CS (OS) 504/2004 Polyflor Limited v. A.N. Goenka: Efore Ipin Anghi

SCC Online Web Edition, Copyright © 2020
Page 1 Thursday, August 13, 2020

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CS(OS) 504/2004
Polyflor Limited v. A.N. Goenka
2016 SCC OnLine Del 2333 : (2016) 159 DRJ 664 : (2016) 156 DRJ 600
In the High Court of Delhi at New Delhi

(BEFORE VIPIN SANGHI, J.)
Polyflor Limited .…. Plaintiff

Sushant Singh, Kumar Chitranshu and Harsh Pathak, Advocates
v.
Sh. A.N. Goenka & Ors. DA+ .…. Defendants
Ajay Amitabh Sharma, Advocate
CS(OS) 504/2004
Decided on April 18, 2016
Civil Procedure Code, 1908 — Or. 7, R. 14(3) — Production of documents — Audited
Annual reports — Held, plaintiffs were aware of 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 plaintiffs, plaintiffs are obliged to maintain records for a
period of seven years under law applicable to plaintiff company, it cannot be said that in
spite of due diligence, plaintiffs could not have produced said documents during filing of — No
merit found in present chamber appeal and hence dismissed
(Para 25)
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
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
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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, 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 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. v. Veejay Lakshmi Engineering
Works Ltd., (2008) 149 PLR 40 in support of his 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
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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 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 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
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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 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 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
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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 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
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
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
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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 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.
———
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SCC Online Web Edition, Copyright © 2020

Page 1 Thursday, August 13, 2020

Polyflor Limited v. A.N. Goenka

In the High Court of Delhi at New Delhi

Polyflor Limited .…. Plaintiff

© EBC Publishing Pvt.Ltd., Lucknow.

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