Delhi High Court
Bhai Analjit Singh vs M/S. Mitsui & Co. Ltd. & Ors. on 19 December, 2008
Equivalent citations: AIR 2009 DELHI 75, 2009 AIHC NOC 524 (2009) 160 DLT 231, (2009) 160 DLT 231
Author: A.K. Sikri
Bench: A.K.Sikri, Manmohan Singh
Reportable
IN THE HIGH COURT OF DELHI AT NEW DELHI
+FAO (OS) No.433/2008
Date of Hearing: 14.11.2008
Date of Decision: 19.12.2008
#Bhai Analijit Singh .....Appellant
! Through: Mr. B.B. Sawhney, Sr. Advocate
with Mr.Amit Kumar Singh
Versus
$M/s. Mitsui & Co. Ltd. & Ors. .....Respondents
Through Mr.Sandeep Sethi, Sr. Advocate
with Ms.Sangeeta Bhati, Ms.Ruchi Gaur
and Mr.Prabhat Kumar for respondent No.1
Mr.Sanjeev Puri, Sr. Advocate with
Mr.Gyaltsen for respondent Nos.4(a),
4(b) and 4(c)
CORAM :-
*THE HON'BLE MR.JUSTICE A.K.SIKRI
THE HON'BLE MR. JUSTICE MANMOHAN SINGH
1.Whether Reporters of Local papers may be allowed to
see the Judgment?
2.To be referred to the Reporter or not?
3.Whether the judgment should be reported in the Digest?
A.K. SIKRI, J.
:
1. The respondent No.1 herein is the plaintiff in CS(OS) No.593/1999 filed for recovery of money against three persons, namely, Bhai Manjit Singh, defendant No.1(respondent No.2 herein), Bhai Mohan Singh, Karta of Bhai Mohan Singh HUF, defendant No.2 and Bhai Manjit Singh FAO (OS) No.433/2008 Page 1 of 18 HUF, defendant No.3 (respondent No.3 herein). During the pendency of the suit Bhai Mohan Singh (defendant No.2) passed away and in these circumstances, the plaintiff moved application under Order XXII for substituting his legal representatives. Legal representatives named in these applications are the appellants herein as well as the respondents No.4(a) to 4(c) herein. This application has been allowed by the learned Single Judge vide orders dated 16.9.2008. The opposition of this application by the appellant herein [defendant No.2(d)] has been repelled. Not satisfied, the appellant has challenged that order in this appeal. It is not in dispute that the appellant as well as the respondents No.4(a) to 4(c) are the legal representatives of the deceased defendant No.2. The opposition of the appellants for impleadment was on the ground that the cause urged in the plaint qua defendant No.2 constituted a personal claim, which was extinguished and did not survive on the passing away of defendant No.2. Therefore, his legal representatives could not be substituted in his place. For appreciating this contention and the manner in which it is dealt with by the learned Single Judge, it would be necessary to take note of the averments made in the suit on the basis of which cause is founded FAO (OS) No.433/2008 Page 2 of 18 against the defendants and in particular against second defendant, since deceased.
