9911796707
TMI Blog2002 (3) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of deciding these applications are as under : Prime Displays Pvt. Ltd., Everest Media Ltd., and Abiz Business Pvt. Ltd. have filed company petitions against Larsen and Toubro Ltd. for winding up of the Larsen and Toubro Ltd., which is a company incorporated under the Companies Act, on the ground that it is unable to pay its debts. Larsen and Toubro Ltd. has taken out these company applications. In this order the Larsen and Toubro Ltd. is referred to as the applicant and the companies which have filed these company petitions are referred to as the respondents. The applicant has entered into contracts with the respondents, which are called "hoarding contracts". Pursuant to the terms of these contracts, the respondents in the month of June, 2001, raised bills on the applicant. The amounts under the bills were payable by the applicant on or before July 31, 2001. The applicant did not make the payment. Demand notices dated August 31, 2001, were served on the applicant by the respondents under section 434 of the Companies Act. The applicant repudiated the hoarding contracts by letters issued in September, 2001. The applicant took the stand that it is not liable to pay t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be pointed out that in the schedule to the applications, 23 documents have been listed, but learned counsel for the applicant at the outset stated that they do not seek any such order in relation to the documents at serial Nos. 22 and 23 in the schedule of the applications. The learned senior counsel for the applicant, Andhyarujina, submits that these 21 documents, copies of which have been produced by the respondents have been prepared by the applicant in anticipation of litigation and are in the nature of legal advice sought, both from the applicant s legal department as well as from counsel for the purpose of seeking further legal advice. Hence, these documents are privileged. It is submitted that legal privilege claimed in this regard is of two types : (1) communication between legal adviser and the applicant, whether the litigation is contemplated or not; and ( ii ) communication in relation to anticipated litigation, if intended to be used in litigation, whether actually used or not ? So far as the first aspect is concerned, he submits that it is clear from the documents that the legal advice was sought from counsel in the year 1999 itself. Subsequently also legal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es legal advice, he is covered. Equally a person whose chosen activity in the profession is to give legal advice to a client whom he serves full time, is also covered. He submits that the reliance placed on the provisions of the Advocates Act for the purpose of interpreting the meaning of the words used in sections 126 and 129 of the Evidence Act by the respondents is uncalled for. The learned senior counsel appearing for the respondents, Jethmalani, did not dispute the proposition that a communication between a client and his legal adviser in relation to anticipated litigations would be entitled to a privilege, but relying on the judgment of the House of Lords in the case of Waugh v. British Railways Board [1979] 2 All ER 1169, he submits that the privilege can be claimed, if the only or the dominant purpose of the document coming into existence was to refer to the legal advisor for advice and use in litigation. He further submits that even after the document is privileged, in case the document is relevant, secondary evidence of that document is admissible. He relies on the provisions of section 5 of the Evidence Act and the judgment of the Supreme Court in the case of Hira H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant for considering the question. He further submits that the law on this point is now established by the judgment of the Supreme Court in the case of Satish Kumar Sharma v. Bar Council of H. P. [2001] 2 SCC 365. He submits that in view of the judgment of the Supreme Court in the case of Satish Kumar Sharma [2001] 2 SCC 365, the judgment of this court in the case of Municipal Corporation of Greater Bombay, AIR 1982 Bom 6, has lost its binding force. He submits, by referring to various sections of the Advocates Act, especially section 29, that no person can claim to be entitled to practise the profession of law unless he complies with the provisions of the Advocates Act. He submits that giving professional legal advice is practising of profession of law, which only an advocate who is on the roll of the Bar Council can undertake. Learned counsel appearing for the applicant submitted that the provisions of sections 126 and 129 of the Evidence Act being substantive rules of policy of the Legislature operate as a bar to the reception of evidence even though it is relevant. He submits that in relation to the documents which are privileged, the question of relevance and admiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 1 Ch. 431; [1982] 2 All ER 241; [1982] 3 WLR 125 referred to above. He submits that in the present case the appeal court by its order dated February 14, 2002, has directed that the court shall first decide these applications. He submits that the applicant has objected, at the very first moment, to the use of the privileged documents by the respondents. Learned counsel for the applicant further submits that there is no question of the communication being made in furtherance of