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Central Bank Of India v. Srish Chandra Guha
Structured Summary of the Opinion
Factual and Procedural Background
This opinion arises from an application to amend a petition filed pro-inter-esse-suo by Assam Bengal Cereals Limited (a company under the Companies Act, 1956) seeking, inter alia, a declaration of ownership of 19,139 quintals 87 kilograms and 805 grammes of wheat and/or bhushi (as described in the petition's annexure). Joint Receivers were appointed by the Court on an application by the plaintiff in Suit No. 248 of 1970 (Central Bank of India), which claimed to be hypothecatee/pledgee of the goods. The hypothecation/pledge was alleged to have been created by defendants Srish Chandra Guha and Debabrata Guha trading as Guha Rice Co.
Assam Bengal Cereals Limited moved an application in pro-inter-esse-suo and, on July 20, 1970, the Court ordered that the petitioner could take delivery of the claimed goods on furnishing a bank guarantee for the controlled price, and that the rights in goods so delivered would shift to the monies covered by the guarantee. Pursuant to that order Assam Bengal furnished the bank guarantee and took delivery of part of the goods; affidavits were filed and the matter was directed to be tried on evidence (with ongoing examination-in-chief before a judge).
The present application seeks to amend the petition to also claim, in the alternative, declaration of ownership in favour of Indian Tea Association — an unregistered association of members — by examining members of that Association pro-inter-esse-suo. The application to add the Indian Tea Association and to have its representatives (Kamal McNair Kidwai and Joseph Cajetan D'Souza) added as party petitioners was taken out by special leave on August 31, 1971 (over a year after the original pro-inter-esse application and after the July 20, 1970 order).
Legal Issues Presented
- Whether the Indian Tea Association (an unregistered association of members) can be added as a party petitioner at this stage to claim ownership of the goods and be examined pro-inter-esse-suo.
- Whether, in a pro-inter-esse-suo proceeding, a person who seeks examination of title may ask the Court to examine another person's title instead of his own.
- Whether an amendment that would affect the rights that have shifted to monies under a previously furnished bank guarantee or indemnity bond can be permitted at this stage.
- Whether the applicants (Indian Tea Association) have shown the requisite diligence to obtain relief by way of summary pro-inter-esse-suo procedure, given their knowledge of the suit and the passage of time.
Arguments of the Parties
Applicants' (those seeking addition — represented by Mr. Shankar Ghosh) Arguments
- From documents disclosed in the proceedings, Assam Bengal Cereals Ltd. may not be the owners of the goods but agents of the true owners, the Indian Tea Association; consequently, Indian Tea Association should be allowed to be added as party petitioner and examined in pro-inter-esse-suo to determine title.
- Allowing the amendment and adding Indian Tea Association would avoid multiplicity of proceedings and unnecessary expense.
- Cited authorities relied upon to support amendment in substance (rather than form) and rectification of parties or causes of action: L.J. Leach & Co. Ltd. v. Jardine Skinner & Co. (AIR 1957 SC 357); Nichhalbhai Vallabhai v. Jaswantlal Zinabhai (AIR 1966 SC 997); Jai Jai Ram Manohar Lal v. National Building Material Supply Gurgaon ((1969) 1 SCC 869 : AIR 1969 SC 1267).
