Orissa High Court
State Of Orissa And Ors. And Udyog Silpa ... vs Punjab National Bank And Ors. on 27 April, 1988
Equivalent citations: [1991]71COMPCAS220(ORISSA)
Author: D.P. Mohapatra
Bench: D.P. Mohapatra
JUDGMENT V. Gopalaswamy, J.
1. The facts giving rise to the present appeals are briefly stated thus: The Punjab National Bank Ltd. (hereinafter referred to as the "the bank") filed the suit, T. M. S. No. 79 of 1978), in the Court of the Subordinate Judge, Cuttack, against defendant No. 1, Udyog Silpa P. Ltd. (hereinafter referred to as "the company"), and seventeen other defendants, defendants Nos. 2 to 18. Defendant No. 1 company was engaged in manufacturing iron pipes, fittings and allied materials and used to supply the same to the Government of Orissa (defendant No. 11) for being used by the public health department. The defendant No. 1-company, as a constituent of the plaintiff-bank, was enjoying credit facilities from the bank to the tune of Rs. 1,00,000 against Government bills and cheques drawn in favour of the defendant-company towards the value of the manufactured iron goods supplied from time to time during the relevant period. The defendant-company, through its directors, entered into an agreement with the plaintiff-bank for enabling it to secure such credit facilities from the bank. One Golab Devi Jajodia and defendants Nos. 2, 4 and 7 executed deeds of guarantee(s) in favour of the plaintiff-bank agreeing to indemnify the bank to the extent of Rs. 4,00,000 so that the same may serve as sufficient security for the loans advanced by the bank to the defendant-company. In pursuance of the agreement between the parties, the defendant-company used to make over to the plaintiff-bank all its Government bills and cheques for collection from the Government During the relevant period, the defendant-company supplied its manufactured goods, to the Government, of a total value of Rs. 92,263.99 and made over the Government bills relating to the price of goods so supplied, to the plaintiff-bank for collection from the Government. On the strength of such bills, the plaintiff-bank was providing credit facilities to the defendant-company. The plaintiff-bank tried to realise the amount due to it from the company, by sending the bills of a total value of Rs. 92,263.99 in respect of the goods supplied by the company, to the Government for collection. The plaintiff-bank sent the said company's bills to the Government, and on behalf of the company demanded payment under the bills in respect of the goods supplied by the company to the Government. But the Government evaded making the payment under the bills on some pretext or other, in spite of repeated demands by the company and the bank for such payment. Hence, on July 22, 1969, the plaintiff-bank sent a notice, exhibit 40, under Section 80, Civil Procedure Code, to the Government demanding payment of the dues of Rs. 92,263.99 under the bills sent to it for collection, but even after the receipt of the notice, the Government did not pay the amount. By April, 1970, under the cash credit account No. 519 of the defendant-company with the plaintiff-bank, a total sum of Rs. 94,641.86 was found due from the defendant-company to the plaintiff-bank towards principal and interest accrued due by that date. As the bank could not recover any part of that amount through the bills of the company sent to the Government for collection, the bank demanded of the company to repay that amount directly to them, but the company failed to do so. Hence, the bank filed the suit for recovery of Rs. 94,641.86 alleging that defendants Nos. 2 to 10, 17 and 18, as directors of defendant No. 1-company, guarantors, for the sums advanced by the bank and as their successors-in-interest, are also jointly and severally liable for the repayment of that amount. Defendant No. 11 is the State Government of Orissa, defendants Nos. 12 and 15 are the oil collectors of Puri and Sambalpur respectively, defendant No. 13 is the chief engineer, P. H. D., Bhubaneswar, defendant No. 14 is the executive engineer, P. H. D. No. 1, Bhubaneswar and defendant No. 16 is the executive engineer, P. H. D., Sambalpur. The plaintiff-bank claimed that, in the facts of the case, defendants Nos. 11 and 16 are also jointly and severally liable to pay the suit amount of Rs. 94,641.86. The common plea of defendants Nos. 1 to 10, 17 and 18 is that as the defendant-company had made over its bills of a total value of Rs. 92,236.99 to the plaintiff-bank for collection, nothing more is payable to them under the cash credit account and as the non-recovery of the amount under the bills from the Government was due to the negligence of the bank, the defendants cannot be held liable for the same. The gist of the plea of defendants Nos. 11 to 16 is that as there was no privity of contract between the Government and the plaintiff-bank in the matter of supply of the goods in question by the defendant-company, there is no cause of action for the filing of the suit by the bank against them and the suit is, therefore, not maintainable and liable to be dismissed.
2. The trial court, by its judgment and decree dated September 30, 1975, and October 9, 1975, respectively, decreed the suit against defendants Nos. 11 to 16 for Rs. 83,214.99 and against the other defendants for a sum of Rs. 11,426.87 with pendente lite and future interest at the rate of 6 per cent. per annum till realisation and directed that the costs and interest be proportionately distributed against the two sets of the defendants. Being aggrieved by the said judgment and decree passed against them for a sum of Rs. 83,214.99, defendants Nos. 11 to 16 preferred First Appeal No. 37 of 1976 making the plaintiff-bank as respondent No. 1, the company as respondent No. 2 and the other defendants as respondents Nos. 2(a) to 12. Defendant No. 1-company and defendants Nos. 4, 5, legal representatives of original defendant No. 7, and defendants Nos. 17 and 18 preferred First Appeal No. 21 of 1976 against the judgment and decree holding them liable for payment of Rs. 11,426.87 making the bank as respondent No. 1, defendants Nos. 11 to 16 as respondents Nos. 2 to 7 and defendants Nos. 3, 8, 9 and 10 as respondents Nos. 8 to 11 respectively.
