Calcutta High Court
Halonix Limited vs Khaitan Electricals Limited on 19 August, 2016
Author: Arijit Banerjee
Bench: Manjula Chellur, Arijit Banerjee
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
GA 2213 of 2016
With
APOT 258 of 2016
CS 229 of 2015
Halonix Limited
Vs.
Khaitan Electricals Limited
BEFORE:
The Hon'ble CHIEF JUSTICE DR. MANJULA CHELLUR
&
The Hon'ble JUSTICE ARIJIT BANERJEE
For the Appellant : Mr. Vipul Kundalia, Advocate
Ms. Sonal Shah, Advocate
For the Respondents: Mr. Jishnu Chowdhury, Advocate
Mr. I. Ahmed, Advocate Mr. R. Upadhyay, Advocate Heard on : 09.08.2016., 11.08.2016 Delivered on : 19.08.2016 Dr. Manjula Chellur, Chief Justice:
This appeal is directed against order dated 29.6.2016 where in an application under Order 7 Rule 11 of the Code of Civil Procedure came to be filed, seeking rejection of the plaint but the same came to be disposed of opining that since the matter requires consideration of facts and law, an opportunity must be granted to the plaintiff to establish its case. Aggrieved by the same, the appellant before us contends that the Trial Judge was not justified in not rejecting the plaint when the same is hit by one of the four clauses of Rule 11 of Order 7 of CPC, on the issue of limitation. It is further contended on behalf of the appellant that in order to decide an application filed under Order 7 Rule 11, averments in the plaint alone are germane and the same cannot be improved by adducing evidence. The real object of Order 7 Rule 11 is defeated by the impugned order of the learned Trial Judge since it ignores basic and cardinal Rule that pleadings alone could be looked into in order to opine whether the suit is barred by limitation or not. In other words, without addition or subtraction of words one has to look at the pleadings and then decide whether the suit is barred by any law including limitation. Therefore, keeping the issue of limitation open to be decided at the trial of the suit is incorrect. Without appreciating the averments and the arguments disposal of the application mechanically was unwarranted is the stand of the appellant. According to the appellant's Counsel, the Court ought to have seen whether the suit was filed within three years from the year in which the so called running account came to be closed that is the last item admitted or proved entered in the account or within three years from the last of the supply made. The appellant relies upon (2005) 7 SCC 510 in the case of Popat and Kotecha Property Vs. State Bank of India Staff Association. The Division Bench of the High Court opined that the suit was barred by limitation and appellant/defendant was entitled to order of rejection of plaint in terms of Order 7 Rule 11. In an appeal before the Apex Court, Their Lordships opined that Division Bench was wrong in opining that the suit for execution of sale deed was barred by limitation since the bar of limitation cannot be pleaded so as to obstruct execution of sale deed since limitation bars only remedy. The statements contained in the plaint did not indicate that the suit was barred by limitation. Therefore, Their Lordship opined that the Division Bench of the High Court was wrong. Ultimately, at paragraphs 23, 24 and 25 opined as under:-
"23. Rule 11 of order 7 lays down an independent remedy made available to the defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate at any stage when the objections can be raised, and also does not say in express terms about the filing of a written statement. Instead, the word 'shall' is used clearly implying thereby that it casts a duty on the Court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the four clauses of Rule 11, even without intervention of the defendant. In any event, rejection of the plaint under Rule 11 does not preclude the plaintiffs from presenting a fresh plaint in terms of Rule 13.
24. The above position was highlighted in Sopan Sukhdeo Sable and Ors. V. Assistant Charity Commissioner
25. When the averments in the plaint are considered in the background of the principles set out in Sopan Sukhdeo case the inevitable conclusion is that the division Bench was not right in holding that Order 7 Rule 11 CPC was applicable to the facts of the case. Diverse claims were made and the Division Bench was wrong in proceeding with the assumption that only the non- execution of lease deed was the basic issue. Even if it is accepted that the other claims were relatable to it they have independent existence. Whether the collection of amounts by the respondent was for a period beyond 51 years needs evidence to be adduced. It is not a case where the suit from statement in the plaint can be said to be barred by law. The statement in the plaint without addition or subtraction must show that it is barred by any law to attract application of Order 7 Rule 11. This is not so in the present case."
Per contra, learned Advocate for the respondent/plaintiff contends that the law declared by the Supreme Court is otherwise and according to him if facts also are required to be looked into while deciding objection that the suit is barred by limitation, it would not be proper to reject the plaint under Order 7 Rule 11. According to him, since there were talks of settlement/reconciliation between the parties, the suit has to be filed in terms of Article 56 of the Limitation Act. In support of his contention, he refers to (2006)5 SCC 662 in the case of Balasaria Construction (P) Ltd. Vs. Hanuman Seva Trust and Others.
In this case rejection of plaint on the ground of bar of limitation was not approved since there was conflicting opinion of different Benches and if the question has to be decided on the basis of the fact that the suit was barred by limitation, then Order 7 Rule 11
(d) is not applicable.
