# HARYANA STAIB INDUSTRIAL DEVELOPMENT CORPORATION v. MIS CORK MANUFACTURING CO

- **Citation:** [2007] 9 S.C.R. 508
- **Court:** Supreme Court of India
- **Decided:** 2007-08-27
- **Case number:** Civil Appeal No. 3940 of2007
- **Bench:** T Arun Chatterjee, P.K. Balasubramany An
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/haryana-staib-industrial-development-corporation-v-mis-cork-manufacturing-co-23297
- **Pages:** 25

## Headnote

Code of Civil Procedure, 1908:
s. JOO and Order 41, Rule 27-Applicationfor production of additional
C evidence in second appeal before High Court-Legal notice issued by couf!Sel
for plaintiff to defendant sought to be produced as admissible evidence at
second appellate stage by latter which was lying with it during pendency of
suit and first appeal-Jn appeal before Supreme Court, difference of opinion
between the two Judges comprising the Bench with regard to decision of
D High Court rejecting application under Or.41 r.27 as also dismissing the
second appeal-Matter referred to larger Bench.
The plaintiff-respondent was allotted an industrial plot by the defel!dantappellant Corporation as per allotment letter dated 24.11.1987. An agreement
was entered into between the parties on 12.2.1988, Clause 8 whereof provided
E that the allottee would start construction on the plot within a period of one
and half years from the date of issuance of the allotment letter and would
complete the erection and installation of machinery and commence production
within a period of two years from the date of allotment of the plot, failing which
the plot would be liable to be resumed and the security amount forfeited. The
F appellant, finding that Clause 8 of the agreement was not complied with by
the respondent, issued a show cause notice to it as to why the plot be not
resumed and possession taken. According to the appellant, it issued the
resumption order on 13.9.1991, and on 20.9.1991 took possession of the suit
plot. On 5.10.1995 the respondent filed a civil suit in the Court of Addi. Civil
Judge praying for a decree of permanent injunction restraining the appellan~
G from interfering with the possession of the suit plot and further reallotting it
to any other person. It was submitted that Clause 8 of the agreement could
not be complied with because of the high tension wires running over the suit
plot and unless the same were removed the plaintiff was not in a position to
raise any construction. The appellant filed a written statement stating that
H
508
STATEINDUSTRIALDEVE. CORPN.1•. CORKMANUFACTURINGCO.
509
the suit was time barred since the plot had been resumed on 13.9.1991. It A
was also submitted that the plaintiff suppressed the facts regarding knowledge
of the resumption order and taking over possession of the suit plot. The trial
court, however, decreed the suit; and the first appellate court affirmed the
decree. In the second appeal, the defendant-appellant filed an application under
Order 41, Rule 27, C.P.C. for acceptance of additional evidence, i.e. the legal B
notice issued on behalf of the plaintiff to the defendant showing
acknowledgement of receipt of the resumption order dated 13.9.1991 by the
plaintiff-respondent The High Court rejected the application and dismissed
.>
the second appeal holding that no substantial question of law arose therein.
In the instant appeal filed by the defendant-Corporation, it was contended C
for the appellant that the High Court erred in rejecting the application under
Order 41, Rule 27 CPC since the additional evidence wa'> sought to be adduced
in order to prove that the plaintiff had clear knowledge of the resumption order
passed on 13.9.1991, and the suit having been filed on 5.10.1975 was barred
by limitation.
Referring the matter to the larger Bench, the Court
HELD: (By the Court):
D
In view of the difference of opinion, let this matter be placed before
Hon'ble the Chief Justice oflndia for referring it to an appropriate larger E
Bench.
Per Chatterjee, J.
1.1. The High Court was right in holding that the additional evidence,
i.e. the legal notice issued by the counsel for the respondent to the appellant, F
ought not to have been admitted at the stage of the second appeal. Keeping in
view the principles enunciated by this Court, and applying the same to the
facts and circumstances of the instant case, it cannot be assumed that the
said additional evidence sought to be adduced under Order 41 Rul

## Text

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A
HARYANA STAIB INDUSTRIAL DEVELOPMENT CORPORATION
v.
