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Letter of credit suit-injunction India

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1709 OF 2007
State Bank of India & Anr. …. Appellants Versus
M/s. Emmsons International Ltd. & Anr. ….Respondents JUDGMENT
R.M. Lodha, J.
This civil appeal, by special leave, is from the judgment and decree of the Madhya Pradesh High Court whereby the Division Bench of that Court allowed the first appeal of the present 1st respondent–M/s. Emmsons International Ltd.–and set aside the 1
 judgment and decree of the trial court (First Additional District Judge, Bhopal) and decreed the 1st respondent’s monetary claim.
2. Unialkem Fertilizers Limited–2nd respondent in this appeal (hereinafter referred to as `the buyer’) placed a purchase order on M/s. Emmsons International Limited (hereinafter referred to as `the seller’) for supply of 2000 MT of Syrian Rock Phosphate at the rate of Rs. 2100/- per metric ton for an aggregate amount of Rs. 43,86,411/-. The payment terms provided `against 180 days issuance of letter of credit’. On June 18, 1997, at the request of the buyer, a letter of credit for Rs. 43,86,411/- was established by the appellant No. 1 — State Bank of India, Industrial Finance Branch, Bhopal (hereinafter referred to as `the issuing bank’) in favour of the seller; the appellant No. 2 — State Bank of India, New Delhi Main Branch, New Delhi being the advising Bank. The seller supplied the material vide sale invoice, high seas delivery, bills of lading, etc. and the buyer is said to have accepted the documents.
3. The letter of credit established by the issuing bank, inter alia, made the following stipulations:
" . . . . . . . . THIS DOCUMENTARY CREDIT WHICH IS AVAILABLE BY NEGOTIATION OF 2
 YOUR DRAFT AT 180 DAYS FROM DESPATCH
DRAWN FOR 100.00% OF INVOICE VALUE ON
UNIALKEM FERTILIZERS LTD., E-5 PLOT NO. 4, RAVI SHANKAR NAGAR, BHOPAL, 462 016 BEARING THE CLAUSE "DRAWN UNDER DOCUMENTARY CREDIT NO. 0192097 LC000087 OF STATE BANK OF INDIA, INDUSTRIAL FINANCE BRANCH, GR. FLOOR, L.H.O. PREMISES, HOSHANGABAD ROAD,
BHOPAL – 462 011 (INDIA)." ACCOMPANIED BY DOCUMENTS LISTED IN ATTACHED SHEET (S)
EVIDENCING DISPATCH OF GOODS AS PER THE ATTACHED SHEETS.
FOR LIST OF REQUIRED DOCUMENTS,
MERCHANDISE DESCRIPTION AND OTHER
INSTRUCTIONS PLEASE SEE THE ATTACHED CONTINUATION SHEETS WHICH FORM AN
INTEGRAL PART OF THIS CREDIT.
SHIPMENT FROM : SYRIA TO KANDLA, INDIA
SHIPMENT TERMS : CIF
PARTIAL SHIPMENT : ALLOWED
TRANSSHIPMENT : NOT ALLOWED
INSTRUCTION TO THE ADVISING BANK:
– ALL BANK CHARGES (OTHER THAN
ISSUING BANK CHARGES) ARE FOR
ACCOUNT OF BENEFICIARY.
– DISCREPANT DOCUMENTS TO BE SENT STRICTLY ON COLLECTION BASIS.
– ALL DOCUMENTS TO INDICATE L/C NO. 0192097 LC 000087 AND DATE 18/06/97.
– NEGOTIATIONS UNDER THIS CREDIT ARE RESTRICTED TO STATE BANK OF INDIA, NEW DELHI, MAIN BRANCH, 11, SANSAD MARG, POST BOX NO. 430, NEW DELHI –
110 001.
3
 – EXCEPT IN SO FAR AS OTHERWISE EXPRESSELY STATED THIS DOCUMENTARY CREDIT IS SUBJECT TO
THE UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (UCP) (1993 REVISION) OF THE
INTERNATIONAL CHAMBERS OF COMMERCE (PUBLICATION NO. 500)
WE HEREBY ENGAGE WITH DRAWERS
AND/OR BONAFIDE HOLDERS THAT DRAFT
DRAWN AND NEGOTIATED IN CONFORMITY WITH THE TERMS OF THIS CREDIT WILL BE DULY HONOURED ON PRESENTATION AND
THAT DRAFTS ACCEPTED WITHIN THE TERMS
OF THIS CREDIT WILL BE DULY HONOURED AT MATURITY. THE AMOUNT OF EACH DRAFT
MUST BE ENDORSED ON THE REVERSE
OF THIS CREDIT BY THE NEGOTIATION BANK……….."
(Emphasis supplied by us)
4. The terms of Letter of Credit were amended on June 23, 1997 to the following effect :
"AT THE REQUEST OF THE APPLICANT UNIALKEM FERTILIZERS LTD., E-5 PLOT NO. 4, RAVI SHANKAR NAGAR, BHOPAL – 462 016. WE
HAVE TODAY AMENDED OUR CAPTIONED
LETTER OF CREDIT AS UNDER :
FIRST PAGE OF LETTER OF CREDIT LINE SECOND TO READ AS : NEGOTIATION OF YOUR DRAFT AT 180 DAYS FROM THE DATE OF DELIVERY ORDER DATED 18/06/97 INSTEAD
OF EXISTING PLEASE MAKE THE FOLLOWING AMENDMENTS TO ATTACHED SHEET NO. 1 OF
4
 L/C POINT NO. 01 TO BE DELETED POINT NO. 02 TO BE DELETED POINT NO. 04 TO READ AS
COPY OF CERTIFICATE OF SYRIAN ORIGIN ISSUED BY CHAMBER OF COMMERCE
INSTEAD OF EXISTING. POINT NO. 05 TO READ
AS COPY OF CERTIFICATE OF QUALITY AND QUANTITY ISSUED BY CHAMBER OF
COMMERCE INSTEAD OF EXISITING POINT NO.
12 TO READ AS DRAFT DRAWN UNDER THIS LETTER OF CREDIT ARE NEGOTIABLE BY THE
STATE BANK OF INDIA, MAIN BRANCH, NEW DELHI AND ORIENTAL BANK OF COMMERCE, OVERSEAS BANK, NEHRU PLACE, NEW DELHI ALSO INSTEAD OF EXISTING.
ALL OTHER TERMS AND CONDITIONS REMAIN
UNCHANGED."
(Emphasis supplied by us)
5. On July 8, 1997, the issuing bank received negotiated documents under the letter of credit from Oriental Bank of Commerce (hereinafter to be referred as `negotiating bank’) for payment. On that day itself, the issuing bank pointed out the following discrepancies to the negotiating bank : (i) certificate from the negotiating bank mentioning all the terms of credit have not been furnished; (ii) the certificate of Syrian Origin is not issued by Chamber of Commerce.
The issuing bank, thus, advised the negotiating bank to rectify the discrepancies within seven days of submission of documents. 5
6. Thereafter, between July 10, 1997 and February 7, 1998, the correspondence ensued through telegrams and letters between the negotiating bank and the issuing bank. According to the negotiating bank, the discrepancies notified by the issuing bank were rectified and the documents complied with the requirement of the credit. On the other hand, the issuing bank continued to insist that the documents were discrepant; the documents presented were not acceptable to it and it was holding the documents on collection basis at the risk and responsibility of the negotiating bank.
7. It was then that the seller brought an action by way of a summary suit for a decree in the sum of Rs. 63,74,356/- (principal amount of Rs. 43,86,411/- and interest of Rs. 19,87,945/-) together with the interest at the rate of 18 per cent per annum from the date of the suit to the date of decree and thereafter the interest at the same rate on decretal amount till realization against the issuing bank and the advising bank. The buyer was impleaded as a formal party.
8. The issuing bank (defendant no. 1) made an application for leave to defend which was granted by the trial court. The issuing 6
 bank then filed written statement justifying its action of not honouring the credit on diverse grounds, namely; (i) the certificate of origin issued by Chamber of Commerce was different from the certificate of origin dated March 30, 1997 issued by the supplier of the material; (ii) neither the description of goods nor the quantity or weight matched with each other in the above documents; (iii) the certificate of origin has been issued in favour of MMTC and not in favour of the seller; (iv) at the request of the negotiating bank, the documents were retained by it but only on collection basis in order to remit the amount after collecting the same from the buyer and (v) it has acted in accord with Uniform Customs and Practice for Documentary Credits (for short, ` UCP500′).
9. On the pleadings of the parties, the trial court framed the following five issues :
"Issue No. 1. Whether respondent Nos. 1 & 2 have dishonoured the
documents relating to the "letter of credit" against the rules and practice?
Issue No. 2. Whether applicant is eligible to get Rupees 43,86,411/- and 18
percent interest p.a. over it from
respondent Nos. 1 & 2 on the 7
 basis of letter of credit given by them?
Issue No. 3. Assistance and expenses?
Issue No. 4 Whether respondent is eligible to get Rs. 14,258/- as handling/collection fee from
applicant?
Issue No. 5. Whether applicant has accepted the encashment of bill and
document on collection basis?"
It may be noted that trial court has referred to the seller as applicant and the issuing bank (defendant no. 1) and the advising bank (defendant no. 2) as respondent nos. 1 and 2 respectively.
10. The parties tendered oral as well as documentary evidence in support of their respective case.
11. The trial court after viewing the evidence and hearing the arguments held that the issuing bank has properly dishonoured the documents relating to the letter of credit and the seller was not entitled to get any amount or interest from the issuing bank and the advising bank on the basis of that letter of credit. The trial court has also concluded that seller accepted the encashment of bill and document on collection basis. In light of these findings, the trial court vide its decision dated February 4, 2002 dismissed the seller’s claim. 8
12. The seller filed first appeal against the judgment and decree of the trial court before the High Court of Madhya Pradesh. As noted above, the Division Bench of that Court allowed the seller’s appeal and granted a decree to the seller as prayed in the suit.
13. The legal position appears to be fairly well-settled that a draft with accompanying documents must be in strict accord with the letter of credit. If the documents presented comply with the terms of the credit, the issuing bank must honour its obligation in accordance with the terms of credit. In United Commercial Bank v. Bank of India and others1, this Court referred to few decided cases of the English Courts, Halsbury’s Laws of England and also couple of books on the subject by eminent authors–Davis’ Law Relating To Commercial Letters of Credit, 2nd Edn. (at page 76) and Paget’s Law of Banking, 8th Edn. (at page 648)–and it was held that the documents tendered by the seller must comply with the terms of the letter of credit and that the banker owes a duty to the buyer to ensure that the buyer’s instructions relative to the documents against which the letter of credit is to be honoured are complied with. It was stated that the description of the goods in the relative bill of 1 (1981) 2 SCC 766
9
