Orissa High Court
Ponni Sugars And Chemicals Ltd. vs Bargarh Cooperative Sugar Mills Ltd. on 19 August, 2002
Equivalent citations: 2002(II)OLR351
JUDGMENT R.K. Patra, J.
1. The short question that arises for consideration in this revision is whether the learned trial Judge is justified in law in rejecting the application filed by the petitioner under Order 1, Rule 10 (2), C.P.C. to implead the State of Orissa as a party to the suit.
2. The petitioner is defendant No. 1 in Money Suit No. 56 of 1997 pending on the file of the Civil Judge (Senior Division). Bargarh. The opposite parties as the plaintiff has filed the suit for recovery of Rs. 2,17,12.822/-(Rupees two crores seventeen lakhs twelve thousand eight hundred twenty two) only with interest thereon (Rs. 1,78,90,000/- towards arrear royalties plus damages of Rs. 38,22,822/-) from the petitioner. Its case is that it is a Cooperative Society registered under the Orissa Cooperative Societies Act. It owns the Baragarh Cooperative Sugar Mills with its plants at Tora. As it was unable to manage the plant profitably, it decided to hand over the management to some party for consideration. The petitioner (defendant No. 1) came forward to take over the management of the Sugar Mill and accordingly an agreement was executed on 30.8.1991 between them for handing over the management of the Sugar Mill to the former (petitioner). As per the terms of the agreement, the petitioner became entitled to the possession, custody and right to use and utilise the property mentioned in Annexures-1 to 4 enclosed to the agreement. In consideration of the handing over of the management, the petitioner accepted the liability to pay to the opposite party at the end of each sugar session (on or before 30th September of each year) royalty of Rs. 6.00 lakhs for the first three years and thereafter royalty of Rs. 89.45 lakhs per annum for the balance 13 years. As per the agreement the petitioner is to pay the prescribed royalty irrespective of the fact whether the business of the Sugar Mill goes on successfully or not. Accordingly, the petitioner was delivered possession and given custody of all movable and immovable properties. The petitioner duly took over possession and custody of the properties and has been in continuous possession and custody thereof and has been operating the business of the Sugar Mill. It, however, in clear violation of the terms of the agreement failed to pay and clear up the royalties despite repeated demands. As the petitioner ultimately failed to fulfil its obligations, the opposite party had to file the suit.
3. The petitioner appeared in the suit and filed written statement challenging its maintainability inter alia on the ground of non-joinder of necessary party. It was averred in the written statement that it was at the instance of the State Government it entered into an agreement with the opposite party to take over the management of the Sugar Mill. The Sugar Mill of opposite party was in the miserable condition and to revive the same it approached the State Government to make further investment. In view of such request, the State Government invited the petitioner for discussion with regard to handing over of the management of the Sugar Mill. The petitioner had discussion with the Secretary of the Cooperative Department of the State Government and after obtaining certain clarification, agreement was executed.
Although it was pleaded in the written statement that the State of Orissa is a necessary party to the suit, the opposite party did not take steps to implead it. The petitioner as a consequence filed an application under Order 1, Rule 10 (2), C.P.C. to implead the State of Orissa as a party to the suit on the ground inter alia that the State Government was closely connected with the negotiation before the execution of the agreement dated 30.8.1991 and it is only at the instance and under the direction of the Government, the opposite party agreed to hand over the charge of the management to the petitioner and under the pressure of the State Government the petitioner entered into the agreement. As the revival of the Sugar Mill was a joint venture, the presence of State of Orissa is necessary for effective disposal of the suit.
The learned Civil Judge by the impugned order dated 18.8.2000 rejected the application on the ground that the State of Orissa is not a necessary or a proper party to the suit because the suit is for money decree based on an agreement entered into between the parties. The execution of the agreement being an admitted fact and the State of Orissa being not a party to the said agreement, its presence is not necessary.,
4. Sub-rule (2) of Rule 10 of Order 1, C.P.C. provides for joinder of two classes of persons namely, necessary parties and proper parties. A necessary party is one who ought to have been joined i.e. a person in whose absence no effective decree at all can be passed. A proper party is he, whose presence is necessary to enable the Court to effectually and completely adjudicate upon and decide all questions involved in the suit. The aforesaid legal position is well settled. Counsel for both parties referred to number of decisions of this Court. I need not burden this order with those case laws because each of them has been decided on the facts and circumstances of that case.
Keeping the above well established principle in view, let me examine the facts of the case. I have carefully gone through the pleadings of the parties. The opposite party has commenced the suit for recovery of the arrear royalties together with damages flowing from the agreement dated 30.8.1991 admittedly entered into between the parties. The State of Orissa is not a party to the agreement. According to the petitioner, it agreed to take over the management of the Sugar Mill of the opposite party at the instance and intervention of the State Government and because of pressure exerted by the Government it had to sign the agreement. The petitioner denies the lability to pay royalty on the ground that the agreement is a void one for lack of consideration and the agreement has otherwise become frustrated. This being the position, I am of the opinion that the State of Orissa is neither a necessary party nor a proper party. The opposite party can recover the suit amount without the State of Orissa being made a party, inasmuch as, the opposite party stakes its claim of royalty basing on the agreement dated 30.8.1991. For adjudication of the dispute between the parties, the presence of the State of Orissa is not at all necessary because; firstly State of Orissa is not a party to the agreement and secondly, whether the agreement was executed under the pressure of the State Government or at the intervention of the State Government is a matter of evidence which the petitioner can lead in course of trial.
For what has been stated above, the impugned order does not call for any interference. There is no merit in this revision which is accordingly dismissed.