MIS CORK MANUFACTURING CO.
AUGUST 27, 2007
B
(T ARUN CHATTERJEE AND P.K. BALASUBRAMANY AN,JJ.)
Code of Civil Procedure, 1908:
s. JOO and Order 41, Rule 27-Applicationfor production of additional
C evidence in second appeal before High Court-Legal notice issued by couf!Sel
for plaintiff to defendant sought to be produced as admissible evidence at
second appellate stage by latter which was lying with it during pendency of
suit and first appeal-Jn appeal before Supreme Court, difference of opinion
between the two Judges comprising the Bench with regard to decision of
D High Court rejecting application under Or.41 r.27 as also dismissing the
second appeal-Matter referred to larger Bench.
The plaintiff-respondent was allotted an industrial plot by the defel!dantappellant Corporation as per allotment letter dated 24.11.1987. An agreement
was entered into between the parties on 12.2.1988, Clause 8 whereof provided
E that the allottee would start construction on the plot within a period of one
and half years from the date of issuance of the allotment letter and would
complete the erection and installation of machinery and commence production
within a period of two years from the date of allotment of the plot, failing which
the plot would be liable to be resumed and the security amount forfeited. The
F appellant, finding that Clause 8 of the agreement was not complied with by
the respondent, issued a show cause notice to it as to why the plot be not
resumed and possession taken. According to the appellant, it issued the
resumption order on 13.9.1991, and on 20.9.1991 took possession of the suit
plot. On 5.10.1995 the respondent filed a civil suit in the Court of Addi. Civil
Judge praying for a decree of permanent injunction restraining the appellan~
G from interfering with the possession of the suit plot and further reallotting it
to any other person. It was submitted that Clause 8 of the agreement could
not be complied with because of the high tension wires running over the suit
plot and unless the same were removed the plaintiff was not in a position to
raise any construction. The appellant filed a written statement stating that
H
508
STATEINDUSTRIALDEVE. CORPN.1•. CORKMANUFACTURINGCO.
509
the suit was time barred since the plot had been resumed on 13.9.1991. It A
was also submitted that the plaintiff suppressed the facts regarding knowledge
of the resumption order and taking over possession of the suit plot. The trial
court, however, decreed the suit; and the first appellate court affirmed the
decree. In the second appeal, the defendant-appellant filed an application under
Order 41, Rule 27, C.P.C. for acceptance of additional evidence, i.e. the legal B
notice issued on behalf of the plaintiff to the defendant showing
acknowledgement of receipt of the resumption order dated 13.9.1991 by the
plaintiff-respondent The High Court rejected the application and dismissed
.>
the second appeal holding that no substantial question of law arose therein.
In the instant appeal filed by the defendant-Corporation, it was contended C
for the appellant that the High Court erred in rejecting the application under
Order 41, Rule 27 CPC since the additional evidence wa'> sought to be adduced
in order to prove that the plaintiff had clear knowledge of the resumption order
passed on 13.9.1991, and the suit having been filed on 5.10.1975 was barred
by limitation.
Referring the matter to the larger Bench, the Court
HELD: (By the Court):
D
In view of the difference of opinion, let this matter be placed before
Hon'ble the Chief Justice oflndia for referring it to an appropriate larger E
Bench.
Per Chatterjee, J.
1.1. The High Court was right in holding that the additional evidence,
i.e. the legal notice issued by the counsel for the respondent to the appellant, F
ought not to have been admitted at the stage of the second appeal. Keeping in
view the principles enunciated by this Court, and applying the same to the
facts and circumstances of the instant case, it cannot be assumed that the
said additional evidence sought to be adduced under Order 41 Rule 27 CPC,
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. Admittedly, G
the said legal notice was lying with the 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. (Para 17) [521-E; 520-D-F)
H
510
SUPREME COURT REPORTS
[2007] 9 S.C.R
A
Municipal Corporation For Greater Bombay v. Lal Pancham of Bombay
and Ors., (1965] 1 SCR 542; and State of Gujarat and Anr. v. Mahendra
Kumar Parshottambhai Desai [Dead] by Lrs., [2006) 9 SCC 772, relied on.
