Kerala High Court
Ravindra S. More And Anr. vs Sudarsan Chits (India) Ltd. (In ... on 26 November, 1990
Equivalent citations: [1992]73COMPCAS393(KER)
Author: K.S. Paripoornan
Bench: K.S. Paripoornan
JUDGMENT Paripoornan, J.
1. The respondents in C. C. No. 1009 of 1988-C in C. P. Nos. 8, 9 and 49 of 1981 are the appellants in this appeal. The claimant is the respondent in this appeal. C. C. No. 1009 of 1988 was filed by the respondent-company against the appellants on the basis of a demand promissory note executed by the appellants on December 4, 1975. The claim filed in this court is dated October 28, 1987. The claim was based on the original consideration and balance of account. The appellants filed a written statement in the claim dated January 22, 1989. Therein, the plea was that they were rendering professional services to the respondent-company, as narrated in the written statement, and which will be substantiated by a reference to the records, which are in the possession of the claimant. It was stated that the understanding between the parties was that no amount was to be repaid to the claimant-company. It was stated that the promissory note was executed only for company records. The appellants also pleaded that as per the rules followed by the claimant-company, when a subscriber defaults three consecutive instalments, the entire amount becomes due and facility of payment by instalments is not available to him and so time for payment starts running from then onwards. It was stated that in this case the time starts from February 5, 1976, and so the claim filed more than three years thereafter is barred by limitation. The date of commencement of winding up of the company is long after the matter is barred, i.e., long after February 5, 1979. The commencement of winding up of the company was only on January 2, 1981. Even before the commencement of the winding up, the claim was barred by limitation. To save limitation, the claimant stated in' the claim petition that a sum of Rs. 500 was paid on December 2, 1978. This was denied by the appellants. No document was produced to show that any such payment was made. On the other hand, the plea of the appellants that Rs. 500 was not paid and could not have been paid was sought to be substantiated by reference to the notice sent by the claimant dated January 22, 1980 (January 20, 1980 ?), showing that the balance principal amount of Rs. 46,500 is payable. A xerox copy of the notice received by the appellants and the postal cover were marked as exhibits "A" and "B".
2. On the above premises, the substantial plea was that the chit liability and the promissory note liability became time barred long before January 2, 1981--commencement of the winding up of the claimant-company. The written statement of the appellants is dated January 22, 1989, and is seen filed in court on January 24, 1989. The matter stood posted before court on February 6, 1989. On that day, the court adjourned the matter for reply of the claimant and posted the matter to March 7, 1989. When the matter stood posted again on March 7, 1989, the claimant had not filed any reply then and so the court adjourned the matter to April 3, 1989, Even on that day, the reply was not filed. So, the court adjourned the case to June 20, 1989. The reply is not seen filed even on June 20, 1989, to which date the claim stood posted. On June 20, 1989, the learned single judge, after noticing in brief the contention of the appellants, stated thus :
"The additional director will verify this contention and if the contention is true, record satisfaction of the decree. The claim is decreed as prayed for with costs subject to the above conditions. In case the respondents are aggrieved by the decision of the additional director regarding the above contention they may move the execution court for appropriate reliefs."
3. The judgment was pronounced on June 20, 1989. Aggrieved by the said judgment, the respondents in the company claim have come up in appeal.
4. We heard counsel for the appellants Mr. M. C. Sen and counsel for the respondent/claimant Mr. K. P. Dandapani. This appeal came up before other Benches on earlier occasions. As to what happened on those days is the subject-matter of rival pleas by the appellants' counsel and the respondents' counsel. The appellants' counsel has filed a statement dated November 15, 1990 and the respondents' counsel has filed a statement dated November 15. 1990. We do not think that it is either safe or" proper for this court to resolve the controversy raised in the statements filed by the appellant's counsel and the respondent's counsel. Really it is not necessary. This is not a case where the judgment of the learned single judge is based on any concession by the appellants or their counsel or a case where any statement contained in the judgment of the learned single judge is sought to be contradicted, either by affidavits or by way of evidence. The judgment appealed against also does not in terms say that any point or aspect was admitted, or argued, so as to exclude other points from consideration, and so the rule laid down by the Supreme Court in Bank of Bihar v. Mahabir Lal [1963] 33 Comp Cas 783 ; AIR 1964 SC 377, paragraph 5 and State of Maharashtra v. Ramdas Shrinivas Nayak, AIR 1982 SC 1249, at page 1251, para. 4, will not strictly apply. So, we proceed to consider the matter on merits.
