Kerala High Court
Kunnoth Moidu vs Mohammed Iqbal Shah on 25 September, 2014
Author: B.Kemal Pasha
Bench: B.Kemal Pasha
IN THE HIGH COURT OF KERALAAT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE B.KEMAL PASHA
THURSDAY, THE 25TH DAY OF SEPTEMBER 2014/3RD ASWINA, 1936
CRP.No. 388 of 2009 ( )
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IA.416/2002 IN OS 47/2001 OF SUB COURT, VADAKARA
REVISION PETITIONER/PETITIONER:
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KUNNOTH MOIDU, DIRECTOR, M/S AIR COSMOS
TOURS AND TRADE LINKS (PVT.) LTD., S/O.CHOKRU, 42 YRS
RESIDING AT 'MAJILIS', KUNINGAD DESOM, PURAMERI
VILLAGE, VATAKARA TALUK, NOW WORKING AT AI-ADWAH
GROUP, BAHRAIN.
BY ADVS.SRI.B.KRISHNAN
SRI.R.PARTHASARATHY
RESPONDENTS/RESPONDENTS:
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1. MOHAMMED IQBAL SHAH, DIRECTOR
M/S.AIR COSMOS TOURS AND TRADE LINKS (PVT.) LTD.
34 YEARS, S/O.K.A.IBRAHIM, 'MINARA'
V.O.ROAD, VADAKARA.
2. N.SUNIL KUMAR, DIRECTOR, M/S. AIR
COSMOS TOURS AND TRADE LINKS (PVT. )LTD., 37 YEARS
S/O.NARAYANAN NAIR, 'PARVATHI SADAN', NUT STREET
VADAKARA.
3. MOHAMMED VANIMAL, DIRECTOR,
M/S AIR COSMOS TOURS AND TRADE LINKS (PVT.) LTD
38 YEARS, S/O.ABDULLA, KUTTIKATTIL HOUSE
VANIMEL, POST, KALLACHI
VADAKARA TALUK.NOW WORKING AT 21
CENTURY BOOK SHOP, P.B.NO.55893, BEHIND BUS STOP
RASHIDIYA, DUMAI
R BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR
THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON
25-09-2014, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
[CR]
B. KEMAL PASHA, J.
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C.R.P. No.388 of 2009
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Dated this the 25th day of September, 2014
O R D E R
~ ~ ~ ~ ~ ~ Challenging the dismissal of his third party claim under Order VIII A Rule 8 of the Code of Civil Procedure, 1908 (hereinafter referred to as 'the Code') the Subordinate Judge's Court, Vadakara, through order dated 07.03.2009 in I.A.416/2002 in O.S.47/2001, the defeated 4th defendant has come up in revision.
2. O.S.47/2001 was a suit for money filed by the ING Vysya Bank Limited, Calicut as plaintiff against the 1st defendant company and defendants 2 to 6, who were its Directors. The 4th defendant, who is the petitioner herein, filed a written statement contending as follows:- CRP.388/2009 : 2 :
"This defendant confesses to a decree with a request to re-evaluate the interest claimed in the light of the Apex court judgment reported in 2001 SAR (Civil) 930. This defendant further submits that the confession of this defendant is without prejudice to a claim under Order 8 A of the Code of Civil Procedure against Defendants 2, 3 and 5 based on indemnity bonds for which leave is claimed today by separate applications. There may be a decree accordingly."
Through the written statement, the 4th defendant has made it clear that he was about to proceed against defendants 2, 3 and 5 based on indemnity bonds executed them in his favour, by having recourse to the provisions under Order VIII A of the Code. Through separate application, leave was also sought for. Leave was granted.
3. Defendants 2, 3 and 5 in the suit are the respondents in the third party claim. According to the petitioner, defendants 2, 3 and 5 had independently executed Exts.A1 to A3 indemnity bonds dated 17.12.1996. CRP.388/2009 : 3 : The case of the petitioner is that the plaintiff bank had issued bank guarantee for 10 lakhs to IATAby debiting the bank guarantee loan account of the 1st defendant company. One bank guarantee issued in favour of the Indian Airlines was invoked to the extent of 8,134/-. The bank had adjusted an amount of 2,68,148/- on 02.01.1999 from the NRNR account of the petitioner. Further, an amount of 36,831/- was adjusted from his NRNR account on 16.12.1999. The petitioner paid an amount of 1,00,000/-, 50,000/- and 25,000/- also thereby making a total payment of 4,79,979/- to the loan account.
4. The petitioner had created a mortgage by depositing his title deeds relating to his dwelling house as persuaded by defendants 2, 3 and 5 for facilitating the sanction of the bank guarantee. It was because of the mortgage of his dwelling house, that the petitioner was constrained to discharge the liability to the said bank. It is the case of the petitioner that the said defendants had CRP.388/2009 : 4 : executed Exts.A1 to A3 indemnity bonds in their personal capacity, thereby each of them indemnifying him against all claims of the bank up to a limit of 10 lakhs. Therefore, each one of defendants 2, 3 and 5 are liable to the petitioner on the indemnity bonds to an extent of 1/4th of the plaint claim. The petitioner is entitled to get 1/4th out of the total amount of 4,79,979/- along with interest at 8.5% on 2,87,500/- from 16.12.1999 plus 1/4th of the plaint claim.
