Allowed

M. Kishan Rao v. R. Subramanyam

Telangana HC8 Apr 2010CRP/3570/2009

Case brief

AI extract

What is this about?

This court allowed civil revision petitions challenging the dismissal of an application for interrogatories under CPC. The court held that questions regarding the existence of the transferor company and the loan details were relevant facts in issue, not fishing enquiries, and ordered the plaintiff to answer them.

What did the court decide?

The impugned order dated 09.03.2009 in I.A. No.627 of 2008 is set aside and the application is allowed directing the plaintiff to answer the interrogatories on or before 19.04.2010.

M. Kishan Rao Vs R. Subramanyam — Contract and Commercial Disputes | Telangana HC (2010)

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THE HON’BLE SRI JUSTICE K.C.BHANU

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CIVIL REVISION PETITION Nos. 3570 of 2009 & 3575 of 2009

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COMMON ORDER:

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1. Civil Revision Petition No.3570 of 2009 is directed against the order dated 09.03.2009 in I.A. No.626 of 2008 in O.S. No.145 of 2006 on the file of the I Additional Chief Judge, City Civil Court at Secunderabad, whereunder and whereby the petition filed under Order XI Rule 1 of the Code of Civil Procedure, 1908 (for short, ‘CPC’) to grant leave to the petitioner/plaintiff to deliver interrogatories to the respondents/defendants to be answered within 10 days, was allowed.

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2. Whereas, the defendants 1 and 3 in the above suit filed I.A. No.627 of 2008 under Order XI Rules 1 and 2 CPC to permit them to deliver interrogatories to the respondent/plaintiff for answering the same. The said petition was dismissed by the trial Court vide its order dated 09.03.2009. Challenging the same, Civil Revision Petition No.3575 of 2009 is filed.

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3. For sake of convenience, the parties are hereinafter referred to, as they are arrayed in the suit.

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4. In so far as allowing the petition filed by the plaintiff to serve interrogatories to the defendants, the learned counsel for the petitioners in Civil Revision Petition No.3570 of 2009 is not seriously challenging the order. But, he is seriously challenging the order impugned in the

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other Civil Revision Petition No.3575 of 2009. Therefore, for the purpose of disposal of the present Civil Revision Petitions, the facts in I.A. No.627 of 2008 are relevant.

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5. The brief facts are that, the suit is filed for recovery of Rs.104,03,25,039.04 ps. with interest @ 18% per annum on the ground that the plaintiff is a transferee of an actionable claim executed on 07.10.2005 by a private limited company M/s. Ellala Infotech Inc., registered in United States of America, and engaged in the business of Information Technology and investments; that the defendants 1 and 3 denied in toto the entire transaction including the alleged actionable claim or the obligation to pay the said entity, the amount of US $ 5 million; that, the defendants filed written statement and also filed draft issues, but till today, no original document evidencing the transaction was filed into the court; that, in order to shorten the trial, they may be permitted to serve the interrogatories annexed to the application under Order XI Rules 1 and 2 CPC on the plaintiff, who may be directed to answer the same.

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6. The eleven(11) interrogatories annexed to the petition to be served on the plaintiff, are as follows:

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1.Is it not true that M/s. Ellalla Infotech Inc. was not formed as a private limited co. or registered as such at United States of America ?

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2.Is it not true that M/s. Ellala Infotech Inc. was not in existence on any of the material dates viz. 24.02.1997 or 07.10.2005 ?

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3.When was the entity M/s. Ellala Infotech Inc. incorporated mentioned in paragraph 1 of the plaint

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registered as Private Limited Company under the laws of any state or under federal laws in the United States of America ?

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4.Was the amount of US $ 5 million shown in the accounts of the said Ellala Infotech Inc. as having been remitted to India ?

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5.What are the documents available now to show that the said entity was in existence as a private limited company in any state or States in the United States of America ?

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6.Did the entity M/s. Ellala Infotech Inc. submit returns to the authorities concerned in the state in which it is incorporated and carrying on business ?