3. On a consideration of the pleadings, the evidence adduced by the parties and the arguments advanced at the time of hearing, the following points arise for consideration in First Appeal No. 37 of 1976 :
(1) What is the amount payable by defendants Nos. 11 to 16 to the defendant-company towards the value of the goods received from the defendant-company ?
(2) By the date of the suit, what was the amount due from the defendant-company to the plaintiff-bank, under the cash credit account of the defendant-company ?
(3) Whether the plaint discloses any cause of action for filing the suit against defendants Nos. 11 to 16 ?
(4) Whether the suit against defendants Nos. 11 to 16, is otherwise also not maintainable ?
(5) To what relief is the plaintiff is entitled under the provisions of Order 41, Rule 33, Civil Procedure Code, in case the appeal preferred by defendants Nos. 11 to 16 is allowed ?
4. It is on the findings on the above points in First Appeal No. 37 of 1976 that the result of the other appeal, i.e., First Appeal No. 21 of 1976 would depend. Hence, only the points raised in First Appeal No. 37 of 1976 are taken up for consideration in the first instance.
5. Point No. 1.--It is the common case of the plaintiff-bank and the defendant-company that the defendant-company had supplied iron pipes, fittings and allied materials to the P. H. Divisions at Sambalpur and Bhubaneswar during the years 1965 and 1966 and the total value of the goods so supplied was Rs. 92,263.99. According to the plaintiff-bank, when the nine bills relating to the said supply of goods were sent to the Government for collection of the dues mentioned therein, the Government evaded payment on some pretext or other. In the trial court, defendants Nos. 11 to 16, the Government and the officers representing the Government, even disputed the receipt of the goods of the value of Rs. 92,263.99 from the defendant-company. So the plaintiff and the defendant-company relied on the documentary and oral evidence to prove that goods of a total value of Rs. 92,263.99 were in fact supplied to defendants Nos. 11 to 16 and that the value of the same was not paid by defendants Nos. 11 to 16.
6. Out of the nine disputed bills in question sent to the Government for collection by the plaintiff-bank, two of them related to the P. H. Division No. II, Sambalpur, while the remaining seven bills related to the P. H. Division No. 1, Bhubaneswar. Admittedly, the plaintiff-bank sent these bills to the Government for realisation of the amounts mentioned therein.
7. Exhibit 30 is the forwarding letter dated April 24, 1967, addressed to the Execative Engineer, P. H. Division No. II, Sambalpur, by the bank demanding payment of the amount of Rs. 6,666.50 covered by the bill, exhibit 30(a). Exhibit 30(b) is the receipted challan of the Government acknowledging the receipt of the materials in support of the bill, exhibit 30(a). Exhibit 31 is the forwarding letter dated April 29, 1967, addressed to the Executive Engineer, P. H. Division No. II, Sambalpur, by the plaintiff-bank demanding payment of the amount of Rs. 6,174.42 towards the value of the goods supplied as per the forwarding letter of the defendant-company dated April 26, 1967, marked exhibit 31(a). Exhibit 31(b) is the connected letter showing the particulars of the goods despatched by road transport. Exhibit D is a plain paper receipt dated April 1, 1967, signed by the Section Officer, P. H. Division No. II, Sambalpur, acknowledging the receipt of the articles mentioned in exhibit 31(b). Defendants Nos. 11 to 16 examined S. Sethi, the head clerk of the P. H. Division, Sambalpur, as DW-2. He was examined to state that the goods covered by the two disputed bills were never received by his division. DW-2 has admitted that Shri Marwah was the Section officer of Sambalpur, P. H. Division. Shri A. K. Sanyal, the present director of the company, examined himself as DW-1 and stated on oath that he personally delivered the goods under the two disputed bills and obtained the receipted challan, exhibit 30(b) and exhibit D. Exhibit D bears the signature of Marwah, the then Section officer. DW-1 deposed that exhibit 30(b) contains the endorsement of the Section officer, P. H. Division of Burla Water Works. Defendants Nos. 11 to 16 did not take any steps to examine the officers who, according to the defendant-company, signed on the receipt, exhibits D and 30(b) to deny their signatures. Likewise, none of the officers who were competent to depose about the receipt or non-receipt of goods from the defendant-company during the relevant period, were examined by defendants Nos. 11 to 16. Though, prior to the filing of the suit, there was demand for the payment of the value of the goods mentioned in exhibit 30(b) and exhibit D, defendants Nos. 11 to 16 never denied the receipt of the goods mentioned therein.
8. So, placing reliance on exhibits 30 series and 31 series and considering the other facts and circumstances of the case, it can be safely held, as found by the trial court, that P. H. Division No. II, Sambalpur, received the goods of a total value of Rs. 12,840.92.
