Andhra HC (Pre-Telangana)
V. Krishna Rao vs The Vysya Bank Ltd., Regd. Banking ... on 8 August, 2002
Equivalent citations: II(2003)BC489
JUDGMENT
1. Heard Sri R. Prabhakar, Advocate representing Sri Srinivasulu, learned counsel for the appellant and Sri Praveen Kumar representing Sri Vilas Afjul Purkar, learned counsel for the respondent.
2. The appellant is the 25th defendant and the respondent - M/s. The Vysya Bank Limited - is the plaintiff in O.S.No.289 of 1978 on the file of the Principal Subordinate Judge, Guntur.
3. The only question that was raised by the learned counsel for the appellant-25th defendant is whether the appellant-25th defendant is entitled to grant of compensatory costs under Section 35-A C.P.C.?
4. In view of the fact that the arguments are advanced only on this simple question, all factual details need not be discussed at length. The respondent-bank filed the said O.S.No.289 of 1978 against the appellant-25th defendant and other defendants for recovery of a sum of Rs.9,82,862-59 ps. and for passing of preliminary decree and other reliefs. The appellant-25th defendant filed written statement to the effect that he did not execute the guarantee bond either on 2-9-1975 or on any other date as alleged in the plaint; that he never executed any other document as alleged in the plaint; that the alleged signature on guarantee bond dated 2-9-1975 is not that of him and it is a rank forgery; that he borrowed Rs.40,000/- on 30-10-1975 from the respondent-bank for the purchase of vehicle and executed on the same date a promissory note in favour of the respondent-bank; that subsequently he and the respondent-bank entered into a hire-purchase agreement in respect of the vehicle and that in connection with the loan taken by him from the respondent-bank for the purchase of the vehicle and also in connection with hire-purchase agreement entered into with the respondent-bank with reference to the vehicle the respondent-bank and its officers took the signatures of the appellant-25th defendant on printed blank papers by representing that they were necessary in connection with the loan transaction and the hire purchase- agreement of the vehicle. The appellant-25th defendant further pleaded that if it is otherwise found that the signature on the alleged guarantee bond dated 2-9-1975 and produced by the respondent-bank into the court is that of the appellant-25th defendant, the guarantee bond must have been fabricated on the blank printed paper without informing him and in collusion with the other parties who are enimically disposed of towards him. No doubt, several other details also were pleaded in the written statement. Ultimately it was prayed that the suit be dismissed with compensatory costs under Section 35-A C.P.C.
5. As far as fourth defendant is concerned issue No.9 framed is as follows:
Whether the fourth defendant is entitled to compensatory costs under Section 35-A C.P.C.?
6. As far as the appellant-25th defendant is concerned, no issue was framed relating to payment of compensatory costs. But, however, issues Nos.10 and 11 framed by the court below relating to the appellant-25th defendant are as follows:
(1) Whether the signatures of the appellant-25th defendant on the guarantee bond dated 2-9-1975 is not forged? and (2) Whether the suit is bared by limitation so far as the appellant-25th defendant is concerned?
7. The appellant-25th defendant was examined as D.W.12. On appreciation of evidence especially in view of the admission made by P.W.3, the court below observed:
"Ex.A.29 which purported to have been executed in the month September, 1975 but it can not be believed to be true and correct and the stamps were purchased some where in July 1976. I hold that the 25th defendant can not be held liable on the basis of Ex.A.29. As the liability of 25th defendant under the guarantee bond dated 2-9-1975 is not acceptable, so issue No.10 regarding limitation lost its importance."
8. The court below, on appreciation of the oral evidence of P.Ws.1 to 3 and D.Ws.1 to 15 and the documentary evidence Exs.A.1 to A.141 and Exs.B.1 to 34, decreed the suit as against defendants 31 to 37 (legal representatives of the first defendant) and also defendants 2 to 5, 7, 12, 14 and 23 and dismissed the suit as against the other defendants including the 25th defendant. Aggrieved by the judgment and decree of the court below in not awarding compensatory costs, the 25th defendant filed this appeal.