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7.What are the documents available with the plaintiff to show that the above said amount is paid or remitted to the Defendants/ petitioners by the said entity ? 8.Did the plaintiff obtain the transfer of the alleged actionable claim on payment of consideration to the said entity ?

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9.If the plaintiff had paid any consideration, what was the amount paid by way of consideration, what was the date on which the amount is paid and what was the place where the said amount was paid ? 10.What is the documentary proof in original to show that a consideration if any paid or alleged to have been paid by the plaintiff to the said entity entered in the records of the company of having been received from the plaintiff and if so on what date?

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11.What is the document establishing the alleged loan of US $ 5 million to the defendants on 28.02.1997 ?

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7. The said petition was resisted by the plaintiff by filing counter stating that the affidavit filed in support of the petition does not disclose any valid grounds for grant of any relief and the petition is not maintainable; that he filed the suit for recovery of money in his capacity as a transferee of an actionable claim, and in the plaint, he had

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given necessary particulars relating to the transfer of actionable claim contained in the document dated 07.10.2005 executed by M/s.Ellala Infotech Inc., which was registered in the United States of America; that, since the defendants denied the said transaction, there is no cause, much less justification, for filing the present petition; that, the interrogatories are in the nature of eliciting the information, which would come out during trial of the suit; that, if the present petition is allowed, it would give an undue advantage to the defendants during trial of the suit; that, the averment that the petition is aimed at shortening the trial of the suit, is totally incorrect and misconceived; that, except the said assertion, the petitioners did not plead any cause, much less justification, for filing of the present petition; that, the interrogatories annexed to the present application are in the nature of enlightening the defendants themselves about the transaction and they are not relevant and based on the pleadings. Hence, they prayed to dismiss the petition.

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8. The trial Court, by order dated 09.03.2009, came to the conclusion that the defendants, who have admitted their signatures in all the documents, must be aware of the existence of M/s. Ellalla Infotech Inc. and other relevant facts, and that if the defendants disclose under what circumstances and in what context they put their signatures in these documents and executed the same, necessary issues would be framed and the relevant party

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would be asked to prove to discharge his onus, and all the interrogatories are in the nature of fishing enquiry and these questions be permitted to be asked a the time of cross-examination, and accordingly dismissed the petition.

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9. Now, the point for consideration in the revision petition is whether order dated 09.03.2009 in I.A. No.627 of 2008 in O.S. No.145 of 2006 on the file of the I Additional Chief Judge, City Civil Court at Secunderabad, is correct and proper ?

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10. The learned senior counsel Sri J.V. Suryanarayana appearing for the petitioners in C.R.P. No.3575 of 2009 contended that the interrogatories sought to be served have a direct bearing and relate to the matter in question in the suit, inasmuch as the petitioners are entitled to know whether the entity M/s. Ellala Infotech Inc., which claims to have advanced the loan amount, was a company registered in the United States of America; that, it is the specific case of the defendants that M/s. Ellala Infotech Inc. has not advanced loan of US$ 5 million to the defendants on 24.02.1997 and also they denied the incorporation of the limited company; that the defendants denied execution of any document styled as confirmation of commitment dated 15.01.2001; that the defendants have not availed any loan from M/s. Ellala Infotech Inc.; that, the defendants are not aware of such entity by name M/s. Ellala Infotech Inc. and the signatures of the

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defendants were obtained in different context and not in the context of any loan advanced by M/s. Ellala Infotech Inc.; that the interrogatories sought to be served directly relate to the matter in question in the suit and the defendants are entitled to know whether any such amount was paid, by way of documentary proof. Hence, he prays to set aside the impugned order.