 lading must be the same as the description in the letter of credit, that is, the goods themselves must in each case be described in identical terms, even though the goods differently described in the two documents are, in fact, the same. The Court reiterated, ` . . . . . . a bank issuing or confirming a letter of credit is not concerned with the underlying contract between the buyer and seller. Duties of a bank under a letter of credit are created by the document itself, but in any case it has the power and is subject to the limitations which are given or imposed by it, in the absence of the appropriate provisions in the letter of credit’.
14. Where the customer of bank instructs the bank to open a credit, the bank acts at its peril if it departs from the precise terms of the mandate.
15. Lord Diplock in Commercial Banking Co. of Sydney Ltd. v. Jalsard Pty. Ltd.2 stated at page 286 of the Report that the issuing banker and his correspondent bank have to make decisions as to whether a document which has been tendered by the seller complies with the requirements of a credit.
2 (1973) AC 279
10
16. It needs no emphasis that a contract is concluded between the issuing bank and the seller no sooner the bank issues the credit and communicates it to the seller. Under an irrevocable credit the issuing bank gives an unequivocal and binding undertaking to the seller that it will pay against documents/bills drawn in compliance with the terms of credit.
17. The relevant clauses of Articles 13, 14 and 19 of UCP 500 read as under:
"Article 13.
Standard for Examination of Documents
a Banks must examine all documents stipulated in the Credit with reasonable care, to ascertain whether or not they appear, on their face, to be in compliance with the terms and conditions of the Credit. Compliance of the stipulated documents on their face with the terms and conditions of the Credit, shall be determined by international standard banking practice as reflected in these Articles. Documents which appear on their face to be inconsistent with one another will be considered as not appearing on their face to be in compliance with the terms and conditions of the Credit.
Documents not stipulated in the Credit will not be examined by banks. If they receive such documents, they shall return them to the presenter or pass them on without responsibility.
11
 b The Issuing Bank, the Confirming Bank, if any, or a Nominated Bank acting on their behalf, shall each have a reasonable time, not to exceed seven banking days following the day of receipt of the documents, to examine the documents and determine whether to take up or refuse the documents and to inform the party from which it received the documents accordingly.
c . . . . . . .
Article 14.
Discrepant Documents and Notice
a . . . . . .
b Upon receipt of the documents the Issuing Bank and/or Confirming Bank, if any, or a Nominated Bank acting on their behalf, must determine on the basis of the documents alone whether or not they appear on their face to be in compliance with the terms and conditions of the Credit. If the documents appear on their face not to be in compliance with the terms and conditions of the Credit, such banks may refuse to take up the documents.
c If the Issuing Bank determines that the documents appear on their face not to be in compliance with the terms and conditions of the Credit, it may in its sole judgement approach the Applicant for a waiver of the discrepancy(ies). This does not, however, extend the period mentioned in sub. Article 13 (b).
d . i. . . . . . .
ii. Such notice must state all discrepancies in respect of which the bank refuses the documents and must also state whether it is holding the documents at the disposal of, or is returning them to, the presenter.
iii. . . . . . . . .
12
 e If the Issuing Bank and/or Confirming Bank, if any, fails to act in accordance with the provisions of this Article and/or fails to hold the documents at the disposal of, or return them to the presenter, the Issuing Bank and/or Confirming Bank, if any, shall be precluded from claiming that the documents are not in compliance with the terms and conditions of the Credit.
f . . . . . . . . . .
Article 19.
Bank-to-Bank Reimbursement Arrangements
a . . . . . . .
b Issuing Banks shall not require a Claiming Bank to supply a certificate of compliance with the terms and conditions of the Credit to the Reimbursing Bank. c . . . . . . . .
d . . . . . .
e . . . . . . ."
18. In light of the above legal position, we heard Mr. R.K. Sanghi, learned counsel for the appellants and Mr. Shyam Divan, learned senior counsel for the 1st respondent for some time. In the course of hearing, however, it transpired that the High Court in its judgment that runs into 56 foolscap pages while reversing the judgment of the trial court, has not at all adverted to issue no. 5 framed by the trial court nor it considered or upset the finding of the trial court on that issue.
13
19. Mr. Shyam Divan, learned senior counsel for the seller – 1st respondent fairly stated that the finding on issue no. 5 recorded by the trial court has not at all been considered in the impugned judgment although, he strenuously urged that once the discrepancies on the basis of which the issuing bank refused the documents were rectified and the time allowed for encashment had expired, the issuing bank was obliged to honour the letter of credit and the case set up by the issuing bank that the seller had accepted the encashment of bill and document on collection basis was false and frivolous.
20. Having regard to the controversy set up by the parties in the course of trial, in our view, it cannot be said that issue no. 5 is immaterial or finding of the trial court on that issue is inconsequential. The High Court was hearing the first appeal and, as a first appellate court it ought to have considered and addressed itself to all the issues of fact and law before setting aside the judgment of the trial court. The judgment of the High Court suffers from a grave error as it ignored and overlooked the finding of the trial court on issue no. 5 that the seller accepted the encashment of bill and document on collection basis. The High Court was required to 14
 address itself to issue no. 5 which surely had bearing on the final outcome of the case.
21. In Santosh Hazari v. Purushottam Tiwari (Deceased) by L.Rs.3, this Court held (at pages 188-189) as under : "……..The appellate court has jurisdiction to reverse or affirm the findings of the trial court. First appeal is a valuable right of the parties and unless restricted by law, the whole case is therein open for rehearing both on questions of fact and law. The judgment of the appellate court must, therefore, reflect its conscious application of mind and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of the appellate court. … while reversing a finding of fact the appellate court must come into close quarters with the reasoning assigned by the trial court and then assign its own reasons for arriving at a different finding. This would satisfy the court hearing a further appeal that the first appellate court had discharged the duty expected of it……"
22. The above view has been followed by a 3-Judge Bench decision of this Court in Madhukar and Others v. Sangram and Others4, wherein it was reiterated that sitting as a court of first appeal, it is the duty of the High Court to deal with all the issues and the evidence led by the parties before recording its findings. 3 (2001) 3 SCC 179
4 (2001) 4 SCC 756
15
23. In the case of H.K.N. Swami v. Irshad Basith (Dead) by LRs.5, this Court (at pages 243-244) stated as under : "The first appeal has to be decided on facts as well as on law. In the first appeal parties have the right to be heard both on questions of law as also on facts and the first appellate court is required to address itself to all issues and decide the case by giving reasons. Unfortunately, the High Court, in the present case has not recorded any finding either on facts or on law. Sitting as the first appellate court it was the duty of the High Court to deal with all the issues and the evidence led by the parties before recording the finding regarding title………".
24. Again in Jagannath v. Arulappa and Another6 while considering the scope of Section 96 of the Code of Civil Procedure, 1908, this Court (at pages 303-304) observed as follows : "2. A court of first appeal can reappreciate the entire evidence and come to a different conclusion. In the present case, we find that the High Court has not adverted to many of the findings which had been recorded by the trial court. For instance, while dismissing the suits filed by the respondents, the trial court had recorded a finding on Issue 5 that the defendant-appellant had taken actual possession of the suit properties in Execution Petition No. 137 of 1980 arising out of OS No. 224 of 1978. Without reversing this finding, the High Court simply allowed the appeals and decreed the suits filed by the plaintiff-respondents in toto. Similarly, there are other issues on which findings recorded by the trial court have not been set aside 5 (2005) 10 SCC 243
6 (2005) 12 SCC 303
16
 by the High Court. The points involved in the appeals before the High Court required a deeper consideration of the findings recorded by the trial court as well as the evidence and the pleadings on record."
25. The decided cases of this Court in Jagannath6 and H.K.N. Swami5 were noticed by this Court in a later decision in the case of Chinthamani Ammal v. Nandagopal Gounder and Another7.
26. In our view, the High Court failed to follow the fundamental rule governing the exercise of its jurisdiction under Section 96 of the Code of Civil Procedure, 1908 that where the first appellate court reverses the judgment of the trial court, it is required to consider all the issues of law and fact. This flaw vitiates the entire judgment of the High Court. The judgment of the High Court, therefore, cannot be sustained.
27. For the above reasons, we accept the appeal, set aside the impugned judgment of the High Court and restore First Appeal No. 225 of 2002 for re-hearing and fresh decision. All contentions of the parties are kept open to be agitated at the time of the hearing of the first appeal. No order as to costs.
7 (2007) 4 SCC 163
17
 …………………….J.
(Aftab Alam)
…………………… J.
(R.M. Lodha)
NEW DELHI.
AUGUST 18, 2011.
 with the thanks to Indiankanoon resurcess:
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written statement in civil suit.

