Kerala High Court
Dr. L. Prabhakara Prabhu vs Canara Bank And Ors. on 12 March, 1996
Equivalent citations: AIR1996KER297, AIR 1996 KERALA 297, (1996) 1 KER LJ 636, (1996) 1 KER LT 682, (1996) 4 LANDLR 247, (1996) 2 BANKLJ 287, (1996) 2 BANKCAS 359, (1996) 2 CIVLJ 658
Author: B.N. Patnaik
Bench: B.N. Patnaik
ORDER B.N. Patnaik, J.
1. Both the revision petitions were heard together, as they arise out of a common order.
2. The 4th defedant in O.S. No. 140 of 1988, on the file of the Sub Court, Ernakulam has preferred these revisions against the common order dated 6-7-1991 in I. A. Nos. 5603 and 5404 of 1990 dated 14-9-1990 arising out of the said suit. By the impugned order, the learned Sub Judge dismissed "the applications arid rejected the prayer of the petitioner to implead the counter-petitioner, who later died during the pendency of the proceeding, as third party under Order 8A, Rule I of the Code of Civil Procedure claiming that he is entitled to contribution from or indemnity against the third party. The legal representatives of the deceased counter-petitioner have been brought on record as respondents 8 to 10 in these revisions.
3. The plaintiff (first respondent herein) filed the suit against the petitioner and respondents 2 to 7 (who were defendants I to
7) for recovery of about Rs. 6,00,000/-. The said amount was advanced by Lakshmi Commercial Bank to the first defendant. It merged with the plaintiff-Bank subsequently.
The petitioner/4th defendant executed an equitable mortgage of his properties and a guarantee agreement standing as security for the loan. The petitioner at first denied the execution of the equitable mortgage and the deed of guarantee in his written statement.
But, later on personal verification of the documents filed by the plaintiff in the Court below he having found that he had actually signed the deed of guarantee in respect of the loan advanced to the first defendant filed an additional written statement admitting the fact. The counter-petitioner (late Sri B.S. Kamath) was working as a Chartered Ac countant and was a friend of the petitioner. It is contended that on his request the petitioner signed some documents in the bank. At that time, the counter-petitioner had orally agreed to contribute or indemnify against his liability.
4. The suit was filed on 2-3-1988. The petitioner filed a written statement on 4-10-1988 without stating about the said liability of the third party. Subsequently, he filed an additional written statement on 1-9-1990 making an averment that the counter-petitioner -- third party is liable to indemnify him against the claim if he is found liable to pay any amount under the decree. It is stated by him that the third party executed a written agreement on 13-6-1990 to this effect. Hence he filed the applications to implead the counter-petitioner and grant leave to him to issue third party notice to the counter-petitioner/third party.
5. The plaintiff-Bank and the third party filed objections. The plaintiff stated that the cause of action as averred by the petitioner arose subsequent to the filing of the suit. The trial of the suit will be protracted if the petition is allowed. It will also cause inconvenience to the plaintiff. The third party contended that he never made any promise nor did he enter into any oral agreement with the petitioner as claimed by him. He further stated that on 13-6-1990 he was brought to the house of the petitioner by his brother and some others and was forced to sign some papers there. He signed it under threat and coercion. These papers were convened into an agreement. He filed a complaint in the Court of the Chief Judicial Magistrate, Ernakulam as C.C. No. 616 of 1990 against the petitioner and others. Since he has not executed the agreement voluntarily, he is not liable to indemnify the petitioner in case the petitioner sustains any loss on account of the loan. He is therefore not a necessary party.
6. The learned Sub Judge held that there is no prima facie case and the claim now advanced by the petitioner is devoid of any bona fides. The cause of action for claiming contribution accrued to the petitioner according to his own admission, subsequent to the filing of the written statement. There was no oral agreement between the petitioner and the third party at the time of transaction with the bank. The written agreement was brought into existence under suspicious circumstances. Such a complicated question regarding the genuineness of the agreement cannot be considered in this suit at the expense of the plaintiff. With these observations, leave was refused for issue of notice to the third party and the prayer to implead him as a party in the suit was rejected.
