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State Trading Corporation of India Ltd. Vs. Ironside Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberAppeal No. 30 of 1964 and Suit No. 327 of 1963
Judge
Reported inAIR1966Bom126; (1965)67BOMLR644; ILR1966Bom312
ActsBombay Court Fees Act, 1959 - Sections 2(C) and 5(1); Code of Civil Procedure (CPC),1908- Sections 26 - Order 4, Rule 1
AppellantState Trading Corporation of India Ltd.
Respondentironside Ltd. and anr.
Appellant AdvocateMurzban Mistree and ;Nathwani, Advs.;M.S. Sanghvi, Adv.
Respondent AdvocateNariman and ;B.R. Zaiwalla, Advs.
Excerpt:
bombay court-fees act (bom. xxxvi of 1959), sections 5(1), 2(c); sch i, articles 4, 7; schedule ii. articles 1(f)(iii), 20-23 - bombay high court original side rules. rules 151-155--indian divorce act (iv of 1869), sections 10, 14, 18, 19--hindu marriage act (xxv of 1955), section 13--civil procedure code (act v of 1908), section 26; order iv, rule 1--whether court-fee leviable on third party notice--third party notice whether a plaint for purposes of court-fees act--applicability of article 7, schedule i to court-fees act.;under the bombay court-fees act, 1959, court-fee is leviable on a third party notice as an application to the court to obtain relief specified in the third party notice.;barclays bank v. tom [1923] i.k.b. 221, weld & co. v. sher mahomed (1919) 21 bom. l.r. 808,.....chainani, c.j. (1) this is appeal by the original defendants against the order made by the mr. justice k.k. desai directing the defendants to pay court -fee on the third party note taken out by them against the second respondent. on 5th september 1959 the second respondents entreated into a contract with the first respondents who are the original plaintiffs, for the supply of manages are to the plaintiffs. the contract provided that the material shall be re - routed through the state trading corporation of the india ltd. i.e. through the defendants. on these day the appellants defendants entered into a contract with the first respondents for the supply of managers are to the first respondents. the appellants also entered into a contract with the first respondents for the supply of.....
Judgment:

Chainani, C.J.

(1) This is appeal by the original defendants against the order made by the Mr. Justice K.K. Desai directing the defendants to pay court -fee on the third party note taken out by them against the second respondent. On 5th September 1959 the second respondents entreated into a contract with the first respondents who are the original plaintiffs, for the supply of manages are to the plaintiffs. The contract provided that the material shall be re - routed through the state Trading corporation of the India ltd. I.e. through the defendants. On these day the appellants defendants entered into a contract with the first respondents for the supply of managers are to the first respondents. The appellants also entered into a contract with the first respondents for the supply of manganese are of the in first respondent. The appellants also entered into a contract with the second respondents, who agreed to supply the manages are to the appellants. The arrangements arrived to the therefore was that the second respondents were to supply manganese are to the appellants who had to consign it to the first respondents. According to the first respondents the goods supplied to them were not of the proper quality and there was also short deliveries. On 23rd September 1963 the first respondents therefore filed a suit against the appellants in which they claimed about Rs. 7, 75, 000 from the appellants. On 27th November 1963 the appellants obtained leave from the second respondents and to serve it upon them. This leaves was applied for and grated under Rules 151 of the High court Original side Rules. By this notice the second respondents were informed the same relieves, which had been claimed from the appellants by the first respondents. The notice also stated.

'The defendants say that the following question or issues relate to or are connected with the original subject matter of the above suit and are original subject the matter of the above arising the between the plaintiff and the defendants same should property be determined on only as between the plaintiff and the defendants but as between the plaintiff and defendants but as between the plaintiff defendants and yourselves.

(i) Whether the said consignment of the Manganese are shipped is per S.S. 'Older' in July 1960 was deficient in quantity and quality as alleged by the plaintiffs in the plaint and you thereby committed a breach of the alleged contract No, 90/1959.

(ii) whether the your committed fraud, miss- respondent of deceit as stated by the plaintiff in the suit.

