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Date : 02/05/2023

(2022) 10 DEL CK 0018

In the Delhi High Court
Case No : I.A. No. 11509 Of 2021 In Civil Suit (OS) No. 1753 Of 2013

M/S Jindal Drilling And Industries Ltd APPELLANT

Vs
Naresh Kumar Agarwal And Others RESPONDENT

Date of Decision : 10-10-2022

Acts Referred:
Code Of Civil Procedure, 1908 — Section 151 , Order 11 Rule 1, Order 11 Rule 12,
Order 21 Rule 12, Order 21 Rule 14, Order 11 Rule 14, Order 11 Rule 18, Order 11
Rule 21, Order 31 Rule 21
Citation : (2022) 10 DEL CK 0018
Hon'ble Judges : Neena Bansal Krishna, J
Bench : Single Bench
Advocate : Pradeep Diwan, Harshil Gupta, Dhruv Gupta, Ratan K Singh, Rajeev
Gurung, Kanishka, Abhishek Bhushan Singh, Nikhilesh Krishnan
Final Decision :

Judgement
Neena Bansal Krishna, J
I.A. 11509/2021
1. An application under Order XI Rule 21 Read with Section 151 of the Code of Civil
Procedure, 1908 (hereinafter referred to as “CPC”) has been filed on behalf of the
defendant no. 1 for dismissal of the suit of the plaintiff for non-production of the
documents as directed by the Court.
2. The plaintiff has filed a suit for recovery of Rs. 14,92,00,000/- and for rendition
of accounts. The defendant has stated that this Court vide Order dated 26th
September, 2019 allowed the I.A. No. 11042/2019 under Order XI Rule 12 CPC
filed by defendant no. 1 with the following directions:
“The plaintiff to file affidavit with respect to the documents of which discovery is
sought, within one month from today. The documents, possession and custody of
which is admitted, be filed along with the said affidavit”
3. It is submitted that out of 33 documents mentioned in the said application, the
plaintiff has filed only 11 documents, that too photocopies, and blatantly
refused/neglected to file remaining documents by taking totally baseless,
untenable and impermissible pleas. The plaintiff has failed to file the documents,
possession and custody of which is expressly admitted by the plaintiff.
4. The plaintiff had challenged the aforesaid Order before the Division Bench of this
Court vide FAO(OS) No. 227 of 2019 but the Appeal was dismissed by the Hon’ble
Division Bench vide Order dated 24th February, 2020. The Discovery Order dated
26th September, 2019 thus attained finality and is binding on the parties.
5. It is asserted that only on repeated directions by the learned Joint Registrar, the
plaintiff finally filed an Affidavit dated 15th February, 2021 along with photocopies
of some documents, purported to be in compliance of the Discovery Order dated
26th September, 2019. The perusal of the said Affidavit shows the obstinacy and
contumacy on the part of the plaintiff and demonstrates its deliberate and willful
attempt to disregard/disobey the discovery Order passed by this Court.
6. It has been explained that the plaintiff has admitted the documents at serial no.
6, 19, 23 and 24 of the application as being in its possession and custody.
Document no. 6 are the quarterly reports of the Plaintiff Company as periodically
reported to its Board of Directors, showing Inter-Corporate loans and investments
for the period from 1st April, 2008 to 30th March, 2013. However, the plaintiff has
refused to file this document on record by claiming that the defendant no. 1 has
unnecessarily sought Quarterly reports which are 20 in number running into
hundreds of pages, which has no relevance.
7. The Documents at Serial No. 19 show that as on 30th November, 2012, Mr. D P
Jindal, his family members and his closely held entities were 100% stakeholders in
Jindal Pipes Ltd. The plaintiff in respect of these documents has asserted that the
documents sought are vague and are not specific and therefore, cannot be
provided. Moreover, the documents sought pertain to Jindal Pipes Limited which is
not a party to the present suit and the documents have no relevancy with the
subject matter of the present suit since it pertain to the period of November, 2012
while defendant no. 1 was removed from the Directorship of the Plaintiff Company
in March, 2011.
8. Document No. 23 relates to Loan Guarantees given by the Plaintiff Company
to/for various related parties during the period from September, 2010 till date and
Interest/ Guarantee fee earned by the Plaintiff Company on the same during the
said period.