WRITTEN STATEMENT(order 8 rule 1 of Cpc.)
 Written statement.
The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence.
Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the same on such other day, as may be specified by the Court, for reasons to be recorded in writing, but which shall not be later than ninety days from the date of service of summons.]

When written statement not filed within thirty days.

When written statement not filed within thirty days.
Procedure when party falls to present written statement called for by Court.- Where any party from whom a written statement is required under rule 1 or rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgement against him, or make such order is relating to the suit as it thinks fit and on the pronouncement of such judgement a decree shall be drawn up.
IN THE HIGH COURT OF DELHI AT NEW DELHI
SUBJECT : CODE OF CIVIL PROCEDURE
Date of decision: December 20th, 2007
CM No.4155/07 in RFA No. 176/07 and RFA.No.176/07
M/s. Guru Nanak Mechanical Works and ors. … Appellant
Through Mr. Purshottam Singh, Advocate
Versus
Shri. R.K. Dutta … Respondent
Through Mr.S.K. Garg, Advocate
Coram :
HON’BLE MR.JUSTICE MANMOHAN SARIN
HON’BLE MR.JUSTICE SUDERSHAN KUMAR MISRA
MANMOHAN SARIN, J
1. Appellant has preferred this Regular First Appeal against the order dated
9.12.2006 passed by the Mr. D. C. Anand, Additional District Judge, Delhi by which the
suit filed by the respondent was decreed under the provisions of Order 8 R. 10 CPC on
the failure of the appellant to file the written statement. Learned judge proceeded on the
ground that no written statement can be placed on record after 90 days of service of
summons on the defendant. In the present case defendant/appellant was served on
6.5.2006. Permission of the court was taken while filing the written statement on
25.8.2006 which is the mandate of law in case the written statement is to be taken on
record on record beyond the period of 90 days.
2. As a short question is involved, with the consent of parties the appeal is taken up
for disposal. Brief Facts of the case are: i) Appellant had quoted for the supply of a High
Speed Power Press Line of 150 ton capacity along with a Grippen Feeder and Combined
Decoiler cum straightener, a price of Rs. 8,40,000/-. The supply was to be made within 8-
9 weeks from the date of the order. Advance payment of Rs.1,50,000/- was made by the
respondent. In between, there was increase in the price of steel and revised quotation with
in increase in the price of machine by 25% i.e., to Rs. 10,00,000/- (Rs. Ten Lacs) was
submitted. Respondent accepted the revised price and remitted further advance. A total
sum of Rs.2,50,000/- (Rs. Two Lac Fifty Thousand) was paid by the respondent to the
appellant as advance. Respondent also remitted a sum of Rs.1,12,000/- for purchase of 30HP Eddy Current Drive motor instead of Seimens Electric Motor. (ii) Appellant on
account of financial difficulties being faced required further advance to complete the
manufacture and deliver the machine. Respondent thereupon paid a further sum of
Rs.2,00,000/- vide Pay Order No.800138 dated 4.10.2004 Appellant had assured that the
machine would be ready for trial and testing by 15.10.2004 and finally delivery would be
given by 20.12.2004 A penalty of Rs.15,000/- per day was agreed for delay in delivery.
This penalty was to be increased to Rs.20,000/- if the delivery was delayed beyond
25.10.2004 iii) Appellant could not deliver the machine until 18.2.2005. A further sum of
Rs.2,50,000/- and another sum of Rs.1,00,000/- was paid by the respondent to the
appellant vide Pay orders Nos. 812561 dated 29.1.2005 and 813038 dated 17.2.2005
respectively. The machine was delivered on 18.2.2005. iv) Respondent has filed a suit,
claiming damages of Rs.15 lacs together with pendente lite and future interest @ 18% per
annum. The plaintiff averred in the plaint that it was entitled to claim Rs.30,57,000/- out
of which Rs.23,75,000/- is claimed on account of the penalty and the rest on account of
non-supply of the items, as averred in para 30 of the plaint. However, plaintiff confined
his claimed to Rs.15,00,000/- (Rs. Fifteen Lacs) together with pendente lite and future
interest @ 18% per annum from the date of filing of the suit.
3. We may note some of the relevant dates. The appellant was duly served with
summons on 6.5.2006 and appeared in Court on 18.5.2006. The case was adjourned to
21.7.2006 since the presiding officer was on leave. On 21.7.2006, the appellant sought
time to file written statement. The case was adjourned to 25.8.2006. Appellant was
granted time to file written statement within the 90 day period from the date of service
i.e. upto 5.8.2006. The next date given for admission/denial of documents was 25.8.2006.
The appellant tendered the written statement on the date when he appeared on 25.8.2006
but without any application seeking condonation of delay in filing of the written
statement.
4. Learned Additional District Judge adjourned the matter for further proceedings to
8.9.2006 when an application under Order 8 R. 10 CPC was also moved by the
respondent culminating in passing of the order dated 9.12.2006 decreeing the suit under
Order 8 R. 10 CPC.
5. Learned counsel for the respondent at this stage submitted that not only was the
machine defective, their essential accessories and parts, which were required to be
supplied as per the original contract were also not supplied. Learned counsel for the
appellant submitted that this is a case where the appellant has suffered on account of
casual approach and neglect of the counsel. It submitted that the appellant was always
prepared with the case, ready and willing to file written statement but was not advised by
his counsel with regard requirement of filing written statement within the stipulated time
and consequences of non filing thereof. Learned counsel for respondent refuted the same
by urging that the appellant /defendant’s partner had appeared on 21.7.2006 and was thus
aware of the requirement of filing the written statement within 90 days. Besides
ignorance of law was no ground. Learned counsel for the respondent objected to the same
and submitted that the defendant himself had appeared at the threshold and was,therefore, required to file the written statement and ignorance of law cannot be urged at
this stage.
6. We have considered the matter. There is a delay of 22 days and the appellant has
tendered a plausible explanation for the same. Even if the appellant became aware of the
direction to file written statement within 90 days from service on 21.7.2006, it does not
negate the plea that he was not advised by the counsel about the consequences emanating.
The appellant tendered the written statement on 25.8.2006 unsupported by an application.
This tends to support the appellant’s argument that the counsel had adopted a casual
approach. Appellant has tendered a plausible explanation for delay in filing of the written
statement, which deserves to be accepted. Reference may be invited to the judgment of
the Supreme Court in Salem Advocate Bar Association, Tamil Nadu Vs.Union of India
reported at 2005 AIR Supreme Court 3353, wherein the Court held that the provisions of
Order VIII Rule 1 CPC, providing for upper limit of 90 days to file written statement is
directory and that the order extending time beyond that cannot be made in routine. Time
can be extended only in exceptionally hard cases. Reference is also invited to the decision
of this Court in Prem Lata Vs.Rajinder Soni reported at 2006(126) DLT 168 with regard
to extension of time beyond 90 days period.
7. Leaving that apart and considering the nature of the relief sought and the
transaction involved, in our view this is a case where the respondent should have been
called upon to prove the loss and damages suffered and sustained by it rather than
proceeding to decree the suit under Order 8 R. 10 CPC. The court is vested with this
discretion even on account of the failure of the party to file the written statement.
Reference may be made to Balraj Taneja vs. Sunil Madan (1999) AIR (SC) 381 wherein
the Supreme Court observed: The court has not to act blindly upon the admission of a
fact made by the defendant in his written statement nor the court should proceed to pass
judgment blindly merely because a written statement has not been filed by the defendant
traversing the facts set out by the plaintiff in the plaint filed in the court. In a case,
specially where a written statement has not been filed by the defendant, the court should
be a little cautious in proceeding under Order 8 Rule 10 CPC. Before passing the the
judgment against the defendant it must see to it that even if the facts set out in the plaint
are treated to have been admitted, a judgment could possibly be passed in favor of the
plaintiff without requiring him to prove any fact mentioned in the plaint. It is a matter of
courts satisfaction and, therefore, only on being satisfied that there is no fact which need
proved on account of deemed admission, the court can conveniently pass a judgment
against the defendant who has not filed the written statement. In Syed Ismail and Anr. v.
Smt. Shamshia Begum and Anr. AIR 2000 KANT 34 it was held: The impugned order
does not disclose the nature of pleading placed by the plaintiff and whether there is prima
facie material to grant a decree in his favour. A judgment in favour of plaintiff is not
automatic. The Court has to consider the case of the plaintiff and grant a decree in his
favour. The learned trial Judge has not referred to the pleadings of the plaintiff and the
documents produced by him to substantiate even a prima facie case for grant of a decree
in his favour. Therefore the judgment and decree in favour of the plaintiff is not
automatic on failure of the opposite party to put his defence. The Court can grant a
judgment in favour of the party only upon consideration of the case of the plaintiffincluding appreciation of pleadings and evidence. Similar view was taken in Alson
Motors v. Sh. Rajesh Kumar AIR 1993 Jammu and Kashmir
12. It was further observed that mere statement that the suit of the plaintiff is decreed
under Order 8 Rule 10 cannot be sustained. In Indradhanush T.V. Pvt. Ltd. vs. National
Film Development Corporation 2006(3) AD(Delhi) 104 it was observed on failure to file
written statement under this provision, the court has been given the discretion either to
pronounce judgment against the defendant or make such other order in relation to suit as
it thinks fit. In the context of the provision, despite use of the word shall, the court has
been given the discretion to pronounce or not to pronounce the judgment against the
defendant even if written statement is not filed and instead pass such other order as it may
think fit in relation to the suit. In view of the aforesaid judicial pronouncements, we are
of the view that in the present case, the appellant deserves to be permitted to contest the
suit on merits and the delay of 20 days in filing of the written statement beyond the 90
days period deserves to be condoned in this case. We also notice that plaintiff has averred
in the plaint that even though he is entitled to Rs. 30,57,700/- (Rs. Thirty Lacs Fifty
Seven Thousand Seven Hundred) he is only making a claim for Rs. 15,00,000/- (Rs.
Fifteen Lacs). The said claim in the plaint is not based on any admitted amount. A
substantial portion of the claim in the plaint is attributable to the penalty claimed.
Respondent, in the circumstances, has also not averred that the penalty as stipulated was
pre- estimate of damages which the party had incurred . We are of the view that the
quantum of loss and damages incurred by the respondent requires to be proved by
evidence. Respondent would also have to prove having suffered the damages and loss as
claimed. We accordingly, condone the delay in the filing of written statement and set
aside the impugned order directing the written statement to be taken on record, subject to
costs of Rs.15,000/-. Rs.7,500/- to be paid to the respondent and Rs.7,500/- to be paid to
the Delhi High Court Legal Services Committee. At this stage, learned counsel for the
respondent prays that the direction be given for expediting the trial as the decree suit has
been set aside and the respondent is being required to prove his case on merits. The trial
of the suit is expedited. The Trial Court shall endeavour to conclude trial within six
months from today. Appeal stands allowed in the above terms.
Sd./-
MANMOHAN SARIN, J.
Sd./-
SUDERSHAN KUMAR MISRA, J
. December 20, 2007

 Judgement on admissions.

