Bombay High Court
Delta Products (Pvt.) Ltd. vs Industrial Credit And Investment ... on 12 September, 1978
JUDGMENT V.S. Deshmukh, J.
1. Parties waive notice of appeal. Preparation of paper book disponsed with. Compilation to be treated as the paper book.
2. This is an appeal arising out of an order passed by a learned Single Judge in Notice of Motion No. 485 of 1978 in Original Side Suit No. 686 of 1973. The few facts that should be noted for the purpose of appreciating the order under dispute are these :
3. The plaintiff is the Industrial Credit and Investment Corporation of India and the original defendant No. 1 is Delta Products Pvt. Ltd., which is now in liquidation. By a deed of mortgage dated 12th June, 1964, defendant No. 1 mortgaged all its existing properties, viz., immovable as well as plant, machinery etc., including the future additions of constructions as well as machinery spare parts etc. to the plaintiff. The mortgage shows that the plaintiff was to advance U.S. Dollars 63,000/- to defendant No. 1 for the purpose of importing machinery. By this indenture not only all the existing properties were mortgaged, but a flouting charge was created on all the properties that would be added, whether immovable or movable or otherwise. Not only that but even uncalled for share capital was also subject to the charge of the plaintiff.
4. As the amount was not paid, the present suit came to be filed for the recovery thereof. During the pendency of that suit, the company went into liquidation and Official Liquidator was appointed. The company had already filed a written statement. The liquidator after his appearance told the trial Court that he was merely disputing the question of interest and nothing else was being disputed. In the circumstances, a decree came to be passed in terms of the prayer clauses of the plaintiff. The dispute raised about interest was rejected. The liquidator filed an appeal against the order granting the interest, but that was also ultimately withdrawn. This decree was sought to be amended by taking out a Notice of Motion, which has been allowed. Being aggrieved by that order, original judgment-debtor has filed this appeal.
5. The main point raised on behalf of the appellant is that the Court had no power to amend the plaint as well as the decree under section 152 read with section 151 of the Code of Civil Procedure. Even if it has power, this is not a fit case were that power should have been exercised. What precisely is done by allowing the Notice of Motion may first be seen. The plaint has been instituted against two defendants. The first defendant is the present appellant. The second defendant is the Canara Bank, which is one of the Nationalised Banks. This plaint is instituted to enforce the mortgage charge against all the properties of the present appellant-defendant No. 1, which were mortgaged under an indenture dated 13th June, 1964. The plaint in paragraphs 6 and 7 clearly suggested that the security offered was the entire property of defendant No. 1.
6. A short history, which we have indicated above, shows that at the time the indenture of mortgage was prepared defendant No. 1 company owned a piece of immovable property with some structure in which were housed a few machines. A loan of 63, 000 U.S. Dollars was offered under the bound to enable the defendant No. 1 company to import machinery for its use. It need not be specifically stated that when defendant No. 1 company commenced its production after the installation of all the machinery, it would require raw material, stores, spares etc. continuous process would go on where raw material would be converted into finished products with the assistance of the machinery and the finished products in due course would be sold in the market. During all this process, the entire property, including the machinery stores spares and the uncalled share capital, was subjected to the mortgage charge of the plaintiffs. It was this charge which was sought to be enforced by filing the suit.
7. However, when the indenture was executed on June 12, 1964, only some of the machines were installed in the piece of land belonging to defendant No. 1 company. The indenture, therefore, described the immovable property and the movable property as it then stood on June 12, 1964. At the time of the institution of the suit in 1973 much more machinery was purchased and there were stores including spares and raw material. It is the case of the plaintiffs that thought mistake of accidental omission what was described in the plaint as property mortgaged is the same property which was originally described in the indenture of mortgage. Since there was a flouting charge on all the additions to the property, the correct description should have been to make a list of all the properties and added them. Instead an error that crept in was to repeat the schedules as in the original document, which described the immovable and movable property, and faithfully reproduce in the body of the plaint, the terms of the mortgage bond. It has been stated that the plaintiff has a right to recover its money from all the properties immovable as well as movable belonging to defendant No. 1 company. The decree is as sought in the same way.
