Uttam Singh Dugal & Co.Ltd vs Unied Bank Of India & Ors on 8 August, 2000

Supreme Court of India
Uttam Singh Dugal & Co.Ltd vs Unied Bank Of India & Ors on 8 August, 2000
Author: R Babu
Bench: S.R.Babu, J.Auguat, Shivaraj V. Patil
           PETITIONER:
UTTAM SINGH DUGAL & CO.LTD.

	Vs.

RESPONDENT:
UNIED BANK OF INDIA & ORS.

DATE OF JUDGMENT:	08/08/2000

BENCH:
S.R.Babu, J.Auguat, Shivaraj V. Patil




JUDGMENT:

RAJENDRA BABU, J. :

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

Transorient Engineering Company Ltd. subcontracted
construction of students dormitories/dining hall for the
University of Baghdad, Iraq. Respondent Nos. 1 to 3
functioned as consortium to finance the said project.
Certain disputes having arisen petitioner filed suits
against the respondent Banks that the debits raised are
illegal etc. Indian Overseas Bank (IOB) filed a suit for
recovery of certain sums of money and an application made
therein under Chapter XIII-A of the Original Side Rules and
the High Court of Calcutta rejected the same and Respondents
1 and 3 Banks and E.C.G.C. were also impleaded by an
amendment in the said suit. Respondent No.1 filed a suit
for recovery of certain sum of money with certain other
reliefs and in that suit, application for judgment upon
admission was allowed. Appeal thereon being unsuccessful,
this petition is filed.

The application filed by Ist respondent-Bank for
judgment on admission covers only a part of the suit claim.
The Ist respondent-Bank relied upon (I) Balance Sheet of the
petitioner for year ending 31st March, 1989 with reference
to Schedules C, D and E; (ii) Minutes of the meeting
of Board of Directors held on 30th May, 1990 which noticed
the discussion at the meeting and issues that could be
deemed to have been settled as result thereof. (iii) letter
dated 4th June, 1990 communicating the resolution and
minutes of the meeting of the Board of Directors held on May
30, 1990. In the said minutes in the meeting held on 30th
May, 1990, it was mentioned as follows:- IT WAS RESOLVED
THAT :

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

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

It is also resolved that the Company disputes the
amount of Rs.3,08,01,000 debited to its Cash Credit Account
on 01.08.89 which along with interest stands at
Rs.3,60,62,579 as on 31.03.90.

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

Natures Present Sanctioned Amount Due (Rs. In lakhs)
(Rs. In lakhs)

Cash Limit/OD 65.00 101.16 Inland Guarantee 401.31
23.18 Baghdad Guarantee 1082.60 793.73 Jordan Guarantee
209.30 101.85 Term Loan 5.00 Nil Loan Account Nil 16.88

——— ———- 1745.07 1036.80 ======= =======

That, also due to fluctuations in Exchange Rate there
has been difference in amount due under Jordan Guarantee
amounting to about Rs.21 lakhs which is not reflected in
details shown above.

A copy of the aforesaid resolution was sent to the
plaintiff with the following note as indicated in the letter
dated 4th June, 1990: a) We do not confirm the debit entry
of Rs.3,60,62,579/- representing your share of the invoked
guarantee with interest upto 31.3.90 which has been effected
by you unauthorisedly against the illegal payment made by
the Indian Overseas Bank. We are enclosing a copy of the
reply given to the Legal Notice received by us from them.
The reply is self-explanatory. You will agree that before
effecting the said payment consisting of such a large
amount, a reference ought to have been made to us.

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

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

d) Almost two years ago an unofficial freeze was
imposed on our Inland Guarantee limits for reasons never
communicated to us. Thus, you had denied fresh Guarantees
for Bid Bonds etc. to tender for new works and the
companys huge fleet of Construction equipments and trained
personnel perforce thereby remained idle since the last one
and a half year.

The petitioners filed an affidavit-in-opposition to
contend that: 1. That the defendant No.1s suit is barred
by limitation; 2. That the resolution dated 30.5.90 was
passed subject to a condition that the inland guarantee
limit would be resumed and that as the condition was not
fulfilled, the resolution was no binding; 3. That the
defendant No.1s suit was liable to be stayed under Section
10 CPC because the matter in issue in the suit was also
directly and substantially in issue in the previous suits
filed by others 4. That the suit of the defendant No.1 is
bad for misjoinder of parties.

The defendants further contended that, insofar as
resolution dated 30.5.90 and a letter dated 4.6.1990 are
concerned, they are to the effect that they are matters of
record and save what are matters of record and save what
would appear from the letter dated 30.5.1990 all allegations
to the contrary are disputed and denied. It is
categorically denied that there is any admission of
liability by the first respondent to the Petitioner to the
extent of Rs.10,15,80,090 as on 30th March 1990 or that
since the said alleged admission of the liability the claim
of the Petitioner has increased and it is now more than
Rs.24 crores, as wrongly alleged, if at all.

At the time of hearing it appears it was contended:

1. that the amount claimed by the plaintiff from the
defendants was part of the consortium agreement under which
the Indian Overseas Bank, United Bank of India and the EXIM
Bank agreed to advance money to defendant No. 1 in the
proportion of 50:25:25. It was stated that Indian Overseas
Bank has filed a suit against the defendants for recovery of
all the amounts advanced by the consortium to the defendant
No.1 and that suit was still pending, therefore, they were
estopped from filing that suit and making an independent
claim against the defendant No.1. 2. That in the suit
filed by Indian Overseas Bank an application had been moved
by the Indian Overseas Bank for final judgment under Chapter
XIII-A on the basis of the same documents which were sought
to be relied upon by the plaintiff. The trial judge had
rejected the same. 3. That payments had been made
subsequent to the admission and loan was recalled only in
1993 just prior to the filing of the suit. 4. That several
claims have been included in the suit in respect of which
another suit has been filed in the Madras High Court and,
therefore, the amount could not be recovered. 5. The claim
of the plaintiff had been covered by a counter guarantee
issued by the Export Credit Guarantee Corporation and the
extent of payment made by it to the plaintiff and the suit
was for the reason not maintainable at the instance of
defendant No. 1. 6. That the defendants in the suit had
filed a separate suit in which he had claimed for certain
reliefs which would nullify the claim made by the plaintiff
in the suit.

The learned trial judge found that there is an
unequivocal admission of the contents of the documents and
what is denied is the extent of admission and the increase
of the liability admitted. The learned trial judge took the
view that the pre-requisites of Order XII, rule 6 CPC had
been satisfied in this case and that on a plain reading of
the resolution of the Board dated 30.5.90 there could be no
doubt that the Petitioner had made a clear, unambiguous and
unconditional acknowledgement of its liability to the Bank.
The language of the resolution would show that the extent of
the admission in the resolution is for Rs.10,15,80,000/-, if
not for Rs.10,36.80 lakhs. The figure of Rs.1015.80 lakhs
is firm admission being the figure arrived at after
deducting Rs.21 lakhs claimed by the defendants by reason of
fluctuation of the exchange rate and that was the amount
claimed by the Petitioner in the suit. This admission made
in the course of the Board of Directors resolution had not
been explained by the Petitioner in the
affidavit-in-opposition but on the other hand had reiterated
the same. The arguments raised before the trial court were
considered to be contrary to the pleadings raised in the
case. Therefore, the application was allowed.

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

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

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

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

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

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

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

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

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

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