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High Court Of Himachal Pradesh
R.L.KHURANA
STATE OF HIMACHAL PRADESH - Appellant
Versus
HIMACHAL RANG UDYOG - Respondent
Civil Suit No. 76 of 1988
Decided On : 11/25/1997
CONSTITUTIONAL LAW - SUIT BY STATE GOVERNMENT - AUTHORITY TO FILE SUIT - MANAGING DIRECTOR OF STATE CORPORATION NOT AUTHORISED - SUIT NOT PROPERLY LAID - LIMITATION - SUIT FOR RECOVERY OF OUTSTANDING SALE CONSIDERATION - PRESCRIBED PERIOD OF LIMITATION THREE YEARS - SUIT FILED AFTER EXPIRY OF LIMITATION PERIOD - BARRED BY TIME.
Fact of the Case:
The State of Himachal Pradesh and the Himachal Pradesh State Forest Corporation filed a suit to recover an outstanding amount of Rs. 6,27,143.81 from the defendants for the supply of resin and turpentine. The defendants had purchased the products on 29.3.1974 but failed to pay the amount despite repeated demands. The first plaintiff, the State of Himachal Pradesh, had transferred the management and control of the resin and turpentine factories to the second plaintiff, the Himachal Pradesh State Forest Corporation, with effect from 1.4.1974, but retained the right to recover dues payable to it until 31.3.1974.
Finding of the Court:
The court held that the suit filed on behalf of the State of Himachal Pradesh through the Managing Director of the Himachal Pradesh State Forest Corporation was not properly laid. The Managing Director was not authorized to file the suit on behalf of the State under the rules of business framed by the Governor under Article 166(3) of the Constitution of India. The court also held that the second plaintiff, the Himachal Pradesh State Forest Corporation, did not have the locus standi to bring the suit to recover the outstanding amount from the defendants as the right to recover the amount pertaining to the period prior to 31.3.1974 was never assigned to it by the first plaintiff. Additionally, the court found that the suit was barred by limitation as it was filed after the expiry of the prescribed limitation period of three years.
Issues: 1. Whether the suit filed on behalf of the State of Himachal Pradesh through the Managing Director of the Himachal Pradesh State Forest Corporation was properly laid. 2. Whether the second plaintiff, the Himachal Pradesh State Forest Corporation, had the locus standi to bring the suit to recover the outstanding amount from the defendants. 3. Whether the suit was barred by limitation.
Ratio Decidendi: 1. The court relied on Articles 300(1) of the Constitution of India and Section 79 of the Code of Civil Procedure to hold that the suit on behalf of the State of Himachal Pradesh was not properly laid as it was not filed through the authorized authority. 2. The court relied on the notification dated 25/26.3.1974 to hold that the second plaintiff did not have the locus standi to bring the suit as the right to recover the outstanding amount pertaining to the period prior to 31.3.1974 was never assigned to it by the first plaintiff. 3. The court relied on the Limitation Act to hold that the suit was barred by limitation as it was filed after the expiry of the prescribed limitation period of three years.
Final Decision: The court dismissed the suit with no orders as to costs.
R.L. KHURANA, J.—The present suit has been filed by the two plaintiffs for the recovery of Rs. 6,27,143.81 p. detailed as under:— (a) Amount due to non-payment of bills for the supply resin and turpentine. Rs. 1,70,128.66 p. (b) Interest on such amount at the rate of 18 per cent per annum from 29.3.1974 to 30.6.1988 (the date of suit.) Rs. 4,36,786.OOp. (c) Amount due on account of sales-tax at the rate of 6 per annum due to non-receipt of D1 forms. Rs. 10,382.40 p. (d) Interest on the amount of sales-tax at the rate of 18% per annum. Rs. 14,950.75 p. Total Rs. 6,27,143.81 p. The plaintiff No. 1 is the State of Himachal Pradesh. While plaintiff No. 2 is the Himachal Pradesh State Forest Corporation. They are hereinafter being referred to as the "first plaintiff and "second plaintiff", respectively. The suit has been filed by both the plaintiffs through Managing Director of the second plaintiff.
2. The first plaintiff was running two resin and turpentine factories, respectively at Bilaspur and Nahan and was dealing in the business of resin and turpentine. The defendants had purchased resin and turpentine on 29.3.1974 vide four bills worth Rs. 1,70,128.66 p. Such amount has not been paid by the defendants inspite of repeated demands.
3. On and with effect from 1.4.1974, the first plaintiff constituted a Corporation known as Himachal Pradesh State Forest Corporation, a company registered under the Indian Companies Act, 1956, and on the creation of such Corporation, that is, the second plaintiff, the management, control and business of the two resin and turpentine factories at Bilaspur and Nahan was transferred to it vide notification No. 10-26/72-SF dated 25/26.3.1974. However, by the same notification, the first plaintiff retained the right to recover the amounts due to it from various parties till 31.3.1974.
4. A sum of Rs. 1,70,128.66p. was thus due from the defendants as on 31.3.1974. The sale of resin and turpentine was made to the defendants against D form. Since the defendant failed to supply the requisite D form in respect of the purchases made by them, they are, as such, liable to pay sales tax at the rate of 6% per annum. The outstanding amount of sales tax comes to Rs. 10,382.40p.
5. As per the custom of the trade, the plaintiffs are also entitled to interest on the outstanding amounts at the rate of 18 per cent per annum, as detailed at (b) and (d) above.
6. The suit was being initially resisted and contested by the defendants and on the pleadings of the parties, issues were framed on 29.8.1990. The plaintiffs closed their evidence in the affirmative on 28.6.1996. Thereafter, the case was being adjourned from time to time for evidence of the defendants on payment of costs and otherwise. However, neither any evidence was produced nor the costs were paid by the defendants. Ultimately, on 5.9.1997, when the case was fixed for evidence of the defendants, Shri R.L. Sood, Advocate, the learned Counsel for the defendants pleaded no instructions, since the defendants were not responding to his various communications. He was as such permitted to withdraw from the case and the defendants were ordered to be proceeded against ex-parte.
7. I have heard the learned Counsel for the plaintiffs and have gone through the record of the case.
8. As stated above, the suit has been filed by two plaintiffs, namely, State of Himachal Pradesh and Himachal Pradesh State Forest Corporation, through Shri V.P. Mohan, the then Managing Director of the H.P State Forest Corporation, the second plaintiff.
9. The first question, which arises for consideration is whether the suit on behalf of the first plaintiff, the State of Himachal Pradesh through the Managing Director of the H.P. State Forest Corporation is a properly laid suit.
10. Article 300(1) of the Constitution of India, provides:— "The Government of India may sue or be sued by the name of the Uni
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