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High Court Of Himachal Pradesh
V.K.MEHROTRA
STATE BANK OF PATIALA - Appellant
Versus
HYPINE CARBONS LTD. - Respondent
Civil Suit No. 72 of 1979
Decided On : 11/08/1988
CIVIL PROCEDURE CODE - MISJOINDER OF PARTIES AND CAUSES OF ACTION - INTERPRETATION OF ORDER I RULE 3, ORDER II RULE 3, ORDER I RULE 5, ORDER II RULE 1, ORDER I RULE 3-A, ORDER II RULE 6, ORDER I RULE 13, ORDER II RULE 7, ORDER I RULE 9, ORDER I RULE 10(2), ORDER VI RULE 18, ORDER II RULE 8 - LIBERAL INTERPRETATION - NO DEFEAT OF SUIT DUE TO MISJOINDER - ELECTION OF DEFENDANTS OR CAUSES OF ACTION - AMENDMENT OF PLAINT - SEPARATE TRIALS - CONVENIENCE OF JUSTICE - COMPANY PETITION - JURISDICTION OF COURT - SECTION 446(2) OF THE COMPANIES ACT, 1956.
Fact of the Case:
The plaintiff-Bank filed a suit against the first defendant (Hypine Carbons Ltd. in liquidation) and various other defendants for recovery of different amounts. The contesting defendants raised an objection of misjoinder of parties and causes of action. The plaintiff-Bank contended that there was no misjoinder and that the suit was maintainable.
Finding of the Court:
The court held that there was no misjoinder of parties or causes of action. It observed that the basic claim of the plaintiff-Bank was against the first defendant and that the contesting defendants had rendered themselves liable for payment of the different amounts claimed from them by the plaintiff by accepting Hundis with an obligation for payment to be made directly to the plaintiff-Bank. The court further held that the trial of the various defendants or the various causes of action together, in one suit, would not embarrass or delay the trial of the suit or is otherwise inconvenient.
Issues: Whether the suit is bad for mis-joinder of parties and causes of action.
Ratio Decidendi: The court held that the provisions of Order I Rule 3, Order II Rule 3, Order I Rule 5, Order II Rule 1, Order I Rule 3-A, Order II Rule 6, Order I Rule 13, Order II Rule 7, Order I Rule 9, Order I Rule 10(2), Order VI Rule 18, and Order II Rule 8 of the Code of Civil Procedure should receive a liberal interpretation. The court observed that the basic object in permitting joinder of defendants or causes of action being to avoid multiplicity of proceedings, the provisions contained in these rules should be interpreted liberally. The court further held that misjoinder of parties or causes of action does not result in the suit being defeated. The court also held that where the trial of the various defendants or the various causes of action together, in one suit, would not embarrass or delay the trial of the suit or is otherwise inconvenient, the court may direct separate trials.
Final Decision: The court answered the first issue in the negative in favour of the plaintiff-Bank and against the contesting defendants. The court directed that the case be listed for argument on the remaining issues in the next week.
V. K. Mehrotra, J—The first defendant Hypine Carbons Ltd. (in liquidation) was established at Nalagarh in the State of Himachal Pradesh to carry on the business of producing, processing of activated carbon and bye-products thereof. At the request of the first defendant, State Bank of Patiala sanctioned and granted some credit limits to it in pursuance of an agreement dated December 18, 1972. This agreement was reviewed and the necessary documents renewed from time to time.
2. The first defendant was supplying its manufactured products, which were hypothecated with the Bank, to various parties with direction to make payment directly to the Bank. Hundies used to be drawn by these parties which used to be discounted to the Bank.
3. A petition for the winding up of the first defendant (being Company Petition No. 1 of 1977) was moved in this Court by M/s. Kuldip Industrial Corporation. This Court, while admitting the petition, appointed a Provisional Liquidator for the first defendant under Section 450 of the Indian Companies Act, 1956.
4. The first defendant made default in making repayments as envisaged under the various agreements with the Bank. The manufacturing operations of the first defendant came to a stand still The Bank had to issue notices to the first defendant recalling the loan and requiring repayment
5. The Provisional Liquidator could also not make suitable arrangements for the discharge of the liability of the first defendant to the Bank.
6. Company Application No. 4 of 1978 was moved by the Bank in Company Petition No. 1 of 1977 with the following prayers: "(1) to sell the pledged/hypothecated goods immediately and in case the amount realized by their sale is more than the amount due to the petitioner Bank the balance may be allowed to be paid to respondent No. 2 so that the employees of the respondent Company are paid their wages as directed by this Honble Court on 24-8-1977. (2) In case the amount realized from the sale of the pledged hypothecated goods falls short of the amount due to the petitioner Bank, it may be permitted to file a suit for the recovery of the balance amount with interest and costs by enforcing the personal guarantee of respondents No. 3 to 5. (3) To file a suit against respondent No. 1 and respondents No. 6 to 12 for the recovery of the amount as detailed above with interest and costs. (4) Such other order may be made in the premises as shall be just".
7. In the application, the first respondent was M/s. Hypine Carbons Ltd. while defendants No. 2, 4, 6, 8, 10, 12 and 13 were arrayed as respondents No. 6 to 12.
8. The aforesaid Company Application No. 4 of 1978 was allowed by this Court on May 30, 1979. The operative portion of the order of this Court reads thus: "As such, the application is allowed and the petitioner is permitted to sell the goods pledged/hypothecated to it on behalf of respondent No. 1 Company in collaboration with the Official Liquidator. Proper accounts of the goods sold and price fetched would be maintained by the Bank and the Official Liquidator. The sale would be subject to the confirmation by this Court. The petitioner is also permitted to file a suit against respondent No. 1 and respondents No- 3 to 5 to recover the amount due with interest and costs. The petitioner is also allowed to file a separate suit for the recovery of the amount due from respondent No. 1 and respondents No. 6 to 12 to the petitioner Bank with interest and costs. The petition is accordingly disposed of."
9. On October 15, 1979, the present suit (No. 72 of 1979) was filed by the Bank in this Court. In it, the first defendant is M/s. Hypine Carbons Ltd. (in liquidation). As mentioned earlier, defts. No. 2, 4, 6, 8, 10, 12 and 13 are the parties which were respondents No. 6 to 12 in Company Petition No. 4 of 1978 and in respect whereof permission was granted by this Court to the Bank to file a separate suit for recovery of the amount due from the first defendant and these respondents. Defendants
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