8. However, as this accidental slip led to the misdescription of the property and the defences raised were confined only to the question of interest, the mistake was never realised later on. On the assumption that the plaint has been properly drafted the point regarding interest was squarely met by the plaintiffs and after the Court rejected the plea of the defendants in that behalf, the decree-debtor became a party to the drafting of the minutes of the decree. This is not a consent decree in the real sense of the term. It only means that the liquidator representing defendant No. 1 company could not find any defence other than challenging the amount of interest. Once that was being negatived by the Court, it was clear that either the Court passed a decree itself or the parties lived a part of the courts work by furnishing a minutes of the order. This assistance rendered by the parties in furnishing minutes of the order is not and cannot be called a consent decree in the real sense of the term. In the circumstances the initial mistake of misdescription continued to the decree when it was drawn up.
9. It may incidentally be noted that during the pendency of the suit a Receiver was appointed. This Receiver's appointment was few months before the Official Liquidator was appointed a liquidator in the winding up proceedings against the defendant No. 1 company. The receiver took charge but could not make a detailed report as the inventory could not be prepared in a short time. He, therefore, locked the premises and took charge. When he could spare time, his representative went to the premises and in the presence of the representatives of both the parties, prepared an inventory of articles, which runs into more than 500 items. Even though the Receiver thus took possession of every piece of property including all additions to the original machinery and the stores no complain was ever raised before the trial Judge that the receiver has taken possession of property which is not forming part of the subject-matter of the suit. In the circumstances a decree came to be drafted as per the wording of the plaint. When the question of execution arose, the plaintiff's realised that it would be a necessary for them to get the decree corrected by giving a detailed description of all the properties which represent the addition to the original properties described in the mortgage bond. For this purpose a Notice of Motion was taken out, and after hearing the parties the learned trial Judge made the Notice of Motion absolute.
10. The first point which we will dispose of is the one which was never raised either before the trial Court on in the Memo of Appeal in this Court. Mr. Angal argues that a tripartite agreement has taken place on 13th of July, 1970 between the plaintiffs, defendant No. 1 company and defendant No. 2. This agreement became necessary because the defendant No. 1 wanted further accommodation from defendant No. 2 Bank by way of running capital for their manufacturing process. It appears that the Bank was not willing to make any advances on the basis of a second charge. The plaintiffs already had a first charge on all the properties of defendant No. 1 complain. Perhaps on the representation of defendant No. 1, the plaintiffs became agreeable to the tripartite agreement. Under this arrangement the Bank was permitted to give advances on certain properties. The Bank was permitted to rank as the first charge-holders along with the plaintiffs in certain proportion. It meant that in the event of the property of the defendant No. 1 company came to be sold for the realisation for the dues, the plaintiffs and defendant No. 2 would share the not realised amount in a certain proportion. But for such an agreement the entire price realised would have to be first utilised for paying the plaintiff's dues. If there is any balance, then only the second charge-holder would have got it. The above arrangement was brought about to enable defendant No. 1 to obtain a loan for working capital from defendant No. 2, the Bank.
11. Mr. Angal argues before us for the first time that a tripartite agreement amounts to giving up all the charge by the plaintiffs in respect of the properties not described in the original mortgage bond. In other words, the mortgage security was given up in respect of all the additions to be made to the property of defendant No. 1 company as it stood on 12th of June, 1964. We may point out that this was not the plea at all in the written statement filed by the defendant No. 1 company on February 12, 1974. When the present Notice of Motion is taken out for the amendment of the plaint and decree by including the entire property belonging to defendant No. 1, a written opposition has been filed to the amendment. Even then a point is not raised in that written opposition that a tripartite arrangement was meant for giving up the plaintiffs charge over certain properties of the defendant No. 1 company. Mr. Angal tried to make a faint argument on the basis of the instructions that the argument was, however, raised before the learned trial Judge. As the learned trial Judge has made the Notice of Motion absolute without a speaking order, we have no means to verify whether this could be so. We, therefore, went through the Memo of Appeal in this Court and found that this point is not raised even in the Memo of Appeal. This took away all the strength from the argument of Mr. Angal that an attempt was made to argue before the learned trial Judge, though a specific plea was not taken in the written statement. We are thus satisfied that the defendant No. 1 company has raised this point for the first time even though three earlier opportunities were available to it. On this short ground the plea could be rejected.
