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CASE NO.: Appeal (civil)  3940 of 2007

PETITIONER: Haryana State Industrial Development Corporation

RESPONDENT: M/s. Cork Manufacturing Co

DATE OF JUDGMENT: 27/08/2007

BENCH: Tarun Chatterjee & P.K. BALASUBRAMANYAN

JUDGMENT: JUDGMENT

CIVIL APPEAL NO. 3940 OF 2007 [Arising out of SLP [C] No. 11683 of 2006]

TARUN CHATTERJEE, J. 1.      Leave granted.  

2.      This appeal is directed against the  judgment and order dated       20th January,  2006 of the Punjab and Haryana High Court at  Chandigarh whereby the High Court affirmed the  concurrent judgments of the courts below  decreeing the suit of the plaintiff/respondent  (for short the respondent’) and declaring the  resumption of plot allotted to the respondent  by the defendant/appellant (for short ’the  appellant’) as illegal.

3.      The appellant allotted an industrial plot  bearing PlotNo.259, Udyog Vihar, Phase IV,  Gurgaon to the respondent vide its allotment  letter dated 24th November, 1987. Pursuant to  the allotment letter dated aforesaid, the  appellant entered into an agreement on 12th  February, 1988 with the respondent    Clause 8  of which provides that the respondent shall  start construction on the plot for setting up  of an industry within a period of three months  and complete the construction thereof within  one and a half years from the date of issuance  of the allotment letter and further, the  respondent shall complete the erection and  installation of machinery and commence  production within a period of two years from  the date of allotment of plot failing which the  plot shall be liable to be resumed and the  security amount equivalent to ten per cent of  the cost of the plot deposited by the  respondent at the time of allotment shall stand  forfeited. Clause 28 of the agreement provides  that in case of breach of any of the terms and  conditions of the agreement including Clause 8,  the appellant reserves the right to exercise  its right of resumption of the plot. The  appellant, when found that the respondent had  violated Clause 8 of the agreement, issued a  show cause notice to it as to why the suit plot  should not be resumed and the possession not be

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taken back. On                 13th September,  1991, the appellant issued a resumption order  for non compliance of Clause 8 of the agreement  by the respondent stating that the respondent  had contravened the terms and conditions of the  allotment order. According to the appellant,  possession of the suit plot was taken back from  the respondent on 20th September, 1991.

4.      The respondent filed a Civil Suit before  the Addl. Civil Judge (Senior Division),  Gurgaon in 1995 more precisely on                    5th October, 1995 praying for a decree of  permanent injunction restraining the appellant  from interfering and/or disturbing in any  manner the possession of the suit plot and  further restraining the appellant from re- allotting the plot to any other person on the  basis of resumption order, if any. In the  plaint, it was alleged that it was not possible  for the respondent to comply with Clause 8 of  the agreement because of high tension wires  existing over the suit plot and until and  unless the said high tension wires were removed   from the suit plot, the respondent was not in a  position to raise construction on the same  within the time specified in Clause 8 of the  agreement. For the reasons aforesaid, the  appellant had no right to disturb possession of  the suit plot or initiate any proceeding  against them. Inspite of several letters  written by the respondent to the appellant for  removing high tension electric wires and  electric pole, the appellant did not remove the  same till in the year 1995, when suit was  already pending, but instead the appellant  sought to resume the suit plot for non  compliance of Clause 8 of the agreement.  Accordingly, a decree for permanent injunction  restraining the appellant from interfering  and/or disturbing the possession of the  respondent in respect of the suit plot and  other reliefs as noted herein above was prayed  for.

