Union Of India v. M/S. Feroze And Co. .

J.N Wazir, C.J:— This is an appeal against a judgment and decree of a Single Judge decreeing a part of the plaintiffs claim upon admission under Order 12, 1 Rule 6 of the CPC. The facts, in so far as they are material, are as follows:

2. The plaintiff, Feroze and Co., instituted a suit for the recovery of five lacs of rupees from the defendant which included the security deposits amounting to Rs. 1,70,000/- lying with the defendant on account of various contracts entered into by the plaintiff with the defendant. The plaintiff made an application to the Court under Order 12, Rule 6 of the CPC praying that a decree be passed in its favour for a sum of Rs. 1,70,000/- admitted by the defendant in its written statement to be due to the plaintiff firm and payable by it. The defendant resisted this application on the ground that the claim of the plaintiff in respect of the security deposits cannot be decreed unless the plaintiff furnished a no demand certificate as required by clause 17(iv) of the contract entered into between the parties. It was further pleaded that the Court had no jurisdiction to try the suit and that the suit was not maintainable in view of the arbitration clause is the agreement. The learned trial Judge overruled these objections and held that there was an unconditional admission on the part of the defendant in respect of the liability for return of security amount of Rs. 1,70,000/-, that the conditions laid under Order 12, Rule 6 of the CPC were fully satisfied and that the plaintiff was entitled to recover Rs. 1,70,000/- lying with the defendant as security deposits. A decree for Rs. 1,70,000/- was passed in favour of the plaintiff against the defendant. The defendant has appealed against this judgment and decree.

3. It is contended on behalf of the appellant that the learned trial Judge Had erred in holding that there was an unconditional admission of liability on the part of the defendant respect of security deposits of Rs. 1,70,000/- lying with St. It is argued that in paragraph 9 of the written statement the defendant had definitely stated that it was prepared to return the balance of security deposits to the plaintiff only on its furnishing a no demand certificate as contemplated by the terms of the agreement, that there was no unconditional or unequivocal admission on the part of the defendant regarding its liability to pay the security deposits to the plaintiff and that a decree could not have been passed for this amount under Order 12, Rule 6 of the CPC Paragraph 9 of the written statement filed by the defendant is in the following terms:

“The defendant has always been and is even now prepared to return the balance of security deposits to the plaintiff on his furnishing the ‘No-Demand Certificate’ as contemplated in the terms of the agreement. The plaintiff Being bound by clause, 17(iv) of the agreement, has to execute a ‘No-Demand Certificate’ and on his furnishing the same, accounts are to be got audited and settled finally by the Accounts Branch who shall order to release of the security. In all the cases where ‘No-Demand Certificate’ has been furnished, the plaintiff has been paid the amount deposited. In other cases as he does not furnish ‘No-Demand Certificate’ the securities cannot be released nor the amount ordered to be paid. In such circumstances the suit for the return of security deposits is premature, uncalled for, incomplete and not maintainable”.

4. From what has been stated in the written statement it is clear that the defendant admits that the plaintiff is entitled to receive the security deposits but subject to the condition that it executes a no-demand certificate as required under clause 17(iv) of the agreement between the parties. After the no-demand certificate is furnished by the plaintiff, the defendant has to get the accounts audited and to ascertain if there is any claim of the defendant against the plaintiff and then release the securities.

5. Great stress has been laid by the counsel for the defendant appellant on the fact that there is a clear agreement between the parties, clause, 17(iv) whereof lays down that the plaintiff before claiming security deposits shall have to furnish a no-demand certificate. He contends that it is not open to the plaintiff to claim security deposits without fulfilling the condition precedent, namely, to furnish a no-demand certificate. The sole question for determination therefore, in this appeal is whether there was an unconditional admission by the defendant in the written statement that the security deposits were due and payable fo the plaintiff firm. On a perusal of the written statement and the objections filed by the defendant to the application made by the plaintiff for the recovery of security deposits it is clear that the admission is strictly a conditional one and not an unequivocal and clear admission of liability.

6. The learned counsel appearing for the respondent argued that the condition imposed by the clause in the agreement as to the payment of security deposits was void and a nullity in the eye of law, and that the learned Judge was justified in completely ignoring that condition. He has argued that there was no counter-claim made by the defendant against the plaintiff with respect to these deposits and the trial court was right in decreeing part of the claim on the basis of the defendant's admission. It is true that the defendant admitted that the security deposits were lying with it and were returnable to the plaintiff on its furnishing a no-demand certificate. The condition precedent for return of security deposits is the furnishing of a no-demand certificate by the plaintiff as agreed to between the parties. According to the learned counsel for the respondent this condition is void and a nullity in the eye of law because, he submits, it is hit by Section 28 of the Contract Act. Relevant provision of Section 28 of the Contract Act, reads as under:

“Every agreement, by which any party there is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may enforce his rights, is void to that extent.”

7. It is argued by the counsel for the respondent that the purpose of the condition was to compel the plaintiff to negotiate with the defendant privately out of Court and thus to restrict with from enforcing his rights by the usual legal proceedings; that such a condition was void under Section 28 of the Contract Act and was rightly ignored by the learned trial Judge. We find ourselves unable to agree with this contention.

