Eviction of Tenant by unregistered partnership firm !

Comment  : In this case an unregistered firm sued to recover possession from a tenant (erstwhile insofar as term of tenancy had ceased) – the suit was resisted on the ground that since the basis of suit lied in contract entered into with tenant – it is hit by the mischief of S.69 and an unregistered firm could not sue, subsequent registration cannot cure the defect as the suit is still born. 

These arguments were partly overcome by holding that when the contractual tenancy expired – the suit fell into the law of the land (TPA) and not under the contract. Hence unreg firm could sue. 

Though it was not required for the decision of the case – the Court went on to hold that subsequent registration – should cure the defect for the reason :-

a) In any case even if plaint rejected on above ground – new one can be filed on same COA – benefit of exclusion of time spent in such inchoate proceedings would be set off u/s 14 L.A. 

b) Techincality should not frustrate justice if on the date of registration the claim is not time barred – no reason why parties should be made to fight it out again from scratch

Supreme Court of India
M/S. Raptakos Brett & Co. Ltd. vs Ganesh Property on 8 September, 1998
Equivalent citations: 1998 VIIAD SC 37, AIR 1998 SC 3085
Author: S Majmudar

JUDGMENT

S.B. Majmudar, J.

1. Leave granted.

2. We have heard learned counsel for the parties finally in this appeal. Hence, this appeal is being disposed of by this judgment.

3. This appeal by special leave seeks to challenge the decision rendered by learned Single Judge of the High Court of Judicature at Calcutta confirming decree for possession passed against the appellant-defendant by the learned Judge, 7th Court of City Civil at Calcutta in Title Suit No. 1481 of 1986. In order to appreciate the grievance of the appellant-defendant, it is necessary to note a few relevant background facts.

FACTUAL MATRIX:

4. The respondent-plaintiff is the owner of suit premises consisting of ground floor of a building situated at Marquis Street, Calcutta. The said premises were rented to the appellant-defendant on a monthly rent of Rs. 2045 by a registered lease dated 16.03.1964. This lease was for a period of 21 years commencing from 16.03.1964 and ending on 15.03.1985. On the expiry of the said period, the respondent-plaintiff D alleging to be a registered partnership firm, filed the aforesaid suit praying for a decree for possession as well as damages @ Rs. 200 per day for illegal occupation of the premises by the appellant-defendant. The defence of the appellant-defendant was that after the expiry of the lease period, it had continued to be a tenant by acceptance of rent by the defendant-landlord and hence it had become a tenant by holding over Under Section 116 of the Transfer of Property Act, 1882 (for short ‘the Property Act’). Further defence was taken by the appellant-defendant by way of a separate application seeking dismissal of the suit under Order 7 Rule ll(d) of CPC (for short ‘CPC’) on the ground that the suit for possession as filed by the plaintiff-respondent, which was an unregistered partnership firm, was not maintainable.

5. Learned Trial Judge, framed relevant issues on the pleadings and came to the conclusion that the defendant-appellant was not a tenant holding over and was in unlawful possession of the premises after the expiry of the lease period. On the question of maintainability of the suit, the Trial Court held that the suit was not hit by Section 69 Sub-section (2) of the Indian Partnership Act, 1932 (for short ‘the Partnership Act’). Accordingly, a decree for possession was passed. The appellant-defendant carried the matter in first appeal before the High Court. As noted earlier, the learned Single Judge who decided the said appeal, held against the appellant-defendant and dismissed the appeal. That is how the appellant-defendant is before us in the present case.

RIVAL CONTENTIONS:

6. Learned senior counsel, Shri R.F. Nariman for the appellant- defendant, placed a solitary contention for our consideration. He submitted that on a proper reading of the plaint as filed by the respondent it has to be held that the respondent sought to enforce a right arising out of the contract of lease between the parties and as on the date of the suit, the respondent was not a registered partnership firm, the suit was ex-facie not maintainable and was required to be dismissed on this ground alone. However, he fairly stated that on merits, as the West Bengal Rent Act does not apply to a lease for 21 years and more and as the finding of the courts below that the appellant was not a tenant by holding over, he cannot urge any other contention save and except the aforesaid solitary one. In support of his contention he also submitted that it is a fact that even though pending the suit the respondent plaintiffs firm got registered, the said registration was of no avail to the respondent as the suit which was a still born one could not be revived on account of this subsequent event. In support of this contention Shri Nariman placed reliance on various decisions of this Court and High Courts to which we will make a reference at an appropriate stage in latter part of this judgment.

7. Learned senior counsel Dr. A.M. Singhvi for the respondent-plaintiff contested the aforesaid contention and contended that only the averments made in the plaint have to be seen on demurer for deciding whether the suit was barred Under Section 69 sub- section (2) of the Partnership Act, that on a conjoint reading of relevant clauses of the plaint it has to be held that the suit was not filed for enforcing any right arising from a contract which was already at an end by efflux of time and that the suit was not based on any of the contractual terms. Reference to the said contract or any of its clauses was purely for mentioning a historical event for supporting the plaintiff’s case for decision and such factual narration of past events did not form the foundation of the plaint nor did they form part of the cause of action. In the alternative, it was contended by Dr. Singhvi that even assuming that the suit could be said to have been partly based on any of the terms of the contract so as to attract the bar of Section 69(2) of the Partnership Act, this was in fact based on two causes of action; (i) on the covenant contained in the erstwhile contract; (ii) on the law of the land, namely, common law as well as Section 111(a) read with Section 108(q) of the Property Act and so far as this latter cause of action is concerned, it cannot in any way be said to be arising out of the contract. Hence the said cause of action was not in any way hit by Section 69(2) of the Partnership Act. He lastly contended without prejudice to his aforesaid contentions that even if a view is taken that the suit as a whole was hit by Section 69(2) of the Partnership Act, as pending this suit before the decree could be passed, the plaintiff-respondent had put his house in order and got the firm registered the initial defect, if any, which made the suit dormant got cured and consequently it could not be said that the decree passed by the Trial Court was in any way erroneous in law. In support of his contentions, he also invited our attention to a number of decisions of this court and various High Courts to which we will make a reference hereafter.

8. In view of the aforesaid rival contentions, the following points arise for our consideration :

(i) Whether the suit filed by the respondent was barred Under Section 69 Sub-section (2) of the Partnership Act either wholly or in part;

(ii) If the suit was so barred, whether subsequent registration of the plaintiffs firm under the Partnership Act could revive the suit or to make it competent at least from the date on which such registration pending the suit was obtained by the respondent firm;

(iii) What final order?

9. We shall deal with these points in the same sequence in which they are catalogued herein above.

Point No. 1:

10. In order to appreciate the rival contentions centering round this point, it will be necessary to note the relevant provision of the Partnership Act. Section 69 Sub-section (2) reads as under :

“69. Effect of non-registration -

(1) xxx xxx xxx

(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm”.

A mere look at the aforesaid provision shows that the suit filed by an unregistered firm against a third party for enforcement of any right arising from a contract with such third party would be barred at its very inception. To attract the aforesaid bar to the suit the following conditions must be satisfied:

(i) That the plaintiff partnership firm on the date of the suit must not be registered under the provisions of the Partnership Act and consequently or even otherwise the persons suing are not shown in the Register of Firms as partners of the firm, on the date of the suit.

(ii) Such unregistered firm or the partners mentioned in the subsection must be suing the defendant third party.

(iii) Such a suit must be for enforcement of a right arising from a contract of the firm with such a third party.

Chapter VII of the Partnership Act deals with registration of firms. As per Section 56 thereof the State Government of any State may, by notification in the Official Gazette, direct that the provisions of this Chapter shall not F apply to that State or to any part thereof specified in the notification. It is not the case of any party that any such exemption has been granted so as not to make applicable the said Chapter to the pending controversy between the parties. As per Section 57, the State Government may, by notification, appoint a Registrar of Firms for the purpose of the Act. As per Section 58, the registration of a firm can be effected at any time by sending by post or delivering to the Registrar of the area in which any place of business of the firm is situated or proposed to be situated, for the purpose of getting the firm registered by furnishing relevant data as required by the said Section. As per Section 59, when the Registrar is satisfied that provisions of Section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and then he has to file the statement furnished to him by the firm concerned. It is in the light of the aforesaid statutory provisions of Chapter VII that the effect of non-registration has to be considered as laid down by Section 69 in its various sub-clauses. We are concerned in the present case only with Section 69 Sub-section (2) as extracted earlier.

11. Coming back to the consideration of the requirements of Section 69 Sub-section (2) under which bar to file such a suit would arise on the part of the unregistered firm it may be noted that on the facts of the present case it is not in dispute between the parties that when the suit was filed in 1986 the first condition for attracting this bar squarely got attracted namely, that the respondent firm was not a registered firm though it was wrongly mentioned in the plaint that it was a registered firm. Second condition for attracting the bar was also found satisfied as the appellant was a third party being erstwhile tenant against whom the suit was filed. It is the third condition which is the bone of serious contention between the parties. Learned senior counsel Shri Nariman for the appellant submitted that the third condition was also satisfied on the facts of the present case as the suit filed by the respondent-plaintiff unregistered firm was for enforcement of the right of the respondent-plaintiff arising from the contract of lease which was entered into between the parties in 1964 for a period of 21 years and which had expired at the end of 15.03.1985. It is this contention of learned senior counsel Shri Nariman that has been vehemently contested by learned senior counsel Dr. Singhvi for the respondent-plaintiff. At the outset he submitted that for deciding the question whether the suit is barred Under Section 69 Sub-section (2) of the Partnership Act or not only averments in the plaint as a whole will have to be seen. In this connection, he rightly invited our attention to Order VII Rule 11 Clause (d) of the CPC which reads as under :

“ORDER VII: xxx xxx xxx

11. Rejection of plaint – The plaint shall be rejected in the following cases :

(a) xxx xxx xxx (b) xxx xxx xxx (c) xxx xxx xxx

(d) where the suit appears from the statement in the plaint to be barred by any law” :

We have, therefore, to see the averments in the plaint for deciding whether on the averments in the plaint, the suit can be said to have been barred Under Section 69 Sub-section (2) of the Partnership Act as that is the only bar which is relied upon by the learned senior counsel for the appellant for non-suiting the plaint. The plaint in the present case is a very short one consisting of five paragraphs. It would, therefore, be appropriate to reproduce these paragraphs. They are as under :

“1. The defendant was a Lessee under the plaintiff in respect of ground floor of the main building (except the staircase and common spaces) as premises No. 6, Marquis Street, Calcutta, butted and bounded as given in the schedule hereunder at a monthly rent of Rs. 2045 payable according to English Calendar month for a term of twenty one years commencing from 16.03.1964 and ending on 15.03.1985 under a Registered Lease dated 16.03.1964.

2. The said lease dated 16.03.1964 in respect of the suit-premises terminated by efflux of time on the expiry of 15.03.1985 but the defendant has failed and neglected to quit, vacate and deliver up peaceful possession of suit premises to the plaintiff as required under the covenant of the said lease and law of land.

3. The plaintiff in this suit seeks to recover from the defendant khas possession of the suit premises which the defendant has failed to vacate and is in wrongful occupation thereof. The plaintiff also claims and seeks to recover mesne profits or damages @ Rs. 200 per day or at such rate as the learned Court may determine, from 16.03.1985 till recovery of khas possession.

4. The cause of action for this suit arose at 6, Marquis Street, Calcutta, P.S. Taltola, within the jurisdiction of this Court on the expiry of 15.03.1985 and subsequently.

5. For the purpose of jurisdiction and court fee the value of the suit has been assessed at Rs. 25,540 (monthly rent Rs. 2045.00 x 12) for recovery of possession and tentatively valued at Rs. 10.00 for recovery of mesne profit or damages. The plaintiff undertakes to pay further court fee as may be assessed.”

Based on these averments, the plaintiff has prayed for decree for khas possession and mesne profits @ Rs. 200 per day or at such rate as the Court may determine from 16.03.1985 till recovery of khas possession. Our attention was invited by learned senior counsel for the parties on the moot question as to how the averments in the plaint have to be construed. Shri Nariman invited our attention to a decision of this Court in Udhav Singh v. Madhav Rao Scindia, . In the said report at page 254, Sarkaria, J, speaking for the Court made the following pertinent observations :

“We are afraid, this ingenious method of construction after com- partmentalisation, dissection, segregation and inversion of the language of the paragraph, suggested by Counsel, runs’counter to the cardinal cannon of interpretation, according to which, a pleading has to be read as a whole to ascertain its true import. It is not permissible to call out a sentence or a passage and to read it out of the context, in isolation. Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without addition or subs traction of words, or change of its apparent grammatical sense. The intention of the party concerned is to be gathered, primarily, from the tenor and terms of his pleading taken as a whole.”

On the other hand, Dr. Singhvi for the respondent, invited our attention to a decision of this Court in Ram Sarup Gupta (Dead) by Lrs. v. Bishun Narain Inter College and Ors., , wherein it is observed that.

“…The pleadings however should receive a liberal construction; no pedantic approach should be adopted to defeat justice on hair-splitting technicalities….”

Keeping in view this settled legal position, let us see what has the plaintiff alleged in the suit as the basis of its cause of action. This can be culled out on a conjoint reading of all the aforesaid paragraphs of the plaint. So far as the first paragraph is concerned, it is obvious that the plaintiff has relied on background facts for introducing its case against the defendant. It has traced the history of the relations between the parties and has tried to show how the defendant came to occupy the suit premises. Reference to registered lease of 16.03.1964 in the first paragraph, therefore, cannot be said to be the foundation of the right to sue as tried to be got enforced by the plaintiff through the machinery of the court. It is not possible to agree with the contention of the learned senior counsel Shri Nariman for the appellant that the first paragraph shows the foundation of the right of the plaintiff for evicting the defendant. It is obvious that unless the history of the relationship of the parties is traced the plaintiff cannot show how the defendant has continued to remain in possession after the expiry of the lease period. However, the subsequent paragraphs 2 to 5 have been relied upon by the counsel for both the parties for supporting their respective cases and, therefore, they require a closer scrutiny. So far as the second paragraph is concerned, it is clearly stated that despite the efflux of time permitting the lease, the defendant had failed to evict and deliver actual possession of the suit premises to the plaintiff on expiry of 15.03.1985. It is also obvious that this averment is based on and expressly refers to the covenant in the lease which required the defendant on expiry of the lease to deliver vacant and peaceful possession to the plaintiff. So far as the said covenant is concerned, when we turn to the lease deed we find mentioned therein at Clause 11, the following material recitals :

“11. That the lessees shall quit and deliver peaceful and vacant possession of the said demised premises to the lessors or their agents on the expiry of the tenure of this lease and/or sooner determination thereof for any reason whatsoever.”

Similar recitals are found in Clause 14 of the lease deed which reads as under :

“That on the expiry of the period of the terms of herein mentioned and/or sooner determination thereof for any reason whatsoever the lessee shall peacefully and quietly quit, yield and deliver vacant possession of the said demised premises to the lessors of their nominees and agents in good order, condition and tenantable repair with usual wear and tear and damages caused by other causes as mentioned in Item No. 6, above excepted.”

A conjoint reading of these clauses in the lease deed with the averments in paragraph 2 of the plaint, therefore, clearly indicate that the plaintiff had sought to enforce through court, amongst others its right to get restoration of the peaceful possession of the suit premises from the defendant arising from the alleged breach of these relevant covenants on the part of the defendant on the expiry of the lease period. If the averments in paragraph 2 had rested at this stage, Shri Nariman would have been perfectly justified in submitting that the plaintiff was trying to enforce solely its right arising out of the erstwhile contract. However, the very same paragraph proceeds further and states in the last line thereof that the defendant had not vacated the premises under the law of the land. This raises the moot question whether the plaint as framed is based on two causes of action or only on one solitary cause of action as submitted by Shri Nariman, learned senior counsel for the appellant-defendant. Dr. Singhvi, learned senior counsel for the plaintiff at the outset submitted that the recitals in paragraph 2 regarding the covenants was by way of a historical fact and the suit is purely based on the law of the land, namely, the Common Law as well as Section 108(q) read with Section 111(a) of the Property Act. While Shri Nariman for the appellant took an entirely opposite stand by submitting that these very recitals in paragraph 2 show that the suit as based solely on the right arising from the alleged breach of covenant by defendant and the reference to law of the land is by way of abundant caution. As we shall see hereinafter, neither of these extreme covenants can be countenanced. Turning to paragraph 3, it is no doubt true as submitted by Dr. Singhvi for the respondent that the plaintiff has clearly stated that it is seeking to recover possession from the defendant as the defendant failed to vacate and is in wrongful occupation of the premises. The words “wrongful occupation of the premises” according to Dr. Singhvi show that the plaintiff was alleging in clear terms that the defendant was in unauthorised occupation of the premises after the termination of the contract. Placing reliance on a number of decisions of this Court it was submitted by Dr. Singhvi that on the expiry of the period of tenancy the erstwhile tenant in the absence of any evidence of tenancy by holding over has to be treated as a tenant at sufferance akin to a trespasser and, therefore, the averments in paragraph 3 of the plaint clearly show that the suit was for enforcing the legal right arising from any law or under any relevant provision of the Property Act and the suit cannot be said to be based on any covenant of the erstwhile lease which was dead and gone by efflux of time. In this connection, strong reliance was placed by Dr. Singhvi in the latter part of paragraph which indicated that the plaintiff was seeking to recover mesne profits of damages @ Rs. 200 per day which had nothing to do with the erstwhile lease rent fixed under the contract. According to Dr. Singhvi this averment clearly indicated that the plaintiff treated the defendant to be in unlawful possession and hence the claim for damages. On the other hand, Shri Nariman learned senior counsel for the appellant submitted that the term “wrongful occupation” as found in paragraph 3 when read in the light of paragraph 2 would indicate that according to the plaintiff, defendant was in breach of covenant of handing over of peaceful possession on expiry of lease as enjoined on the defendant under the contract of lease and that “wrongful occupation” due to alleged breach of contract was different from “unlawful occupation”. In our view, this hyper technical submission of Shri Nariman cannot be countenanced as there is no real distinction between the terms “wrongful occupation” and “unlawful occupation”. Whatever is unlawful cannot be said to be rightful and would necessarily be wrongful. In Concise Oxford Dictionary, 7th Edition, the term “wrongful” is defined at page 1240 as under :

“characterised by unfairness or injustice; contrary to law, (of person) not entitled to position etc. occupied;”

It is, therefore, obvious that recitals in paragraph 3 can support the case of the plaintiff both on the ground, if any, that the defendant had committed breach of the covenant and therefore, it was in wrongful occupation and also equally on the ground that under law of the land, the defendant was not entitled to continue in possession after the termination of the period of lease and, therefore, it was in unlawful or wrongful occupation. The words “wrongful occupation” cannot, therefore, be interpreted to mean only ‘in breach of any of the terms and conditions of the contract’ and can legitimately take in its sweep unlawful occupation after the lease expired on efflux of time as per Section 111(a) of the Property Act read with Section 108(q) thereof. The restricted meaning of the term ‘wrongful occupation’ as tried to be suggested by Shri Nariman cannot be accepted. On the contrary, the claim of mesne profits @ Rs. 200 per day as found in paragraph 3 of the plaint clearly shows that the plaintiff treated the defendant to be in unauthorised and illegal occupation after the efflux of time of the lease and therefore, the demand was for mesne profits at the aforesaid rate per day. That had no nexus with the rental of the premises. Turning to the cause of action paragraph 4 it is seen that it is also in general terms and refers to the situation after the expiry of 15.03.1985 when the lease period was over. It states that the cause of action for recovery of possession arose within the territorial jurisdiction of the court from that date and such cause of action continued subsequently thereafter. Consequently, paragraphs 3 and 4 of the plaint can be said to be equivocal and not necessarily confined to the breach of the covenant of the lease as mentioned in paragraph 2 of the plaint.