The opinion does not contain a detailed account of the respondents' legal arguments in opposition to the addition beyond the factual positions reflected in the record (e.g., Central Bank of India's claim as hypothecatee and the existence of the bank guarantee/bond arrangement).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| L.J. Leach & Co. Ltd. v. Jardine Skinner & Co., AIR 1957 SC 357 | Cited for the proposition that an original cause of action or party description may be amended/substituted (example given: substitution from wrongful conversion to breach of contract). | The case was cited by applicants' counsel to support the request for amendment. The Court noted the reliance but did not adopt this case as justifying the addition of the Indian Tea Association at the present stage in view of intervening events and lack of diligence. |
| Nichhalbhai Vallabhai v. Jaswantlal Zinabhai, AIR 1966 SC 997 | Cited for the proposition that a party not formally named may be in substance the real party through an agent, and hence formal amendment may be appropriate. | The applicants relied on this case to argue that Assam Bengal acted as agent for Indian Tea Association. The Court recorded the reliance but found that other factual and procedural considerations (possession, guarantee, delay) prevented permitting the addition now. |
| Jai Jai Ram Manohar Lal v. National Building Material Supply Gurgaon, (1969) 1 SCC 869 : AIR 1969 SC 1267 | Cited for the principle that an amendment to rectify mis-description of the plaintiff (to reflect the true suing party in substance) may be permitted. | The Court noted the citation but concluded that the circumstances differed: here the rights had already shifted to monies and the applicants for addition had not acted with required diligence, so addition could not be allowed at this stage. |
| Sreedhar Chaudhury v. Nilmoni Chaudhury, 41 Cal LJ 197; AIR 1925 Cal 681 | Cited for the principle that an examination pro-inter-esse-suo is a summary procedure and will not be ordered unless the applicant shows utmost diligence. | The Court applied this principle directly: it held that the Indian Tea Association had knowledge of the suit since June 18, 1970, did not act promptly, and therefore lacked the diligence necessary to obtain pro-inter-esse relief at this late stage. |
Court's Reasoning and Analysis
The Court proceeded step-by-step, basing its analysis strictly on procedural history, the nature of the pro-inter-esse-suo remedy, and the factual events that transpired after the original application:
- Nature of the procedure: The Court observed that a proceeding in pro-inter-esse-suo is not provided for in the Code of Civil Procedure or the Rules of the Original Side but is an imported English summary procedure used to allow a person to be examined as to his title over property in respect of which a Receiver has been appointed in litigation between others. It is a personal right enabling that person to be examined as to his own title; such a person cannot ask the Court in that proceeding to examine another person's title.
- Scope of the existing proceeding: In this matter the interest of Assam Bengal Cereals Ltd. was the subject of the pro-inter-esse-suo examination and was the one directed to be examined by the Court. Subsequently (on July 20, 1970) the Court ordered delivery of the goods to Assam Bengal upon furnishing security in the form of a bank guarantee; the rights in the goods so delivered were ordered to shift to the monies under that guarantee.
- Effect of the bank guarantee and indemnity: Assam Bengal, along with National and Grindlays Bank Ltd., agreed to indemnify or pay the Central Bank of India the value of the goods in the event Assam Bengal failed to establish title. That bond/agreement had been acted upon. The Court reasoned that it could not permit an amendment now which would effectively change the liabilities under that arrangement (i.e., it could not order that Assam Bengal or the bank would be relieved of liability should Assam Bengal fail while a different party succeed).
- Lack of diligence and timing: The Indian Tea Association and/or its applicants had knowledge of the suit and proceedings since June 18, 1970 but did not take steps and only sought to be added by special leave more than a year later (August 31, 1971). The Court relied on the authority that pro-inter-esse-suo relief is a summary procedure granted only on a showing of utmost diligence; the applicants' inaction demonstrated want of diligence.
- Absence of subject-matter for examination: The Joint Receivers were no longer in possession of the goods; therefore there was nothing left in their possession in respect of which an examination pro-inter-esse-suo could now be ordered. The Court held that in these factual circumstances no application for examination pro-inter-esse-suo could be made at this time.
- Consequential procedural consequence: The Court further observed that if the Indian Tea Association were directed to be added, it would be deemed to have made the application in pro-inter-esse-suo only from the date of the order adding it — a prospect which would not vindicate the purpose of permitting examination in the original proceeding and would be inconsistent with the rights already shifted to monies under the guarantee.
Holding and Implications
Core Ruling: The Court held that the Indian Tea Association cannot be added as a party petitioner at this stage.
The direct consequences and ancillary rulings given in the order are:
- Leave was granted to the petitioner Assam Bengal Cereals Ltd. to amend the petition as shown in red ink in paragraph 3-A of the draft petition (Annexure 'D' to the application) and to re-verify the petition after such amendments are effected.
- Amendments were to be effected on the signed copy of the minutes upon the applicant's solicitor undertaking to the Court to have the order drawn up and filed.
- The applicant must pay the costs of this application.
- Respondents were given leave to file an affidavit-in-opposition to the amended petition within three days of service of an amended copy of the petition.
- All parties were to act on a signed copy of the minutes.
Implications beyond the parties: The opinion does not purport to set a novel legal precedent; its reasoning is fact-specific. The principal implication is procedural and immediate: (a) the application to add the Indian Tea Association as a party petitioner and to obtain pro-inter-esse-suo examination on its behalf is refused at this juncture because of lack of diligence and because the subject-matter is no longer in receivers' possession; and (b) a limited amendment to Assam Bengal's petition is permitted subject to the conditions and safeguards ordered. No broader doctrinal innovation or binding new rule was announced beyond applying established principles regarding the nature of pro-inter-esse-suo relief, the consequences of the shift of title to monies under a bank guarantee/indemnity, and the requirement of diligence for summary relief.