12. However, on merits also we find that the tripartite agreement is not at all meant for giving up the first charge of the plaintiffs but it is meant to permit defendant No. 2 to rank as first charge-holder along with the plaintiffs in respect of certain properties and that to in a certain proportion on realisation of the price thereof. This plea has, therefore, no substance, and must be rejected on merits also.
13. That takes us to the main point as to whether the Court has a right to effect certain corrections in the decree as well as the pleadings under the provisions of section 152 read with section 151 of the Code of Civil Procedure. A lot of case law has been shown to us on the point and we may make a brief reference to it a little later. However, looking to the provisions of these two sections and taking into consideration the principle on which they are based, we have no doubt that a broad view must be taken of the provisions of section 152. The procedural laws are primarily meant to do justice between the parties. If, therefore, there are mistakes which are capable of being rectified and they answer the description of the mistakes under section 152, the Court should normally be inclined to rectify the mistakes under section 152, the Court should normally be inclined to rectify the mistakes and do justice between the parties. The after decree stage is the only stage when section 152 can come into operation. In the present case, the body of the plaint undoubtedly claims a decree for enforcing the entire mortgage bond and the description of the property mortgaged is given at two different places in the plaint.
14. In paragraphs 5 and 6 of the plaint there is a clear reference to the recitals of the bond and it is expressly indicated that not only the properties that were in existence at the time of the execution of the bond but all the later additions are subject to the flouting charge of the plaintiff's claim, and it is this charge which is sought to be enforced. However, there is also a reference that the property so mortgaged has been more particularly described in Schedules 'A' and 'B' to the plaint. While preparing those schedules, a clerical mistake has crept in where the person who drafted the plaint merely and mechanically copies the description of the property in the original mortgage bond. The draftsman seems to have forgotten that the property must be described as it existed on the date of the suit. After negativing the defendants in the matter of interest the Court's judgment undoubtedly is to grant a decree as claimed in the plaint. If that is the judgment, the entire property as indicated in the plaint as being subjected to the mortgage charge, must be the subject matter of the decree. In that sense the decree to be drawn must conform to the judgment made by the Court. That obviously is the requirement of Order 20, Rule 6.
15. The present decree confines itself to the schedules attached to the plaint and does not described the entire property which was then in existence and which was subjected to the mortgage charge of the plaintiffs. When this mistake is brought to the notice of the Court, could it not rectify the same? Mr. Angal argues that the judgment itself is confined to the schedules to the plaint and therefore, the decree as drawn up is the faithful decree representing all that the judgment gave to the plaintiffs.
16. It is there that we are not able to agree with the learned Counsel for the appellant. In our view the judgment undoubtedly is to grant to the plaintiffs a decree based upon the mortgage charge and a final decree drawn by the consent of the parties by eliminating one stage in a mortgage suit. However, apart from that consent to eliminating one stage in a mortgage suit. However, apart from that consent to eliminate one stage, rest of the decree is based upon the judgment of the Court, which in our view, is to grant a full decree on the mortgage charge in respect of all the properties which were the subject-matter of the original bond. If all the additions to the properties to be made later were also subject-matter of the bond and that description finds place in paragraph 6 of the plaint in the same language, we must understand the judgment to grant that relief. The misdescription of the property in the schedules to the plaint is thus a clerical mistake. It can also be described as an error arising from an accidental slip or omission, which can be corrected by the Court at any time either of its own motion or on the application of any of the parties.