5. Defendants 1, 2 and 3 have filed counter affidavit contending, inter alia, as follows:-
The 3rd defendant, who is the 2nd respondent herein, alone contested the third party claim. The petitioner is not entitled to have recourse to the provisions under Order VIII A of the Code and that his remedy is to file a separate suit. The entire liability of the company as such has to be taken note of and the same has to be apportioned among all the Directors.
6. It seems that apart from taking up a contention CRP.388/2009 : 5 : that the junction of all the Directors are necessary for deciding the liability, any specific plea of non-joinder has not been taken up by defendants 1 and 2. At the same time, the 3rd defendant has taken up a contention that the claim is bad for non-joinder of necessary parties.
7. On the side of the petitioner, the petitioner was examined as PW1 and Exts.A1 to A4 were marked. On the side of the respondents, the 3rd defendant was examined as RW1 and Exts.B1 to B4 were marked. It seems that when the matter reached the stage of evidence, the only contesting respondent as against the third party claim was the 3rd defendant, who is the 2nd respondent herein. Defendants 2 and 5 were not contesting. The court below, after hearing both sides, dismissed the third party claim through the impugned order.
8. Heard the learned counsel for the petitioner Sri.B.Krishnan and the learned counsel for the 2nd respondent Sri.M.Gopikrishnan Nambiar. Still, respondents CRP.388/2009 : 6 : 1 and 3, who are defendants 2 and 5, are not contesting.
9. The execution of Exts.A1 to A3 indemnity bonds are not challenged. The court below has also found that Exts.A1 to A3 indemnity bonds were executed by respondents 1 to 3. Exts.A1 to A3 were executed by the respondents in favour of the petitioner on 17.12.1996. In Exts.A1 to A3, the petitioner was styled as the 'indemnified' and the respondents were styled as the 'indemnifiers'. In the said indemnity bonds, they have stated, "The indemnifier in his personal capacity indemnifies the indemnified in his personal capacity against all claims by M/s.Vysya Bank on the basis of financial accommodation extended to M/s.Air Cosmos Tours and Trade Links Private Limited, to a limit of 10 lakhs". M/s.Air Cosmos Tours and Trade Links Private Limited is the 1st defendant company of which the petitioner and the respondents along with some others were Directors.
10. It is clear from Exts.A1 to A3 that those indemnity CRP.388/2009 : 7 : bonds were executed by the respondents in their personal capacity for indemnifying the petitioner also in his personal capacity against all claims of M/s.Vysya Bank in respect of the financial accommodation extended to the 1st defendant company. It seems that the court below has non-suited the petitioner mainly on the ground that all the other Directors of the company, who were also responsible for the assets and liabilities of the company, were not impleaded and, therefore, there could not have a full fledged adjudication in respect of the claims among the Directors of the company.
11. Through evidence, the attempt from the part of the 2nd respondent was to bring out the fact that certain amounts due to the company were accepted by the petitioner and further, the petitioner himself had caused some loss to the company on account of his negligence. It was contended that unless the entire disputes relating to the financial transactions of the company and the rights and liabilities among all the Directors were adjudicated, a proper CRP.388/2009 : 8 : decision could not have been taken. It seems that ultimately the court below was carried away in clubbing those matters also, as matters to be considered in adjudicating a claim under Order VIII A of the Code.
12. The learned counsel for the 2nd respondent has invited the attention of this Court to the decision in Prabhakara Prabhu Vs. Canara Bank [1996 (1) KLT 682], wherein a learned Single Judge of this Court had deduced the procedure contemplated under Order VIII A of the Code as follows:-
"(1) The defendant must show that there exists a prima facie case and there are bona fides in his claim against the third party.
(2) While considering the petition under Rule 1 of Order 8A, the Court must be satisfied that the plaintiff is not unduly embarrassed or put to additional expenses or difficulty. If the adjudication of the question between the defendant and the third party would embarrass the plaintiff in his trial, the court generally CRP.388/2009 : 9 : exercises its discretion by ordering the trial of those issues subsequent to the trial of the action.
(3) The Court will dismiss the application if it is found that the claim is outside contribution or indemnity.
(4) The Court will dismiss the application if the case is one of too great complication or difficulty to be properly tried in the original action and if the Court finds that these matters cannot be properly tried together with the original action.
(5) The Court cannot refuse to implead third parties merely on the ground of inconvenience to plaintiff.
(6) The Rule applies irrespective of the fact whether the suit claim is admitted by the defendant or not and is not limited to a claim out of the same transaction or simultaneous transaction.