9. The evidence of DW-1, the witness for the defendant-company, shows that all the goods covered by the other seven disputed bills, exhibits 32(a), 33(a) to 38(a) applied to the P. H. Division No. I, Bhubaneswar, were delivered at the stores and the store-keeper, Shri K. Mohapatra, endorsed the receipt of the goods on the challans. Exhibit 32 is the forwarding letter dated May 23, 1967, addressed by the bank to the executive engineer, P. H. Division No. I, Bhubaneswar, demanding payment of Rs. 14,516.62 relating to the supply of goods covered by the bill, exhibit 32(a) and exhibit 32(b), is the relevant receipted challan acknowledging the receipt of the goods. Exhibit 33 is the forwarding letter dated June 29, 1967, addressed by the bank to the Executive Engineer, P. H. Division No. I, Bhubaneswar, demanding payment of Rs. 17,303.23 relating to the supply of goods covered by the bill, exhibit 33(a) and exhibit 33(b), is the relevant receipted challan acknowledging the receipt of the goods. Exhibit 34 is the forwarding letter dated July 13, 1967, addressed by the bank to the Executive Engineer, P. H. Division No. I, Bhubaneswar, demanding payment of Rs. 5,373.06 relating to the supply of goods covered by the bill, exhibit 34(a) and exhibit 34(b), is the relevant receipted challan acknowledging the receipt of the goods. Exhibit 35 is the forwarding letter dated August 2, 1967, addressed by the bank to the Executive Engineer, P. H. Division No. I, Bhubaneswar, demanding payment of Rs. 13,196.93 relating to the supply of goods covered by the bill, exhibit 35(a) and exhibit 35(b), is the relevant receipted challan acknowledging the receipt of the goods. Exhibit 36 is the forwarding letter dated August 11, 1967, addressed by the bank to the Executive Engineer, P. H. Division No. I, Bhubaneswar, demanding payment of Rs. 6,272.77 relating to the supply of goods covered by the bill, exhibit 36(a) and exhibit 36(b), is the relevant receipted challan acknowledging the receipt of the goods. Exhibit 37 is the forwarding letter dated December 5, 1967, addressed by the bank to. the Executive Engineer, P. H. Division No. I, Bhubaneswar, demanding payment of Rs. 11,877.23 relating to the- supply of goods covered by the bill, exhibit 37(a) and exhibit 37(b), is the relevant receipted challan acknowledging receipt of the goods. Exhibit 38 is the forwarding letter dated January 31, 1968, addressed by the bank to the Executive Engineer, P. H. Division No. I, Bhubaneswar, demanding payment of Rs. 11,877.23 relating to the supply of goods covered by the bill, exhibit 38(a) and exhibit 38(b), is the relevant receipted challan acknowledging the receipt of the goods.
10 .The evidence of DW-1 examined on behalf of the defendant-company shows that he had personally delivered all the goods covered by the bills, exhibits 30 to 38 and 46, and obtained the receipted chal-lans which he submitted to the plaintiff-bank along with the bills. It is in the evidence of DW-1 that all the said goods have been supplied at the stores of the Section Officer, P. H. Division No. I, Bhubaneswar, and that Shri K. Mohapatra was the store-keeper under the Section Officer, Stores, Bhubaneswar, and that the store-keeper also had been authorised to receive the goods. DW-3 is the Section Officer, P. H. Division No. 1, Bhubaneswar, examined on behalf of defendants Nos. 11 to 16. Defendants Nos. 11 to 16 made an attempt through DW-3 to prove that the Section officer alone was the competent officer authorised by the executive engineer to receive the goods and acknowledge the receipt on the challans. But, in the cross-examination of DW-3, it was elicited that the Government did make payment in part on the basis of the endorsements made by the storekeeper, Sri K. Mohapatra, on the challans, exhibit 37(b) and exhibit 46(b). All the disputed challans, exhibits 32(b) and 33(b) to 38(b), bear the designation rubber stamp of the Section Officer, Stores of P. H. Division, Bhubaneswar. DW-3 admitted that the said rubber stamp remained in his custody and none could use it without his permission. Though the plaintiff-bank and the defendant-company were all along demanding payment from the Executive Engineer, P. H. Division No. I, Bhubaneswar, for the value of the goods received under each of the challans, the receipt of such goods was never disputed by the executive engineer. Hence, considering the other facts and circumstances of the case and relying on the documentary evidence, exhibits 32 series, 33 series to 38 series, it is held, agreeing with the finding of the trial court, that the goods covered by the seven disputed bills were received by the P. H. Division No. I, Bhubaneswar, and that the total value of the goods covered by the said seven bills comes to Rs.79,423.07.
11. It is earlier found that the goods covered by the nine disputed bills were received by the P. H. Division, Sambalpur, and P. H. Division No. I, Bhubaneswar, and so it necessarily follows that the executive engineers concerned (defendants Nos. 14 and 16) were liable to pay for the same to the defendant-company. That the total value of the goods covered by the said nine bills under reference comes to Rs. 92,263.99 (Rs. 79,423.07 plus Rs. 12,804.92) is not disputed. From bill No. 2024, dated February 5, 1968, marked exhibit V-l(a), it is seen that the original defendant No. 7, Mohan Kumar Jajodia (since dead), husband of the director, Sita Devi (defendant No. 5), made an endorsement therein acknowledging the receipt of Rs. 9,049 towards part payment of the bill, exhibit 38(a). Exhibit V-1(b) is the money receipt for Rs. 9,049 granted by the said Mohan Kumar Jajodia (original defendant No. 7) on behalf of Udyog Silpa P. Ltd. (defendant No. 1). Hence, it is seen that when Rs. 9,049 is deducted from Rs. 92,263.99, the total amount payable, a sum of Rs. 83,214.99 was still payable by defendants Nos. 11 to 16 to the defendant-company towards the value of the goods received from the defendant-company.