9. Document No. 24 relates to party transactions submitted by Plaintiff Company’s
Finance department for the Board Meetings held during the financial year 2009-
2010. It is asserted that in respect of these documents it has been admitted that
the Annual Reports are in the possession of Plaintiff Company but the same are not
being filed herewith because they are extremely voluminous. The defendant has
asserted that the plea of plaintiff that the documents are voluminous and not
relevant, cannot be permitted to be raised at this stage when the Court has
already directed the documents to be discovered.
10. Defendant no. 1 has further asserted that the plaintiff has admitted to being in
possession of document no. 11- showing Mr. Anil Jain to be the Vice President of DP
Jindal Group Companies as on 27th March 2009 and document no. 12- showing Mr.
Anil Jain as Chief Financial Officer and Vice President of Jindal Group of Companies,
including Maharashtra Seamless Limited. Document no. 12 shows the tenure of
employment of Mr. Anil Jain with the various D P Jindal Group Companies.
Likewise, Document no. 31, 32 and 33 are bid documents, list of persons employed
by Jindal Pipes Limited and employees working for Oil and Gas related work of
Jindal Pipes Limited, respectively. However, the plaintiff has refused to provide
these documents on the ground that Mr. Anil Jain was not the Vice President of the
Plaintiff Company but was the CFO of Maharashtra Seamless Limited. Moreover, it
is asserted that these documents pertain to different entities which are not a party
to the present suit. Maharashtra Seamless Limited is a Public listed Company and
the documents pertaining to this Company can be obtained from the Ministry of
Corporate Affairs.
11. The defendant has claimed that the third category of documents are at serial
nos. 9, 10, 25, 26, 27, 28 and 29 which have not been filed by the plaintiff on the
ground that the same do not pertain to the plaintiff.
12. The defendant has claimed in his application that the plaintiff in its affidavit has
admitted possession and custody of the documents but is refusing to produce the
documents on frivolous reasons and the non-production of these documents is in
disregard and violation of the Order dated 26th September, 2019 of this Court. The
plaintiff cannot refuse to produce the same at this stage. The plaintiff has willfully
not complied with the Discovery Order dated 26th September, 2019 and therefore
the present suit is liable to be dismissed under Order XI Rule 21 CPC with cost.
13. The plaintiff in its reply to the application has submitted that due compliance of
the Order dated 26th September, 2019 has been made to the best of its ability and
the available documents have been filed except those for which requisite leave has
been sought herein. It is claimed that the application is absolutely frivolous,
vexatious and liable to be dismissed and is intended to delay and prolong the suit
of the plaintiff. It is asserted that the present application is beyond the purview of
the Order dated 26th September, 2019. In compliance of the Order, the plaintiff
has filed its affidavit dated 15th February, 2021 stating its stand apropos each and
every document while also filing the documents along therewith and nothing was
withheld by the plaintiff. It is asserted that the relevance of the documents is yet to
be examined by this Court and for this reason the plaintiff was allowed to state its
stand for each and every document in its affidavit.
14. It is further submitted that in the I.A. No. 11042/2019 under Order XI Rule 12
CPC, filed by the defendant, the prayer was made for discovery of documents and
no prayer for production of documents was made. The Order dated 26.09.2019
therefore, cannot be deemed to be an Order for discovery of documents under
Order XI Rule 12 CPC or an Order of inspection of Documents under Order XI Rule
18 CPC and the harsh and penal consequences provided under Order XI Rule 21
CPC cannot ensue.
15. The defendant no. 1 has not been able to show any willful or deliberate breach
or disobedience of the Order of the Court. The application on the face of it has been
filed with the ulterior purpose of drawing self-arrived inferences and to do fishing
and roving enquiry by seeking documents, which are not even relevant for the
disposal of the suit. The documents sought by the defendant no. 1 do not relate to
the relevant period, when the money transactions took place in the month of
March, 2009. Rather, the description of documents contain a tacit admission on the
part of the defendant no. 1 that he personally used to control the transactions of
the plaintiff. It is claimed that the purpose of production of documents is not to
encourage any party to develop a cross-examination of the witnesses to be
produced by the other party. The filing of irrelevant documents would not only
cause delay but would also widen the spectrum of documentary and oral evidence.
It is submitted that the present application is frivolous and without any merits and
is liable to be dismissed.