12. They can as well support the case of the plaintiff for possession also under general law of the land as recited in last lines of paragraph 2. So far as paragraph 5 regarding the court is concerned, it is now well settled that if the plaintiff seeks possession of the demise premises from the erstwhile tenant, court fee payable would not be on the market value of the suit property, but on the basis of the valuation of the premises computed on the basis of 12 months rent as it would not be a suit simpliciter on title against a rank trespasser. Only in the latter type of suits that the market value would be the valuation for the purpose of court fees.

13. Having seen the aforesaid relevant averments in the plaint, now it is time for us to consider the rival contentions pressed for our consideration by learned senior counsel for both the parties. Shri Nariman, learned senior counsel appearing for the appellant vehemently contended that the phrase “arising from” or “arising out of a contract as employed by Section 69 Sub-section (2) of the Partnership Act is of wider import as compared to the term “arising under”. In support of his contention, he invited our attention to a decision of this court in Jagdish Chander Gupta v. Kajaria Traders (India) Ltd., . In the said case, this court was concerned with the question whether the application moved by an unregistered partnership firm Under Section 8 Sub-section (2) of the Indian Arbitration Act, 1940 for appointment of an arbitrator in the light of the arbitration agreement between the parties was covered by Section 69 Sub-section 3 of the Indian Partnership Act. In this connection this court observed that :

“That since the arbitration clause formed a part of the agreement constituting the partnership it is obvious that the proceeding which is before the Court is to enforce a right which arises from a contract. Whether one views the contract between the parties as a whole or one views only the arbitration clause it is impossible to think that the right to proceed to arbitration is not one of the rights which are founded on the agreement of the parties.”

So far as the aforesaid decision is concerned, it has to be noted that when an application is moved Under Section 8 Sub-section (2) of the Arbitration Act for appointment of an arbitrator, such an application has necessarily to be based on the arbitration clause which is a part of the main contract between the parties. Such an application was, therefore, rightly held to be having a direct nexus with the main contract between the parties which covered the arbitration clause. In the facts of the present case, we fail to appreciate how this decision can be of any assistance to Shri Nariman. In the present suit by erstwhile landlord against the erstwhile tenant the claim for possession by itself has nothing to do with the contract of tenancy which had already come to an end more than a year back. For such claim there is no question of the source of right to possession being its erstwhile contract which is dead and gone. It cannot necessarily be the foundation of the cause of action unless the plaint itself refers to such a cause of action arising out of the terms and conditions of the erstwhile contract which according to the plaint are still subsisting on the date of the suit. Thus, it cannot be generalised that in every case when on the expiry of period of lease the landlord seeks to recover possession from the erstwhile tenant such a suit must necessarily be said to be one for enforcement of right arising from the contract of tenancy with third party ex-tenant. On the other hand, Dr. Singhvi appearing for the respondent rightly contended placing reliance on a catena of decisions of this court that on expiry of the period of lease, the erstwhile tenant who continues in possession, in the absence of being a tenant holding over, has to be treated as tenant at sufferance whose right of occupation arises not from the erstwhile contract which is dead and gone but which may arise under the general law of the land particularly against forcibly re-entry by ex-landlord or under any statutory law protecting the possession of statutory tenants under the relevant rent Act if applicable. In this connection, Dr. Singhvi invited our attention to a decision of this court in Ganga Dutt Murarka v. Kartik Chandra Das and Ors., . Shah, J., speaking for a three Judge Bench of this Court in the aforesaid decision held at page 819 of the Report that after the expiry of the lease if the erstwhile tenant continues in possession against the wish of the landlord he cannot be said to have continued in possession pursuant to a contract which is already non-existent. The following pertinent observations in this connection were pressed in service by Dr. Singhvi:

“…Of course, there is no prohibition against a landlord entering into a fresh contract of tenancy with a tenant whose right of occupation is determined and who remains in occupation by virtue of the statutory immunity. Apart from an express contract, conduct of the parties may undoubtedly justify an inference that after determination of the contractual tenancy, the landlord had entered into a fresh contract with the tenant, but whether the conduct justifies such an inference must always depend upon the facts of each case. Occupation of premises by a tenant whose tenancy is determined is by virtue of the protection granted by the statute and not because of any right arising from the contract which is determined. The statute protects his possession so long as the conditions which justify a lessor on obtaining an order of eviction against him do not exist. Once the prohibition against the exercise of jurisdiction by the court is removed, the right to obtain possession by the lessor under the ordinary law springs into action and the exercise of the lessor’s right to evict the tenant will not unless the statute provides otherwise, be conditioned.”

(Emphasis supplied)

He also invited our attention to another decision of this Court in M.C. Chockalingam and Ors. v. V. Manickayasagam and Ors., , wherein Goswami, J, speaking for the Court considered the question whether a contractual tenant after the termination of the tenancy can be said to be in lawful possession of the cinema theatre and would be entitled to renewal of cinema licence as per Rule 13 of the relevant rules. Considering the status of the erstwhile tenant on the expiry of the lease to be that of a person in wrongful possession, the following observations were made in paragraph 16 of the Report:

“16. Law in general prescribes and insists upon a specified conduct in human relationship or even otherwise. Within the limits of the law, courts strive to take note of the moral fabric of the law. In the instant case, under the terms of the lease, the property had to be handed over to the lessor. Besides Under Section 108(q) of the Transfer of Property Act, on the determination of the lease, the lessee is bound to put the lessor into possession of the property. Since the landlord has not assented to the lessee’s continuance in possession of the property, the lessee will be liable to mesne profits which can again be recovered only in term of his wrongful possession. Under Section 5(1) of the Act, the licensing authority in deciding whether to grant or refuse a licence has regard, amongst others, to the interest of the public generally. Public interest is, therefore, also involved in granting or refusing a licence. That being the position, the expression ‘lawful possession’ in Rule 13 assumes a peculiar significance of its own in the context of the provisions of the Act. Hence in any view of the matter possession of the respondents on the expiry of the lease is not lawful possession within the meaning of rule 13.”

Dr. Singhvi in this connection also vehemently relied upon the decision of this court in the case of R.V. Bhupal Prasad v. State of A.P. and Ors., , wherein a two Judge bench of this Court,

speaking through Ramaswamy, J., made the following pertinent observations in paragraph 8 of the Report:

“8. Tenant at sufferance is one who comes into possession of land by lawful title, but who holds it, by wrong after the termination of the term or expiry of the lease by efflux of time. The tenant at sufferance is, therefore, one who wrongfully continues in possession after the extinction of a lawful title. There is little difference between him and a trespasser. In Mulla’s Transfer of Property Act (7th Ed.) at page 633, the position of tenancy at sufferance has been stated thus: A tenancy at sufferance is merely fiction to avoid continuance in possession operating as a trespass. It has been described as the least and lowest interest which can subsist in reality. It, therefore, cannot be created by contract and arises only by implication of law when a person who has been in possession under a lawful title continues in possession after that title has been determined, without the consent of the person entitled. A tenancy at sufferance does not create the relationship of landlord and tenant. At page 769, it is stated regarding the right of a tenant holding over thus : The Act of holding over after the expiration of the term does not necessarily create a tenancy of any kind. If the lessee remaining in possession after the determination of the term, the common law rule is that he is a tenant on sufferance. The expression “holding over” is used in the sense of retaining possession. A distinction should be drawn between a tenant continuing in possession after the determination of the lease, without the consent of the landlord and a tenant doing so with the landlord’s consent. The former is called a tenant by sufferance in the language of the English law and the latter class of tenants is called a tenant holding over or a tenant at will. The lessee holding over with the consent of the lessor is in a better position than a mere tenant at will. The tenancy on sufferance is converted into a tenancy at will by the assent of the landlord, but the relationship of the landlord and tenant is not established until that rent was paid and accepted. The assent of the landlord to the continuance of the tenancy after the determination of the tenancy would create a new tenancy. The possession of a tenant who has ceased to be a tenant is protected by law. Although he may not have a right to continue in possession after the termination of the tenancy, his possession is juridical.”

(Emphasis supplied)

On the same lines are the decisions of this Court in Smt. Shanti Devi v. Amal Kumar Banerjee, , Murlidhar Jalan (since

deceased) through his Lrs. v. State of Meghalaya and Ors., and D.H. Maniar and Ors. v. Waman Laxman Kudav,

.

14. In view of the aforesaid settled legal position, it must be held that on the expiry of the period of lease, the erstwhile lessee continues in possession because of the law of the land, namely that the original landlord cannot physically throw out such an erstwhile tenant by force. He must get his claim for possession adjudicated by a competent court as per the relevant provisions of law. The status of an erstwhile tenant has to be . treated as a tenant at sufferance akin to a trespasser having no independent right to continue in possession.

15. However, the aforesaid conclusion will not clinch the matter one way or the other. The reason is obvious. While considering the question whether the suit as filed is hit by Section 69 Sub-section (2) of the Partnership Act or not, we have to see what the plaintiff claims as his cause of action. It is obvious that if the suit is based solely on the ground that the erstwhile tenant defendant unlawfully remained in possession after the expiry of the lease and is required to hand over possession to the plaintiff, the suit can be said to be based on the sole cause of action for enforcement of a right arising at general law and under the Transfer of Property Act in favour of the plaintiff and against the defendant who was earlier protected by the contract between the parties. Shri Nariman in this connection was right when he contended that the aforesaid decisions of this Court only decide the status of such an erstwhile tenant and there can not be any dispute that the appellant on the expiry of the lease, especially when there was no evidence to show that he was a tenant by holding over, had continued in occupation as a tenant at sufferance. However, the nature of the right sought to be enforced by the plaintiff has to be culled out from the recitals in the plaint even against such a tenant at sufferance.

16. Once this stage is reached in the course of arguments of learned counsel for the parties, it becomes at once necessary to see as to whether the relevant recitals in the plaint as seen by us earlier can be said to have referred to the erstwhile contract between the parties purely by way of a historical event or whether the plaintiff sought to base its cause of action for possession on any of the terms of the contract and or on provisions of general law simpliciter. Dr. Singhvi for the respondent-plaintiff in support of his case submitted that reference to the covenant of the lease as found in paragraph 2 was purely of a historical nature and it only meant that after the expiry of 15.03.1985 when the contract was determined by efflux of time on that date, the defendant had not acted according to the covenant of the contract on expiry of 15.03.1985 but that was purely a historical event when the suit was filed in 1986. The cause of action of the present suit was, therefore, based on the law of the land. In this connection he vehemently placed reliance on paragraphs 3 and 4 of the plaint noted by us earlier. As we have already seen, paragraphs 3 and 4 of the plaint are of general nature and can support the cause of action of the plaintiff both on the ground of breach of covenant by defendant to hand over vacant possession as agreed to by it as well as on the ground that under the common law of the land the defendant was liable to be evicted having not acted upon the statutory requirement of the provisions of Section 108(q) read with Section 111(a) of the Property Act. It is, therefore, not possible for us to agree with Dr. Singhvi for the respondent that on a conjoint reading of paragraphs 2, 3 and 4 of the plaint, it has to be held that the. plaintiff was not at all basing his case on the relevant clauses of the erstwhile contract.

17. It is easy to visualise that convenant mentioned in paragraph 2 of the plaint regarding the appellant’s liability to hand over vacant and peaceful possession of the suit property to the plaintiff lessor would come into operation only after the period of the lease is over. Therefore, it cannot be said that the said covenant would not remain effective and pending between the parties after the lease gets determined by efflux of time. To that extent the extreme contention of Dr. Singhvi that this part of the cause of action did not arise out of the contract of lease cannot be accepted.

18. However, the aforesaid conclusion of ours cannot put an end to the controversy between the parties. Reason is obvious. The plaintiff in clearest terms has based its cause of action also on the law of the land as found in paragraph 2 of the plaint. So far as this part of the cause of action is concerned, it is a distinct cause of action apart from the cause of action emanating from the alleged breach of the covenant on the part of the defendant. So far as the law of the land is concerned, it is obviously the common law under which the erstwhile tenant on expiry of the lease has to hand over vacant possession to the erstwhile landlord. But that apart, the said obligation on the part of the erstwhile tenant is statutorily recognised by Section 108(q) read with 111(a) of the Property Act Section 111 Clause (a) reads as under :

“111. A lease of immovable property determines -

(a) by efflux of the time limited thereby.

(b) xxx xxx xxx (c) xxx xxx xxx (d) xxx xxx xxx (e) xxx xxx xxx (f) xxx xxx xxx (g) xxx xxx xxx (h) xxx xxx xxx

In the present case we are not concerned with any of the other clauses of Section 111. We confine the present decision only on the aforesaid mode of determination of lease of immovable property by efflux of time. It is obvious that such a lease gets determined by efflux of time. The determination is automatic and does not depend upon any Act either on the part of the landlord or on the part of the tenant. When such automatic statutory determination of lease takes place, Section 108(q) gets simultaneously attracted against the erstwhile lessee. Section 108 of the Property Act deals with rights and liabilities of lessors and lessees. The said Section reads as under:

“108. In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased :

A. Rights and Liabilities of the Lessor.

(a) xxx xxx xxx (b) xxx xxx xxx (c) xxx xxx xxx

B. Rights and Liabilities of the Lessee.

(d) xxx xxx xxx (e) xxx xxx xxx (f) xxx xxx xxx (g) xxx xxx xxx (h) xxx xxx xxx (i) xxx xxx xxx (j) xxx xxx xxx (k) xxx xxx xxx (1) xxx xxx xxx (m) xxx xxx xxx (o) xxx xxx xxx (p) xxx xxx xxx

(q) on the determination of the lease, the lessee is bound to put the lessor into possession of the property”.

It is, therefore, obvious that a statutory obligation is foisted on the lessee on the determination of the lease which earlier existed in his favour. Therefore, on a conjoint reading of Section 108(q) read with Section 111(a) of the Property Act, it becomes obvious that under law the erstwhile landlord is entitled to base his cause of Action on the statutory obligation of the erstwhile lessee on determination of the lease to put the lessor in possession of the property. It is this statutory right of the lessor and the corresponding statutory obligation of the lessee that can be said to have been relied upon by the plaintiff for getting peaceful possession from the defendant as per the recitals in second part of paragraph 2 read with paragraphs 3 and 4 of the plaint.

19. It is of course true that in paragraph 2 of the plaint reliance is also placed on the non-delivery of vacant and peaceful possession of the suit premises to the plaintiff by the defendant as per the covenants which as we have noted are covenants being clauses 14 and 17 of the lease. As they are express covenants relied on by the plaintiff, it is not necessary for us to examine the wider question whether there is any implied covenant on the part of the lessee to hand over possession to the lessor on the expiry of the lease as tried to be suggested by learned senior counsel Shri Nariman placing reliance on a decision of the Division Bench of the Travancore High Court in Sivjnanam Abraham and Anr. v. Mathevan Pillai Bhoothalin-gam Pillai and Ors., AIR (1952) Vol. 39 Travancore page 359 and also on the decision of the Karnataka High Court in the case of Mrs. Thayarammal v. People’s Charity Fund, Banglore and Ors., . All the same we may briefly deal with them. In the case of Sivjnanam Abraham and Anr. v. Mathevan Pillai Bhoothalingam Pillai and Ors. (supra), the court was not directly concerned with the interpretation of Section 69 Sub-section (2) of the Partnership Act. The question before the court was whether on the determination of lease erstwhile tenant was liable to restore the possession of the property to the plaintiff. Analysing the landlord’s claim for recovery of possession on determination of tenancy it was observed in paragraph 7 that :

“7. The landlord’s claim for recovery of possession of the properties from a tenant on the determination of tenancy need not be based on any contract expressly entered into that behalf. The right of the landlord to get and the liability of the tenant to surrender possession of the properties leased, on the determination of the tenancy, is inherent in the very relationship of landlord and tenant and will be implied by the law. This is known as the rule in HENDERSON v. SQUIRE, (1869) LR 4 QB 170.

“The duty of the tenant upon the determination of the tenancy is simply to yield up peaceable and complete possession of the premises demised to him together with all fixtures except those which he is entitled to remove….This duty will be implied in law if not expressed in the contract between the parties and the tenant will not discharge the duty by merely going out of possession unless he restores possession to the landlord” Foa on the Relationship of Landlord and Tenant, 6th Ed. P 838.

