IN THE HIGH COURT OF DELHI AT NEW DELHI
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Date of Decision: 18.04.2016
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% CS(OS) 504/2004
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POLYFLOR LIMITED
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..... Plaintiff
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Through:
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Sushant Singh, Kumar Chitranshu and
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Harsh Pathak, Advocates
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versus
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SH. A.N. GOENKA & ORS.
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DA+
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..... Defendants
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Through:
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Ajay Amitabh Sharma, Advocate
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CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
VIPIN SANGHI, J. (OPEN COURT)
O.A. No.84/2016
1. This chamber appeal is directed against the order dated 16.03.2016 passed by the learned Joint Registrar dismissing the application preferred by the plaintiff under Order 7 Rule 14(3) CPC i.e. I.A. No.1446/2016. The suit seeking permanent injunction, passing off, delivery up and unfair trade practices and rendition of accounts was filed by the plaintiff in April 2004. The issues in the suit were framed on 02.12.2013. The recording of evidence is in progress before the Local Commissioner. The plaintiffs witness PW-1 has been under cross examination. At that stage the plaintiff moved the aforesaid application under Order 7 Rule 14(3) CPC seeking to
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place on record three sets of documents relating to the audited statement of accounts of the plaintiff. These documents were sought to be produced to substantiate the sales figures and turnover of the plaintiffs under the trademark POLYFLOR since 1997, upto 2013.
2.The first set of documents sought to be produced are photocopies of annual report of the plaintiff, which includes the annual report of its predecessor, for the year 1997-99. The second set is the original duly audited annual report for the year ending 30.06.2001 and 30.06.2003. The third set of original annual reports are of the plaintiff company for the years ended on 30.06.2005, 2007, 2009, 2011 and 2013.
3.The learned Joint Registrar in his order takes note of the fact that the original suit was filed in the year 2004; the documents sought to be produced were neither filed alongwith the plaint, nor at the stage of admission/denial of documents, nor even at the stage of framing of issues on 02.12.2013; PW-1 is under cross examination and had been substantially cross examined when the application was moved on 27.01.2016. The learned Joint Registrar has observed that vague and non convincing reasons have been given by the plaintiff for not filing the documents earlier, and unjustifiable reason has been given as to why, when the documents were in the domain and control of the plaintiff, the same were not filed at the appropriate stage, or even at the stage of framing of issues.
4.So far as the documents pertaining to the years after 2004 are concerned, the Joint Registrar has also observed that they do not appear to be relevant, as they reflect the sales figures post the filing of the suit,
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whereas the claim of the plaintiff for damages upon rendition of accounts is limited to Rs.20 lacs, which would have to be substantiated on the basis of the claim of sales/goodwill for the period prior to the filing of the suit.
5.The submission of learned counsel for the petitioner is that the stage at which the application under Order 7 Rule 14(3) was moved is not relevant. What is relevant to be examined is whether the documents are germane. It also needs to be appreciated that the documents are audited accounts of the plaintiff company, and their authenticity is beyond doubt. Learned counsel submits that no prejudice would have been suffered by the defendant even if the plaintiff was permitted to place on record the additional documents at this stage, and the defendant could have been compensated by way of costs for the inconvenience suffered.
6.Learned counsel submits that the power of the court to permit filing of additional documents at any stage of the proceedings is not taken away under the law, and in the interest of justice, the court can grant permission to produce additional documents even at the final stage of proceedings, and even at the appellate stage. In support of his submission, he has placed reliance on a judgment of the Division Bench of Bombay High Court in
Smt. Shantibai K Vardhan v. Meera G Patel, Appeal No.86/2008 decided
on 29.08.2008.
7.Learned counsel for the defendants has appeared even before issuance of notice in this chamber appeal, and he has advanced his submissions.
8.Learned counsel for the defendants submits that there is absolutely no justification for seeking leave to produce the aforesaid documents at this
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highly belated stage, when the cross-examination of the PW-1 is underway, and has substantially been completed. He points out that nearly 140 questions have already been put to PW-1. Learned counsel submits that the documents sought to be produced are the plaintiff’s own documents, namely purported annual reports/ financial statements from 1997 till 2013. Obviously, the plaintiff could have produced the documents available for the period up to the date of filing of the suit in 2004, along with the suit, and for the period thereafter, till as late as issues were framed in 2013. There is no explanation furnished as to why it is claimed that the plaintiff could not discover that the statement of accounts from 1997-98 onwards. The applicant/ plaintiff claims that the annual reports/ financial statements for 1997, 1998 & 1999 were not traceable and available with the plaintiff, and had been lost. However, there is no disclosure as to when the said annual reports/ financial statements were lost, and from where the copies, which are now sought to be produced, have become available.