(7) There need not be any privity of CRP.388/2009 : 10 : contract between the plaintiff and the third party for application of the provisions of Order 8A C.P.C.
(8) The third party has every right to contest his liability to contribute or to indemnify the defendant; he can also step into the shoes of the defendant and fight the defendant on all grounds, which are available to the defendant himself.
(9) The Court must consider the question of maintainability of the suit before issuing third party notice on the defendant's petition."
13. Even though Order VIII A has been there in the statute from 1958 onwards, the procedure contemplated the same has only been very rarely invoked. Even though the nomenclature of the Order shows that it is third party claim, the provisions contained under Rule 8 of Order VIII A shows that the disputes between co-defendants are also to be treated as third party claims within the meaning of Order CRP.388/2009 : 11 : VIII A of the Code, and such questions can also be decided in the suit itself through such third party claims. For entertaining the third party claim among the co-defendants, or the defendant/defendants with a third party/third parties, what has to be considered mainly is whether any prejudice will be caused to the plaintiff on such an adjudication. If in any way the plaintiff will be put in hot waters on account of such an adjudication, the court can very well direct the party who moots the third party claim to have recourse to a separate suit.
14. In short, what is to be considered is whether on account of the third party claim, the suit will become a more complicated one, which cannot be properly adjudicated. In the event of the suit becoming a more complicated one, which cannot be properly adjudicated, of course, the ultimate loser will be the plaintiff and, therefore, in such cases, the court need not always entertain such a third party claim. However, in cases wherein such third party claim can CRP.388/2009 : 12 : also be entertained and adjudicated properly along with the suit, the court has to adjudicate it in order to avoid multiplicity of proceedings.
15. The respondents in a third party claim are also in the status of defendants in such third party claims. The person, who moots the third party claim, shall be in the status of a plaintiff as far as the said third party claim is concerned. Therefore, it is evident that the counter to be filed as against a third party claim shall be in the form of a written statement in which, all such contentions as contemplated under Order VIII of the Code can be resorted to by a respondent in a third party claim. If at all, such a respondent is entitled to claim a set off, he can claim the same. In cases wherein such a person can raise a counter claim, he can claim the same. Of course, in cases wherein such set off or counter claims are also being set up by the respondent in a third party claim, the ultimate result will be that the suit may become more complicated, which cannot CRP.388/2009 : 13 : be properly adjudicated. In this particular case, it seems that apart from taking up a contention with regard to non-joinder, no other contentions are seen resorted to by the 2nd respondent herein.
16. The contentions resorted to by the 2nd respondent cannot be adjudicated in the third party claim. Other Directors of the company are admittedly not made parties. In such a context, the respondents or any other respondents herein can get all their claims adjudicated through a separate suit. Relating to Exts.A1 to A3, it seems that the respondents in their personal capacity, had offered indemnification to the petitioner in the event of any claim from M/s.Vysya Bank relating to the financial accommodation extended by the said bank to the 1st defendant company. The indemnity created by the respondents to indemnify the petitioner is totally independent of the other assets and liabilities of the company.
CRP.388/2009 : 14 :
17. It seems that each one of the respondents had agreed to indemnify for an amount to a maximum limit of 10 lakhs. Therefore, whatever be the claim by the bank towards the 1st defendant company, which ultimately fall up on the shoulders of the petitioner on account of the security furnished by him for availing the financial nursing, each of the respondents are liable to the extent up to 10 lakhs to indemnify him. It seems that the total amount of liability, which had to be incurred in this connection by the petitioner was 4,79,979/-, which was taken away by the bank from his accounts and also the plaint claim. Fairly, the petitioner has deducted 1/4th to be borne by him, even though going by the contentions resorted to by the respondents, he could have deducted less than that. As the matter was treated as personal liability among the petitioner and respondents 1 to 3, he has claimed only 3/4th of the total liability incurred by him. On going through the wordings of Exts.A1 to A3 indemnity bonds, it is evident that the adjudication of the CRP.388/2009 : 15 : entire liabilities of the company among all its Directors are alien to the scope of the present third party claim. Matters being so, it seems that the court below has erred in dismissing the third party claim. The court below ought to have allowed the third party claim as prayed for by the petitioner.
18. On a perusal of the records, it has come out that necessary court fee as provided under Section 49 of the Kerala Court Fees and Suits Valuation Act, 1959 was not paid by the petitioner and the same was not collected by the court below. The said aspect was not under challenge from the side of the respondents also. At the same time, for getting the decree drafted, the petitioner has to pay the court fee before the court below. It is found that the petitioner is entitled to get a decree for the third party claim mooted by him. The court below is directed to draft the decree and to issue the decree to the petitioner herein after satisfying that the entire court fee as provided under Section CRP.388/2009 : 16 : 49 of the Kerala Court Fees and Suits Valuation Act, 1959 is paid by the petitioner.
In the result, this C.R.P.is disposed of as above.
Sd/-
(B.KEMAL PASHA, JUDGE) aks/27/09 // True Copy // PA to Judge