He also relies upon (2007)14 SCC 183 in the case of C. Natrajan Vs. Ashim Bai and Another to contend that only if upon taking all the allegations made in the plaint taken to be correct in their entirety; the suit appear to be barred by any law and Court is not entitled to consider the case of the defence, then the Court can reject the plaint under Order 7 Rule 11(d). The question whether the suit is barred by limitation or not, depends upon the facts and circumstances of each case. If factual consideration is required then it cannot be decided under Order 7 Rule 11(d)CPC. As a matter of fact, in this case an application for rejection of the plaint came to be filed initially before the Trial Court on the premise that the suit was barred by limitation. Trial Court dismissed the said application opining that it was a mixed question of fact and law. The Supreme Court allowing the appeal opined that applicability of one or other provisions of the Limitation Act per se cannot be decisive for the purpose of determining the question as to whether the suit is barred under one or the other Article contained in the schedule appended to the Limitation Act. Before the Trial Court, it was on the ground of Limitation Act with reference to the identification of the property but before the High Court it was altogether different. Ultimately, since the contentions raised by the respondent vis a vis application under Order 7 Rule 11 (d) entitled the matter to go for a trial, because of the facts and circumstances of that case, Their Lordships opined that it cannot be decided at the time of disposal of application under Order 7 Rule 11(d) whether Article 58 of the Limitation Act is applicable or Article 65 of the Limitation Act is applicable or Articles 142 or 144 of the Limitation Act can be taken into consideration. In the present case, the suit was filed for recovery of money. It is not in dispute that the plaintiff/respondent was selling its products under the brand name 'Khaitan'. The plaintiff Company was operating a Compact Floracent Lamp (CFL) manufacturing unit at 'Ponta' in Himachal Pradesh. In 2004 or 2005, it discontinued the manufacturing activity but the 'goodwill' in the market; 'Khaitan' had a demand.
Plaintiff/respondent entered into a contract with the appellant/defendant that defendant would manufacture CFL and package with brand name with plaintiff's trademark 'Khaitan'. In other words, after manufacturing the CFL, the trademark of the plaintiff alone which was used on the package and product would be made over to the plaintiff and plaintiff would cause same to be sold in the market. In terms of agreement from time to time the respondent/plaintiff would place orders with the appellant/defendant for manufacture of CFL lamps of particular specification. Apparently, continuous running account between the parties was maintained. Whenever defective goods were found, the cost of such defective (returned goods) would be deducted from the amount payable to the defendant. The last supply of the goods was made, admittedly as per paragraph 7, on 22.10.2009.
The plaintiff relies upon averments in the plaint i.e paragraphs 7, 12 and 13 of the plaint as very relevant which read as under:-
"7. In those circumstances, the plaintiff has discontinued obtaining further supplies from the defendant. Particulars of the total defentive items would appear from a schedule annexed hereto and marked with the letter "C". The last supply made by the defendant was on October 22, 2009.
12. In view of the plaintiff's request that the entirety of the credit notes should be issued, the defendant suggested that there should be reconciliation exercise. This would appear from emails dated 29th January, 2011, 30th April, 2012 and 22nd May, 2012, copies emails dated 29th January, 2011, 30th April, 2012 and 22nd May, 2012 are annexed collectively hereto and marked with the letter "H". Some of these emails were issued by the Plaintiff from its office at 46C, J.L. Nehru Road, Kolkata - 700 017, within the jurisdiction aforesaid.
13. There were also meetings between the parties in this regard on 24th August, 2011, 22nd February, 2012, 24th February, 2012, 7th June 2012 and 18th June 2012. What has transpired in some of these meetings have been recorded in emails. The reconciliation effort continued up to 11th September, 2012 when the entire details of returns were forwarded by the plaintiff to the defendant. A copy of the email dated 11th September, 2012 along with its enclosures are annexed hereto and marked with the letter "I". There has been no response from the defendant thereafter. The plaintiff states that the same should be construed to be refusal on the part of the defendant to make payment. The meetings were held outside the jurisdiction aforesaid."
From reading of the above paragraphs of the pleadings though the last supply of goods was on 22.10.2009, there is nothing on record to show when the last return of goods were made and when exactly there was refusal to take defective goods. That apart paragraph 12 and 13 indicate there were talks with regard to the supply of goods and request to lift the defective goods till 11.9.2012. According to plaintiff their reconciliation effort continued up to 11.09.2012.
Reading of the material as it is without any addition or substraction from several paragraphs from the plaint, one cannot conclude that there was no talks of reconciliation. On the other hand, if there were talks of reconciliation, what were the talks of settlement and reconciliation between the parties can be analyzed only after a full-fledged trial since parties must be allowed to admit or deny the contents of the documents referred to in paragraphs 12 and 13. It is always open to the defendant to take the plea of limitation. Further, defendant can challenge the evidence that would be relied upon by the plaintiff in support of contentions raised at para 12 and 13. The challenge in the present case requires to be decided on facts also; whether the suit is barred by limitation. We are not expressing any opinion so far as the limitation is concerned since the same has to be decided only after a full-fledged trial. In the light of above reasoning, we are of the opinion the appeal deserves to be dismissed and accordingly dismissed. Contentions are kept open. (Manjula Chellur, Chief Justice) I agree.
(Arijit Banerjee, J.) LATER:
The time granted to file the written statement before the Trial Court is lapsed. We extend the same four weeks from today. (Manjula Chellur, Chief Justice) I agree.
(Arijit Banerjee, J.)