(iii) Whether the damages for the aforesaid breach of contract mentioned in [I] hereof come to the said sum of Rs. 2,49, 455. 49 NP. As per particulars mentioned in Ex. G to the plaint and the said further sum of Rs. 16, 609 with interest on the aforesaid sums at the rate of 6 per annum from the date of the suit till judgment.

(iv) Whether you failed to ship the remaining quantity of the manganese are by the end of November 1960 and thereby committed a breach of the said alleged contract No. 90/1959.

(v) Whether under the circumstances stated in sub = paragraph [iv] above you are liable to return to the defendants the said sum of the Rs. 5,77,128.68 nP being the price paid in the advances on behalf of the defendants to your under the contract No. 99/1959 with interest thereon at 6 per cent per annum from the 6th day may 1960 till payment.

(vi) Whether you are liable to the pay to the defendants the cost that the defendants may have to pay to the plaintiff in suit and the costs incurred by the defendants in defending the plaintiff claims in the suit as also of the Third party proceedings.'

The notice further stated that if the second respondents wished to disputed the plaintiff claim in the suit against the defendants or their liability to the defendants or it they wished to the be hears on the said question or issued or on the defendants liability to the plaintiff or the liability of the second respondents to the defendants then they should causes an appearances to the entered should without eight days fro the service of the notice. The second respondents were further informed that is default of their doing so they would be might be passed against the do any decree that might to passed against the defendants the compensation to the defendants to the extent therein specified. On 17th January 1964 the second respondents filed their appearances. On 5th February 1964 the appellants took out a summons for directions under Rules 154 of the Original side rules. This summons camp up of the for hearing before my learned brother. He directed that a notices should be served on the state government for consideration of the point whether court fees were payable on the third party notices. The summons was thereafter heard by Mr. Justice K.K. desai. He come to the conclusion of that the court =- fee were payable to accordingly directed to the appellants to pay court - fees in the respect of the Third Party notices, in the respect of the Third party notice which the had been issued to the second respondents. Against that order the presents appeal has been filed.

(2) Mr. Mistree, learned counsel of the appellants has contended that the Third party notice is issued by the court , that it bears the seal of the issued court that the is consequently it is only a process issued by the court that the it is not a pleading of any party and that consequently no court = fee is payable is respect of it. In order to determine the validity of these arguments, it is necessary to consider of the relevant provision of the rules. The provisions in regard to the Third Party procedure are contained in Chapter IX of the Original are contained in the rule (1) of Rule 151 in the following terms 151 (1) where is suit a defendants claims as against the any person not already a party to the suit (hereinafter called the third party) -

(A) that his entitled to contribution or indemnity, or.

(B) that he is entitled to any relief or remedy relating to or connected with the original subject - matter of the suit and substantially the same as some relief or remedy claimed by the plaintiff or

(C) that any question or issue relating to or connected with the said subject = matter is substantially the same as question or issue and arising between the plaintiff and the defendants sand should property be determined not only as between the plaintiff and the defendants but as between the plaintiff and the defendants or the third party or between any or either of them.

He may be leave of the court or a judge issue a notice [here in after called the third party notice] to that effect sealed with the seal of the court. Such noticed shall be field with the prothonotary and senior mast and copy there of served on such person accordingly to the rules relating to the services of writs of the summons'

The third party procedure can therefore be adopted when the defendants claim from the adopted when the defendants claims third party an indemnity or contribution of the some the relief connected with the original some other relief subject matter of the suit or when common question of and arises of the between or the plaintiff and the defendants and between the defendants and the third party, or when any question arising between the plaintiff and the defendant can property be determined as between the plaintiff and the defendants can and third party. Before this procedure can be adopted it is necessary to obtain leave of the court. Sub rule (2) of Rule 151 states of that the notice shall state the nature an grounds of the claim or the nature and the extent of the relief or remedy claimed or the nature of question or issue sought to the determined and that such notice shall to the form No.13 or the No. 14 with such variations as circumstances may require. The defendants had therefore to the state of the made to him but also the grounds on the which is his claims based. He had therefore to give the particular so his claim in the notice. Sub = rule (3) of Rule 151 provides:

'(3) The third party shall as from the time of the service upon him of the notice, be a party to the suit with the same rights in respect of his defense against as any claim made against him defense against any claim made duly sued him in ordinary way by the defendants.