12. Point No. 2.--The plaintiff-bank has stated in the plaint that by the date of filing of the suit, the defendant-company was due to pay to the plaintiff-bank an aggregate sum of Rs. 94,641.86 towards the principal and interest payable under the cash credit account with the bank. PW-1 is the bank manager who duly proves the certified copy of the bank account of defendant No. 1-company with the plaintiff-bank and the same is marked as exhibit 45. On a perusal of exhibit 45, it is seen that, under the cash credit account No. 519 (bills a/c) maintained by the defendant-company with the plaintiff-bank, a sum of Rs. 94,641.86 was due from the defendant-company to the plaintiff-bank by June 1, 1978. There is nothing in the evidence of PW-1 or in the evidence adduced on behalf of the defendant-company to create any doubt regarding the correctness of the recitals in exhibit 45. On the other hand, exhibit 27 is the balance confirmation receipt executed by Mohan Kumar Jajodia (original defendant No. 7) on March 7, 1969, on behalf of the defendant-company confirming the correctness of the balance of Rs. 91,692.62 as on December 31, 1968, of cash credit account No. 519. So, exhibit 27 confirms the correctness of the recitals in exhibit 45. Even defendants Nos. 1 to 10, 17 and 18 do not dispute the correctness of the statement of account, exhibit 45, but their common plea is that as the Government bills of a total value of Rs. 92,263.99 were delivered to the plaintiff-bank for collection, they are no longer liable to pay the suit amount of Rs. 94,641.86.
13. Point No. 3.--After referring to State of Madras v. C. P. Agencies, AIR 1960 SC 1309 and Mohammad Khalil Khan v. Mahbub Ali Mian, AIR 1949 PC 78, this court, in Sivananda Roy v. Janaki Ballav Pattnaik, AIR 1985 Orissa 197, made the following observations (at page 200) :
". . .To put it in a concise form, the words 'cause of action' mean the whole bundle of material facts which are necessary for the plaintiff to prove, in order to entitle Mm to the reliefs claimed in the suit. Order 7, Rule 11, requires the plaintiff to incorporate in the plaint the facts constituting the cause of action. Thus, the plaintiff has to plead all material facts upon which his right to relief is based and from which the court can arrive at a conclusion in his favour. . .
14. Reading Order 6, Rule 2 and Order 1, Rule 11, Civil Procedure Code, together, it is clear that the words 'material facts' occurring in Order 6, Rule 2, Civil Procedure Code, with reference to a plaintiff means the facts necessary to form a complete cause of action. The language of Order 7, Rule 11, Civil Procedure Code, makes it imperative that the facts constituting the cause of action must find place in the plaint. Thus, the conclusion is irresistible that all the facts and not the evidence, which are necessary to be proved in order to entitle the plaintiff to the relief claimed must find place in the plaint. A plaint which does not conform to the aforesaid requirement can be said to be one which does not disclose a cause of action within the meaning of Order 7, Rule 11(a), Civil Procedure Code."
15. Hence, keeping in mind the principles enunciated above, we proceed to scrutinise the plaint in the present case to find out if it discloses a cause of action against defendants Nos. 11 to 16 for claiming the suit amount of Rs. 94,641.86 or any part of it, from them.
16. On a reading of the plaint, it is seen that except baldly stating that as defendants Nos. 11 to 16 avoided making payment of the price of goods worth Rs. 92,263.99 supplied to them by the defendant-company from time to time, the plaintiff-bank was compelled to file the suit againt them also, the plaintiff has failed to explain as to how the plaintiffs suit is maintainable against defendants Nos. 11 to 16 for the realisation of the price of the goods which were not supplied by them. On the face of it, the supply of the goods in question was the result of an agreement between the defendant-company on the one hand and the executive engineers of the P. H. Divisions (defendants Nos. 14 and 16) on the other. The plaintiff-bank has not pleaded, as it ought to have, that there was a privity of contract between it and defendants Nos. 11 to 16 in the matter of the supply of goods in question to defendants Nos. 11 to 16. So, the plaintiff-bank should have clearly explained in its plaint as to how it has a cause of action for filing the suit against defendants Nos. 11 to 16 for recovering the price of goods supplied to them by the defendant-company.
17. On a perusal of the plaint, it is seen that in paragraph 21 of the plaint, there is a mere statement that by about March 7, 1969, a sum of Rs. 91,692.62 was due also from defendants Nos. 11 to 16 under the cash credit account of the defendant-company. Paragraph 33 is another brief para in the plaint wherein the plaintiff-bank alleged that as defendants Nos. 11 to 16 avoided making the payment of Rs. 92,263.99 the plaintiff-bank filed the suit against them also. Excepting for these two paras, there is no reference to defendants Nos. 11 to 16 in any of the other paragraphs of the body of the plaint. The plaintiff-bank has not pleaded anything about there being a privity of contract, either expressed or implied between the plaintiff-bank on the one hand and defendants Nos. 11 to 16 on the other in relation to the transactions of supply of the goods in question. No issue was framed by the trial court on the aspect of such existence of privity of contract between the plaintiff and defendants Nos. 11 to 16 in the matter of supply of the goods in question. The plaintiff-bank has not stated the necessary facts in the plaint on the basis of which he claims to be entitled to a decree against defendants Nos. 11 to 16 either for the sum of Rs. 94,641.86 or for the sum of Rs. 92,263 as prayed for by him.
