P. Vishwanath Shetty vs K. Balachandra Shetty and Others

K. Sreedhar Rao, J.—The respt No. 1/first plaintiff entered into a written agreement dated 20-02-1987 with the appellant/defet. No. 1 vide Ex.P.1 for transfer of shares of Navabharath Flange & Allied Industries. The total shares of the company was sold for face value of Rs. 20,00,000/- under Ex.P.1. Rs. 10,00,000/- was paid towards the part of the consideration. The balance of Rs. 10,00,000/- was agreed to be payable within six months. In Ex.P.1 it was also stipulated that if balance of Rs. 10,00,000/- is not paid on or before 30-03-1989, the appellant shall pay interest at 15% p.a. w.e.f. 31-07-1989 till the date of payment.

The 19th respondent/ deft No. 2 was the Managing Director of the Company as on the date of the Ex. P. 1 and consenting witness and guarantor for payment both under Exs.P.1 and P.2. The appellant failed to pay the amount. Hence, the suit was filed by pltfs No. 1 to 18 on 1-7-92. The first plaintiff had signed the plaint. The Pltfs No. 2 to 18 have not signed the plaint. The plaintiffs made an application to amend the cause title of the plaintiff to describe pltfs No. 2 to 18 of being represented by the pltf No. 1 as their power of attorney. The amendment is allowed and effected vide order of the trial court dated 01-08-1995.

The first appellant filed written statement contending that the suit is barred by time. The first plaintiff did not have power of attorney of pltfs. No. 2 to 18 as on the date of Ex. P. 1 and P.2. The suit is instituted without the signatures of Pltfs. No. 2 to 18. Therefore the institution of the suit is a nullity. It is further stated that, the first plaintiff suppressed the material facts regarding the bad financial shape of the company and by misrepresenting the facts, the shares are sold. On the date of Ex.P. 1 the company had incurred huge loss, the shares were not even worth the face value. Hence, pray for dismissal of the suit.

The deft. No. 2 has filed a written statement denying the allegation that he is surety to the transaction and prayed for dismissal of the suit.

The trial court on the basis of the oral and documentary evidence upheld the contention of the plaintiff and decreed the suit against in favour of the plaintiff. The first defendant is in appeal.

Sri. A.N. Jayaram, learned Sr. Counsel submitted the following circumstances to assail the judgment and decree of the trial court: -

a) The plaint initially is not signed by pltfs, No. 2 to 18. The averment in the plaint does not suggest that the pltf. No. 1 is authorised to prosecute the suit on behalf of pltfs. No. 2 to 18. On the other hand, the plaint suggests that, it is a case of joinder of plaintiffs and joinder of causes of action. Each one of the plaintiffs assert that the suit is instituted in their individual capacity jointly with other plaintiffs.

(b) The amendment to the cause title is effected describing first plaintiff as the power of attorney to the pits. No. 2 to 18 after three years of the institution of the suit. The amendment effected is after the expiry of the limitation. Hence, there is no valid institution of the suit by pltfs. No. 2 to 18.

(c) The agreement at Ex.P.2 discloses that the amount is to be payable on or before 31-3-89 the suit is filed on 4-7-92 which is beyond the period of limitation.

(d) The first plaintiff suppressed the material facts regarding the financial status of the company. The company at the time of Ex. P. 1 was a sick industry. The BIPR proceedings were instituted for rehabilitation. The, appellant because of misrepresentation and fraud purchased the shares. In that view the contract under Ex. P. 1 is void.

Sri. K. Ramakrishna Bhat, Counsel for respts. No. 1 to 18 per contra, relied on the ruling of Privy Council Mohini Mohun Das v. Bungsi Buddan Sana Das in ILR (Vol. xvii) Calcutta Series Page 581, ruling of the Bombay High Court in AIR v. Ramachandra Dhondo Datar AIR 1961 sc 292, and the decision of the Patna High Court in Bibi Asghari and Another Vs. Muhammad Kasim and Others, to bring home the point that the absence of signatures of some of the plaintiffs in the plaint would not invalidate the plaint and does not render suit bad in law. Further it is held that the making signatures belatedly in the plaint would not make the suit barred by limitation.

