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Sundardas Harbhagwandas and ors. Vs. the Indian Bank Ltd., Madras and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberCivil Revn. Petn. Nos. 2282 of 1968 and 307 etc. of 1969
Judge
Reported inAIR1974Mad119
ActsCode of Civil Procedure (CPC), 1908 - Order VIII-A, Rule 5; Madras High Court Original Side Rules - Order 5-A
AppellantSundardas Harbhagwandas and ors.
RespondentThe Indian Bank Ltd., Madras and ors.
Cases ReferredIn P. S. Pattabhiraman v. Ganapathi
Excerpt:
.....as it was not raised in lower court - petition dismissed as it not fit case for applying third party procedure. - - the banks files suits against the maker of the hundi as well as the petitioner which discounted the hundi. 4. the plaintiff-banks objected to the impleading of the respondents as defendants to the suit stating that the liability of the executant of the hundi as well as the petitioner which discounted the hundi is beyond dispute and the object of the petitioner in seeking to implead the respondents as defendants to the suit is to delay the remedies available to the petitioner. it was observed that all that is necessary for the application of third party procedure is whether, if the plaint claim is allowed, the defendant has a claim in that event for indemnity, by..........the court shall exercise its discretion and decide whether this is a proper case in which third party procedure has to be restored to. mr. ranganatha sastry for the petitioner relied on the decision in parasmal v. rajalakshmi, : air1970mad47 where it has been held that third party procedure is available in suits on negotiable instruments. it was observed that all that is necessary for the application of third party procedure is whether, if the plaint claim is allowed, the defendant has a claim in that event for indemnity, by reason of such claim being allowed, from a third party, and that, if the requisite is satisfied, the court will be justified, on any extraneous grounds, from refusing third party procedure. the question as to prejudice to the plaintiff was neither raised nor.....
Judgment:
ORDER

1. In all these petitions, the petitioner is the same which is a registered firm of bankers. The facts are similar in all these petitions and the question that arises for determination is also the same. A hundi was executed by a merchant in favour of one or other of the Banks who are respondents in these petitions. The hundi was discounted by the petitioner-2nd defendant. When the hundi became payable, neither the executant of the hundi nor the petitioner paid the amount due to the concerned banks. The banks files suits against the maker of the hundi as well as the petitioner which discounted the hundi. The petitioner filed petitions for impleading certain respondents as defendants to the suit, on the ground that they had executed letters of guarantee undertaking to be liable regarding the promissory notes and other transactions that may be entered into by the petitioner. The courts below dismissed the petitions declining to implead the respondents as defendants to the suit. Hence these revision petitions.

2. The allegations made in the petition is that the petitioner discounted the hundi with the bank, and, as the executant of the hundi defaulted to pay the amount under the hundi, the plaintiffs banks filed suits for recovery of the amount.

3. The petitioner stated that the respondents, who are sought to be impleaded as defendants to the suit, have executed letters of guarantee in favour of the petitioner, whereby they made themselves liable for payment of loans on promissory notes, hundies etc. Therefore, according to the petitioner, the respondents are liable for the suit claim. It is also the case of the petitioner that one of the respondents has created an equitable mortgage by deposit of title deeds in respect of the loan. In the circumstances, the petitioner pleaded that the respondents should be impleaded as defendants to the suit.

4. The plaintiff-Banks objected to the impleading of the respondents as defendants to the suit stating that the liability of the executant of the hundi as well as the petitioner which discounted the hundi is beyond dispute and the object of the petitioner in seeking to implead the respondents as defendants to the suit is to delay the remedies available to the petitioner. One of the respondents sought to be impleaded as a defendant to the suit, stated that he is not liable for the suit claim, and that he has filed a partition suit O.S. No. 554 of 1969 in which the petitioner is a party and his rights and claims are pending in that suit.

5. The learned counsel for the petitioner submitted before me that the provisions of Order VIII-A, C.P.C. are wide enough to enable the petitioner to implead third parties as parties to the suit. He also submitted that the lower court was in error in relying on the decision in Uthaman Chettiar v. Thiagaraja Pillai, (1956) 68 M.L.W. 810 = AIR 1956 Mad 155, which was subsequently dissented from in later decisions.

6. The object of Order VIII-A, Civil P.C. is to prevent the same question being tired twice over, where there is substantial question common as between the plaintiff and the defendant in the action and as between the defendant and a third person. In such a case, the third person is impleaded as party to take part in the proceedings so as to bind him by the decision on the question that is raised. In all these case, it has to be considered whether the plaintiff would be prejudiced in any way or delayed in his action by impleading third parties. If the decision on the claim by the plaintiff is likely to be unduly prolonged and thereby there would be considerable delay in the plaintiff obtaining relief the Court would be hesitant to implead third parties as parties to the suit. Under Order VIII-A, Civil P.C. a defendant, who claims to be entitled to contribution from or indemnity against any person not already a party to the suit, may, by leave of the Court, issue notice to such a person. The Court shall exercise its discretion and decide whether this is a proper case in which third party procedure has to be restored to. Mr. Ranganatha Sastry for the petitioner relied on the decision in Parasmal v. Rajalakshmi, : AIR1970Mad47 where it has been held that third party procedure is available in suits on negotiable instruments. It was observed that all that is necessary for the application of third party procedure is whether, if the plaint claim is allowed, the defendant has a claim in that event for indemnity, by reason of such claim being allowed, from a third party, and that, if the requisite is satisfied, the Court will be justified, on any extraneous grounds, from refusing third party procedure. The question as to prejudice to the plaintiff was neither raised nor considered in the decision cited and the observations cannot be read as the learned Judge laying down that prejudice to the plaintiff is an extraneous ground.