After the service of third party notice upon him, a third party therefore becomes a party to the suit between the plaintiff and defendants. He is also entitled to raise all defendants to the claim made against him by the defendants of which he could have urged if instead in the taking out a third party notice the defendants had filed a suit against him.

(3)Rule 152 States that in the default of the third party entering an appearance, he shall be deemed to admit the validity of the decree obtained against the defendants and his own liability to contribute or indemnify as the case may be the extent claimed in third party notice Rules 153 provided claimed that when a third party marks a default in entering an appearance in the suit in case the suit is tried and results in favor of the plaintiff as judge who tries the suit may pass such decree as the nature of the case may require for the defendants giving the notice against the third party.

(4) Rule 154 provides that if a third party enters an appearance, the defendants may apply to the court for directions and the courts or judge may (a) where the liability of the third party of the defendants giving the notice is established to on the hearing of the application pass such decree as the nature of the case may require in favour of the defendants giving the notice against the third party, or (b) if satisfied that there is a question or issue property to the be tried as between the plaintiff and the defendant and the third party to make the contribution or indemnity claimed to in whole or in part or as to any other relied or remedy claimed in the notice by the defendants or that a question or issue stated in the notice should be determined not only as between the plaintiff and the defendants and the third party or any or either of the them over such question or issue to be tried of the suit as the court of Judges may direct or 9c) dismiss the application. Rule 155 states that he court or judge upon the hearing of the application mentioned to in Rule 154 may if it shall appear desirable to the do so give the third party liberty to defend the suit either alone or jointly with the original defendants or to appears at the trial and take such part of the in as may be just and such directions as to the courts questions and the rights and liabilities of the parties most conveniently determined and enforced and as to the mode and extend into which the third party shall be bound or made liable by the decree in the suit. The third party by notices such is to be issued to inform No., 13 of the No. 14, with such variation of as circumstances may requiems. The relevant part of Form No.13 is as follows:

'Take notice that his suit has been brought be the plaintiff against the defendants.

The defendants claims to be entitled to contribution from you to the extent to.....

Or to recover damages for breach of contract for the sale and delivery to the plaintiff of....

The defendants claims for to be indemnified by you against liability in respect to the said contract or any breach thereof on the ground that is was made by the him on your behalf and as your agent.

And take notice that if you wish to dispute the plaintiff claim in this suit as against the defendants or your liability to the defendants you must causes an appearance to the entered for you within the eight days after service of this notice.

In deferral of your so appearing you will be deemed to admit the validity and of any decree passed against the defendants and your own liability to contribute or indemnify of the extent herein claimed which may be summarily enforced against you pursuant to the rules of the High court.'

Form No. 14 is to be adopted when a common question or issue is to be determined.

(5) The object of this procedure is to avoid multiplicity of proceedings and to enable to the defendants to obtain expeditiously in the same suit in which a claim has been made against the defendants relief which he is entitled in respect of that claim from a third party. It saves the defendants the necessity of instituting separate suit and eliminate the risk to the conflicting decision of any common question of issue which may arise between the plaintiff and the defendants and the defendants and the third party. In Barclays Bank v. Tom [1923] I KB 221, it was held that the person who has been served by the defendants with a third party notice is the entitled to counterclaim against the defendants. At pp. 223 and 224 secretion L J explained the third party proceedings in test term:

'I think it is important to keep clearly in mind that the third party procedure is. A plaintiff has a claim against a defendant. The defendant thinks if he is liable he has a claim over against third party. With the matter between the defendants and the third party the plaintiff has obviously nothing to do. He is not concerned with the question whether the defendants has remedy against somebody else. His remedy is against the defendant. But the defendants is much interested in getting the third party bond by the result of the trial between the plaintiff and lost he had them to fight the case against the third party possible different materials with the risk that a different result against might be arrived at. The object of the third party procedure is then in the first place to get the third party bound by the decision between the plaintiff and the defendants. In the next place it is directed to getting the question between the plaintiff and the defendants so that the defendant may not be in the position of having to wait a considerable time before he establishes his right of indemnity against the third party while all the time the plaintiff if enforcing his judgment against the defendant. And thirdly, it is directed to saving the extra expense which would be involved by two independent actions. With these objects in view the third party order usually provided that the third party may appears at the trail between the plaintiff and the defendants.'

