Uttam Singh Duggal & Co. Ltd. v. United Bank Of India And Others

S. Rajendra Babu, J.— This petition is filed against the judgment passed by the High Court of Calcutta affirming a decree passed by the learned Single Judge of the High Court for a sum of Rs 1015.50 lakhs on application of the respondent for judgment upon admission as provided under Order 12 Rule 6 of the Code of Civil Procedure. The facts leading to the suit are as follows:

Transorient Engineering Company Ltd. sub-contracted construction of students' dormitories/dining hall for University of Baghdad, Iraq. Respondents 1 to 3 functioned as consortium to finance the said project. Certain disputes having arisen, the petitioner filed suits against the respondent Banks that the debits raised are illegal etc. Indian Overseas Bank (IOB) filed a suit for recovery of certain sums of money and an application made therein under Chapter XIII-A of the Original Side Rules and the High Court of Calcutta rejected the same and Respondents 1 and 3 Banks and ECGC were also impleaded by an amendment in the said suit. Respondent 1 filed a suit for recovery of certain sum of money with certain other reliefs and in that suit, application for judgment upon admission was allowed. Appeal thereon being unsuccessful, this petition is filed.

2. The application filed by the 1st respondent Bank for judgment on admission covers only a part of the suit claim. The 1st respondent Bank relied upon (i) balance-sheet of the petitioner for the year ending 31-3-1989 with reference to Schedules ‘C’, ‘D’ and ‘E’; (ii) minutes of the meeting of the Board of Directors held on 30-5-1990 which noticed the discussion at the meeting and issues that could be deemed to have been settled as a result thereof; and (iii) letter dated 4-6-1990 communicating the resolution and minutes of the meeting of the Board of Directors held on 30-5-1990.

3. In the said minutes in the meeting held on 30-5-1990 it was mentioned as follows:

“It was resolved that in consideration of United Bank of India, Connaught Circus Branch, New Delhi, having agreed to the continuation of the previously sanctioned aggregate credit limits amounting to Rs 17.45 crores and in consideration of the Bank having agreed to continue the operation of the various borrowing accounts with outstanding dues, as stated hereinbelow in detail, the Company agrees to duly execute a fresh set of documents as required by the Bank thereagainst.

That Mr Harcharan Singh Duggal, the Managing Director of the Company be and is hereby authorised to execute the said documents and the official seal of the Company be affixed thereon.

It is also resolved that the Company disputes the amount of Rs 3,08,01,000 debited to its cash-credit account on 1-8-1989 which along with interest stands at Rs 3,60,62,579 as on 31-3-1990.

That the Company accepts its liability as per details stated hereinbelow:

Natures Present sanctioned Amount due (Rs in lakhs) (Rs in lakhs) Cash limit/OD 65.00 101.16 Inland guarantee 401.31 23.18 Baghdad guarantee 1082.60 793.73 Jordan guarantee 209.30 101.85 Term loan 5.00 Nil Loan account Nil 16.88 1745.07 1036.80

That, also due to fluctuations in exchange rate there has been difference in amount due under Jordan guarantee amounting to about Rs 21 lakhs which is not reflected in details shown above.”

4. A copy of the aforesaid resolution was sent to the plaintiff with the following note as indicated in the letter dated 4-6-1990:

“(a) We do not confirm the debit entry of Rs 3,60,62,579 representing your share of the invoked guarantee with interest up to 31-3-1990 which has been effected by you unauthorisedly against the illegal payment made by Indian Overseas Bank. We are enclosing a copy of the reply given to the legal notice received by us from them. The reply is self-explanatory. You will agree that before effecting the said payment consisting of such a large amount, a reference ought to have been made to us.

(b) The loan account of Janpath Branch amounting to Rs 4,03,820 is not accepted and is totally denied. We have repaid your Janpath Branch the convertible loan for Baghdad along with interest in full. The debit in your ledger is on account of the Janpath Branch not giving effect to the reduced interest rate as directed by Reserve Bank of India. At their request a copy of RBI circular was given to them and had also been sent to you.