18. Hence, on a careful scrutiny of the plaint, and as discussed earlier, it is found that it does not disclose any cause of action for filing the suit against defendants Nos. 11 to 16.
19. Point No. 4.--The trial court passed the decree against the appellants (defendants Nos. 11 to 16) directing them to pay the sum of Rs. 83,214.99 to the plaintiff-bank. It was earlier found that by the date of filing of the suit Rs. 83,214.99 was the amount still payable by defendants Nos. 11 to 16 to the defendant-company towards the value of the goods received from the defendant-company by P. H. Divisions, Bhubaneswar and Sambalpur. Exhibits 30(a), 31(a) to 38(a), are the 9 bills which relate to the goods supplied by the defendant-company and it is in respect of these bills that a sum of Rs. 83,214.99 was found payable by defendants Nos. 11 to 16 to the defendant-company. The defendant company had made over the said 9 bills to the plaintiff-bank for the purpose of collection of the amounts due under the bills so that the same may be appropriated by the plaintiff-bank towards discharge of the dues payable by the defendant-company under the cash credit account. Learned counsel for the appellants in First Appeal No. 37 of 1976 contended that as the goods in question were supplied by the defendant-company to defendants Nos. 11 to 16, they were liable to pay the price of the goods only to the defendant-company and, therefore, for the realisation of the same, the plaintiff-bank's suit against defendants Nos. 11 to 16, as filed, is not maintainable, as there was no privity of contract between the plaintiff-bank and defendants Nos. 11 to 16 in the matter of the supply of the goods.
20. Neither the plaintiff-bank nor the defendant-company placed any material to show that there was privity of contract, either express or implied, between defendants Nos. 11 to 16 on the one hand and the plaintiff-bank on the other regarding the transactions relating to supply of the goods in question to defendants Nos. 11 to 16 by the defendant-company. A privity of contract is said to exist between two persons when there is a valid agreement enforceable by law as between them. A person who cannot show such privity of contract is a stranger to the contract. Under the Indian law of contracts, a person cannot acquire rights under a contract to which he is not a party and, therefore, a stranger to a contract cannot sue upon it. In the present case, regarding the supply of the goods in question, the contract was only between the defendant-company on the one hand and defendants Nos. 11 to 16 on the other and the plaintiff-bank was not a party to that contract. Because the plaintiff-bank is a stranger to the said contract between the defendant-company and defendants Nos. 11 to 16, he cannot independently sue upon that contract for enforcing the rights of the defendant-company.
21. Learned counsel for the plaintiff-respondent pleaded that in any event, defendants Nos. 11 to 16 are liable to pay to the bank the value of the goods supplied by the defendant-company by virtue of the provisions of Section 70 of the Indian Contract Act. One of the essential requirements of Section 70 is that the plaintiff must lawfully do something for the defendant or deliver something to him. But, in the present case, the plaintiff himself has not delivered the goods in question to defendants Nos. 11 to 16. Hence, we find that, in the facts of the present case, the benefit of the provisions of Section 70 is not available to the plaintiff to enforce his claim against defendants Nos. 11 to 16. That apart, it is only when the necessary ingredients to support the cause of action under Section 70 of the Indian Contract Act are pleaded in the plaint, that a cause of action is constituted under Section 70 of the Act as held in Union of India v. Sita Ram Jaiswal, AIR 1977 SC 329. In the present case, as the conditions necessary for applicability of Section 70 are neither pleaded nor proved, such a claim under Section 70 of the Indian Contract Act cannot be advanced for the first time in the appellate court.
22. Learned counsel for the appellants contended that even if the nine disputed bills, on which the plaintiff rests his claim, are construed as bills of exchange, taking the defendant-company as the drawer, the executive engineers (defendants Nos. 14 and 16) as the drawees and the plaintiff-bank as the payee, even then defendants Nos 11 to 16 are not liable to pay the amount covered by the bills to the plaintiff-bank, so long as they have not accepted the bills. In this context, he relied on the decision in Jagjivan Mavji Vithlani v. Ranchhoddas Meghji, AIR 1954 SC 554, where it was held that the drawee of a negotiable instrument is not liable on it to the payee, unless he has accepted it. Under Section 32 of the Negotiable Instruments Act, the liability of the drawee arises only when he accepts the bill. As held in the above Supreme Court cases, what is requisite for fixing the drawee with liability under Section 32 is the acceptance by him of the instrument and not an acknowledgment of liability. As the law prescribes no particular form for acceptance, there should be no difficulty in construing an acknowledgment as an acceptance, but then, it must satisfy the requirements of Section 7, and must appear on the bill and be signed by the drawee. In the present case, none of the disputed bills was accepted by any of defendants Nos. 11 to 16, in the manner required by the relevant provisions of the Negotiable Instruments Act. So, as contended by learned counsel for the appellants, as there was no acceptance of any of the bills by defendants Nos. 11 to 16, no cause of action has arisen to the plaintiff-bank against them on the strength of such bills. So, the plaintiffs suit against defendants Nos. 11 to 16 for the recovery of the amounts under the nine disputed bills is not maintainable.