(6) It will be seen has that in the third party notice the defendants has to specify the relief claimed by the him and the grounds on which he claims it, as he would do no it plaint, it instead to taking out a third party notice he filed a suit in other to obtain the same relief. The third party notice therefore contains a statement of the causes of action of the respect defendant against the third party. It incorporates the pleading the defendants is respect of disclaims against the third party. It is to this pleading that the third party is called upon the to make his reply. It is the claim made in this document which the third party has to defend and it is on the claim made I this document that the court ma y pass a decree in favor of the defendants against t he third party. A third party notice therefore serves two purposes. It is in intimation to the third party that a claim to contribution of indemnity or some other relay had been made against the him by the defendants and that if he does not appear and dispute his liability a decree may be passed against him. It is also serves the purposes of the plaint. In this connection reference may be made to the decision of Marten j., as the then was in Weld & Co. V. Sher Mahomed, 21 Bom LR 808: AIR 1920 Bom 363 in which he held that third party proceedings fall within the he held that third party proceedings fall within the words 'suits of every description' in Clauses 12 of the letters Patenat. At p. 813 [of Bom LR]; At p. 364 of AIR] the learned judge observed.

'.................... we have under the Bombay High court Rules a form of procedure which is in substances a 'suit' against the third party within the letters patent. Before the third party notice has been served on him, he is a free man and no court can pass a decree against the him. As a result of that third party notice he in peril, and may, unless he takes certain steps, have decree passed against him. It seems have to me therefore passed against him. It seems to me classes 12 of the Letters Patent, just as the the case of an added defendants or of counterclaim against the new party does, and that leave under Clause 12 is necessary.'

(7) A third party notice bears the seal of the court. This must be so because it is a process issued by the and under the authority or the court. For the same reason it is not signed or verified by the defendants as an ordinary pleading is required to be signed and verified. But as a third party notice also incorporates the defendants pleading in notice respect of his claim against the third party, the fact that is bears the seal o the court or that it isn't signed or verified by the defendants, in the manner in which a pleading is required to be signed and verified would not save the defendants from liability to pay court - fee it is otherwise payable. Sub - section (1) of S. 5 of the Bombay court - fee act 1959 provided that o documents of any of the kinds specified to this act annexed shall be filed, second schedule to this act record in any court of justice, unless in respect of such document there has been paid a fee of an amount not less than that indicated in either of the said schedules as the proper fee for such document. A third party notice is field in court. It will therefore attract duty it if can be said to be a document of nay of the kind specified in the first or second schedule to the act. The two schedules prescribe court - fees on plaint applications and petitions filed in court. The act was enacted in 1959 many years after the third party procedure has been introduced. No separate provision has been made in the act for levy of court = fee on third party notices. A third party notice is also not included in the definition of 'plaint' given in clauses (C) in S. 2 of the Act. It has therefore been contended by Mr. Mistree that an court - fee is leviable on a third party notice as if the legislature intended that court = fee should be levied on such a notice it would have made a provision to that the a notice. If however it can be said to be a plaint, application or petition it would be liable to court = fee under one or other of the articles in the two schedules.

(8) The question therefore arises whether a third party notices is plaint within the meaning the notice court - fees act. According to the Oxford dictionary a plaint means as statement of grievances made to court of law for the purposes of obtaining redress. In Jowit's Dictionary of English Law, 'Plaint' is defined as a statement in writing of a causes of action. In Assan v. Pathumman. ILR 22 Mad 494 Subramania Ayyar, j. Observed.

(8a) In the same volume at p. 256 [of ILR 22 Mad] there is the report of the another decisions of Division Bench of the Madras High court to which also the learned judge was a party, [Venkata Chandrappa v. Venkatarama Reddi] in which is was held that the suit must commence with a plaint and a proceeding which is capable of terminating in a decree or an order having the force and decree or an order having the force of decree cannot, on that ground alone, be deemed to be a suit with in the meaning or the code ,if it has not commenced with a plaint.