(c) That fresh documents are executed against the consideration of permitting us to operate the sanctioned limits thereagainst as they stand. The debit entry of Rs 3,60,62,579 and entries for interest thereon will have no bearing on the actual amount due as confirmed by us in our Board resolution.

(d) Almost two years ago an unofficial freeze was imposed on our inland guarantee limits for reasons never communicated to us. Thus, you had denied fresh guarantees for bid bonds etc. to tender for new works and the Company's huge fleet of construction equipments and trained personnel perforce thereby remained idle since the last one-and-a-half years.”

5. The petitioners filed an affidavit-in-opposition to contend that:

(1) that Defendant 1's suit is barred by limitation;

(2) that the resolution dated 30-5-1990 was passed subject to a condition that the inland guarantee limit would be resumed and that as the condition was not fulfilled, the resolution was not binding;

(3) that Defendant 1's suit was liable to be stayed under Section 10 CPC because the matter in issue in the suit was also directly and substantially in issue in the previous suits filed by others; and

(4) that the suit of Defendant 1 is bad for misjoinder of parties.

6. The defendants further contended that, insofar as the resolution dated 30-5-1990 and a letter dated 4-6-1990 are concerned, they are to the effect that they are matters of record and save what are matters of record and save what would appear from the letter (sic resolution) dated 30-5-1990 all allegations to the contrary are disputed and denied. It is categorically denied that there is any admission of liability by the first respondent to the petitioner to the extent of Rs 10,15,80,090 as on 30-3-1990 or that since the said alleged admission of the liability the claim of the petitioner has increased and it is now more than Rs 24 crores, as wrongly alleged, if at all.

7. At the time of hearing it appears that it was contended:

1. That the amount claimed by the plaintiff from the defendants was part of the consortium agreement under which Indian Overseas Bank, United Bank of India and EXIM Bank agreed to advance money to Defendant 1 in the proportion of 50:25:25. It was stated that Indian Overseas Bank has filed a suit against the defendants for recovery of all the amounts advanced by the consortium to Defendant 1 and that suit was still pending, therefore, they were estopped from filing that suit and making an independent claim against Defendant 1.

2. That in the suit filed by Indian Overseas Bank an application had been moved by Indian Overseas Bank for final judgment under Chapter XIII-A on the basis of the same documents which were sought to be relied upon by the plaintiff. The trial Judge had rejected the same.

3. That payments had been made subsequent to the admission and loan was recalled only in 1993 just prior to the filing of the suit.

4. That several claims have been included in the suit in respect of which another suit has been filed in the Madras High Court and, therefore, the amount could not be recovered.

5. The claim of the plaintiff had been covered by a counter-guarantee issued by the Export Credit Guarantee Corporation and the extent of payment made by it to the plaintiff and the suit was for the reason not maintainable at the instance of Defendant 1.

6. That the defendants in the suit had filed a separate suit in which they had claimed for certain reliefs which would nullify the claim made by the plaintiff in the suit.

8. The learned trial Judge found that there is an unequivocal admission of the contents of the documents and what is denied is the extent of admission and the increase of the liability admitted.

9. The learned trial Judge took the view that the prerequisites of Order 12 Rule 6 CPC had been satisfied in this case and that on a plain reading of the resolution of the Board dated 30-5-1990 there could be no doubt that the petitioner had made a clear, unambiguous and unconditional acknowledgement of its liability to the Bank. The language of the resolution would show that the extent of the admission in the resolution is for Rs 10,15,80,000, if not for Rs 10,36.80 lakhs. The figure of Rs 1015.80 lakhs is firm admission being the figure arrived at after deducting Rs 21 lakhs claimed by the defendants by reason of fluctuation of the exchange rate and that was the amount claimed by the petitioner in the suit. This admission made in the course of the Board of Directors' resolution had not been explained by the petitioner in the affidavit-in-opposition but on the other hand had reiterated the same. The arguments raised before the trial court were considered to be contrary to the pleadings raised in the case. Therefore, the application was allowed.

