RFA No.28-2007 Page 1 of 23 IN THE HIGH COURT OF DELHI AT NEW DELHI RFA No.28/2007 Judgment pronounced on February 28th, 2011 # M/s Jain Motor Company Pvt Ltd …. Appellant Through: Mr. Adarsh B. Dial, Sr. Advocate with Mr. Rajiv Nanda and Ms. Sumati Anand, Advocates Versus $ M/s Maharashtra State Road Transport Corporation ... Respondent Through: Mr. R.S. Hegde, Advocate CORAM: HON'BLE MR. JUSTICE G.S. SISTANI 1. Whether reporters of local papers may be allowed to see the Judgment? YES 2. To be referred to the Reporter or not? YES 3. Whether the Judgment should be reported in the Digest? YES G.S. SISTANI, J. ORAL 1. Present appeal has been filed by the appellant under Section 96 of the Code of Civil Procedure (herein after referred as “CPC”) against the judgment and decree dated 27.09.2006 passed by the learned trial court dismissing the suit of the appellant as barred by limitation. 2. The brief facts necessary to be noticed for the disposal of the present appeal are that the plaintiff (appellant herein) was dealing in manufacture and sale of different types of auto parts, accessories and PV foams and the like. The defendants (respondents herein) purchased PV foams from the appellant through various bills as per their requirements and the supplies were made accordingly. The total supplies made by the appellant to the respondents amounted to Rs. 25,46,030.56 P out of which RFA No.28-2007 Page 2 of 23 the respondents had paid an amount of Rs. 21,51, 786.30 P leaving an outstanding amount of Rs. 3,94,244.26P. Despite service of a legal notice dated 01.08.1988, the respondents failed to pay the outstanding amount and thus, the appellant was forced to file a suit for recovery of Rs. 3,94,244.26 P along with interest @ 23% per annum w.e.f 26.09.1985 according to the agreement , market custom and the prevailing usage. The total recoverable amount from the respondent @23% interest is Rs.7,35,314.26 P. 3. On the basis of the pleadings of the parties and material on record, the learned trial court framed the following issues on 30.01.1996: 1. Whether the plaintiff proves that the defendant purchased PV Foams worth Rs. 3,94,244.26 P as averred in the plaint para 3? 2. Whether the plaintiff is entitled to interest @ 23% per annum as averred in plaint para 4? 3. Whether the suit claim or any part of it barred by limitation? 4. Whether the defendants prove that the plaintiff is not entitled to the difference in freight charges amounting to Rs. 1, 11,625.20 P? 5. Whether the defendants prove that the amount of Rs. 5,93,039.77 P are liable to be adjusted as alleged extra payment, as averred in para 6 of the written statement? 6. To what relief, if any, the plaintiff is entitled to? 7. What order and decree? 4. Evidence was led by both the parties. The plaintiff (appellant herein) examined PW 1 Sh. Amit Jain, Managing Director of the appellant company whereas the defendants (respondents herein) have examined DW 1 Sh. Devi Dass Kanhaiya, Senior Store Officer of the respondent at Aurangabad. The learned trial court, while deciding issue nos. 1, 2, 4 and 5 in the favour of the RFA No.28-2007 Page 3 of 23 appellant, dismissed the suit of the appellant on the ground that the suit was barred by limitation. This has led to the filing of the present appeal. The counsel for the appellant has restricted his prayer with regard to the issue of limitation alone. 5. The counsel for the appellant submits that judgment of the trial court on the issue of limitation is contrary to the facts and law. The counsel further submits that the learned trial court has failed to appreciate that the minutes of the meeting dated 19.03.1987 (exhibited at Ex. P4) were duly signed by the representatives of the respondents as well as of the appellant. It is further contended that the aforesaid minutes were admitted by the respondents during the admission denial of the documents and it amounts to acknowledgment of liability by the respondents within the meaning of sections 18 and 19 of the Limitation Act which is sufficient to extend the period of limitation. 6. The counsel for the appellant, while drawing the attention of this court to the contents of para 4 of Ex P4, further submits that the contents of para 4 makes it clear that the respondents have unequivocally acknowledged that the respondents have to settle a claim of the plaintiff appellant after due verification thereby admitting the jural relationship of debtor and creditor between the appellant and the respondents. It is contended that trial court has erred in holding that the expression „after due verification‟ imposes a condition to the claim of the plaintiff. The counsel submits that an acknowledgment must indicate an admission of jural relationship of a debtor and creditor though it need not specify the exact nature of the transaction or right. To RFA No.28-2007 Page 4 of 23 support his contention, the counsel places reliance in the case of Food Corporation of India v. Assam State Cooperative Marketing & Consumer Federation Ltd. and Others, reported in (2004)12 SCC 360 and more particularly at paras 14 and 15 which read as under: “14. According to Section 18 of the Limitation Act, an acknowledgement of liability made in writing in respect of any right claimed by the opposite party and signed by the party against whom such right is claimed made before the expiration of the prescribed period for a suit in respect of such right has the effect of commencing a fresh period of limitation from the date on which the acknowledgement was so signed. It is well settled that to amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act, it need not be accompanied by a promise to pay either expressly or even by implication. 