17. In principle, therefore, if we look at the provisions of sections 151 and 152 and properly analyse the pleadings of the parties, allowing of the Notice of Motion was undoubtedly the correct order to pass. The Counsel for the respondents made available to us a copy of the judgment delivered by a learned Single Judge of this Court in Suit No. 244 of 1953 of this Court on June 20, 1956. In that suit the recitals in the mortgage bond before the Court sought to mortgage not only the existing piece and parcel of ground together with the existing structures but also subjected the subsequent structures to be built to the mortgage charge of the plaintiff. While drafting the plaint, though recitals were reproduced in the body in the schedule of the property, the description was copies from the original mortgage bond and it could not obviously contain the future additions. A preliminary decree was passed by consent which led to the passing of the final decree. At the time of execution, an application similar to the one before us was made for incorporating the description of the additional structures in the decree so as to make it possible to execute the decree against all the structures standing on the piece of ground. The learned Single Judge says that such an application must be allowed under the provisions of sections 151 and 152 and he had already taken a similar view earlier in another suit. Though not a direct judgment for assistance, he referred to a reported decision in Karimunnisa Begum v. Jamaluddin, 39 Bom.L.R. 915. It was a decision by the then Chief Justice sitting as a Single Judge and the pointed question before the learned Chief Justice was whether the provisions of section 152 can be applied in correcting a decree based upon the consent of the parties. Since the decree before the learned Chief Justice was a consent decree and since that was the only point raised before him, the discussion in the judgment is confined to that point only. The application before the trial Judge failed as, according to the trial Judge, section 152 was not applicable to a consent decree or order. The learned Chief Justice observes that he was not referred to any authority, and he was not aware of any authority either in this country or in England, and he was called upon to decide the point on first principles.
18. Against this background the learned Chief Justice observes that a consent order is a form of contract, a mistake in a contract common to both parties,--and a clerical mathematical error can hardly fail to be that-can be rectified by an order of the Court, the method of obtaining such an order is a matter of procedure. Normally a suit is necessary, but when the contract is embodied in an order, the learned Chief Justice saw no reason why the parties should not avail themselves of the simple method of correcting such mistakes in an order provided by section 152. With these observations the learned Chief Justice sets aside the order of the learned trial Judge.
19. This judgment is relied upon only to point out the manner in which section 152 is to operate and how it is to be construed broadly. The learned Single Judge Coyajee, J., in his judgment in Suit No. 244/53 has referred to the Allahabad judgment in Aziz Ullah Khan v. The Collector of Shahjahanpur, I.L.R. 54 All. 800. In that case property in a certain village was mortgaged but by an accidental slip the name of the village was wrongly given in the mortgage deed. In a suit brought to enforce the mortgage the same misdescription of the village was copied in the plaint and was carried to the decree, the sale certificate and dakhalnama. The mistake came to light when the auction purchaser, who was the mortgage himself, applied for the mutation of his name. They refused to effect mutation on the ground that the decree-holder was not the purchaser of the property in the Village Nawadiya Zamania Nagla. The decree-holder then applied under section 152 for the amendment of the decree as also the amendment of the connected documents. The trial Judge permitted evidence to be led about the mistake and found that there was never any doubt about the identify of the property. In the circumstances the mistake was permitted to be corrected and the decree was amended.
20. In the revision carried to the High Court a Division Bench of the Allahabad High Court took the view that the language of section 152 is wide enough to cover the correction of mistake made by the parties themselves as well as mistakes made by the Court or by its Ministerial Officers. They further observed that although section 152 can only apply in terms to the amendment of decrees and not to the amendment of the plaint, sale certificate and dakhalnama, the power of the Court to make corrections is not confined to section 152. According to them, extensive powers may be exercised also under sections 151 and 153. According to them, the case before them was eminently a case in which the Court should exercise its inherent power and correct the accidental slip, as the correction was necessary for the ends of justice.