9. Sri R. Prabhakar, Advocate representing Sri Srinivasulu, learned counsel for the appellant-25th defendant, submits that though there is no specific issue relating to awarding of compensatory costs the 25th defendant took a specific stand in the written statement itself and the court below believed the defence raised by him and dismissed the suit against him and, therefore, this is a fit case where the compensatory costs should have been awarded to the appellant-25th defendant by the court below. The learned counsel has taken me through the respective pleadings of the parties especially the written statement filed by the appellant-25th defendant, issues 10 and 11 that were framed by the court below and also the findings recorded while answering the said issues.
10. Sri Praveen Kumar, Advocate representing Sri Vilas V. Afjal Purkar for the respondent-bank, on the other hand, contends that absolutely there cannot be any mala fide or ill-will on the part of the banking institution in impleading a party and that even as per the defence taken by the appellant-25th defendant he himself was doubtful about the document in question and in fact he has taken defence that his signatures might have been used for the fabrication of the said document because of the collusion by some defendants with the officials of the respondent-bank. The learned counsel for the respondent-bank further contends that even the findings recorded at paragraph 40 of judgment of the court below while answering issues 10 and 11 are not clear findings so as to impose the compensatory costs on the respondent-bank.
11. In view of the respective contentions advanced by both counsel the points that arise for consideration before this court are as follows:
(1) Whether the appellant-25th defendant is entitled to compensatory costs as claimed by him in the facts and circumstances of the case? and (2) If so to what relief the appellant-25th defendant is entitled?
Point No.1:-
As already observed by me supra, since the scope of the appeal itself is limited to the question of compensatory costs only, all the other details need not be discussed at length.
12. D.W.12 is the appellant-25th defendant. Ex.A.29 is the guarantee bond said to have been executed by him. P.W.3 deposed that generally the bank used to purchase the stamps from the Registrar's office at Guntur but the guarantee bond under consideration discloses that adhesive stamps were purchased at Hyderabad. No doubt, this witness also deposed that he cannot say whether all the documents were executed on one and the same day without looking into the documents. In view of some admissions made by P.W.3, the court below arrived at the conclusion that the liability of the appellant-25th defendant under the guarantee bond is not acceptable and negatived the relief on that ground. However, in the light of the facts and circumstances of the case, it is not a case where a clear finding was recorded that the document is a forged one. While deciding the question of awarding compensatory costs, it may be appropriate to have a look at Section 35-A C.P.C. which reads:
"35-A. Compensatory costs in respect of false or vexatious claims or defences ---(1) If in any suit or other proceeding, including an execution proceeding but excluding an appeal or a revision, any party objects to the claim or defence on the ground that the claim or defence or any part of it is, as against the objector, false or vexatious to the knowledge of the party by whom it has been put forward, and if thereafter, as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part, the Court, if it so thinks fit, may, after recording its reasons for holding such claim or defence to be false or vexatious, make an order for the payment to the objector by the party by whom such claim or defence has been put forward, of costs by way of compensation.
(2) No Court shall make any such order for the payment of an amount exceeding three thousand rupees or exceeding the limits of its pecuniary jurisdiction, whichever amount is less:
Provided that where the pecuniary limits of the jurisdiction of any Court exercising the jurisdiction of a Court of Small Causes under the Provincial Small Cause Courts Act, 1887 (9 of 1887), or under a corresponding law in force in any part of India to which the said Act does not extend and not being a Court constituted under such Act or law, are less than two hundred and fifty rupees, the High Court may empower such Court to award as costs under this section any amount not exceeding two hundred and fifty rupees and not exceeding those limits by more than one hundred rupees:
Provided, further, that the High Court may limit the amount which any Court or class of Courts is empowered to award as costs under this section.
(1) No person against whom an order has been made under this section shall, by reason thereof, be exempted from any criminal liability in respect of any claim or deference made by him.
