Odisha State Financial Corporation v. Vigyan Chemical Industries & Ors.

Held: The impleadment of a party in a pending suit takes effect only from the date on which such an application is allowed – However, the proviso enables the court to direct that such impleadment shall relate back to an earlier date, provided that the omission was due to a mistake made in good faith – A mistake in good faith would be applicable if the person claiming shelter under such plea is able to prove that he has exercised all possible diligence and believed an existing fact or law to be true or applicable, which is probable but not correct – Essentially, such a mistake in good faith can only denote an error in judgment, but cannot include a plea that he was not aware of the law, as per the maxim “Iqnorantia facti doth excusat; Ignorantia juris non excusat” which means, ignorance of fact is an excuse, but ignorance of law is not excused – Further, Section 21 is applicable only in pending proceedings and the provision is to be pressed into service when the application for impleading is decided and not later – The trial Court, while passing an order for impleadment has to consider the proviso to Section 21, the facts pleaded, and the evidence both documentary or oral, and then decide, whether the legal requirement is satisfied to hold that the suit is deemed to have been instituted against the impleaded party with effect from an earlier date – It is also open to the Court to consider the facts and upon satisfaction, to apply the proviso – However, such an exercise must be done while deciding the application and a further order is to be passed to that effect immediately and not after the suit is decreed. [Para 41.1] Case Law Cited