Chandubhai Explosives Pvt. Ltd. Vs Union Bank of India and others

M.N. Chandurkar, Actg. C.J.

1. The petitioner in this petition is the plaintiff, who had initially filed a suit against all the three defendants-respondents. It is not necessary to refer to the details of the plaint and it is sufficient to mention that substantially the suit was for recovery of Rs. 73,698-12 with interest on the ground of wrongful conversion or monies had and received or alternatively for damages. The petitioner''s claim was that a cheque for Rs. 68,907.32, which was drawn by the petitioner in favour of Indian Explosives Ltd and sent to the said Company was not received by the Company, but it was later learnt that this amount was paid through defendant No. 2, which is a Co-operative Bank to one M/s. Mansukhlal Shashikant Trading Corporation. Defendant No. 3 is a constituent of defendant No. 3-Bank who is said to have introduced the person in whose account the amount has actually been credited. The suit was filed on 30th January 1975. The cause of action shown in the suit is said to have arisen on 11th September 1974 and 27th September 1974. 11th September 1974 is the date of payment of the amount of the cheque to M/s. Mansukhlal Shashikant Trading Corporation. It appears that after the suit was filed, a notice u/s 164 of the Maharashtra Co-operative Societies Act, 1960, was served on defendant No. 2 on 23rd July 1975.

2. It appears that the petitioner realised the infirmity in the suit filed before the expiry of the period of notice u/s 164 of the Maharashtra Co-operative Societies Act and requested the Court on 3rd March 1977 for deletion of respondent No. 2. Almost four months thereafter, an order for deletion of respondent No. 2 was made on 5th July 1977. The petitioner then again made an application for addition of respondent No. 2 as a party on 13th July 1977. That application was ultimately allowed on 9th August 1978. On 9th August 1978 the suit had already become barred by limitation against respondent No. 2 on the basis of the cause of action shown in the plaint. It appears that an objection on the ground of limitation was raised by respondent No. 2. The petitioner, therefore, made an application on 9th August 1978, that is, on the some day on which the order was passed but after the order, requesting the Court to exercise its discretion under the proviso to section 21(1) of the Limitation Act, 1963 (hereinafter referred to as "the Act of 1963"). This application was rejected by the trial Court. The trial Court took the view that respondent No. 2 having been originally joined as a party but having subsequently been deleted this was not a case which was covered by the proviso to section 21(1) of the Act of 1963. The trial Court found that this was not a case in which omission on the part of the petitioner to include respondent No. 2 could be said to be doe to a mistake made in good faith. This order is challenged by the petitioner.

3. Now, the main question in this petition is when can the respondent No. 2 be said to have been validly joined as a party defendant and can the suit be treated as having been instituted against it within the prescribed period of limitation. It is undoubtedly true that on 9th August 1978 when the trial Court passed the order allowing the application of the petitioner to join respondent No. 2 as a party, the period of three years from the date of the cause of action had already expired but yet the trial Court had granted the application for addition of respondent No. 2. It is obvious that the petitioner was constrained to seek the aid of the proviso to section 21(1) of the Act of 1963 having regard to the objection raised on the ground of limitation.

4. According to the petitioner, respondent No. 2 must be treated as having been joined as a party to the suit on the date on which the suit itself was filed. Under no circumstances can such a request be granted because the date on which the suit was instituted, i.e. 30th of July 1975, the suit could not have been validly filed against respondent No. 2, because the period of the statutory notice u/s 164 of the Maharashtra Cooperative Societies Act which was issued to the said Bank only on 23rd July 1975 had not expired. Alternatively, it is contended that the date on which the application for joining the defendant No. 2 as a party must be treated as the date on which the suit must be treated as having been instituted against defendant No. 2. Now, admittedly, the application for addition of respondent No. 2 was made within a period of three years from the date of cause of action. The question is where the application for addition of a party is made within the period of limitation but the Court taken time to dispose it of, firstly, can the party which is diligent enough in making the application within the prescribed period of limitation be penalized for the delay in deciding the application for joining of a party and secondly, in such a case, does the proviso to section 21(1) of the Act of 1963 at all apply. The answer to the first question must be in the negative. Section 21(1) reads as under:-

21(1). Where after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit, shall, as regards him, be deemed to have been instituted when he was so made a party :

Provided that where the Court is satisfied that the omission to include a new plaintiff or defendant was due to a mistake made in good faith it may direct that the suit as regards such plaintiff or defendant shall be deemed to have been instituted on any earlier date.