23. Hence, when the issue of maintainability is examined from different angles as discussed above, it is seen that, in any view of the matter, the plaintiff-bank has no cause of action for filing the suit against defendants Nos. 11 to 16. So, the decree passed by the trial court against the appellants for Rs. 83,214.99, solely on the basis that the value of the goods in question amounting to Rs. 83,214.99 was still liable to be paid by defendants Nos. 11 to 16 to the defendant-company, is not maintainable in law and the same is, therefore, liable to be set aside and accordingly, the appeal preferred by the appellants is bound to be allowed.
24. Point No. 5.--It is earlier found that the defendant-company is liable to pay to the plaintiff-bank a sum of Rs. 94,641.86 towards the dues under the cash credit account No. 519 maintained by the company with the bank. It is only by keeping that amount of Rs. 94,641.86 in mind, that the trial court has directed defendants Nos. 11 to 16 to pay Rs. 83,214.99 to the plaintiff-bank, while directing the rest of the defendants to pay the balance sum of Rs. 11,426.87 (Rs. 94,641.86 minus Rs. 83,214.99) to the plaintiff-bank. The plaintiff-bank was legitimately entitled to recover a sum of Rs. 94,641.86 from the defendant-company and the other defendants, excepting from defendants Nos. 11 to 16, under the cash credit account. The plaintiff-bank has impleaded defendants Nos. 11 to 16 in the suit and claimed a sum of Rs. 92,263.99 under the nine disputed bills from them, towards the discharge of its dues amounting to Rs. 94,641.86, under the cash credit account of the defendant-company. The plaintiff-bank is interested in realising the entire amount of Rs. 94,641.86 under the cash credit account and it is least concerned as to who, amongst the defendants, pays the sum. In that view of the matter, when a decree was passed only against defendants Nos. 11 to 16 in respect of the sum of Rs. 83,214.99 and for the balance sum of Rs. 11,426.87 against the other defendants, the bank did not choose to prefer an appeal claiming that a decree for the said sum of Rs. 83,214.99 should have been passed against all the defendants and not merely against defendants Nos. 11 to 16. Now that the decree directing defendants Nos. 11 to 16 to pay the plaintiff-bank Rs. 83,214.99 is being set aside, the issue that necessarily arises for consideration is whether the plaintiff-bank should be deprived of its legitimate dues merely because it figures as a respondent. In this context, learned counsel for the respondent-bank contended that, in the facts and circumstances of the case, even if the appeal preferred by the defendants Nos. 11 to 16 is allowed, by virtue of the provisions of Order 41. Rule 33, Civil Procedure Code, a decree ought to be passed in favour of the bank against the other respondents.
25. For convenience of ready reference, the relevant portion of Order 41, Rule 33, Civil Procedure Code, is extracted below :
"Power of Court of Appeal.--The appellate court shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection."
26. The scope of Rule 33 is indicated by the following illustration given under that Rule :
"A claims a sum of money as due to him from X or Y and in a suit against both obtains a decree against X. X appeals and A and Y are respondents. The appellate court decides in favour of X. It has power to pass a decree against Y."
27. The illustration deals with a situation which is very similar to the situation in the present case.
28. The illustration to Rule 33 indicates a type of cases for which provision is intended to be made. But it is not exhaustive of the classes of cases to which the Rule applies, and does not restrict the scope of the rule. The present case falls within the type indicated by the illustration. In Venukuri Krishna Reddi v. Kota Ramireddi, AIR 1954 Mad 848. Rajamannar C. J. and Venkatarama Aiyar J. while holding that though Order 41, Rule 33, confers wide and unlimited jurisdiction on courts to pass a decree in favour of a party who has not preferred any appeal, there are, however, certain well-defined principles in accordance with which that jurisdiction should be exercised, indicated the cases in which courts could interfere under Order 41, Rule 33, Civil Procedure Code, by observing, at page 852, as follows:
". . . . One is where as a result of interference in favour of the appellant it becomes necessary to re-adjust the rights of other parties. This might happen when A files a suit claiming a relief in the alternative against B or C and obtains a decree against B and not against C and in an appeal by B the court holds that it is C and not B that is liable. That is the illustration to the rule.
A third class of cases in which this Rule has been applied is when the relief prayed for is single and indivisible but is claimed against a number of defendants. In such cases, if the suit is decreed and there is an appeal only by some of the defendants and if the relief is granted only to the appellants, there is the possibility that there might come into operation at the same time and with reference to the same subject-matter two decrees which are inconsistent and contradictory.
.... This, however, is not intended to be an exhaustive enumeration of the classes of cases in which courts could interfere under Order 41, Rule 33. Such an enumeration would neither be possible nor even desirable for situations might arise which cannot be foreseen or predicted in which the court must have the power to exercise its jurisdiction under that Rule ......"
29. In State of Uttar Pradesh v. Tulsi Ram, AIR 1971 All 162, Justice M. H. Beg held, at page 166, as follows :
". . . Powers conferred by Order 41, Rule 33, Civil Procedure Code, seem to be wide enough to enable this court to alter the decree, in order to do complete justice, so that it is set aside against the defendant-appellant but passed against a defendant-respondent who should have been actually held liable. It only involves the substitution of one defendant by the correct one, on findings given, as the judgment-debtor in the decree passed ..."