16. Learned counsel on behalf of the defendant has submitted during the course of
arguments that he is restricting his present application only to Document No. 6
which is quarterly reports of the Plaintiff Company for the period from 1st April,
2008 to 30th April, 2013 and to Document No. 3 which is the re-structuring Scheme
of the Plaintiff Company as approved on 23rd April, 2010. It is argued that the
plaintiff has taken different stands at different stages. In his reply dated
26.08.2019 to the present application, the plaintiff had claimed that there was no
such report to the knowledge of the plaintiff, to show that an inter-corporate loan
of Rs. 8.5 Crores was taken and also asserted that this document was irrelevant.
In Discovery affidavit dated 15th February, 2021 submitted by the plaintiff, it was
asserted that defendant no. 1 has unnecessarily sought quarterly reports from the
year 2008 to 2013 which have no relevance to the present matter. In the reply to
the present application, it is asserted that the plaintiff has misunderstood the
documents sought as Annual Reports which were mentioned at serial No. 23 and 24
and had been filed along with the reply.
17. Likewise, in respect of Document no. 3, the plaintiff has taken a different stand
in his reply to the earlier application for discovery, his affidavit of discovery, and
his reply to the present application. He vehemently argued that the shifting stands
taken by the plaintiff at different stages show that he has intentionally and willfully
withheld the documents and his contumacious conduct invites dismissal of his suit
under Order XI Rule 21 CPC.
18. In support of his assertions, defendant has placed reliance on Hindustan Zinc
Limited vs. Durga Construction Pvt. Ltd 2021 SCC OnLine Del 3333, M/s. Narosa
Publishing House vs. Jagbir Singh in Suit No. 182/1997 decided on 09.10.1999 and
Sh. Shravan Kumar Gupta Vs. Sh. Tara Chand Gupta and Ors in I. A. No. 895/2013
decided on September 12, 2013.
19. Learned counsel for the plaintiff has argued that Order XI of CPC deals with 3
aspects namely interrogatories, discovery of documents and inspection of
documents. The Order XI Rule 12 provides for discovery of documents by either of
the parties, on an affidavit. Rule 16 further provides that the Court may at any
stage during the pendency of the suit, Order the production of the documents. Rule
21 provides the consequences of non-compliance with the Order for discovery. It
specifically provides that in case the party fails to comply with an Order to answer
interrogatories or for discovery or for inspection of documents, the suit is liable to
be dismissed or the defence is liable to be struck of as the case may be. There is
no consequence given in Rule 21 CPC in respect of non-production of documents in
compliance of the Order of the Court under Rule 14. Therefore, even if the Court
has directed production of documents pursuant to the discovery of the documents
by a party, the consequence of dismissal of the suit under Rule 21 CPC cannot
follow. The only consequence for non-production can be in terms of Order XII CPC.
It is argued that the defendant himself has admitted in his application that an
affidavit admitting or denying the possession of the documents has been filed by
the plaintiff which implies that the due compliance of the Order of the Court dated
26 September, 2019 has already been made by the plaintiff and the consequence
of dismissal of the suit under Rule 21 of CPC cannot follow.
20. The plaintiff has placed reliance on Babbar Sewing Machine Company vs. Trilok
Nath Mahajan (1978) 4 SCC 188, Desh Raj Gupta Vs. State (1987) ILR 2 Delhi 153,
Union Bank of India and Ors. Vs. Hemantlal Ranchhodbhai Vegad AIR 1991 GUJ
113, Chandan Lal Jour Vs. Amin Chand Mohan Lal and Ors. AIR 1960 P&H 500,
Lajpat Rai Vs. TejBhan and Ors. AIR 1957 P&H 14.
21. Submissions heard.
22. The Legislature with an intent to empower the Court to require the parties’
adversary to answer interrogatories or to give a discovery of documents on
affidavit or permit inspection of certain documents, has enacted the provision of
Order XI CPC with an object to provide for fair disposal of suit and to reduce
litigation expenses. The primary object is to assist the Court in administration of
justice. It necessarily follows that the Court must judicially exercise its discretion
keeping this object in view. In Lajpat Rai (Supra) while highlighting the
aforementioned objects of this provision, it was observed that an Order granting
discovery and inspection in some cases, results in serious prejudice and injury to
the party that has to comply with it and therefore, it is necessary that the court
shall apply its mind carefully before making any Order. It is not the intention of the
Legislature that such orders should be made as a matter of routine and of no
serious consequence.