5.      After appearance in the suit, the appellant  filed a written statement in which the  appellant alleged that a resumption order was  passed by it on 13th September, 1991 and  possession of the suit plot was resumed on 20th  September, 1991 for alleged violation of Clause  8 of the agreement. The plea of limitation was  also raised saying that since the suit plot was  resumed on 13th September, 1991 by the  appellant and the suit was filed on 5th  October, 1995, the suit must be held to be  barred by limitation. In the written statement,  it was also alleged by the appellant that the  respondent had suppressed the fact regarding  knowledge of the resumption order and also  regarding taking over of the possession of the  suit plot.  Accordingly, the appellant had  prayed for dismissal of the suit.

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6.      The following issues were framed by the  trial court :

1.      Whether the order dated 13.9.91,  if any, is illegal, null and void and  not binding upon the plaintiff ? 2.      Whether the plaintiff is in  possession over the plot in question ? 3.      Whether the plaintiff has got no  locus-standi to file the present suit  ? 4.      Whether the suit is barred by  limitation ? 5.      Whether the plaintiff is estopped  from filing the present suit by his  own act and conduct ? 6.      Whether the suit is bad for non- joinder of the necessary parties ? 7.      Relief.

 7.    The trial court, after the parties had  adduced evidence, both oral and documentary, in  support of their respective claims, decreed the  suit of the respondent inter alia on the  following findings of fact :- (I)     As the high tension line and an  electric pole which existed, was  removed on                         30th November, 1995 when the suit  was already pending, the  Construction in compliance with  Clause 8 of the agreement could  not be raised on the suit plot.  (II)    Other allottees in the same area  were granted extension of time to  raise construction on identical  facts and accordingly it was the  duty of the appellant to extend  the time for the respondent also  after removing the electric wire  and pole which existed on the suit  plot.  (III)   Even if the appellant had  resumed the suit plot on 13th  September, 1991, the same was so  done without giving any  opportunity of hearing to the  respondent. (IV)    No show cause notice was served by  the appellant on the respondent  and no procedure was followed to  resume the suit plot.

On the above findings of fact arrived at by the  trial court on appreciation of the evidence,  oral and documentary on record, the following  conclusions were drawn :-

1.      The order of resumption passed by  the appellant dated 13th  September, 1991 whereby the suit  plot was allegedly resumed, was  illegal and against the principles  of natural justice and therefore  liable to be set aside.

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2.      The suit was not barred by  limitation as the respondent was  in possession of the suit plot and  resumption order of the appellant  was not served upon the  respondent. 3.      The respondent had by cogent  evidence proved his possession  over the suit plot and accordingly  the respondent was entitled to a  decree of permanent injunction as  prayed for.  

8.      Feeling aggrieved, the appellant preferred  an appeal by which the decree of the trial  court was affirmed. The appellate court also  echoed the finding of the trial court and held  that the appellant instead of removing the high  tension wire and electric pole from the suit  plot resumed the plot in question on 13th  September, 1991 without affording the  respondent any opportunity of being heard and,  therefore, held that the resumption order was  ineffective and not binding on the respondent.  The appellate court also held that the suit was  not barred by limitation because no cogent  evidence was produced by the appellant to show  that the respondent was served with the copy of  the resumption order at all or that the  respondent had any prior knowledge of the  resumption order.            9.      A second appeal was, thereafter, filed by  the appellant before the High Court and in the  second appeal, the appellant filed an  application under Order 41 Rule 27 read with  Section 151 of the CPC for acceptance of an  additional evidence which was nothing but a  legal notice dated 8th October, 1991 sent by  the counsel for the respondent wherein the  respondent had acknowledged the receipt of  resumption order of the appellant dated 13th  September, 1991. The appeal as well as the  application for acceptance of additional  evidence under Order 41 Rule 27 of the CPC was  taken up for final hearing and by the impugned  judgment, the High Court rejected the said  application filed under Order 41 Rule 27 of the  CPC and also the appeal of the appellant.  Before the High Court in second appeal, the  main thrust of the argument of the learned  counsel for the appellant was that the legal  notice allegedly served by the respondent on  the appellant should be permitted to be  produced on record as additional evidence in  the exercise of its power under Order 41 Rule  27 of the CPC to show that the suit filed in  1995 was barred by limitation. On the merits of  the second appeal, the High Court recorded the  following :-

"Nothing has been shown that the  findings recorded by both the courts  below suffer from any infirmity or are  contrary to the record. No question of

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law, much less any substantial  question of law arises in the present  appeal."  