Order: The Court's formal order granted the narrow amendment relief to Assam Bengal Cereals Ltd., required payment of costs by the applicant, allowed respondents limited opportunity to oppose the amended petition, and expressly declined to add Indian Tea Association as a party petitioner at this stage.
1. This is an application for amendment of a petition filed in pro-inter esse-suo seeking inter alia to add in the said proceedings Indian Tea Association stated to be an unregistered Association of members. The petition was filed by Assam Bengal Cereals Limited, an existing Company within the meaning of Companies Act, 1956 of No. 10, Netaji Subhas Road. In the said petition the Assam Bengal Cereals Limited claimed inter alia to be examined pro-inter-esse-suo as to their right, title and interest in 19139 Quintals 87 Kilogramms and 805 gramms of wheat and/or Bhushi fully described in Annexure (a) to the said petition. The petitioner in the said petition also claimed a declaration to the effect that it was the absolute owner of the said goods.
2. The petition was necessitated because of the fact that on the aforesaid goods Joint Receivers were appointed by this Court on the application of the plaintiff in the Suit No. 248 of 1970, that is to say, Central Bank of India. The Central Bank of India claimed to be the hypothecatee or pledgee in respect of the said goods. The hypothecation or pledge was alleged to have been created by the defendants in the suit. Srish Chandra Guha and Debabrata Guha carrying on business under the name and style of Guha Rice Co.
3. After the petitioner Assam Bengal Cereals Limited made the said application in pro-inter-esse-suo an order was made on the said application by me on July 20, 1970 inter alia to the following effect to wit:—
“The petitioner shall be at liberty to take delivery of the goods claimed by it on furnishing bank guarantee for the controlled price of the goods. The form of the guarantee shall be settled by Mr. S.C Mitter of Messrs. C.C Basu and in case of dispute as to the form, the matter may be mentioned in Court. The rights of the parties in the goods so taken delivery of by the petitioner shall shift to the monies covered by the bank guarantee”. Pursuant to the said order the bank guarantee in terms thereof was duly furnished by the petitioner viz. Assam Bengal Cereals Limited. A part of the goods claimed by them were handed over to them by the Joint Receivers according to the petitioner. The joint Receivers are not in possession of any goods now. Pursuant to the directions given by Court affidavits were duly filed by the parties. Thereafter the matter was directed to be tried on evidence.
4. The parties duly disclosed their documents, inspection whereof were given and taken by them respectively. In fact Examination De Benese of one of the witnesses of the petitioner is going on before Mr. Justice R.M Datta.
5. By the proposed amendment petitioners seek to claim a declaration in the alternative of the ownership of Indian Tea Association of the said goods upon examination of the members of the said Association in pro-inter-esse-suo.
6. The order for appointment of Receivers was made in this suit on June 18, 1970 for the first time and the application in pro-inter-esse-suo was moved before the Court for the first time on July 20, 1970. Notice of motion in the instant case was taken out by special leave of the Court on August 31, 1971. i.e after more than a year from the date of making of the said application in pro-inter-esse-suo, by the Assam Bengal Cereals Limited, as well as the Indian Tea Association, an unregistered association of members. The applicants i.e, Kamal McNair Kidwai and Joseph Cajetan D'Souza, the Vice-Chairman and Secretary of the Indian Tea Association have applied to be added as party petitioners in the instant application in the pending application made by Assam Bengal Cereals Limited in a representative capacity, that is to say, on behalf of all the members of the said Association.
7. Mr. Shankar Ghosh, appearing on behalf of the applicants submitted that from the documents disclosed in the proceedings a view may be taken that Assam Bengal Cereals Ltd. were not the owners of the said goods but were the agents of the owners of the said goods, their principal the Indian Tea Association being the owners thereof. In the premises Mr. Ghosh submits in order to avoid multiplicity of proceedings and save unnecessary additional expenses this application has been made. Mr. Ghosh cited the cases of L.J Leach and Co. Ltd. v. Jardine Skinner and Co., AIR 1957 SC 357 where the original cause of action in damages for wrongul conversion of the goods was allowed to be amended by the Supreme Court by substituting the cause of action of breach of contract. Mr. Ghosh also cited Nichhalbhai Vallabhai v. Jaswantlal Zinabhai, AIR 1966 SC 997 for the proposition that although Indian Tea Association was not formally a party petitioner in the pending application it was in substance the petitioner in the pending application through its agent the Assam Bengal Cereals Ltd. Thus adding in these circumstances of Indian Tea Association at the present moment is merely a formal matter. Mr. Ghosh also relied on Jai Jai Ram Manohar Lal v. National Building Material Supply Gurgaon, (1969) 1 SCC 869 : AIR 1969 SC 1267. Amendment in the said case was allowed on the ground that the firm which had sued as the plaintiff through the manager could not do so because the provisions of Order 30 of the CPC did not apply to the case of a proprietorship concern. It was heard however that in substance it was the person constituting that firm who had instituted the said suit. So amendment was allowed only to rectify the mis-description of the plaintiff by bringing in the proprietor of the firm as the plaintiff suing as such proprietor of the said firm. In AIR 1966 SC 997 the averments made by mistake in the plaint by describing the plaintiff as a present member of the joint family was allowed to be deleted by way of amendment on the ground that the suit was in substance a suit for partition and that averment was really made through inadvertence.