Under the proviso, the Court has to be satisfied that the omission to include a plaintiff or defendant was due to a mistake made in good faith and then it may direct that the suit as regards such plaintiff or defendant shall be deemed to have been instituted on any earlier date. Reference to "any earlier date" in the proviso is in the context of the date which is statutorily fixed u/s 21(1) of the Act of 1963 as the date on which the plaintiff or defendant is substituted or added, being the date when the suit shall as regards him be deemed to have been instituted when he was so made a party. The proviso is obviously intended to relieve a party of the possible penal consequences following the delayed joining a party to a suit if the omission to join as plaintiff or defendant was due to a mistake; in good faith. If however a party is joined as a plaintiff or a defendant before the expiry of the period of limitation prescribed for the suit in question, it will not be necessary for the powers of the Court under the proviso to be invoked.

5. Undoubtedly, the words "deemed to have been instituted when he was so made a party", if given a literal construction, would mean that the date on which an order requiring a person to be made a party to the suit is to be treated as the date on which the suit will be treated as having been instituted against that party. Such a result would, however, be wholly unjust and unfair in a case where a plaintiff or defendant has applied before the expiry of the prescribed period of limitation for any person to be joined as a party but for some reason or the other application could not be disposed of within the prescribed period of limitation for the suit. It must, therefore, be held that in such a case the party must be deemed to have been joined on the date on which the application for joining a person as a party is made, though the order of the Court on such an application has been made beyond the prescribed period of limitation. On the facts of this case it was, therefore, not necessary for the plaintiff in this case to call in aid the proviso to section 21(1) of the Act of 1963.

6. It may be pointed out that section 21(1) of the Act of 1963 is analogous to the provisions of section 22(1) of the Indian Limitation Act, 1908 (hereinafter referred to as "the Act of 1908"). A question like the one involved in this case had come up before this Court in Ramkrishna Moreshwar v. Ramabai ILR 17 Bom. 29. That was undoubtedly a case before the Act of 1908, but the principle which is spelt out in that decision would, in my view, be applicable, while construing the provisions of section 22(1) of the Act of 1908 or section 21(1) of the Act of 1963. In Ramkrishna''s case, the plaintiffs, as sharers in certain rent alleged to be due by the defendants, sued to recover their share. The defendants contended that all the co-sharers were necessary parties. At the hearing on the 24th January 1889, the other co-sharers of the plaintiffs applied to be made as co-plaintiffs and they wanted to adopt what the plaintiffs had done in the suit. The application was rejected and the suit was dismissed for want of necessary parties. On appeal, the District Court, holding that the lower Court ought to have joined the co-sharers passed an order on 3rd July 1890 making them co-plaintiffs, but confirmed the lower Court''s decree on the ground that on 3rd July 1890 when the co-sharers were made plaintiffs the suit was barred by limitation. The plaintiffs then appealed to the High Court. This Court, while remanding the matter, held that the order of the lower appellate Court of the 3rd July 1890 allowing the application of the co-sharers which had been made on the 24th January 1889 should be treated as operating nunc pro tune and that the co-sharers should be regarded as having been made parties to the suit when their application'' was made. It was held that the delay was attributable to the act of the Court, and the plaintiffs should not suffer from it. A similar view has been taken by the Madras High Court in the The Trustees of Port of Madras Vs. Good Year India Ltd. and Others, . In that case the Court was concerned with section 22(1) of the Act of 1908. In that decision a Division Bench of the Madras High Court held that the diligent applicant who had applied within the period prescribed should not suffer because the Court for some reason or the other cannot or does not give him the relief within the period. That was a case in which in a suit, which was filed originally against the Great Eastern Shipping Company on 6th February 1963 on the basis of the cause of action which arose on 30th October 1962, an application was made to impaled the Port Trust on 30th April 1963. u/s 110 of the Madras Port Trust Act, 1905, no suit could be commenced against the Port Trust after six months from the accrual of the cause of such suit. The application of the Port Trust to be joined as defendant was decided on 1st July 1963. The contention raised on behalf of the Port Trust was that for the purpose of section 22(1) of the Act of 1908 the Port Trust could be said to have been made a party only on 1st July 1963 by which time the period of six months from 30th October 1962 had expired. Negative this contention the Division Bench observed as follows (page 318):

The position is this. The plaintiffs had necessarily to make an application under Order 1, Rule 10, CPC to implead the Port Trust and all that they could do on their part was to be vigilant and file the application within the period of six months allowed by section 110 of the Madras Port Trust Act. They had no control on what happened in the Court after the filing of the application and it would be unreasonable to construe section 22(1) as to defeat their right even though they had been diligent and for some reason or other the Court could not pass the order within time. It would be a different matter if the plaintiffs could have straightway made the Port Trust a party without the intervention of the Court. But because they had necessarily to file an application, justice requires that section 22 of the Limitation Act, 1908 should be construed as meaning that the date of the application should be taken as the date when the new party was impleaded.

(Emphasis supplied.)