On the facts it is submitted that, the first plaintiff had filed the photocopy of the power of attorney of pltfs.No/2 to 18 dt 26-03-1982 alongwith the plaint. Upon the technical objection by the defendants an application was filed for amendment of the cause title. The court after hearing both the parties allowed the application. Accordingly the amendment is effected describing the plaintiff as power of attorney of pltffs. No. 2 to 18 and original power of attorney is also produced. Hence, it is argued that the technical defects in the plaint are properly cured by the necessary amendment. Therefore, it cannot be argued that the suit is validly instituted and barred by time.

In the decision of the Privy Council the facts disclose that, the suit is when instituted by three plaintiffs jointly for recovery of money. One Mohini Mohun Das was the Manager for three brothers who had lent loan to the defendant. The suit was instituted on behalf of three brothers (Creditors) the plaint was verified and signed by Mohini Mohun Das the petition was filed by Mohini Mohun Das to amend the cause title to implead him as co-plaintiff. The trial court dismissed the suit on the ground that Mohini Mohun Das who signed and verified the pleadings had no authority and the application to come on record is filed after the expiry of the period of limitation. In the context of the said facts The Privy Council while allowing the appeal has made the following observations:

On the face of the plaints the three joint-creditors -are named as co-plaintiffs. The names of Gobind Rani and Khetter Mohun have not been struck out, nor did they, or either of them, attempt to repudiate the suits. But still it was contended that Mohini Mohun was the sole plaintiff, or, at any rate, that Khetter Mohun ought not to be treated as a co-plaintiff from the commencement of the litigation.

The Bombay High Court in AIR v. Dhondo Dattar AIR 1961 has made the following observations:

18) Their Lordships of the Privy Council observed in ILR 17 Cal 580 (PC) that there was no rule that a person named as co-plaintiff in the plaint was not to be treated as a plaintiff unless he signed and verified the plaint. Order 6 Rule 14, which requires that every plaint should be signed by the plaintiff and his pleader, if any, has, in view of the Privy Council decision to be interpreted so as to mean that a plaint should be signed by at least one plaintiff. See also Bibi Asghari and Another Vs. Muhammad Kasim and Others, .

25) AS regards the verification of the plaint in the instant case it was verified by Chushey as agent of the AR1 Limited (plaintiff No. 1). It was not verified by plaintiff No. 2. Order 6, Rule 15 of the CPC requires that the plaint should be verified by the plaintiff or one of the plaintiffs or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case. Order 6, Rule 15, does not refer to persons authorized by the plaintiff or any of the plaintiffs. If the plaint is not verified by a plaintiff or by any one of the plaintiffs, it can be verified only by a person proved to the satisfaction of the Court to be acquainted with the facts of the case. It is true that there are several authorities in favour of the view that omission to verify a pleading is a mere irregularity and that a pleading which is not verified as required by Order 6, Rule 15, may be verified at any later stage of the suit, even after the expiry of the period of limitation. See Ephrayim H. Ephrayim Vs. Turner, Morrison and Co., , Shib Deo Misra and Others Vs. Ram Prasad and Others, , The Calico Printers'' Association Ltd. Vs. A.A. Karim and Bros., , Ramgopal Ghose Vs. Dhirendra Nath Sen and Others, and Educational Book Depot and Another Vs. Dr. Rabindra Nath Tagore, .

26) In the instant case the objections raised by the defendant to the plaint merely related to the validity of the power of attorney in favour of Ghushey and consequent irregularities in regard to the signing and verification of the plaint. The objection that the plaint was not verified by a person acquainted with the facts of the case has not been urged by the learned Counsel for the defendant respondent before us. But this point was considered by the lower court which held that it cannot be said that on 18-02-1949, the elate of presentation of the plaint, Ghushey was acquainted with the facts of the case. The lower Court therefore held that the verification was not proper. But in the next paragraph of the judgment (paragraph 37) the lower court took the view that it was only on 24-4-51 that the plaint was properly signed and verified by Ghushey under a power of attorney from plaintiff No. 1, as it came to be after the conversion of the company into a public Limited Company. But, as already observed, in order to comply with the rules regarding verification contained in Order 6, Rule 15, it is not sufficient that the plaint is verified by someone authorised by the plaintiff. It must be verified by the plaintiff, or one of the plaintiffs, or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case. See also AIR 1943 Cal 13. Ghushey verified the plaint on 18-2-49 and also on 24-4-51. In his deposition on 8-8-53 he swore that he had no personal knowledge about the facts stated in the plaint or the nature of the dispute between tire parties. The plaint is therefore not verified by any of the plaintiffs or by a person acquainted with the facts of the cause. I would like to impress upon Courts receiving pleadings and officers authorized to receive pleadings the necessity and importance of seeing their requirements of Order 6, Rules 14 and 1 and of Order 7, Rule 1, are properly complied with. The defect or the absence of a proper verification of the plaint is however one of procedure and is a mere irregularity. The defendant did not object to it. In ILR 18 All 396, case decided by three judges, it was held that or a mere question of defect of verification it is not necessary for an appellate court to pay any attention or take any steps to rectify a defect in the verification of a plaint.

