Calcutta High Court
Oriental Remedies & Herbals Ltd vs Mrinal Kanti Chowdhury on 23 April, 2008
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
GA No. 523 of 2008
CS No. 34 of 2000
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIENTAL REMEDIES & HERBALS LTD.
Versus
MRINAL KANTI CHOWDHURY
For the Plaintiffs: Mr. Pramit Kumar Roy, Adv.
For the Defendant : Mr. Jishnu Chowdhury, Adv.,
Mr. Sudhakar Prasad, Adv.
Hearing concluded on: April 17, 2008.
BEFORE
The Hon'ble Justice
SANJIB BANERJEE
Date: April 23, 2008.
SANJIB BANERJEE, J. : -
The defendant has taken out the Master's Summons for rejection of the
plaint relating to the suit on the ground that it discloses no cause of action. The
defendant says that the suit is otherwise vexatious and in abuse of process and
such a ground can be read into Order VII Rule 11(a) of the Code of Civil
Procedure, 1908.
The plaintiff nos. 1 and 2 are engaged in the manufacture of medicine and
paper. The plaintiff nos. 3 and 4 are directors of the plaintiff nos. 1 and 2. The
defendant, at the time of the institution of the suit, was the financial adviser of
the Himachal Pradesh State Industrial Development Corporation Limited (the
Corporation). The plaintiffs say that the acts and conduct of the defendant they
complain of were not commensurate with his position and status and he misused
his authority as an officer of the Corporation to go out of his way to cause
prejudice to the plaintiffs.
Upon default in repayment to the Corporation by a company that obtained
credit facilities from it, the Corporation took over its assets in accordance with
law and invited offers for the sale of such assets. The plaintiff no. 1, through the
director plaintiffs, made an offer for purchase of the assets and an agreement
was entered into in November, 1993 for the sale of the assets held by the
Corporation and another State Financial Corporation at a consideration of Rs.50
lakh. The plaintiffs obtained possession of the factory and its equipment situated
in Solan, Himachal Pradesh, in January, 1994. The plaintiff no. 1 requested the
Corporation that the assets relating to the paper business at Solan be transferred
to the second plaintiff. An agreement was executed in August, 1994 between the
second plaintiff, the Corporation and the other financial corporation by which the
land, plant and machinery at Solan were sold in favour of the second plaintiff for
Rs.50 lakh. It is claimed that the first plaintiff had already paid a quarter of the
consideration prior to the agreement of August, 1994 and the second plaintiff
was thus to pay Rs.37.50 lakh which it agreed to pay in ten half-yearly
instalments beginning November, 1994 and ending May, 1999. The plaint refers
to this transaction as the first premises.
The plaintiffs allege that after the plaintiffs acquired the Solan property, an
officer of the Corporation approached the plaintiffs to purchase the property held
by another sick debtor of the corporation. The plaintiffs say that such proposed
second transaction did not go through because of illegalities noticed by the
plaintiffs in the functioning of the sick debtor company and the complicity of the
Corporation's officers in the acts of illegality.
The plaint proceeds to record that in August, 1994 the plaintiffs purchased
the property of another sick debtor (not being the defaulter that the Corporation's
officials proposed the plaintiffs buy) of the Corporation with the plaintiff no. 1
purchasing the land and building and the second plaintiff acquiring the plant
and machinery of what is described by the plaintiffs as the second premises. Two
agreements were entered into between the relevant plaintiffs on the one hand and
the Corporation and the other financial corporation on the other. The plaintiffs
were to pay a total consideration of Rs.82 lakh for the second premises. Between
the first and second plaintiffs they paid Rs.20,50,000/- being a quarter of the
amount payable in respect of the second premises; with the balance being treated
as loan by the Corporation and the other financial corporation, repayable in
instalments. The plaintiffs say that the agreements relating to the second
premises required the plaintiffs to be made over possession thereof and the
corporation and the other financial corporation being obliged to ensure an
atmosphere which permitted smooth and efficient running of the unit at the
second premises. The plaintiffs complain that neither corporation acted in terms
of its obligations relating to the second premises and the relevant averments, if
generously read, would imply that the possession of the machinery and other
assets at either the first premises or at the second premises were not made over
to the plaintiffs.