23. Wallace. J. in K. V. Ramachari V. K.V. Krishnama Chari AIR 1924 Mad 846 had
observed that a privilege, such as inspection by a party of his adversary’s
documents is not a matter of routine, but is to be permitted or refused only after a
judicial decision and not as a right to the inspection itself, but with reference also to
the stage of the case at which such right is to be permitted and that it is to be so
exercised so as to result in as little harm as possible to the parties who are entitled
to have the protection of the Court in carrying on their lawful pursuits.
24. Order XI CPC deals with discovery and inspection. This Order may be classified
into three categories:
i. Discovery by interrogatories which is dealt by Rule 1 to Rule 11 of CPC.
ii. Discovery and production of documents which is dealt with in Rule 12 to Rule
14 of CPC.
iii. Inspection of documents which is dealt under Rule 15 to Rule 20 of CPC.
25. Order XI Rule 14 empowers the Court at any point to order the production of
such documents relating to any matter in question in a suit as are in the power and
possession of a party as the Court thinks right. On production of the documents,
the Court is empowered to deal with such documents it appears to the Court to be
just.
26. Learned counsel on behalf of the plaintiff has argued that though Rule 14 CPC
gives the discretion to the Court to direct production of documents in respect of
which a discovery has been done by either party under Rule 12 on an affidavit, but
Rule 21 is not applicable to non-compliance of the Order of production of a
document under Rule 14.
27. The consequence of non-compliance of the directions under various Rules is
given in Rule 21 of Order XI CPC which provides that in case of non-compliance of
any Order in respect of interrogatories, discovery or inspection, the consequence of
dismissal/striking out of defence may follow as the case may be. It reads as
follows:
“Rule 21. Non compliance with Order for discovery.- (1) Where any party fails to
comply with any Order to answer interrogatories, or for discovery or inspection of
documents, he shall, if a plaintiff, be liable to have his suit dismissed for want of
prosecution, and, if a defendant, to have his defence, if any, struck out, and to be
placed in the same position as if he had not defended, and the party interrogating
or seeking discovery or inspection may apply to the court for an Order to that
effect, and an Order may be made on such application accordingly, after notice to
the parties and after giving them a reasonable opportunity of being heard.
(2) Where an order is made under sub-rule (1) dismissing any suit, the plaintiff
shall be precluded from bringing a fresh suit on the same cause of action.”
28. The consequence of non-compliance with Rule 12/14 of Order 21 was by the
Madras High Court in Sithamalli Subpayyer Vs. Mala Ramanathan (1924) 46 MLG
350 wherein it was observed that Rule 21 does not apply to an Order for production
as it speaks only of interrogatories, discovery or inspection. In the repealed Code,
the words “or production” appeared in the corresponding section but they have
been omitted in the new Code. This deletion is apparently to bring the Code in
conformity with the English Rule where Order XXXI Rule 21 of English Rules of
Practice did not mention the words “or production”. It was observed that only three
situations are envisaged i.e. interrogatories, discovery or inspection to attract the
penal provision of Rule 21. It does not apply to Rule 14 which provides for Order
for production of documents. Similar observations were made in The Lyalpur Sugar
Mills and Co. and Ors. v. Ram Chander Gur Shai Cotton Mills And Company AIR
1922 All 235 DB; Sahoo Munalal Vs. Tara Lal AIR 1929 All 83.
29. In Chinnappain vs. Ram Chandran AIR 1989 Mad 314, the Madras High Court
followed the decision in Sithamalli Subpayyer (supra) to observe that failure to
comply with the Order for production of the document, would not attract Order XI
Rule 21 of CPC.
30. This Court in Maj Retd Sukesh Behl & Anr vs Koninklijke Philips Electronics in
F.A.O. (OS) 458/2015 decided on 19th January, 2016, made a reference to the
aforementioned judgments to conclude that failure to produce documents directed
to be produced under Order XI Rule 14 would not entitle a Court to pass an order
under Order XI Rule 21 of CPC. It further observed that an order for production
under Order XI Rule 14 of CPC, does not decide or affect any vital and valuable
rights of the parties. The consequence of non-production does not lie under Order
XI Rule 21 of CPC but the Court may in case of non-production of documents, draw
an adverse inference against the erring party.
31. From the above discussion it is abundantly clear that even if there is non-
compliance of Order of production of documents under Rule 14, then also there can
be no dismissal of the suit under Rule 21 and the application is liable to be
dismissed on this ground itself.