any illegal purpose as argued by Sri Jethmalani. He submits that in the reply filed to the company applications, it is not pleaded that these documents have come into existence for any illegal purpose. It is also not pleaded as what is the illegal purpose. It is submitted that specific pleading in relation to such allegation of illegality, fraud, inequity, etc., are absolutely necessary. He relies on the provisions of Order 6, rule 4 of the Civil Procedure Code. He submits that it is clear from the submissions made in these company applications that the respondents desire to rely on these documents, because these documents disclose the correct facts and law. Learned counsel further submits that production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w in this regard is to be found in the judgment of the Court of Appeal in England. In its judgment in the case of Southwark and Vauxhall Water Company [1878] 3 QBD 315 (CA) referred to above, Lord Cockburn, C. J. has observed thus (p. 317) : "The relation between the client and his professional legal adviser is a confidential relation of such a nature that to my mind the maintenance of the privilege with regard to it is essential to the interests of justice and the well-being of society. Though it might occasionally happen that the removal of the privilege would assist in the elucidation of matters in dispute, I do not think that this occasional benefit justified us in incurring the attendant risk. The question here is whether the documents of which inspection is sought are within the privilege. I think they are. It is clear that they were documents containing information which had been obtained by the plaintiffs with a view to consulting their professional adviser. Two out of the three sorts of documents were actually submitted to him; as to the other it is not clear whether it was actually submitted to him or not. It is admitted upon the decisions that where information has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uested various officers and executives including in the advertising and public relations department (A and PRD) to undertake a study of the background/genesis of the domestic hoarding contracts. These officers and executives were also asked to consider various related aspects of the matter, including a possibility of the applicant having to terminate the long-term hoarding contracts entered into with the respondent, resulting in possible litigation. This study and review was initiated because, as already set out in paragraph 15 of the affidavit in reply, sometime in May/June, 1999, the attention of the applicant was drawn to the exorbitant rates of advertising and the abnormally long periods for which the contracts were entered into/renewed with the respondent herein. 5. In the aforesaid circumstances, I say and submit that the internal notes and documents referred to in the schedule to the present company application are either documents prepared in anticipation of litigation consequent upon possible termination of the respondents contracts and/or in the nature of legal advice sought/obtained both internally from the applicant s legal department or from counsel/attorneys. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a judgment in the case of Waugh v. British Railways Board [1979] 2 All ER 1169 (HL) referred to above. In his judgment in the above-referred case, Lord Edmund-Davies, after referring to the authorities observed thus (p. 1183): "After considerable deliberation, I have finally come down in favour of the test propounded by Barwick C. J. in Grant v. Downs [1976] 135 CLR 674 at 677 in the following words : Having considered the decisions, the writings and the various aspects of the public interest which claim attention, I have come to the conclusion that the court should state the relevant principle as follows : a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection. Dominant purpose, then, in my judgment, should now be declared by this House to be the touchstone. It is less stringent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e litigations for the purpose of seeking legal advice and for use for the purpose of defence or prosecution of the anticipated litigation remains uncontro-verted and therefore, in these circumstances, I am left with no alternative but to accept the statement of the applicant that all these 21 documents have come into existence in anticipation of litigation for the purpose of seeking legal advice and for use in the anticipated litigation for the purpose of defence or for the purpose of prosecuting that litigation. Perusal of the documents also shows that the legal opinion secured from the council have been referred to in detail, the consequence of the termination of the contract as well as the consequence of non-payment of charges under the contracts have been discussed in detail, the probability of litigation between the parties as a result of the above referred steps has been extensively referred to and discussed in all these documents. Thus, it cannot be said that the dominant purpose of these documents is not use of these documents for the purpose of defence or for the purpose of prosecuting the anticipated litigation. The privilege that attaches to a document coming into exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled to disclose to the court any confidential communication which has taken place between him, and his legal professional adviser, unless he offers himself as a witness, in