“Judgement on admissions.
Order XII Rule 6 of the CPC, which reads as under:
“Judgement on admissions-(1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admissions.
(2) Whenever a judgment is pronounced under sub-rule (1) a decree shall be drawn upon in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced.”
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6734 OF 2012
(Arising out of S.L.P. (C) No.10576 of 2011)
M/s Payal Vision Ltd. …Appellant
Versus
Radhika Choudhary …Respondent
J U D G M E N T
T.S. THAKUR, J.
1. Leave granted.
2. In a suit for possession and recovery of mesne profit filed by the plaintiff- appellant before the trial Court of Additional District Judge, Delhi, the plaintiff prayed for a decree for possession in its favour on admissions, invoking the Court’s powers under Order XII Rule 6 of the Code of Civil Procedure, 1908. The trial Court examined the prayer and held that the jural relationship of landlord and tenant was admitted between the parties and so was the rate of rent as settled by them. Service of a notice terminating the tenancy of the defendant-respondent also being admitted, the trial Court saw no impediment in decreeing the suit for possession of the suit property. The application filed by the plaintiff- appellant under Order XII Rule 6 of the CPC was accordingly allowed and the suit filed by the plaintiff to the extent it prayed for possession of the suit property decreed in its favour.
3. Aggrieved by the decree passed against the respondent, the respondent filed Regular First Appeal No. 81 of 2009 before the High Court of Delhi which was allowed by the High Court in terms of its order dated 14th March, 2011 reversing the judgment and decree passed by the trial Court and remanding the matter back to the said Court for disposal in accordance with law. The present appeal by special leave assails the correctness of the said judgment.
4. Mr. Nagendra Rai, learned counsel appearing on behalf of the appellant, strenuously argued that the High Court had fallen in error in holding that there was no clear admission by the defendant either regarding the existence of a relationship of landlord and tenant between the parties or the service of notice of termination of tenancy upon the defendant. He referred to the averments made in the plaint and the written statement to buttress his submission that the existence of the tenancy was unequivocally admitted, no matter the defendant-tenant had questioned the validity of the lease deed in her favour for want of stamp duty and registration as required under law. The fact that the lease deed was not registered did not, contended Mr. Rai, make any material difference so long that the defendant had been put in possession of the demised property pursuant to the said document and so long as she held the same as a tenant. The rate of rent was also not disputed by the defendant nor was the service of notice of termination, which aspects alone were relevant and if admitted or proved, sufficient for the Court to decree the suit for the relief of possession. Mr. Rai submitted that the defendant had no doubt disputed the title of plaintiff-appellant and alleged that the land underlying the super structure had vested in the Gram Sabha but any such contention was not available to her in view of Section 116 of the Indian Evidence Act, 1872 that estopped a tenant from denying the title of the landlord. Relying upon the decisions of this Court in Karam Kapahi v. Lal Chand Public Charitable Trust (2010) 4 SCC 753 and Charanjit Lal Mehra v. Kamal Saroj Mahajan (2005) 11 SCC 279, Mr. Rai argued that the High Court ought to have refused any interference with the decree passed by the Court below especially when no triable issue arose for determination by the trial Court.
5. On behalf of the respondent, it was argued that the High Court was justified in holding that the written statement did not contain a clear and unequivocal admission of the relevant aspects, namely the existence of the jural relationship of landlord and tenant between the parties and the termination of the tenancy by service of a notice under Section 106 of the Transfer of Property Act, 1882. According to him, the High Court was also justified in relying upon the decision of this Court in Jeevan Diesels & Electricals Ltd. v. Jasbir Singh Chadha (2010) 6 SCC 601 while reversing the judgment and decree passed by the Court below.
6. In a suit for recovery of possession from a tenant whose tenancy is not protected under the provisions of the Rent Control Act, all that is required to be established by the plaintiff-landlord is the existence of the jural relationship of landlord and tenant between the parties and the termination of the tenancy either by lapse of time or by notice served by the landlord under Section 106 of the Transfer of Property Act. So long as these two aspects are not in dispute the Court can pass a decree in terms of Order XII Rule 6 of the CPC, which reads as under:
“Judgment on admissions-(1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admissions.
(2) Whenever a judgment is pronounced under sub-rule (1) a decree shall be drawn upon in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced.”
7. The above sufficiently empowers the Court trying the suit to deliver judgment based on admissions whenever such admissions are sufficient for the grant of the relief prayed for. Whether or not there was an unequivocal and clear admission on either of the two aspects to which we have referred above and which are relevant to a suit for possession against a tenant is, therefore, the only question that falls for determination in this case and in every other case where the plaintiff seeks to invoke the powers of the Court under Order XII Rule 6 of the CPC and prays for passing of the decree on the basis of admission. Having said that we must add that whether or not there is a clear admission upon the two aspects noted above is a matter to be seen in the fact situation prevailing in each case. Admission made on the basis of pleadings in a given case cannot obviously be taken as an admission in a different fact situation. That precisely is the view taken by this Court in Jeevan Diesels & Electricals Ltd. (supra) relied upon by the High Court where this Court has observed:
“Whether or not there is a clear, unambiguous admission by one party of the case of the other party is essentially a question of fact and the decision of this question depends on the facts of the case. The question, namely, whether there is a clear admission or not cannot be decided on the basis of a judicial precedent. Therefore, even though the principles in Karam Kapahi (supra) may be unexceptionable they cannot be applied in the instant case in view of totally different fact situation.”
8. Coming then to the question whether there is any admission by the tenant-respondent regarding the existence of the jural relationship of landlord and tenant between the parties, it would be profitable to refer to the averments made by the plaintiff-appellant in para 2 of the plaint which is to the following effect:
“That the plaintiff had agreed to let out the entire property at Khasra No. 857 min. (1-03) Village Tehsil Mehrauli in the NCT of Delhi Gitorani alongwith superstructure including servant quarter and garage of the defendant to the defendant for residential requirement at a monthly rent of Rs.50,000/- (Rupees fifty thousand only) towards the rent for the demised premises exclusive of charges for the electricity appliances, fixtures and fittings for a period of three years commencing on 10th day of October 2001 vide lease agreement dated 10.10.2001.”
9. In the written statement filed by her, the defendant has while asserting that the averments made in para 2 above are vague, false and wrong asserted that the property in question was not let out for residential purposes as alleged by the tenant but was constructed for commercial use and let out for that purpose only. The execution of the lease deed dated 10th October, 2001 to which the plaintiff made a reference in para 2 of the plaint is also not denied. Although the defendant appears to be suggesting some collateral agreement also to have been orally entered into by the parties, the relevant portion of the written statement dealing with these aspects may at this stage be extracted:
“……………. It is further denied that property was let out for residential purposes. As submitted in preceding paras the said property was constructed for use of commercial purposes and was let out for commercial purposes at commercial rent. Execution of Lease Deed is though not denied but is vehemently submitted that the said document was entered upon on the asking of the plaintiff whereas the terms were different than those incorporated in the lease deed.”
10. When placed in juxtaposition the averments made in the plaint and the written statement clearly spell out an admission by the defendant that lease agreement dated 10th October 2001 was indeed executed between the parties. It is also evident that the monthly rent was settled at Rs.50,000/- which fact too is clearly admitted by the defendant although according to the defendant, the said amount represented rent for commercial use of the premises and not residential purposes as alleged by the plaintiff. Suffice it to say that the averments made in the written statement clearly accept the existence of the jural relationship of landlord and tenant between the parties no matter the lease agreement was not duly registered. Whether the tenancy was for residential or commercial use of the property is wholly immaterial for the grant of a decree for possession. Even if the premises were let out for commercial and not residential use, the fact remained that the defendant-respondent entered upon and is occupying the property as a tenant under the plaintiff. The nature of this use may be relevant for determination of mesne profits but not for passing of a decree for possession against the defendant.
11. Incidentally, the defendant appears to have raised in the written statement a plea regarding the nature and extent of the super structure also. While the plaintiff’s case is that the super structure as it existed on the date of the lease deed had been let out to the defendant and the defendant had made structural changes without any authorisation, the defendant’s case is that the super structure was constructed by her at her own cost pursuant to some oral agreement between the parties. It is unnecessary for us to delve deep into that aspect of the dispute, for the nature and extent of superstructure or the legality of the changes allegedly made by the defendant is not relevant to the determination of the question whether the existence of tenancy is admitted by the defendant. At any rate, nature and extent of structure whether modified or even re- constructed by the defendant is a matter that can not alter the nature of the possession which the defendant holds in terms of the agreement executed by her. The relationship of the landlord and the tenant remains unaffected even if the tenant has with or without the consent of the landlord made structural changes in the property. Indeed if the tenancy was protected by the rent law and making of structural changes was a ground for eviction recognised by such law, it may have been necessary to examine whether the structure was altered and if so with or without the consent of the parties. That is not the position in the present case. The tenancy in question is not protected under the Rent Control Act having regard to the fact that the rate of rent is more than Rs. 3500/- per month. It is, therefore, of little significance whether any structural change was made by the defendant and if so whether the same was authorised or otherwise. The essence of the matter is that the relationship of the landlord and the tenant is clearly admitted. That is the most significant aspect to be examined by the Court in a suit for possession especially when the plaintiff seeks a decree on the basis of admissions.
12. That brings us to the second question, namely, whether the tenancy stands terminated either by lapse of time or by a notice served upon the defendant. The defendant-tenant did not have the benefit of a secure term under a registered lease deed. The result was that the tenancy was only a month to month tenancy that could be terminated upon service of a notice in terms of Section 106 of the Transfer of Property Act. The plaintiff’s case in para 6 of the plaint was that a notice was served upon the tenant under Section 106 of the Transfer of Property Act pointing out that the defendant- tenant had made substantial structural changes in the premises and had not complied with the terms of the lease agreement. The notice was duly served upon the tenant to which the tenant has not replied. Para 6 reads as under:
“That since the defendant had carried out substantial structural changes and further did not comply with the covenants of the lease agreement the plaintiff was compelled to serve a notice under Section 106 of the Transfer of Property Act. The said notice was duly served upon the defendant and no reply to the said notice has been received by the plaintiff or its counsel.”
13. In reply, the defendant has not denied the service of a notice upon the defendant. Instead para 6 is entirely dedicated to the defendant’s claim that the whole structure standing on the site today has been constructed by her out of her own money. The defendant has not chosen to deny even impliedly leave alone specifically that notice dated 17th March 2003 was not served upon her. In para 6 of the preliminary objections raised in the written statement she has simply disputed the validity of the notice on the ground that that the same is not in accordance with Section 106 of the Transfer of Property Act. Para 6, reads as under:
“That the alleged notice dated 17th March, 2003 is not as per the provisions of Section 106 of Transfer of Property Act. It is settled law that notice for termination of lease has to be in mandatory terms so specified in Section 106 of Transfer of Property Act.”
14. Far from constituting a denial of the receipt of the notice the above is an admission of the fact that the notice was received by her but the same was not in accordance with Section 106 of the Transfer of Property Act. In fairness to counsel for the tenant-respondent in this appeal, we must record that the order passed by the High Court was not supported on the plea of the notice being illegal for any reason. A copy of the notice in question is on the record and the same does not, in our opinion, suffer from any illegality so as to make it non-est in the eye of law.
15. We may, before parting, refer to yet another contention that was raised by the defendant-respondent in her defence before the courts below. In para 1 of the written statement filed by her it was contended that the property in question had vested in the Gram Sabha and that the plaintiff, therefore, could not seek her eviction from the same. The contention was, it appears, based on an order dated 17th February, 1999 passed by the Revenue Authority under the Delhi Land Reforms Act whereby it was directed that the property would stand vested in the Gram Sabha if the plaintiff did not re-convert the land in question for agricultural purposes within three months. What is important is that the tenancy under the lease agreement dated 10th October, 2001 started subsequent to the passing of the said order of the Revenue Authority. In other words, the challenge to the title of the plaintiff qua the suit property was based on a document anterior to the commencement of the tenancy in question. It also meant that the challenge was in substance a challenge to the landlord’s title on the date of the commencement of the tenancy. Section 116 of the Evidence Act, 1872, however, estoppes the tenant from doing so. The legal position in this regard is settled by several decisions of this Court and the Privy Council. Reference may in this regard be made to Mangat Ram v. Sardar Mehartan Singh (1987) 4 SCC 319 and Anar Devi (Smt.) v. Nathu Ram (1994) 4 SSC 251. In the later case this Court observed:
“13. This Court in Sri Ram Pasricha v. Jagannath, has also ruled that in a suit for eviction by landlord, the tenant is estopped from questioning the title of the landlord because of Section 116 of the Act. The Judicial Committee in Kumar Krishna Prasad Lal Singha Deo v. Baraboni Coal Concern Ltd., when had occasion to examine the contention based on the words ‘at the beginning of the tenancy’ in Section 116 of the Evidence Act, pronounced that they do not give a ground for a person already in possession of land becoming tenant of another, to contend that there is no estoppel against his denying his subsequent lessor’s title. Ever since, the accepted position is that Section 116 of the Evidence Act applies and estops even a person already in possession as tenant under one landlord from denying the title of his subsequent landlord when once he acknowledges him as his landlord by attornment or conduct. Therefore, a tenant of immovable property under landlord who becomes a tenant under another landlord by accepting him to be the owner who had derived title from the former landlord, cannot be permitted to deny the latter’s title, even when he is sought to be evicted by the latter on a permitted ground.”
16. To the same effect is the decision of Privy Council in Krishna Prasad v. Baraboni Coal Concern Ltd. AIR 1937 PC 251, where Privy Council observed:
“The section postulates that there is a tenancy still continuing, it had its beginning at a given date from a given landlord. It provides that neither a tenant nor any one claiming through a tenant shall be heard to deny that that particular landlord had at that date a title to the property. In the ordinary case of a lease intended as a present demise (which is the case before the Board, on this appeal) the section applies against the lessee, any assignee of the terms and any sub-lessee or licensee. What all such persons are precluded from denying is that the lessor had a title at the date of the lease and there is no exception even for the case where the lease itself discloses the defect of title. The principle does not apply to disentitle a tenant from disputing the derivative title of any who claims to have since become disentitled to the reversion……”
(emphasis supplied)
17. In the light of the above, the trial Court was, in our view, perfectly justified in decreeing the suit for possession filed by the appellant by invoking its powers under Order XII Rule 6 of the Code of Civil Procedure. Inasmuch as the High Court took a different view ignoring the pleadings and the effect thereof, it committed a mistake.
18. We accordingly allow this appeal, set aside the impugned judgement and order of the High Court and affirm the judgment and decree passed by the trial Court. The Parties are directed to bear their own costs.
19. Keeping in view the fact that the premises in question is being used by the tenant for commercial purposes, we grant to the defendant time till 31st December, 2012 to vacate the same on furnishing an undertaking in usual terms before this Court within four weeks from today. Needless to say that the defendant shall be liable to pay the mesne profit for the period hereby granted at the rate determined by the trial Court.
20. The appeal is allowed accordingly.
……………………………………….……….…..…J.
(T.S. Thakur)
…………………………..…………………..…..…J.
(Gyan Sudha Misra)
New Delhi
September 20, 2012