9. Similarly, in relation to the annual reports for the period between 2000 to 2004, there is no explanation as to why it is claimed that the plaintiff could not gather the report for the year 2000. Learned counsel submits that on a perusal of the plaintiff’s application, it is evident that the plaintiff is guilty of not exercising due diligence in the matter of producing the documents, which are now sought to be produced at this highly belated stage.
10. Learned counsel for the defendants has sought to place reliance upon the judgment of this Court in Gold Rock World Trade Ltd. Vs. Veejay
Lakshmi Engineering Works Ltd., (2008) 149 PLR 40 in support of his
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submissions.
11.The plaintiff has claimed damages by alleging passing off by the
defendants of its trademark “POLYFOR”. The plaintiff is now seeking to produce the aforesaid documents, namely copies of the annual reports for the period from 1997 onwards to substantiate its plea with regard to the sales, popularity and goodwill enjoyed by the plaintiff in respect of its trademark “POLYFOR”.
12.Order VII Rule 14 (1) provides that: “Where a plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in court when the plaint is presented by him and shall, at the same time deliver the document and a copy thereof, to be filed with the plaint”.
13.Sub-rule (2) of Order VII Rule 14 provides that: “Where any such documents not in the possession or power of the plaintiff, he shall, wherever possible, state in whose possession or power it is”.
14.Thus, when the suit was filed, the plaintiff was obliged to produce all documents which it sought to rely upon in its power and possession. If, according to the plaintiff, the annual reports from 1997 to 2003-04 were not available with it, under Order VII Rule 14 (2), the plaintiff was obliged to state in whose possession and power the said documents, namely, the annual reports, were.
15.During the course of submissions, learned counsel for the plaintiff has submitted that under the law, as prevalent in United Kingdom, the plaintiff
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was obliged to maintain the financial statements for the period of seven years. The suit was filed in the year 2004. Therefore, the plaintiff was obliged to have in its power and custody the annual reports from 1997 onwards. The plaintiff did not make any disclosure under Order VII Rule 14
(2) in the plaint, or any other document, at the time of filing of the suit that it is not in possession of its annual reports. The statement has now come, for the first time, in the present application in the year 2016.
16. Order VII Rule 14 (3) mandates that: “A document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not without the leave of the Court, be received in evidence on his behalf at the hearing of the suit”. Thus, as a matter of rule, the plaintiff is prohibited from leading in evidence a document which he ought to have produced when the plaint was presented. The exception to this rule is that, where the Court grants leave to the plaintiff, the document may be permitted to be led in evidence at the hearing of the suit.
17. Thus, the issue is, whether in the above noted facts and circumstances, the plaintiff is entitled to grant of such leave. In the present case, the plaintiff’s witness PW-1 is under cross-examination and has already undergone a substantial portion of his cross-examination. To grant leave to, and permit the plaintiff to file and lead in evidence additional documents at this stage would mean that the defendants would be put to serious prejudice. The defendants have not had the occasion to deal with the said documents. Had the documents now sought to be produced, been produced at the relevant time, i.e. at the stage of filing of the suit, or at least at the time when
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the issues were framed, the defendants would have had the occasion to deal with the same by making appropriate pleadings and filing its own documents to counter the reliance placed by the plaintiff on the documents in question.
18.The progress of the suit cannot be interdicted on account of the blatantly casual approach of the plaintiff. The plaintiff has not given any justifiable and acceptable explanation for not filing the said documents at the earlier stage of the proceedings. If the submissions of the plaintiff were to be accepted, it would mean that in every case, a party should be permitted to lead in evidence documents not earlier filed and relied upon at any stage of the proceedings.