21. After extensive discussion based upon these two judgments, the learned Single Judge Coyajee, J., allowed the application and permitted the description of the mortgage property to be corrected in the plaint as well as in the decree.
22. In view of the discussion on principle which we have made earlier, we are in respectful agreement with the view already taken by the learned Single Judge of this Court. So far as the balance of convenience is concerned, we have already any doubt that the balance undoubtedly lies entirely in favour of the plaintiffs and against defendant No. 1 company. Here is a solemn contract by which the company is permitted to import machinery and in fact owes its very existence to these advances by the plaintiffs. The same solemn contract creates a flouting charge upon properties then existing as well as to be added later on. When the bond was prepared, only the plot of ground with a structure and some machines were alone in existence and they alone could come in the description of the property in the schedules to the mortgage bond. Though the body of the plaint carries the recitals properly, undoubtedly an accidental slip has occurred when nobody's attention was invited to the additional property which the company acquired in due course and which was already subjected to the mortgage charge of the plaintiffs. This misdescription apart, there is hardly any doubt that the floating charge covered all the belongings of the company including uncalled for share capital. About the terms of this mortgage bond there is no dispute. The tripartite agreement later made in 1970 does not relieve any property from the charge of the plaintiffs. On the contrary it emphasises the fact that the plaintiffs alone were the first charge-holders on all the properties and but for such a contract, defendant No. 2 could not have ranked in equal status for claiming certain share, as a first charge-holder along with the plaintiffs. In the suit at no stage any defence was raised indicating that the plaintiffs were not entitled to enforce the charge against all the properties of the company. When, therefore, the parties knew the real nature of the contract and it was expressed in one part of the plaint correctly but not in the other, and that other part is carried to the decree, an obvious case of mistake arises which must be rectified.
23. Mr. Angal, however, cited a number of judgments which we may briefly refer but which, according to us, do not much assist the appellant at all. He referred us to Namdeo Amaut Gohane v. Narayan Shamrao Deshmukh, . The head note was read out to us. The learned Single Judge observes that where there has been a clerical or arithmetical mistake or an error arising from accidental slip or omission, Court can amend or vary a decree under section 152. A decree through formal, must reflect all the adjudication by Court. It should be drawn up in such a way as to make itself contained and a reflection of all important reliefs given by judgment. If the decree did not conform to judgment and did not bring out all the reliefs intended by the judgment, decree could certain be amended to bring it in conformity with the intention that was expressed in judgment. The learned Judge proceeds to observe that the amendment shall not however be allowed if it is not in furtherance of judgment. Those observations though consistent with the facts of the case before him, undoubtedly represent the correct principle, namely, that whenever reliefs were intended to be given the judgment must be reflected in the decree.
24. We have already stated that the plaint refers in the body of it to all the property that was mortgaged and claims a relief of recovery of the amount due by sale of that property. When the Court makes a judgment in favour of the plaintiffs and grants the claim, undoubtedly the intention is to permit recovery of the decree-holder's dues by sale of that property. However, when it came to the description of property, a mistake crept in at the initial stage in the plaint. Where the description of the bond was blindly copied without reference to the existing situation on the date of the suit that mistake has been naturally continued in the drafting of the decree. It cannot be said that the judgment is confined only to that property and not to all the property that was mortgaged against which a decree was in fact sought in the body of the plaint. We do not know what assistance the appellant can derive from this judgment.
