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Judgment
A short and crisp question flaw raised in the appeal is whether the direction issued by the Tribunal below to produce documents under Order 11 Rule 14, CPC includes direction for discovery of those documents on oath and whether defence could be struck off under Order 11 Rule 21, CPC for non-compliance of such direction though there was no specific direction for discovery of those documents.
The prayer made by the appellant on the above noted ground has been rejected by the Tribunal below through a well-reasoned order against which the appellant has filed the present appeal.
On an application filed by the appellant herein, the Tribunal below, vide its order dated 14.3.2011, had directed the respondent Bank to produce the following documents:
"(a) Approval/Consent/Permission of the defendant/counter claimant for increasing the amount of the derivative transactions (underlying from Rs. 30 crores to Rs. 86 crores).
(b) The details and rates at which the alleged Transaction No. 1 was unwound by the applicant Bank and on what basis, the applicant Bank handed over the alleged amount of 40,000/- USD to the defendant/claimant at the time of unwinding to the defendant/claimant at the time of unwinding the alleged transaction No. 1.
(c) The details and rates at which the transaction No. 4 was partially cancelled as alleged by the applicant Bank in the aforesaid OA No. 218/09 filed before the Hon'ble Tribunal and under what circumstances the transaction No. 4 has provided an alleged return of 1,00,000 USD.
(d) The details of Aggarwal Investments and details of the Bank where Pay Order No. 628080 dated 19.7.2007 issued by the applicant Bank to the Aggarwal Investments for an amount of Rs. 22,00,534/- had been deposited on account of partial cancellation of the alleged transaction No. 4.
(e) The monthly statements and ledger of the accounts of the defendant/counter claimant maintained by the applicant Bank with respect to all the 4 alleged derivative transactions and forward contracts."
Pleading non-compliance of the order passed dated 14.3.2011 as noticed above the appellant filed an I.A. No. 742/2011 as noticed above the appellant filed an I.A. No. 742/2011 under Section 19(25) and Section 22(2)(b) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act) read with Order11 Rule 21, CPC to dismiss the pending O.A. filed by respondent Standard Chartered Bank and to strike off the defence in the counter-claim due to non-compliance of the above order.
The respondent Bank had filed an affidavit pleading complete compliance of the orders passed by the Tribunal for production of documents whereas the case set up by the appellant in the present I.A. No. 742/2011 was that the O.A. be dismissed and the defence be struck off due to non-compliance of the direction to produce documents. While rejecting the application filed by the appellant, the Tribunal has noticed that though the appellant had filed LA. No. 345/2010 for discovery and production of documents but the Tribunal had only directed the respondent Bank for production of documents. While deciding the issue, the Tribunal has made reference to a judgment passed by the Kerala High Court in Ismail Pillai Mohammed Haneefa v. Mohammedali Vaidya Ibrahim Kunju Vaidyan, AIR 2007 Kerala 276, where the issue of striking off defence in relation to Order 11, Rule 21, CPC has been considered. The High Court in this judgment has observed that to attract Rule 21, the party shall have to comply with an order to answer the interrogatories or for discovery or for inspection of documents. It is noticed that the power provided under Rule 21 can be invoked only within the ambit of the section. As per High Court, such an order could be passed only if the Court had earlier passed an order under Rule 2 or Rule 11 of Order 11 to answer the interrogations, or an order under Rule 12 of Order 11 to make discovery on oath of documents. As per High Court, an order passed by the Court to produce document in its possession is only an order under Rule 14 of Order 11 and non-compliance thereof will not visit the stringent order provided under Rule 21 of Order 11 of the Code.
This issue has also been discussed by the Rajasthan High Court in the case of Amarsingh v. Chaturbhuj, AIR 1957 Rajasthan 367. In this case also refusal to produce certain document is not considered a lapse within the meaning of Rule 21 of Order 11, CPC at all. Thus, the Court has held that the penal consequences prescribed thereunder could not be imposed.
The Counsel for the appellant, however, would contend that application filed by the appellant was for discovery and production of documents and the non-compliance thereof would lead to the consequences as given in Order 11 Rule 21, CPC, As per the Counsel, the prayer for production of document is regulated by Order 11 Rule 14, but prior thereto is an Order 11 Rule 12 which deals with discovery of documents. Order 11 Rule 12, CPC provides that any party may, without filing any affidavit, apply to the Court for an order directing any other party to any suit to make discovery on oath of the documents which are or have been in possession or power, relating to any matter in question therein.