2. It is alleged by the plaintiff that the plaintiff was interested in purchasing a property in New Delhi and through broker it was introduced to defendant No.1, who showed his interest in selling property bearing No.61, Golf Links, New Delhi. Defendant No.1 also represented that he was fully competent to enter into the negotiations. Plaintiff was informed that the property in question was in the name of Bhai Mohan Singh HUF of which defendant No.1 is a member and defendant No.2 is the Karta. Certain other representations were made regarding family settlement between the parties as per which, the aforesaid property came to the share of defendant No.1, though this was not recorded in the records of the L&DO. Defendant No.1 informed that he was duly authorized and competent to deal with the property in question. Defendant No.2 also issued letter dated 2.2.1996 whereby the plaintiff was informed that defendant No.1 was irrevocably authorized by the defendant No.2 to deal with the property in question. It was also stated that in that letter by the defendant No.2 that the plaintiff should make payment of sale consideration to the defendant No.3 and the agreement to sell as well FAO (OS) No.433/2008 Page 3 of 18 as the sale deed would be executed by the defendant No.2. Both defendants No.1 and 2 assured the plaintiff that the property was free from all encumbrances and defendant No.1 was fully authorized and entitled to deal with the property and the title deeds of the property would be made available to the plaintiff. Memorandum of Understanding dated 3.2.1996 was also executed between the parties, inter alia, stating that an agreement of sale with respect to the said property would be executed on or before 28.2.1996 after the plaintiff and its advocates were satisfied about the title of the defendant No.1 to the property in question. Total consideration agreed for the property in question was to be Rs.16 crores and it was further agreed that 10% of that amount, i.e., Rs.1.6 crores would be paid by the plaintiff to the defendant No.2 as token money/part payment against the aforesaid consideration. The manner in which balance payment was to be made was also recorded. The plaintiff accordingly paid a sum of Rs.1.60 cores as token money/advance/part payment to defendant No.1 by cheque drawn in favour of defendant No.3.
However, when the relevant documents pertaining to the property were demanded for examination, it transpired that the said property was, in fact, mortgaged to defendant No.4 bank against a loan of FAO (OS) No.433/2008 Page 4 of 18 Rs.2.25 crores. Defendant No.1 also failed to satisfy the plaintiff about its title to the property and the property was not free from encumbrances as well. In these circumstances, the plaintiff called off the deal and sent notice dated 1.2.1999 to defendants No.1 to 3 calling upon them jointly and severally to refund the advance money together with interest/compensation/damages. As the money was not refunded, suit was filed stating that defendants No.1 to 3 were jointly and severally liable to pay the amount along with interest @ 18% per annum. In the plaint there are further allegations against defendant No.2. It is alleged that defendants No.1 and 2 deliberately concealed and suppressed the material fact regarding the mortgage of the said property. Defendant No.2 supported defendant No.1 in his plans to deceive the plaintiffs and both defendants No.1 and 2 jointly and severally played fraud on the plaintiff and cheated it by misappropriating the total amount of Rs.1.60 crores.
3. The submission of the learned counsel for the appellant while contesting the application for bringing the LRs on record, before learned Single Judge as well as before us, was that on an overall reading of the suit averments it would be manifest that defendant No.2 was sought to be fastened with liability on the ground that he made FAO (OS) No.433/2008 Page 5 of 18 misrepresentation and played fraud upon the plaintiff in connivance with defendant No.1. It was argued that at best these constituted personal allegations and did not survive the death of the person. The learned Single Judge repelled this contention in the following manner:-
"9. No doubt, there are certain averments in the plaint, which point to culpability of the second defendant. However, the Court cannot lose sight of the fact that a common written statement was filed by all the defendants; in para 7 of that written statement, the defendants aver as follows:
"Acting upon the said MOU the defendants did not deal with the said property and maintained status quo for (a) keeping the property vacant despite many offers for its lease at high rates of rent, (b) not entering into even discussion with other prospective buyers who were keen to purchase the property."
It is again averred as follows:
"..........the answering defendants are even now prepared and agree to the plaintiff making payment direct to defendant No.4 bank against the outstanding loan and retrieving from the bank the title deeds of the property in order to complete the sale transaction as agreed between the parties, in terms of the MOU dated 3rd February, 1996."
10. Apart from the above averments, the materials on record which include a letter written by the second defendant are indicative of his role and involvement in the transaction. In these circumstances, the Court is un-persuaded by the submission on behalf of the legal representative 2(d) who has not even chosen to file a reply for more than a year that the FAO (OS) No.433/2008 Page 6 of 18 suit abated so far as the second defendant was concerned. The other legal representatives have not field any reply, opposing the application."