19.The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 provides under Order XI Sub- rule (1) of Rule 1 contained in its Schedule that: “Plaintiff shall file a list of all documents and photocopies of all documents, in its power, possession, control or custody, pertaining to the suit, along with the plaint, including:—
(a) documents referred to and relied on by the plaintiff in the plaint; (b) documents relating to any matter in question in the proceedings, in the power, possession, control or custody of the plaintiff, as on the date of filing the plaint, irrespective of whether the same is in support of or adverse to the plaintiff’s case;”.
20.Sub-rule (5) of Rule 1 states that: “The plaintiff shall not be allowed
to rely on documents, which were in the plaintiff’s power, possession, control or custody and not disclosed along with plaint or within the extended period set out above, save and except by leave of Court and such
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leave shall be granted only upon the plaintiff establishing reasonable cause for non–disclosure along with the plaint”. Thus, the plaintiff has to establish a reasonable cause for non-disclosure of the documents now sought to be produced along with the plaint.
21.As aforesaid, there is no cause shown, much less a reasonable cause for non-disclosure of the documents and non-filing of the documents, or at least copies thereof along with the plaint, or even till the stage of framing of the issues.
22.Reliance placed by learned counsel for the plaintiff on the decision in
Smt. Shantibai K Vardhan (supra) is of no avail. In this case, the Division Bench was dealing with an appeal from an order passed by the learned Single Judge, whereby the learned Single Judge had granted leave to the defendant to lead evidence and place on record certain documents referred to in the affidavit of documents filed by the defendant. The factual background of the said case was that the plaintiffs had filed a suit for specific performance on 16.01.1979. On 25.03.1980, the defendants had filed their written statement. Pertinently, in February, 1995, an affidavit of documents was filed by the defendants giving a list of 59 documents which were referred to and relied upon by the defendants. The plaintiffs led their evidence on the issues which had been framed, whereafter the evidence was closed by the plaintiffs. The defendants made a statement that they do not wish to lead evidence. The matter was taken up for final disposal, and during the course of hearing, the plaintiffs were advised to amend their plaint. Accordingly, they sought amendment of the plaint. The said application was allowed on 16.06.2007 and, significantly, direction was
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given to both the parties that they were at liberty to lead evidence, if advised
and necessary on the basis of the pleas raised in the amended plaint, as well
as in the written statement. In this background, the defendants moved an
application seeking to lead detailed evidence. It was this application which
was allowed by the learned Single Judge, and against the said order of the
learned Single Judge the appeal was preferred before the Division Bench.
The Division Bench, while dismissing the appeal, took into account the
aforesaid facts & circumstances. The Division Bench, inter alia, observed
in paragraph 12 as follows:
“12. … … … In the present case, it has to be noted that affidavit of documents was filed by the defendants. The documents could not be traced and, subsequently, the defendants were in a position to procure the said documents and, after an application for amendment which was filed by the plaintiff was allowed and permission was granted to the parties to file additional written statement, the application for production of documents was made and the learned Single Judge was pleased to allow the said application.”
23.From the above, it would be seen that the documents which had been referred to and relied upon by the defendants, as early as in 1995, were sought to be produced and lead in evidence by the defendants. The occasion for the same had arisen as the plaintiffs had been permitted to amend the plaint, and leave had been granted by the Court to both the parties to lead further evidence. However, the fact situation in the present case is entirely different, and therefore, the decision in Smt. Shantibai K Vardhan (supra) has absolutely no application in the facts of the present case.
24.In Gold Rock World Trade Ltd. (supra), a similar application under
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Order VII Rule 14 had been moved before the Court for production of
additional documents and for filing an additional affidavit. The stage in the
said suit was more or less the same, namely that the plaintiff had led its
evidence in the affirmative and closed the same. The application had been
filed prior to the defendants’ witnesses filing their affidavits by way of
evidence towards examination-in-chief. The learned Single Judge rejected
the application of the plaintiff. While doing so, the learned Single Judge
observed:
“3. ... ... ... A plain reading of Order 7 Rule 14 (3) makes it clear that a document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not, without the leave of the Court, be received in evidence on his behalf at the hearing of the suit. The learned counsel for the plaintiff submits that leave of the Court ought to be granted to the plaintiff for producing the additional documents referred to in the application under Order 7 Rule 14 and as also for calling the witness for producing the documents mentioned in the other application. The learned counsel for the plaintiff referred to the decision of the Supreme Court in the case of Salem Advocate Bar Association, Tamil Nadu v. Union of India: (2005) 6 SCC 344. With reference to paragraph 13 thereof, the learned counsel submitted that the Court may permit leading of such evidence even at a later stage subject to any terms that may be imposed upon by the Court which may be just and proper.
