Union of India (UOI) and Another vs Mohammad Yusuf

Surjit Singh, J

This Regular Second Appeal by Union of India and one of its functionaries, hereinafter called defendants, is directed against the judgment and decree, dated 30.12.2006, of learned District Judge, whereby accepting the appeal of respondent Mohammad Yusuf, hereinafter called plaintiff, against the judgment and decree, dated 27.11.2004 of the trial Court, said judgment and decree of the trial Court, dismissing the suit of the plaintiff-respondent, has been set aside and the suit has been partly decreed.

Respondent-plaintiff filed a suit for recovery of a sum of Rs. 2 lacs, on account of damages, alleging that he was engaged as carriage contractor, by means of a written agreement Ext. D-1, for carrying, inter-alia, bales of paper, through coolies. An FIR was lodged against the plaintiff by the defendants on 12.9.1986. Allegation made in the FIR was that plaintiff had misappropriated 198 bales of paper, worth Rs. 1,47,828.23. It was alleged that the allegedly misappropriated bales of paper had been entrusted to the plaintiff, through his coolies, at Railway Station for carriage to the printing press, but the said bales of paper did not reach the press.

When the matter was under investigation by the police, defendants invoked arbitration clause in the agreement, Ext. D-1, and submitted a claim to the Arbitrator for recovery of money value of allegedly misappropriated bales of paper. Arbitrator dismissed the claim of the appellants-defendants, vide award dated 1.12.1988. Appellants-defendants challenged the award by filing objections in the Court of Senior Sub Judge, Shimla, which were dismissed. An appeal was filed in the Court of District Judge. That appeal was also dismissed.

It was pleaded that FIR had ultimately been submitted for cancellation by the police and the Magistrate ordered the cancellation thereof, vide order Ext. AW1/A. Plaintiff alleged that FIR had been lodged, with a view to harassing him and that arbitration reference had also been made by the appellants-defendants to harass him. It was stated that when FIR had been cancelled, defendants could not have submitted any claim to the Arbitrator and the very fact that despite cancellation of FIR they invoked arbitration clause suggests that their intention was to harass the plaintiff. It was also pleaded that filing of objections against the award of the Arbitrator, by which plaintiff had been awarded a sum of Rs. 28,783/-, and defendants'' claim for the value of bales of paper was rejected, also indicated that their intention was to harass the plaintiff-respondent. Further, it was alleged that a letter had been written on 11.9.1986 by the appellants-defendants to other departments of the Government of India not to assign any coolieage work to the plaintiff and this had also been done with a view to causing damage and financial loss to the plaintiff, besides defaming him. On these allegations, a sum of Rs. 2 lacs was claimed, by way of damages.

Various issues were framed, based on the pleadings of the parties. Parties went to trial. Learned trial Court concluded that the respondent-plaintiff was entitled to a sum of Rs. 25,000/-, but did not pass any decree against the appellants-defendants, holding that the claim was barred by time. It was held that limitation for claiming compensation for malicious prosecution was one year and the suit having been filed beyond the prescribed limitation, claim was barred.

Appeal was carried by the respondent-plaintiff to the District Judge, who vide impugned judgment and decree, held that this was not a case of malicious prosecution, but a tort of different kind, i.e. abuse of process of law, with intent to cause damage, for which there was no limitation. Learned first Appellate Court also held that the respondent-plaintiff was entitled to a sum of rupees one lac, on account of harassment, caused by abuse of process of law. Accordingly, a decree for a sum of rupees one lac was passed in favour of the plaintiffrespondent and against the appellants-defendants.

Appeal was admitted on the following substantial questions of law:

Whether the ld. Lower Appellate Court was justified in holding that Article 74 of the Limitation Act was not attracted in the instant case?

Whether a suit for recovery of damages on account of defamation can be allowed in the absence of any evidence on record to establish that the defendants acted with malice and ill-will against the plaintiff?