4. As mentioned above, the submission of the learned counsel for the appellant remained the same. Mr. Sawhney, learned senior counsel appearing for the appellant, emphasized that the agreement was essentially between the plaintiff and the defendant No.1 and money was also paid to defendant No.1 and 3 even as per the averments made in the plaint. The defendant No.2 was arrayed as party and decree prayed against him only on the ground that defendant No.2 gave assurances that property was free from encumbrances and further that defendant No.1 was fully authorized to deal with the said property. These assurances, if turned out to be false, amounted to civil wrong, which could be attributed to defendant No.2 personally. Cause of action was clearly pleaded against defendant No.2 on the aforesaid allegation which was manifest from the reading of paras 11 and 12. Therefore, the alleged liability of the defendant No.2 would only be tortuous and not contractual. The learned counsel argued that it was settled position in law that right to sue for tort survives only (i) in case of a deceased plaintiff, if the estate has thereby suffered damage; and FAO (OS) No.433/2008 Page 7 of 18
(ii) in case of a deceased defendant, if there has thereby been benefit or accretion to the estate.
5. He also submitted that since the money was not received by the respondent No.2, its estate was not benefitted and thus, there was no additional benefit/accretion to own monies or estate of the defendant No.2, which is the prerequisite for impleading LRs of such wrong doer on his death. Learned counsel also made fervent plea that in any case, cost of Rs.60,000/- should not have been imposed. Mr.Sethi, learned senior counsel appearing for the respondent No.1/plaintiff, on the other hand, submitted that the appellant/defendant No.2(d) and the other impleaded legal heirs of the deceased defendant No.2 are necessary and proper parties to the suit for the purpose of effectively adjudicating the disputes between the parties. The learned Single Judge has rightly allowed the impleadment of the LRs of the deceased defendant No.2 after correct appreciation of the facts and law involved in the present case and the appeal of the appellant must fail for the following amongst other reasons:-
(i) The MOU dated 3.2.1996 was entered into with defendant No.1 to the suit for the purchase of property bearing FAO (OS) No.433/2008 Page 8 of 18 No.61, Golf Links which stood in the name of the deceased defendant No.2. The part payment of Rs.1.60 crores was made to defendant No.1 and 3 to the suit in respect of the said property upon the instructions of the deceased defendant No.2 and as such the deceased defendant No.2 would have been equally liable to refund the monies of the plaintiff.
(ii) The plaintiff holds defendant Nos.1 to 3 jointly and severally liable for refund of plaintiff's monies/dues.
Deceased defendant No.2 would be equally liable to the plaintiff for the refund of the monies fraudulently extracted from it by the defendants. A decree if passed by this Court in favour of the plaintiff and against defendant Nos.1 to 3 would be equally executable against the estate of the deceased defendant No.2, hence the necessity of impleading the LRs of the deceased defendant.
(iii) Further, it is respectfully submitted that the deceased defendant no.2 has at no point of time disassociated himself from the transaction in question. The defendants have filed a joint written statement to the plaint wherein FAO (OS) No.433/2008 Page 9 of 18 no denial of his involvement in the transaction has been made by the deceased defendant. No application has ever been moved by the deceased defendant for striking off his name from the array of parties for lack of cause of action. Therefore, it is necessary that the LRs of the deceased defendant be impleaded for the proper adjudication of the suit. Further, no reply to the application for impleadment of LRs was filed by the appellant/defendant for over a year after issuance of notice objecting to their impleadment in the suit.
(iv) Section 306 of the Succession Act, 1925, lays down the causes of action that do not survive against his executors or administrators after the death of a person. In terms of the said section, only causes of action for defamation, assault or other personal injuries and cases where after the death of the party, the relief sought could not be enjoyed or grant of which would be nugatory are causes that would not survive after the death of a person. The reliance of the appellant on the maxim action personalis moritur cum persona is completely misplaced and FAO (OS) No.433/2008 Page 10 of 18 untenable. The case of the plaintiff/respondent does not fall under any of the cases discussed in the aforesaid section and the appellant is, thus, a necessary and proper party to the suit.
6. We have given our due consideration to the aforesaid submissions made by counsel for both the parties. We have also minutely gone through the averments made in the plaint in order to see the nature of allegations leveled against the defendant No.2 and the basis on which he was impleaded in the suit as defendant and decree sought against him.