8. A proceeding in pro inter esse suo is not provided for either in the Code of Civil Procedure or in the Rules of the Original Side of this Court. This is a procedure imported into this country from England. In order to do justice to a person, the Court allows that person to come in and be examined as to his title to the goods or property over which the Court has appointed Receiver in a proceeding between persons other than the said person. That is done so that no person may suffer because of any order that may be passed by the Court. It is the right in such a proceeding of that person who claims to be the owner of the goods or property to be examined as to his title to the said goods or property. It is in that sense a personal right of that person only. That person cannot in my opinion in such a proceeding ask the Court to examine some other person with regard to that person's right or title in the goods or property over which the Court has appointed a Receiver.
9. In the pending proceeding the interest of the Original applicant i.e the Interest of the Assam Bengal Cereals Ltd. was directed to be examined. Further subsequent to the making of the said application an order was passed on 20th July, 1970 directing the Joint Receivers to hand over the said goods to Assam, Bengal Cereals Ltd. upon its furnishing security in the sum of Rs.
10. Assam Bengal Cereals Ltd. along with National and Grindlays Bank Ltd. agreed to indemnify or pay to the Central Bank of India the value of the said goods being the sum of Rs. in the event Assam Bengal Cereals Ltd. fails to establish its title as the owner of the said goods. The said bond or the agreement has been acted upon by the parties. It cannot now be ordered by amending the original petition that even if Assam Bengal Cereals Ltd. fails to establish its title to the said goods but the Indian Tea Association establishes its title there to Assam Bengal Cereals Ltd. or the National and Grindlays Bank Ltd. jointly or severally shall not be liable to pay the said sum to Central Bank of India. The right, title and interest in the said goods of the parties in the said proceeding on 20th July, 1970 stood shifted to the said money under the said bond. That position cannot be changed now in any opinion in the instant application.
11. It is not that the members of the said Indian Tea Association or the Association or the applicants did not know of the said suit or the proceedings therein. The Indian Tea Association and/or the applicants had knowledge of the said suit filed by the Central Bank of India as long ago as 18th June, 1970, They stood by; they did not take any step in the matter. The Assam Bengal Cereals Ltd. by furnishing the said Bank guarantee mentioned above has taken away the said goods. The aforesaid facts, to say the least, show want of diligence on the part of Indian Tea Association. A summary procedure in the form of an application in pro inter esse suo be resorted to or allowed to be resorted to only by a party who shows the utmost diligence. See Sreedhar Chaudhury v. Nilmoni Chaudhury, 41 Cal LJ 197 at p. 201: (AIR 1925 Cal 681). An examination pro interesse suo is never ordered unless the applicant shows diligence.
12. Now there is no goods in the possession of the Joint Receivers in regard to which there may be an examination in pro interesse suo of the Indian Tea Association. Therefore, in my opinion, no application can be made now for examination in pro interesse suo by any person.
13. If the Indian Tea Association is directed to be added it shall be deemed to have made the application in pro interesse suo only when the order for its addition is made.
14. The Indian Tea Association cannot in my view be added as a party petitioner at this stage.
15. For the reasons stated above I pass the following order:—
Leave is given to the petitioner Assam Bengal Cereals Ltd. to amend the petition as shown in red ink in paragraph 3-A of the draft petition being Annexure ‘D’ thereto. Leave is given to re-verify the petition after such amendments are effected. Amendments be effected on the signed copy of the minutes upon the applicant's Solicitor's undertaking to Court to have this order drawn up and filed. The applicant must pay the cost of this application. Leave is given to the respondents to file an affidavit-in-opposition to the amended petition within three days of the service upon them of an amendment copy of the petition. All parties to act on a signed copy of the minutes.
16. Order accordingly.
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