7. Rules 1 and 5 of Order 8 A of the Code of Civil Procedure read as follows:
"1. Third Party notice: (1) Where in respect of the claim made against him in the suit, a defendant claims to be entitled to contribution from or indemnity against any person not already party to the suit (hereinafter called the third party) he may by leave of Court, issue a notice (hereinafter called the third party notice) to that effect, sealed with the seal of the Court.
(2) An application for leave to issue such notice shall be filed along with the written statement of the said defendant and be accompanied by a draft of the notice sought to be issued. The notice shall state the nature and grounds of the claim and when the draft of the same is approved by Court with or without corrections, it shall be served on the third party together with a copy of the plaint and a copy of the said defendant's written statement in the manner prescribed for the service of summons.
5. (1) On hearing of such application -
(a) if the Court is of the opinion either that the claim made in the third party notice is prima facie not warranted or that it is not so intimately connected with the plaintiffs claim in the suit as to render its being conveniently tried along with the plaintiffs claim in the suit, or that its trial in the suit will unduly prolong or hamper the trial of the suit, the Court may dismiss the proceedings on the third party notice;
(b) if the Court is satisfied that there is a question to be tried as to the liability of the third party to make the contribution or pay the indemnity claimed, in whole or in part, and that it is just and convenient to try the same in the suit itself, the Court may order the question of such liability as between the third party and the defendant giving notice, to be tried in such manner as it may direct and may by the said order also give liberty to the third party to defend the suit itself upon such terms as may be just.''
8. In Thiruvannamalai Adhinam Sri Daivasigamani, In Re. (Law Weekly Volume 68 -- 1955 page 371), the Madras High Court, while considering the ambit of Order 8A, C.P.C. held as follows:
"The object of the third party procedure is two fold : First to prevent the same question from being tried twice with possibly different results; and secondly, to prevent multiplicity of actions and to enable the Court to settle disputes between all the parties in one action. The third party procedure is applicable only to cases of contribution or indemnity. In effect, a claim to contribution is a claim to a partial indemnity. Contribution is bottomed and fixed on general principles of justice and does not spring from contract, though contract may qualify,it.
The Court on a consideration of all matters has to decide whether the third party application should be dismissed or proceeded with, care being taken to see that the plaintiff is not unduly embarrassed or put to additional expense or difficulty, for he has nothing to do with the questions which have arisen between the defendants. The Court will also dismiss the application if it is found that the claim is outside contribution or indemnity, or if the case is one of too great complication or difficulty to be properly tried in the original action. If the Court finds that these matters cannot be properly tried together with the original action, then it is open to the Court to order that the questions arising between the third party and the assured (defendant) be tried in such manner at or after the trial of the suit as the Court may direct."
In D. Venkatachalapathi v. Surya Prakashrao (AIR 1957 Andhra Pradesh 939). It is laid down by the Andhra Pradesh High Court, by following the decision of the Madras High Court in Venkata Krishna Naidu v. Narayana Swami Iyer (AIR 1939 Madras 172), as follows:
"......... it is the duty of the Court to see that by the addition of the third party the plaintiff is not embarrassed in the trial of question in which he would have no concern. If the adjudication of the question between the defendant and the third party would embarrass the plaintiff in his trial, the Court generally exercises its discretion by ordering the trial of those issues subsequent to the trial of the action."
