Madras High Court
G. Swaminathan And Anr. vs Banumathi And Anr. on 2 September, 1994
Equivalent citations: (1994)2MLJ515
ORDER S. Subramani, J.
1. Defendants in O.S. NO. 81 of 1990 before the Subordinate Judge, Kumbakonam, are the revision petitioners.
2. The first respondent herein filed the above suit for recovery of amount on the basis of two promissory notes alleged to have been executed by the petitioners on 7.2.1986 and 14.8.1987 for Rs. 10,000 each. It is also alleged in the plaint that the promissory note dated 7.2.1986 is not barred since the same is acknowledged in the subsequent promissory note dated 14.8.1987. The cause of action for the suit is stated to have arisen on the dates of promissory notes under the jurisdiction of Kumbakonam. A sum of Rs. 28,750 is claimed as due to the plaintiff as on the date of suit with future interest.
3. In the written statement filed by the second defendant, it is stated that the first defendant has nothing to do with the suit transaction and that is not benefited by the amounts given by the plaintiff. It is further averred by him that he has no transaction with the plaintiff and all along the transaction was only with plaintiffs husband. According to him, it is the practice of plaintiffs husband to give financial assistance to him and he used to lend money for a period of 100 days and amounts were received on 7.2.1986 and 14.8.1987 by signing unfilled promissory notes. According to him, he has discharged the entire liability to the plaintiffs husband, and he is not liable to pay any amount as per the notes dated 7.2.1986 and 14.8.1987 and they are not supported by consideration. He also pleaded limitation, and prayed for dismissal of the suit.
4. Thereafter, the petitioners filed I.A. No. 1 of 1991 to implead the plaintiffs husband as an additional party to the suit under Order 1, Rule 10(2) read with Section 151 of the Code of Civil Procedure. It was objected to by the plaintiff and, by the impugned order, the, court below dismissed the same. The said order is challenged by the petitioners in this revision and according to the petitioners, the application should have been allowed under the provisions of Order 8-A, C.P.C.
5. The court below dismissed the application on the ground that it is not necessary to implead the second respondent herein as a party to the suit since the suit is based on a promissory note.
6. Before deciding the question as to whether the second respondent is to be added as a party in a suit filed by the first respondent herein, we may consider the question as to the applicability of Order 8-A, C.P.C, and the law regarding the same.
7. 0rder 8-A of the Code of Civil Procedure deals with third party procedure. It permits the defendant in a suit to implead a person on his request. Rule 1 of Order 8-A, C.P.C. reads thus:
Where a defendant claims to be entitled to contribution from or indemnity against any person not already a party to the suit (hereinafter called a third party), he may, by leave of the court, issue a notice (hereinafter called a third party notice) to that effect, sealed with the seal of the court. The notice shall state the nature and grounds of the claim. Such notice shall be filed into court with a copy of the plaint and shall be served on the third parly according to the rules relating to the service of summons.
Certain decisions were also cited before me. One of the earliest decisions cited was Uthaman Chettiar v. T.K. Thiagaraja Pillai 1955 M.W.N. 759 : 1955 L.W. 810 : A.I.R. 1956 Mad. 155. In that case, Panchapakcsa Ayyar, J., held that in a suit on a promissory note, usually Order 8-A procedure is not attracted. Though the provision of Order 8-A of the Code of Civil Procedure is also applicable to a suit on a promissory note, suit or negotiable instrument stands on an entirely different fooling from other suits and third party notices can only be issued when justified by the contents of the promissory note, etc. The same was explained in a subsequent decision of this Court P.S. Pattabhiraman v. Ganapaihy Kannappa Mudaly and Ors. . In that case, it was held that even in the case of a promissory note, the provisions Order 8-A, C.P.C. are applicable. It was further held that in t he case of a promissory note, the liability is always on the maker and he cannot claim indemnity or contribution from any other person. If the said maker has paid the amount to any other person on the basis of the representation made by that person, the quest ion is not indemnity or contribution, but one for damages on account of misrepresentation. In that view of the matter, explaining and approving the decisions in A.I.R. 1956 Mad. 155, it was held that Order 8-A, C.P.C, procedure is not applicable. In the same volume, in Ramaswami Pillai v. Annammal (1962) 1 M.L.J. 49, the same learned Judge has further reiterated that in "case a person receives some amount on the basis of some representation which he was not entitled to, the same is not a case of indemnity or contribution. 8. in Parasmal Chordia v. Rajalakshmi Animal and Anr. , another learned single Judge of this Court held that in the case of promissory note, the third parly procedure enunciated under Order 8-A, C.P.C. can be invoked. In that case also, the decision in Uthaman Chettiar v. T.K. Thiagaraja Pillai 1955 M.W.N. 759 : 1955 L.W. 810 : A.I.R. 1955 Mad. 155, was explained. The learned single Judge in that case impleaded an additional parly taking into consideration the special facts of the case. There was an undertaking of indemnity by a third person to indemnify the promisor in case the promissory note was to be enforced. In view of that specific undertaking and special facts, the learned Judge impleaded a third party invoking the provisions under Order 8-A, C.P.C. It was a case of a special circumstance as enunciated in the decision in A.I.R. 1956 Mad. 155.