Smt. Pramod Kumari Bhatia v. Om Prakash Bhatia and Ors., (1980) 1
SCC 412; Karnataka Board of Wakfv~ Government of India and Ors., [2004)
B 10 SCC 779; and Sunder Lal & Sonv. Bharat Handicrafts Pr. Ltd, AI~ (1968)
SC 406, referred to.
1.2. 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.
C acceptance of the additional evidence under Order 41, Rule 27(l)(b} of the
Code. It canilot be said 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. 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.
D all these years i.e. from 5th October 1995 till 31st January 2005;
(Para 17) [521-B, D, Fl
2.1. The High Court held that no question of law much.less any
substantial question of law arose in the.second appeal. A perusal of the
judgment of the High Court also does not show that any substantiaiquestion
E of law, as enumerated in Section 100 of the CPC was in fact raised before the
High Court. [Para 18] [521-H; 522-A]
2.2. So far as the trial court is concerned,.it came.to a finding of fact
that the respondent was found to be in possession ofthe suit plot in spite of
resumption notice having been issued by the appellant. The trial court also
F 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
G respondent These findings offact were.echoed oy the first appellate court as
well. [Para 18) [522-=A-C)
2.3.Jt 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
H in nature. The High Court in second appeal found that the appellant had failed
>
STATEINDUSTRIALDEVE. CORPN. 1•. CORK MANUFACTURING CO.
511
to satisfy it that the findings recorded by the courts below suffered from any A
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. [Para 181 (522-C, DJ
Per Balasubramanyan, J
1. The High Court was clearly in error in refusing to admit in evidence,
the notice sent on behalf of the plaintiff by its advocate to the defendant. It
must be noticed that not even an objection was filed on behalf of the plaintiff
to the application under Order 41 Rule 27 of the Code denying the issuance
B
of such a notice. After all, the purpose for which the notice was sought to be C
produced was only to show that the plaintiff was aware of the resumption made
in the year 1991 and the specific acknowledgement of receipt of the relevant
letters in that behalf. Even otherwise, the letters produced at the trial do
indicate that the plaintiff was aware of the resumption of the plot. Therefore,
this was a case where the document produced under Order 41Rule27 of the
Code was required to enable the High Court to pronounce a judgment more D
satisfactorily to its conscience constituting other sufficient cause within the
meaning of Order 41 Rule 27 of the Code for production of additional evidence.
The authenticity of the notice had not been questioned by filing an objection
and the High Court was therefore in error in thinking that it was not a
document which could be straightaway aceepted. (Para 161
2. The plaintiff came forward with a dubious case regarding the order
ofresumption of the plot in question. There was clearly a default on the part
of the plaintiff in complying with the requirement of putting up an industry
E
in the plot and starting commercial production within two years of the
allotment. The excuse put forward by the plaintiff was the existence of an F
electric pole and overhead electric wires, which stood in the way of the
construction, and that it was for the defendant-Corporation to have got them
removed. In the written instrument of allotment, there was no such stipulation.
Having accepted the allotment on its basis and taken possession of the plot, it
is not open to the plaintiff to raise a contention based on some other subsequent
understanding between the plaintiff and some officers of the defendant or G
outside the agreement. (Para 131 (529-B-E)
3.1. The plaintifrs plea that it was not aware of the order of resumption
is belied by the letters marked on its side through PW4 and the admission of
PW6. These letters clearly show that the plaintiff was given notice of the
resumption and was informed that ifhe did not comply with the requirement H
512
SUPREME COURT REPORTS
[2007] 9 S.C.R.