5. Counsel for the appellants submitted that he has raised very valid pleas in defence. They are to the effect, that the claim is barred by limitation, and that the understanding was that no amount was to be repaid to the company and that the promissory note was executed only for company records. The appellants' counsel further submitted that the acknowledgment, if any, should be in writing and mere payment is not enough. It should be before the suit. If it is a payment that is relied on as an acknowledgment, such payment should be in the handwriting of, or in a writing signed by the person making the payment. Counsel also relied on the decision of the Supreme Court in Sant Lal Mahton v. Kamla Prasad, AIR 1951 SC 477, at page 479, paragraphs 8 to 10 and K. C. Pangunni v. Official Liquidator, Wandoor Jupiter Chits Pvt. Ltd., [1981] 51 Comp Cas 453 ; ILR 1981 (1) Ker 420. These aspects were highlighted to show that very valid defences were open to the appellants and in the manner in which the claim stood posted on various dates, the final abrupt disposal of the claim, by delivering the judgment on June 20, 1989, was unjustified and it so resulted due to a misapprehension or mistake. Counsel for the respondent/claimant sought, to support the judgment of the learned single judge by stating that the learned single judge has directed verification of the matter by the additional director and record satisfaction, if the plea is found to be true, and even if the claimant is aggrieved by the decision of the additional director, liberty was given to the appellants to raise the plea in the execution court. Substantial justice has been done to the appellants and there cannot be any grievance that the disposal of the claim resulted due to any misapprehension or mistake or the disposal of the matter is in any way unreasonable.
6. We have considered the rival pleas. We have earlier adverted to a few postings of the case, after the filing of the written statement. To repeat-the appellants filed the written statement dated January 22, 1989, on January 24, 1989. The matter stood posted to February 6, 1989. On that day, the court adjourned the claim for the reply of the claimant. It stood posted to March 7, 1989. The claimant did not file any reply then. So, the matter was adjourned to April 3, 1989. The claimant did not file any reply even on that day. So, the court adjourned the case to June 20, 1989. Even on that day, it does not appear that the claimant filed any reply. The matter came up before the learned single judge on that day and he proceeded to deliver judgment on that day itself. Though the court itself has adjourned the claim for the reply of the claimant, no reply was filed even as late as June 20, 1989. It is not evident as to why the claimant did not file any reply. Apparently, the court was satisfied that the reply was called for, and if so, the reason why the court proceeded to judgment abruptly, though the claim was not posted for framing of issues or for evidence is not clear. Rule 6 of the Companies (Court) Rules provides as follows :
"Save as provided by the Act or by these Rules, the practice and procedure of the court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these Rules. . . . . "
7. ["Code" means the Code of Civil Procedure, 1908, as specified in rule 2(4) of the Companies (Court) Rules, 1959.]
8. After the filing of the written statement, when the claim came up before the learned single judge on February 6, 1989, and thereafter till June 20, 1989, on the day when the judgment was delivered, the matter stood adjourned for the claimant to file the reply. In the nature of the pleadings in the case, the real dispute between the parties could be highlighted only by framing appropriate issues. The framing of issues has a very important bearing on the trial and decision of a case. In this case, the pleadings raise points with sufficient clearness, warranting the framing of issues. It does not appear that the parties invited the attention of the court for framing of the issues or to post the case for trial. However, it cannot be forgotten that it is primarily the duty of the court to frame the issues : Kesavan v. Narayanan, AIR 1953 Trav-Coch 118, at page 119. A court commits a grave irregularity in proceeding to the final hearing of a case without settling the issues therein : Muttayan Chetti v. Sangili Vira Pandia Chinnathambiar [1882] ILR 6 Mad 1, 9 (PC); Chiranji Lal v. Shankar Lal, AIR 1951 Raj 56 ; Aziz Ahmed Khan v. I. A. Patel, AIR 1974 AP 1 [FB] and Kaniz Fatima v. Shah Nairn Ashraf, AIR 1983 All 450. We are satisfied that such irregularity, on the facts of this case, is a material one affecting the disposal of the case on merits. On the facts of this case, in the nature of the serious contentions raised, the failure to frame the issues is a material irregularity which has resulted in prejudice and injustice to the appellants, in that, prima facie substantial pleas could not be and were not adjudicated. For rendering the judgment in the case, formulation or determination of the issues that arose for consideration was essential. That alone will focus the attention of the court as to what are the points that arise for determination, and the evidence to be adduced in that behalf by the parties, depending upon the burden of proof cast on them.
9. On the facts of this case, on a perusal of the court records regarding the various postings, we presume that the learned single judge proceeded to judgment on June 20, 1989, though no issues were framed and the case was not posted for trial, due to some mistake or misapprehension. We are satisfied that the ends of justice require that the necessary issues arising on the pleadings in the case should be framed and the matter posted for trial to enable the parties to lead evidence, if any. Since it has not been so done, there has been a denial of opportunity to the appellants/claimants before a decree was passed against them. It is not possible to adjudicate the entire matter in controversy without formulating the issues and posting the case for trial affording opportunity to the parties to lead evidence, if any.
10. On the facts of this case, we hold that the judgment of the learned single judge merits interference, in view of the material irregularity in the procedure adopted in the disposal of the case. We set aside the judgment of the learned single judge and order a remit of the matter to the company judge. The claim will be posted for framing of issues and for trial and then adjudication shall follow on the basis of the evidence adduced by the parties.
11. The appeal is allowed.