9. In this connection it is worthwhile to note that in asimple money suit based on a note, Negotiable Instruments Act governs the whole transaction. The question of benami and the right of a third person is not really a matter in issue. Under the provisions of the Negotiable Instruments Act, a discharge can be had only on payment to the holder of the note and not to any other person. It is not open to a promisor of a note to contend that someone other than the holder on the face of it is the real owner of the note. It has special rules of evidence and presumption. Being documents relating to commercial transactions, the court is bound to give effect to the tenor of the document. That is why, in Uthaman Chettiar's case 1955 M.W.N. 759 : 1955 L.W. 810 : A.I.R. 1956 Mad. 155, this Court held that for impleading a third party invoking Order 8-A procedure, the contents of the promissory note, etc. have to be considered to find out whether there was any special circumstance. I do not think that any exception can be made for the enunciation of law made by the learned Judge.
10. In Rangaswami Gounder v. Ramaswami Gounder , a learned single Judgc of this Court did not approve the decision in Uthaman Chettiar v. T.K. Thiagaraja Pillai 1955 M.W.N. 759 : 1955 L.W. 810 : A.I.R. 1956 Mad. 155. The learned Judge assumed that in Uthaman Chettiar's case, it was held that in a suit based on promissory note, the provision of Order 8-A, C.P.C, is not applicable. A reading of that judgment will show that the learned Judge who decided Uthaman Chettiar's case, never held that the principle of third party procedure is not applicable. What the learned Judge held was, that just like an ordinary suit, in a suit on a negotiable instrument, Order 8-A, C.P.C, cannot be invoked. The applicability of Order 8-A, C.P.C, was not doubted in that case. In taking this view, I am supported by the decision in P.S. Pattabhiraman v. Ganapathy Kannappa Mudaly and also by the decision in N.M. Parthasarathi v. Dharmalingam (1976) 1 M.L.J. 349. In the latter decision, a third party was impleaded taking into consideration the special circumstance of the case. That was a case where three persons executed a promissory note jointly in favour of the plaintiff and between the promissors, there was a dispute as to interse liability. The learned single Judgesaid that the liability can be decided in the suit itself, invoking the third party procedure. The contents of the promissory note were taken to invoke the procedure.
11. Victory Laminations v. Plastolite Industries, , was a case where Order 8-A, C.P.C, was invoked in the case of a negotiable instrument. There was evidence in that case regarding the special relationship of parties and between them there was dispute. In that view of the matter, the procedure was invoked and third party was impleaded. That also supports the reasoning in Uthaman Chettiar v. T.KThiagaraja Pillai 1955 M.W.N. 759 : 1955 L.W. 810 : A.I.R. 1955 Mad. 155.
12. In M/s. Zebec Polymers and Cartons represented by its partner S. Ganesan v. Balusseiy Polymers (P) Ltd., Triplicane, Madras-5 and Anr. reported in (1990)2 L.W. 567, also Nainar Sundaram, J. impleaded a third party alter holding that there is prima facie evidence and circumstances exist to implead a third party.