In Parasmal Chordia v. Rajalakshmi Ammal (AIR 1970 Madras 47), it is laid down that all that is necessary for the application of third party procedure is whether if the plaint claim is allowed the defendant has a claim, in that event, for indemnity by reason of such claim being allowed, from a third party. If that requisite is satisfied, the Court will not be justified, on any extraneous ground, from refusing third party procedure. It is also laid down that the rule is not limited to claim of indemnity arising out of same transaction or simultaneous transaction. It also does not limit the scope of Rule f so as to make it ap :cable only to cases where the suit claim is admitted. In Sundardas v. Indian Bank Ltd., (AIR 1974 Madras 119), it has been observed as follows:
"....... in applying third party procedure, the Court is bound to balance the two considerations, namely, the plaintiffs right to choose the party against whom he wants relief and avoidance of the possibility of conflicting judgments. The position, therefore, is that, before granting permission for impleading third parties as parties to the suit, the interests of the plaintiff should be taken note of. The Court will not be justified in refusing leave to implead third parties as parties to the suit merely on the ground that the plaintiff would be inconvenienced. But, if, by impleading third parties, the plaintiff is considerably prejudiced, or delayed in getting his relief unduly the Court will not resort to third party procedure."
In Victory 'Laminations v. Plasiolite Industries (AIR 1982 Madras 243), it is laid down that the right of the petitioner to invoke the procedure laid down under Order 8A can be safeguarded provided a prima facie case is made out for the issue of such notice. This Court in Kerala Transport Company v. Colonial Distributors, (1971 KLT 78 : AIR 1971 Ker 230) has laid down that the third party procedure is intended to decide the question of contribution or indemnification of the defendant by the third party sought to be impleaded; and in such a case, it is evident that there cannot be any privity of contract between the plaintiff and the third party. In P.C. Cherian v. Varkey George, (1973 KLT 651), this Court reiterated the above proposition of law and also observed that Order 8A is intended to benefit the defendant who if defeated in the action, is entitled to reimbursement by way of indemnity. In such a case, the policy of the rule is that the defendant need not be driven to a fresh suit to put the indemnity into operation.
In Velu Pillai v. Abdul Rahiman, (AIR 1962 Kerala 326) it is laid down as follows:--
"The Court must consider the question of maintainability of the suit before issuing third party notice on the defendant's petition. In case the suit is found to be not maintainable, the question of third party procedure will not arise. If the decision of the issue is in favour of the plaintiff, the Court must consider whether the defendant is entitled to be indemnified by the third party's estate."
9. From the aforesaid decisions, the following principles regarding the scope and applicability of the provisions of Order 8A of the Code of Civil Procedure may be deduced :
(1) The defendant must show that there exists a prima facie case and there are bona fides in his claim against the third party.
(2) While considering the petition under Rule 1 of Order 8A, the Court must be satisfied that the plaintiff is not unduly embarrassed or put to additional expense or difficulty. If the adjudication of the question between the defendant and the third party would embarrass the plaintiff in his trial, the Court generally exercises its discretion by ordering the trial of those issues subsequent to the trial of the action.
(3) The Court will dismiss the application if it is found that the claim is outside contribution or indemnity.
(4) The Court will dismiss the application if the case is one of too great complication or difficulty to be property tried in the original action and if the Court finds that these matters cannot be properly tried together with the original action.
(5) The Court cannot refuse to implead third parties merely on the ground of inconvenience to plaintiff.
(6) The Rule applies irrespective of the fact whether the suit claim is admitted by the defendant or not and is not limited to a claim out of the same transaction or simultaneous transaction.
(7) There need not be any privity of contract between the plaintiff and the third party for application of the provisions of Order 8A, C.P.C.
(8) The third party has every right to contest his liability to contribute or to indemnify the defendant; he can also step into the shoes of the defendant and fight the defendant on all grounds, which are available to the defendant himself.
(9) The Court must consider the question of maintainability of the suit before issuing third party notice on the defendant's petition.
10. The question that arises for consideration in this case is whether the Court below is justified in rejecting the petition of the petitioner to implead the third party. This question has to be decided in the light of the above principles.
11. The maintainability of the suit is not in dispute. There is no substance in the contentions that by impleading the third party the plaintiff would be inconvenienced and that for want of privity between the plaintiff and the third party the petition is unfounded.
