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2015 DIGILAW 296 (ORI)

Ranjit Kumar Patnaik v. Industrial Promotion & Investment Corporation of Orissa Ltd (IPICOL)

2015-05-01

B.K.NAYAK

body2015
JUDGMENT : B. K. NAYAK, J. This appeal has been filed by the plaintiff challenging the judgment and decree passed by the learned Civil Judge (Senior Division), Bhubaneswar in C.S. No.532 of 2004. 2. The plaintiff-appellant filed the aforesaid suit for a declaration that the suit property seized by the police on 06.10.1993 as per the seizure list belonged to the plaintiff in his individual capacity and for a direction to the defendants to deliver/restore the said property to him. The case of the plaintiff is that he worked in top positions in Textile Industry at various places for about 30 years and planned to start a Small Scale Industry after his retirement. For the said purpose, he purchased some second hand machines from M/s. Swan Mills, Bombay on 10.03.1990. One Mr. A.H. Shah of Bombay had purchased a sick textile unit, called “Lingaraj Textiles Ltd.” on 02.03.1990 at Mancheswar, Bhubaneswar from one Amarendra Dash and others with the permission of IPICOL and OSFC (defendants), who had granted Term Loans to the company on mortgage of the land and hypothecation of plant and machinery, in their favour on 100% share purchase basis. Mr. A.H. Shah having failed to run the unit sold the same to the plaintiff on share transfer basis on 05.09.1990 and the plaintiff ran the unit for two years by investing about Rs.40,00,000/-in the Unit and had paid about Rs.32,00,000/-to IPICOL/OSFC. The plaintiff had purchased the aforesaid second hand machines from M/s. Swan Mills Limited, Bombay for the purpose of doubling unit at Mancheswar. During 1993 because of financial difficulties the work of the plant was seriously affected and the plaintiff failed to pay the installments to the defendants. It is further alleged by the plaintiff that on 04.10.1993, defendant no.1-IPICOL took over the assets of Lingaraj Textiles limited in a surprise move without recalling the loan and without giving prior notice. The plaintiff filed T.S. No.491 of 1993 in the court of the Sub-ordinate Judge, 1st Court, Cuttack and had got order of injunction against the defendants preventing future sale of the assets, but the injunction order was vacated by the learned District Judge and the defendants sold away the assets at a low price. The plaintiff filed T.S. No.491 of 1993 in the court of the Sub-ordinate Judge, 1st Court, Cuttack and had got order of injunction against the defendants preventing future sale of the assets, but the injunction order was vacated by the learned District Judge and the defendants sold away the assets at a low price. It is the further case of the plaintiff that on 05.10.1993, IPICOL had managed to obtain an ex-parte search warrant from the District Magistrate, Khurda, Bhubaneswar to search the residential premises of the plaintiff for some machines allegedly stolen from the factory. On 04.10.1993, the defendants had taken over the unit under Section 29 of the State Financial Corporation Act and made an inventory of the machines and prepared a list of machines which the company had never purchased. The search warrant include the description of alleged stolen machines, namely, six numbers of Ring frame, two numbers of winding machines, two doubling machines, and some other equipments and machineries with spare parts. On the basis of search warrant, the defendants through police searched the personal godown of the plaintiff and seized certain machines and took possession of the same which the plaintiff had purchased from M/s. Swan Mills, Bombay, but it did not belong to the company, Lingaraj Textiles. Though seized property did not belong to the company, nor were hypothecated to the defendants, the documents of title of the plaintiff to the seized property had been misplaced at the time of search and seizure, which he could not produce at that time. It was only on 25.08.2004 the plaintiff could be able to trace out the title deeds with respect to his personal ownership over the seized machineries. On the basis of the seizure of the machineries from the godown of the plaintiff and the F.I.R. registered in that respect at Mancheswar Police Station on 02.10.1993 G.R. Case No.3539 of 1993 had been initiated against the plaintiff in the court of the learned S.D.J.M., Bhubaneswar in which the plaintiff was convicted. Challenging such conviction, the plaintiff has filed Criminal Appeal No.215 of 2002 before the High Court, which is still pending. Challenging such conviction, the plaintiff has filed Criminal Appeal No.215 of 2002 before the High Court, which is still pending. It is further alleged that the seized properties are the personal properties of the plaintiff and not that of the M/s. Lingaraj Textiles Limited and that after tracing out the documents of title to such property, the plaintiff approached defendant no.1 on 27.08.2004 and requested to return the properties to him, but to no effect. Hence, the plaintiff filed the suit on 14.09.2004 claiming the reliefs as aforesaid. 