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11. On the other hand, the learned counsel Sri Vedula Venkata Ramana, appearing for the respondent contended that the confirmation of commitment letter dated 15.1.2001 was executed by the defendants and they admitted the transaction; that it is the specific case of the plaintiff that M/s. Ellala Infotech Inc., as per the deed dated 7.10.2005, advanced loan of US$ 5 million to the defendants, and the defendants agreed to pay the said amount in terms of the commitment document dated 15.1.2001; that, similarly, the defendants also executed another confirmation letter dated 21.01.2003 and the said confirmation is with regard to payment of the amount enured to the benefit of the plaintiff since the plaintiff is a transferee; that the plaintiff has to succeed by adducing necessary evidence with regard to the defendants obtaining loan from M/s. Ellala Infotech Inc. and the interrogatories now sought to be served are fishing out information which is not relevant for the purpose of deciding the facts in issue; that the defendants admitted about payment to be made to the plaintiff by virtue of the commitment letter dated 15.1.2001 and 21.1.2003; that the interrogatories now sought to be served with regard to

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information relating to lending of the amount by M/s. Ellala Infotech Inc. or its incorporation in the United States of America is not much relevant; that the trial Court, after an elaborate consideration of the material on record, rightly held that the interrogatories are in the nature of fishing enquiry and all those questions can be put to the witnesses who may be examined on behalf of the plaintiff during trial, and there are no grounds to interfere with the impugned order. Hence, he prayed to dismiss the Civil Revision Petition.

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12. Powers under Article 227 of the Constitution of India involves a duty on the High Court to keep its inferior Courts and Tribunals within the bounds of their authority, and to see that they do what their duty requires and that they do it in a legal manner. Findings of fact of the inferior Court or Tribunal can be set aside when there is no material to justify such a conclusion and if no reasonable person could possibly have come to the conclusion which the Court or Tribunal has come to, or in other words, it is a finding which is perverse in law. It cannot be used as an appellate or revisional power. Though the High Court is not justified in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein, at the same time, to test whether the findings are correct or not, necessarily it has to see the material available on record.

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13. The suit is based upon transfer of actionable claim of a deed dated 07.10.2005 in favour of the plaintiff said to

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have executed by M/s. Ellala Infotech Inc., which is a private limited company registered at United States of America and doing business in Information Technology and Investments. By virtue of the said deed, the plaintiff is entitled to initiate proceedings for recovery of the loan. M/s. Ellala Infotech Inc. had advanced a loan of US$ 5 million to the defendants to be payable jointly and severally on 28.2.1997. The plaintiff is the transferee and M/s. Ellala Infotech Inc. is the transferor.

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14. Whereas the defendant no.1 specifically denied that the plaintiff is the transferee of the actionable claim under the deed dated 7.10.2005 executed by M/s. Ellala Infotech Inc. represented by its President Mr. Sanjeev. Similarly, the defendant no.1 also denied that M/s. Ellala Infotech Inc. advanced loan of US $ 5 million to the defendants on 28.2.1997. It is also denied that the defendants got incorporated a limited company by name Merit in Port Louis, Mauritius on 24.2.1997. The defendant no.1 also denied that the defendants either jointly or severally executed any document styled as confirmation of commitment on 15.1.2001 and they agreed to pay the amount in terms of the commitment document dated 15.2.2001. It is also denied by the defendant no.1 that the defendants executed another deed of confirmation dated 21.1.2003. It is specifically stated that the defendants have not availed any loan from M/s. Ellala Infotech Inc. and that they have not executed any confirmation letter either on 15.1.2001 or any other

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date; that the defendant no.1 is not aware of any such entity by name M/s. Ellala Infotech Inc. till it was mentioned in the first notice dated 13.8.2005; that, on enquiries, the defendants came to know that there was no such entity by name M/s. Ellala Infotech Inc. in existence anywhere in United States of America since 1987; that, as the defendants have not availed any loan from M/s. Ellala Infotech Inc. and have never executed any confirmation of commitment in its favour, the question of repayment does not arise; that the signatures of the defendants were obtained in a different context and not in the context of any loan advanced by M/s. Ellala Infotech Inc.