(9) Even thought the dictionary meaning of the words 'Plaint' is very wide, it has in legal phraseology come to acquire a more limited meaning and that is statement in writing of the causes of action in a suit. Every proceeding in a court is not commenced by a plaint. Section 10 of the Indian Divorce Act, 1869 states that the any husband may present that petition of District court praying a petition of the husband marriage may is dissolved on the ground that his wife had been guilty of adultery. The section also provides for a petition by a wife for dissolution of her marriage on certain ground. Section 18 states that any husband or wife may present a petition praying that he his her marriages ma be declared null and void. Section 14 and 19 provides for decrees being passing in such cases section 13 of the Hindu Marriage Act being provides for a petition begin presented to the court by either the husband o the wife for dissolution of marriage by a decree for divorce on the ground specified in this section. These proceedings therefore commence with a petition, which is not called a plaint even though the proceedings ends in a case deer of the court. The court = fee act also marks separate provisions for such petitions. Article 20 in schedule II provides for court = fee of the Rs. 37.50 on every petition under the India Divorce Act except petition under S .44 of that Act. The same court - fee has been prescribed by Article 21 on a petition under the Hindu Marriage act. An additional under Court - fee is payable when in addition to divorce damages are claimed. Court fees are therefore levied on these documents as petitioners and not as plaints. Article 4 in schedule as petitioners and not as plaints applications or petition which is capable of begin treated or as a suit. Similar phraseology is used in some other articles such as article 23 of in schedule 11. The court = fee act itself therefore makes a distinction of between a plaint and an application or petition presented to account. It recognizes that every document of containing a statement of the every document of containing action or by which a proceedings is commenced in a court is not a plaint.

(10) Section 26 of the Civil Procedure code states that every suit shall be instated by the presentation of a plaint or in such other manner as may be prescribed. O. 4, R.1 lays down that every suit shall be instated by presentation of plaint to the court or such other officer as it appoints I n this behalf. In Hansraj Gupta v. Official Liquidators the privy Council held that the words ' suit' in S. 3 of the India Limitation act , ordinarily means civil proceedings instituted by the presentation of plaint. The instituted by the presentation of the of plaint. The same view has been taken by a full Bench of this court in Farkhundali v. Potdar : AIR1962Bom162 where it is observed that the word 'suit' is term of art and ordinarily means a proceedings instituted in a civil court by the presentation of plaint. It was held in that the case that a proceedings under S. 54 of the Bombay Co - operative societies act is not a suit. These authorities, therefore establish that a plaint is a document by the presentation of which in a civil court a suit is instituted.

(11) Sub - rule (3) Rule 151 of the Original side Rules, which I have quoted above stated that a third party shall have the same rights in respect of any claim made against the him as if he any claim made against him as if the had been duly sued in the ordinary way by the defendants. A third party is therefore given a right to defend himself as if a suit has been filed that is as if a plaint had a suit has been filed that is as it plaint had been presented. The defense is to be made to the claim set out in third party notice. By a legal fiction created by sub = rule (3) of the Rule 151 a third party proceeding is therefore treated as a suit for certain purposes. In state of Bombay v. Pandurang : 1953CriLJ1049 the supreme court has observed that full effect must be given to a statutory fiction and that if should be carried to its logical conclusion. It has therefore been contended by Mr. Nariman and Mr. Sanghavi that a third party proceedings is by legal fiction to be regarded a as suit, the third party notice must necessarily be held to be plaint. The legal fiction has however been introduced in order that no prejudice ma be caused to the third party be a third party notice being taken out instead of a suit being filed against him and in order to give the third party full opportunity to defend himself. He is therefore placed in the same position as if a suit had been filed against him. The legal fiction has therefore been enacted for a limited purpose. There is nothing in the rule which suggested that a third party notice must be treated as plaint for the all purposes. Rule 151 itself provides and that for the purposes of enforcing his claim against the third party the defendants may take is third party notice. A third party proceedings in the suit filed by the plaintiff against the defendant. In our opinion, therefore a third party notices is not a plaint at least for the purposes of the court - fees act.