Whether the Ld. Lower Appellate Court has fallen in grave error in not acknowledging the fact that plaintiff had himself acquiesced to the Arbitration proceedings and had filed a counter claim himself?

Whether Union of India in the instant case can be held to have invoked arbitration proceedings with a view to harass the plaintiff-respondent despite the fact that arbitration clause was incorporated in the agreement Ex. DW-1/A entered between the parties?

I have heard learned Counsel for the parties and gone through the record.

May be that Article 74 of the Limitation Act is not applicable, because the said Article applies only where damages are claimed, on account of malicious prosecution, but that does not mean that there is no limitation prescribed for this kind of suits. Learned first Appellate Court has observed that this is a case of continuous harassment, because first the FIR was lodged, then a letter was written to other departments not to assign any work to the plaintiff-respondent, thereafter arbitration clause was invoked and then objections against the order of the Arbitrator were filed and when those objections were dismissed, an appeal was filed against the order, dismissing the objections and that that appeal was finally dismissed on 16.6.1995 and the suit was filed in the year 1996.

View taken by the learned first Appellate Court does not appear to be correct. Limitation, in respect of claim for damages, based on a tort, starts running when the tort is committed. In the present case, FIR was lodged in the year 1986. Order cancelling the FIR was passed on 20.8.1988 by the Magistrate. No appeal or revision against that order was filed. Reference to Arbitrator was made even before the cancellation of FIR. It was not a one sided reference.Respondent-plaintiff also submitted a claim to the Arbitrator.His claim was accepted and a sum of Rs. 28,783.96 was awarded to him. Claim of the appellants-defendants was dismissed.

Admittedly, there was an arbitration clause in the agreement. Plea of the respondent-plaintiff was that when FIR had been cancelled, there was no justification for making reference to the Arbitrator. Reference to the Arbitrator had been made, as already noticed, before the FIR was cancelled.Moreover, cancellation of FIR did not mean that there was no merit in the claim of the appellants-defendants for recovery of the value of lost bales. It was only a case of cancellation of FIR. Even when acquittals take place in cases of misappropriation of entrusted money by the servants or agents, suits for recovery can be filed by the employer against the servants or agents responsible for causing such loss.Finding by a criminal Court does not bring to an end the civil liability, in this kind of cases. Criminal Court''s finding is only with regard to the liability of the concerned persons, under penal laws.

Above stated position apart, even on merits, the order of cancellation cannot be called in aid by the respondentplaintiff. Order nowhere says that the respondent-plaintiff was not responsible for the loss of bales of paper. It simply says that evidence could not be gathered by the Investigating Agency to link the respondent-plaintiff, with the alleged offence of misappropriation.

As noticed above, Arbitrator was approached to adjudicate the claim of the defendants-appellants, in accordance with the agreement between the parties. Simply for the reason that the appellants-defendants invoked the arbitration clause, it cannot be said that the purpose of approaching the Arbitrator was to harass the plaintiffrespondent, especially when the respondent-plaintiff also submitted himself to the jurisdiction of the Arbitrator by making a claim. When the Arbitrator rejected appellantsdefendants'' claim and allowed the claim of respondentplaintiff, they (appellants-defendants) had the legal right to file objections and even to file an appeal against the order, rejecting their objections.

In the absence of specific and definite evidence, indicating that the object and the purpose behind making reference to the Arbitrator, filing objections against the award and then filing appeal against the order, dismissing the objections, was to harass the plaintiff-respondent, finding cannot be returned, merely on the basis of lodging of FIR and invoking arbitration clause and challenging the award passed by the Arbitrator, that the object was to harass the respondent-plaintiff.

As regards the writing of letter dated 11.9.1986 to other departments, claim was barred, when the suit was filed. Said letter was written on 11.9.1986, while the suit was filed in the year 1996.

In view of the above discussion, all the substantial questions of law, on which the appeal was admitted, are answered in favour of the appellants-defendants and consequently, appeal is accepted. Judgment and decree of the first Appellate Court, decreeing the suit of the plaintiff are set aside and the suit is dismissed.