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15. Serving of Interrogatories is governed by Order XI Rule 1 CPC, which reads thus:

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“Discovery by interrogatories: In any suit the plaintiff or defendant by leave of the Court may deliver interrogatories in writing for the examination of the opposite parties or any one or more of such parties and such interrogatories when delivered shall have a note at the foot thereof stating which of such interrogatories each of such persons is required to answer:

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Provided that no party shall deliver more than one set of interrogatories to the same party without an order for that purpose:

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Provided also that interrogatories which do not relate to any matters in question in the suit shall be deemed irrelevant, notwithstanding that they might be admissible on the oral cross-examination of a witness.”

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Therefore, the above provision allows the interrogatories to be administered in writing by the plaintiff

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or by the defendant with the leave of the Court, to the opposite party or one or more of them in any matter relating to a suit.

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16. After settlement of issues, a party to the suit may require information from his adversary as to the facts or as to documents in possession or power of such party relevant to the issue in the suit, and where the information as to facts is required, the party is allowed to put a series of questions to his adversary. These questions are called interrogatories. The Court would go through the proposed questions and if it considers them proper, will compel the other side to answer them on oath before trial. This is called discovery of facts. Interrogatory means to ask questions or to make enquiry closely or thoroughly. The function of interrogatories is to enable a party to obtain from the opposite party admissions or evidence of material facts to be adduced at the trial or to appraise the strength or weakness of the case before the trial and thereby to assist in the fair disposal of the proceedings at or before the trial or in saving costs. The right to administer interrogatories, however, is neither absolute nor unqualified. Every suit or action contemplates two sets of facts viz. (1) facta probanda (facts constituting party’s case) and (2) facta probantia (facts constituting evidence). The party is entitled to know beforehand only facta probanda and not facta probantia. The power to serve interrogatories should not be confined within narrow technical limits, but it must be exercised liberally so

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as to shorten the litigation and serve ends of justice. Interrogatories must be directed to facts relevant ‘any matters in issue’.

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17. Material facts are, all the facts which are essential to clothe the petition with complete cause of action. If the material facts are not pleaded, then it goes to the root of the case. But, all the material facts which may be relevant relate to any matter in issue, can be allowed to be administered by interrogatories. The right is, thus, not confined to the ‘fact directly in issue’, but extends to all facts, existence or non-existence of which is relevant to the existence or non-existence of the facts directly in issue.

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18. The expression ‘facts in issue’ as defined under Section 3 of the Indian Evidence Act, 1872, which means and includes any fact from which, either by itself or in connection with other facts, the existence, non-existence, nature or extent of any right, liability, or disability, asserted or denied in any suit or proceeding, necessarily follows. Explanation to the definition says that whenever, under the provisions of the law for the time being in force relating to Civil Procedure, any Court records an issue of fact, the fact to be asserted or denied in the answer to such issue, is a fact in issue. Therefore, the expression ‘facts in issue’ means matters which are in dispute or which form subject of investigation.

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19. The matters which are affirmed by one party to the

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suit and denied by another party, may be termed as facts in issue, and what facts are in issue in particular cases, is a question to be determined by the substantive law or in some cases by that branch of the law of procedure which regulates the law of pleadings, civil or criminal. Therefore, the Court has to decide how the parties are to convince the court of the existence of that set of facts which would establish the existence of the right or liability which they alleged to exist. The facts lie at the foundation of the law, for, ‘Exfacto Jus Oritur’ – the law arises out of a fact. The law cannot take the effect unless the facts are known. Without knowing the facts, the Judge cannot know what law applies to determine the outcome of the proceedings before him. Ascertaining existence or nonexistence of the facts and then declaring the rights and liabilities of the parties by applying the relevant law, to these ascertained facts, are the two basic functions of the Judicial Officer adjudicating any judicial proceedings.