“A lease usually contains a covenant on the part of the lessee to deliver up the premises on the determination of the term. In the absence of such a covenant or of any express stipulation, the tenant is under an implied contract to restore possession to the landlord”. The complete Law of Landlord & Tenant by Redman, edited by Hill, 8th Ed. (1939) p. 459.

See also “VENKATESH NARAYAN v. KRISHNAJI ARJUN, 8 Bom. 160. Section 108(q) of the Transfer of Property Act has recognised this obligation on the part of the tenant. Indeed one does not come across an instance of this plea having been ever seriously put forward.”

We fail to appreciate how this decision can advance the case of the appellant. All that it says is that on determination of tenancy the tenant would be bound to restore the possession of the demised premises to the erstwhile landlord and if there is an express term/convenient in the lease to that effect it would apply and if there is no express covenant the law will imply an obligation to that effect of the erstwhile tenant. As we have noted in the present case there is an express covenant in the lease which also was relied upon by the plaintiff. But in the absence of such an express covenant the law would imply a statutory obligation on the part of the ex-tenant to deliver and restore vacant possession of demised premises to the landlord on determination of the lease. That would obviously create a legal right in favour of the landlord and correspondent legal duty and obligation on the part of the ex-tenant. That is precisely what is being sought to be enforced by the plaintiff by basing its right to possession also on the law of the land. Similarly, the decision of the learned Single Judge, M. Rama Jois, in the case in Mrs. Thayarammal v. People’s Charity Fund, Bangalore and Ors. (supra) also cannot be of any avail to learned senior counsel for the appellant. The learned Judge in the said decision has taken the view following this Court’s decisions that on expiry of the lease, the erstwhile lessee cannot be said to be in lawful possession within the meaning of Rule 6 of the Karnataka Cinemas (Regulation) Act (23 of 1964). It is of course true that while referring to Section 108(q) of the Property Act it has been observed that on the expiry of the lease period the lessee was bound to put the lessor into possession of the property and that it would be an implied term of the contract. It imposes an obligation in law on the erstwhile tenant to restore possession to the landlord.

20. It is difficult to see how these observations of the learned Judge can advance the case of the appellant. The obligation to restore possessions by the ex-lessee will flow from the statutory provisions and not from any term of the contract. It is easy to visualise that any term in contract which is parallel to the statutory obligation of the contracting party would be based on such legal obligation and cannot be said to be laying down any inconsistent but legally permissible contractual term. In this connection Shri Nariman, learned senior counsel for the appellant also invited our attention to the observations in Foa’s General Law of Landlord and Tenant, 8th Edn., at page 711. It has been observed by the learned author in paragraph 1083 of Chapter 2 dealing with Rights and Remedies of the Landlord that :

“Subject to the provisions of the Rent Restriction Acts and to any stipulation or local custom to the contrary (a), and to the right conferred upon him in lieu of emblements by statute (b), the duty of the tenant upon the determination of the tenancy is to yield up peaceable and complete (c) possession of the premises demised to him, together with all fixtures except those which he is entitled to remove; and after entry and demand of possession by the landlord, or any Act upon such entry showing an intention to resume possession, the tenant and all persons claiming under him are liable to be treated as trespassers (d). This duty will be implied in law if not expressed in the contract between the parties, and the tenant will not discharge it by merely going out of possession, unless he restores possession to the landlord (e).”

We fail to appreciate how these observations can change the complexion of the controversy in the present case. Even it there is no express covenant in the contract, law will imply duty on the tenant to hand over the possession on determination of lease. This will be a legal obligation covered by the express law of the land on which reliance is placed in paragraph 2 of the plaint. Similar observations are found in Hill & Redman on Landlord & Tenant, Seventeenth Edition, Chapter 6, paragraph 425 at page 520. Our attention was also invited by Shri Nariman to the observations in Mulla in “The Transfer of Property Act”, 8th ED., at pages 843 and 844. Shri Nariman placed strong reliance on the observations of the learned author at page 844 to the following effect :

Sec. 108 – This section, as said by Coutts Trotter, J., sets out in a convenient form the implied covenants usually subsisting in a lease (i). Nearly all the clauses were said by Rankin, C.J., to be expressions of well settled principles familiar to the law of England (j). The section has no application to a tenancy at will, for a tenancy p at will is not a lease as defined in the Act (k).”

21. Even these observations do not in any way dilute the contention of learned senior counsel for the respondent that when the plaintiff has relied on law of the land, any implied covenant as contemplated by the statutory provisions of Section 108(q) would still remain in the domain of statutory obligation on the part of the appellant to hand over vacant possession to the respondent on determination of lease by efflux of time. Consequently, the decisions of Travancore and Karnataka High Courts which have taken the view that there is an implied term in the contract of lease that after the expiry of the lease period the lessee would put the lessor in possession would not be of any assistance to the appellant. It has to be noted that so long as this implied term runs parallel to the statutory obligation of such erstwhile lessee as per Section 108(q) it cannot be said that the said statutory obligation gets obliterated and repealed merely because such implied term can be culled out from the contract itself. Such an implied obligation or term in the contract cannot in any way reduce the legal efficacy of the statutory obligation foisted upon such a lessee by the express provisions of Section 108(q) read with Section 111(a) of the Property Act.

22. So far as the applicability of the bar of Section 69INDIAN PARTERNERSHIP ACT, 1932^ Sub-section (2) of the Partnership Act is concerned, it is true that it is a penal provision which deprives the plaintiff of its right to get its case examined on merits by the court and simultaneously deprives the court of its jurisdiction to adjudicate on the merits of the controversy between the parties. It will, therefore, have to be strictly construed. It is also true that once on such construction of this provision the bar Under Section 69(2) of the Act gets attracted, then the logical corollary will be that the said provision being mandatory in nature would make the suit incompetent on the very threshold. Consequently, it is not necessary for us to examine various decisions of this court rendered in connection with Section 80 of the CPC or Section 77 of the Indian Railways Act to which our attention was invited by learned senior counsel Shri Nariman. We my proceed on the basis that for sustaining a suit which falls within the sweep of Section 69 Sub-section (2), the condition precedent is that the firm must be registered at the time of filing of the suit. If it is not registered the suit must be held to be incompetent from the inception. In this connection we may refer to a decision of the Division Bench of the Calcutta High Court in the case of M/s. Goraknath Champalal Pandey v. Hansraj Manot, (Calcutta Weekly Notes, Vol. 74 (1969-70) at page 269, which has confirmed the decision of the learned Single Judge of the same High Court in the case of Hansraj Manot v. Goraknath Champalal Pandey, (Calcutta Weekly Notes, Vol. 66 (1961-62) at page 262. It was held in the said decisions that the conditions of Section 69 Sub-section (2) were mandatory in nature. However, it must be observed that the said decisions were rendered in an entirely different fact situation wherein during the subsistence of the contract of tenancy the tenant had failed to pay rent and consequently the landlord had filed the suit for possession on the ground that the tenant had committed breach of the term of tenancy about regular payment of rent. The said suit obviously was a suit for enforcement of the right arising out of a contract of tenancy for regular payment of stipulated rent which was subsisting between the parties. The said suit filed by plaintiff unregistered firm was rightly held to be barred by Section 69 Sub-section (2) of the Partnership Act. In this connection we may also refer to a decision of the Patna High Court in Padam Singh Jain v. Mis. Chandra Brothers and Ors., , wherein a learned Single Judge of the Patna High Court had taken the view that after the expiry of the contractual tenancy when the tenant had continued in occupation as a statutory tenant and when the landlord based his suit for possession on any of the ground available under the Rent Act it cannot be said to be a suit for enforcement of a right arising from the contract of tenancy. The said decision rendered on its own facts cannot advance the case of either side. Similarly, the aforesaid decisions of the Calcutta High Court equally cannot advance the case of either side. In the present case we are concerned with the lease which has come to an end and the erstwhile tenant has remained in occupation as a tenant at sufferance. Under law the erstwhile landlord is entitled to restoration of-possession by enforcement of statutory obligation of the erstwhile tenant as statutorily imposed on him Under Section 108(q) read with Section 111(a) of the Property Act. The non-compliance of the statutory obligation by the defendant when made subject matter of corresponding legal right of the erstwhile landlord cannot be said to be giving rise to enforcement of any contractual right of the plaintiff arising from the expired contract of tenancy. As seen earlier, the controversy would have clearly ended in favour of the respondent and against the appellant if the plaint has referred to only the law of the land under which the defendant was required to be evicted on the expiry of the lease. But unfortunately for the plaintiff the suit is also based on the breach of the covenant of the lease as seen from paragraph 2 of the plaint. It is, therefore, not possible to interpret the averments with reference to the covenant of the lease only as referring to a historical fact as tried to be submitted by Dr. Singhvi for the respondent.

23. The net effect of this discussion, therefore, is that the plaint as framed by the plaintiff respondent is based on a composite cause of Action consisting of two parts. One part refers to the breach of the covenant on the part of the defendant when it failed to deliver vacant possession to the plaintiff lessor on the expiry of the lease after 15.03.1985 and thereafter all through out and thus it was guilty of breach of covenants 14 and 17 of the lease. The second part of the cause of Action, however, is based on the statutory obligation of the defendant lessee when it failed to comply with its statutory obligation Under Section 108(q) read with Section 111(a) of the Property Act. So far as this second part of the cause of Action is concerned it cannot certainly be said that it is arising out of the erstwhile contract.

24. However, one contention of learned senior counsel for the appellant is required to be noted so far as this second part of the cause of Action is concerned. It was submitted that Section 108(q) of the Property Act itself provides that it is subject to the contract or local usage to the contrary and that Section 4 of the Property Act lays down that chapters and sections of this Act which relate to contracts shall be taken as part of the Indian Contract Act, 1972. Our attention, in this connection, also was invited to Section 1 of the Indian Contract Act, 1872 which provides that :

“nothing herein contained shall affect the provisions of any Statute, Act or Regulation not hereby expressly repealed, nor any usage or custom of trade, nor any incident of any contract, not inconsistent with the provisions of this Act”.

25. We fail to appreciate how these provisions are of any assistance to the learned senior counsel for the appellant. Section 108 of the Property Act lays down that in the absence of a contract to the contrary the rights and liabilities of the lessor and lessee would be those which are covered by the rules mentioned in that Section. Consequently it must be held that as compared to what is laid down by this Section by way of rights and liabilities to the lessor and lessee, if the contracting parties have not provided anything to the contrary to such statutory rights and liabilities in their contract, then these statutory rights and liabilities would prevail. But if any contrary provision is mentioned in the contract qua such rights and liabilities then because of Section 4 of the Property Act such a contrary provision in the contract will get saved on the combined operation of Section 4 of the Property Act and Section 1 of the Indian Contract Act, 1872. But that would also be subject to the rider that such an inconsistent contract should not be inconsistent with the provisions of the Indian Contract Act. Thus in absence of any contrary provision in the contract, Section 108 will operate on its own. If there is any contrary provision in the contract it will prevail over the provision in Section 108, provided such contrary provision in the contract is not inconsistent with the main provision of the Indian Contract Act. The combined operation of Section 108 and Section 4 of the Property Act and Section 1 of the Indian Contract Act can be better visualised by illustrations. Clause (b) of Part A of Section 108 deals with statutory rights of lessor to put the lessee in possession of the property leased at the lessee’s request. That is the mandate of the aforesaid statutory provision. This statutory right of the lessee and corresponding liability of the lessor can be subject to a contract to the contrary. If under the contract of lease the parties have agreed to a stipulation that the lessor will put the lessee in possession after a period, say, three or four months within which the lessor will effect necessary repairs to the premises by way of white wash etc., then the statutory right of the lessee to be put in possession on the extent of the lease as per the said Sub-section (b) would get curtailed or superimposed by the contractual right of the lessor to wait for the aforesaid period of delay and it will simultaneously cut across the statutory right of the lessee to be put in possession on the later’s request. Such contrary provision in the contract will in its turn be saved by Section 4 of the Property Act read with Section 1 of the Contract Act as it in its turn is not inconsistent with any of the provisions of the present Indian Contract Act. We may take another illustration. Part B of Section 108 deals with Rights and Liabilities of lessee. When we turn to Clause (q) thereof, we find that there is a statutory obligation of the lessee on determination of lease to put the lessor in possession of property. There can still be a contract between the parties at the time of entering into lease or even thereafter that on the determination of lease the lessee will be given six months time to remove his fixtures and to vacate the premises when such a locus poenetentiae is given to the lessee under the contract by the lessor, the statutory obligation of the lessee flowing from Section 108(q) to immediately put the lessor in possession of the property on determination of lease would get superseded and postponed by six months as stipulated in the contract. This will be a contract contrary to what is statutorily provided Under Section 108(q). It is such a contract to the contrary which would be saved by Section 4 of the Property Act as such a contract to the contrary is expressly saved by Section 108 and it also cannot be said to be consistent with any of the provisions of the Indian Contract Act. Hence Section 1 of the Contract Act also will not hit the said contract to the contrary. Thus on a conjoint reading of the statutory scheme of Section 108 and Section 4 of the Property Act and Section 1 of the Contract Act it must be held that in absence of such contrary legally permissible contracts, the statutory rights and liabilities of lessors and lessees is laid down Under Section 108 of the Property Act, especially Section 108(q) in the present case would remain fully operative by force of the statute itself. It is not the contention of either side that there was any contract to the contrary which permitted the lessee to continue in possession after the determination of lease by efflux of time even for a day more. In this connection, we may usefully refer to a decision of this court. While interpreting the phrase “contract to the contrary” as found in Section 108 of the Property Act, this court in the case of Madan Lal v. Bhai Anand Singh and Ors., , speaking through Shri Beg. J., held that if the tenant on determination of lease wants to show that he is not bound to hand over the vacant possession forthwith to the landlord as he has paid the market value of the construction put in by him on the leased premises, there should be an express term to the contrary in the contract of tenancy which would override Section 108(q) obligation and as in the case before this court there was no such express term to the contrary in the lease deed it was held that the obligation Under Section 108(q) had to be complied with by the tenant. In this connection following pertinent observations were made in paragraph 4 of the Report as under:

“…If this had really been the intention of the parties, there was nothing to prevent them from inserting such a term in the deed so as to make that intention explicit. It appears to us that the more natural construction of the clause is that rights of ownership, including the right to take possession of the building, would become vested in the lessor at the expiry of the period of the lease, and that 50% of the market-value of the building, which was to be paid in any case, became a condition attached to this ownership of the building when it vested in the lessee. The lessor was, in any case, to pay 50% of the market- value of the structure, and, in the event of a sale, the payment of this amount became a first charge on the proceeds of sale. It is also significant that it is not mentioned in the deed that a purchaser of the Cinema house, who would presumably prefer to obtain possession so as to be able to run it, could not get possession of it until the market-value was ascertained or 50% of it was paid. Possession of a Cinema house after the expiry of a building lease involving the passing of ownership of the building on such expiry is, after all, an important matter. In view of Section 108(q) of the Transfer of Property Act the burden of proving “a contract to the contrary” was on the lessee; and, something to indicate an agreement to the contrary should be there, on such a matter involving a valuable right before this burden could be held to have been duly discharged.”

26. On the facts of the present case it has to be held that there is no further locus poeneteatiae given to the tenant to continue to remain in possession after the determination of lease by efflux of time on the basis of any such contrary express term in the lease. Consequently, it is legal obligation flowing from Section 108(q) of the Act which would get squarely attracted on the facts of the present case and once the suit is also for enforcement of such a legal right under the law of the land available to the landlord it cannot be said that enforcement of such right arises out of any of the express terms of the contract which would in turn get visited by the bar of Section 69 sub- section (2) of the Partnership Act. Consequently it has to be held that when paragraph 2 of the plaint in addition made a reference to right of the plaintiff to get possession under the law of the land, the plaintiff was seeking enforcement of its legal right to possession against the erstwhile lessee following from the provisions of Section 108(q) read with Section 111(a) of the Property Act which in turn also sought to enforce the corresponding statutory obligation of the defendant under the very same statutory provisions. So far as this part of the cause of Action is concerned it stands completely outside the sweep of Section 69 Sub-section (2) of the Partnership Act. The net result to this discussion is that the present suit can be said to be partly barred by Section 69 Sub-section (2) so far as it sought to enforce the obligation of the defendant under Clauses 14 and 17 of the contract of lease read with the relevant recitals in this connection as found in paragraph 2 of the plaint. But it was partly not barred by Section 69 Sub-section (2) in so far as the plaintiff based a part of its cause of Action also on the law of the land, namely, Transfer of Property Act where under the plaintiff had sought to enforce its statutory right Under Section 108(q) read with Section 111(a) of the Property Act. Enforcement of the right had nothing to do with the earlier contract which had stood determined by efflux of time. The first point for determination therefore, has accordingly, to be held partly in favour of the plaintiff and partly in favour of the defendant. As the decree for possession is passed on the basis of both parts of causes of Action, even if it is not supportable on the first part, it will remain well sustained on the second part of the very same cause of Action.

27. In view of our conclusion on point No. 1, though the appellant partly succeeds thereon the ultimate decree for peaceful possession against the appellant would remain well sustained.

Point No. 2. :

28. In the light of our conclusion on Point No. 1, the alternative contention as to the effect of subsequent registration of the partnership on the suit would pale into insignificance and would become of academic interest. It is, therefore not necessary for us to closely examine this alternative contention. However, as both the learned senior counsel have pressed in service their respective contentions on this point for our consideration we may briefly refer to these contentions without expressing any final opinion thereon one way or the other.

29. Shri Nariman, learned senior counsel for the appellant submitted that the suit filed was barred from inception Under Section 69 Sub-section (2) of the Partnership Act-I it was a still born one and therefore, there was no question of reviving it on account of subsequent registration of the plaintiff partnership firm. In support of this contention he invited our attention to the decisions of various High Courts such as Jammu Cold Storage and General Mills Ltd. v. Khairati Lal and Sons, AIR (1960) Jammu & Kashmir page 101, Danmal Parshotam Dass (Firm) v. Babu Ram-Chhote Lai (Firm), , Dwijendra Nath Singh and Anr. v. Govinda and Anr.,

and also to two decisions of this Court in the cases of The Commissioner of Income Tax, Andhra Pradesh, Hyderabad v. Jayalakshmi Rice and Oil Mills Contractor Co., , and in Shreeram Finance Corporation v. Yasin Khan and Ors., and in the case of Sunderlal and Sons v. Yagendra Nath Singh and Anr., . He submitted that almost all the High Courts were unanimous in their decisions that if the suit filed by an unregistered firm is incompetent from the inception as per Section 69 Sub-section (2) subsequent registration of the plaintiff firm will be of no avail.