8. The condition in clause 17(iv) of the agreement does not restrict the plaintiff from enforcing his rights under, or in respect of, the contract by the usual legal proceedings in a Court of law. The plaintiff has actually brought a suit for the recovery of five lacs of rupees which according to him he is entitled to recover under the contracts entered into by him with the defendant. It is nowhere pleaded by the defendant that the plaintiff is precluded from bringing a suit for enforcing his rights under clause 17(iv) of the agreement. The clause of the agreement merely lays down the procedure to be gone through in claiming the return of the security deposits. It does not preclude the plaintiff from seeking a remedy in respect of these deposits by the usual legal proceedings. In our view this clause is merely ant additional formality introduced by the express agreement of the parties and is a reasonable one as it relates to the return of security deposits after a final settlement of accounts which is the essential purpose of obtaining such a deposit. The plaintiff sought to avail himself of the admission of liability ignoring the condition which was an essential part of the admission itself. This, in our opinion the plaintiff could not do. Lord Dunedin in delivering judgment of the Judicial Committee in Motabhoy Mulla Essabhoy v. Mulji Haridas, AIR 1915 PC 2 observed as follows:

“But an admission in pleading cannot be so dissected, and if it is made subject to a condition, it must either be accepted subject to the condition or no accepted at all”.

9. In Birendra Nath Mallick; v. Brahma Brata Roy.*, 50 Cal WN 439 it was held that the admission; was made subject to a condition and no judgment as prayed for by tile plaintiff could be passed. A judgment on admission under O. 12 R. 6 is a matter of discretion and not a matter of right: and the Court would not entertain an application for such judgment when the case involves-questions which cannot be conveniently dealt with in a motion under the rule. The same view was I taken in Koramall Rambullobh v. Mungilal Dalim Chand, AIR 1920 Cal 163. It was held therein that,

“an ambiguous admission in a written statement that a certain sum of money was due to the plaintiff is not such an admission as would justify an order under O. 12 R. 6”.

10. It is well settled that admissions of fact have be taken as a whole and they should not be split in parts in order to adopt that part which is favourable and to discard the other part which is unfavourable. Therefore it is clear that in order that a judgment may be obtained under O. 12 R. 6 the admission must be unconditional, clear and unequivocal. In the present case we are unable to find any clear and unconditional admission made by the defendant on the basis of which part of the plaintiff's claim could be decreed under O. 12 R. 6 of the CPC. The learned counsel for the respondent has not been able to cite any authority in support of the contention that when there is a conditional admission of the defendant the condition attached to the admission can be ignored and a decree passed on the basis of such admission under O. 12 R. 6. He has relied upon an English ruling Lancashire Welders Ltd. v. Harland and Wolff, 1950-2 All ER 1096.

11. In that English case the plaintiffs issued a writ specially indorsed under R.S.C Order 3 Rule 6 claiming £31,657, 14s. 2d., being the balance of moneys due for work done and services rendered by the plaintiffs for and to the defendants. The plaintiffs applied by summons under R.S.C, Order 14 for summary judgment, and in answer the defendants filed an affidavit in which they admitted that an amount of £1,694, 19s. 8d was owing to the plaintiffs, but disputed the claim as to the residue. The district registrar gave un-conditional leave to defend as to the whole. That decision was not made the subject of appeal. Later, the defendants filed a defence in which they admitted indebtedness in the sum of £1,756 18s. 9d. (which they paid into Court in full satisfaction of the plaintiffs claim), but disputed the claim as to the residue. On that defence, the plaintiffs issued a summons under R.S.C O. 32, R. 6, asking for judgment for the sum admitted in the defence. The district registrar refused the order asked for and his order was affirmed by the judge, who gave weight to the fact that, on the similar question being before the court on the summons under Order 14, no such Order was made. On further appeal by the plaintiffs.

12. Held: “the facts that judgment had not been given for the sum admitted to be due in the proceedings under R.S.C Order 14, that the amount claimed was very much larger than the amount admitted, and that the amount of the claim, so far as admitted in the defence, had been paid info court afforded no reason why judgment should not be given for the plaintiffs under R.S.C Order 32, R. 6; to refuse the relief claimed would result in injustice to the plaintiffs; and, therefore, the judge's order, although it deluded on the exercise of his discretion under R.S.C, Order 32, Rule 6, would be reversed”.

13. It was a suit of summary nature like a suit under Order 37 of the CPC and the defendants to that case had unconditionally admitted their liability in regard to a certain sum of money. That case has no bearing upon the precise question which is before us, i.e whether an admission with a condition attached to it can form the basis for decreeing part of a claim under O. 12 R. 6.

14. Having regard to paragraph 9 of the written statement in which the defendant has taken the plea that the plaintiff was bound by clause 17(iv) of the agreement and had to execute a no-demand certificate before the security deposits could be released in his favour, that the suit for return of security deposits was premature, uncalled for, incomplete and not maintainable, we are unable to say that in the written statement taken as a whole there was an unconditional, unambiguous, and unequivocal admission that Rs. 1,70,000/- was due and payable to the plaintiff from the defendant. In this case we were only concerned with the question whether the written statement-contained such an admission on the para of the defendant as would justify an order under Order 12, Rule 6 of the CPC. We have, after considering all the aspects of the case come to the conclusion that the admission relied upon by the learned Judge is not an unconditional, unambiguous and clear admission on which part of the claim of the plaintiff could be decreed under Order 12, Rule 6 without disposing of the other issues which arise out of the pleadings of the parties.

15. We, therefore, allow this appeal, set aside the decree of the trial Judge and remit the case to him with the direction that he will draw the issues on the pleading of the parties and dispose of the case on merits as early as possible.

16. We Think it proper not to make any order as to costs in the circumstances of this case.

17. K.V Gopalakrishnan Nair, J.:— I agree.

DF/J/D.H.Z

18. Appeal allowed.