10. On appeal, the Division Bench noticed these very facts and also noted that discrepancy, if any, between the appellant's particulars and the particulars in respect of which a judgment was sought on admission was not made the subject-matter of challenge either in the affidavit-in-opposition before the trial Judge or in the arguments thereof and characterised the same as a point of accounting discrepancy which could not be raised at the stage of appeal and dismissed the same.

11. Learned counsel for the appellant contended that Order 12 Rule 6 comes under the heading “Admissions” and a judgment on admission could be given only after due opportunity to the other side to explain the admission, if any, is given; that such admission should have been made only in the course of the pleadings or else the other side will not have an opportunity to explain such admission, that even though the provision reads that the court may at any stage of the suit make such order as it thinks fit, the effect of admission, if any, can be considered only at the time of trial; that the admission even in pleadings will have to be read along with Order 8 Rule 5(1) CPC and the court need not necessarily proceed to pass an order or a judgment on the basis of such admission but call upon the party relying upon such admission to prove its case independently; that during pendency of other suits and the nature of contentions raised in the case, it would not be permissible at all to grant the relief before trial as has been done in the present case; that the expression “admissions” made in the course of the pleadings or otherwise will have to be read together and the expression “otherwise” will have to be interpreted ejusdem generis.

12. As to the object of Order 12 Rule 6, we need not say anything more than what the legislature itself has said when the said provision came to be amended. In the Objects and Reasons set out while amending the said Rule, it is stated that “where a claim is admitted, the court has jurisdiction to enter a judgment for the plaintiff and to pass a decree on admitted claim. The object of the Rule is to enable the party to obtain a speedy judgment at least to the extent of the relief to which according to the admission of the defendant, the plaintiff is entitled”. We should not unduly narrow down the meaning of this Rule as the object is to enable a party to obtain speedy judgment. Where the other party has made a plain admission entitling the former to succeed, it should apply and also wherever there is a clear admission of facts in the face of which it is impossible for the party making such admission to succeed.

13. The next contention canvassed is that the resolutions or minutes of the meeting of the Board of Directors, resolution passed thereon and the letter sending the said resolution to the respondent Bank cannot amount to a pleading or come within the scope of the Rule as such statements are not made in the course of the pleadings or otherwise. When a statement is made to a party and such statement is brought before the court showing admission of liability by an application filed under Order 12 Rule 6 and the other side has sufficient opportunity to explain the said admission and if such explanation is not accepted by the court, we do not think the trial court is helpless in refusing to pass a decree. We have adverted to the basis of the claim and the manner in which the trial court has dealt with the same. When the trial Judge states that the statement made in the proceedings of the Board of Directors' meeting and the letter sent as well as the pleadings when read together, leads to unambiguous and clear admission with only the extent to which the admission is made in dispute, and the court had a duty to decide the same and grant a decree, we think this approach is unexceptionable.

14. Before the trial Judge, there was no pleading much less an explanation as to the circumstances in which the said admission was made, so as to take it out of the category of admissions which created a liability. On the other hand, what is stated in the course of the pleadings, in answer to the application filed under Order 12 Rule 6 CPC, the stand is clearly to the contrary. Statements had been made in the course of the minutes of the Board of Directors' meeting held on 30-5-1990 which we have already adverted to in detail. In the pleadings raised before the Court, there is a clear statement made by the respondent as to the undisputed part of the claim made by them. In regard to this aspect of communicating the resolution dated 30-5-1990 in the letter dated 4-6-1990 what is stated in the affidavit-in-opposition in application under Order 12 Rule 6 CPC is save what are matters on record and save what would appear from the letter (sic resolution) dated 30-5-1990 all allegations to the contrary are disputed and denied. This averment would clearly mean that the petitioner does not deny a word of what was recorded therein and what is denied is the allegation to the contrary. The denial is evasive and the learned Judge is perfectly justified in holding that there is an unequivocal admission of the contents of the documents and what is denied is extent of the admission but the increase in the liability is admitted.