3. Defendant no.1-IPICOL filed a written statement stating that the suit was not maintainable and was barred by limitation being filed after the lapse of ten years. It was also stated that the suit was hit under Section 10 of the C.P.C. as the plaintiff had filed another suit bearing T.S. No.461 of 2003 before the learned Civil Judge (Junior Division), Bhubaneswar for the same cause of action, which was still pending. The other averments made in the plaint were denied. It was specifically pleaded in the written statement that the hypothecated property of M/s. Lingaraj Textiles were illegally removed by the plaintiff to his godown located at his residence for which an F.I.R. was lodged giving rise to Mancheswar Police Station Case No.203 of 1993, corresponding to G.R. Case No.3539 of 1993 in the court of the learned S.D.J.M., Bhubaneswar wherein the plaintiff was convicted under Section 406 of the I.P.C. and such conviction was upheld in the appeal preferred by him. On the basis of search warrant, the plaintiff’s godown was searched and huge quantity of company’s properties stolen or illegally removed were recovered from the godown for which an inventory was prepared. The plaintiff had no title to the properties seized and that he has tried to make out a concocted story that documents with regard to his ownership over the machineries had been misplaced and that he has prepared fabricated document for the said purpose. M/s. Lingaraj Textile was financed by IPICOl and OSFC and accordingly the Unit with its plant and all machineries both present and future were hypothecated to IPICOL as a first charge to secure the loan and necessary documents were executed by the company through its Director. M/s. Lingaraj Textile was financed by IPICOl and OSFC and accordingly the Unit with its plant and all machineries both present and future were hypothecated to IPICOL as a first charge to secure the loan and necessary documents were executed by the company through its Director. The plaintiff having become a defaulter in repayment of the loan, IPICOL was compelled to invoke Section 29 of the SFC Act and seized the assets of the company. The plaintiff having come to know about such proposed seizure, dismantled various machineries and illegally removed the same from the factory premises to his residence at Bhubaneswar on the day of Gandhi Jayanti, which was a public holiday. On getting information about such removal, the defendants filed F.I.R. and got a search warrant from the Collector, Khurda, on the basis of which the godown at his residence was searched and the machineries were recovered. Such facts having been proved, the plaintiff was convicted in the criminal trial. The plaintiff was thus not entitled to any relief claimed in the suit. Defendant no.2, OSFC did not file any written statement and was set ex-parte. 4. On the basis of the pleadings of the parties, the trial court farmed four issues, out of which Issue Nos.2 and 3 relate to the question of ownership of the plaintiff over the seized property in his individual capacity and the entitlement of the plaintiff for recovery of the same. No specific finding on the issue with regard to limitation has been given by the trial court, who stated that the same was not pressed. In the suit, the plaintiff examined two witnesses including himself as P.W.1 and defendant examined one D.W. Besides both the parties relied upon and proved some documents. On consideration of the evidence, the trial court came to the conclusion that the plaintiff failed to prove his personal ownership over the disputed properties and hence was not entitled to any relief. 5. In assailing the impugned judgment, the learned counsel for the appellant submitted that the trial court based his findings mainly on the judgment of the criminal court, i.e., the Sub Divisional Judicial Magistrate passed in G.R. Case No.3539 of 1993 where the plaintiff was convicted for criminal breach of trust and not on independent assessment of evidence. 5. In assailing the impugned judgment, the learned counsel for the appellant submitted that the trial court based his findings mainly on the judgment of the criminal court, i.e., the Sub Divisional Judicial Magistrate passed in G.R. Case No.3539 of 1993 where the plaintiff was convicted for criminal breach of trust and not on independent assessment of evidence. Since a civil court is not bound by the finding of the criminal court and that the trial court in the case in hand having not given its independent finding with regard to plaintiff’s ownership over the suit property, its judgment is liable to be set aside. He also submits that the evidence on record including the documents of title with regard to the suit property prove the title of the plaintiff and that there is no evidence to show that the suit properties were ever hypothecated to the defendants as security against loans advanced by the defendants to Lingaraj Textile Limited. Refuting the contention raised by the learned counsel for the appellant, the learned counsel for the respondent no.1 submitted that on plaintiff’s own showing the suit was barred by limitation under Article 69 of the Limitation Act and, therefore, the suit should be dismissed on that ground alone and that the trial court could not have entertained the suit simply stating erroneously that the issue of limitation was not pressed. He also submits that the trial court has recorded his findings with regard to illegal and unauthorized removal of the suit properties by the plaintiff from the factory premises to his residential godown not merely on the findings recorded by the criminal court but also on independent assessment of the evidence. It is also his submission that as per the hypothecation agreement (Ext-L) all existing and future assets and machineries of Lingaraj Textiles stood hypothecated in favour of the defendant and that there is ample evidence that the plaintiff unauthorisedly removed the suit properties from the factory premises of the Unit to his residential godown which were seized by the police on the basis of search warrant. On the point of limitation, it was replied by the learned counsel for the appellant that in the instant case the question of limitation was a mixed question of law and fact and that the defendants having not pressed the same, the lower court was justified in not giving any specific finding on the issue. 