The plaintiffs allege that the corporations were aware that without the
transfer of assets relating to the first premises in the name of the second plaintiff,
the second plaintiff could not obtain credit facilities from its bankers and could
not show such asset as part of its own in its effort to raise funds from the market
by way of a public issue of shares. The plaintiffs allege that the delay on the part
of the corporations to acquiesce in the second plaintiff taking over a part of the
assets at the first premises resulted in the proposed public issues of both plaintiff
companies being delayed and ripening at a time when there was a slump in the
primary market. The plaintiffs thereafter sing the usual song as is the wont of
their ilk as to how the elements and the rest of humanity conspired against them
to render their business venture relating to the first premises unviable and the
manufacturing facility thereat having to be closed down.
Despite the misfortune that had befallen the plaintiffs at the first premises,
they say they found a sum of Rs.12 lakh to advance to the two Corporations for
taking over a further sick manufacturing unit at Solan that produced drugs. The
plaintiffs say that no agreement was ultimately executed in respect of the
proposed third premises and the money was paid in anticipation of an agreement
as to possession. It is at the thirtieth paragraph of plaint that the defendant is
first mentioned other than the initial description of the defendant at the opening
of the plaint. The plaintiffs say at the thirtieth paragraph that the sum of Rs.12
lakh was paid by the plaintiffs to the two corporations "through the defendant
amongst others" not intending such payment to be gratuitous. The plaintiffs add
that the corporations and the defendant have enjoyed the benefit of such
payment and are bound to compensate the plaintiffs therefor. The plaintiffs
thereafter reiterate the particulars of the payments made in respect of the first
two premises, as if by their repetition the money paid would double.
At paragraph 32 of the plaint, the plaintiffs say that in view of the
allegations made in respect of the aborted second transaction, the defendant
retaliated and forcibly took possession the first and second premises without
giving any or adequate notice in January, 1997. Over the next several paragraphs
the plaint rambles on the alleged illegal act of possession in respect of the first
and second premises being snatched and concludes the saga at the thirty-eighth
paragraph in the following words:
"38. The Plaintiffs, for the purpose of present suit are not claiming back
possession of the First premises and the Second premises and are not
claiming any relief against the two companies. As such the plaintiffs are
praying for leave under order 2 Rule 2 of the Code of Civil Procedure, 1908
prior to institution of the present proceeding."
At the following paragraph the plaintiffs claim to have suffered loss and
damage for their "illegal" dispossession from the first and second premises and
claim to have suffered such loss at the offices of the first two plaintiffs within
jurisdiction. Paragraph 40, in this context, makes interesting reading:
"40. In this connection, it may not be out of place to state that due to
illegal acts, actions and/or activities on the part of the defendant, the
Plaintiffs have suffered irreparable loss, injury and prejudice, particulars
whereof are given hereinbelow:
P A R T I C U L A R S
i) Principal amount ... Rs.66,00,00,000/-
ii) Interest ... Rs.34,00,00,000/-
____________________
TOTAL ... Rs.100,00,00,000/- "
=================
Never mind the plaintiffs' claim of irreparable damages and the assessment thereof in the same breath, the plaintiffs' grievance against the defendant begins in right earnest at paragraph 42 of the plaint and the perceived illegality on the part of the defendant is summarised at paragraph 46. The eloquence of the averments should not be robbed by paraphrasing:
"42. The arbitrary acts, actions on the part of the Defendant continued even after taking possession of the First and Second premises. The defendant was instrumental in publishing a Public Notice, inter alia, in the Economic Times, Calcutta Edition, (hereinafter referred to as the said public notice) which is published from S.N. Banerjee Road, Calcutta, within the aforesaid jurisdiction. The Public Notice has also been published at about the same time in Economic Times, New Delhi, outside the aforesaid jurisdiction.
A copy of the said Public Notice as published in the Calcutta Edition in Calcutta is annexed hereto and marked as Annexure "A". The said public notice was received by the plaintiffs in presence of various persons at 63, Rafi Ahmed Kidwai Road, Calcutta-700016 within the aforesaid jurisdiction."
"46. The plaintiffs were never given any opportunity of being heard and the allegations made in the public notice are based on incorrect statement of facts and surmises."
The public notice said to have been published on or about January 30, 1997 is the first annexure to the plaint and the plaintiffs complain of the three final paragraphs of the notice which appears to have been issued by two officials of the two Corporations named by designation:
"PUBLIC NOTICE This is for the information of the General Public that:-
1. ...
2. ...
3. ...
4. M/s ORHL and M/s NPL are not the Owners of the above properties and the Directors Shri Pyush Agarwal & Mrs. Neelam Agarwal do not enjoy clear titles of the aforesaid properties. These two Companies are yet to pay an amount of more than approx. Rs.110.00 lacs (Rupees one hundred ten lacs only) to both HPSIDC and HPFC as consideration money including interest plus future interest as per the purchase agreements.
