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HC ruling on admission of liability by contractor co upheld

R.N. Sahai

``WE are not impressed with the contention of the counsel that there is no admission of liability by the contractor-company for the purpose of Order XII Rule 6 of the Code of Civil Procedure at all, nor that the admission if any is conditiona l, because we cannot spell out any condition stated therein, nor the dismissal of application filed by another bank in the suit has any relevance. Therefore, we are of the view that this case deserves to be dismissed with advocates fees quanti fied at Rs 10,000.''

With these words, a special leave petition by a company-contractor was dismissed by the Supreme Court. In this case, the trial judge had, inter alia, relied on admission of liability by the contractor-company to bank on the resolution of the board of dir ectors of the company.

This was challenged by the company- contractor before the Supreme Court because the High Court had already dismissed its appeal.

This was in Uttam Singh Dugal and Co vs. Union Bank of India (Special Leave Petition (c) No. 12511 of 1999 decided on August 8, 2000) by a Division Bench comprising Mr Justice S. Rajendra Babu and Mr Justice Shivraj V. Patil.

Briefly, the contracting company had given sub-contract of constructing students' dormitories/dining hall for the University of Bhagdad, Iraq, to another party. Certain banks were acting as consortium to finance this project.

On certain disputes having arisen, the company-contractor filed suits against the banks on the ground that the debits raised were illegal.

Indian Overseas Bank (IOB) also filed a suit for recovery of certain sum of money, and an application made therein was rejected by the High Court. The banks forming the consortium as also Export Credit Guarantee Corporation (ECGC) were also impleaded in it by amending the suit.

Then, Union Bank of India (UBI) filed a suit for recovery of certain sum of money with certain other reliefs, and in that suit, application for judgment upon admission was allowed.

The trial judge had found that there was an unequivocal admission of the contents of the relevant documents by the contractor and what was denied was the extent of admission, and the increase of the liability. The trial judge took the view that the pre-r equisites of Order XII, Rule 6 of the Code of Civil Procedure, 1908 had been satisfied, and on a plain reading of the resolution of the board of directors of the company there could be no doubt that the contractor had made a clear, unambiguous and uncond itional acknowledgment of its liability to the bank.

According to the trial judge, the language of the resolution would show that the extent of the admission in the resolution was for Rs 10,15,80,000, if not for Rs 10,35,80 lakh.

On appeal, the Division Bench noticed these very facts, and also noted that discrepancy, if any, between the contractor's particulars and the particulars in respect of which a judgment was sought on admission, was not made the subject-matter of challenge , either in the affidavit-in-opposition before the trial judge or in the arguments thereof, and characterised the same as a point of accounting discrepancy, which could not be raised at the stage of appeal, and dismissed the same.

The contractor filed a special leave petition before the Supreme Court against the judgment passed by the High Court of Calcutta affirming the decree passed by the Single Judge for a sum of Rs 10,15,50 lakh in favour of UBI.

The Supreme Court dismissed the petition and rejected the various contentions raised on behalf of the petitioner.

Referring to the contention that admissions referred to in Order XII, Rule 6 CPC should be of the same nature as other admissions referred to in other rule preceding this Rule, and that the admissions generally arise when a statement was made by a party in any of the modes provided under Sections 18 to 23 of the Evidence Act, 1872, the judges pointed out that admissions were of many kinds.

They may be considered as being on the record as actual if that is either in the pleadings or in answer to interrogatories or implied from the pleadings by non-traversal.

Second, the admissions may be as between parties by agreement or notice. Since they have considered that admission for passing the judgment is based on pleadings itself, it would be unnecessary to examine as to what kinds of admissions are covered by Ord er XII, Rule 6 CPC.

(By arrangement with Corporate Law Adviser, New Delhi.)