7. The provisions of Order VIII-A, Civil P.C. are based on the rules relating to third party procedure embodied in O. 5-A of the Madras High Court Original Side Rules, and their object is to avoid multiplicity of suits and the possibility of conflicting decisions being rendered with reference to the same subject-matter in different suits.

8. In Swansa Shipping Co. v. Duncan, (1875) 1 QB 644, while dealing with O. XVI Rr. 17 and 18 which provided for third party procedure when the defendants claim contribution and indemnity against a person, it was held that the Court should consider whether the plaintiff would be prejudiced in any way or delayed in his action by such proceedings. In AIR 1956 Mad 155, Panchapakesa Ayyar, J., while considering the applicability of the provisions of Order VIII-A, Civil P.C. to a suit on promissory notes, held that in suitable cases third party notice can be issued. The learned Judge observed that, where no reference at all was made to a third party or his joint liability along with the petitioner in the promissory note, it is inexpedient, inadvisable and dangerous to issue a third party notice, simply because the contention was set forth in the written statement and there is an issue also in the suit. The learned Judge has not ruled that third party procedure cannot be resorted to in a suit on promissory notes, but has only sounded caution in resorting to the third party procedure in such suits. In P. S. Pattabhiraman v. Ganapathi, : AIR1962Mad202 , Ramachandra Iyer, J. (as he then was) observed-

'Order VIII-A, Civil P.C. provided for impleading a third party so as to enable the Court to decide the substantial question involved in the presence of the third party. But the impleading of a third party might in certain cases, tend to delay or even embarrass trial of the suit. There should, therefore, be a proper balancing of two considerations: (1) the plaintiff's right to choose the party against whom he wants relief and the avoidance of unnecessary issues in a suit which would tend to delay and embarass the trial and (2) avoidance of the possibility of conflicting judgments and if possible to render justice to the defendant without in any way affecting the plaintiff's rights.'

9. The learned Judge understood the decision in AIR 1956 Mad 155, on which reliance was placed in support of the contention that Order VIII-A, Civil P.C. will never apply to suits on promissory notes, as not laying down any such broad proposition. As stated already in AIR 1956 Mad 155 Panchapakesa Ayyar, J. held that in suitable cases third party notice can be issued even on a suit on promissory notes. The observation of the learned Judge, namely, that where no reference at all was made to a third party or his joint liability along with the petitioner in the promissory not it is inexpedient, inadvisable and dangerous to issue a third party notice cannot, be taken to mean that the learned Judge intended to strictly restrict the impleading of third parties to proceedings on promissory notes only to cases where there is reference to liability of third parties in the pronote itself. But, as observed in : AIR1962Mad202 , in applying third party procedure, the Court is bound to balance the two considerations, namely the plaintiff's right to choose the party against whom he wants relief and avoidance of the possibility of conflicting judgments. The position therefore, it that before granting permission for impleading third parties as parties to the suit, the interests of the plaintiff should be taken not of. The Court will not be justified in refusing leave to implead third parties as parties to the suit merely on the ground that the plaintiff would be inconvenienced. But, if, by impleading third parties, the plaintiff is considerably prejudiced, or delayed in getting his relief unduly the Court will not resort to third party procedure.

10. In these cases, a decree has been passed by consent against the executant of the hundi and the petitioner who had discounted the hundi. In the circumstances, the impleading of third parties as parties to the suit and permit the defendant and third parties to settle disputed questions of fact and law would considerable delay the remedy of the plaintiff. The plea raised on behalf of one of the respondents sought to be impleaded as a party to the suit is that he is not liable for the suit debt, that he had filed a party and that his liability is subject to the result of that suit. It is also stated that some of the respondents sought to be impleaded as defendants to the suit are partners of the firm that executed the hundi. In the circumstances, the disputes between the petitioner and the third parties to be impleaded as parties to the suit have to be decided before the plaintiff gets his relief. Thus, the plaintiff will be seriously prejudiced.

11. Mr. Ranganatha Sastri, the learned counsel for the petitioner, next submitted that the procedure under Order VIII-A, Civil P.C. contemplated passing of the decree as against the defendants in the suit, leaving the question as to the liability between the defendants and third parties, sought to be impleaded, to be decided separately. In support of this contention, the learned counsel referred to Order VIII-A, Rule 5 which provides that, if the third party enters appearance, on the application of the defendant the Court may, if satisfied that there is a question to be tried as to the liability of the third party to make the contribution or pay the indemnity claimed, in whole or in part, order the question of such liability as between the third party and the defendant to be tried at or after the trial of the suit. The learned counsel submitted that under Order VIII-A rule 5 of the court may determine separately the rights as between the petitioner and the respondents sought to be impleaded as defendants to the suit. But this plea was not taken at the time when the applications were made in the lower court for impleading the respondents as defendants to the suit is taken for the first time in this Court. Therefore, I am not inclined to allow the petitioner to take this plea.

12. For the reasons stated above, I am satisfied that this is not a fit case for applying third party procedure under O. VIII-A. The petitions are, therefore, dismissed with costs.

13. Petitions dismissed.


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