counter claim by defendant in civil suit

 Counter-claim by defendant
(1) A defendant in a suit may, in addition to his right of pleading a set-off under rule 6, set up, by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defense or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not:
Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.
(2) Such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim.
IN HIGH COURT OF DELHI AT NEW DELHI
SUBJECT : CODE OF CIVIL PROCEUDRE
Judgment pronounced on: 10.04.2012
I.A. No.5509/2011 in Counter Claim No.41/2009 in
CS (OS) No.576/2009
SKYHAWK EDUCATIONAL AND WELFARE SOCIETY
(REGD.) & ANR     ….. Plaintiffs
Through Mr Harish Malhotra, Sr. Adv.
       with Ms. Nandni Sahni, Adv.
Versus
DIRECTORATE OF EDUCATION & ORS ….. Defendants
Through Ms. Purnima Maheshwari, Adv. for defendants
No.1, 2 & 4. Mr. Ved Prakash Sharma, Adv. with
Ms. Amrit Kaur Oberoi, Adv. for applicant/D-3.
       Ms. Sujata Kashyap, Adv. for D-5.
CORAM:
HON’BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. By this order, I shall dispose of the application being I.A.
No.5509/2011 filed by the counter-claimant/defendant No.3
under   Order VI, Rule 17 and Order 1, Rule 10 read with
Section 151 CPC.
2. The brief facts are that the plaintiffs have filed the
above-mentioned suit for declaration, permanent and
mandatory injunction against the present defendant
No.3/counter-claimant and others, on the premise that
plaintiff No.1 is a Society registered under the Societies
Registration   Act, 1860 and the said Society by virtue of a resolution dated 20.04.2008 expelled the defendant
No.3/counter-claimant from the its membership.
3. Defendant No.3/counter-claimant has filed his written
statement as well as the counter-claim thereby
controverting the claim made by the plaintiffs.  Defendant
No.3 has also questioned the true status and position of
plaintiff No.1 as a society to run as an educational
institution.
4. The issues were framed on 18.05.2010 in the main suit.
The plaintiffs were directed to adduce evidence in the first
instance and ten weeks’ time was granted to the plaintiffs to
produce the evidence by way of affidavit(s).  An additional
issue was also framed on 22.09.2010 in view of the
application filed by defendant No.3, being I.A.
No.8077/2010.  On the said date, three issues in the
counter-claim No.41/2009 were also framed.  The plaintiffs
filed the list of witnesses and also the evidence of PW.1
along with 10 other affidavits of the witnesses.
5. In the meanwhile, the defendant No.3/counter-claimant
has filed the present application for amendment of  his
counter-claim.   It is stated in the application that after the
discovery of some documents, the said amendment has
been sought, as the applicant did not know about the
custody of these documents.
6. It is contended by the defendant No.3/applicant that the
applicant was not aware of the custody of three documents
which are now sought to be placed on record until February,
2011 which are now sought to be placed on record.   The
details of discovery of these documents are given in para-6
of the application which is reproduced here below:
“6. That defendant No.3 had discovered documentary
evidence i.e.  writings  dated 21.08.2004, 23.08.2007,
proposed settlement dated 01.10.2007 between Shri Balraj Singh Lochhab and Shri Yashpal Rana, Release Deed  dated
25.02.2008 by Shri Surender Singh in favour of  Shri Balwan
Singh, Release Deed dated 26.02.2008 and Receipt dated
26.02.2008 by Shri Anand Singh alias Anand Kumar in
favour of Shri Bhom Singh which was in the custody  and
possession of Shri AnandSingh alias Anand Kumar Dahiya
and have been handed over to defendant No.3 only on 5th
February 2011 as already explained.
     A perusal of these documents coupled with proposed
settlement dated 11th December, 2007 (already on the
court record) leaves no doubt that the real intention of the
parties was to have a partnership amongst themselves and
the affairs of the partnership were being shown to be run by
the society to obviate the de-recognizition and de-affiliation
of the school by the Directorate of Education, Central Board
of Secondary Education.
     The defendant No.3 is also filing an application for
amendment of his counter-claim.”
7. It is further stated that in order to adjudicate the
controversy between the parties, the proposed defendants
No.6 to 10 are necessary parties to be impleaded and at the
same time, paragraphs-7(iv)A to 7(iv)F are necessary to be
added in the preliminary objections of the counter-claim
after paragraph-7(iv) thereof, the details of which are
mentioned in paragraph-8 of the application.
8. Mr. Ved Prakash Sharma, learned counsel appearing on
behalf of defendant No.3/counter-claimant states that the
said amendments are clarificatory in nature which explain
the relationship between the parties which are reflected in
the document dated 11.12.2007 and the same would also go
into the route of the controversy between the parties.  The
defendant No.3 earlier could not take the said proposed
pleas for want of sufficient evidence which has been
discovered and said documents came to the knowledge of
defendant No.3/counter-claimant only on 05.02.2011.  In
order to avoid the multiplicity of litigations, the notices dated 18.02.2011 under Section 80 CPC were issued to the
Government of India, Directorate of Education, CBSE and
Registrar of Societies.  It is also prayed that proposed
defendants No.6 to 10 be impleaded in the suit.
9. The application of defendant No.3/counter-claimant is
strongly opposed by the learned counsel for the plaintiffs
who has argued that the trial in the matter has already been
commenced as the issues in the matter were framed on
18.05.2010.   An additional issue in the suit and the issues
in the counter claim were framed on 22.09.2010.  The
plaintiffs have already filed 10 affidavits.  Thus, under
proviso of Order VI, Rule 17 CPC, the amendment
application is not maintainable as no due diligence as
provided in the proviso has been shown by the defendant
No.3.  The said documents were available with defendant
No.3/counter-claimant.  The learned counsel has referred
the following judgments in support of his submissions:-
(i) Prominent Hotels Ltd. vs. New Delhi Municipal Council,
reported in 175 (2010) DLT 66.
(ii) Gastech Process Engineering (India) Pvt. Ltd. vs.
Saipem, reported in 159(2009) DLT 756.
(iii) D.K. Attery (Dr.) vs. Kanwal Singh Mehra, reported in
159(2009) DLT 764.
(iv) Vidyabai and Others vs. Padmalatha and Another,
reported in (2009) 2 Supreme Court Cases 409.
(v) Rohit Singh and Others vs. State of Bihar (now State of
Jharkhand) and others, reported in (2006) 12 Supreme
Court Cases 734.
10. Mr. Sharma, learned counsel appearing on behalf of the
applicant/defendant No.3 has argued that the contentions of
the learned counsel for the plaintiffs have no force.   He has
also argued that the trial has not commenced in the
counter-claim which has to be treated as a normal suit
under the provisions of Order VIII, Rule 6A(4) CPC  which
provides that the counter-claim shall be treated as a plaint
and governed by the rules applicable to plaints. He further argued that while framing the additional issue in the
counter-claim on 22.09.2010, there were no directions given
to the defendant No.3/counter-claimant to file any  list of
witnesses or evidence by way of affidavit.  The learned
counsel states that since the list of witnesses and affidavit(s)
have not been filed by the defendant No.3, therefore, the
trial has not commenced in the counter-claim.  In support of
his submissions, Mr. Sharma has referred the decision of this
Court given in the case of Rajesh Sharma vs. Krishan Pal &
Anr., reported in 183(2011) DLT 791, it has been held that
the actual commencement takes place only when either
witness appears in Court for giving evidence, or affidavits of
witnesses are filed by way of their examination-in-chief.
11. After hearing the rival submissions of the learned
counsels for both the parties, it is not in dispute that the
additional issue in the above case was framed on
22.09.2010 and the issues in the counter-claim were also
framed on the same date.  It appears from the record that
there was no direction given to the defendant No.3/counterclaimant to file the list of witnesses or evidence by way of
affidavit.  Under the provisions of Order VIII, Rule 6A (4)
CPC, the counter-claim has to be treated as a plaint and
governed by the rules applicable to plaints.  No doubt, the
plaintiffs have filed the evidence of PW-1 and other 10
affidavits.  As far as the defendant No.3/counter-claimant is
concerned, his counter-claim has to be treated as an
independent suit.    It is also a matter of fact that the
defendant No.3/counter-claimant has not filed the list of
witnesses or evidence by way of affidavit.  Therefore, it
appears to the Court that the proviso as referred to by the
learned counsel for the plaintiffs for rejection of the present
application has no applicability under the said
circumstances.  As regards the objections of the plaintiff on
merit of the proposed amendments are concerned, the same
cannot be considered at the time of deciding the application
for amendment.   12. In para-6 of the application, specific statement has been
made that this documentary evidence which was in the
custody and possession of Sh. Anand Singh  alias Anand
Kumar Dahiya, the same was  handed over to defendant
No.3 only on 5.2.2011. In case the statement of defendant
No.3 is correct, then, there is no impediment to allow the
application even if trial in the matter is commenced.
13. As far as adding of proposed defendant Nos.6 to 10 is
concerned, I am of the considered view that it is not
necessary to implead these defendants.  However, liberty is
granted to the defendant No.3 to summon these persons as
their witnesses to prove the documents in accordance with
law.  The prayer of the defendant No.3 in this regard is
rejected.
14. It appears prima-facie that the amendments sought by
the defendant No.3/counter-claimant are bonafide in nature
and the statement made in the proposed parties are based
upon evidence received by the defendant No.3 in the matter
of February, 2011.
15. In view of the above, the present application filed by the
defendant No.3/counter-claimant is partly allowed as prayed
for.  The amended counter-claim filed along with the
application is taken on record.
16. The application is disposed of.
I.A. No.5510/2011 and I.A. No.2499/2011
17. The application, bearing I.A. No.5510/2011, has been
filed by defendant No.3, under Order VIII, Rule 1A(3) read
with Section 151 CPC with a prayer that he may be allowed
to place on record the original documents as per the list of
documents along with the documents annexed to the
present application on record, in support of his defence as
well as counter-claim. 18. The application, bearing I.A. No.2499/2011, has been
filed by the plaintiffs under Section 151 read with Order VII,
Rule 14(3) CPC, praying that they may be allowed to place
on record Annexure P-1 along with their additional affidavit
and original documents and Sh. Balraj Singh Lohchab,
plaintiff No.2’s evidence be recorded on the basis of the said
additional evidence by way of affidavit and documents also.
19. In view of the order passed in I.A. No.5509/2011, both
the applications are allowed.
CS (OS) No.576/2009 & Counter Claim No.41/2009
20. Amended written statement/counter claim is taken on
record.  Replication/written statement be filed by  the
plaintiffs within four weeks, replication in counter claim be
filed within four weeks thereafter. Additional documents be
filed within six weeks.  List the matter before Joint Registrar
for admission/denial of documents on 03.09.2012.
Sd./-
      MANMOHAN SINGH, J.
APRIL 10, 2012

preliminary issue-order 14 rule 2 of CPC.

 

 
preliminary issue.
 
order 14 rule 2 of cpc.
 
Court to pronounce judgment on all issues
 
(1) Notwithstanding that a case may be disposed of on preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues.
 
(2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to-
 
(a) the jurisdiction of the Court, or
 
(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue.
 
 

IA 12530/2000 in CS(OS) 1823/2000 Page 1 of 17
THE HIGH COURT OF DELHI AT NEW DELHI
%   Judgment delivered on: 20.09.2010
IA No.12530/2000 in CS(OS) No.1823/2000
Sh. Anil Kumar Sanghi & Anr. ….. PLAINTIFFS
Vs 
Sh. Hari Kishan Sanghi & Ors.             ….. DEFENDANTS
                            