A similar view is taken by the Nagpur High Court in Praful Kumar v. Gajendra Singh 1944 NLJ 510 = AIR 1945 Nag. 57. Dealing with section 22 of the Act of 1908 it was held by the Division Bench of that Court that when a person is added as a defendant on an application made for the purpose, the addition must be deemed to take effect from the date of the presentation of the application. The decision of this Court in Ramkrishna''s case (supra) was cited and it was held that the principle laid down in that decision is that it is the date of the application which is material and not the date on which the party is brought on the record and that that is the way in which the words "when he was so made a party" in section 22 of the Act of 1908 ought to be interpreted. A passage from an earlier decision of the Madras High Court in South Indian Industrials Ltd. v. Narasimha Rao AIR 1927 Mad. 372, was quoted with approval. In that passage, the Madras High Court bad stated (page 59):

.........It is contrary to one of the clear principles of the Law of Limitation that a diligent party who has come to Court with his suit or his application within the period prescribed should be defeated because the Court for some reason cannot or does not give him his relief within that period. The heavy penalty for exceeding the arbitrary periods of limitation is to be counter-balanced by the assurance of safety when within them.

7. Mr. Mhamane, appearing on behalf of respondent No. 2, has, however, referred us to the decision of the Supreme Court in Ram Prasad Dagduram Vs. Vijay Kumar Motilal Mirakhanwala and Others, . That was a suit filed to enforce a mortgage executed in favour of the plaintiff''s grandmother. The plaintiff claimed to be the adopted son of the mortgagee. The suit was dismissed as adoption was not proved. On appeal to the High Court, the plaintiff sought to add a new ground that if adoption is not proved the heirs of the original mortgagee would be the plaintiff''s mother and her two sisters, but because the two aunts were not available to figure as co-plaintiffs, he filed an application to implead his mother as the plaintiff and the two aunts as pro-forma defendant. This application was allowed by the High Court and a decree was granted in favour of the plaintiff''s mother and her sisters without going into the question of adoption. The mortgagor appealed to the Supreme Court. The Supreme Court found that the High Court erred in assuming that addition of parties under Order 1, Rule 10(1) CPC did not attract section 22 of the Act of 1908. It was held that the suit was not the continuation of the original suit as the claim made by the original plaintiff was on his own behalf and not representing the daughters of Tarabai. It was pointed out that the new plaintiff (original plaintiff''s mother) and the two defendants (original plaintiff''s aunts) must be regarded as new defendants and by reason of section 22(1) of the Act of 1908 the suit must as regards them be deemed to have been instituted when they were made parties. Now, in that case the application for joining parties was made on 3rd November 1958 and the order was made on 4th November 1958. That decision does not show that the question as to whether the date of application should be treated as the date on which the parties must be deemed to have been joined was considered. On facts it appears that even if 3rd November 1958 was taken as the date on which the right plaintiff was brought on record, the result would have been the same. That decision, therefore, does not assist Mr. Mhamane. The learned counsel appearing for defendant No. 1 has invited my attention to a decision of the Karnataka High Court in Mahadeva Rao v. S.G. Chicknageswaraih AIR 1981 Karnataka 16. A suit was filed by A against B and C for recovery of money. Later C was deleted as defendant at the request of A himself. But again at the instance of A, C was impleaded as defendant when the claim was barred by time against him. The plaintiff claimed the benefit of the proviso to section 21(1) of the Act of 1963 and it was held that the said proviso applies to cases of initial omission to add parties and it has no application where plaintiff impleads a person as defendant but later with open eyes gives him up. I have taken the view that the proviso to section 21(1) of the Act of 1963 was not at all relevant in the present case, notwithstanding the fact that the plaintiff himself claimed that he should be given the benefit of the proviso to section 21(1) of the Act of 1963. Apart from the fact that on that ground the decision of the Karnataka High Court is not relevant for our purpose, on the facts of the present case, it is clear that legally original defendant No. 2 could not have been made a party defendant to the suit when it was filed because of the statutory bar of notice u/s 164 of the Maharashtra Co-operative Societies Act. The suit as originally filed had to be treated as wholly incompetent and invalid and merely because the name of defendant No. 2 was later on deleted by the petitioner-plaintiff and again the petitioner sought the addition of defendant, that by itself would not have deprived the petitioner of the benefit of the proviso to section 21(1) of the Act of 1963, it had become necessary for him to so claim.

8. I am, therefore, of the view that though the learned trial Judge was justified in making his operative order that the proviso to section 21(1) of the Act of 1963 could not be invoked, the further finding which he has confirmed that the suit against defendant No. 2 was barred by limitation is liable to be set aside. The suit as against defendant No. 2 must be treated as having been filed on 13th July 1977 when the application for joining defendant No. 2 as party was made.

9. The petition is thus partly allowed and the rule made absolute accordingly. However, in the circumstances there will be no order as to costs. The trial Court shall now proceed with the suit.