10.     Feeling aggrieved by the judgment of the  High Court, the instant special leave petition  has been filed in respect of which leave has  already been granted.

11.     On behalf of the appellant, Mr. R. Mohan,  Additional Solicitor General submitted at the  first instance that the High Court was not  justified in rejecting the application for  acceptance of additional evidence filed under  Order 41, Rule 27 of the CPC.  By the  application under Order 41, Rule 27 of the CPC,  a legal notice alleged to have been served by  the counsel for the respondent on the appellant  was in fact sought to be admitted in evidence  to prove that the respondent had clear  knowledge of the resumption order passed on  13th September, 1991 and if such fact was  accepted, the suit filed in the year 1995 was  clearly barred by limitation. The High Court,  however, while rejecting the application for  acceptance of additional evidence, held that  the legal notice which was alleged to have been  served on the appellant was per se not  admissible in evidence nor was it proved that  the legal notice was issued by the respondent.   The High Court also held that even if the same  was issued, such a legal notice did not advance  the case of the appellant.   

12.     Before we deal with the aforesaid  submission of Mr.Mohan, we may remind ourselves  of the provisions of Order 41 Rule 27 of the  CPC which are as follows:

"27.    Production of additional evidence  in Appellate Court \026 [1]The parties to  an appeal shall not be entitled to  produce additional evidence, whether  oral or documentary, in Appellate  Court.  But if-

[a] the court from whose decree  the appeal is preferred has  refused to admit evidence which  ought to have been admitted, or

[aa]  the party seeking to produce  additional evidence, establishes  that notwithstanding the exercise  of due diligence, such evidence  was not within his knowledge or  could not, after the exercise of  due diligence, be produced by him  at the time when the decree  appealed against was passed, or

[b]  the Appellate Court requires  any document to be produced or any  witness to be examined to enable  it to pronounce judgment, or for

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any other substantial cause,  the Appellate Court may allow such  evidence or document to be  produced, or witness to be  examined.   [2]  Whenever additional evidence is  allowed to be produced by an Appellate  Court, the Court shall record the  reason for its admission."

13.     We have carefully examined the provisions  made under Order 41 Rule 27 of the CPC. The  parties to an appeal shall not be entitled to  produce additional evidence, oral or  documentary, before the appellate court except  on the grounds enumerated in Clause (a), (aa)  and (b) of Order 41 Rule 27(1) of the CPC. The  court may permit additional evidence to be  produced only when it is satisfied with the  three grounds namely, (i) if the Court from  whose decree the appeal is preferred has  refused to admit evidence which ought to have  been admitted; (ii) a party seeking to produce  additional evidence establishes that  notwithstanding the exercise of due diligence,  such evidence was not within his knowledge or  could not, after the exercise of due diligence,  be produced by him at the time when the decree  appealed against was passed; and (iii) when the  appellate court requires any document to be  produced or any witness to be examined to  enable it to pronounce judgment; or for any  other substantial cause.  

14.     In Municipal Corporation For Greater  Bombay Vs. Lal Pancham of Bombay and Ors. [1965  (1) SCR 542], this Court held that power under  Order 41 Rule 27 of the CPC could not be used  for removing a lacuna in the evidence and did  not entitle the appellate court to let in fresh  evidence at the appellate stage when even  without such evidence it could pronounce  judgment in the case.  Following the aforesaid  decision in Municipal Corporation For Greater  Bombay Vs. Lal Pancham of Bombay and Ors. [1965  (1) SCR 542], this Court again in State of  Gujarat and Anr. Vs. Mahendra Kumar  Parshottambhai Desai [Dead] by LRs [(2006) 9  SCC 772] in para 10 page 775 observed as  follows:

"\005. Though the appellate court has the  power to allow a document to be  produced or a witness to be examined  under Order 41 Rule 27, the  requirement of the said Court must be  limited to those cases where it found  it necessary to obtain such evidence  for enabling it to pronounce judgment.   This provision did not entitle the  appellate court to let in fresh  evidence at the appellant stage where  even without such evidence it can  pronounce judgment in the case.  It

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does not entitle the appellate court  to let in fresh evidence only for the  purposes of pronouncement of judgment  in a particular way.  The High Court  referred to the earlier proceedings  before various authorities and came to  the conclusion that though the  appellants had sufficient opportunity  to bring the evidence on record, for  reasons best known to it, the State  did not produce the entire evidence  before the trial court and it was only  8 years after the dismissal of the  suit that the applications were filed  for adducing additional evidence in  the appeal." (Emphasis supplied)

15.     In Smt. Pramod Kumari Bhatia Vs. Om  Prakash Bhatia and Ors. [(1980) 1 SCC 412], it  has been held that the High Court was not  unjustified in refusing to admit the additional  evidence under Order 41 Rule 27 of the CPC when  such additional evidence purported to defeat  the claim of one of the parties and such  additional evidence was sought to be laid many  years after filing of the suit. In that  circumstance, this Court has held in the  aforesaid decision that the discretion used by  the appellate court in refusing to receive  additional evidence at the late stage cannot be  interfered with.

16.     In a recent decision of this court in the  case of Karnataka Board of Wakf Vs. Government  of India and Ors. [ (2004) 10 SCC 779], this  Court has again clearly laid down the  principles for acceptance or refusal of  additional evidence at the appellate stage  observing that the scope of Order 41 Rule 27 of  the CPC is very clear to the effect that the  parties to an appeal shall not be entitled to  produce additional evidence, whether oral or  documentary, unless they have shown that in  spite of due diligence, they could not produce  such documents and that such documents are  required to enable the court to pronounce a  proper judgment.  

17.     Keeping the aforesaid principles in mind  and applying the same on the facts and  circumstances of this case, we are unable to  accept the contention of the learned Additional  Solicitor General appearing for the appellant  that the legal notice dated                      8th October, 1991 could not be produced in  evidence before the trial court or before the  first appellate court due to inadvertence and  lack of proper legal advice.  For this purpose,  we have examined the pleadings made in the  application for acceptance of additional  evidence closely and in detail. Admittedly, the  legal notice issued by the counsel for the  respondent to the appellant which was sought to  be admitted as additional evidence at the  second appellate stage was lying with the