15. The statement providing foundation for a plea of acknowledgement must relate to a present subsisting liability, though the exact nature or the specific character of the said liability may not be indicated in words. The words used in the acknowledgement must indicate the existence of jural relationship between the parties such as that of debtor and creditor. The intention to attempt such jural relationship must be apparent. However, such intention can be inferred by implication from the nature of the admission and need not be expressed in words. A clear statement containing acknowledgement of liability can imply the intention to admit jural relationship of debtor and creditor. Though oral evidence in lieu of or making a departure from the statement sought to be relied on as acknowledgement is excluded but surrounding circumstances can always be considered. Courts generally lean in favour of a liberal construction of such statements though an acknowledgement shall not be inferred where there is no admission so as to fasten liability on the maker of the statement by an involved or far-fetched process of reasoning. (See Shapoor Freedom Mazda v. Durga Prosad Chamaria and Lakshmirattan Cotton Mills Co. Ltd. v. Aluminium Corpn. of India Ltd.) So long as the statement amounts to an admission, acknowledging the jural relationship and existence of liability, it is immaterial that the admission is accompanied by an assertion that nothing would be found due from the person making the admission or that on an account being taken something may be found due and payable to the person making the acknowledgement by the person to whom the statement is made.” RFA No.28-2007 Page 5 of 23 7. It is further contended by the counsel for the appellant that the letter dated 13.03.1986 which is referred to in Ex P4 was not in the possession of the appellant and the said letter was produced by the respondents only after a notice was issued by the appellant to them and therefore, the letter has to be relied upon. The counsel further submits that the letter dated 13.03.1986 exhibited as Ex D-12 has to be read along with the minutes of the meeting dated 19.03.1987 exhibited as Ex P4. During the course of hearing, the counsel for the appellant has drawn the attention of the court to Exhibits P1 to P3 which are admitted documents to advance his contention that the respondents have acknowledged their liability towards the appellant. 8. It is strongly urged by Mr.Dayal, counsel for the appellant that a perusal of the documents would make it clear that the last transaction between the appellant and the respondent was on 25.09.1985 and since then, there have been no business dealings. It is further pointed out by the counsel that the minutes exhibited as Ex P4 are with regard to refunds and that there was never a dispute that some amount was payable by the respondents to the appellant but that the dispute was only regarding the quantum of the amount. 9. The counsel for the appellant contends that the trial court has lost sight of the fact that the running account existing between the appellant and the respondents which makes it apparent that the last transaction between the appellant and the respondents took place on 25.09.1985 which is the starting point of the period of limitation. The limitation period was further extended by the RFA No.28-2007 Page 6 of 23 acknowledgment of the respondents on 19.03.1987 and the suit was filed on 13.07.1989 which is within the period of limitation of three years. Reliance is sought on Syndicate Bank v. Channaveerappa Beleri and Others reported in (2006)11 SCC 506 and more particularly at para 15 which reads as under: “15. The respondents have tried to contend that when the operations ceased and the accounts became dormant, the very cessation of operation of accounts should be treated as a refusal to pay by the principal debtor, as also by the guarantors and, therefore, the limitation would begin to run, not when there is a refusal to meet the demand, but when the accounts became dormant. By no logical process, we can hold that ceasing of operation of accounts by the borrower for some reason, would amount to a demand by the Bank on the guarantor to pay the amount due in the account or refusal by the principal debtor and guarantor to pay the amount due in the accounts.” 10. The counsel for the appellant further submits that the trial court has grossly erred in holding that the contents of para 4 of Ex P4 is not even remotely related to the claim of the plaintiff in the suit. Admittedly, there were business relations between the parties as has been admitted in the pleadings. The nature of transactions has also been admitted. The meeting dated 19.03.1987 took place between the appellants and the respondents in view of the payments due to the appellant. All this was recorded in the minutes of the meeting which mention the details of the bills for which the claim was made by the appellant. The counsel for the appellant contends that perusing the contents of Ex. P4 would show that the respondents agreed to pay the amounts due to the appellant after due verification if the appellant issued certified duplicate copies of bills of back RFA No.28-2007 Page 7 of 23 squabs with the non-payment certificate, thereby admitting the jural relationship of debtor and creditor between the respondent and the appellant. 11. The counsel for the respondent submits that there is no infirmity in the judgment of the learned trial court. The claim in the suit is in respect of transactions for which bills dated 21.04.1984 to 25.09.1985 were issued. Since the last transaction between the appellant and the respondents was on 25.09.1985, the suit, having been filed on 03.07.1989, was clearly barred by limitation. 