30. In Sir Hari Sankar Pal v. Anath Nath Mitter, AIR 1949 FC 106, it was held that against the decision of the Calcutta Improvement Tribunal apportioning the compensation awarded for compulsory acquisition of premises between the proprietors and the lessees, an appeal was taken to the High Court by some of the proprietors who represented one-third share in the proprietary interest. The other co-sharer proprietors were made the respondents to the appeal. The High Court allowed the appeal and reversed the decision of the Improvement Tribunal. As, however, the appeal was filed not by all the proprietors but by some of them who had one-third share in the proprietary right, the appellants were declared entitled to a sum which was one-third of the total sum and no relief was given to the non-appealing proprietors with regard to whom the decision of the Improvement Tribunal was left intact. The result was that though the decision of the High Court was against the lessees, they indirectly got two-thirds of the increased amount to which, according to the judgment of the High Court, the proprietors were entitled. Subsequently, the other proprietors, who had not joined in filing the appeal but figured merely as the respondents therein, presented an application for review of the judgment, on the ground that even though they did not file any appeal, relief could and should have been given to them under the provisions of Order 41, Rule 33, Civil Procedure Code, inasmuch as their case rested entirely on the same footing as that of the appealing proprietors and the entire decision of the Improvement Tribunal was pronounced to be wrong. This application was allowed by the High Court, purporting to act under Order 41, Rule 33, Civil Procedure Code. The Federal Court held that the case was a fit one for the exercise of the powers under Order 41, Rule 33. The Federal Court further held that there was an omission on the part of the court to consider the clear provision of Order 41, Rule 33, Civil Procedure Code, when the original judgment was passed ; and such omission, which appeared on the face of the judgment, constituted a sufficient ground analogous to those mentioned in Order 47, Rule 1, Civil Procedure Code, and that, therefore, the court was not incompetent to reconsider the matter after the judgment if it so desired. Hence, it is seen that, as held by the Federal Court, Order 41, Rule 33, Civil Procedure Code, is a purely enabling provision which enables the appellate court to exercise certain powers in favour of a party who has not filed the appeal, if the circumstances of the case and the interests of justice so required.
31. In Probhat Chandra Biswas v. Gopal Chandra Mukerji, AIR 1922 Cal 398, a Division Bench of the Calcutta High Court held that under Order 41, Rule 33, there is no restriction of the powers as to any one class of suit under that rule.
32. Learned counsel for the defendant-company relied on the decision in Ekadasi Pradhan v. State of Orissa [1974] 2 CWR 858 and contended that, in the facts of the present case, the provisions of Order 41, Rule 33, Civil Procedure Code, cannot be invoked in favour of the plaintiff-bank against the other respondents.
33. In the above case, the facts may be briefly stated thus : In that case, the petitioners objected to the claim for settlement of land in favour of Opposite party No. 4 before opposite party No. 3 on the allegation that they and not opposite party No. 4 were the tenants in possession of the land on the relevant date and that opposite party No. 4 was never the holder of village office abolished under the Orissa Merged Territories (Village Officers Abolition) Act, 1962, and was not in possession of the land on the said date. Opposite party No. 3, after enquiry, held by his order (annexure-1), that opposite party No. 4 was the holder of the village office abolished under the said Act and that although the petitioners were in possession of the land they were not tenants under opposite party No. 4. On these findings, opposite party No. 3, while settling the land with occupancy rights therein in favour of opposite party No, 4 on fixation of fair and equitable rent, directed the petitioners' possession to be noted by his order (annexure-1). Opposite party No. 4 preferred an appeal before opposite pary No. 2 against the direction contained in annexure-1 to note possession of the petitioners. This appeal was allowed by opposite party No. 2 by his order (annexure-2) as a result whereof, the direction of opposite party No. 3 to note the petitioners' possession was set aside. Before opposite party No. 2, the petitioners in the course of hearing of the appeal, raised a contention that even though they had neither preferred an independent appeal nor a cross-objection against the order (annexure-1) of opposite party No. 3 rejecting their claim to settle the land on them as tenants, they were entitled to have their claim decided in the appeal preferred by opposite party No. 4. This contention of the petitioners was, however, rejected by opposite party No. 2. The petitioners, thereafter, being aggrieved by the order (annexure-2) preferred a second appeal before the member, Board of Revenue. This appeal having been dismissed by the member, Board of Revenue, by his order (annexure-4), the petitioners came up before the High Court for quashing the above referred orders (annexures 1, 2 and 4) passed under the provisions of the Orissa Merged Territories (Village Officers Abolition) Act, 1962, and for a direction to settle the disputed land in favour of the petitioner.
34. In the above case, it was contended by the petitioners that the appellate court had power to settle the lands with the petitioners by applying the provisions under Order 41, Rule 33, Civil Procedure Code. The facts of that case are such that the case comes within the scope of Order 41, Rule 22, Civil Procedure Code. Order 41, Rule 22, Civil Procedure Code, clearly provides that if the decree appealed against is partly in favour of the respondent and partly against him and if he had not preferred either an independent appeal or a cross-objection against that part of the decree which is against him, while supporting the decree which is in his favour on the grounds decided against him he cannot challenge that part of the decree against him. As it was a case falling under Order 41, Rule 22, it could not come under Order 41, Rule 33, Civil Procedure Code. Hence, it was held that in the appeal carried by opposite party No. 4 before opposite party No. 2, the petitioners, without filing a cross-objection, could not agitate the question whether they were tenants in respect of the disputed land, since the said question had been finally decided against them by opposite party No. 3 and no appeal was preferred by them against the said decision.