30. On the other hand, learned senior counsel for the respondent Dr. Singhvi submitted that so far as the High Courts decisions are concerned, the Nagpur High Court in Jakiuddin Badruddin and Ors. v. Vithoba Jagannath Gadali and Anr., AIR (1939) Nagpur 301 and Lahore High Court in Nazir Ahmad and Ors. v. Peoples Bank of Northern India Ltd., (in liquidation) through Official Liquidator and Ors., AIR 29 (1942) Lahore 289 had taken a contrary view. However, Shri Nariman for the appellant joined issue on this point and submitted that the aforesaid decision of the Nagpur High Court was not accepted by a latter decision of the same High Court in Abdul Karim v. Ramdas Narayandas Shop, ILR (1951) Nagpur page 31 and the aforesaid Lahore decision was expressly dissented to by two later decisions of the Punjab High Court in Des Raj Prem Chand and Anr. (Firm) v. Hira Lal Kali Ram and Anr. (Firm), and in Puran Mai Ganga Ram (Firm) v. The Central Bank of India Ltd., .

31. So far as this Court’s decisions on this point were concerned Dr. Singhvi appearing for respondent submitted that in The Commissioner of Income Tax, Andhra Pradesh, Hyderabad v. Jayalakshmi Rice and Oil Mills Contractor Co., (supra) this court was not directly concerned with the question which is posed for our consideration. In the said decision the effect of registration of the firm in the subsequent assessment year as per Section 58 of the Partnership Act on the status of the erstwhile unregistered firm for the earlier assessment year fell for consideration of this court. It is of course true that Grover, J., speaking for this court in the said decision observed in passing that “even Under Section 69 of the Partnership Act which deals with the effect of non-registration it has been consistently held that the registration of a firm subsequent to the filing of the suit did not cure the defect” and that the observations of the Allahabad High Court in Danmal Parshotamdas (Firm) v. Babu Ram-Chhotelal (Firm), (supra) were mentioned with approval. Dr. Singhvi submitted that these observations were clearly obiter. In any case the High Court’s decision on the point even if approved in general should not be treated to be a precedent while considering the scope and ambit of Section 69 Sub-section (2) of the Partnership Act and the effect of subsequent registration of an unregistered firm on the suit filed earlier when it was not so registered. For supporting this contention reliance was placed on a decision of this Court in Smt. Saiyada Mossarrat v. Hindustan Steel Ltd., Bhilai Steel Plant, Bhilai (M.P.) and Ors., paragraphs 4 and 5, The Mumbai Kamgar Sabha, Bombay v. Abdulbhai Faizullabhai and Ors., and Sreenivasa General Traders and Ors. v. State of Andhra Pradesh and Ors., . Relying on these decisions it was submitted that the observations of this court in (supra) which were

purely obiter should not be treated to be of any binding effect for deciding the present controversy. So far as the two member Bench decision of this Court in (supra) is concerned, it was submitted by Dr. Singhvi for the respondent that the said decision was directly concerned with second part of Section 69(2) of the Partnership Act and it held that subsequent amendment of the plaint filed by a firm whose reconstitution was not got registered under the Act earlier was of no avail and suit could not be saved. The said decision had no concern with the first part of Section 69(2). Even otherwise it had not taken into consideration various salient features of such litigations. According to Dr. Singhvi the salient features which were required to be considered were as under :

(i) Subsequent registration of the firm would serve the purpose of the Section namely, to enable only registered firms to file such suits;

(ii) Even if subsequently registered the firm would get the suit revived from the date of such registration sufficient penalty would get imposed on the plaintiff firm as it would loose more than three years mesne profits from the date of registration and other financial benefits prior to such a reviving as such subsequent register would have no retrospective effect.

(iii) the overriding need for such a liberal view would be to avoid Unnecessary multiplicity of proceedings based on mere technicalities.

In this connection it was submitted that even though the suit is found to be barred under Order 69 Rule (2) of the Partnership Act and, therefore, the plaint gets rejected under Order 7 Rule 11(d), as per Order 7 Rule 13 fresh suit can always be filed on the same cause of Action leaving aside the further question whether the said defective suit could be permitted to be withdrawn by the plaintiff under Order 23 Rule 1 Sub-rule (3) of the CPC and even in such a contingency the benefit of Section 14 of the Limitation Act would be available for filing a fresh suit. If that happens all that a subsequently registered plaintiff partnership firm could do is to immediately file a second suit on the ground that it is now already registered and that could only result in giving a fresh number to the suit which would further delay the proceedings before the court as it would be a freshly filed suit having a new number referable to the year of its filing. Thus ad-judicatory process would be further delayed. That such a situation in the present days when the court dockets are heavily loaded and arrears are mounting should be avoided and such a technical contention which does not advance the case of justice should be rejected. That the courts always lean in favour of curing such technical obstacles which have no bearing on the merits of the controversy between the parties. In this connection Dr. Singhvi pressed in service to two decisions of this Court. In Bansidhar Sankarlal v. Md. Ibrahim & Am., , Shah, J., speaking for the two Judge Bench held in paragraph 8 of the report that even if a suit or proceeding is instituted by a liquidator without obtaining leave of the company court as per the provisions of Section 171 of the Companies Act, 1913, which even barred the commencement of such proceedings against a company without the leave of the Court, once the leave is granted subsequently, the proceedings would be treated as not barred on the date granting of leave. That the aforesaid observations of this Court relied on by Dr. Singhvi are quite relevant and apposite for deciding the present controversy as such an approach would avoid placing reliance on pure technicalities and would further the ends of justice by enabling the court to adjudicate the matter on merits between the parties and unnecessary proliferation of- litigation will get avoided. In this connection Dr. Singhvi also invited our attention to another decision of this Court in Everest Coal Company Pvt. Ltd. v. State of Bihar and Ors., , wherein Krishna Iyer, J, speaking for a two Judge Bench of this Court considered the effect of filing of a suit by a receiver appointed under Order 40 Rule 1 of the CPC without obtaining prior leave of the Court. It was held in the said decision that if such a suit was filed by a receiver and if subsequently leave was obtained it would validate the suit. Krishna Iyer, J., noted that filing of the suit without leave of the Court would amount to contempt of the court and still subsequently obtained leave would cure the defect and remove the sin. In paragraph 11 of the Report it was observed that :

“Once amends are made by later leave being obtained, the gravamen is gone and the suit can proceed. The pity is that sometimes even such points are expanded into important questions calculated to protract Indian litigation already suffering from unhealthy longevity.”

Placing reliance on these decisions of this Court, it was submitted by Dr. Singhvi that the decision of this Court in

(supra) requires to be reconsidered.

32. We, prima facie, find substance in what is contended by Dr. Singhvi for the respondent. It is obvious that even if the suit is filed by an unregistered partnership firm, against a third party and is treated to be incompetent as per Section 69 Sub-section (2) of the Partnership Act, if pending the suit before a decree is obtained the plaintiff puts its house in order and gets itself registered the defect in the earlier filing which even though may result in treating the original suit as still born, would no longer survive if the suit is treated to be deemed to be instituted on the date on which registration is obtained. If such an approach is adopted, no real harm would be caused to either side. As rightly submitted by Dr. Singhvi that, Order 7 Rule 13 of the CPC would permit the filing of a fresh suit on the same cause of Action and if the earlier suit is permitted to be continued it would continue in the old number and the parties to the litigation would be able to get their claim adjudicated on merits earlier while on the other hand if such subsequent registration is not held to be of any avail, all that would happen is that a fresh suit can be filed immediately after such registration and then it will bear a new number of a subsequent year. That would further delay the adjudicatory process of the court as such a new suit would take years before it gets ready for trial and the parties will be further deprived of an opportunity to get their disputes adjudicated on merits at the earliest and the arrears of cases pending in the court would go on mounting. It is axiomatic to say that as a result of protracted litigation spread over tiers and tiers of court proceedings in hierarchy, the ultimate result before the highest court would leave both the parties completely frustrated and financially drained off. To borrow the analogy in an English poem with caption “death the leveller”, with appropriate modification, the situation emerging in such cases can be visualised as under : “upon final court’s purple alter see how victor victim bleed”. All these considerations in an appropriate case may require a re-look at the decision of the two member Bench of this Court in

(supra). However, as we have noted earlier, on the facts of the present case, it is not necessary for us to express any final opinion on this question or to direct reference to a larger Bench for reconsidering the aforesaid decision. With these observations we bring down the curtains on this controversy. Point No. 2, therefore, is answered by observing that it is not necessary on the facts of the present case in the light of our decision on the first point to decide this point one way or the other. Point No. 2 is, therefore, left undecided as not surviving for consideration.

Point No. 3 :

33. As a result of the aforesaid discussion, it is held that the suit as filed by the respondent was partly barred Under Section 69 Sub-section (2) of the Partnership Act but was partly not barred and consequently the decree passed by the Trial Court as confirmed by the High Court is held to have remained well sustained and calls for no interference in the present appeal.

34. In the result, this appeal fails and is dismissed.

35. At the request of learned counsel for the appellant, time to vacate the suit premises is granted till 30.6.1999 on the appellant’s filing usual undertaking in the Registry of this Court within four weeks from today and also on further condition that from 1.10.1998 till the premises are vacated or till 30.6.1999, whichever is earlier, the appellant will pay by way of occupation charges Rs. 50,000 per month. If any of the conditions of the aforesaid undertaking or the present order is committed breach of, extension of time will stand recalled and the decree for possession will become executable forthwith.

36. In the facts and circumstances of the case, there will be no order as to costs.


Marriage without Sex – Anathema – Court holds Impotency/Refusal to have Intercourse – Mental Cruelty

Comment : In this case the SC highlighted again that merely by adoption the adoptive parents are not deprived of right to deal with their properties as such, however if there is an agreement to the contrary such rights may be restricted, and since by such agreement right/title/interest is created/declared and extinguished it is required to be compulosrily registered (Dina Ji v. Daddi – 1990) 

Supreme Court of India
Chiranjilal Srilal Goenka … vs Jasjit Singh & Others on 1 December, 2000
Author: Shah
Bench: M.J.Rao, M.B.Shah

CASE NO.:

Appeal (civil) 723 1973

PETITIONER:

CHIRANJILAL SRILAL GOENKA (DEAD), BY LRS.

Vs.

RESPONDENT:

JASJIT SINGH & OTHERS

DATE OF JUDGMENT: 01/12/2000

BENCH:

M.J.Rao, M.B.Shah

JUDGMENT:

L…..I………T…….T…….T…….T…….T…….T..J J U D G M E N T

Shah, J.

Aforesaid appeal is filed against the judgment and order passed by the High Court of Delhi in Civil Writ Petition No.734 of 1971 filed by the deceased Chiranjilal Srilal Goenka of Bombay challenging the order No.19 of 1971 dated 8th February, 1971 passed by the Gold Control Administrator, New Delhi. Deceased appellant challenged confiscation of gold by the custom authorities under Gold Control orders by filing writ petition which was dismissed by the High Court. Against that order, the aforesaid appeal is filed. Pending appeal, appellant (Chiranjilal Srilal Goenka) died on 24th November, 1985. A dispute aroseas to who is the legal heir of the deceased. Firstly, one of the daughters, Sushila Bai N. Rungta claimed under a Will dated 29th Oct., 1982 and secondly, Radheshyam Goenka claimed as adopted son and thirdly, Smt. Raj Kumai R. Goenka wife of adopted son claimed independently. Keeping the question of right, title and interest in the property open, for continuing the proceedings, all the three were ordered to be brought on record by order dated 7.10.1991. It was also ordered that appeal be listed to consider the possibility of appointing an arbitrator by common consent or by orders of the Court for bringing about a settlement. Thereafter, to settle the dispute as to who would be the legal heirs to the estate of Chiranjilal Srilal Goenka, this Court passed an order on 1.11.1991 appointing Mr. Justice V.S. Deshpande, retired Chief Justice of Bombay High Court, as arbitrator which is reproduced hereunder

By consent of parties Justice V.S. Deshpande, retired Chief Justice of the Bombay High Court is appointed as arbitrator to settle the dispute as to who would be the legal heirs to the estate of late Chiranjilal Srilal Goenka. The question as to statutory action under the Gold Control Act is left open and is made explicitly clear that it is not a part of the reference. Arbitrator will fix his terms of fees and should function in such a way that the award is made available within four months from now. Parties will be entitled to place the claims before the Arbitrator in regard to trust and other institutions but the same may not be finally dealt with by the arbitrator. Arbitration expenses shall be shared equally by the parties corresponding to the share of interest in the property.

For deciding the dispute, on 10th April, 1992 the Arbitrator framed issues as under

(1) Does claimant No.1 prove execution of the Will dated 29th (28th) October, 1982, and prove the same to be the last and genuine Will of late Shri C.S. Goenka?

(2) If not, does she prove the execution of the Will dated 4.7.1978 and prove the same to be the last and genuine Will of late Shri C.S. Goenka?

(3) Does claimant No.2 prove that the late Shri C.S. Goenka duly adopted him on 26.1.1961?

(4) Is the copy of the document dated 26.1.1961 filed by claimant No.2 admissible in evidence?

(5) Is the said document genuine and brought into existence in the way claimed by claimant no.2?

(6) If yes, then does the said document constitute an agreement between Mangalchand and late Shri C.S. Goenka?

(7) If yes, can the said agreement be said to be the one contemplated by Section-13 of the Hindu Adoption and Maintenance Act?

(8) If yes, then would the said agreement dated 26.1.1961 prevent the late C.S. Goenka from disposing of and dealing with the estate, according to his wishes by a Will?

(9) In view of finding on issues above, who are the legal heirs to the estate of the late Shri C.S. Goneka?

For issue nos.1 and 2, it was pointed out that probate suit is pending in the Bombay High Court, wherein the learned Judge has expressed doubt whether arbitrator has jurisdiction to decide probate suit. Hence, IA No.3 of 1992 was filed before this Court to seek clarification. By judgment and order dated 18th March, 1993 this Court held that arbitrator can not proceed with probate suit and decide issue nos.1 and 2 framed by him and the High Court was requested to proceed with the probate suit No.65 of 1985. Till the decision in the probate suit, the arbitrator was requested not to decide issue nos.1 and 2. The Court observed that it would be open to the arbitrator to proceed with other issues and would conclude his findings on issue nos.1 and 2 on the basis of result in the probate proceedings and make the award according to law.

Thereafter, in the probate suit on 27.10.1999 parties filed Minutes of order stating as under:-

(1) The Caveators/Defendants concede to the execution and genuineness of the Will dated 29th October, 1982 of the deceased Chiranjilal Shrilal Goenka of which probate is sought by the petitioner. Petition allowed accordingly as prayed.

(2) The parties agree that this order/decree will be without prejudice to the rights, claims and contentions of the parties in the arbitration proceedings pending before Justice V.S. Deshpande, Retd. Chief Justice of Bombay High Court.

(3) No Order as to costs.

On the same date, the Court passed order in terms of minutes of order.

Subsequently, after recording the evidence, Arbitrator passed an Award on 16th June, 2000. He arrived at the conclusion that Will in favour of Sushila Bai N. Rungta executed by Chiranjilal was in-operative and Radheshyam was the sole heir as adopted son. It was also held that Sitabai Mangal Chand Kedia and Raj Kumari wife of Radheshyam do not claim to be such heirs.

On the basis of that Award, on behalf of Radheshyam IA No.9 of 2000 is filed for making the award rule of the court and to pass a decree in terms of the award. That award is challenged by Sushilabai N. Rungta by filing objection under Section 33 read with Section 30 of the Arbitration Act, 1940. As against this, Radheshyam has submitted that there is no error of law or facts apparent on the face of record and the Arbitrator has given well reasoned award which does not call for any interference.

At the time of hearing, Mr. Vinod Bobde, learned senior counsel for objector submitted that he was not challenging the finding given by the learned Arbitrator that Radheshyam was adopted son of Chiranjilal. However, he submitted that finding of the arbitrator that there was an agreement between Chiranjilal Goenka and parents of Radheshyam that Radheshyam was given on adoption to Chiranjilal on the conditions mentioned in the so-called photocopy of letter dated 26.1.1961 is, on the face of it, illegal and arbitrary. He further submitted that assuming that the said letter can be considered to be an agreement, it requires registration as it limits the right of absolute owner Chiranjilal to bequeath the property by Will. He further submitted that after codification of Hindu Adoptions & Maintenance Act, 1956 (hereinafter referred to as the Act), Sections 12 and 13 govern the rights of the adopted son and the adoptive parents.

As against this, Mr. Sanghi, learned senior counsel submitted that it cannot be said that the award made by the arbitrator is in any way on the face of it, illegal or arbitrary and that when the reasoned award is passed by the learned arbitrator, even if other view is possible on the interpretation of law, it would not be open to this Court to disturb the finding given by the Arbitrator. For dealing with contentions of the learned counsel, we would first refer to relevant parts of Sections 12 and 13 of the Act, which read as under:-

12. Effects of adoption. An adopted child shall be deemed to be the child of his or her adoptive father or mother for all purposes with effect from the date of the adoption and from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced by those created by the adoption in the adoptive family:

Provided that

(a) .. (b) .. (c) the adopted child shall not divest any person of any estate which vested in him or her before the adoption.

13. Right of adoptive parents to dispose of their properties:

Subject to any agreement to the contrary, an adoption does not deprive the adoptive father or mother of the power to dispose of his or her property by transfer inter vivos or by will.

Reading Section 12 proviso (c) and Section 13 together it is apparent that adoption would not divest any person of any estate which is vested in him or her before the adoption. It also does not deprive the adoptive father or mother the power to dispose of his or her property by transfer, inter vivos or by Will. However, this power to dispose of the property would be subject to any agreement between the parties.