12. It is further submitted by the counsel for the respondent that at the stage of the arguments, the appellant cannot place reliance on Ex P4 to advance his case. Merely because the respondent has admitted the document, no benefit can be conferred on the appellant when the appellant has specifically denied Ex P4 in its pleadings. It is argued by the counsel for the respondent that the appellant has denied the existence of Ex P4, which are the minutes of the meeting held on 19.03.1987, by a denial of the existence of any meeting dated 19.03.1987 between the appellant and the respondent. It is further pointed out by the counsel for the respondent that PW 1 has denied the existence of document exhibited as Ex P4 and has also denied the identity of the person who has signed the aforesaid document on behalf of the appellant. As per Ex P4, representative of the appellant company is one Mr. Ravi Shourey who signed Ex P4 on behalf of the appellant. The appellant in its replication before the trial court has denied that Mr. Ravi Shorey acted as the representative of the appellant. The counsel contends that the RFA No.28-2007 Page 8 of 23 appellant at this stage, is estopped from raising a claim based on Exhibit P4 which has been specifically denied by him. To support his argument, the counsel for the respondent places reliance on Maqboolunnisa v. Mohd. Quaraishi reported in (1998)9 SCC 585 and particularly at para 3 which reads as follows: “ 3. It is an admitted case of the parties that during the pendency of the proceedings in the trial court, a shop adjacent to the demised premises, also measuring 10' x 15' was vacated by one Shri Sukumaran. The appellant did not amend the pleadings to assert that the shop which had been vacated by Shri Sukumaran was not sufficient for her son to shift his business. Even at the trial no such plea was raised. The fact position is that the shop from which the son of the appellant was to shift measured only 4' x 4' while the shop which had been vacated by Shri Sukumaran measured 10' x 15'. At the trial, during her evidence, the appellant went on to say that by breaking the wall between the suit shop and the shop vacated by Shri Sukumaran the entire area can be converted into one big shop to enable the son to carry on his business. That such evidence should not have been allowed to be let in since it was beyond the pleadings admits of no exception. But even if we ignore that infirmity, we find that the assertion itself does not establish a genuine bona fide need. It is not stated by the appellant in her evidence that the shop vacated by Shri Sukumaran was not sufficient accommodation to enable her son to carry on the business. The “desire” to have a very large shop cannot be equated with a “genuine bona fide need” to have the premises. The landlady, thus, has failed to establish the bona fide need to have the scheduled property vacated. The High Court while considering this aspect observed: “The scheduled premises as admitted by Smt Maqboolunnisa is about 10' x 15'. It is also admitted by her that adjacent premises occupied by Shri Sukumaran has been vacated and it is lying vacant. The vacancy of this premises occurred during the pendency of the proceedings for eviction. The vacation of the premises by Sukumaran is admitted by PW 2 Shri Munner Ahamad. With regard to the area and dimensions of the shop vacated by Sukumaran, Smt Maqboolunnisa PW 1 admits as under: „The scheduled shop and adjacent shop are of same measurement. It may be little less than 10' x 15'.‟ Though PW 2 stated that the scheduled shop is 6' x 6', on further cross-examination admitted as under: RFA No.28-2007 Page 9 of 23 „I do not know whether the shop fallen vacant is 10' x 15'. Again I say it is of similar size as that of the scheduled shop.‟ ” The High Court then concluded: “From these admissions of the respondent and her witness, it is obvious that subsequent to the institution of the eviction petition against the revision petitioner she has come into possession of the premises measuring about 10' x 15' that is almost equal in dimensions of the scheduled premises.” 13. Reliance is also placed on State Bank of India v. SN Goyal reported in (2008)8 SC 92 and more particularly on paras 19, 20, 21 and 22 which read as under: “Re: Question (ii) — Effect of absence of pleading 19. The plaint did not contain any plea that the order of removal by the appointing authority (Chief General Manager) was vitiated on account of his consulting and acting on the advice of the Chief Vigilance Officer of the Bank. Nor did it contain any allegation that the appointing authority acted on extraneous material in passing the order of removal. In the plaint, the challenge to the order of removal was on the ground that the enquiry by the enquiry officer was opposed to principles of natural justice that is: (i) the charge was vague and not established; (ii) he was not given reasonable opportunity to defend himself; (iii) material witnesses were not examined; (iv) documents relied on were not formally proved; (v) burden of proof was wrongly placed on him; (vi) findings in the enquiry report were based on surmises and conjectures; and (vii) the enquiry officer was prejudiced. The respondent had also averred that the appointing authority had approved the recommendation made by the disciplinary authority for imposition of penalty of removal without application of mind and without giving him a hearing. He alternatively contended that the punishment imposed was severe and disproportionate to the gravity of the proved charge. But there was absolutely no plea with reference to the advice/recommendation of the Chief Vigilance Officer of the Bank. However, during the examination of the Bank‟s witness DW 1 (T.S. Negi, Deputy Manager) it was elicited that on 18-1-1995, the disciplinary authority had put up a recommendation to impose the penalty of reduction of pay by four stages by taking a lenient view; that the appointing