Advocates who appeared in this case:
For the Plaintiff : Mr. Pravir K.Jain, Advocate
For the Defendant:  Mr. Arvind Kumar & Ms. Neelam Rathore, Advocates for D-1&2.
Mr. Rajat Aneja, Advocate for D-5/Applicant.
Ms. Padma Priya, Advocate for D-7 / NHAI.
CORAM :-
HON’BLE MR JUSTICE RAJIV SHAKDHER
1.  Whether the Reporters of local papers may 
   be allowed to see the judgment ?  No
2.  To be referred to Reporters or not ?  Yes
3.  Whether the judgment should be reported 
      in the Digest ?  Yes
RAJIV SHAKDHER, J
IA No. 12530/2000 (O. 7 R. 11 and S. 151 of CPC by Deft. No. 5)
1. By this order I propose to dispose of the captioned application, which  has been 
filed by R.K.S. India Pvt. Ltd. erstwhile defendant no.5 (hereinafter referred to as “RKS”)
under the provisions of Order  VII Rule 11 read with Section 151 of the Code of Civil 
Procedure, 1908 (in short, “CPC”).  
2. At the outset, as it is evident, this application has been pending for the  last 10 
years.   The parties to date have not led evidence. In this context, there are two orders 
which I must refer to right in the beginning.   
2.1 First, is  the  order dated 24.01.2001 wherein, it has been noticed that the 
applicant/RKS had filed an application under Order VII Rule 11 CPC read with Section 
151 CPC for dismissal of the suit  on the ground of lack  of cause of action, and on the 
ground of jurisdiction.  The court observed that this objection be taken as a preliminary IA 12530/2000 in CS(OS) 1823/2000 Page 2 of 17
objection in the written statement which would be considered as a preliminary issue.  The 
court,  further went on to  observe that the said  application shall be decided by way of 
decision on the preliminary issue  arising out of the written statement.  Accordingly, 
defendants including applicant/RKS were directed to file their respective  written 
statements.  Consequent thereto the defendants have filed their written statements.  The 
plaintiffs in response thereto, have filed their replication.  
2.2 The second order, to which reference is required is: order dated 16.12.2003.  By 
this order, issues were cast in the suit.  The total number of issues cast in suit are thirty 
nine.  Out of these, issue nos.24, 31, 32 & 33 were treated as preliminary issues.  For the 
sake of convenience, the said issues are extracted hereinafter :-
“Issue No.24- Whether the suit is not maintainable in terms of Order 7 Rule 
11  CPC? OPD3&4
Issue No.31- Whether defendant no.5 is a tenant in different portions of suit 
property, as mentioned in sub-paras a, b and c of para A of preliminary 
objections of written statement filed by defendant no.5? OPD-5
Issue No.32- If Issue No.32 is answered in the affirmative, whether the suit 
is barred under Section 50 of Delhi Rent Control Act? OPD-5
Issue No.33- Whether there is no cause of action against defendant no.5 for 
filing the present suit, as alleged in the written statement filed by defendant 
no.5?  If so, its effect?  OPD-5”
3. With the aforesaid prefatory note, let me briefly advert to the facts, which in my 
view, would be relevant for the purposes of disposal of the captioned application.  
4. The plaintiffs have filed the instant suit for possession, declaration, rendition of 
accounts and injunction.  It is averred in the plaint that one Mahabir Prasad, who died in 
December, 1970 was blessed with three sons.  These being: Mr. Hari Kishan Sanghi, Mr. 
Tek Chand Sanghi and Mr. Ram Kishan Sanghi.  The plaintiffs, that is; Mr. Anil Kumar 
Sanghi, Mr. Arun Kumar Sanghi alongwith Mr. Sanjay Kumar Sanghi are progeny of Mr. 
Ram Kishan Sanghi and Smt. Indra Devi.  Similarly, Mr. Hari Kishan Sanghi was blessed IA 12530/2000 in CS(OS) 1823/2000 Page 3 of 17
with two sons Mr. Rajender Kumar Sanghi and Mr. O.P. Sanghi.  Mr. O.P. Sanghi had 
expired prior to the institution of the present suit.  Mr. Rajender Kumar Sanghi was 
married to Smt. Prabha Sanghi.  They were blessed with a son i.e., Mr. Ankur Sanghi.  At 
the point in time when, the suit was first instituted, Mr. Hari Kishan Sanghi alongwith his 
son,  daughter in law and grandson  were  impleaded as  defendant no.1, 2, 3 and 4 
respectively, while Mr. Ram Kishan Sanghi, who was also impleaded in the suit alongwith 
his wife Smt. Indra Devi and his third son Mr. Sanjay Kumar were arrayed as  defendant 
nos.7, 8 & 9.  Therefore, the two branches of the family emerged.  The branch of Mr. Hari 
Kishan Sanghi comprised of himself; his son, Mr. Rajender Kumar Sanghi; his daughterin-law, Ms. Prabha Sanghi; and grandson, Mr.Ankur Sanghi.  The other branch comprised 
of the plaintiffs i.e. Mr. Anil Kumar Sanghi and Mr. Arun Kumar Sanghi alongwith their 
father Mr. Ram Kishan Sanghi, their mother, Smt. Indra Devi and their brother Mr. Sanjay 
Kumar Sanghi.  For the sake of convenience, the two branches are compendiously referred 
to hereinafter by me as: Hari Kishan and family; and Ram Kishan and family.  As noticed 
above, the two branches traced their root to Mahabir Prasad Sanghi.
5. It is the case of the plaintiffs that Mr. Hari Kishan Sanghi alongwith Mr. Ram 
Kishan Sanghi and their brother Mr. Tek Chand Sanghi (who are the uncles of the 
plaintiffs) and Sh. Mahabir Parsad Sanghi  (who was the plaintiffs‟ grand father)
constituted a Joint Hindu Family.  It is also the case of the plaintiffs that the said Mahabir  
Prasad Sanghi alongwith his two sons, referred to above, lived as members of a Joint 
Hindu Family, and in the process acquired various properties and businesses.  The said 
joint family, it is averred, resided in a tenanted property situated at 61, Darya Ganj,  Delhi.  
The above members of the Joint Family  it is averred,  were joint in estate, mess and 
worship.
6. What is pertinent for the purposes of the captioned application is that the joint 
family, it appears acquired, amongst various other properties,  four (4) plots in Delhi,
which were, numbered as plots nos.1, 2, 3 & 4 Kilokari Village, Ring Road, New Delhi-
110 014 (hereinafter, referred to as Property No.1, 2 and 3 respectively).  These plots, it is IA 12530/2000 in CS(OS) 1823/2000 Page 4 of 17
averred, were acquired in 1957 by the joint family in the name of Mr. Mahabir   Prasad 
Sanghi, who was the karta of the joint family.  I am, not for the moment, referring to other 
properties and agricultural  lands which, the plaintiffs claim the joint family owns and 
possesses.  
6.1 It is also the case of the plaintiffs that in 1960-1962, super-structures were raised 
on property nos.1, 2 & 3 out of the funds owned by the joint family.  
6.2 It is averred that in 1964, a partial partition took place between the members of the 
joint family, and consequent thereto, property no.3, with the superstructure then obtaining 
, fell to the share of the branch of the family headed by Mr. Ram Kishan i.e. the father of 
the plaintiffs herein.  In-so-far-as property no.2 was concerned,  by virtue of the very same 
partition, fell to the share of Mr. Tek Chand Sanghi, while property no.1 came to the share 
of the family of Mr. Hari Kishan Sanghi. 
7. It is the case of the plaintiffs that Mr. Hari Kishan Sanghi being the eldest son of 
Mr. Mahabir Prasad Sanghi, had in sum and substance taken over the reins of the family,
and thereby exerted great amount of influence on the other members of the family.  The 
plaintiffs allege that the affairs of the family, which also included management of  the 
property  which fell to the share of Ram Kishan Sanghi and family i.e. Property No.3 was 
within the domain of Mr. Hari Kishan Sanghi.  The averments to that effect have been 
made in paragraph 14 of the plaint.  There are also averments to the effect that the ground 
floor of property no.3 was let out on rent to Ranbaxy, W.H.O., GM (Postage & 
Telegraph), etc., and the rents which were realized by Mr. Hari Kishan Sanghi were 
deposited, in joint account of  Ram Kishan Sanghi and family. It is further averred that out 
of the rental income of the  ground floor of the property no.3, further construction was 
carried out whereby, the first floor and the barsati floor alongwith the annexe was raised 
on property no.3.  It is alleged that between 1964-1980, the ground floor was let out by 
Mr. Hari Kishan Sanghi to various tenants on behalf of Ram Kishan Sanghi  and family.  
For this purpose, it is averred, Mr. Hari Kishan Sanghi obtained a power of attorney in 
favour of his son Mr. Rajender Kumar Sanghi from the plaintiffs (i.e. Anil Kumar Sanghi IA 12530/2000 in CS(OS) 1823/2000 Page 5 of 17
and Arun Kumar Sanghi) and Defendant Nos. 7 and 8 (i.e. Mr. Ram Kishan Sanghi and 
Smt. Indra Devi).  There is also an averment to the effect that by a registered deed dated 
29.03.1980, a partition, in respect of property no.3, took place in the family of Mr. Ram 
Kishan Sanghi whereby, the two plaintiffs and Mr. Ram Kishan Sanghi, Smt. Indra Devi 
and Mr. Sanjay Kumar acquired 1/5
th
undivided share in property no.3.   It is specifically 
averred that this partnership deed was witnesseth by Mr. Hari Kishan Sanghi.  There are 
further averments to the effect that in 1989, the first floor of property no.3 was let out to 
an entity by the name of Indian  Renewable Energy Development Agency (i.e. M/s. 
IREDA) vide lease agreement dated 30.06.1989 at a rent of Rs.45,000/- p.m.
8. In so far as applicant / RKS is concerned, there are averments made in para 22 of 
the plaint.  The said averments basically advert to the fact that  in 1975, the joint family 
comprising of Mr. Hari Kishan Sanghi, Mr. Ram Kishan Sanghi and Mr. Tek Chand 
Sanghi acquired an industrial plot bearing no.10, DLF Industrial Estate, Faridabad by 
acquiring share holding rights in the company by the name of M/s.  Optical Instrument 
Company Pvt. Ltd., which at that point of time evidently owned the said property.  
Subsequently, it is averred, the name was changed to the present name of applicant i.e. 
R.K.S. India Pvt. Ltd.  It is alleged that the management and control of the said company 
was, however, entrusted to Mr. Hari Kishan Sanghi.  
9. What is important is that the plaintiffs have specifically adverted to the fact that  
Mr. Hari Kishan Sanghi had got signatures of Mr. Ram Kishan Sanghi, Smt. Indra Devi 
and Mr. Sanjay Kumar on blank papers and documents which included stamp papers by 
representing to them that the said documentation was required for taxation purposes.  
There is also a reference to the fact that in early 1991, the ground floor of property no.3 
was let out to one French company  at  a rent of Rs.1,30,000/- p.m., out of which   only 
Rs.30,000/- was shown as the rent, while the balance sum was shown as “liaison charges”
only to avoid tax liability.  The fact that the signatures on documents were appended by 
Mr. Hari Kishan Sanghi, in good faith, is also adverted in para 24 and 28 of the plaint.IA 12530/2000 in CS(OS) 1823/2000 Page 6 of 17
10. The plaintiffs have filed a site plan to show that while the annexe to the super 
structure built on property no.3 is in their possession, including the drive way and all other 
portions marked therein in yellow colour, the first floor and the barsati, which is marked in 
red colour, is in possession of Hari Kishan Sanghi and family.  It is averred that the first 
floor and the barsati floor is occupied by M/s. Pulse Impulse Health Club Fitness Centre, 
which is an entity controlled by Hari Kishan Sanghi and family.  At the relevant point in 
time, the ground floor which is marked green, in the site plan, was occupied by defendant 
no.10 i.e. National Highway Authority of India (in short „NHAI‟).  
10.1 To be noted during the pendency of the proceedings,  NHAI  has vacated the 
premises.  Reference in this regard may be made to order dated 23.09.2002 passed by this 
court. 
11. In the background of these broad averments, the plaintiffs have sought reliefs of 
declaration that they are owners of property no.3, more specifically comprising of the 
main building, annexe, servant quarters and  garages shown in colour yellow, red, green
and brown in the site plan appended to the plaint.   The plaintiffs also sought possession of 
entire first and barsati floor of property no.3 alongwith servant quarters and  garages 
shown in colour red in the site plan appended to the plaint.  A mandatory injunction was 
also sought at the relevant point in time qua NHAI India as also the injunction against 
Hari Kishan Sanghi and family against creating any third party rights in property no.3 or 
any part thereof.  There are other reliefs also sought for, such as rendition of accounts with 
regard to other properties, I am  not detailing the same out, as presently one is  not 
concerned with them.
12. The applicant/ RKS in both in the written statement as well as in the captioned 
application  has raised preliminary objections with regard to lack of cause of action qua 
itself, as  also raised objection as to the jurisdiction  of the court to entertain and try the 