35. But, the facts of the present case are different. The following observations of this court in that very decision Ekadasi Pradhan v. State of Orissa [1974] 2 CWR 858 are relevant to the situation in the present case and hence extracted below :
"A party to a suit who is aggrieved by a decree, if he wants to get rid of it has to prefer an appeal against the same. Where he fails to do so, no relief can ordinarily be granted to him under Order 41, Rule 33, Civil Procedure Code. This rule, however, is subject to certain exceptions. Where, due to interference in favour of the appellant in an appeal, it is necessary to readjust the rights of other parties not arrayed as the appellants, the court may, in exercise of its power under Order 41, Rule 33, Civil Procedure Code do the same."
36. The case at hand is one of those exceptional cases where the powers under Order 41, Rule 33, Civil Procedure Code, ought to be invoked in favour of the respondent-bank against the other respondents when the appeal preferred by defendants Nos. 11 to 16 is allowed. The very illustration given under Order 41, Rule 33, Civil Procedure Code, leaves no room for doubt that Order 41, Rule 33, Civil Procedure Code, ought to be applied in favour of the respondent-bank, in view of the facts of the present case.
37. Now, we proceed to consider the merits of First Appeal No. 21 of 1976. It was earlier found that under the cash credit account, the defendant-company was liable to pay a sum of Rs. 94,641.86 to the plaintiff-bank. Even while deciding the connected First Appeal No. 37 of 1976, it was held that the defendant-company was liable to pay a sum of Rs. 83,214.99 to the plaintiff-bank. In this appeal, the only substantial point that was urged on behalf of the appellants is that since the nine disputed Government bills were made over to the plaintiff-bank for the realisation of its dues under the cash credit account, neither Rs. 11,426.87 nor any other amount was payable to the bank.
38. Learned counsel for the appellants contended that if the respondent-bank failed to collect the dues under the nine disputed bills, it was because of its own laches and the appellants could not be held liable for the same. There is no material to support the above contention of the appellants. As defendants Nos. 11 to 16 did not pay the amount to the plaintiff-bank under the nine disputed bills, the bank was entitled to realise the amount directly from the defendant-company. So, the trial court was justified in passing the judgment and decree in favour of the plaintiff-bank for the sum of Rs. 11,426.87 against the appellants and respondents Nos. 8 to 11. Therefore, First Appeal No. 21 of 1975 is without any merit.
39. There remains to be considered the question of liability of the defendants other than defendants Nos. 11 to 16. It is in the evidence of PW-1 that defendants Nos. 2 to 6 were initially the directors of defendant No. 1-company. The name of defendant No. 6 was expunged after his death. Defendants Nos. 17 and 18 who were appointed as directors subsequently were impleaded in the suit on the application filed by the plaintiff. Defendant No. 7, the husband of defendant No. 5, was closely associated with the transactions in question and had taken active part in the activities of the company. After the death of defendants Nos. 2 and 7 during pendency of the suit, their legal representatives were substituted in their places. Further, defendant No. 4 was a guarantor and executed the bond as per exhibit 44 wherein it was stipulated, inter alia, that the guarantor, his heirs, successors and executors would remain bound to the bank for the liabilities of the company. A similar bond was also executed by defendant No. 2 and one Golapdevi Jajodia, mother of defendants Nos. 7 to 10. The said bond has been marked as exhibit 44(b). The facts stated above have not been controverted in the evidence led on behalf of the defendants. As such, they have to be accepted as correct. Earlier, we have held that the plaintiffs suit is to fail against the State Government and its officers and the same is to succeed against the company, its directors and guarantors.
40. On the discussions in the foregoing paragraphs, the judgment and decree passed by the trial court against defendants Nos. 11 to 16 directing them to pay a sum of Rs. 83,214.99 to the plaintiff-bank has to be set aside and the First Appeal No, 37 of 1976 preferred by them is to be allowed. But, due to such interference in favour of the appellants, in the interests of justice, it becomes necessary to readjust the rights between the respondents. It was earlier found that the plaintiff-bank was legitimately entitled to receive a sum of Rs. 94,641.86 from the defendant-company towards the dues of its cash credit account. In fact, the trial court passed a decree only for Rs. 11,426.87 against defendants Nos. 1 to 10, 17 and 18 as it has passed a decree for the balance amount of Rs. 83,214.99 against defendants Nos. 11 to 16. Now that the appeal preferred by defendants Nos. 11 to 16 is allowed, the findings arrived at in the case in favour of the respondent-bank demand under the provisions of Order 41, Rule 33, Civil Procedure Code, that a decree should be passed in favour of the defendant-respondent-bank for the said sum of Rs. 83,214.99 against the other respondents. Hence, while allowing the appeal preferred by defendants Nos. 11 to 16, we pass a decree in favour of the respondent-bank for a sum of Rs. 83,214.99 against the other respondents in this appeal.
41. On ultimate analysis, First Appeal No. 37 of 1976 is allowed, First Appeal No. 21 of 1976 is dismissed and the suit is decreed against defendants Nos. 1 to 10, 17 and 18. They shall be jointly and severally liable for the suit amount together with pendente lite and future interest thereon at the rate of six per cent. per annum (simple interest) till realisation. The suit is dismissed against defendants Nos. 11 to 16. There will be no order for costs in the appeal.
D.P. Mohapatra J.
42. I agree.