The rule further states that on hearing such an application, the Court may either refuse or adjourn the same and if satisfied that such discovery is not necessary or not necessary at that stage of the suit make such an order either generally or limited to certain classes of documents, as may, in its discretion, be thought fit. Further there is proviso to this rule which states that discovery shall not be ordered when and so far as the Court shall be of the opinion that it is not necessary either for disposing fairly of the suit or for saving costs.
Rule 14 talks of production of document. This rule provides that it shall be lawful for the Court at any time during pendency of the suit to order production by any party thereto, upon oath or such of the documents in his possession or power relating to any matter in question in such suit as the Court may think right. The Court has been given power to deal with such documents, when produced, in such manner as shall appear just.
The wording of Rule 12 and Rule 14 is noticeably different. Rule 12 and Rule 14 of Order 11 are independent of each other and hence the Court can entertain application under Rule 14 directly without insisting on application being filed under Rule 12. An order for production of document under Rule 14 is quite different from order of discovery under Rule 12 or an order of inspection under Rule 18. The power given to the Court directing discovery of document under Rule 12 appears to be in the discretion of the Court and it may either refuse or adjourn the same or make any such order either generally or limited to certain class of documents. There is yet another rider which is given in the proviso as already noticed. The rule gives the Court a discretion to refuse discovery of documents when there is no reasonable prospect of its being of any use or to limit the nature and extent of discovery. The Court while exercising discretion either refuse or adjourn. The application, is to be guided by the pleadings and the nature of tile action. This discretion vested in the Courts must be exercised judicially to further the primary object of the rules and care must be taken that they are not used with ulterior motive.
When the production of document is directed under Rule 14, then the Court is given liberty to deal with such document, when produced, in such manner as shall appear just. Though the application may have been filed by the appellant under Order 11 Rule 12, CPC for discovery of documents, but the Court passed orders for product of documents. It is held that order of production should not be passed as routine matter. The mere production of document does not give an immediate and indefeasible right of inspection to other. Document produced does not become ipso facto a piece of evidence in a case. That being the position, it would necessarily imply that the Court had declined the permission sought for discovery of documents for which it had ample power as given in Rule 12. In my view, it will be futile exercise still to urge, as has been the attempt by the Counsel for the appellant, that the order passed by the Tribunal below on 14.3.2011 in I.A. No. 345/2010 has to be treated as direction for discovery of documents. There is a marked difference between these two provisions and the Tribunal below being conscious of this difference appears to have only directed production of document and not discovery thereof.
In this regard, r have minutely perused the order dated 14.3.2011 where the specific directions were for production of the documents listed above. The operative part of the order in this regard reads:
"...I am of the opinion that the production of the following documents would be helpful in adjudication of the claim of the present O.A."
The Tribunal thus has clearly directed the production of documents which cannot be read to mean that discovery of documents was ordered as is the contention.
Counsel for the appellant has also invited my attention to the case of Vestergaard Frandsen A/s & Ors. v. M Sivasamy & Ors., 2009 (40) PTC 223 (Del). The Counsel would refer to the observation made in this judgment where it is recorded that while considering the application under Order 11 Rule 12, CPC, the Hon'ble Supreme Court has ruled that relevance, justness and expediency to produce documents are germane consideration which would weigh with the Court while making the order. In this case, reference is made to nature and extent of discovery given in Hulsbury's Laws of England, fourth edition, Volume 13 in Para 1 where the term 'discovery' in this title is used to describe the process by which the parties to civil cause or matter are enable to obtain, within certain defined limits, full information of the existence and the content of all relevant documents relating to the matters in question between them. It is also mentioned that the process of discovery of the documents operates generally in three successive stages, namely (1) the disclosure, in writing by one party to the other of all the documents which he has or has had in has possession, custody or power relating to matter in question in proceedings; (2) the inspection of the documents disclosed, other than those for which privilege from or other objection to production is properly claimed or raised; and (3) the production of the documents disclosed weather for inspection by the opposite party or to the Court.
