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Madhya Pradesh High Court · body

2017 DIGILAW 856 (MP)

R. K. Traders (Regd. Firm) v. Hong Kong Bank

2017-07-24

S.A.DHARMADHIKARI

body2017
JUDGMENT : This appeal by the plaintiffs under section 96 of the Civil Procedure Code is directed against the judgment and decree dated 31-1-2003 passed in Civil Suit No. 29-A/88 by the III Additional District, Judge, Gwalior. 2. Facts relevant and necessary for decision in the appeal are that the plaintiffs/appellants filed a Civil Suit against the respondents alleging that the plaintiff No. 1 was registered as partnership firm engaged in wholesale trade of cloth and was also stockist of D.C.M. Silk Mills, Delhi for the purpose. 3. The defendant/respondent No. 1 was formerly known as Mercantile Bank, Ltd. The said bank had sanctioned a credit limit of Rs. 7,00,000/- in favour of plaintiff/appellant firm. As a security to the aforesaid credit limit, the plaintiff No. 1 pledged with the respondent No. 1 bank a Fixed Deposit receipt for Rs. 70,000/- which was issued by the defendant/respondent No. 2 in the name of the plaintiffs No. 1 and 2. The D.C.M. Silk Mills stood surety for the aforesaid limit. 4. After running the business for over a period of time, the plaintiff/appellant firm closed its business with the D.C.M. Silk Mills and the defendant/respondent No. 1 adjusted the proceedings of Fixed Deposit receipt for Rs. 70,000/- and the four Life Insurance Policies towards liquidation of balance amount outstanding in the loan account. The remaining amount was paid to defendant No. 1 by the D.C.M. Silk Mills and the reminder by plaintiff No. 1. It was also alleged that the account with defendant No. 1 thus was settled and nothing remained due to defendant No. 1 by plaintiff No. 1. 5. Since the alleged outstanding amount was settled, the plaintiff/appellant demanded that the four Life Insurance Polices lying unutilized with defendant/respondent No. 1 be returned to the plaintiff/appellant which was subsequently refused by the defendant-bank. It was further alleged that the defendant-bank tried to get the policies encashed from defendant No. 2. The plaintiff informed the defendant No. 2 all the facts and situation with a request not to make the payment of policies to the defendant No. 1. 6. It was further alleged that the defendant-bank tried to get the policies encashed from defendant No. 2. The plaintiff informed the defendant No. 2 all the facts and situation with a request not to make the payment of policies to the defendant No. 1. 6. Since the defendant No. 2 was bent upon to make the payment of the policies to the defendant No. 1, the plaintiff had no option but to file the suit for declaration to the effect that the defendant No. 1 was not entitled to encash the policies and that the plaintiffs were entitled to receive the amount from defendant No. 2. A mandatory injunction was also prayed for to the effect that the defendant No. 1 should deliver the policies to the plaintiffs and the defendant No. 2 should not make any payment towards those policies to defendant No. 1 instead of the plaintiff. 7. The defendants appeared in the case but the defendant No. 1 choose not to contest the suit and as such no written statement was filed, also did not cross-examine the prosecution witness and led no evidence while defendant No. 2 contested the suit on the sole ground that since the policies have been assigned willfully by the plaintiffs in favour of the defendant No. 1 and the assignment was got registered with defendant No. 2, hence the plaintiffs were not entitled to receive the policies from defendant No. 1 or the proceeds of the policies from defendant No. 2. 8. In the meanwhile, the D.C.M. Silk Mills Ltd filed an application before the trial Court under Order 1, Rule 10, Civil Procedure Code for being impleaded in the Suit on the ground that the instant suit has been filed by the plaintiffs in order to frustrate the decree that applicant was likely to secure in another suit filed by it against the plaintiff No. 1. Since the said application reveal nothing whatsoever to connect the subject-matter, therefore, the application was rejected. 9. The trial Court framed the following issues on 1-11-2002. Since the said application reveal nothing whatsoever to connect the subject-matter, therefore, the application was rejected. 