Legislature has codified and crystalised the situation prevailing prior to the enactment of the Act that there was no implied contract on the part of the adoptive father or mother in consideration of the gift of his son by a natural father or mother that he or she would not dispose of property by transfer or by Will. However, in case of specific agreement to the contrary between the parties, the power to dispose of the property would be subject to the said agreement.

Keeping these in background, we would consider the facts of the present case. It is the case of both the parties that Mr. Chiranjilal Goenka had two daughters namely Sitabai, born on 29.10.1938 and another Sushilabai born on 3.9.1950. Sitabai was married to Mangal Chand Kedia of Kanpur and gave birth to Radheshyam on 8.9.1954 and to another son Govind on 3.8.1956. On 26.1.1961 Chiranjilal adopted Radheshyam. It is the contention of the learned counsel for Radheshyam that on the said date prior to adoption, a writing recording the terms of earlier arrived oral agreement was dictated by Chiranjilal in the form of an offer letter from the natural parents, which was recorded by relative Mr. Hanuman Prasad Poddar. Photocopy of the said letter is produced on record, which is in Hindi and its translation is to the following effect: -

Salutations from Mangalchand Kedia to the respected Shri Chiranjilal Goenka. I am giving you in adoption with much pleasure my son Chi. Radheshyam. From now he is alone your son. And he alone will inherit your entire moveable and immovable property. During your life time you shall be entitled to your entire moveable and immovable property. In case if you die, your wife Smt. Bhagwandevi shall have absolute right. Similarly, if she dies earlier you will have absolute right. After the death of both of you, Chiranjeev Radheshyam alone shall have full right on total moveable and immovable property. I am writing this letter with pleasure. 26.1.1961.Magh Shukla 10 Samvat 2017 Thursday.

Questions which would require consideration in these proceedings would be (1) Whether the writing dated 26.1.1961 can be considered to be an agreement between Chiranjilal and the parents of Rahdeshyam? (2) Whether it is an agreement as contemplated by Section 13 of the Act limiting the rights of adoptive parents to dispose of the property by will? And if so, (3) Whether it requires registration?

It has been contended by the learned senior counsel Mr. Bobde that the aforesaid letter cannot be considered to be any agreement between Chiranjilal and Mangal Chand Kedia, father of Radheshyam. He further submitted that there is nothing on record to prove that the aforesaid unilateral offer of Kedia was accepted by Chiranjilal. He further pointed out that this letter nowhere provides that rights of Chiranjilal to dispose of his property by transfer or by Will is any way restricted. It is his contention that even this letter specifically provides that during the life time of Chiranjilal, he would be absolute owner of the property meaning thereby that he would have right to transfer the property or bequeath the same.

As against this, learned senior counsel Mr. Sanghi submitted that the aforesaid writing specifically provides that Shri Radheshyam shall be the sole heir to the properties of Chiranjilal after his death and death of his wife. The said writing was signed by Mangal Chand Kedia, his wife Sita Bai and witnessed by Hanuman Prasad Poddar and eight other eminent people of the community. After this letter, Chiranjilal took Radheshyam on adoption and therefore, it should be held that terms of the said letter were accepted by Chiranjilal. On the basis of these facts, if finding is given by the arbitrator, it cannot be said that award is, on the face of it, illegal. It is submitted that only after marriage of Sushilabai with Rungta of Jaipur, disputes arose in 1975 between Chiranjilal and Radheshyam. May be that, more than 38 proceedings were initiated between Chiranjilal and Radheshyam and in proceedings Chiranjilal resiled from his agreement and the factum of adoption in subsequent affidavit filed by him, but that would not nullify the agreement or the adoption. It is, therefore, submitted that because of adoption agreement Radhey Shyam would be the sole and exclusive heir of the assets of late Chiranjilal after his death. Therefore, the Will dated 29th October, 1982 executed by him would be inoperative and of no effect. The learned counsel further submitted that parties can enter into a binding oral agreement unless there is any extra requirement by statute to record the same in writing. Section 13 of the Act does not require the agreement to be in writing. For this purpose, he relied upon the decision in Tarsem Singh v. Sukhminder Singh [1998 (3) SCC 471]. In any case, after taking advantage by adopting Radheshyam, Chiranjilal is bound by the said letter. For this purpose, he has relied upon Mohaomed Musa & Others v. Aghore Kumar Ganguli (AIR 1914 PC 27), Venkayaamm v. Apparao (AIR 1916 PC 9) and Re Basham (1987 (1) All ER 405). He also submitted that the said letter does not require any registration. He finally submitted that the award passed by the arbitrator can not be said to be illegal which would call for any interference. Hence, it should be made rule of the Court. In our view, the photocopy of the letter, presuming that such letter was written by Mangal Das Kedia to Chiranjilal at the time of giving Radheyshyam in adoption, there can be no doubt that it does not reflect any agreement between the parties. At the most it was only a unilateral offer giving child in adoption on certain expectations. The letter appears to be signed by number of persons and if really Chiranjilal had accepted it, then he would have placed his signatures on the said letter. There is nothing on record that he accepted the same as it was. Secondly, the letter at the most indicates that from that day, RadhesShyam would be the adopted son of Chiranjilal and would inherit his property. However, it was made clear in that very letter that during the life time of Chiranjilal and his wife, they were the absolute owners of their properties. There is nothing to indicate in the said letter that it was a covenant or a contract restricting the powers of Chiranjilal or his wife to dispose of the property either by transfer or by Will. Nowhere, it is stated that during his life time, Chiranjilal will not be entitled to dispose of his property either by transfer or by Will. Hence, there is no positive or negative agreement limiting the rights of Chiranjilal to dispose of the property by executing the Will. Presuming that the aforesaid letter is an agreement, at the most it can be stated that from the said date Radheshyam would be son of Chiranjilal and would be entitled to inherit his properties. This also would not mean that there is any agreement that adoptive father has no right to dispose of his property.

However, learned Senior counsel Mr. Sanghi submitted that in the letter, it is mentioned that after the death of Chiranjilal and his wife, Radheshyam alone would have full right on the moveable and immovable property belonging to them. He, therefore, submitted that the aforesaid offer implies that right of Chiranjilal was restricted and he could not execute the Will. In our view, this submission has no force. The aforesaid term of the letter only indicates that Radheshyam alone would be the heir and would have full right on the moveable and immovable property as heir. That is to say, it would mean if any property is left by deceased Chiranjilal which is not transferred or bequeathed, then Radheshyam would be the heir and entitled to receive the same. This would not mean that there was any restraint on the part of Chiranjilal to execute the will. In support of his contention, learned counsel Mr. Sanghi referred to the following passage from Theobald on Wills (At Page 93), [Fourteenth Editionby J.B. Clark):

Contract to leave residue. But a covenant to leave the covenantee all the property or a share of the property of the covenantor does not create a debt.

The effect of such a covenant is to leave the covenantor free to dispose of his property in his lifetime by gift or otherwise as he thinks fit, so long as he does not dispose of it in fraud of the covenant. The covenantee is entitled to have the covenant specifically enforced, and he will take subject to payment of the funeral and testamentary expenses and debts of the covenantor.

Evasion of contract not permitted. If the covenant is limited to the personal property of the covenantor and he buys real estate, the real estate is, in the hands of the heir or a devisee, charged with the purchase-money. And though the covenantor can dispose of the property in his lifetime, he cannot defeat the covenant by a disposition by will, nor by any disposition which has the same effect as a testamentary disposition, for instance, a voluntary settlement whereby he settles property on himself for life with remainders over.

The aforesaid paragraphs in no way support his contention. On the contrary it specifically mentions the effect of such covenant stating that it leaves the covenantor free to dispose of his property in his lifetime by gift or otherwise as he thinks fit so long as he does not dispose of it in fraud of the covenant. Hence, Chiranjilal was entitled to dispose of the said property either by transfer or by will. Further, in the present case, there is no question of fraud on the part of Chiranjilal. Admittedly, the relations between Chiranjilal and Radheshyam were so much strained that more than 38 litigations were pending between them in various courts. Further, the aforesaid paragraph is to be read in context of previous paragraph which provides for a contract to leave residue. In the present case, there is no such contract to leave residue in favour of Radheshyam. In this view of the matter, it cannot be said that by the said letter, there is any agreement limiting the rights of adoptive parents to dispose of their property by executing a will.

The next question would be whether the said letter, if considered as an agreement, restraining or limiting the rights of adoptive father to bequeath the property requires registration? In support of this contention, learned counsel Mr. Bobde referred to the decision of this Court in Dinaji v. Daddi (1990 (1) SCC 1). In that case Hindu widow adopted a son on April 28, 1963 by executing the deed of adoption. The document was not registered and the trial court admitted the same in evidence in proof of adoption. Subsequently, by registered sale deed dated April 28, 1966, she transferred immovable property including agricultural land and houses in favour of the appellant Dinaji. On the basis of the sale deed, suit for injunction and possession was filed against the adopted son. After considering the provisions of Section 12 (c), this Court held that after the Hindu Succession Act came into force, widow became absolute owner of the property of her husband and, therefore, merely by adopting a child, she could not be deprived of any of her rights in the property. The Court further held the adoption would come into play and the adopted child could get the rights for which he is entitled after her death as is clear from the Scheme of S. 12 proviso (c). Thereafter, the Court considered section 13 of the Act and observed that this section enacts that when the parties intend to limit the operation of proviso (c) to S. 12, it is open to them by an agreement and it appears that what she included in the present deed of adoption was an agreement to the contrary as contemplated in S. 13 of the Hindu Adoptions and Maintenance Act. However, the Court held that in view of Section 17(1)(b) of the Registration Act, the said part of the deed which refers to the creation of immediate right in the adopted son and the divesting of the right of the adoptive mother in the property will squarely fall within the ambit of Section 17(1)(b) and, therefore, under Section 49 of the Registration Act.

As against this, learned senior counsel for the respondent Mr. Sanghi submitted that the aforesaid letter is not to be construed as a deed, but is to be taken as an offer letter and by conduct of adopting Radheshyam as son, Chiranjilal could not dispose of the property by will. In our view, this argument is totally devoid of any substance because if reliance is required to be placed on the letter for holding that it restrains Chiranjlal to dispose of the property by will, then it is required to be read as a document which limits the rights of Chiranjilal to deal with his property including the immoveable property. Therefore, it would require registration. In any case, the aforesaid question is not required to be considered in detail because we have already arrived at the conclusion that there is no agreement between the parties before adoption indicating any contrary intention as contended.

Finally, we would deal with the contention of learned counsel Mr. Sanghi that when two views are possible and the arbitrator has taken a plausible view, the award cannot be interfered with. For deciding this contention, we would refer to some parts of the award which would reveal that the award is, on the face of it, illegal and erroneous and contrary to what has been discussed above. The arbitrator has misinterpreted the letter as an adoption agreement between Mangalchand Kedia and late Chiranjilal and thereafter relied upon the part of the said agreement as two terms of the agreement and has held that as per the said terms, Chiranjilal has committed him to have only life interest in the said property for himself and his wife. After their death, Radheshyam would be the successor of their entire property. He, therefore, held that there is an implied prohibition against them to transfer any part of their property. Obviously, either of them is incompetent to transfer any part of the property inter vivos or under any will. In this view of the matter, I hold that the adoption agreement covered by the finding on issue No. 6 is an agreement to the contrary as contemplated under Section 13 of the Act. In this view of the matter, we hold that the award dated 16th June, 2000 passed by the arbitrator holding that the will executed by Chiranjilal is inoperative and requires to be set aside and we so do. It is held that on the basis of the probated Will Sushilabai N. Rungta is legal heir of the deceased Chiranjilal. Ordered accordingly. There shall be no order as to costs.

Manohar Lal Chopra v. RaI bahadur Seth Hiralal – Supreme Court on Court’s power to grant injunction under it’s inherent powers.

Comment : In this case the court held that S.151 does not empower the court to pass wild anti suit injunctions – where the power is expressly given in S.94(a) CPC/O.39 R 1 & 2, 151 should be pushed into action only rarely. In this case a court gave an anti suit injunction staying proceedings in a suit in a different suit. In the fitness of things the other court should have ruled on it’s own jurisdiction and could ignore the injunction given herein. 

Supreme Court of India

Manohar Lal Chopra vs Rai Bahadur Rao Raja Seth Hiralal on 16 November, 1961
Equivalent citations: 1962 AIR 527, 1962 SCR Supl. (1) 450
Bench: Dayal, Raghubar

PETITIONER:

MANOHAR LAL CHOPRA

Vs.

RESPONDENT:

RAI BAHADUR RAO RAJA SETH HIRALAL

DATE OF JUDGMENT:

16/11/1961

BENCH:

DAYAL, RAGHUBAR

BENCH:

DAYAL, RAGHUBAR

WANCHOO, K.N.

GUPTA, K.C. DAS

SHAH, J.C.

CITATION:

1962 AIR 527 1962 SCR Supl. (1) 450 CITATOR INFO :

F 1965 SC1144 (6)

R 1966 SC1899 (5)

F 1983 SC1272 (21)

R 1986 SC 421 (34)

ACT:

Civil Procedure-Inherent powers of courts- Temporary Injunction-Restraining party from proceeding with suit in another State-Legality and propriety of-Code of Civil Procedure, 1908 (V of 1908), ss. 94(c) 151:O. 39 r. 1.

HEADNOTE:

M filed a suit at Asansol against H for recovery of money. Later, H filed a counter suit at Indore against M for recovery of money. In the Asansol suit one of the defences raised by H was that the Asansol court had no jurisdiction to entertain the suit. H applied to the Asansol court to stay the suit but the court refused the prayer. An appeal to the Calcutta High Court against the refusal to stay was dismissed with the direction that the preliminary issue of jurisdiction should be disposed of by the trial court immediately. Thereupon, H applied to the Indore court for an injunction to restrain M from proceeding with the Asansol suit pending the disposal of the Indore suit and the court purporting to act under O. 39 Code of Civil Procedure granted the injunction. M appealed to the Madhya Bharat High Court which dismissed the appeal holding that though O. 39 was not applicable to the case the order of injunction could be made under the inherent powers of the court under s. 151 Code of Civil Procedure. ^

Held, that the order of injunction was wrongly granted and should be vacated. Per, Wanchoo, Das Gupta, and Dayal,JJ.-The Civil courts had inherent power to issue temporary injunctions in cases which were not covered by the provisions of O. 39 Civil Procedure Code. The provisions of the Code were not

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exhaustive. There was no prohibition in s. 94 against the grant of a temporay injunction in circumstances not covered by O. 39. But inherent powers were not to be exercised when their exercise was in conflict with the express provisions of the Code or was against the intention of the legislature. Such powers were to be exercised in very exceptional circumstances. A plaintiff of a suit in another jurisdiction could only be restrained from proceeding with his suit if the suit was vexatious and useless. It was not so in the present case. It was proper that the issue as to jurisdiction should be decided by the Asansol court as directed by the Calcutta High Court. The Indore court could not decide this issue. Beside, it was open to the Asansol court to ignore the order of the Indore court and to proceed with the suit. This would place M in an impossible position. An order of a court should not lead to such a result.

Varadacharlu v. Narsimha Charlu, A.I.R. 1926 Mad.258; Govindarajalu v. Imperial Bank of India, A.I.R. 1932 Mad. 180 ; Karuppayya v. Ponnuswami, A.I.R. 1933 Mad. 500(2); Murugesa Mudali v. Angamuthu Madali, A.I.R. 1938 Mad. 190 and Subramanian v. Seetarama, A.I.R. 1940 Mad. 104, not approved.

Dhaneshwar Nath v. Ghanshyam Dhar, A.I.R. 1940 All.185, Firm Richchha Ram v. Firm Baldeo Sahai, A.I.R. 1940 All.241, Bhagat Singh v. Jagbir Sawhney, A.I.R. 1941 Cal. 670 and Chinese Tannery Owners’ Association v. Makhan Lal, A.I.R. 1952 Cal. 550, approved.

Padam Sen v. State of U.P. [1961] 1 S. C. R. 884, Cohen v. Rothfield, L. R. [1919] 1 K. B. 410 and Hyman v. Helm, L. R.(1883) 24 Ch. D. 531, relied on.

Per, Shah, J.-Civil courts have no inherent power to issue injunctions in case not covered by O. 39, rr. 1 and 2 Code of Civil Procedure. The power of civil courts, other than Chartered High Courts, to issue injunctions must be found within the terms of s. 94 and O. 39, rr. 1 and 2. Where an express provision is made to meet a particular situation the Code must be observed and departure therefrom is not permissible. Where the Code deals expressly with a particular matter the provision should normally be regarded as exhaustive. Padam Sen v. State of U. P. [1961] 1 S. C. R. 884, relied upon.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 346 of 1958.

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Appeal by special leave from the judgment and order dated May 10, 1955, of the former Madhya Bharat High Court in Misc. Appeal No. 26 of 1954. S. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant.

S. T. Desai, K. B. Bhatt and B. R. L. Iyengar, for the respondent.

1961. November 16. The Judgment of Wanchoo, Das Gupta and Dayal,JJ., was delivered by Dayal J. Shah J., delivered a separate Judgment. RAGHUBUR DAYAL, J.-The appellant and the respondent entered into a partnership at Indore for working coal mines at Kajora gram (District Burdwan) and manufacture of cement etc., in the name and style of ‘Diamond Industries’. The head office of the partnership was at Indore. The partnership was dissolved by a deed of dissolution dated August 22, 1945. Under the terms of this deed, the appellant made himself liable to render full, correct and true account of all the moneys advanced by the respondent and also to render accounts of the said partnership and its business, and was held entitled to 1/4th of Rs. 4,00,000/- solely contributed by the respondent toward the capital of the partnership. He was, however, not entitled to get this amount unless and until he had rendered the accounts and they had been checked and audited.

The second proviso at the end of the convenants in the deed of dissolution reads: “Provided however and it is agreed by and between the parties that as the parties entered into the partnership agreement at Indore (Holker State) all disputes and differences whether regarding money or as to the relationship or as to their rights and liabilities of the parties hereto in respect of the

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partnership hereby dissolved or in respect of question arising by and under this document shall be decided amicably or in court at Indore and at nowhere else.”