Though Counsel has relied on the above noted observation as contained in Halsbury's Laws of England noticed in the judgment, to me such observation may not help the submissions that the Counsel has pursued before me 'Discovery', as per Halsbury Laws operate generally in three successive stages. First stage as noticed is, disclosure in writing. Then comes inspection and third is production. As noticed above mere production does not given indefeasible right of inspection. Under English Law, if an action is one for penalties, no discovery of document is allowed (1948) 2 All ER 179 refers'. Under Civil Procedure Code two separate provisions are made for discovery and production. Even the effect of non compliance is also different as can be seen from Order 11 Rule 21. Where a party refuses to produce certain documents, it can not be penalized under Order 11 Rule 21 of the code as refusal to produce document can not be treated to be a lapse within meaning of Order 11 Rule 21 of CPC. Besides, the provisions of law contained in this rule being penal in their nature must be construed strictly. Even where the parties apply for an order under this rule the Court should not impose the penalty except in extreme cases and as last resort. Dismissal of suit is to be ordered only where the Court is satisfied that the part is avoiding a fair discovery or is guilty of wilful default. The discovery process may have been described as such as noted above, but such observation in no manner support the contention of the Counsel that production of document means discovery of the documents as well. As noticed, two different provisions are made under CPC for discovery and production and so the production and discovery are to be treated differently. This position is clarified by Order 11 Rule 21 where effect of non-compliance is also different.
Reference is also made to judgment in the case of Babbar Sewing Machine Company v. Trilok Nath Mahajan, AIR 1978 SC 1436, to urge that the ratio of law emerging from Ismail Pillai Mohammed Haneeta's case (supra) was contrary to the principle laid down of this judgment passed by the Supreme Court. In Sewing Machine case the trial Court had ordered for production and inspection of certain documents by the defendant. The plaintiff therein made an application under Order 11 Rule 21 stating that defendant that failed to comply with the order as regard to the production of documents. Defendant therein opposed the applications stating that there was no failure to produce documents. The trial Court passed an order striking off the defence of the defendant. When the matter reached Supreme Court, it has held that the penalty imposed by Order 11 Rule 21 is highly penal nature and ought only to be used in extreme cases and should in no way be imposed unless there is a clear failure to comply with the obligations laid down in the rule. Further observations made by the Hon'ble Supreme Court in this case, which are relevant, may be noted here are as under:
"Even assuming that in certain circumstances the provisions of Order 11, Rule 21 must be strictly enforced, it does not follow that a suit can be lightly thrown out or a defence struct out, without adequate reasons. The test laid down is whether the default is wilful. In the case of a plaintiff, it entails in the dismissal of the suit and, therefore, an order for dismissal ought not be made under Order 11 Rule 21, unless the Court is satisfied that the plaintiff was wilfully withholding information by refusing to answer interrogatories or by withholding the documents which he sought to discover."
The Hon'ble Supreme Court has not laid down any different principle of law than one as held in the case of Ismail Pillai Mohammed Haneefa v. Mohammedali Vaidya Ibrahim Kunju Vaidyan and Vestergaard Frandsen A/s & Ors. v. M. Sivasamy & Ors. (supra).
Though the parties have entered into legal debate on the issue of pro dud ion and 'discovery' and about the different effect thereof in terms of Order 11 Rule 21, but in this case such a debate is uncalled for whether it be a production or discovery the prayer was for striking out the defence and dismissing the O.A. in terms of Order 11 Rule 21 for not complying with the order passed by the Tribunal. The case of the respondent Bank is that it had complied with the order and it is so stated on affidavit before the Tribunal below. The question of striking out defence and dismissing the suit in default as per Order 11 Rule 21 can arise only where party fails to comply with the order for interrogatories or discovery of documents. Once the order is complied with, the question of dismissing the suit under Order 11 Rule 21 does not arise. No submissions are made before me to show that the Bank had failed to comply with the order or how such failure on the part of the Bank was alleged. No case for dismissing the O.A. therefore is made out which in any case can not be done in routine and such penalty is to be imposed when party is avoiding fair discovery or is guilty of wilful default which is not the case here from any angle.
In view of above discussion, I find that the Tribunal below is fully justified in rejecting the prayer of the appellant and the impugned order, therefore, does not call for any interference. The present appeal is therefore, dismissed.