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20. On this aspect, the learned counsel for the petitioners/ defendants relied on a decision in Smt. Sharada Dhir v. Ashok Kumar Mukhija & others ,^[1] wherein it is held thus:

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“..Interrogatories cannot be disallowed merely because the party interrogating has other means of proving the facts in question. One of the important purpose of interrogatories is to obtain admission of material fact of a case. Under this rule the Interrogatories may be served with the leave of the court by one party to the other in a suit (1) to ascertain the nature of his opponent's case and material facts

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constituting it and (2) to support his own case by obtaining admissions or by impeaching or destroying his opponent's case. The interrogatories which do not relate to any matter in question involved in the suit, indeed, would be deemed irrelevant even though they might be admissible in oral cross-examination of the witnesses…”

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21. The learned counsel for the petitioners/defendants also relied on a decision in Bhakta Charan Mallik v. Nataorar Mallik & others ,^[2] wherein it is held thus:

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“Obviously the purpose of this rule is to enable a party to require information from his opponent for the purpose of maintaining his own case or for destroying the case of the adversary. The main object of interrogatories is to save expenses and shorten the litigation by enabling a party to obtain from his opponent information as to the facts material regarding the question in dispute between them or to obtain admission of any facts which he has to prove on any issue which is raised between them. As a general rule, interrogatories are to be allowed whenever the answer to them will serve either to maintain the case of the party administering them or to destroy the case of the adversary. The power to serve interrogatories as it appears is not meant to be confined within narrow technical limits. It should be used liberally whenever it can shorten litigation and serve the interest of justice. However, this can be exercised within certain limits. The power to order interrogatories to be served and answer should be used with considerable care and caution, so that it is not abused by any party. A party entitled to interrogate his opponent with a view to ascertain what case he has to meet and the facts relied on and to limit the generality of the pleadings and find out what is really is in issue See AIR 1934 Nagpur 181 Shamrao v. Motiram.”

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22. The learned counsel for the petitioners/defendants also placed strong reliance on a decision in P.Balan v. Central Bank of India, Calicu t^[3] , wherein it is held thus:

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“The object and purpose of serving interrogatories is to enable a party to require information from his opponent for the purpose of maintaining his own case or for destroying the case of the adversary. The answering of the interrogatories might save expenses and shorten the litigation by enabling a party to obtain from the other side information as to material facts regarding the questions in dispute or issues raised or to obtain admission of facts which the plaintiff has to prove on any issue. Answering the interrogatories might often shorten the trial proceedings and save the time of the Court and parties besides saving expenses for summoning witnesses, documents and the like. As a general rule, therefore, interrogatories are to be allowed whenever the answer to them will serve either to help the party in proving his case or to destroying the case of the adversary. The power is not meant to be confined within narrow limits. It should be used liberally whenever it can shorten the litigation and serve the interest of justice. Nevertheless, the power is to be exercised with care and caution so that it is not abused by any party. Interrogatories have to be confined to the facts which are relevant to the matters in question in the suit.”

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23. The learned counsel for the petitioners/defendants also placed reliance on a decision in Jamaitrai Bishansarup v. Rai Bahadur Motilal Chamaria ,^[4] wherein it is held thus:

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“Interrogatories must be confined to matters which are in issue or sufficiently material at the particular stage of the action at which they are sought

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to be delivered, or to the relief claimed including the amount of the damages, and as a general rule, perhaps to matters which are relevant to the facts directly in issue, but under some circumstances they may extend to the facts the existence or nonexistence of which is relevant to the existence or nonexistence of the facts directly in issue…”

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From the above decisions, it is clear that interrogatories are relevant to the existence or nonexistence of the facts directly in issue. Bearing the above principles in mind, it has to be seen whether interrogatories now sought to be served on the plaintiff are material facts which are relevant with regard to the material facts in issue.