9. The trial Court framed the following issues on 1-11-2002. ØŒ okn Á'u fu"d"kZ ¼1½ D;k oknhx.k us Áfroknh ØŒ 1 dk leLr _.k vnk dj fn;k x;k gS \ ugha ¼2½ D;k Áfroknh ØŒ 1 us voS/k :i ls oknh dh Hkkjrh; thou chek fuxe dh ikfyfl;ksa dks jksd j[kk \ vÁekf.kr ¼3½ D;k Áfroknhx.k 5]000 :i;s fo'ks"k gtsZ ds :i esa ikus ds vf/kdkjh gS \ vÁekf.kr ¼4½ lgk;rk ,oa O;; \ oknh dk okn fu.kZ; dafMdk ØŒ 18 ds vuqlkj lO;; fujLr fd;k x;kA Thereafter, on the settling date i.e. 11-11-2002, the case was fixed for evidence of both the parties on 26-11-2002. The plaintiffs sought for adjournment on 26-11-2002 which was granted and the case was fixed for evidence on 4-12-2002. On the said date also adjournment was sought by the plaintiffs which was allowed and the case was fixed on 3-1-2003 for evidence of both the parties. On 3-1-2003, the plaintiffs did not seek any adjournment and began to lead their evidence in accordance with order passed by the trial Court earlier and submitted an affidavit of plaintiff No. 2 (PW-1) under Order 18, Rule 4 of the Civil Procedure Code which was taken on record. The plaintiffs simultaneously filed an application under Order 7, Rule 14(3) of the Civil Procedure Code. Thereafter, case was adjourned on the request of the defendant No. 2 for 16-1-2003 for filing reply and arguments on the aforesaid applications and also for cross-examination of P.W-1. At this stage, the plaintiff's right to produce further evidence was also closed. The plaintiffs produced P.W-1 for cross-examination on 16-1-2003 and submitted another evidence of one Smt. Ashu Rani Vaishya, the plaintiff No. 1(B)(PW-2) along with an application under section 151 of Civil Procedure Code duly supported by an affidavit and the medical certificate explaining the absence on 3-1-2003. The plaintiffs further prayed to take on record the affidavit filed under Order 18, Rule 4, Civil Procedure Code. The plaintiffs, at this stage, filed an application under Order 26, Rule 1, Civil Procedure Code. Thereafter, PW-1 was cross-examined and was discharged. The plaintiffs further prayed to take on record the affidavit filed under Order 18, Rule 4, Civil Procedure Code. The plaintiffs, at this stage, filed an application under Order 26, Rule 1, Civil Procedure Code. Thereafter, PW-1 was cross-examined and was discharged. But the trial Court rejected the plaintiff's application filed under section 151 of Civil Procedure Code holding that under Order 17, Rule 1 of the Civil Procedure Code more than three opportunities could not be given and their right of evidence has already been closed on 3-1-2003 and declined to take the affidavits under Order 18, Rule 4, Civil Procedure Code. As a consequence the application under Order 26, Rule 1, Civil Procedure Code was also rejected. But the affidavit filed by defendant No. 2 under Order 18, Rule 4, Civil Procedure Code was taken on record and the case was adjourned for cross-examination. 10. Shri Anil Kumar Jain, learned counsel for the appellants made following submissions:— (1) That the trial Court fell in error in considering and implementing the provisions of Order 17, Rule 1, Civil Procedure Code. The proviso to the aforesaid rule prohibits more than three adjournments but the learned appellate Court misread it as three opportunities in all on the one hand and on the other hand when the plaintiff answered the query made by the trial Court on 3-1-2003 that they would produce more witnesses soon after the examination of PW -1 was over, the trial Court has considered the same as if the plaintiffs were seeking another adjournment and as such right to lead further evidence was closed. More over on perusal of the order-sheet dated 3-1-2003 it can be seen that the adjournment was for the third time and the trial Court could have very well granted one more opportunity to the plaintiffs to lead further evidence. The trial Court has fallen into error by closing the right to lead further evidence. (2) The learned trial Judge failed to appreciate the fact that the plaintiffs have proved that the entire money due to the defendant No. 1 has already been settled in view of the oral evidence of the PW-1 and the documentary evidence Exhibit P-2 and Exhibit P-3, the learned trial Court has ignored all these evidence and did not consider the same at all. The findings recorded are totally perverse as such deserves to be set aside. The findings recorded are totally perverse as such deserves to be set aside. (3) The trial Court ought to have granted one more opportunity to lead further evidence in as much as this Court in the judgment reported in 2004 (1) MPHT (5) (NOC), Chaitya alias Chaitram v. Smt. Yamona Bai has held that “the provisions of Order 17, Rule 1, Civil Procedure Code is directory in nature and the Courts are precluded from taking into consideration the reasons explained for non-production of witnesses. The Courts below further are not precluded from exercising inherent jurisdiction to grant opportunity to the party for production of further evidence. It is contended that in the light of the aforesaid view taken by this Court, the matter needs to be remanded before the trial Court to proceed further from that stage i.e. recording of further evidence of the plaintiff's witnesses.” 