authority had by its note dated 18-1-1995 accepted the said recommendation; that subsequently, on 2-2-1995, the appointing authority had informed the Chief Vigilance Officer of the Bank about the enquiry and proposed punishment; and that after receiving the comments of the Chief Vigilance Officer, the appointing authority on the RFA No.28-2007 Page 10 of 23 recommendations of the disciplinary authority had reconsidered the question of punishment and imposed the penalty of removal. The respondent-plaintiff did not amend the plaint to include the averments and grounds to challenge the order of removal on the said additional ground. No issue was framed in that behalf. No amount of evidence on a plea that was not put forward in the pleadings can be looked into. In the absence of necessary pleading and issue, neither the trial court nor the appellate court could have considered the contention and recorded a finding thereon. 20. The learned counsel for the respondent submitted that the order of removal was challenged on the ground that it was opposed to principles of natural justice and the averments in the plaint were sufficient to enable the plaintiff to establish any ground in support of it and it was not necessary to separately plead each and every fact or ground in support of his contention that the order of removal was vitiated. While there is no need to plead evidence, the grounds of challenge and the facts in support of each ground will have to be pleaded. In this case, the minimum pleading that was necessary was that the appointing authority acted on extraneous material in arriving at the decision or acted on the advice or recommendation of an authority which was not concerned with the enquiry. 21. In the absence of appropriate pleading on a particular issue, there can be no adjudication of such issue. Adjudication of a dispute by a civil court is significantly different from the exercise of power of judicial review in a writ proceedings by the High Court. In a writ proceedings, the High Court can call for the record of the order challenged, examine the same and pass appropriate orders after giving an opportunity to the State or the statutory authority to explain any particular act or omission. In a civil suit parties are governed by rules of pleadings and there can be no adjudication of an issue in the absence of necessary pleadings. 22. The learned counsel for the respondent submitted that the respondent was unaware of the earlier order dated 18- 1-1995 or about the consultation with the Chief Vigilance Officer when he filed the suit and therefore could not make necessary averments in the plaint in that behalf. But that is no answer. The Code of Civil Procedure contains appropriate provisions relating to interrogatories, discovery and inspection (Order 11 Rules 1, 12 and 15) to gain access to relevant material available with the other party. A party to a suit should avail those provisions and if any new ground becomes available on the basis of information RFA No.28-2007 Page 11 of 23 secured by discovery a party can amend its pleadings and introduce new facts and grounds which were not known earlier. The difficulty in securing relevant material or ignorance of existence of relevant material will not justify introduction of such material at the stage of evidence in the absence of pleadings relating to a particular aspect to which the material relates. If a party should be permitted to rely on evidence led on an issue/aspect not covered by pleadings, the other side will be put to a disadvantage. For example, in this case, if there had been a plea and issue on the question whether extraneous material was taken into account, the Bank could have examined the appointing authority to explain the context in which he informed the Chief Vigilance Officer about the matter or explain how his decision was not dependent upon any extraneous material. Therefore, the courts below committed a serious error in holding that the order of removal was based on extraneous material (the advice/recommendation of the Chief Vigilance Officer) and therefore invalid.” 14. The counsel for the respondent submits that the entire claim of the alleged acknowledgment of debt and admission of jural relationship is purportedly based on the contents of para 4 of the minutes of the meeting exhibited as Ex P4 which refers to two letters dated 21.08.1985. Both the letters dated 21.08.1985 have not been produced on record by the appellant. The said letters are not part of the trial court record nor the aforesaid letters are relevant as these letters do not deal with the subject matter of the suit. The counsel further points out that the said letters have been issued with reference to specific supply of “back squabs” whereas the claim of the appellant in the suit relates to alleged supply of “PV Foams” which is a different commodity and that the claim of the appellant is not under the letters dated 21.08.1985. The appellant has nowhere in his plaint or evidence has referred to the said letters. 15. It is strongly urged by the counsel for the respondent that the contents of para 4 do not constitute an acknowledgment of RFA No.28-2007 Page 12 of 23 liability by the respondents nor is there any admission of jural relationship by the respondents in the said para. It is argued by the counsel for the respondent that the statement in para 4 of Ex P4 is a conditional statement and the appellant neither pleaded in plaint nor has led any evidence to prove that the said condition has been performed. It is further contended by the counsel for the respondent that the letter dated 13.03.1986 is not part of the evidence since the original letter was not produced by the appellant. The letter was brought on record only after the directions of the court and when produced, it was denied by the