On September 29, 1945, a registered letter on behalf of the respondent was sent to the appellant. This required the appellant to explain to and satisfy the respondent at Indore as to the accounts of the said colliery within three months of the receipt of the notice. It was said in the notice that the accounts submitted by the appellant had not been properly kept and that many entries appeared to be wilfully falsified, evidently with malafide intentions and that there appeared in the account books various false and fictitious entries causing wrongful loss to the respondent and wrongful gain to the appellant. The appellant sent a reply to this notice on December 5, 1935, and denied the various allegations, and requested the respondent to meet him at Asansol or Kajoraram on any day suitable to him, within ten days from the receipt of that letter. On August 18, 1948, the appellant instituted Suit M. S. No. 33 of 1948 in the Court of the Subordinate Judge at Asansol against the respondent for the recovery of Rs. 1,00,000/- on account of his share in the capital and assests of the partnership firm ‘Diamond Industries’ and Rs. 18,000/- as interest for detention of the money or as damages or compensation for wrongful withholding of the payment. In the plaint he mentioned about the respondent’s notice and his reply and to a second letter on behalf of the respondent and his own reply thereto. A copy of the deed of dissolution, according to the statement in paragraph 13 of the plaint, was filed along with it.

On October 27, 1948, respondent filed a petition under s. 34 of the Arbitration Act in the Asansol Court praying for the stay of the suit in 454

view of the arbitration agreement in the original deed of partnership. This application was rejected on August 20, 1949.

Meanwhile, on January 3, 1949, the respondent filed Civil Original Suit No. 71 of 1949 in the Court of the District Judge, Indore, against the appellant, and prayed for a decree for Rs. 1,90,519-0-6 against the appellant and further interest on the footing of settled accounts and in the alternative for a direction to the appellant to render true and full accounts of the partnership.

On November 28, 1949, the respondent filed his written statement in the Asansol Court. Paragraphs 19 and 21 of the written statement are: “19. With reference to paragraph 21 of the plaint, the defendant denies that the plaintiff has any cause of action against the defendant or that the alleged cause of action, the existence of which is denied, arose at Kajora Colliery. The defendant craves reference to the said deed of dissolution whereby the plaintiff and the defendant agreed to have disputes, if any, tried in the Court at Indore. In the circumstances, the defendant submits that this Court has no jurisdiction to try and entertain this suit.

21. The suit is vexatious, speculative, oppressive and is instituted malafide and should be dismissed with costs.”

Issues were struck on February 4, 1950. The first two issues are:

“1. Has this Court jurisdiction to entertain and try this suit?

2. Has the plaintiff rendered and satisfactorily explained the accounts of the partnership in terms of the deed of dissolution of partnership ?”

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In December 1951, the respondent applied in the Court at Asansol for the stay of that suit in the exercise of its inherent powers. The application was rejected on August 9, 1952. The learned Sub-Judge held:

“No act done or proceedings taken as of right in due course of law is ‘an abuse of the process of the Court’ simply because such proceeding is likely to embarass the other party.”

He therefore held that there could be no scope for acting under s. 151, Code of Civil Procedure, as s. 10 of that Code had no application to the suit, it having been instituted earlier than the suit at Indore. The High Court of Calcutta confirmed this order on May 7, 1953, and said:

“We do not think that, in the circumstance of these cases and on the materials on record, those orders ought to be revised. We would not make any other observation lest it might prejudice any of the parties.”

The High Court further gave the following direction:

“As the preliminary issue No.1 in the two Asansol suits have been pending for over two years, it is only desirable that the said issues should be heard out at once. We would, accordingly, direct that the hearing of the said issues should be taken up by the learned Subordinate Judge as expeditiously as possible and the learned Subordinate Judge will take immediate steps in that direction.” Now we may refer to what took place in the Indore suit till then. On April 28, 1950, the appellant applied to the Indore Court for staying that suit under ss. 10 and 151 Code of Civil Procedure.

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The application was opposed by the respondent on three grounds. The first ground was that according to the term in the deed of dissolution, that Court alone could decide the disputes. The second was that under the provisions of the Civil Procedure Code in force in Madhya Bharat, the court at Asansol was not an internal Court and that the suit filed in Asansol Court could not have the effect of staying the proceedings of that suit. The third was that the two suits were of different nature, their subject matter and relief claimed being different. The application for stay was rejected on July 5, 1951. The Court mainly relied on the provisions of the Second proviso in the deed of dissolution. The High Court of Madhya Bharat confirmed that order on August 20, 1953. The position then, after August 20, 1953, was that the proceedings in both the suits were to continue, and that the Asansol Court had been directed to hear the issue of jurisdiction at an early date.

It was in these circumstances that the respondent applied under s. 151, Code of Civil Procedure on September 14, 1953, to the Indore Court, for restraining the appellant from continuing the proceedings in the suit filed by him in the Court at Asansol. The respondent alleged that the appellant filed the suit at Asansol in order to put him to trouble, heavy expenses and wastage of time in going to Asansol and that he was taking steps for the continuance of the suit filed in the Court of the Subordinate Judge of Asansol. The appellant contested this application and stated that he was within his rights to institute the suit at Asansol, that that Court was competent to try it and that the point had been decided by overruling the objections raised by the respondent and that the respondent’s objection for the stay or

457

proceedings in the Court at Asansol had been rejected by that Court. He denied that his object in instituting the suit was to cause trouble and heavy expenses to the respondent.

It may be mentioned that the respondent did not state in his application that his application for the stay of the suit at Asansol had been finally dismissed by the High Court of Calcutta and that that Court had directed the trial Court to decide the issue of jurisdiction at an early date. The appellant, too, in his objection, did not specifically state that the order rejecting the respondents’s stay application had been confirmed by the High Court at Calcutta and that that Court had directed for an early hearing of the issue of jurisdiction.

The learned Additional District Judge, Indore, issues interim injunction under O. XXXIX, Code of Civil Procedure, to the appellant restraining him from proceeding with his Asansol suit pending decision of the Indore suit, as the appellant was proceeding with the suit at Asansol in spite of the rejection of his application for the stay of the suit at Indore, and , as the appellant wanted to violate the provision in the deed of dissolution about the Indore Court being the proper forum for deciding the dispute between the parties. Against this order, the appellant went in appeal to the High Court of Judicature at Madhya Bharat, contending that the Additional District Judge erred in holding that he was competent to issue such an interim injunction to the appellant under O. XXXIX of the Code of Civil Procedure and that it was a fit case for the issue of such an injunction and that, considering the provisions of O. XXXIX, the order was without jurisdiction.

The High Court dismissed the appeal by its order dated May 10, 1955. The learned Judges agreed with the contention that O. XXXIX, r. 1 did not

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apply to the facts of the case. They, however, held that the order of injunction could be issued in the exercise of the inherent powers of the Court under s. 151, C.P.C. It is against this order that the appellant has preferred this appeal, by special leave.

On behalf of the appellant, two main questions have been raised for consideration. The first is that the Court could not exercise its inherent powers when there were specific provisions in the Code of Civil Procedure for the issue of interim injunctions, they being s. 94 and O.XXXIX. The other question is whether the Court, in the exercise of its inherent jurisdiction, exercised its discretion properly, keeping in mind the facts of the case. The third point which came up for discussion at the hearing related to the legal effect of the second proviso in the deed of dissolution on the maintainability of the suit in the Court at Asansol.

We do not propose of express any opinion on this question of jurisdiction as it is the subject matter of an issue in the suit at Asansol and also in the suit at Indore and because that issue had not yet been decided in any of the two suits. On the first question it is argued for the appellant that the provisions of cl. (c) of s. 94, Code of Civil Procedure make it clear that interim injunctions can be issued only if a provisions for their issue is made under the rules, as they provide that a Court may, if it is so prescribed, grant temporary injunctions in order to prevent the ends of justice from being defeated, that the word ‘prescribed’, according to s. 2, means ‘prescribed by rules’ and that rr. 1 and 2 of O.XXXIX lay down certain circumstances in which a temporary injunction may be issued. There is difference of opinion between the High Court on this point. One view is that a Court 459

cannot issue an order of temporary injunction if the circumstances do not fall within the provisions of Order XXXIX of the Code: Varadacharlu v. Narsimha Charlu (1), Govindarajulu v. Imperial Bank of India (2), Karuppayya v. Ponnuswami (3), Murugesa Mudali v. Angamuthu Mudali (4) and Subramanian v. Seetarama (5). The other view is that a Court can issue an interin injunction under circumstances which are not covered by Order XXXIX of the Code, if the Court is of opinion that the interests of justice require the issue of such interin injunction: Dhaneshwar Nath v. Ghanshyam Dhar (6), Firm Bichchha Ram v. Firm Baldeo Sahai (7),Bhagat Singh v. jagbir Sawhney (8) and Chinese Tannery owners’ Association v. Makhan Lal (9). We are of opinion that the latter view is correct and that the Courts have inherent jurisdiction to issue temporary injunctions in circumstances which are not covered by the provisions of O.XXXIX, Code of Civil Procedure. There is no such expression in s. 94 which expressly prohibits the issue of a temporary injunction in circumstances not covered by O. XXXIX or by any rules made under the Code. It is well-settled that the provisions of the Code are not exhaustive for the simple reason that the Legislature is incapable of contemplating all the possible circumstances which may arise in future litigation and consequently for providing the procedure for them. The effect of the expression ‘if it is so prescribed’ is only this that when the rules prescribe the circumstances in which the temporary injunction can be issued, ordinarily the Court is not to use its inherent powers to make the necessary orders in the interests of justice, but is merely to see whether the circumstances of the case bring it within the prescribed rule. if the provisions of s. 94

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were not there in the Code, the Court could still issue temporary injunctions, but it could do that in the exercise of its inherent jurisdiction. No party has a right to insist on the Court’s exercising that jurisdiction and the Court exercises its inherent jurisdiction only when it considers it absolutely necessary for the ends of justice to do so. it is in the incidence of the exercise of the power of the Court to issue temporary injunction that the provisions of s. 94 of the Code have their effect and not in taking away the right of the Court to exercise its inherent powers.

There is nothing in O. XXXIX, rr. 1 and 2, which provide specifically that a temporary injunction is not to be issued in cases which are not mentioned in those rules. The rules only provide that in circumstances mentioned in them the Court may grant a temporary injunction. Further, the provisions of s. 151 of the Code make it clear that the inherent powers are not controlled by the provisions of the Code. Section 151 reads:

“Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of the justice or to prevent abuse of the process of the Court.” A similar question about the powers of the Court to issue a commission in the exercise of its powers under s. 151 of the Code in circumstances not covered by s. 75 and Order XXVI, arose in Padam Sen v. The State of Uttar Pradesh (1) and this Court held that the Court can issue a commission in such circumstances. It observed at page 887 thus:

“The inherent powers of the Court are in addition to the powers specifically conferred on

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the Court by the Code. They are complementary to those powers and therefore it must be held that the Court is free to exercise them for the purpose mentioned in s. 151 of the Code when the exercise of those powers is not in any way in conflict with what has been expressly provided in the Code or against the intentions of the Legislature.”

These observations clearly mean that the inherent powers are not in any way controlled by the provisions of the Code as has been specifically stated in 151 itself. But those powers are not to be exercised when their exercise may be in conflict with what had been expressly provided in the Code or against the intentions of the Legislature. This restriction, for practical purposes, on the exercise of these powers is not because these powers are controlled by the provisions of the Code but because it should be presumed that the procedure specifically provided by the Legislature for orders in certain circumstances is dictated by the interests of justices.

In the above case, this Court did not uphold the order of the Civil Court, not coming under the provisions of order XXVI, appointing a commissioner for seizing the account books of the plaintiff on the application of the defandants. The order was held to be defective not because the Court had no power to appoint a commissioner in circumstances not covered by s. 75 and O. XXVI, but because the power was exercised not with respect to matters of procedure but with respect to a matter affecting the substantive rights of the plaintiff. This is clear from the further observations made at page 887. This Court said: “The question for determination is whether the impugned order of the Additional Munsif appointing Shri Raghubir Pershad Commissioner for seizing the plaintiff’s books of account 462

can be said to be an order which is passed by the Court in the exercise of its inherent powers. The inherent powers saved by s. 151 of the Code are with respect to the procedure to be followed by the Court in deciding the cause before it. These powers are not powers over the substantive rights which any litigant possesses. Specific powers have to be conferred on the Courts for passing such orders which would affect such rights of a party. Such powers cannot come within the scope of inherent powers of the Court in matters of procedure, which powers have their source in the Court possessing all the essential powers to regulate its practice and procedure.”

The case reported as Maqbul Ahmad Pratap Narain Singh does not lay down that the inherent powers of the Court are controlled by the provisions of the Code. It simply holds that the statutory discretion possessed by a Court in some limited respects under an Act does not imply that the Court possesses a general discretion to dispense with the provisions of that Act. In that case, an application for the preparation of a final decree was presented by the decree-holder beyond the period of limitation prescribed for the presentation of such an application. It was however contended that the Court possessed some sort of judicial discretion which would enable it to relieve the decree-holder from the operation of the Limitation Act in a case of hardship. To rebut this contention, it was said at page 87: “It is enough to say that there is no authority to support the proposition contended for. In their Lordships’ opinion it is impossible to hold that, in a matter which is governed by Act, an Act which in some limited respects gives the Court a statutory discretion, there can be

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implied in the Court, outside the limits of the Act, a general discretion to dispense with its provisions. It is to be noted that this view is supported by the fact that s. 3 of the Act is peremptory and that the duty of the Court is to notice the Act and give effect to it, even though it is not referred to in the pleadings”.

These observations have no bearing on the question of the Court’s exercising its inherent powers under s. 151 of the Code. The section itself says that nothing in the Code shall be deemed to limit or otherwise affect the inherent power of the Court to make orders necessary for the ends of justice. In the face of such a clear statement, it is not possible to hold that the provisions of the Code control the inherent power by limiting it or otherwise affecting it. The inherent power has not been conferred upon the Court; it is a power inherent in the Court by virtue of its duty to do justice between the parties before it. Further, when the Code itself recognizes the existence of the inherent power of the Court, there is no question of implying any powers outside the limits of the Code.

We therefore repel the first contention raised for the appellant.

On the second question, we are of opinion that in view of the facts of the case, the Courts below were in error in issuing a temporary injunction to the appellant restraining him from proceeding with the suit in the Asansol Court. The inherent powers are to be exercised by the Court in very exceptional circumstances, for which the Code lays down no procedure. The question of issuing an order to a party restraining him from proceeding with any other suit in a regularly constituted Court of law deserves

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great care and consideration and such an order is not to be made unless absolutely essential for the ends of justice.

In this connection, reference may usefully be made to what was said in Cohen v. Rothfield (1) and which case appears to have influenced the decision of the Courts in this country in the matter of issuing such injunction orders. Scrutton, L. J., said at page 413:

“Where it is proposed to stay an action on the ground that another is pending, and the action to be stayed is not in the Court asked to make the order, the same result is obtained by restraining the person who is bringing the second action from proceedings with it. But, as the effect is to interfere with proceedings in another jurisdiction, this power should be exercised with great caution to avoid even the appearance of undue interference with another Court”.

And again, at page 415:

“While, therefore, there is jurisdiction to restrain a defendant from suing abroad, it is a jurisdiction very rarely exercised, and to be resorted to with great care and on ample evidence produced by the applicant that the action abroad is really vexatious and useless.”

The principle enunciated for a plaintiff in a earlier instituted suit to successfully urge a restraint order against a subsequent suit instituted by the defendant, is stated thus in this case, at page 415:

“It appears to me that unless the applicant satisfies the Court that no advantage can be gained by the defendant by proceeding with the action in which he is plaintiff in another part of the King’s dominions, the Court should not stop him from proceeding

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with the only proceedings which he, as plaintiff, can control. The principle has been repeatedly acted upon.”

The injunction order in dispute is not based on any such principle. In fact, in the present case, it is the defendant of the previously instituted suit that has obtained the injunction order against the plaintiff of the previously instituted suit.

The considerations which would make a suit vexatious are well explained in Hyman v. Helm (1). In that case, the defendant, in an action before the Chancery Division of the High Court brought an action against the plaintiffs in San Francisco. The plaintiffs, is an action in England, prayed to the Court to restrain the defendants from proceeding further with the action in San Francisco. It was contended that it was vexatious for the defendants to bring the action in San Francisco as the witnesses to the action were residents of England, the contract between the parties was an English contract and that its fulfilment took place is England. In repelling the contention that the defendants’ subsequent action in San Francisco was vexatious, Brett, M. R., said at page 537:

“If that makes an action vexatious it would be a ground for the interference of the Court, although there were no action in England at all, the ground for alleging the action in San Francisco to be vexatious being that it is brought in an inconvenient place. But that is not the sort of vexation on which an English Court can act.

It seems to me that where a party claims this interference of the Court to stop another action between the same parties, it lies upon him to shew to the Court that the multiplicity of actions is vexatious, and that the whole burden of proof lies upon him. He does not satisfy that burden of proof by merely she-

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wing that there is a multiplicity of actions, he must go further. If two actions are brought by the same plaintiff against the same defendant in England for the same cause of action, then, as was said in Mchonry v. Lewis (22 Ch. D. 397) and the case of the Peruvian Guano Company v. Bockwoldt (23 Ch. D. 225), prima facie that is vexatious, and therefore the party who complains of such a multiplicity of actions had made out a prima facie case for the interference of the Court. Where there is an action by a plaintiff in England, and a crossaction by a defendant in England, whether the same prima facie case of vaxation arises is a much more difficult point to decide and I am not prepared to say that it does.”