4. I have heard counsel for the parties. The Supreme Court decision in Salem Advocate Bar Association (supra) was in the context of additional evidence. By virtue of the 1976 amendment, Rule 17-A had been introduced in Order 18. The
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said Rule 17-A granted discretion to the Court to permit production of evidence not previously known or which could not be produced despite due diligence. Rule 17-A of Order 18 was deleted by the Code of Civil Procedure (Amendment) Act, 1999 which took effect on 1.7.2002. While considering the effect of this deletion the Supreme Court observed:-
“13. In Salem Advocate Bar Assn. (I) v. Union of
India, (2003) 1 SCC 49, it has been clarified that on deletion of Order 18 Rule 17- A which provided for leading of additional evidence, the law existing before the introduction of the amendment i.e. 1-7- 2002, would stand restored. The Rule was deleted by Amendment Act of 2002. Even before insertion of Order 18 Rule 17-A, the court had inbuilt power to permit parties to produce evidence not known to them earlier or which could not be produced in spite of due diligence. Order 18 Rule 17-A did not create any new right but only clarified the position. Therefore, deletion of Order 18 Rule 17- A does not disentitle production of evidence at a later stage. On a party satisfying the court that after exercise of due diligence that evidence was not within his knowledge or could not be produced at the time the party was leading evidence, the court may permit leading of such evidence at a later stage on such terms as may appear to be just.”
Thus, the Supreme Court held that the insertion of Rule 17-A was only clarificatory of the in-built power of the Court to permit parties to produce evidence not known to them earlier or which could not be produced in spite of due diligence. The learned counsel for the plaintiff sought to invoke this in-built
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power of the court even in respect of Order 7 Rule 14 (3) which relates to production of documents at a belated stage. There would be no difficulty in holding that the in-built power referred to in the said Supreme Court decision could also be invoked when the question of granting leave arises in the context of Rule 14 (3) of Order 7. Consequently, before leave of the Court can be granted for receiving documents in evidence at a belated stage, the party seeking to produce the documents must satisfy the Court that the said documents were earlier not within the party's knowledge or could not be produced at the appropriate time in spite of due diligence. It has been submitted by the learned counsel for the defendant that the documents pertain to a settlement between the plaintiff and a foreign party (COGETEX). The settlement was arrived at, as per the statement recorded in the crossexamination of PW1, on 7.10.1996. However, there is not a whisper of this statement even in the replication which was filed on 11.9.1997. In fact, the affidavit by way of evidence was filed by the plaintiff in the year 2003 and even in that affidavit, there is no reference to the documents which are now sought to be introduced. In my view, these circumstances clearly show that the conditions necessary before leave of the Court can be granted have not been satisfied. It cannot be said that the plaintiff was not aware of the documents earlier, or that the same could not be produced in spite of due diligence on the part of the plaintiff. All the material now sought to be introduced, was well within the knowledge of the plaintiff at least in the year 2003. As the plaintiff was not diligent enough at that point of time, this Court is left with no alternative but to reject its request.”
(emphasis supplied)
25. In my view, the aforesaid judgment squarely applies to the facts of the present case. It cannot be said by the plaintiffs that they were not aware of
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the existence of their own audited annual reports from 1997 onwards till 2013. Since the said annual reports are of the plaintiffs themselves, and even according to the plaintiffs, the plaintiffs are obliged to maintain the records for a period of seven years under the law applicable to the plaintiff company, it cannot be said that in spite of due diligence, the plaintiffs could not have produced the said documents at the time of filing of the suit in respect of the period 1997 to 2004, and for the period thereafter till the time of framing of issues in 2013. Not only these documents, or even copies, therefore, were not filed earlier, they were not even referred to or relied upon either in the pleadings, or in any other document filed by the plaintiff.
26. Thus, I find absolutely no merit in the present chamber appeal and dismiss the same, leaving the parties to bear their respective costs.
VIPIN SANGHI, J
APRIL 18, 2016
sr / B.S. Rohella
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