6. The points of determination in this appeal are: (i) Whether the suit properties are the personal properties of the plaintiff and were not the properties of Lingaraj Textiles and hypothecated to the defendants as security; (ii) Whether the plaintiff’s suit is barred by limitation. 7. With regard to the plaintiff’s title over the suit property, it may be stated that in the plaint, plaintiff has not given the description of the properties either in the body of the plaint or in the form of a schedule attached thereto. The suit properties are descried as those, which were seized by the police on 06.10.1993, as per the seizure list from the godown situated within the residential premises of the plaintiff. Admittedly, D.W.1, who was an Officer of defendant no.1 having received information about illegal and unauthorized removal of some machineries by the plaintiff from the mill premises, lodged F.I.R. at Mancheswar Police Station on 02.10.1993 and obtained a search warrant from the Collector and District Magistrate, Khurda, on the basis of which the police searched the residential godown of the plaintiff and recovered certain machines and spare parts which are used in Textile Mills and prepared search list/seizure list (Ext. Q) which contain fourteen items of properties, such as machines, motors etc. Plaintiff claims that he had purchased those articles from one M/s. Swan Mills, Bombay on 10.03.1990 for opening a textile unit in Orissa and that he had lost the documents of title (Purchase memo) of such machines and that only after such document could be found out by him that he demanded from defendant no.1 to return those properties and having failed to get the same, filed the suit. The plaintiff’s averments indicate that on 10.03.1990, the plaintiff had not acquired Lingaraj Textiles. On the contrary, it is specifically stated that he purchased the said unit on 05.09.1990 from one Mr. A.H. Shah, who was unable to run the sick unit. The plaintiff’s averments indicate that on 10.03.1990, the plaintiff had not acquired Lingaraj Textiles. On the contrary, it is specifically stated that he purchased the said unit on 05.09.1990 from one Mr. A.H. Shah, who was unable to run the sick unit. The sale invoice proved by the plaintiff as Ext.2 reveals that on 10.03.1990 one M/s. Swan Mills Limited, Bombay sold some used unserviceable machines and spares to the plaintiff. The said invoice refers to some machines by names without indicating their make and number and they do not completely and exactly tally with the properties recovered from the residential godown of the plaintiff by the police on search. In his cross-examination, the plaintiff admitted that by the time of purchase of the machines from Bombay he had not initiated the process for establishment of any factory, such as acquisition of land, registration with D.I.C., Sales Tax and clearance from Environmental Authority. It sounds highly improbable that a person without initiating any process for establishment of an Industry, purchased some machines usable in Textile Industry with the hope that sometime in future he would establish an Industry and run it by using those machines. It is also admitted by the plaintiff in his pleading that he acquired Lingaraj Textiles on purchase about six months after alleged purchase of machines from Bombay. He also admits in his cross-examination that he cannot name the spare parts purchased by him and the value thereof. It is also admitted by him in his cross-examination that at the time of recovery of the suit properties from his personal godown by the police, he did not intimate the police that he had purchased those machines from M/s. Swan Mills Limited. He also admits that there is nothing in Ext.2 to indicate that M/s. Swan Mills Limited is a textile industry and that it was authorized to sell such machines. For all such reasons, the trial court has rightly concluded that Ext.2 is a fake and fabricated document which has not been proved by the author thereof or the authorized representative of M/s. Swan Mills Limited. Hence, no reliance can be placed on Ext.2 as being the document of title of the plaintiff in respect of the suit properties. 8. For all such reasons, the trial court has rightly concluded that Ext.2 is a fake and fabricated document which has not been proved by the author thereof or the authorized representative of M/s. Swan Mills Limited. Hence, no reliance can be placed on Ext.2 as being the document of title of the plaintiff in respect of the suit properties. 