A and sent satisfactory reply, the land would be resumed without any further .
notice within the time stipulated therein. Thus, obviously, adequate notice and
adequate opportunity was given to the plaintiff before the order of resumption
was passed. (Para 14) (529-F)
3.2. Non-examination of the original allottee was fatal to the case of the
B plaintiff under the circumstances. P.W.6, who is examined on behalf of the
plaintiff came into picture only in the year 1996 and was not a competent
witness to speak about anything that transpired in the year 1991. It was a
clear case for drawing an adverse inference against the plaintiff for nonexamination of the allottee. These vital aspects have been ignored by the trial
C court and by the first appellate court. The courts below acted perversely in
entering a finding that the order of resumption was illegal and was not binding
on the plaintiff. (Para 14) (529-G; 530-A)
3.3. A finding ignoring legal evidence available in the case and ignoring
the inferences to be drawn from the circumstances established, is a finding
D that can only be described as perverse and such a finding is not binding on
the second appellate court under Section 100 of the Code. In fact, it compels
interference by the second appellate court. The High Court has unfortunately
not adverted to anything relevant, and was incorrect in thinking that the
findings of fact are not liable to be interfered with in the case on hand. At
least, it should have seen that parole evidence to alter the terms of a written
E instrument was not permissible and the fact that the courts below hatf relied
on such evidence justified interference by the High Court in second appeal.
(Para 14) (530-B-CJ
3.4. Similarly, the finding on possession is also found to be based on no
F legal evidence and consequently infirm and liable to be interfered with by this
Court as it should have been interfered with by the Second Appellate Court.
There is no evidence to show that the plaintiff-allottee continued in possession
until the power of attorney was executed in favour of P.W. 6. The suggestion
to P.W. 6 that he was aware of the resumption and re-allotment to another
entity when he filed the suit, is a justifiable suggestion on the facts of this
G case. (Para 15( (530-F, E)
H
4. Thus, on the whole, the plaintiff has not made out any case for relief
in the present suit. The judgments of the courts below, therefore, call for
interference. The appeal deserves to be allowed. If the decree passed is not
set aside, the Court would be failing in its duty exercising jurisdiction under
STATEINDUSTRIALDEVE. CORPN. v. CORKMANUFACTIJRINGCO. [TARUNCHATTERJEE,J.] 513
Article 136 of the Constitution of India. After all, the jurisdiction of this Court A
is a corrective jurisdiction and not a restricted one. (Para 17) (531-DJ
5. During the course of the hearing, the defendant-appellant offered that
the plot could be allotted afresh to the plaintiff, ifthe latter was willing to pay
the price at the rate of Rs.13,000/- per sq,uare meter which is the current
rate. The pl?intiff was not willing to pay that price. Taking note of the B
circumstances, it would be proper to give the plaintiff an opportunity to have
the land allotted to it afresh, on its paying .a price for the plot at the rate of
Rs.10,000/- per square meter. (Para 1911531-F-Gl
6. The appellant would initiate action against those officers who were
dealing with the cancellation of the allotment and taking possession of the C
property, and more particularly those who were in charge of the litigation
and who failed to produce vital documents including the notice issued on behalf
of the plaintiff that was sought to be produced in second appeal It is absolutely
necessary to take such action in the interests of the appellant, the citizens
and the State since it should not be forgotten that the appellant is a trustee of D
public property and is expected to deal with it as a trustee with all care and
caution. (Para 20( (532-C)
7. Time has come to exhort the trial courts, the first appellate courts
and the second appellate courts in the State to show better application of mind
while deciding a lis keeping in mind that what they are performing is a divine E
function that is onerous and at the same time challenging. These observations
regarding the courts in the State are made noticing with regret the lack of
application of mind in many a case that had come before this Court.
(Para 20) (532-D-E)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3940 of2007.
From the final Judgment and Order dated 20.01.2006 of the High Court
of Punjab and Haryana at Chandigarh in Regular Second Appeal No. 2320 of
2005.