which case he may be compelled to disclose any such communications as may appear to the court necessary to be known in order to explain any evidence which he has given, but no others." Perusal of the provisions of section 126 of the Evidence Act shows that it injuncts a lawyer from disclosing without his client s express consent any communication made to him in the course and for the purpose of his employment as such lawyer. Obviously, the injunction contained in section 126 of the Evidence Act against a lawyer is for the benefit of a client. Thus, a client is entitled to prohibit his lawyer from disclosing any communication made to such lawyer in the course and for the purpose of his employment as a lawyer. Section 129 has been enacted to protect the client from being forced to disclose this communication. The Supreme Court in its judgment in the case of State of Punjab v. Sodhi Sukhdev Singh, AIR 1961 SC 493, 526 has observed thus : "It has been acknowledged generally, with some exceptions, that the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence in anticipation of litigation for being used in the litigation for the purpose of litigation or for the purpose of defence that litigation and therefore, they are privileged documents within the meaning of sections 126 and 129 of the Evidence Act. This takes me to the submission of Sri Jethmalani, learned counsel appearing for the respondents, that because these documents were made in furtherance of an illegal purpose, in terms of the provisions of the proviso to section 126 of the Evidence Act, the documents are not entitled to privilege. It is pertinent to note here that in the affidavit filed on behalf of the respondents in this company applications, there are no averments to be found that these documents have come into existence in furtherance of any illegal purpose. Rule 4 of Order 6 of the Civil Procedure Code lays down that in all cases in which a party relies on any misrepresentation, fraud, breach of trust, wilful default or undue influence, particulars of such misrepresentation, fraud, breach of trust, wilful default etc., shall be stated in the pleadings. It is clear that whenever a party wants to contend that any document is prepared in furtherance of any illega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress or necessarily implied prohibition in the Constitution or other law of evidence obtained as a result of illegal search or seizure is not liable to be shut out." It is thus clear that introduction of relevant material can be shut out if by a law in force introduction of such material is prohibited. The Supreme Court has considered this aspect of the matter in relation to the provisions of section 123 of the Evidence Act, which accords privilege to information derived from unpublished official records relating to any affairs of the State, in its judgment in the case of State of U. P. v. Raj Narain, AIR 1975 SC 865 and has observed thus (p. 872) : "Evidence is admissible and should be received by the court to which it is tendered unless there is a legal reason for its rejection. Admissibility presupposes relevancy. Admissibility also denotes the absence of any applicable rule of exclusion. Facts should not be received in evidence unless they are both relevant and admissible. The principal rules of exclusion under which evidence becomes inadmissible are twofold. First, evidence of relevant facts is inadmissible when its reception offends against public policy or a particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was sufficient, held that the copy was admissible, and the jury found a verdict for the plaintiff for the full amount of the bond, leave being given to the defendant to move to enter a non-suit if the court should be of opinion that the copy of the bond ought not to have been received in evidence." Learned counsel appearing for the applicant invited my attention to a judgment of a Court of Appeal, Wellington in the case of R. v. Uljee [1982] 1 NZLR 561. In that judgment, the judgment of the Court of Appeal in the case of Calcraft [1898] 1 QB 759 (CA) referred to above has been discussed in detail. The following observations from that judgment are relevant: "In Calcraft v. Guest [1898] 1 QB 759 (CA) the evidence held admissible was secondary evidence (copies) of documents (proofs and rough notes of evidence used in a former action) which had been made by the solicitors to a predecessor in title of one of the parties to a later action. The other party to the later action had accidentally come into possession of the originals for a time and had made the copies. It was held that, although the documents remained privileged, she was not precluded by the privilege from giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority. And the Court of Appeal referred to that decision with approval in R. v. Tompkins [1977] 67 Cr. App. R. 181, itself a case of using information in privileged document for the purpose of cross-examination rather than putting the document in evidence. But in a civil case, ITC Film Distributors v. Video Exchange Ltd. [1982] 1 Ch. 431; [1982] 2 All ER 241; [1982] 3 WLR 125, Warner J. on weighing the competing interests declined to extend Calcraft v. Guest [1898] 1 QB 759 (CA) to documents obtained by a trick practised in the court room. After the rising of the court one party had contrived to obtain documents brought to the court room by his adversary. He made copies, but Warner J. would not allow him to use these