8. It is claimed by the plaintiff that the suit properties were never the properties of Lingaraj Textiles and were not hypothecated to defendant no.1 against loans advanced to the unit. D.W.1 on the other hand has stated that under the deed of hypothecation not only all existing machineries and assets of the unit were hypothecated but all future acquisition also stood hypothecated as per the terms of the hypothecation agreement. He has however admitted that the agreement did not contain the names and description of specific properties and particularly the suit properties. Admittedly after acquisition of Lingaraj Textiles Ltd., as revealed from the evidence of the plaintiff, the plaintiff became the Managing Director and his daughter became another Director of the said company. It is admitted by the plaintiff in his cross-examination in paragraph-9 that his wife and daughter had filed a suit bearing O.S. No.26 of 1994 impleading the plaintiff and the OSFC as parties for taking back the machines (suit properties) from Lingaraj Textiles Limited on the ground that they had obtained those machineries by lease and on the date of such suit, the present plaintiff was the Chairman of the Lingaraj Textile Pvt. Ltd. This admission of the plaintiff goes to show that the suit machineries were being used in the factory of Lingaraj Textiles. It is, therefore, clear that such machineries, which formed part of the assets of the unit, irrespective of the time of their acquisition by the company, stood hypothecated to the defendants and the recovery of the same from the personal godown of the plaintiff irresistibly leads to the conclusion that they were illegally and unauthorisedly removed by the plaintiff from the factory premises on getting information that defendant no.1 was about to seize the factory in exercise of power under Section 29 of the S.F.C. Act. For the reasons aforesaid, it must be held that the plaintiff has failed to prove that the suit properties recovered by the police from the personal godown of the plaintiff were the plaintiff’s personal property. 9. For the reasons aforesaid, it must be held that the plaintiff has failed to prove that the suit properties recovered by the police from the personal godown of the plaintiff were the plaintiff’s personal property. 9. With regard to the second point, a clear plea was taken in the written statement to the effect that the suit was barred by limitation. As per the plaint the cause of action for the suit was unauthorized and wrongful search and removal of the suit properties at the instance of defendant no.1 from the personal godown of the plaintiff. The search and the recovery of the property was made on 06.10.1993. The plaintiff pleaded that the cause of action arose on 25.08.2004 when the plaintiff could be able to trace out the documents in respect of the suit properties and on 27.08.2004 when he approached the defendant no.1 and asked to return the said properties. The suit for specific movable property wrongfully taken away by the defendant is required to be filed within three years when the property was wrongfully taken, as per Article 69 of the Limitation Act. The plaintiff’s specific case being that the suit property was his personal property and not that of Lingaraj Textile and that they were wrongfully seized and taken away from his godown at the instance of defendant no.1, it is squarely covered under Article 69 of the Limitation Act. Non-availability of documents of the title of the property with the plaintiff on the date of allegedly wrongful seizure would not save limitation or extend the limitation till the date of availability of documents of title which were said to be missing. The trial court in paragraph-11 of its judgment has clearly held that the cause of action arose on 06.10.1993 that is, the date of seizure of the properties and not on 25.08.2004 when the plaintiff allegedly could be able to trace out Ext.2, i.e., the document of title. However, the trial court has stated in the judgment that defendant no.1 has not pressed the question of limitation. It is not understood, as to how the trial court came to such finding, particularly when plea of limitation has been clearly taken in the written statement and the trial court has itself found that cause of action for the suit arose on 06.10.1993. It is not understood, as to how the trial court came to such finding, particularly when plea of limitation has been clearly taken in the written statement and the trial court has itself found that cause of action for the suit arose on 06.10.1993. Limitation in the instant suit being for three years from 06.10.1993, the suit filed in the year 2004 was hopelessly barred by limitation. Section 3 of the Limitation Act mandates that every suit instituted after the prescribed period of limitation shall be dismissed although limitation has not been set up as a defence. The Hon’ble Supreme Court in the decision reported in (2005) 4 SCC 613 , V.M. Salgaocar and Bros. v. Board of Trustees of Port of Mormugao have held as follows : “The mandate of Section 3 of Limitation Act is that it is the duty of the Court to dismiss any suit instituted after the prescribed period of limitation irrespective of the fact that limitation has not been set up as a defence. If a suit is ex-facie barred by the law of limitation, a Court has no choice but to dismiss the same even if the defendant intentionally has not raised the plea of limitation.” A numbers of decisions have been cited by the learned counsel for the appellant, which are not relevant to the point in issue. Hence I do not propose to deal with the same. Therefore, the trial court having clearly come to the conclusion that cause of action did not arise on 25.08.2004 but arose on 06.10.1993 should have dismissed the suit as barred by limitation instead of observing that the issue of limitation was not pressed by the defendants. The mandate of Section 3 did not leave him a choice than to dismiss the suit as barred by time. I therefore hold that the plaintiff’s suit is hopelessly barred by limitation and the same is dismissed as such. 10. On the aforesaid analysis, I find no merit in the appeal which is accordingly dismissed.