5. It has come to the notice of HPFC and HPSIDC that the hypothecated assets of these two Companies viz. Building/Shed materials, Plant & Machineries and other miscellaneous fixed Assets are being removed from the aforesaid sites.
6. Hence, this PUBLIC NOTICE. Anybody dealing with these Directors/Companies for these properties/assets in any way without the consent of HPSIDC Limited/HPFC shall be doing so at his/her/their own risk and responsibilities and such transaction shall not affect the rights of the Corporations. Further, the purchaser/persons acquiring these assets from the aforesaid named persons/Companies shall also be liable for further legal action under the law.
GENERAL MANAGER (RI&A) FINANCIAL ADVISER
HP Financial Corporation, HP State Industrial Development
New Himrus Building, Corporation Ltd., New Himrus Bldg.
Circular Road, Shimla, Circular Road, Shimla,
Fax No. 223027 Fax No. 224278"
For the rest of the plaint leading up to the fifth-eighth and fifty-ninth paragraphs thereof, the plaintiffs complain of the speciousness of the contents of the public notice and set out the routine averments as in any libel action before measuring the extent of their angst in currency and giving the Court the option to enquire into and appraise the compensation they deserve for their misery:
"58. In view of the illegal, wrongful and malicious actions on the part of the defendant in publishing the defamatory statements the plaintiffs have suffered damages and the plaintiffs reasonably assessed such damage at Rs.40,00,00,000/- only and the defendant may be directed to pay the same with interest.
"59. In the alternative the plaintiffs are seeking an enquiry to be made by this Hon'ble Court into the actual damages suffered by the plaintiffs and claims a decree for such amount as may be actually be found due and payable by the defendant to the plaintiffs after such enquiry."
The plaintiffs have paid full court fees and have sought the following reliefs after obtaining leave under clause 12 of the Letters Patent and leave under Order II Rule 2 of the Code:
"(a) A decree for deliver up and cancellation of letters, particulars whereof are given in paragraph 33 hereinabove;
(b) Appropriate declaration be passed declaring the acts complained of in paragraph 37 to be null and void.
(c) Alternatively appropriate declaration be passed declaring that the taking over possession of the first and second premises was illegal, void and ab initio.
(d) A decree for a sum of Rs.1,00,00,00,000/- (Rupees One hundred crores) only from the defendant as pleaded in paragraph 40 above;
(e) A decree for a sum of Rs.40,00,00,000/- (Rupees Forty Crores) only as pleaded in paragraph 58 above.
(f) In the alternative, an enquiry into the damages suffered by the Plaintiffs and decree for such sum as may be found due and payable by the defendant to the Plaintiffs upon such enquiry;
(g) Ad interim interest and interest upon judgement;
(h) Perpetual Injunction restraining the Defendant from continuing with the illegal acts including making and/or publishing of any defamatory statements and/or similar statements against the plaintiffs;
(i) Receiver;
(j) Injunction;
(k) Attachment before judgement;
(l) Cost;
(m) Further and/or other reliefs."
Since the plaintiffs have paid maximum court fees, that they have claimed money decrees as in the fourth and fifth reliefs (whether they include or miss a few additional zeros at the end) to such improbable and absurd extent cannot be viewed as vexatious or making them liable to be summarily dislodged from the seat of judgment.
The defendant says that there really is no basis in the plaintiffs making any claim against the defendant as to dispossession. The defendant suggests that the action should be seen as one for defamation and attacks such claim as being baseless and liable to be nipped in the bud. The defendant insists that the plaint discloses no cause of action as to defamation as the publication complained of is by the defendant in his capacity as an officer of the Corporation and, if an action was to be maintained at all, it would be against the employer and not the employee. The defendant reminds that in their choice of words at paragraph 42 of the plaint, the plaintiffs are aware that the defendant did not publish the writing complained of but was only instrumental in the publication thereof.
Over the several days of hearing, both sets of parties have concentrated on the claim beginning at paragraph 42 of the plaint, though the plaintiffs have not completely abandoned their right to claim the damages of Rs.1 crore found at paragraph 40 on the basis of the allegations found in the paragraphs preceding it. The parties have brought a rich fare of authorities dating back to 1912 particularly as to whether it was the employer that had to be sued on the plaintiffs' alleged cause of action or if the plaintiffs could choose to sue the employee instead. From books on pleadings to texts on tort, the parties have placed them all.