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appellant during the pendency of the suit and  also during the pendency of the first appeal.  The appellant in its written statement had  categorically taken the plea of limitation  which was also one of the main issues in the  suit. It is therefore difficult for us to  conceive that the said notice issued by the  lawyer of the respondent could not either be  produced before the trial court or before the  first appellate court due to lack of proper  legal advice. It cannot also be imagined that  the appellant having taken a specific plea in  the written statement regarding limitation of  the suit could not produce the same due to  inadvertence. In any view of the matter, Order  41 Rrule 27 of the CPC also does not empower an  appellate court to accept additional evidence  on the ground that such evidence could not be  produced or filed either before the trial court  or before the first appellate court due to  inadvertence or lack of proper legal advice.                Mr. Mohan, learned Additional Solicitor General  however sought to argue that the pleadings made  in the application for acceptance of additional  evidence would come within the meaning of  "substantial cause" under Order 41 Rule 27  (1)(b) of the CPC which would require the  appellate court to accept the legal notice in  order to pronounce its judgment. We are unable  to accept this submission of Mr. Mohan. In our  view, lack of proper legal advice or  inadvertence to produce the legal notice in  evidence is not a ground to hold that there was  substantial cause for acceptance of the  additional evidence.  Mr. Mohan, Learned  Additional Solicitor General further sought to  argue that the importance of the legal notice  was not realized and it was due to inadvertence  and lack of proper legal advice that the same  could not be produced before the courts below.  In our view, we do not think that non  realization of the importance of the documents  due to inadvertence or lack of proper legal  advice as noted hereinabove also would bring  the case within the expression "other  substantial cause" in Order  41 Rule 27 of the  CPC. In this connection, reference can be made  to a decision of this court in the case of  Sunder Lal & Son Vs. Bharat Handicrafts Pr.  Ltd. [(AIR) 1968 SC 406]. In any view of the  matter, we do not find that the legal notice  was required by the appellate court to  pronounce a proper judgment in the appeal. It  was open for the High Court to decide the  second appeal on merits with the documents and  evidence already on record.  Therefore, we are  in agreement with the High Court that the  additional evidence namely the legal notice  issued by the counsel for the respondent to the  appellant ought not to have been admitted at  the stage of the second appeal. As noted  hereinabove, the suit was filed by the  respondent on 5th October 1995. The Trial Court  decreed the suit about nine years thereafter  more precisely on 12th March 2004. An appeal

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was carried against the aforesaid judgment of  the trial court which was disposed of on 31st  January 2005. The appellant had failed to  satisfy the High Court as to why the legal  notice which was admittedly lying with them  could not be produced during all these years  i.e. from 5th October 1995 till 31st January  2005. Such being the position and in view of  the discussions made herein above, we are  unable to hold that the High Court was not  justified in rejecting the application for  acceptance of additional evidence at the second  appellate stage.  

18.     Let us now consider whether the three  courts below were justified in decreeing the  suit of the respondent.  Before we consider the  findings of the courts below, it may be kept on  record that in the second appeal, the High  Court held that no question of law much less  any substantial question of law arose in the  same.  On a perusal of the judgment of the High  Court in the second appeal, we also do not find  that any substantial question of law, as  enumerated in Section 100 of the CPC was in  fact raised before the High Court.  So far as  the trial court is concerned, it came to a  finding of fact that the respondent was found  to be in possession of the suit plot in spite  of resumption notice having been issued by the  appellant.  The trial court also came to a  finding of fact that it was due to inaction on  the part of appellant to remove the electric  wires and poles from the suit plot and the  explanation given by the respondent for not  being able to take any step to raise  construction in compliance with Clause 8 of the  agreement must be accepted and therefore a  decree for permanent injunction should be  granted in favour of the respondent. These  findings of fact were echoed by the appellate  court as well. It is well settled that in a  second appeal, High Court is not permitted to  set aside the findings of fact arrived at by  the two courts below until and unless it is  shown that such findings of fact are either  perverse or arbitrary in nature. Mr. Mohan  learned Additional Solicitor General, however,  could not satisfy us that the findings of the  courts below which were also accepted by the  High Court in the second appeal were either  perverse or arbitrary. Accepting this position,  the High Court in second appeal found that the  appellant had failed to satisfy it that the  findings recorded by the courts below suffered  from any infirmity or that they were contrary  to the record. The High Court also concluded  that there was no question of law much less any  substantial question of law which arose in the  second appeal. Before we part with this  judgment, we keep on record that Mr. Mohan  appearing for the appellant substantially  argued before us on the issue that the High  Court was not justified in rejecting the  application for acceptance of additional

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evidence. We have already discussed this aspect  of the matter herein before and after such  discussion, we have already held that there was  no infirmity in that part of the judgment by  which the High Court had rejected the  application for acceptance of additional  evidence.

19.     For the reasons aforesaid, we do not find  any ground for which interference with the  judgment of the courts below can be called for.  Accordingly, the appeal requires to be  dismissed and is dismissed as such. There will  be no order as to costs.