25. Mr. Angal also relied upon certain observations of the Supreme Court in Master Construction Co. v. State of Orissa, . That judgment really deals with Rule 83 of the Orissa Sales Tax Rules which permits a Commission of Sales-tax at any time to correct any arithmetical or clerical mistake or any error apparent on the face of the record arising out of an order passed by him. It is true that Rule 83 is very much similar to the language of section 152. However, the nature of the proceedings before the Sales-tax Officer is quite different and the dispute before the Supreme Court was confined to an order passed by the Commissioner which may or may not contain clerical mistakes or other errors apparent on the face of the record, which needed rectification. The nature of Civil Suit, the method of pleadings and the manner in which decrees are passed must be born in mind while interpreting sections 151 and 152 of the Code of Civil Procedure. It is not possible to bodily accept reasoning under Rule 83 of the Sales-tax Rules for the purpose of construing the provisions of section 152.
26. He then relied upon Shujaatmand Khan and Ors. v. Govind Behari and Ors. . It does appear that in this case the learned Judges of the Division Bench of the Allahabad High Court take the view that a decree and a plaint cannot be permitted to be amended so far as the defects of the property is concerned if the description of the property is faithfully copied from the original bond. If the description of the property itself is wrong, it cannot be permitted to be changed so as to change the very basis of the plaint. It is not necessary for us to discuss this case at length as it would be enough for us to point out that the view of a later Division Bench of the Allahabad High Court is quite contrary to the earlier Division Bench view in Aziz Ullah Khan's case. We may only point out that the earlier judgment does not seem to have been cited before the learned Judges when they disposed of that matter. There is no much discussion and the learned Judges do not consider the proposition whether there was any doubt in the mind of the parties about the identity of the property which was the subject-matter of the original contract. In the circumstances, we do not think that we will derive much help from this judgment.
27. The observations of the Delhi High Court in Smt. Vidyavati Bal v. Smt. Parkash Vati Devi and Anor., , are mere general observations about the meaning and scope of section 152 and do not give us any guidance for the purpose of the present case.
28. The decision in K.P. Rangaiah v. K. Krishnaiah, merely reiterates the principle laid down by the Supreme Court in Sheodhyan Singh v. Mst. Sanichara Kuer, . The rectification permitted under section 152 is confined to misdescription of property and the provisions cannot be resorted to when the identify of the property itself is in dispute. One can hardly quarrel with this proposition.
29. We have, therefore, exerted earlier to point out that so far as the facts of the case before us are concerned, there does not seem to be any dispute about the property that was to be mortgaged or intended to be mortgaged by floating charge so for as the original bond is concerned. Mr. Tijoriwala appearing for the respondent No. 1 plaintiffs while supporting the order of the trial Judge referred us to a judgment of the Supreme Court in Janakiram Iyer v. Nilakanta Iyer, . That was a matter where the word 'not profit' crept in the decree through mistake in place of 'mesne profits'. When an appeal was pending before the Supreme Court, the High Court corrected the mistake under section 151 by substituting the words 'mesne profits' for the words 'net profit'. When this was brought to the notice of the Supreme Court, it approved the step taken by the High Court. Mr. Tijoriwala says that the obvious implication is that the High Court was not doing something which would change the decree or bring about some different relationship between the parties, but it was merely expressing clearly what was intended and only that mistake was rectified which was clearly an accidental slip or a clerical error. That being so the Supreme Court endorsed the step taken by the High Court.
30. These are all the judgments which were cited before us on either side. We have hardly any doubt that there is a preponderance of view in favour of correcting mistakes under section 152 with a view to bring about the real meaning and extent of the decree that was passed by the Court. For that purpose not only mistakes committed by the Court in its own proceedings but the mistake having accidentally crept in the pleadings of the parties can also be corrected within the limits indicated above. Since this is what the learned trial Judge has done in this case, we see no substance in this appeal.
31. The appeal, therefore, fails and is dismissed. The appellant will pay costs of respondent No. 1. There shall be no order as to costs of respondent No. 2.
32. Mr. Angal at this stage orally applies for leave to appeal to the Supreme Court, which is refused.
33. In view of the order in judgment, there will be no order in Motion and there will also be no order as to costs.
34. The costs awarded by this order to be taxed under Original Side Tax Rule No. 569(g), sub-Rule 7(ii).