32. However, the facts as agitated in the present application may also be
considered on merits to determine whether the plaintiff has failed to comply with
the Order dated 26th September, 2019 directing the plaintiff to discover the
documents as per the list furnished by the defendant and also for production of
documents. The relevant part of the Order is reproduced as under:
“The plaintiff to file affidavit with respect to the documents of which discovery is
sought, within one month from today. The documents, possession and custody of
which is admitted, be filed along with the said affidavit”
33. The defendant no. 1 vide application under Order XI Rule 12 of CPC, had only
sought discovery of documents on affidavit and there was no prayer made for
production of documents. The Court in its Order dated 26th September, 2019,
while allowing the application of defendant no. 1 directing affidavit of admission in
respect of documents to be filed, had further invoked its jurisdiction under Rule 14
and directed the plaintiff also to produce the documents.
34. What thus, needs to be considered is whether the plaintiff has failed to comply
with the Order and the directions for production of documents as given by this
Court on 26th September, 2019. To understand this controversy as raised by the
defendant, it would be pertinent to refer to the two documents (to which the
defendant has restricted his relief) and the responses of the plaintiff.
35. In respect of document no. 6 seeking production of quarterly reports of the
plaintiff Company for the period from 1st April, 2008 to 13th March, 2013, the
plaintiff has explained in his affidavit the quarterly reports were misunderstood as
Annual Reports, but they have now been filed on record.
36. Likewise, in respect of document no. 3, with respect to the re-structuring
scheme of the Plaintiff Company as approved on 23rd April, 2010, it has been
explained in the plaintiff’s replication that no re-structuring of the Company to
divide and give the business to defendant no. 1 was ever done and that it was a
mere proposal to re-structure. Likewise, in their reply to the application under
Order XI Rule 12 CPC, it has been stated that no re-structuring Scheme was
approved on 23rd April, 2010. In the reply to the present application, it has been
clarified that though the re-structuring was approved in May, 2010 but the same
was subsequently cancelled on 09th November, 2010.
37. Learned counsel on behalf of the plaintiff has further explained that re-
structuring was agreed in principle in the meeting held in May, 2010, but no
document whatsoever in regard to re-structuring was formulated and since no such
document exists, the same cannot be produced on record. It is thus, explained that
only the proposal of re-structuring was approved but the said approval also got
cancelled subsequently and no document of re-structuring either by way of
approval or as sanctioned ever came into existence.
38. From the explanation, as given by the plaintiff in respect of the two documents
to which the present application was confined by defendant no. 1, it is quite evident
that there is no disobedience or non-compliance of the Order dated 26th
September, 2019 by the plaintiff.
39. In this context, it would be pertinent to refer to the observations of Supreme
Court in Babbar Sewing (Supra) wherein it was held that penalty imposed by Order
XI Rule 21 CPC is of a 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. In Sh. Shravan Kumar (Supra) reference
was made to Halsbury’s Laws of England, 4th Edition, Vol. 13 page 32 to observe
that even if in certain circumstances the provision of Order XI Rule 21 CPC must be
strictly enforced, it does not follow that a suit can be lightly thrown out or defence
struck out without adequate reasons. The test laid down is whether the default is
willful. It is only if the court is satisfied that the plaintiff was willfully withholding
information by refusing to answer interrogatories or by withholding the documents
that the plaintiff must face the consequences of having his plaint dismissed due to
his default i.e. by suppression of information which he was bound to give. It was
further observed that the stringent provisions of Order XI Rule 21 CPC should be
applied only in extreme cases, where there is contumacy on the part of the
defendant or a willful attempt to disregard the order or the Court. In Khajah
Assenoola Joo Vs. Khajah Abdool Aziz I.L.R Cal. 923, it was observed that this rule
must be worked with caution and may be used only as a last resort.
40. In the present case as discussed above, the circumstances do not depict any
contumacy or deliberate and willful disobedience on the part of the plaintiff calling
for imposition of this extreme penalty of dismissal of the suit. Even otherwise, no
case for dismissal of suit is made out as not only the compliance of the Order of the
Court has been made but also because the law does not contemplate dismissal of
suit if there is non-compliance of Order XI Rule 14 of CPC. This application is
without merit and is hereby dismissed.
CS(OS) 1753/2013
1. List this matter before the Local Commissioner on 2nd November, 2022 for
recording of evidence.