27) If defects in regard to the signature verification or presentation of the plaint are cured on a day subsequent to the date of filing the suit, the date of institution of the plaint is not changed to the subsequent date, 34 BLR 628 : AIR 1932 Bom 367 : ILR 54 Cal 380 : All 1927 Cal 376 : ILR 54 All 57 : AIR 193 All 507 (SB) and Shib Deo Misra and Others Vs. Ram Prasad and Others, . When a plaint is re-signed or re-verified it may or may not amount to an amendment of the plaint. Even when a plaint is amended, the amendment relates back to the date of the suit except in some cases, e.g., where the amendment adds new parties or properties, See 34 Bom LR 628 : AIR 1932 Bom 367, Mohini Kumar v. Nia Mohammad : AIR 1944 Cal 4, Nallakumara Goundan Vs. Pappayi Ammal and Another, , Weldon v. Neal (1887) 19 QBD 394 and Janardhan Kishore Lal v. Sib Prasad Ram ILR 43 Cal 95 : AIR 1917 Cal 841.

The ratio laid down in the above decisions squarely applies to the facts on hand. In the instant case, pltfs. No. 1 to 18 had filed the suit, the plaint was (sic) and verified by pltf. No. 1. AT the time of filing of the suit the photo copies of the powers of attorney of Pltfs. No. 2 to 18 were filed. Upon the objection by the other side, formal defect was noticed, an application was filed to amend the cause title to describe the 1st plaintiff as power of attorney of pttfs. No. 2 to 18. The amendment is allowed. The request for amendment is granted, accordingly the cause title amended. The contents of Ex.P.1 and Ex.P.2 disclose that the pltf. No. 1 is entered into transaction with the appellant on behalf of pltfs. No. 2 to 18 whose shares were being sold. In Ex.P.2 it is also specifically stated that, the appellant should not question the authority of first plaintiff to effect the transfer of shares of pitfs. No. 2 to 18 in the future course of time. The fact that the first plaintiff acted as agent of pltfe.No.2 to 18 is borne on record in Ex.P.1 and P.2, the photo copies of the powers of attorney filed along with the plaint and the original powers of attorney. The appellant had acknowledged the fact that the pltf. No. 1 is acting as agent of pltfs. No. 2 to 18 when he was entering into a contract for purchase of shares of pltfs. No. 2 to 18. In that view, it becomes explicit that plaintiff No. 1 had a valid authority to represent pltfs. No. 2 to 18. The amendment effected to cause title although belated rutty cures the technical delects if any. In view of the ratio laid down by Privy Council and the Bombay High Court, it cannot be said that the suit is invalid and barred by time.

The terms of Ex. P.2 does not say that the amount is to be payable on or before 31-03-1989. But puts a rider that if the amount is not paid, the interest shall be payable at 15% p.a. w.e.f. 31.7.1989. The said stipulation cannot be construed to mean that 31.3.1989 is the outer date for payment of the amount. On the other hand, the Ex. P.2 explicitly stipulate that within six months from the date of Ex. P.2 the amount should be paid i.e., on or before 6-7-1989. The reckonable date for limitation would be 6.7.1989. The suit is instituted on 04-07-1992 within the period of limitation.

Regarding the question of fraud, the first defendant after purchase of shares vide Ex. P. 1 dt. 22-08-1988 became the Managing Director of the company and worked in that capacity for almost three years till Ex. P. 2. The application was filed before BIFR when the appellant was the Managing Director. The appellant acknowledged the liability to pay the amount under Ex. P. 2, which is almost three years after Ex. P. 1. In between the said period the appellant had full knowledge of the affairs of the company and consciously executed Ex.P.2.Therfore, it is untenable for the appellant to contend that the contract is vitiated by fraud.

In view of the reasons and discussions made above we find that the judgment and decree passed by the trial judge is proper. Hence, appeal is dismissed.