The defendant has relied on an order made on a similar suit lodged by these plaintiffs against the corresponding official of the other corporation. On the defendant's application of similar import in the other suit, an order was made on June 19, 2006 where the learned Judge held as follows:
"On perusal of the plaint it appears that the suit is absolutely frivolous and vexatious. The defendant discharged his official duty on behalf of the Corporation in the transaction and he was not personally liable for the same. In any event, the genesis of the suit lies at Himachal Pradesh where the property is situated being the subject matter of the sale. Hence the Suit No. 33 of 2000 is dismissed being frivolous and vexatious. ..."
The plaintiffs were not present to contest the defendant's application in the other suit and the Court found understandable grounds for the plaintiffs fighting shy to come and resist the claim being thrown out. The defendant here says that since the plaintiffs preferred no appeal from the order passed in the other suit and since the averments in the two suits are almost identical, the plaintiffs here cannot be heard to insist that this claim must proceed to trial. The defendant argues that a vexatious suit can be summarily rejected and places the judgment reported at AIR 1977 SC 2421 (T. Arivandandam v. T.V. Satyapal) for the purpose.
The plaintiffs' claim in this suit is in two distinct parts. The first relates to the dispossession of the plaintiffs from the two premises and the second is the complaint as to the words contained in the public notice. Even without being sensitive to the plaintiffs having joined two distinct causes of action without leave or adequate pleading, it can be seen that for the first part of the claim the plaintiffs' right to or title in respect of the two premises need to be assessed. Again, if the first part of the claim is construed with some generosity to the plaintiffs - as being maintainable against an officer of the inanimate person which dispossessed the plaintiffs - it would still be a suit for land. Alternatively, if the suit for land aspect were to be disregarded and the substance of the claim against the defendant as to the first part is seen, it would be an absurd claim to say that the creditor's act of dispossession can be complained of by bringing a suit against one of its officers who was but the instrumentality or human agency through which the creditor corporation acted. Also, such part of the claim would fail for the creditor, a necessary party, not being impleaded and the plaintiffs having obtained leave under Order II Rule 2 of the Code in that regard. To allow such an action as is covered by the first part of the claim would be to discourage any officer of a public (or even private) corporation from allowing himself to be the means through which the corporation would function. The first part of the claim is considered to be absurd and vexatious and unworthy of progress to trial.
The question that arises is as to whether in the scheme of Order VII Rule 11 of the Code, the court has the authority to reject a plaint as being vexatious. Even without resorting to the omnibus inherent powers of a civil court recognised by Section 151 of the Code, it is possible to read into the first limb of Order VII Rule 11 a ground for rejection on the plaint being vexatious. The relevant provision in England is slightly different from what our Order VII Rule 11 specifically enunciates. Unlike in India where the Rule says that a plaint may be rejected if it does not disclose any cause of action, the principle in England is that any pleading or indorsement in a writ may be rejected if it does not disclose a "reasonable" cause of action or if it is otherwise vexatious or absurd or would invariably lead to unnecessary embarrassment. But courts in this country have read this principle into Order VII Rule 11 of the Code and the two judgments of the Bombay High Court referred to by the defendant would suffice in the context.
In the judgment reported at AIR 2000 Bom 161 (Crescent Petroleum Ltd v. MV Monchegorsk), the Court considered when a plaint could be struck out on it not disclosing a cause of action:
"5. ... The circumstances in which the plaint can be struck out as disclosing no cause of action has been considered by a Division Bench of this Court in the case of Bomi Munchershaw Mistry v. Kesharwani Co-op. Housing Soc. Ltd. (1988) 3 Bom. C.R. 238. The ratio has been set out in paragraphs 14 and 19 of the judgment which are as follow :
14. The bed-rock upon which is founded the exercise of the right to strike of a pleading is stated succinctly by Fletcher Moulton Lord Justice in Dyson v. Attn. Gen. (1911) 1 K.B. 410 :
"To my mind it is evident that our judicial system would never permit a plaintiff to be driven from the judgement seat in this way without any Court having considered his right to be heard, except in cases where the cause of action was obviously bad and almost incontestably bad."
..."
