputed question of fact, cannot be tried either as a

preliminary issue or by an application under Order 7 Rule 11 CPC vide

the decision of Ramesh B. Desai (supra). Whether or not Sh.

Rajender Kumar was a registered partner of the appellant/plaintiff

partnership firm on the date of the filing of the suit is a factual issue

because the appellant had disputed that Rajender Kumar was an

unregistered partner and had sought to sustain the suit by filing of

different documents from the Registrar of firms to show that Rajender

Kumar was in fact entitled to file the suit because he was a registered

partner of the firm on the date of filing of the suit. The fact that

ultimately on merits the respondent/defendant may succeed at the

stage of final arguments in the suit after evidence is lead on all issues

including the issue of bar under Section 69 of the Partnership Act,

1932, however cannot mean that the mandated procedure of trial of all

issues together and non trial of issues of facts as a preliminary issue

can be given a go bye.

(ii) The respondent/defendant was not entitled to raise a

totally new issue in an application under Order 7 Rule 11 viz of

Rajender Kumar being not a registered partner of the firm because

there was no such defence in the existing written statement where the

only defence was that the partnership firm was not registered. There

was no defence in the written statement that Rajender Kumar was not

shown as a registered partner of the firm on the date of filing of the

suit. Any departure from an existing pleading/written statement could

because of Order 6 Rule 7 CPC have been done by means of an

amendment application, and which procedure has admittedly not been

followed in the present case.

11. In view of the fact that the impugned judgment decides

disputed questions of facts as a preliminary issue/under Order 7 Rule

11 CPC without calling upon the parties to lead complete evidence and

simply on the basis of documents which have been filed, the impugned

judgment is clearly unsustainable and is therefore liable to be set aside

and is accordingly set aside. Since this is a commercial matter and the

appellant has been put to delay of 21 years in progress of its suit for

recovery of money with respect to goods supplied I hold that in terms

of para 37 of the decision of the Supreme Court in the case of Salem

Advocate Bar Association Vs. Union of India (2005) 6 SCC 344

appropriate costs should be imposed on the respondent/defendant for

causing unnecessary delay in the trial of the suit. Accordingly, the

present appeal is accepted and the impugned judgment is set aside

with costs of Rs.20,000/- in favour of the appellant/plaintiff and against

the respondent/defendant and which costs shall be paid within two

weeks from today.

The appeal is therefore disposed of as allowed.

C.M. No.1651/1999 in RFA No.603/1999

No orders are required to be passed in this application

which is disposed of as such.

JANUARY 03, 2011                                 VALMIKI J. MEHTA, J
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