7. Admitted facts are that the advance payment of Rs.1.60 crores was given by the plaintiff to the defendant No.1 by cheque drawn in favour of the defendant No.3. Though it was earnest money/token money against the intended sale of the property bearing No.61, Golf Links, New Delhi, suit is not for specific performance but for refund of this money which was predicated on the allegation that it transpired later that the property in question was mortgaged to the defendant No.4 bank against a loan and the defendant No.1 had failed to satisfy the plaintiff about its title to the property which was not free from FAO (OS) No.433/2008 Page 11 of 18 encumbrances as well. Thus, the plaintiff wants refund of the aforesaid amount of Rs.1.60 crores after it cancelled the deal. Though this money was given with interest to defendants No.1 and 3, reason for impleading defendant No.2 and seeking decree against him also was that it was on the representation of defendant No.2 that such a deal was negotiated by the plaintiff with defendant No.1. The allegations/averments qua defendant No.2 in the plaint are of following nature:-
"6. xxxxx In this regard a letter dt. 2.2.1996 was also issued to the Plaintiff by Defendant No.2 whereby the Plaintiff was informed that Defendant No.1 was irrevocably authorized by Defendant No.2 to deal with the property in question. A copy of the letter dated 2.2.1996 is being annexed herewith as ANNEXURE/P-1.
Defendant No.2 vide the said letter further asked the Plaintiff to make the payment of the sale consideration to Defendant no.3 and informed that the Agreement to Sell and Sale Deed would be executable by Defendant No.2. Defendants No.1 and 2 assured the Plaintiff that the property was free from all encumbrances and Defendant No.1 was fully authorized and entitled to deal with the property and that the title deeds to the property would be made available to the Plaintiff xxxxx Defendant Nos.1 and 2 further assured the Plaintiff that they would satisfy the Plaintiff about the title of the Defendant No.1 to the said property before an Agreement for Sale is executed by the parties.
FAO (OS) No.433/2008 Page 12 of 18
11. That Defendant No.1 and Defendant No.2 deliberately concealed and suppressed a material fact regarding the property having been mortgaged with Defendant No.4 Bank thereby making the Plaintiff part with an amount of Rs.1.6 crores. The Defendants made a factually incorrect representation to the Plaintiff about the title and marketability of the property in question with the mala fide intention of defrauding the Plaintiff of its money xxxxx Whereas Defendant No.1 and Defendant No.2 knew very well that the property in question stood mortgaged to defendant No.4 and would not be released without clearing the bank loan in spite this they entered into an MOU for the sale of the property with the plaintiff and induced the Plaintiff through false representation to part with a substantial sum of money as token/advance amount. Defendant No.1 made specific representation in the MOU that he would be able to pass on a clean and marketable title to the Plaintiff free from all encumbrances.
Therefore, Defendant No.1 made representations to the Plaintiff which were false to his knowledge and Defendant No.2 knowingly supported Defendant No.1 in its plans to deceive the Plaintiff xxxxx
12. That Defendant Nos.1 and 2 have jointly and severally played fraud on the Plaintiff and cheated it and have also misappropriated the total amount of Rs.1.60 crores xxxxx Defendant Nos.1 and 2 have failed to satisfy the Plaintiff about title and interest of the property and have also failed to refund the sum of Rs.1.60 crores paid by the Plaintiff to Defendant No.3 for the benefit of Defendant No.1, hence the Plaintiff is left with no other alternative but to institute the present suit." FAO (OS) No.433/2008 Page 13 of 18
8. Elsewhere also, similar allegations are made against the defendant No.2. All these allegations are in the nature of purported fraud played by defendant No.2 along with defendant No.1 by suppressing the material fact regarding the property having been mortgaged and defendant No.1 not having clear title. Otherwise, most of the pleadings relate to deal between the plaintiff on the one hand and defendant No.1 on the other hand and payment by the plaintiff to the defendant No.1. Therefore, admittedly, in so far as the contractual deal is concerned, it was primarily between the plaintiff and defendant No.1 or for that matter, defendant No.3. The defendant No.2 came into picture for limited purpose of making certain representations on the basis of which, the plaintiff supposedly acted upon. We, therefore, find force in the submission of the learned counsel for the appellant that the plaintiff sought to implicate the defendant No.2 and recovery of money from him on the basis of purported tortuous acts committed by him which were not under the realm of contract.