It should be noticed that this question for an action being vexatious was being considered with respect to the subsequent action brought by the defendant in the previously instituted suit and when the restraint order was sought by the plaintiff of the earlier suit. In the case before us, it is the plaintiff of the subsequent suit who seeks to restrain the plaintiff of the earlier suit from proceeding with his suit. This cannot be justified on general principles when the previous suit has been instituted in a competent Court. The reasons which weighed with the Court below for maintaining the order of injunction may be given in its own words as follows: “In the plaint filed in the Asansol Court the defendant has based his claim on the deed of dissolution dated 22, 1945, but has avoided all references to the provisions regarding the agreement to place the disputes before the Indore Courts. It was an action taken by the present defendant in anticipation of the present suit and was taken in flagrant breach

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of the terms of the contract. In my opinion, the defendant’s action constitutes misuse and abuse of the process of the Court.” The appellant attached the deed of dissolution to the plaint he filed at Asansol. Of course, he did not state specifically in the plaint about the proviso with respect to the forum for the decision of the dispute. Even if he had mentioned the term, that would have made no difference to the Asansol Court entertaining the suit, as it is not disputed in these proceedings that both the Indore and Asansol Courts could try the suit in spite of the agreement. The appellant’s institution of the suit at Asansol cannot be said to be in anticipation of the suit at Indore, which followed it by a few months. There is nothing on the record to indicate that the appellant knew, at the time of his instituting the suit, that the respondent was contemplating the institution of a suit at Indore. The notices which the respondent gave to the appellant were in December 1945. The suit was filed at Asansol in August 1948, more than two years and a half after the exchange of correspondence referred to in the plaint filed at Asansol.

In fact, it is the conduct of the respondent in applying for the injunction in September 1953, knowing full well of the order of the Calcutta High Court confirming the order refusing stay of the Asansol suit and directing that Court to proceed with the decision of the issue of jurisdiction at an early date, which can be said to amount to an abuse of the process of the Court. It was really in the respondent’s interest if he was sure of his ground that the issue of jurisdiction be decided by the Asansol Court expeditiously, as ordered by the Calcutta High Court in May 1953. If the Asansol Court had clearly no jurisdiction to try the suit in view of the terms of the deed of dissolution, the decision of that issue

468

would have finished the Asansol suit for ever. He, however, appears to have avoided a decision of that issue from that Court and, instead of submitting to the order of the Calcutta High Court, put in this application for injunction. It is not understandable why the appellant did not clearly state in his objection to the application what the High Court of Calcutta had ordered. That might have led the consideration of the question by the Indore Court in a different perspective. It is not right to base an order of injunction, under s. 151 of the Code, restraining the plaintiff from proceeding with his suit at Asansol, on the consideration that the terms of the deed of dissolution between the parties make it a valid contract and the institution of the suit at Asansol is in breach of it. The question of jurisdiction of the Asansol Court over the subject matter of the suit before it will be decided by that Court. The Indore Court cannot decide that question. Further, it is not for the Indore Court to see that the appellant observes the terms of the contract and does not file the suit in any other Court. It is only in proper proceedings when the Court considers alleged breach of contract and gives redress for it. For the purposes of the present appeal, we assume that the jurisdiction of the Asansol Court is not ousted by the provisions of the proviso in the deed of dissolution, even though that proviso expresses the choice of the parties for having their disputes decided in the Court at Indore. The appellant therefore could choose the forum in which to file his suit. He chose the Court at Asansol, for his suit. The mere fact that Court is situate at a long distance from the place of residence of the respondent is not sufficient to establish that the suit has been filed in that Court in order to put the respondent to trouble and harassment and to unnecessary expense. 469

It cannot be denied that it is for the Court to control the proceedings of the suit before it and not for a party, and that therefore, an injunction to a party with respect to his taking part in the proceedings of the suit would be putting that party in a very inconvenient position.

It has been said that the Asansol Court would not act in a way which may put the appellant in a difficult position and will show a spirit of cooperation with the Indore Court. Orders of Court are not ordinarily based on such considerations when there be the least chance for the other Court not to think in that way. The narration of facts will indicate how each Court has been acting on its own view of the legal position and the conduct of the parties.

There have been case in the past, though few, in which the Court took no notice of such injunction orders to the party in a suit before them. They are: Menon v. Parvathi Ammal(1), Harbhagat Kaur v. Kirpal Singh (2) and Shiv Charan Lal v. Phool Chand (3). In the last case, the Agra Court issued an injunction against the plaintiff of a suit at Delhi restraining him from proceeding with that suit. The Delhi Court, holding that the order of the Agra Court did not bind it, decided to proceed with the suit. This action was supported by the High Court. Kapur J., observed at page 248:

“On the facts as have been proved it does appear rather extra-ordinary that a previously instituted suit should be sought to be stayed by adopting this rather extraordinary procedure.”

It is admitted that the Indore Court could not have issued an induction or direction to the Asansol Court not to proceed with the suit. The effect of issuing an injunction to the plaintiff of the

470

suit at Asansol, indirectly achieves the object which an injunction to the Court would have done. A court ought not to achieve indirectly what it cannot do directly. The plaintiff, who has been restrained, is expected to bring the restraint order to the notice of the Court. If that Court, as expected by the Indore Court, respects the injunction order against the appellant and does not proceed with the suit, the injunction order issued to the appellant who is the plaintiff in that suit is as effective an order for arresting the progress of that suit as an injunction order to the Court would have been. If the Court insists on proceeding with the suit, the plaintiff will have either to disobey the restraint order or will run the risk of his suit being dismissed for want of prosecution. Either of these results is a consequence which an order of the Court should not ordinarily lead to.

The suit at Indore which had been instituted later, could be stayed in view of s. 10 of the Code. The provisions of that section are clear, definite and mandatory. A Court in which a subsequent suit has been filed is prohibited from proceeding with the trial of that suit in certain specified circumstances. When there is a special provision in the Code of Civil Procedure for dealing with the contingencies of two such suits being instituted, recourse to the inherent powers under s. 151 is not justified. The provisions of s. 10 do not become inapplicable on a Court holding that the previously instituted suit is a vexatious suit or has been instituted in violation of the terms of the contract. It does not appear correct to say, as has been said in Ram Bahadur v. Devidayal Ltd. (1) that the Legislature did not contemplate the provisions of s. 10 to apply when the previously instituted suit be held to be instituted in those circumstances. The provisions of s. 35A indicate that the Legislature was aware of false or vexatious claims or defences 471

being made, in suits, and accordingly provided for compensatory cost. The Legislature could have therefore provided for the non-application of the provisions of s. 10 in those circumstances, but it did not. Further, s. 22 of the Code provides for the transfer of a suit to another Court when a suit which could be instituted in any one of two or more Courts is instituted in one of such Courts. In view of the provisions of this section, it was open to the respondent to apply for the transfer of the suit at Asansol to the Indore Court and, if the suit had been transferred to the Indore Court, the two suits could have been tried together. It is clear, therefore, that the Legislature had contemplated the contingency of two suits with respect to similar reliefs being instituted and of the institution of a suit in one Court when it could also be instituted in another Court and it be preferable, for certain reasons, that the suit be tried in that other Court. In view of the various considerations stated above, we are of opinion that the order under appeal cannot be sustained and cannot be said to be an order necessary in the interests of justice or to prevent the abuse of the process of the Court. We therefore allow the appeal with costs, and set aside the order restraining the appellant from proceeding with the suit at Asansol. SHAH, J.-I have perused the judgment delivered by Mr. Justice Dayal. I agree with the conclusion that the appeal must succeed but I am unable to hold that civil courts generally have inherent jurisdiction in cases not covered by rr. 1 and 2 of O. 39, Civil Procedure Code to issue temporary injunctions restraining parties to the proceedings before them from doing certain acts. The powers of courts, other than the Chartertd High Courts, in the exercise of their ordinary original Civil jurisdiction to issue temporary injunctions are defined by the terms of s. 94(1)(c) and

472

O. 39, Civil Procedure Code. A temporary injunction may issue if it is so prescribed by rules in the Code. The provisions relating to the issue of temporary injunctions are to be found in O. 39 rr. 1 and 2: a temporary injunction may be issued only in those cases which come strictly within those rules, and normally the civil courts have no power to issue injunctions by transgressing the limits prescribed by the rule. It is true that the High Courts constituted under Charters and exercising ordinary original jurisdiction do exercise inherent jurisdiction to issue an injunction to restrain parties in a suit before them from proceedings with a suit in another court, but that is because the Chartered High Courts claim to have inherited this jurisdiction from the Supreme Courts of which they were successors. This jurisdiction would be saved by s. 9 of the Charter Act (24 and 25 Vict. c. 104) of 1861, and in the Code of Civil Procedure, 1908 it is expressly provided by s. 4. But the power of the civil courts other than the Chartered High Courts must be found within s. 94 and O. 39 rr. 1 and 2 of the Civil Procedure Code. The Code of Civil Procedure is undoubtedly not exhaustive: it does not lay down rules for guidance in respect of all situations nor does it seek to provide rules for decision of all conceivable cases which may arise. The civil courts are authorised to pass such orders(as may be necessary for the ends of justice, or to prevent abuse of the process of court, but where an express provision is made to meet a particular situation the Code must be observed, an departure therefrom is not permissible. As observed in L. R. 62 I. A. 80 (Maqbul Ahmed v. Onkar Pratab) “It is impossible to hold that in a matter which is governed by an Act, which in some limited respects gives the court a statutory discretion, there can be implied in

473

court, outside the limits of the Act a general discretion to dispense with the provisions of the Act.” Inherent jurisdiction of the court to make order ex debito justitiae is undoubtedly affirmed by s. 151 of the Code, but that jurisdiction cannot be exercised so as to nullify the provisions of the Code. Where the Code deals Expressly with a particular matter, the provision should normally be regarded as exhaustive. Power to issue an injunction is restricted by s. 94 and O. 39, and it is not open to the civil court which is not a Chartered High Court to exercise that power ignoring the restriction imposed there by, in purported exercise of its inherent jurisdiction. The decision of this Court in Padam Sen v. The State of Uttar Pradesh(1) does not assist the case of the appellant. In Padam Sen’s case this Court was called upon is a original appeal to consider whether an order of a Munsiff appointing a commissioner for seizing certain account books of the plaintiff in a suit pending before the Munsiff was an order authorised by law. It was the case for the prosecution that the appellants offered a bribe to the commissioner as consideration for being allowed to tamper with entries therein, and thereby the appellants committed an offence punishable under s. 165A of the Indian Penal Code. This Court held that the commissioner appointed by the civil court in exercise of powers under O. 26 C. P. Code did not hold any office as a public servant and the appointment by the Munsiff being without jurisdiction, the commissioner could not be deemed to be a public servant. In dealing with the argument of counsel for the appellants that the civil court had inherent powers to appoint a commissioner in exercise of authority under s. 151 Civil Procedure Code for purposes which do not fall

474

within the provisions of s. 75 and O. 26 Civil Procedure Code, the Court observed: “Section 75 of the Code empowers the Court to issue a commission, subject to conditions and limitations which may be prescribed, for four purposes, viz., for examining any person, for making or adjusting accounts and for making a partition. Order XXVI lays down rules relating to the issue of commissions and allied matters. Mr. Chatterjee, learned counsel of the appellants, has submitted that the powers of a Court must be found within the four corners of the Code and that when the Code has expressly dealt with the subject matter of commissions in s. 75 the Court cannot invoke its inherent powers under s. 151 and thereby add to its powers. On the other hand, it is submitted for the State, that the Code is not exhaustive and the Court, in the exercise of its inherent powers, can adopt any procedure not prohibited by the Code expressly or by necessary implication if the Court considers it necessary for the ends of justice or to prevent abuse of the process of the Court. x x x

x

x x x

x

The inherent powers of the Court are in addition to the powers specifically conferred on the Court by the Code. They are complementary to those powers and therefore it must be held that the Court is free to exercise them for the purposes mentioned in s. 151 of the Code when the exercise of those powers is not in any way in conflict with what has been expressly provided in the Code or against the intentions of the Legislature. It is also well recognized that the inherent power is not to be exercised in a manner which will be

475

contrary or different from the procedure expressly provided in the Code.”

The Court in that case held that in exercise of the powers under s. 151 of the Code of Civil Procedure, 1908 the Court cannot issue a commission for seizing books of account of plaintiff-a purpose for which a commission is not authorized to be issued by s. 75.

The principle of the case is destructive of the submission of the appellants. Section 75 empowers the Court to issue a commission for purposes specified therein: even though it is not so expressly stated that there is no power to appoint a commissioner for other purposes, a prohibition to that effect is, in the view of the Court in Padam Sen’s case, implicit in s. 76. By parity of reasoning, if the power to issue injunctions may be exercised, if it is prescribed by rules in the Orders in Schedule I, it must he deemed to be not exercisable in any other manner or for purposes other than those set out in O. 39 rr. 1 and 2.

Appeal allowed.

Whether Arbitration Awards are required to be compulsorily registrable ?

Comment : In a nutshell this decision holds that a private arbitration award is compulsorily registrable and ineffective without the same – but one obtained with intervention of court (reference) does not need to be. 
 
Bombay High Court
Chandrakant Maganlal Patel And … vs Ishwarlal Ghelabhai Choksey And … on 9 October, 1980
Equivalent citations: AIR 1981 Bom 248
Bench: Rege

JUDGMENT

1. This is an appeal by the original plaintiff against the order of the learned Judge of the Bombay City Civil Court, Dated 4-10-1974 raising a question as to the registrability of an award, made in reference by the Court in pending proceedings, under Section 17(b) of the Registration Act.

2. Few facts relevant for the disposal of this appeal are as under:–

The plaintiffs had filed a suit being suit No. 825 of 1967 against 15 defendants in respect of certain property. On 24-10-1969, the parties to the suit filed consent terms agreeing to refer to the arbitration of Advocate Shri P. C. Kapadia all questions or issues arising out of pleadings of the parties including those specifically set out in the said consent terms. Initially defendants Nos. 1 to 3 were joined as defendants to the suit. However, subsequently defendants Nos. 4 to 15 were joined as defendants to the suit as it was disclosed that they had interest in the property.

3. The Arbitrator Shri Kapadia made his award on 27th June 1973. The said award was filed in Court and notices of the award being filed were issued to the parties. Defendants Nos. 1 to 3 received the said notices on 28th” August 1973. On 24th September 1973, they filed a petition raising objections to the said award and prayed for setting aside the same. The said petition was subsequently amended by taking one more ground viz., the award was invalid for want of registration under Section 17(b) of the Registration Act.

4. The learned Judge who heard the said petition dealt only with the question of registration of the award and by his order dated 4th October 1974, held that the said award was compulsorily registrable under the said provisions of Section 17(1)(b) of the Registration Act and since it was not so registered it was invalid. He, therefore set aside the said award on that ground alone and directed that the suit be referred back to the Court for trial from the stage at which it was referred to the arbitration of Shri Kapadia.

5. Against the said judgment and order of the learned Judge, the plaintiff filed an appeal to this Court being appeal from Order No. 417 of 1977. The said appeal came up for hearing before my brother Judge Desai on 27th September 1979. To the said appeal although the plaintiff had made all the defendants to the suit as party respondents, notices were issued only to defendants Nos. 1 to 3 and no bhatta was paid in respect of notices to be issued to the other defendants being defendants Nos. 4 to 15 although they were parties not only to the suit but also to the consent terms and the arbitration proceedings before Shri Kapadia.

6. The learned Judge after considering the rival contentions on the question of registrability of the said award and various decisions cited across the bar in support thereof, held on merits that the award made as a result of an arbitration in a suit was not required to be registered and that the learned Judge of the City Civil Court was not right in taking a contrary view. The learned Judge, however, held that since the appellant plaintiff had not paid bhatta for respondents Nos. 4 to 15 who were joined as party respondents to the appeal and not served them with the notices of the appeal, there was no proper appeal before him. Accordingly, although disagreeing with the lower Court’s finding on the main issue, on the said technical ground only he dismissed the appeal.

7. Against the said decision of Desai J., the plaintiff filed a Letters Patent Appeal to the Division Bench of this Court being Letters Patent Appeal Number 88 of 1979. The Division Bench allowed the said appeal holding that the dismissal of the appeal by Dasai J., on a technical ground was not correct and remanded the matter back to the Court for hearing and disposal of the same on merits. The Division Bench also disposed of the cross objections filed by the defendants in the said Letters Patent Appeal as for want of any finding against defendants Nos. 1 to 3 the said cross objections could not survive. They, however, allowed defendant Nos. 1 to 3 to raise at the hearing of the appeal the contentions raised in the cross objections. That is how this appeal from order has come to be heard by me de novo.

8. Before me both the sides have raised the same contentions as were raised before my brother Judge Desai.

9. The provisions of Registration Act under which the Registrability of the said award is pleaded is Section 17(1)(b). The said Section 17(1)(b) provides :–

“The following document shall be registered…

(b) Other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent of the value of one hundred rupees and upwards, to or in immoveable property.”

“Section 17(2) excludes certain instruments from operation of Section 17(1)(b) and (c). Section 17(2)(vi) as it stood before its amendment by Act XXI of 1929, which came into force on 1-4-1930, excluded from the operation of Section 17(1)(b) and (c) any decree or order of a Court or any award.”

10. However, by the said Act XXI of 1929 the said clause was amended so as to delete the words ‘any award’ there from and add the words except a decree or order, made on a compromise and comprising immovable property other than that which is the subject matter of the suit proceedings.

11. It seems that it is this amendment of Section 17(2)(vi) by deletion of the said words ‘any award’ that has given rise to the controversy in this case.

12. The contention of the learned counsel for the appellant mainly was that there was a vital distinction under the Arbitration Act between an award obtained in an arbitration proceedings without the intervention of the Court (for the sake of convenience referred to as a private award) and one brought about by the intervention of the Court in a judicial proceedings pending before it While not disputing that a private award was compulsorily registrable, if it otherwise fell within the provisions of Section 17(1)(b), according to him, it would not be so in respect of an award in Court proceedings. He submitted that in case of such an award the source of jurisdiction of an arbitrator was an order of reference by the Court, with the arbitrator acting under the orders of the Court, that the provisions of the Arbitration, Act showed that unlike in the case of private arbitration, in an arbitration in the judicial proceedings before the Court the Court retained full control over the arbitration proceedings and it was a permissible delegation by the Court of part of its functions to the arbitrator, on the parties by consent agreeing to do so. Further, according to him, in fact, such arbitration proceedings were part of the judicial proceedings kept pending before the Court, the same coming to an end only on the Court passing a decree in terms of the award. He further contended that unlike a private award, the award made in the pending proceedings cannot by itself purport or operate to create, declare, assign etc, any right in or to immoveable property which was the subject matter of the award, but merely created a right to obtain a decree in terms of the award, with the power of the Court either to set it aside, vary or remit the same.