15. Even without referring to the expression “otherwise” in Rule 6 of Order 12 CPC, we can draw an inference in the present case on the basis of the pleadings raised in the case in the shape of the applications under that Rule and the answering affidavit which clearly reiterates the admission. If that is so, interpretation of the expression “otherwise” becomes unnecessary.

16. The learned counsel for the appellant relied on a decision of this Court in Nagubai Ammal v. B. Shama Rao AIR 1956 SC 593, 1956 SCR 451 as to when an admission becomes relevant. Nagubai Ammal AIR 1956 SC 593, 1956 SCR 451, which is locus classicus on the subject, states that merely because a written admission is made in a different context, such admission may not become relevant if the party making it has a reasonable explanation for that. But that is not the position in the present case at all. Learned counsel for the appellant further adverted to the decision in Balraj Taneja v. Sunil Madan (1999) 8 SCC 396 in which the Court was concerned with a case of the effect of not filing a written statement and whether a decree could be passed only on that basis. That was a suit for specific performance and it was held that it could not be granted without even writing a detailed judgment and adverted to various provisions of the Code of Civil Procedure and reference was made to Order 12 Rule 6 by way of analogy and referred to the dictum in Razia Begum v. Sahebzadi Anwar Begum AIR 1958 SC 886, 1959 SCR 111 to state that Order 12 Rule 6 should be read along with proviso to Rule 5 of Order 8 CPC. In that case, what was noticed was that in cases governed by Section 42 and Section 43 of the Specific Relief Act, 1877 the court is not bound to grant declaration prayed for on the mere admission of the claim by the defendant if the court has reason to insist upon a clear proof apart from admission. The result of a declaratory decree confers status not only on the parties but for generations to come and so it cannot be granted on a rule of admissions and, therefore, insisted upon adducing evidence independent of the admission. That is not the position in the present case at all. We fail to see how this decision can be of any use to the petitioner. The decision in Pandam Tea Co. Ltd., Re AIR 1974 Cal 170 pertains to the manner in which the balance-sheet should be read and has no bearing on the case. The decision in Shikharchand v. Bari Bai AIR 1974 MP 75 is to the effect that the Rule is wide enough to afford relief not only in cases of admissions in pleadings but also in the case of admission dehors pleadings. State Bank of India v. Midland Industries AIR 1988 Del 153 and Union of India v. Feroze & Co. AIR 1962 J&K 66 cannot have any relevance because the facts arising in these cases and the present case are entirely different.

17. Learned counsel for the petitioner contended that admissions referred to in Order 12 Rule 6 CPC should be of the same nature as other admissions referred to in other rule preceding this Rule. Admissions generally arise when a statement is made by a party in any of the modes provided under Sections 18 to 23 of the Evidence Act, 1872. Admissions are of many kinds; they may be considered as being on the record as actual if they are either in the pleadings or in answer to interrogatories or implied from the pleadings by non-traversal. Secondly, as between parties by agreement or notice. Since we have considered that admission for passing the judgment is based on pleadings itself it is unnecessary to examine as to what kinds of admissions are covered by Order 12 Rule 6 CPC.

18. We are not impressed with the contention of the learned counsel for the appellant that there is no admission for the purpose of Order 12 Rule 6 at all, nor that the admission if any is conditional because we cannot spell out any conditions stated therein nor the dismissal of application filed by Indian Overseas Bank in the suit have any relevance. Therefore, we are of the view that this case deserves to be dismissed with advocates' fees quantified at Rs 10,000.