R.Mohan, ASG., Ravindra Bana for the Appellant.
Gaurav Bhatia and Abhishek Chaudhary for the Respondent.
The Judgment and Order of the Court was delivered by
T ARUN CHATTERJEE, J. I. Leave granted.
F
G
H
514
SUPREME COURT REPORTS
[2007] 9 S.C.R
A
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/
B 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
C 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
D 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
E 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 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
F 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 Addi. 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
G 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
H high tension wires were removed from the suit plot, the respondent was not
STATEINDUSTRIALDEVE. CORPN. v. CORK MANUFACTURING CO. [TARUNCHATTERJEE,J.) 515
in a position to raise construction on the same within the time specified in A
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 B
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
c
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, D
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.
6. The following issues were framed by the trial court :
I.Whether the order dated 13.9.91, if any, is illegal, null and void and
not binding upon the plaintiff ?
E
2. Whether the plaintiff is in possession over the plot in question ? F
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 G
own act and conduct ?
6. Whether the suit is bad for non-joinder of the necessary parties ?
7. Relief.
H
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SUPREME COURT REPORTS
[2007] 9 S.C.R.
A
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
resp~mdent inter a/ia 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
B
pending, the Construction in compliance with Clause ~ of the
agreement could not be raised on the suit plot.
c
D
(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.
(Ill)' Even ifthe 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
E the evidence, oral and documentary on record, the following conclusions
were drawn :-
F
I.
The order of resumption passed by the appellant dated 13th
September, 199 l whereby the suit plot was allegedly resumed,
was illegal and against the principles of natural justice and
therefore liable to be set aside.
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
G
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
H high tension wire and electric pole from the suit plot resumed the plot in
4..
STATEINDUSTRIALDEVE. CORPN. 1•. CORKMANUFACTURINGCO.[TARUNCHATTERJEE,J.) 517
question on 13th September, 1991 without affording the respondent any A
._,.
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 B
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, c
199 J 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 4 I 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 D
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 4 J Rule 27 of the CPC to show that the suit filed in 1995 was E
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.
'1r
No question of law, much less any substantial question of law arises F
in the present appeal."
I 0. 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 G
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 H
518
SUPREME COURT REPORTS
[2007] 9 S.C.R.
A to prove that the respondent had clear knowledge of the resumption order
passed on 13th September, 1991 and if such fact was accepted, the s·uit 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
B 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 of0rder41 Rule 27 of the CPC which are
C as follows:
D
E
F
G
"27. Production of additional evidence in Appellate Court - [l]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 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, beforethe aP.pellate court except on
the.grounds enumerated in Clause (a), (aa) and (b) of0rder41Rule27(1) of
H the CPC. The court may permit additionaLev.idence to be produced only when
•
STA 1E INDUSTRIALDEVE. CORPN. v. CORK MANUFACTURING CO. [fARUNCHATIEIUEE,J.) 519
it is satisfied with the three grounds namely, (i) ifthe Court from whose decree A
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 B
any witness to be examined to enable it to pronounce judgment; or for any
other substantial cause .
14. In Municipal Corporation For Greater Bombay v. Lal Pancham of
Bombay and Ors., [1965] I SCR 542, this Court held that power under Order C
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 Clecision in Municipal Corporation For Greater
Bombay v. Lal Pancham of Bombay and Ors., [1965] I SCR 542, this Court
again in State of Gujarat and Anr. v. Mahendra Kumar Parshottambhai D
Desai [Dead) by LRs, [2006] 9 SCC 772, in para IO page 775 observed as
follows:
·~ ... Though the appellate court has the power to allow a document
to be produced or a witness to be examined under Order 41Rule27,
the requirement of the said Court must be limited to those cases E
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 does
not entitle the appellate court to let in fresh evidence only for the F
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 G
that the applications were filed for adducing additional evidence in
the appeal. "
(Emphasis supplied)
15. In Smt. Pramnd Kumari Bhatia v. Om Prakash Bhatia and Ors., H
520
SUPREME COURT REPORTS
[2007] 9 S.C.R.