in evidence. It appears that the validity of the law laid down by the judgment in the case of Calcraft [1898] 1 QB 759 (CA) has been doubted. I have not been, pointed out any judgment of the Supreme Court or this court, where the judgment in the case of Calcraft [1898] 1 QB 759 (CA) has been considered. So far as the law applied in England is concerned, the authority of the rule laid down by the judgment in the case of Calcraft [1898] 1 QB 759 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pending proceedings in the defendant Pape s bankruptcy and subject to the direction of the bankruptcy court. This exception in the order was struck down by the appeal court on an appeal filed by Lord Ashburton. It is clear that the ratio of the decision of Lord Ashburton s case was founded upon confidential nature of the contents of the letter written by Lord Ashburton to Mr. Nooton. The court was concerned to protect that confidence. The following observations from the judgment of Kennedy L. J., in my opinion, are pertinent : "I agree that the better view seems to me to be that although it is true that the principle which is laid down in Calcraft v. Guest [1898] 1 QB 759 (CA) must be followed, yet at the same time, if before the occasion of the trial when a copy may be used, although a copy improperly obtained, the owner of the original can successfully promote proceedings against the person who has improperly obtained the copy to stop his using it, the owner is none the less entitled to protection, because, if the question had arisen in the course of a trial before such proceedings, the holder of the copy would not have been prevented from using it on account of the ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofessional privilege attaches, he may nevertheless use such copies as secondary evidence in his litigation: however, if he has not yet used the documents in that way, the mere fact that he intends to do so is no answer to a claim against him by the person in whom the privilege is vested for delivery up of the copies or to restrain him from disclosing or making any use of any information contained in them." Thus, it appears to be a settled law that a person for whose benefits the document is treated as privileged is entitled to move the court seeking an order of injunction restraining the party who is intending to use the copy in evidence from doing so before the copy is actually used in evidence. The only submission that has been made in this regard on behalf of the respondents is that such an injunction can be sought only by an independent suit for delivery of the copies and not by taking out a motion in the same action. In my opinion, the submission is not well founded. It is clear from the judgment in ITC Film Distributor Ltd. s case [1982] 1 Ch. 431 ; [1982] 2 All ER 241 ; [1982] 3 WLR 125 as well as from the judgment in Goddard s case [1987] 1 QB 670 that a notice of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y produce the same knowing full well that the said documents cannot be produced in the court for the reasons afore-stated. To permit the respondent to produce and refer to the said documents, would in the respectful submission of the applicant, be tantamount to this court placing a premium on dishonesty and would encourage conduct, destructive of commercial morality." In the affidavit in reply, the respondents have stated thus in paragraph 15 : "With reference to paragraph 8, I deny that the company has made out any case whether at law, still less in equity, as alleged or at all. I categorically deny that the petitioner has purloined any documents and/or privileged documents and/or improperly and/or illegally produced as alleged or otherwise howsoever. There is no dishonesty whatsoever on the part of the petitioner. On the contrary, as is evident from the record, it is the company which is thoroughly dishonest and has lost its right to continue in its corporate entity." It is clear that these documents belong to the applicant. The respondents did not disclose the method adopted by them for obtaining copies of these documents. At the fag end of the arguments of Sri Jethmalani, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in evidence. In such a case though the document is relevant and is also otherwise admissible in evidence, the court refuses to receive the document in evidence, because the party which seeks to lead evidence has procured the document unlawfully, in exercise of its discretion. The occasion for the court to exercise such discretion does not arise in the case of documents which are privileged, because such documents cannot be tendered in court. There was considerable debate before me, whether in view of the provisions of section 129 of the Evidence Act, privilege attaches to the advice given by the legal department of the applicant. There was also considerable debate whether for construing the term "legal professional adviser", the provisions of the Advocates Act have to be taken into consideration. Whether in view of the judgment of the Supreme Court in the case of Satish Kumar Sharma [2001] 2 SCC 365, the judgment of this court in the case of Bombay Municipal Corporation, AIR 1982 Bom 6 can be said to be good law. In my opinion, these questions cannot be decided in the present case, because of the absence of proper pleadings. What is contemplated by section 129 is communic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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