instant suit in the background of the following averments.  Briefly, these are  as follows:-IA 12530/2000 in CS(OS) 1823/2000 Page 7 of 17
(i) Vide lease deed dated 22.05.1985 executed in its favour by Ram Kishan 
Sanghi  and family, it acquired  leasehold  rights in the second floor of 
property no.3 alongwith three floors in the annexe block.  The rent as per 
the lease deed is a sum of Rs.1,000/- p.m.  More importantly, as per the 
said lease deed, applicant/RKS  could use the demised premises not only 
for commercial and residential purposes but could also sub-let the demised 
premises or any part thereof. 
(ii) It is averred that by virtue of yet another lease deed dated 09.07.1990, 
applicant/RKS surrendered possession of the annexe block in favour of  
Ram Kishan Sanghi  and family, however, it retained tenancy rights with 
respect to the second floor of the main building of property no.3.  The rent, 
however, remained fixed at Rs.1,000/- p.m.  In so far as the ground floor of 
the main building of property no.3 was concerned, it was let out to the 
applicant/RKS for commercial and residential purposes at a rent of 
Rs.2500/- with a further right to further sub-let.
(iii)By virtue of a lease deed dated 04.01.1995, Shri Hari Kishan Sanghi acting as 
the attorney of  Ram Kishan Sanghi and family, leased out the first floor of 
the main building of Property no.3 to the applicant/RKS @ Rs.2,000/- p.m.  
In this lease deed as well the applicant/RKS was given the right to sub-let 
the demised premises.  
(iv)The applicant/RKS has averred that it is an independent entity which has 
acquired tenancy right in the ground floor, first floor and the second / 
barsati floor of the main building of property no.3.  It is thus submitted by 
applicant/RKS that neither does it have anything to do with the joint family 
nor has any cause of action arisen against it.  It is, therefore pleaded, that 
since  there is no cause of action in so far as applicant / RKS is concerned, 
it should be deleted from the array of parties by taking recourse to 
provisions of Order 1 Rule 10(2) of the CPC. IA 12530/2000 in CS(OS) 1823/2000 Page 8 of 17
(v) In addition, it is also pleaded that the suit is not maintainable in view of the 
provisions of Section 50 of Delhi Rent Control Act, 1958 (in short, D.R.C. 
Act).  The stance being that: since the rent of the  various portions of the 
main building of property no.3 (referred to above) is  less than Rs.3500/-
p.m., it is a matter over which  only  the Rent Controller  would have 
jurisdiction, and therefore, by virtue of Section 50 of the D.R.C. Act, the 
jurisdiction of this court is ousted.  In this connection, it is specifically 
averred that the plaintiffs while, referring to the fact that Mr. Hari Kishan 
Sanghi had let out various portions of property no.3 from time to time to 
various tenants; had concealed the material fact pertaining to execution of 
the three lease deeds referred to in the written statement, and the captioned 
application.
13. At this juncture, it may perhaps be  pertinent to refer to order dated 06.04.2005 
passed in IA No.3191/02 whereby, NHAI which was erstwhile defendant no.10 was 
deleted from the array of parties based on the application filed by NHAI.  The application 
was  pivoted  on the circumstance that  since  NHAI was inducted as a sub-tenant in  a 
portion of property no.3, and the fact that, it had vacated the premises on 30.09.2009; it 
ought to be deleted from the array of parties as, no relief was sought against it.  The court 
based on the application of NHAI directed its deletion from the array of parties.  NHAI 
was, however, directed to file copy of the lease deed, by which, it had been inducted as a 
tenant. 
13.1 By the very same order, directions were passed in IA 12531/2000, whereby Mr. 
Ram Kishan Sanghi, erstwhile defendant no.7, Smt. Indra Devi, erstwhile defendant no.8 
and Mr. Sanjay Kumar, erstwhile defendant no.9 were transposed as plaintiffs.  In these 
circumstances, plaintiffs were directed to file an amended memo of parties.  These orders 
are referred to for the purposes of bringing to fore the fact that the original memo of IA 12530/2000 in CS(OS) 1823/2000 Page 9 of 17
parties stood amended; therefore, as noticed above, the defendants are largely referred to 
by name.   
14. Mr. Aneja, who appeared for the applicant/RKS has argued before me that in view 
of the  lease deeds referred to hereinabove, the execution of which according to him being 
not in dispute, the plaint ought to be rejected in so far as the applicant/RKS is concerned 
as mandated by the provisions of Order VII Rule 11 (a) & (d) of the CPC.  Mr. Aneja has 
also argued that the plaintiffs have not as a matter of fact impugned the said lease deeds.  
It is submitted that the plaintiffs ought to have, in terms of Section 34 of the Specific 
Relief Act, 1963 sought a declaratory relief with respect to the said lease deeds.  The suit 
in these circumstances according to Mr. Aneja is not maintainable.  It is also urged by Mr. 
Aneja that provisions of Section 92 of the Indian Evidence Act, 1872 would prevent the 
plaintiffs from leading any evidence contrary to the contents of the said lease deeds.  
15. Mr. Jain, who appeared for the plaintiffs, submitted that this court is presently 
called upon only to deal with the application filed under Order VII Rule 11 (a) & (d) of 
the CPC, therefore,  the court would only be required to examine the averments made in 
the plaint.  It was contended by him that from the averments made in the plaint, it would 
be quite clear that cause of action, as against the applicant, does arise.  In so far as the case 
set up by the applicant/RKS with regard to ouster of jurisdiction is concerned, Mr. Jain 
relied upon those averments made in the plaint, wherein it has been stated by the plaintiffs 
that from time to time signatures had been obtained of the members of Ram Kishan 
Sanghi  and family by  Shri Hari Kishan Sanghi on blank papers which included stamp 
papers, on the pretext that they were required for tax purposes.   Mr. Jain also refers to the 
averments made in the replication to the written statement filed by the applicant/RKS to 
contend and demonstrate that the veracity of the said lease deeds is squarely challenged.  
Mr. Jain specifically adverted to the fact that there is no denial of the averments made in 
the plaint to the effect that the portions of the property no.3 were let out from time to time 
on rents which were far in excess of Rs.3,500/-.  In this context, one such lease deed dated IA 12530/2000 in CS(OS) 1823/2000 Page 10 of 17
30.06.1999, amongst others, was referred to.  Mr. Jain also sought to contend that, the 
affairs of property no.3 were managed by Shri Hari Kishan Sanghi  as the attorney of Ram 
Kishan Sanghi and family.  He drew my attention to various documents appended at pages 
166, 173 & 186  of the documents filed by the plaintiffs  to demonstrate that Shri Hari 
Kishan Sanghi was  acting for and on behalf of Ram Kishan Sanghi and family in respect 
of property no.3 before the Municipal Corporation of Delhi for the purposes of assessment 
of property tax. 
16. I have heard learned counsel for the parties.  In my view, there are two aspects to 
the matter: first, whether the issue nos. 24, 31, 32 and 33 can be tried as preliminary 
issues.  It is pertinent to note that parties have been stuck; at this stage, and consequently, 
have not led evidence since December, 2003, only for this reason.  The second aspect is 
whether captioned application is maintainable.  Let me deal with the second aspect, first, 
since one is required to tread a known path.   It is trite law that  while dealing with an 
application under Order  VII Rule 11 CPC, the court is only required to look at the 
averments made in the plaint.  The averments made in the written statement are wholly 
irrelevant in order to ascertain as to whether or not, there arises a cause of action or, even 
with respect to bar of maintainability of the suit.   If an authority is required for this 
purpose, I would rely upon the judgment of the Supreme Court in the case Ramesh B. 
Desai and Ors. Vs. Bipin Vadilal Mehta and Ors. (2006) 5 SCC 638 at pages 650-652 
paragraphs no.14 & 15.  In this case, a company petition filed under section 155 (of the 
then prevailing provisions of the Companies Act, 1956) was dismissed on the ground of 
limitation by relying upon averments made in affidavit-in-reply. The Supreme Court in 
this context made the following observations:-
“14. The plea raised by the contesting respondents is in fact a plea of 
demurrer.  Demurrer is an act of objecting or taking exception or a protest.  
It is a pleading by a party to a legal action that assumes the truth of the 
matter alleged by the opposite party and sets up that it is insufficient in law to 
sustain his claim or that there is some other defect on the face of the 
pleadings constituting a legal reason why the opposite party should not be IA 12530/2000 in CS(OS) 1823/2000 Page 11 of 17
allowed to proceed further.  In O.N. Bhatnagar V. Rukibai Narsindas (SCC 
Para 9) it was held that the appellant having raised a plea in the nature of 
demurrer, the question of jurisdiction had to be determined with advertence to 
the allegations contained in the statement of claim made by Respondent under 
Section 91(1) of the Act and those allegations must be taken to be true.  In 
Roop Lal Sathi Vs. Nachhattar Singh Gill (SCC Para 24) it was observed that 
a preliminary objection that the election petition is not in conformity with 
Section 83(1)(a) of the Act i.e. it does not contain the concise statement of the 
material facts on which the petitioner relies, is but a plea in the nature  of 
demurrer and in deciding the question the Court has to assume for this purpose 
that the averments contained in the election petition are true.  Reiterating the 
same principle in  Abdulla Bin Ali V. Galappa it was said that there is no 
denying the fact that the allegations made in the plaint decide the forum and 
the jurisdiction does not depend upon the defence taken by the defendants in 
the written statement.  In Exphar SA V. Eupharma Laboratories Ltd. (SCC 
Para 9) it was ruled that where an objection to the jurisdiction is raised by 
way of demurrer and not at the trial, the objection must proceed on the basis 
that the facts as pleaded by  the initiator of the impugned proceedings are 
true.  The submission in order to succeed must show that granted those facts 
the court does not have the jurisdiction as a matter of law.  In this case the 
decision of the High Court on the point of the jurisdiction was set aside as 
the High Court had examined the written statement filed by the respondents 
in which it was claimed that the goods were not at all sold within the 
territorial jurisdiction of the Delhi High Court and also that Respondent no.2 
did not  carry out business within the jurisdiction of the said High Court.  
Following the same principle in  Indian Mineral & Chemicals Co. V. 
Deutsche Bank (SCC paras 10 and 11), it was observed that the assertions in 
a plaint must be assumed to be true for the purpose of determining whether 
leave is liable to be revoked on the point of demurrer. 
15. The principle underlying clause (d) of Order 7 Rule 11 is no different.  
We will refer here to a recent decision of this Court rendered in Popat and 
Kotecha Property Vs. State Bank of India Staff Assn. where it was held as 
under in para 10 of the report: (SCC p.515).
“10.Clause (d) of Order 7 Rule 7 speaks of suit, as appears 
from the statement in the plaint to be barred by any law.  
Disputed questions cannot be decided at the time of 
considering an application filed under Order 7 Rule 11 IA 12530/2000 in CS(OS) 1823/2000 Page 12 of 17
CPC.  Clause (d) of Rule 11 of Order 7  applies in those 
cases only where the statement made by the plaintiff in the 
plaint, without any doubt or dispute shows that the suit is 
barred by any law in force”.
16. It was emphasized in para 25 of the reports that the statement in the 
plaint without addition or subtraction must show that it is barred by 
any law to attract application of Order 7 Rule 11 CPC. The principle 
is, therefore, well settled that in order to examine whether the plaint is 
barred by any law, as contemplated by Sub-rule (d) of Order VII Rule 
11 CPC, the averments made in the plaint alone have to be seen and 
they have to be assumed to be correct. It is not permissible to look into 
the pleas raised in the written statement or to any piece of evidence. 
Applying the said principle, the plea raised by the contesting 
respondents that the Company Petition was barred by limitation has 
to be examined by looking into the averments made in the Company 
Petition alone and any affidavit filed in reply to the Company Petition 
or the contents of the affidavit filed in support of Company 