A [1980] l sec 412, it has been held that the High Court was not unjustified
in refusing to admit the additional evidence under Order 41 Ru le 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
B 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 v. Government of India and Ors., [2004] IO SCC 779, this Court has
again clearly laid down the principles for acceptance or refusal of additional
C 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.
D
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 t~at 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
E 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 appellant during the pendency
F 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
G 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 Rule 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
H appellate court due to inadvertence or lack of proper legal advice. Mr. Mohan,
STAlEINDUSTRIALDEVE.CORPN.•"CORKMANUFAClURJNGCO.[TARUNCHAITERJEE,J.J 521
learned Additional Solicitor General however.sought to argue that the pleadings A
made in the application for acceptance of"additional evidence would come
within the meaning of "substantial cause" under Order 41 Rule 27 (l)(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 B
substantial cause for acceptance of the additional evidence.' Mr. Mohan,
Learned Additional Solicitor General further sought to argue that the importance
o~ 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 C '
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 v;. Bharat
Handicrafts Pr. Ltd, AIR (1968) SC 406. In any view of the matter, we do not D
find that the legal notice was -required by the appellate court to pronounce
a proper judgment in the appeal. It was open for the Hi~h Court to decide
the second appeal on merits with the documents and evidenc~ 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 E
appeal. As noted hereinabove, the suit was filed by the respondent on 5th
October 199 5. The Trial Court decreed the suit about nine years thereafter
more precisely on 12th March 2004. An appeal 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 F
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 G
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 hefd 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 H
522
SUPREME COURT REPORTS
[2007] 9 S.C.R.
A 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
B 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
C 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
D failed to satisfy it that the findings recorded by the courts below suffered
from any infirmit)' 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
E substantially argued before us on the issue that the High Court was not
justified in rejecting the application for acceptance of additional 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.
F
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.
G
P.K. BALASUBRAMANY AN, J. l. Leave granted.
2. The defendant in Suit No. 8 of 1995 in the court of Senior Sub-Judge,
-1 ,,,._
....
Gurgaon is the appellant in this appeal. The appellant allotted plot No. 259
~·
on 12.3 .1986 to the respondent through its sole proprietor Om Prakash Saharan.
H The approximate area of the plot is 1000 square meters and the tentative price
~t
I
STATEINDUSTRIALDEVE. CORPN. v. CORKMANUFACTIJRJNGCO. [BALASUBRAMANY AN,J.) 523
was Rs. 1,20,000/-. On 12.2.1988, a fonnal agreement was entered into between A
...:?
the parties. According to the agreement, the allottee had to start construction
of a building for the setting up of an industrial unit within a period of three
months and had to complete the construction within one and half years from
the date of issue of the letter of allotment. The construction had to be
completed and the installation of the machinery had also to be completed and B
the coinmercial production was to be started within a period of two years from
the date of allotment. The Agreement also provided that failing compliance
with the above condition by the allottee, the plot was liable to be resumed
and l 0% of the cost of the plot deposited by the allottee at the time of
allotment was liable to be forfeited. The letter of allotment was issued on
24.12.1987. The allottee did not fulfil the condition of starting commercial c
production within two years of the letter of allotment. This fact is not in
dispute. The appellant thereupon issued various notices to the allottee. On
19.7.1991, the allottee requested for extension o time. That request was rejected.
On 13.9.1991, according to the appellant, the appellant issued an order of
resumption which specifically referred to the contravention of the terms and D
conditions of allotment by the allottee. According to the appellant, possession
was taken back on 20.9.1991. The plot was thereafter re-allotted to M/s
Insulation & Electrical Products (P) Ltd., New Delhi on 2.4.1992. Since that
allottee also did not fulfil the conditions, the said allotment was cancelled on
6.1.1994.
E
3. The respondent, the plaintiff, filed an application for referring the
dispute to Arbitration.