11. Per contra, Shri Sunil Kumar Jain, the learned counsel appearing for the respondent No. 2 contended that the judgment and decree passed by the trial Court is just and proper in as much as the insurance policies has been assigned to the defendant No. 1 and they are free to encash them. In these circumstances, no relief can be granted to the appellant and present appeal deserves to be dismissed. 12. Having considered the submissions made by the learned counsel for the parties, the following question emerges for consideration in this appeal. (1) Whether, the trial Court erred in closing the evidence of plaintiffs by rejecting the application under Order 17, Rule 1, Civil Procedure Code on the ground that more than three opportunities could not been granted to the plaintiffs to record the evidence? (2) Whether, on the facts and circumstances of the case, the trial Court was right in dismissing the Suit? As regards question No. 1 Order 17, Rule 1, Civil Procedure Code reads as under:— “1. Court may grant time and adjourn hearing. — [(1) The Court may, if sufficient cause is shown, at any stage of the suit, grant time to the parties or to any of them, and may from time to time adjourn the hearing of the suit for reasons to be recorded in writing. Court may grant time and adjourn hearing. — [(1) The Court may, if sufficient cause is shown, at any stage of the suit, grant time to the parties or to any of them, and may from time to time adjourn the hearing of the suit for reasons to be recorded in writing. Provided that no such adjournment shall be granted more than three times to a party during hearing of the suits.]’ Proviso to Order 17, Rule 1, Civil Procedure Code provides that no adjournment shall be granted more than three times to a party during hearing of the Suit. In the instant case, adjournments were granted on 11-11-2002, 26-11-2002, 4-12-2002 and the matter was fixed on 3-1-2003. On which date the application under Order 17, Rule 1, Civil Procedure Code was filed duly supported by an affidavit. The trial Court without considering the reasons assigned in the application, rejected the application on the ground that no opportunity of leading further evidence can be granted since three adjournments have already been granted. It is well settled that the grounds raised in the application are required to be taken into consideration before passing the order rejecting the application. True, it is that the proviso to the Order 17, Rule 1 provides that no adjournment can be granted after three opportunities but the learned trial Court without considering the reasons mentioned in the application as well as taking into account the proviso of Order 17, Rule 1, Civil Procedure Code is directory in nature. The trial Court is not precluded from taking into consideration the reasons for non-production of witness. The Court below ought to have exercised the inherent jurisdiction to grant opportunity to the party for production of further evidence. As regards question No. 2:— Now turning to the aforesaid question, there is no doubt that opportunity of producing evidence to the plaintiffs has been refused and the case has been concluded without recording evidence of the plaintiffs which amounts to miscarriage of justice, the present appeal needs to be allowed. 13. Accordingly, impugned judgment and decree passed by the trial Court dated 31-1-2003 passed in Civil Suit No. 29-A/1988 is hereby set aside. The application filed by the plaintiffs under Order 17, Rule 1 stands allowed and plaintiffs are allowed to lead further evidence. The matter is remanded back to the trial Court to proceed from that stage. 13. Accordingly, impugned judgment and decree passed by the trial Court dated 31-1-2003 passed in Civil Suit No. 29-A/1988 is hereby set aside. The application filed by the plaintiffs under Order 17, Rule 1 stands allowed and plaintiffs are allowed to lead further evidence. The matter is remanded back to the trial Court to proceed from that stage. Parties are directed to appear before the trial Court on 8th August, 2017. Since the Suit is of the year 1988, it is expected that the parties shall cooperate in the proceedings before the trial Court and the trial Court shall make every endeavour to decide the Suit as expeditiously as possible preferably within a period of six months. With the aforesaid, the appeal stands allowed and disposed of.