9. In fact, the learned Single Judge has accepted this position as is clear from the opening sentence of para 9 of the impugned order, already extracted above. In spite thereof, reason for impleadment of the FAO (OS) No.433/2008 Page 14 of 18 appellant/legal representatives of second defendant are two-fold as given by the learned Single Judge:-
a) Filing of joint written statement by all the defendants;
b) Writing of letter by the second defendant indicative of his role and involvement in the transaction.
10.We do not find these grounds to be relevant for impleadment of the legal representatives of the second defendant after his death. Even when joint written statement was filed by all the defendants, that would not mean that the plaintiff is not bound by its own pleadings and averments made in the plaint, as extracted above, as per which the liability is sought to be fastened upon the defendant No.2 was under
the tort. The letter written by the second defendant indicative of his role and involvement again shows, if at all, misrepresentation on his part which would again be in the realm of tort. The defendant No.2 otherwise was not the beneficiary as money was given to the defendants No.1 and 3. It is not the case of the plaintiff that estate of the defendant No.2 has benefitted and therefore, this benefit has percolated to his legal representatives after his demise. Therefore, the alleged liability of the defendant No.2 would only be tortuous and not FAO (OS) No.433/2008 Page 15 of 18 contractual. In these circumstances, when estate of defendant No.2 has not benefitted, the action against defendant No.2 would not survive after his death and his LRs cannot be brought on record. In M. Veerappa v. Evelyn Sequeira and Ors., AIR 1988 SC 506 the Supreme Court, after extracting Section 306 of the Indian Succession Act, 1925, held that:-
".....the words "personal injuries" do not mean "injuries to the body alone but all injuries to a person other than those which cause death and that the relevant words must be read ejusdem generis with the words 'defamation and assault' and not with the word 'assault' alone."
11.It would also be of advantage to quote the observations of the Full Bench of the Madras High Court in Rustomji Dorabji v. W.H. Nurse, AIR 1921 Mad. 1 (FB) as excerpted by the Supreme Court in the aforesaid judgment:-
"We are therefore driven to the conclusion that the Act must be supposed to have envisaged a logically coherent class of causes of action, and that result can only be achieved by construing "personal injuries" as meaning not "injuries to the body" merely, but injuries to the person in Blackstone's sense, other than those which either cause death or tangibly affect the estate of the deceased injured person or cause an accretion to the estate of the deceased wrong doer. In effect, FAO (OS) No.433/2008 Page 16 of 18 we think that the words which we have to construe are ejusdem generis not merely with the last preceding word "assault", but with the two preceding words "defamation" and "assault"
(emphasis supplied)
12.On this basis the Supreme Court firmed up the legal principle as under:
"The maxim of action personalis cum moritur persona has been held inapplicable only in those cases where the injury caused to the deceased person has tangibly affected his estate or has caused an accretion to the estate of the wrong- doer .........."
xxxxx "If the entire suit claim is founded on torts the suit would undoubtably abate. If the action is founded partly on torts and partly on contract then such part of the claim as relates to torts would stand abated and the other part would survive........"
13.Provisions of Section 306 of the Succession Act would apply in the instant case which are founded on the maxim action personalis moritur cum persona.
14.We, therefore, allow this appeal, set aside the impugned order dated 16.9.2008 passed by the learned Single Judge and consequently, dismiss the application of the plaintiff for bringing the LRs of the defendant No.2 on record. Name of the defendant No.2, because of FAO (OS) No.433/2008 Page 17 of 18 his death, shall be deleted from the array of parties in the suit and the suit shall proceed against defendants No.1 and 3.
(A.K. SIKRI)
JUDGE
December 19, 2008 (MANMOHAN SINGH)
hp. JUDGE
FAO (OS) No.433/2008 Page 18 of 18