In the other case reported at AIR 2000 Bom 34 (SNP Shipping Services Pvt. Ltd & Ors v. World Tanker Carrier Corporation & Anr.) the plaintiffs complained of a newspaper article on court proceedings causing them prejudice. The Court found that the article had accurately reported the findings recorded and what took place before court and felt it was unnecessary, in the circumstances, to allow the plaintiffs to carry such case to trial:
"17. ... The newspaper reports are privileged if published contemporaneously. The report need not be a verbatim one. It is enough if it is in substance a fair account of the findings recorded or what took place. Examined in this light, I do not find the newspaper reports to be beyond the scope of privilege. The findings returned by the New Orleans Court are much more serious than what is printed in the newspaper articles. Thus, in my view, this is a case where the defendants have an absolute defence to the claim of libel put forward by the plaintiffs. It is not a case where the story told in the pleadings was merely "highly improbable". It is a case that even if the plaintiffs are permitted to prove that the statements have actually been made, still the suit would have to be dismissed as the statements would be privileged. There can be but one result. The dismissal of the suit. Applying the aforesaid principles to the facts and circumstances of this case, I am of the considered opinion that the plaint does not disclose a cause of action and has to be struck out under Order 7, Rule 11(a)."
As to the second part of the claim, the plaintiffs say that the impugned publication was beyond the defendant's call of duty as an officer of the corporation, and it is such conduct that the plaintiffs assail in the suit. The defendant contends that the plaintiffs cannot bypass the primary tortfeasor to get at the secondary and argue that only in cases where the employee travels way beyond his authority under his employer, may such an action lie. The principles as to vicarious liability as laid down by English and Indian authorities have been placed. But it appears that the defendant missed the wood for the trees in his assiduous endeavour and Counsel's industry in knocking out the claim.
The plaintiffs have referred to the impugned publication having been published in January, 1997. The suit was instituted in the year 2000. It may have been necessary to go into the legal niceties as to the second part of the claim if there was no Section 3 in the Limitation Act, 1963. The section mandates that whether or not a defence as to limitation is taken, the court will reject a relief barred by the provisions of such statute. It strikes at the court's authority to grant a relief which has been claimed beyond the time stipulated therefor in the schedule to the Act, whether or not limitation is set up as a defence.
"3. Bar of limitation.--(1) Subject to the provisions contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed although limitation has not been set up as a defence.
(2) For the purposes of this Act,--
(a) a suit is instituted,--
(i) in an ordinary case, when the plaint is presented to the proper
officer;
(ii) in the case of a pauper, when his application for leave to sue
as a pauper is made; and
(iii) in the case of a claim against a company which is being wound
up by the court, when the claimant first sends in his claim to the official liquidator;
(b) any claim by way of a set-off or a counter-claim, shall be treated as a separate suit and shall be deemed to have been instituted--
(i) in the case of a set-off, on the same date as the suit in which the set-off is pleaded;
(ii) in the case of a counter-claim, on the date on which the counter claim is made in court;
(c) an application by notice of motion in a High Court is made when the application is presented to the proper officer of that court."
In Part VII of the Schedule to the Act, the relevant periods for divers forms of action in tort have been detailed. Article 75 (and the related Article 76) may be seen in the present context:
"PART VII--Suits Relating To Tort Description of suit Period of limitation Time from which period begins to run
72. ... One year ...
73. ... --do--
74. ... --do--
75. For compensation --do-- When the libel is for libel. published.
76. For compensation --do-- When the words are for slander. spoken, or, if the words are not actionable in themselves, when the special damage complained of results."
Section 2(j) of the Limitation Act defines "period of limitation" to be the period of limitation prescribed for any suit, appeal or application by the Schedule to the Act and "prescribed period" means the period of limitation computed in accordance with the provisions of the Act.
It is not necessary to try to gauge why the legislature set different periods of limitation for different forms of action. One guess could be that if it is a claim in tort, the plaintiff should promptly lodge his claim for the wrongful act or an infringement of a right (other than under contract) leading to the legal liability. In the context of the defendants' charge, the genuineness of the grievance can be tested against the action being launched nearly three years after the date of the impugned publication.
The second part of the plaintiffs' claim is unmistakably for libel relating to a writing published more than a year before the date of institution of the suit. The reliefs claimed in that regard can never be granted as there is a statutory embargo on the court to accept such claim. The finer legal principles involved in the admissibility of the claim pale into insignificance in such context. The plaintiffs can never succeed in respect of the defamation by the impugned publication that they complain of. Just as the first part of the plaintiffs' claim, it is inarguably bad and one that the Court has to dismiss.
The plaint relating to suit no. 34 of 2000 is rejected. The defendant will be entitled to lesser costs of 1000 GMs than what he otherwise deserved. GA 523 of 2008 is allowed accordingly.
Urgent certified photostat copies of this judgment, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(Sanjib Banerjee, J.) Later:
The plaintiffs pray for a stay of the order. The operation of the order will remain stayed for a week.
(Sanjib Banerjee, J.)