Application No. 113 of 1995 filed by the respondents seeking 
dismissal of the Company Petition cannot at all be looked into.”
16.1 As noticed hereinabove, the plaintiffs who are a part of Ram Kishan Sanghi  and
family, have  averred in the plaint that by virtue of partition carried out in 1964, property 
no.3 fell to their share.  It was also their case that the affairs with respect to the said 
property no.3 were looked after by  Shri Hari Kishan Sanghi.  In the plaint, there are 
specific averments to the effect that Shri Hari Kishan Sanghi had obtained signatures of 
Shri Ram Kishan Sanghi and other members of his family on blank documents, papers and 
stamp papers on the pretext that they were required for income tax purposes.  Whether 
these documents included the lease deeds in issue, is a matter which can only be 
ascertained after evidence is led by the parties.  It is well settled execution of documents 
by itself does not establish the veracity of contents of documents. (See Judah vs. Isolyne 
Shrojbashini Bose and Anr. AIR(32) 1945 Privy Council 174 and Ramji Dayawala and 
Sons (P) Ltd. vs. Invest Import (1981) 1 SCC 80  at page 90-91, para 16.  The relevant 
observations being:IA 12530/2000 in CS(OS) 1823/2000 Page 13 of 17
“16…….Undoubtedly, mere proof of the handwriting of a document would not 
tantamount to proof of all the contents or the facts stated in the document.  If 
the truth of the facts stated in a document is in issue mere proof of the 
handwriting and execution of the  document would not furnish evidence of the 
truth of the facts or contents of the document.  The truth or otherwise of the 
facts or contents so stated would have to be proved by admissible evidence, 
i.e. by the evidence of those persons who can vouchsafe for the truth of the 
facts in issue….” 
17. In the instant case  as is evident from the reply filed to the captioned application 
while signatures on the first and second lease deeds dated 22.05.1985 and 09.07.1990 are 
accepted the truth of the contents of the said lease deeds is disputed.  In so far as the third 
lease deed dated 04.01.1995 is concerned what is evident on the bare perusal, is that, while 
Hari Kishan Sanghi has acted on behalf of the landlord, as the attorney for Ramkishan and 
family; on behalf of the applicant RKS i.e., the lessee, the lease is signed by one Neeta 
Khanna.  Evidence will have to be led to vouch safe the truth of the contents of the said 
lease deeds.  Furthermore, notwithstanding the submissions of Mr. Aneja that by virtue of 
Section 92 of Indian Evidence Act, 1872, the plaintiffs cannot lead evidence contrary to 
the contents of documents, it is well settled that evidence can be led  to  explain the 
circumstances in which the documents were executed, or even to show that an agreement 
was executed to create evidence with regard to another matter.  In other words, as in the 
instant case there was no lease created, the document was created only for tax purposes. 
See Raj Satyendra Nath Ray Chaudhury Bahadur Vs. Pramananda Haldar and Ors 164 
Ind Cas 437.  The observations made in paragraph 4, 5 & 6 being relevant are extracted 
below:-
“4……..But under proviso 1 to Section 92, oral evidence is admissible to 
prove the circumstances which would invalidate any such document.  The 
circumstances enumerated in the said proviso, e.g., fraud, etc., are 
illustrative and not exhaustive.  In my opinion the fact that an instrument, 
registered or unregistered, was not intended to be acted upon from the very 
beginning is a fact which comes within proviso 1 and can be proved either by 
direct oral evidence or by indirect or circumstantial evidence furnished by IA 12530/2000 in CS(OS) 1823/2000 Page 14 of 17
the conduct of the parties.  If the cases are examined in this light there is no 
conflict whatsoever……
5.    ….In the case Bini Madhub Gorani V. Labnoii Dassi 6 CWN 242, where 
the defence in a suit for rent based upon a registered kabuliyat, was that the 
kabuliyat was never intended to be acted upon; Rampini, J., sitting singly held 
that oral evidence adduced to sustain the defence was not admissible but on 
Letters Patent Appeal he was overruled by Maclean, C.J., and Macpherson, J. 
Maclean, C.J., observed, firstly, that : 
Evidence would be admissible to show that, as between the landlord 
and the tenant, the document was never intended to be acted upon.
6. The learned Chief Justice further observed (in which observation 
Macpherson, J. also concurred) that evidence would also be admissible “to 
show that there has been, as between the parties to this document, a waiver 
of some of its terms.”  As I shall show later on the last mentioned observation 
only has been taken exception to it later cases and must be held to be not good 
law in view of the decision of the Full Bench in the case of Lalit Mohan Ghost 
Vs. Gopali Chuck Coal Company 39 C 284: 12 Ind. Cas. 723 : 16 CWN 55 : 11 
CLJ 411, but I am not aware of any case of this Court which has either 
dissented from or even cast doubt upon the first mentioned observation of the 
learned Chief Justice.  In the same case Macpherson, J. made the following 
observations:
The defendant in this case does not attempt to give any evidence of an 
oral agreement rescinding or contradicting the contract as to amount of the 
rent payable, but as both the lower Courts have found, he did prove that since 
the time the agreement was entered into he had always paid rent at a lower 
rate than that stated in the agreement.   The evidence was, in my opinion, 
distinctly admissible, not for the purpose of contradicting  the terms of the 
agreement, but for the purpose of showing, as the learned Chief Justice has 
pointed out, that the intention of the parties was, that the agreement was 
from the first not intended to be acted upon.”
17.1 In any event, onus with regard to the lease deeds in issue would rest on the 
applicant / RKS.   As to what would be the effect of not seeking a declaration of Section 
34 of the Specific Relief Act, 1963 will be seen at the stage of final adjudication.  These 
are submissions made at the  bar; there is no reference to them either in the written 
statement or in the captioned application.IA 12530/2000 in CS(OS) 1823/2000 Page 15 of 17
18. This brings me to the first aspect.  As noticed hereinabove, the court by order dated 
24.01.2001 had directed that objections contained in the application under O. VII Rule 11 
CPC should be incorporated in the written statement.  It was only on 16.12.2003 that the 
court held issue no.24, 31, 32 and 33 be tried as preliminary issues.  A bare reading of the 
provisions of Order XIV Rule 2(2) would show  that preliminary issues are those issues 
which can be tried as pure question of law, and pertain to jurisdiction or to bar to the suit 
created by law in force.   Sub-rule (2) of Rule 2 of Order XIV is an exception to sub-rule 
(1) of rule (2) Order XIV which requires the court to try all issues.   Therefore, before a 
Court comes to a conclusion that an issue should be tried as a preliminary issue, it 
ordinarily would assess, as to whether it is a question of law, fact or a mixed question of 
law and fact.  Though, B.N. Kirpal, J. (as he then was) in the case of Mohammad Yasin 
Vs. Abdul Kalam and Anr. 32(1987) DLT 143” has observed that even  “if  some
evidence” is required to be led an issue can be tried as a preliminary issue.  The 
observations of court being relevant are extracted hereinbelow :-
“ I am unable to agree with the contention of the learned counsel for the 
petitioner that the issue of law pertaining to jurisdiction or to the 
maintainability of the suit must be such in which no evidence at all is to be 
recorded.  The expression “issue of law” occurring in sub-rule (2) of Order 
14 Rule 2 is in contra-distinction to the expression “issue of fact”.  Whether 
the court has the jurisdiction to try the suit or may not solely be a question of 
fact.  It may be a question of law or a mixed question of fact and law.  In my 
opinion, even a mixed issue of fact and law, but which pertains to the 
jurisdiction of the court to try the suit, would be covered by Order 14 Rule 
2(2).  The reason for this is obvious.  If the court has no jurisdiction to try the 
suit then its decision on other issues arising in the case would be of no avail.  
If no suit is maintainable then the court would have no jurisdiction to give any 
decision on any other issue arising in the suit.  Order 14 Rule 2 has been 
amended with a view to expedite the trial of the suit.  Previously, all legal 
issues on which the suit could be disposed of  could be tried as preliminary 
issues.  Now a restriction  has been placed by the amendment and the 
restriction is that it is only that preliminary issue pertaining to the jurisdiction 
of the court or the maintainability of the suit which can be tried as a IA 12530/2000 in CS(OS) 1823/2000 Page 16 of 17
preliminary issue.  If  in deciding the jurisdiction of the court or the 
maintainability of the suit some evidence has to be recorded, that does not 
mean that the court would have no jurisdiction to direct such an issue to be 
treated as a preliminary issue. The trial court, therefore, in my opinion, was 
right in coming to the conclusion that the issue with regard to jurisdiction 
would be tried as a preliminary issue.”
(Emphasis is mine)
18.1 However,  if an issue is completely a question of fact, it cannot be tried as a 
preliminary issue.   [See paragraph 13 at page 650 of Ramesh B. Desai (supra)].  The 
relevant observations made in para 13 is extracted hereinbelow:
“13…….. Though there has been a slight amendment in the language of 
Order 14 Rule 2 CPC by the amending Act, 1976 but the principle 
enunciated in the abovequoted decision still holds good and there can be 
no departure from the principle that the Code confers no jurisdiction 
upon the  court to try a suit on mixed issues of law and fact as a 
preliminary issue and where the decision on issue of law depends upon 
decision of fact, it cannot be tried as a preliminary issue.”
19. Whether an issue ought to be tried as preliminary issue is completely in the 
discretion of the trial court.   Furthermore, where the court is of the view, in respect of 
even an issue of jurisdiction; that evidence would be required to be led, it ordinarily would 
not be tried as a preliminary  issue: Shyam Sundar Mohapatra Vs. Janaki Ballav Patnaik 
& Ors. AIR 1990 Orissa 23; Mithlesh Kumari & Ors. Vs. Gaon Sabha Kishanpur & 
Ors. AIR 1999 All. 304; Sidh Nath & Ors. Vs. Distt. Judge Mirzapur & Ors. AIR 2002 
All. 356; Canbank Financial Services Ltd. Vs. V.B. Desai & Anr. AIR 2002 Bom. 247 
and Shoib Ullah & Ors. Vs. Bhartesh Chandra Jain & Anr. AIR 2003 All. 31.   
20. From a conspectus of the facts obtaining in this case, as brought out in the plaint, 
in my view, evidence would be required to be led by parties.  Whether after evidence is 
adduced by parties, the court is in a position to dispose of the suit on the bases of issues 
no.24, 31, 32 and 33 is a matter, which a court could revisit, at that stage.  Given the time 
which has lapsed, in the fitness of things, I deem it fit  to direct parties to lead evidence on IA 12530/2000 in CS(OS) 1823/2000 Page 17 of 17
all issues.  Accordingly, the captioned application is dismissed with observation made 
hereinabove.
21. In view of the above, the captioned application is dismissed.  Needless to say any 
observations made herein will not impact the merits of the case.
CS(OS) 1823/2000
22. List on 19.10.2010 before the Joint Registrar.  The plaintiffs shall file their list of 
witnesses, if not already filed, within two weeks from today alongwith affidavit by way of 
evidence.   The plaintiffs shall ensure the presence of their witnesses for the purposes of 
their examination on the date fixed above.
RAJIV SHAKDHER, J
SEPTEMBER 20, 2010

yg
 
 

Payment of interest.

 

Payment of interest
 
In any decree passed in a suit for foreclosure, sale or redemption, where interest is legally recoverable, the Court may order payment of interest to the mortgagee as follows, namely:—
 
(a) interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage—
 
(i) on the principal amount found or declared due on the mortgage,—at the rate payable on the principal, or, where such rate at the Court deems reasonable, and
 
(ii) [Sub-clause (ii) Omitted by Act 66 of 1956, sec. 14 (w.e.f. 1-1-1957)].
 
(iii) on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgagee-security up to the date of the preliminary decree and added to the mortgage-money,—at the rate agreed between the parties, or, failing such rate, at such rate not exceeding six per cent, per annum as the Court deems reasonable; and
 
(b) subsequent interest up to the date of realisation or actual payment on the aggregate of the principal sums specified in clause (a) as calculated in accordance with that clause at the such rate as the Court deems reasonable.]