13. Commenting on Order 8-A, C.P.C, Mulla on the Code of Civil Procedure, Volume If, 14th Edition, at page 1098, has observed that the object of Order 8-A, C.P.C, is to avoid multiplicity of suits and the possibility of conflicting decisions being rendered with reference to the same subject-matter in different suits. It also says that this Order will apply only when the claim made is for contribution or indemnity. It was also noted that before leave is granted, the court must be satisfied that the question of contribution or indemnity is involved and that the claim is such as can be tried in the suit without injustice to any party. In this connection, it is worthwhile to adopt the following passage in P.S. Pattabhiraman v. Ganapathy Kannappa Mudaly , by Ramachandra Iyer, J.:
The rules relating to third party procedure are based on the procedure prevailing in the English Courts, which have been adopted on the Original Side of the Madras High Court under Order 5-A of the Original Side Rules. The rule is an exception to the principle that the plaintiff is dominus litis entitled to choose the person, against whom he should sue. A strict application of that rule in all cases might involve the questions in the suit being tried again, possibly with different results. A familiar example would be a case of indemnity. Suppose A conveys a property to B, agreeing to indemnify the latter against any claim that may be proved to exist on it. If B subsequently is faced with a claim by C in a suit, B can plead the title of A. But, if he loses in the contest, his remedy would be to proceed against A under the indemnity. The decision in the previous suit between C and B would not preclude A from showing that he had really a good title to the property and if he succeeds the result would be that B would lose his property in favour of Cas a result of the first litigation and would not get indemnity as a result of the second. In such a case, it is but desirable that there should be one binding adjudication between the three persons and to achieve that purpose all the parties should be brought before the same court, and the common question arising between them, namely, the title of A should be adjudicated once for all. Order 8-A, Civil Procedure Code, provides for impleading a third party so as to enable the court to decide the substantial question involved in the presence of a third party. But the impledding of a third party might, in certain cases, tend to delay or even embarrass trial of the suit. There should therefore be a proper balancing of two considerations: (1) the plaintiff's right to choose the party against whom he wants relief and the avoidance of unnecessary issues in a suit which would tend to delay and embarrass the trial and (2) avoidance of the possibility of conflicting judgments and if possible to render justice to the defendant without in any way affecting the plaintiff's rights. Order 1, Rule 10, Civil Procedure Code, enables the court to implead necessary or proper parties. That provision would not enable the granting of relief to the defendant against the party so added. Order 8-A achieves this. But in the application of that rule the third party need not be a necessary or proper party to the plaintiffs suit, nor need there be any privity of contract between him and the plaintiff. Order 8-A, Rule 7, Civil Procedure Code, restricts the application of the rule to cases where the defendant would be entitled to contribution or indemnity against a third party. Before a third party Notice could issue, it is necessary to see whether the defendant is entitled to an indemnity or contribution from a third party.
I am also aware, in most of the decisions cited, it was held that indemnity or contribution need not arise from a contract. It can arise on equitable consideration and also on the basis of any statute.
14. From the above discussion the following principles emerge:
(1) Order 8-A procedure is applicable to suits on negotiable instruments. But, it should be applied only when the court is satisfied that there was special circumstance for invoking the same.
(2) There need not be any privity of contract between the party to be impleaded and the plaintiff in the suit.
(3) The question of indemnity or contribution need not be based on a contract. It can arise on equitable consideration or from right (lowing from statutes.
(4) The court must be satisfied that the defendant is entitled to indemnity or contribution and the question arises in that case.
(5) There must be prima facie evidence before court grants leave.
In Thiruvannamalai Adhinam v. Sri Daivasigamani Amnachala Desika Paramachatya Swamigal 68 L.W. 371, also the above proposition was laid down, though nothing was stated as to the applicability of Order 8-A.C.P.C., in suits on negotiable instruments.
15. On the basis of the above principles, we have to decide whether the second respondent in this civil revision petition has to be impleaded as a defendant in the suit.
16. As staled earlier, we have only one written statement filed by the second petitioner (second defendant), wherein he has admitted that amounts are given by the plaintiff. It is an admission in the pleading that the plaintiff has advanced amounts, on the basis of the promissory notes. Of course, in another portion of the written statement, he says that the dealing was always with the plaintiffs husband who used to take unfilled promissory notes. I do not find any material placed before court to show that the plaintiffs husband had anything to do with the transaction. He has failed to prima facie substantiate the same. He states that he has filed a statement of accounts. The statement of accounts prepared by the second petitioner will have no relevancy and will not bind any one.
17. The lower court dismissed the application not on the ground that Order 8-A, C.P.C., is not applicable, but on the ground that it is not necessary in this suit as it is based on a promissory note. Again the application was only under Order 1, Rule 10(2), C.P.C. So naturally the lower court felt that better materials are required to satisfy itself before impleading another person in the suit.
18. It is also my duty to say that the plaintiff should not be put to hardship merely because the defendant has taken a contention that other persons are interested in the suit. A suit on a promissory note should not be converted into a suit raising unnecessary questions. The court must be prima facie satisfied that the defendant has made out a case for contribution or indemnity on the materials available. No special circumstance is also made out. In this case, I am not satisfied on the basis of the available materials that the petitioner has proved the same. Again, a suit against plaintiffs husband is also not barred.
19. For the above reasons, I do not find any infirmity or illegality in the order of the court below. The court below was perfectly justified in dismissing the I.A.
20. In the result, the revision is dismissed with no order as to costs.