(2) The amount of any compensation awarded under this section in respect of a false or vexatious claim or defence shall be taken into account in any subsequent suit for damages or compensation in respect of such claim or defence."
13. In SWARNAM IYER v. VEERAGU AMMAL, AIR (30) 1943 MADRAS 286 the Madras High Court held that a Court has no power to award compensatory costs under Section 35-A C.P.C. unless objection had been raised on behalf of the plaintiff to the effect that the defence raised was false or vexatious to the knowledge of the defendants and that an order under Section 35-A C.P.C. has to be passed only after recording reasons for holding the defence to be false or vexatious.
14. In VENKATASWAMI v. LAXMINARAYANA, , a Division Bench of this court, no doubt, held that where the plaintiff filed a suit for recovery of Rs.29,264/- against the defendants on the basis of an alleged contract whereby the defendants undertook to purchase goods from the plaintiff, and in support of the claim produced a contract which was proved to have been forged by the plaintiff in order to wreck his vengeance on the defendants, the court was justified in exercising its power under Section 35-A C.P.C. and awarding maximum costs to the defendants.
15. In PEDDARANGASWAMI v. THE STATE OF MADRAS, , a Division Bench of the Madras High Court observed at paragraph 14 of its judgment thus:
"We cannot, however, support the lower Court's award of compensatory costs to the Government and Nimbkar separately in addition to the award of ordinary costs, two sets. The award of compensatory costs is now governed by S.35-A Civil P.C. It is intended to deal with exceptional cases in which the exercise of the ordinary discretion under S.35 would not afford a sufficient compensation. So, before awarding compensatory costs the Court should satisfy itself that the claim was false or vexatious to the knowledge of the appellant and that the interests of justice require compensatory costs to be awarded. We are unable to agree with the learned Judge that the claim of the appellant can be said to be false or vexatious to his knowledge. The appellant might have thought that the provisions in para. 4(1) of the prospecting licence in his favour conferred a right on him to obtain a mining lease. It may be that this contention of his has been found to be untenable. But, on that ground it cannot be said to be false or vexatious. We set aside the decree of the Court below in so far as it awards compensatory costs to the Government and Nimbkar. The award of ordinary costs of the suit will, of course, stand."
16. In SRI KRISHNAPUR MUTT v. GOPALAKRISHNAYYA, AIR 1967 MYSORE 65, it was held that under Section 35-A C.P.C. compensatory costs are to be awarded if the Court finds the claim or defence to be false or vexatious and they are intended to be compensation for the successful party and not either a punishment for the unsuccessful party or a deterrent against future litigation.
17. In ALEYAMMA v. IDICULA, , where there was no objection by the defendant that the claim is false or vexatious, the award of the compensatory costs was held to be invalid.
18. Hear is a case where the respondent-bank instituted the suit and in view of the evidence of P.W.3 a doubt was entertained by the court below and was not inclined to fasten the liability to the appellant-25th defendant in the peculiar facts and circumstances of the case. Merely because the relief was negatived and the suit was dismissed as against the appellant-25th defendant it cannot be said that he is entitled to compensatory costs unless the other ingredients of Section 35-A C.P.C. are satisfied. However, on appreciation of all the facts and circumstances especially in the light of the findings recorded at para 40 of the judgment by the court below, I am of the considered opinion that it is not a fit case where compensatory costs can be awarded by invoking Section 35-A C.P.C. Point No.1 is answered against the appellant-25th defendant and in favour of the respondent-bank.
19. Except this question, no other question had been argued and no other contention had been advanced by both counsel.
Point No.2:-
In view of the findings with regard to point No.1, I am of the considered opinion that the appellant-25th defendant is not entitled to compensatory costs as claimed by him in this appeal. Point No.2 is also answered against the appellant-25th defendant and in favour of the respondent-bank.
20. The appeal is devoid of merits and is, therefore, dismissed. But, however, since the appellant-25th defendant preferred this appeal only to the limited extent of claiming compensatory costs, it is just not to award any costs in this appeal. Accordingly, there shall be no order as to costs.