(12) The next question of be considered is whether court -fees would be leviable on third party notices as an application or petition to the court. A third party notices being a process issued by the court is not itself an application or petition to the court. Before such a notice can be taken to out leave of the court has to be applied for. After the leave has been grand the defendants for is however not bound to proceed further or to take out a third party notice. If he decides to take further steps in the matter, he has to move the court to issue the notice and to seal it. Thereafter it is to be sent for service. The proactive which we have been in formed I followed on the Original side in accordance's with the requirement of the rule the practice seems to be that the after the court has granted leave to take to the third party to is a preoccupies is addressed to the prothonotary of the High court and long with the practice a draft of the third party notice is sent to him for approval and for the approved copy of the notice being sealed. It is by his practice or application that the courts jurisdiction is invoked and the court is moved to summon the defendants and adjudicate upon the claim set out in the and draft the third party. This practice is therefore liable to court - fee as an application the in third party notice.

(13) It has been urged by Mr. Sanghvi that if the relief claimed in the third party notice is capably of being valued in terms of money the article which would be applicable is Art 7 in schedule 1. This article specifies the court - fee payable on any plaint application or petition not specified in the earlier articles in his schedule to obtain substantive relief and which is capable of being valued in terms of monetary gain or prevention of monetary loss, including cases wherein application or petition is either treated as plaint or is described as the mode of obtaining the relief as aforesaid'. Mr. Mistree of obtaining the relief as hand has contended that the courts - fee which would be payable in such a case is that indicated against sub clauses [iii] in clauses [f] in Article 1 in Schedule II that is fixed fee of Rs. 5. Clauses [f] in Article 1 in schedule II refers to an application or petition when presented to a High court. Sub - clauses [I] and [ii] mention certain kinds of applications or petitioners with which we are not concerned. Sub - clauses [iii] refers to 'any other cases not otherwise provided to by this Act' Mr. Mistree has argued that his sub - clauses will apply I n the case of every application of petition presented to a high court unless there is some other specific provision with regard to application or petitioner of High court. We have been taken through the various to application article 1 the two schedule. We find that court fee very according to the subject matter of the plaint application or petition which also according to the authority before the which it is presented. For instances, under article which 6 in schedule II a court - fee of Rs. 2 of prescribed for an application of leave to appeal as pauper when presented to a district court. It presented to High Court the fee is Rs. 5. There are other articles such articles 1 to 7 in schedule 1 which prescribe court - fee with reference t the subjects matter irrespective of the court in which they are present. No sufficient reason has been shown by the sub = clauses (iii) in clauses [f] of Article 1 in schedule II should be construed as referring only to absences or other provisions in the act only specifically in regard to applications to the High court. If there is an article which prescribes court - fees with reference to the subject = matter of the application to the high Court. If there is an article which prescribes court -fee with reference t o the subject matters of the application and if the applicability of the articles is not restricted to the court others then the High courts it will also exclude the application of sub - clauses [iii] in clauses [f] of article I. Thus if the application made to court is to obtain relief of the natures referred to the court is the and sub - clauses [iii] n clauses [f] of the present case the relief which the applicants have claimed from monetary loss. Consequently court - fee payable will be according to the scale indicated against. Article 7 of the in schedule 1 to the act.

(14) In our opinion, therefore the learned judge was right in holding that the appellants are liable to pay court - fees in respect of the third party notice take out by them.

(15) Having regard to the circumstances of this case, we make on order as to costs.

(16) The appellants are given three weeks time to pay court - fees.

(17) The appellants attorney are allowed to withdraw Rs. 1, 000 deposited by the appellants for the respondents costs of the appeal.

(18) It seems to us that the order that there may be no doubt in the matter, Government may consider whether the court - fee act should not be amended and specific provision made therein for the levy of court - fees in respect of third party notices. If it is decided to make for refund to whole or part of the court - fees, it the claim made byte part of the against the third party is not tired on parties either owing to the original suit filed by the plaintiff being dismissed, or if the third party notice is dismissed on the application for directions made under Rule 154.

(19) Appeal dismissed.


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