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24. The suit of the plaintiff is based upon the actionable claim under the deed dated 7.10.2005 executed by M/s. Ellala Infotech Inc., a private limited company registered in the United States of America. Thereafter, the said company, as per the deed dated 7.10.2005, had advanced loan of US $ 5 million to the defendants on 28.2.1997. Admittedly, the document dated 28.2.1997 said to have been executed by the defendants in favour of M/s. Ellala Infotech Inc. has not been filed along with the plaint. Therefore, the entire basis of the claim of the plaintiff is transfer of actionable claim dated 7.10.2005. The plaintiff, being the transferee of the actionable claim, must stand or fall on the strength of his right derived from the transferor. Virtually, the plaintiff stepped into the shoes of the transferor M/s. Ellala Infotech Inc. Unless

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there being an existing liability of the defendants to pay certain amount to M/s. Ellala Infotech Inc., that right cannot be transferred to the plaintiff. Unless it is proved and established that M/s. Ellala Infotech Inc. advanced loan of US$ 5 million on 28.2.1997, the plaintiff, being transferee, cannot derive any better right than what M/s. Ellala Infotech Inc. has got. It is not a case of liability of the defendants to pay certain amounts to the plaintiff based on a contract or otherwise.

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25. The plea of the defendants is that M/s. Ellala Infotech Inc. has not advanced loan of US$ 5 million to the defendants on 28.2.1997 and they also denied about the transfer of actionable claim to the plaintiff by M/s. Ellala Infotech Inc. by deed dated 7.10.2005. It is also the specific case of the defendants that they have never executed any confirmation of commitment deed in favour of the plaintiff and therefore the question of repayment does not arise. But, the defendants admitted that signatures of the defendants were obtained in a different context, but not in the context of loan advanced by M/s.Ellala Infotech Inc. Therefore, in such circumstances, the defendants are entitled to know whether M/s. Ellala Infotech Inc. was in existence or not by the date of the alleged advancing of loan by the said company to the defendants. Whether the loan was advanced and whether the amount of US$ 5 million had been remitted into their account in India and whether any such entity is in existence in United States of America, and whether

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there is any document evidencing the alleged loan of US$ 5 million on 28.2.1997, are the matters relevant and come within the meaning of ‘facts in issue’ upon which a decision has to be arrived at, by the Court. Answering the interrogatories which are now sought to be served on the plaintiff by the defendants, is not by itself a substantive evidence. Even if the plaintiff answers the interrogatories, still the burden is on the plaintiff to establish those interrogatories that may be answered by him, during the trial of the case.

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26. The interrogatories which are now sought to be served, may not amount to facts constituting the evidence, those are the facts in issue constituting the plaintiff’s case. Therefore, the defendants are entitled to know before hand, the facts in issue constituting the plaintiff’s case. No doubt, the plaintiff’s case must stand or fall on its own pleading and evidence. But, at the same time, when the defendants are disputing about advancing of the loan to them by the transferor of the plaintiff, the defendants are entitled to know in what manner, in what way and how the plaintiff’s transferor advanced loan, and by which document, and also whether the amount has been credited to the account of the defendants. Therefore, in the opinion of this Court, the interrogatories now sought to be served on the plaintiff by the defendants are in the nature of facts in issue relevant for the purpose of deciding the suit. Under no stretch of imagination, it can be said that the interrogatories are in the nature of fishing enquiry. Since they are relevant for deciding the

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facts in issue and the entire claim of the plaintiff is the transfer of actionable claim by M/s. Ellala Infotech Inc., they have to be answered by the plaintiff. But, the defendants denied about the availing the loan from M/s. Ellala Infotech Inc. Therefore, in these circumstances, the trial court is not justified in dismissing the I.A. No.627 of 2008. Considering the entire material on record, there is no hesitation in coming to the conclusion that the interrogatories now sought to be served on the plaintiff, are the matters relevant for the purpose of deciding the facts in issue to be decided during trial.

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27. In the result, the impugned order is set aside and the I.A. No.627 of 2008 is allowed directing the plaintiff to answer the interrogatories annexed to the application, on or before 19.04.2010.

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28. Accordingly, Civil Revision Petition No.3570 of 2009 is dismissed, and Civil Revision Petition No.3575 of 2009 is allowed. No costs.

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08.04.2010 (K.C.Bhanu, J.) DRK LR copy to be marked. BO/DRK

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THE HON’BLE SRI JUSTICE K.C.BHANU

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COMMON ORDER

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CIVIL REVISION PETITION No. 3570 of 2009 & 3575 of 2009

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