12. The learned Sub Judge took into consideration various circumstances under which the alleged agreement between the petitioner and the third party came into existence and held that the validity of the so called agreement between them is open to doubt. Further, he also found that the case is one of too great complication to be tried in this proceeding. There is therefore, it is held by him, no prima facie case for the petitioner to seek for impleadment of third party. In my opinion, the aforesaid conclusions have been rightly reached on the basis of the facts which are either admitted or remain uncontroverted.
13. The stand of the petitioner in the beginning was that he never executed any document of guarantee as alleged by the plaintiff. While filing the written statement at the first instance he denied his liability altogether and did not whisper a single word about the liability of the third party to indemnify him. Later, nearly after two years, he came forward with a new plea by filing an additional written statement, that the third party persuaded him to sign the documents and has agreed orally, at the time of signing the bank document, that he would indemnify in case he sustains any loss. Such an agreement, if there was any, could not have been omitted in the first written statement inasmuch as the petitioner had nothing much to lose by it. The oral agreement which is said to have been entered into could not have been a secret understanding between them. If there was any such agreement, the petitioner while filing the first written statement would not have denied altogether about his execution of the bank documents. The fact that at first he disowned his signatures and execution of any document at the earliest opportunity would go a long way to show that the allegation of existence of an oral agreement between them is an afterthought.
14. The third party contended that the written agreement dated 13-6-1990 was obtained from him under threat and coercion. It appears that soon after the execution of the alleged written agreement the counter-petitioner -- third party instituted the criminal proceeding on 18-6-1990 against the petitioner and others. This clearly suggests that the counter-petitioner had protested against the alleged illegal conduct of the petitioner in obtaining the written agreement dated 13-6-1990 before a competent authority prior to 1-9-1990 when the additional written statement was filed. No satisfactory explanation is furnished by the petitioner as to why the counter-petitioner took this step if it was a genuinedocument. In my opinion no prudent man would give his consent for such an agreement after the written statement was filed without any averment therein relating to the claim of indemnity against or contribution from the third party, Since the plea of earlier oral agreement cannot be believed, the later written agreement which has executed about two years after the institution of the suit cannot also be believed as genuine inasmuch as it is recited therein that this agreement was executed in pursuance of the so called earlier oral agreement.
15. Where the Court has every reason to doubt the genuineness of a document from certain tell-tale circumstances, it cannot accept it machanically, particularly when such a suspicious documents, if accepted as genuine is likely to result in the imposition of an unjust liability on the third party. Thus the belated false plea of the petitioner is held to be one devoid of bona fides and the petitioner therefore failed to show a prima facie case in his favour.
16. It has been found above that the alleged written agreement dated 13-6-1990 does not appear to have been executed valuntarily or for consideration. The respective contentions of the petitioner and the third party would necessarily give rise to certain additional issues for enquiry into the question of coercion, threat etc. Such a question is one of great complication to be properly tried in the suit. Since the dispute between the third party and the petitioner, which dispute would not have been oridinarily tried in the suit is required to be decided by taking elaborate evidence thereby resulting in undue delay in the proceeding and unnecessary expenses to the plaintiff, the same cannot be allowed to be agitated in the present suit. I, therefore, hold that on this ground the petition under Rule 1 of Order 8A, C.P.C. in this case cannot be entertained.
17. The learned Sub Judge did not refer to any extraneous material or documents which are not borne out from the records while arriving at the findings. Even if it is possible to have an alternative view, the one taken by the learned Sub Judge being neither perverse nor unreasonable, this Court in exercise of the revisional jurisdiction shall not interfere with it. The Court below is therefore justified in rejecting both the applications of the petitioner to implead the counter-petitioner third party and to issue notice to him.
18. For the reasons stated above, I find that there is no merit in these revisions. They are, therefore, dismissed. No costs.