13. In support of his said contention the learned counsel for the appellant has relied upon certain decisions of different High Courts, which it would be convenient to deal with first.

14. At the outset, it may be stated that all the said decisions excepting the Full Bench decisions of Patna High Court and of Punjab & Haryana High Court

have held that a private award was compulsorily registrable if it otherwise falls within the provisions of Section 17(1)(b) of the Registration Act. Even the view held by the aforementioned Full Bench decisions of the Patna and the Punjab-Haryana High Courts, that private awards as well were not compulsorily registrable, was in terms subsequently negated by the Supreme Court in the case of Satish Kumar v. Surinder Kumar . However, from amongst the said decisions in all those decisions when the question arose as regards the registrability of the award in the pending Court proceedings., the Courts are unanimous in their view that such awards were not compulsorily registrable under said Section 17(1)(b) of the Registration Act.

15. Now dealing with the said decisions, the first in point of time is the decision of the Rangoon High Court in the case of Kya Hla Pru v. Ma Pan Mra Pru (AIR 1935 Rang 16). In that case while dealing with the said question the Court held that an award made by the arbitrators appointed by the Court with a view to having its terms incorporated in decree of the Court is not an award which was compulsorily registrable. While negativing the contention that in view of the fact that the word ‘award’ had been removed from Section 17(2)(vi) of the Registration Act, it was necessary for any award which deals with immovable property to be registered and if not the same was invalid, the Court observed :–

“The argument was unsound. When a matter relating to partition of immoveable property has been referred by the Court to an arbitration and the arbitrators make what is called an award that award in itself does not purport or operate to create, declare, assign, etc., any right, title or interest in or to immovable property. An award of this nature purports to be a recommendation to the Court and it has no validity and in no way affects any immoveable property until and unless it is incorporated in a decree of the Court or is made a part of the decree of the Court. Had the reference to arbitration been a private one outside the Court, then the reference to arbitration together with the award of the arbitrators would constitute a pair of documents which would by themselves purport to effect the partition and the award of this nature would no doubt be of no effect unless registered, but an award made by the arbitrators appointed by the Court with a view to having its terms incorporated in a decree of the Court is not an award which can be compulsorily registrable”.

16. The Full Bench of the Sind Judicial Commissioner’s Court in its decision in the case of Hassanand Naraindas v. Jadhomal Chengomal AIR 1936 Sind 79 following the aforesaid decision of the Rangoon High Court took the same view. The reasoning of the Court for the said view was that an award in a suit being a part of judicial proceedings did not require registration.

17. The Calcutta High Court in the case of Jitendra Nath De v. Nagendra Nath De held:

“An Award made by an arbitrator under orders of the Court has no force unless a decree is passed on it. A private award, if it is valid, is operative even though neither party has sought to enforce it by a regular suit. A private award therefore falls within the class of documents specified in Section 17(1)(b) Registration Act, whereas the award of other classes does not.”

18. Oudh Court in the case of B. Sher Bahadur Singh v. Ram Narain Singh AIR 1945 Oudh 1 following the aforesaid decision of the Rangoon High Court held that where the reference to arbitration is a private one outside the Court, then the reference to arbitration together with the award of the arbitrator constitutes a pair of documents which in themselves purport to effect the partition and an award of this nature is of no effect unless registered, but an award made by arbitrators appointed by the court with a view to having its terms incorporated in a decree of the court is not an award which is compulsorily registrable.

19. Two other decisions which had to be referred to are :– (1) The decision of the Full Bench of Patna High Court in the case of Seonarayan Lal v. Prabhu Chand and (2) of the Full Bench of the Punjab & Haryana High Court in the case of Sardool Singh v. Harisingh who held that even a private award was not compulsorily registrable.

20. The Andhra Pradesh High Court in its Full Bench decision in the case of M. Venkataratnam v. M. Chelamayya took the view that a private award required compulsory registration.

21. However, the question as to the registrability of a private award specifically came to be considered by the Section C. in the case of Satish Kumar v. Surinder Kumar where the Supreme

Court while dealing only with a private award had specifically negatived the said view taken by the Patna and Punjab & Haryana High Courts that the private award was not compulsorily registrable and held that the same falling within the ambit of Section 17(1)(b) of the Registration Act was compulsorily registrable. While making it specifically clear both in the beginning and at the end of the judgment, that they were dealing only with an award made on a reference by the parties without intervention of the court, it pointed out that by reason of Clause 7 to Schedule I which made the award final and binding on the parties, it can hardly be said that it was waste paper unless it was made a rule of the court.

22. Hegde, J. in his further reasoning to the concurring judgment pointed out by referring to para 7 of First Schedule to the Arbitration Act that:–

“It was not possible to accept the view of Patna and Punjab High Courts that the award which was not made a decree of the court has no existence in law.”

He further pointed out that;–

“Learned Judges who decided those cases, appear to have proceeded on the basis that the award which cannot be enforced is not a valid award and the same does not create any rights in the property which was the subject matter of the award. This in my opinion is not a correct approach. The award does create rights in that property but those rights cannot be enforced until the award is made a decree of the court. It is one thing to say that a right is not created, it is an entirely different thing to say that the right created cannot be enforced without further steps. For the purpose of Section 17(1)(b) of the Registration Act, all that we have to see is whether the award in question purports or operates to create or declare, assign or extinguish any right, title or interest, whether vested or contingent of the value of Rs. 100/- or upwards to or in immovable property. If it does, it is compulsorily registrable.”

23. According to the learned counsel for the respondent the question of registrability of any award had got to be determined only by reference to the provisions of Section 17(1)(b) of the Registration Act, and now that the amendment of Section 17(2)(vi) has removed an award from the list of instruments excluded from the application of Section 17(1)(b) and (d) of the said Act, there was no reason for making any distinction between a private award and an award in reference made in the pending court proceedings. According to him even an award made in the pending court proceedings if it were to fall within the purview of Section 17(1)(b) of the said Act was compulsorily registrable and it was not permissible for the court to distinguish the said award from the private award by reference to the provisions of the Arbitration Act particularly as regards the enforceability thereof.

24. In support of his ,said contention the learned counsel for the respondent hag strongly relied on the aforequoted observations of Hegde, J. in his separate reasoning in the aforecited decision of the Supreme Court in Satishkumar’s case .

25. To a limited extent the said contention of the learned counsel for the respondent viz. that for the purpose of determining whether an award was registrable or not, one has to look to the provisions of Section 17(1)(b) of the said Act and the same cannot be determined with reference to the provisions of the Arbitration Act as to its enforce-ability viz. it would not be enforced till the court passed a decree in terms thereof, could be accepted. However, merely because by the amendment of Section 17(2)(vi) of the said Act, awards were removed from the list of instruments excluded from the application of Section 17(1)(b) and (c), it cannot be said that every type of an award would automatically become compulsorily registrable or that for the purpose of determining the nature of the award to find out whether it could at all fall within the provisions of Section 17(1)(b) of the Registration Act, the court cannot look to the provisions of the Arbitration Act. As the aforecited decision of the Supreme Court at page 837 of the report, itself shows that the court there in fact did consider the provisions of para 7 of Schedule I to the Act viz. the award shall be final and binding on the parties; to find out whether a private award, with which the court was specifically concerned in that case, would be compulsorily registrable under the provisions of Section 17(1)(b) of the said Act.

26. The court there observed :–“If the award shall be final and binding on the parties, it can hardly be said that it is a waste paper, unless it is made a rule of the court.” So also the above quoted observations of Hegde, J. in that decision on which the learned counsel for the respondent has strongly relied, refer to the said provisions of para 7 of Schedule I (which is under Section 3 of the said Act applying only to the private arbitration) to point out that a private award (with which the court was dealing) did create rights in property but those rights could not be enforced until the award was made a decree of the court and that it was one thing to say that a right was created and is an entirely different thing to say that the rights created cannot be enforced.

27. In my view, the very circumstance that a private award by reason of the specific provisions of para. 7 of Schedule 1 of the said Arbitration Act making it final and binding on the parties was held to be capable of validly creating rights though they could not be enforced without making the award a decree of the court, constitutes a vital distinction between a private award and an award made in a reference in pending court proceedings, as regards its registrability. So far as the latter type of the award was concerned unlike in the case of private award there was no provision making the award as such final and binding on the parties. Such an award, therefore, unlike a private award unless it is made B decree of the court was incapable of operating or purporting to create any rights, declaration, etc., between the parties to or in immovable property and as such has no more value than a mere scrap of paper. Arbitration proceedings in pending court proceedings though culminating into an award have no independent existence and continue to be a part of the judicial proceedings pending before the court in which reference was made and the award made in such proceedings has got to be made a decree of the court if it were to create any rights between the parties thereto. The distinction drawn by the Supreme Court in the case of a private award viz. its capacity to create rights without being made a decree of the court and its enforceability only on it being made a decree of the court, cannot exist in respect of an award in court proceedings. Further, as the provisions of Section 16(2) of the said Act (which is also applicable to award in pending court proceedings, under Section 25 of the said Act) suggest that such an award at the most can be considered to be a decision of the arbitrator but as such it was incapable of operating or even purporting to create, declare etc. rights in or to an immoveable property. As the Rangoon High Court in the afore cited decision has observed that at the most it could be a recommendation to the court and has no validity unless made a decree of the court.

28. In my view, therefore, for the aforesaid reasons an award in the proceedings pending before the court was incapable of and/or could not operate or purport to create, declare, assign, etc. any rights in or to an immovable property and was therefore not compulsorily registrable under the provisions of Section 17(1)(b) of the Registration Act. In that view of the matter, I am in agreement with the similar view taken by the other courts in the aforesaid decisions and also with the view expressed by my brother Judge S. K. Desai in this very case in his judgment dated 24th September, 1979.

29. The result, therefore, is that the appeal is allowed. The order of the lower court is set aside. However, since the lower court had disposed of the respondent’s petition only on the question of registrability of the award which is negatived by me, the matter is remanded back to the trial court for consideration of grounds (a) to (d) in the respondents’ said petition for setting aside the award and to dispose of the same.

30. Respondents to pay petitioner’s costs of the appeal.

31. Appeal allowed.

Declaration as to illegal termination

Comment : In this case the court held that a declaration that a termination of a professor was illegal and he remained in service, was tantamount to ordering specific performance of a contract based on personal volition/qualification. 
Supreme Court of India
Dr. S. B. Dutt vs University Of Delhi on 3 September, 1958
Equivalent citations: 1958 AIR 1050, 1959 SCR 1236
Bench: Sarkar, A.K.

PETITIONER:

Dr. S. B. DUTT

Vs.

RESPONDENT:

UNIVERSITY OF DELHI

DATE OF JUDGMENT:

03/09/1958

BENCH:

SARKAR, A.K.

BENCH:

SARKAR, A.K.

AIYYAR, T.L. VENKATARAMA

GAJENDRAGADKAR, P.B.

CITATION:

1958 AIR 1050 1959 SCR 1236

ACT:

Arbitration – Award – Direction for enforcement of contract of personal service-Validity-Such direction, if an error on the face of the award-Delhi University Act, 1922 (No. VIII of 1922),s. 45.

HEADNOTE:

The appellant, a professor in the respondent University, was dismissed from service by the respondent. He thereupon referred the dispute as to his dismissal and certain other disputes to arbitration under the provisions Of s. 45 of the Delhi University Act. An award was made on the reference which among other things decided that the appellant’s ” dismissal was ultra vires, mala fide, and has no effect on his status. He still continues to be a professor of the University “. On proceedings to obtain a judgment on the award:

Held, that the award which purported to enforce a contract of personal service disclosed an error on the face of it and must be set aside.

High Commissioner for India v. I. M. Lall, (1948) L. R. 75 I. A. 225 and Ram Kissendas Dhanuka v. Satya Charan Law, (1949) L. R. 77 I. A. 128, distinguished.

An award may disclose an error on its face though the reason for the erroneous decision was not set out in it. Champsey Bhara & Co. v. jivraj Balloo Spinning and Weaving Co. Ltd., (1923) L.R. 50 I.A. 324, explained. Held, further, that an award made under S. 45 Of the Delhi University Act to which the section itself makes the provisions of the Arbitration Act, 1940, applicable, is not the same thing as an award under the Industrial Disputes Act, 1947, and there can be no analogy between the two and the words ‘any dispute ‘ occurring in that section cannot include a dispute relating to reinstatement or authorise the passing of any such direction by the arbitrator. Western India Automobile Association v. Industrial Tribunal, Bombay, [1949] F. C. R. 321, distinguished.

JUDGMENT:

CIVIL APPELLATE JURISDICTION : CiVil Appeal No. 229 of 1956. Appeal from the judgment and order dated January 15, 1955, of the Punjab High Court in F. A. O. No. 119-D of 1954, arising out of the judgment and decree

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dated May 27, 1954, of the Court of Sub-Judge Class III, Delhi, in Suit No. 206 of 1953.

N. C. Chatterjee, A. N. Sinha and P.K. Mukherjee, for the appellant.

M.C. Setalvad, Attorney-General for India, A. B. Rohatgi and B. P. Maheshwari, for the respondent.

1958. September 3. The Judgment of the Court was delivered by

SARKAR J.-This appeal arises out of a proceeding for filing an award in Court and obtaining a judgment thereon. The award was made in respect of disputes between the appellant, a professor of the respondent, the University of Delhi, and the respondent. The dispute originally started many years ago and with the passage of time, increased in volume. A narrative of the disputes is necessary for the proper appreciation of the questions arising in this appeal and this we now proceed to give.

On May 10, 1944, the appellant was appointed Professor of Chemistry by the respondent. In August 1948 the Government of India appears to have sanctioned a scheme called the Selection Grade for a higher grade of pay for certain professors. The appellant claimed to be entitled to the benefit of this scheme but it was not given to him by the respondent. This was the first dispute between the parties. In March, 1949, another professor, Dr. Seshadri, was appointed by the respondent the Head of its Department of Chemistry. The appellant contended that he was the Head of the Department and had been wrongfully superseded by the appointment of Dr. Seshadri as the Head. This gave rise to another dispute. The appellant’s case is that he tried to get this dispute solved by arbitration under the provisions of the Delhi University Act, 1922, but was unable to do so owing to the obstructive attitude of the University authorities, and was, therefore, on October 18, 1949, forced to file a suit for a, declaration that his removal from his position of the Head of the Department of Chemistry was illegal. The respondent in its turn also had certain 1238

complaints against the appellant for misconduct of more or less serious character into the details of which it is not necessary to enter. It appears to have been agreed between the parties in October 1950 that the mutual grievances would be investigated by Sir S. Vardachariar and Bakshi Sir Tek Chand and their decision was to be accepted as final and binding. In view of this agreement the appellant withdrew his aforesaid suit on November 3, 1950. The investigation was thereafter held and a report submitted on March 1, 1951, which appears to have gone substantially against the appellant. The appellant contended that the investigation had not been fairly held and that the report was for this and other reasons defective and not binding on him. He actually made an application on March 26, 1951, to the Sub- Judge, Delhi, under s. 33 of the Arbitration Act, 1940, for a declaration that there was no arbitration agreement and hence the two referees had no jurisdiction to act or to make an award and, in the alternative, if there was an award, for an order setting it aside. While this application was pending, the Executive Council of the respondent passed a resolution on April 26, 1951, terminating the appellant’s service as a professor of the University in view of the findings against him in the report of the investigators. On February 11, 1952, the Sub-Judge, Delhi, dismissed the application under s. 33 on the ground that the agreement as to the investigation by Sir S. Vardachariar and Bakshi Sir Tek Chand of the mutual grievances “,as not a submission to arbitration and, therefore, no application under s. 33 of the Arbitration Act lay. An appeal to the High Court was dismissed on April 22, 1953, for the same reason. What we have stated so far gives the history of the disputes between the parties. We now proceed to the events with which we are immediately concerned in this appeal. On April 28, 1953, the appellant wrote a letter to the respondent claiming, under the provisions of s. 45 of the Delhi University Act, an arbitration with regard to various disputes mentioned in it. That section is in these terms: 1239

” Section 45.

Any dispute arising out of a contract between the University and any officer or teacher of the University shall, on the request of the officer or teacher concerned, be referred to a Tribunal of Arbitration consisting of one member appointed by the Executive Council, one member nominated by the officer or teacher concerned, and an umpire appointed by the Chancellor. The decision of the Tribunal shall be final and no suit shall lie in any Civil Court in respect of the matters decided by the Tribunal. Every such request shall be deemed to be a submission to arbitration upon the terms of this section, within the meaning of the Arbitration Act, 1940, and all the provisions of that Act, with the exception of section 2 thereof, shall apply accordingly.” By that letter the appellant appointed Professor M. N. Saha, the celebrated scientist, now deceased, an arbitrator and called upon the respondent to nominate another arbitrator. The disputes raised in this letter were, (a) that the appellant had been wrongfully deprived of the selection grade; (b) that by the appointment of Dr. Seshadri, as the Head of the Department of Chemistry, the appellant had been wrongfully superseded; (c) that his dismissal was wrongful. A copy of this letter was sent to Professor Saha. On May 2, 1953, the appellant again wrote to the respondent calling attention to the fact that he had already appointed Professor Salia an arbitrator and requiring it to appoint an arbitrator within fourteen days as provided under the law. On May 7, 1953, the respondent wrote to the appellant that his letter of April 28, 1953, had been considered by its Executive Council on April 30, 1953, and that the Council, for the reasons mentioned, to which it is not necessary to refer, did not propose to take any action in the matter. Thereafter, on May 18, 1953, the appellant addressed a further letter to the respondent in which he stated, ” as the said University had failed for 15 clear days to appoint after the service of my said notice “, meaning his notice of May 2, 1953, ” on the University, please take notice that I hereby

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appoint Professor M. N. Saba arbitrator appointed by me to act as the sole arbitrator and give his award.” The appellant also wrote in similar terms to Professor Saba asking him to proceed with the reference as he had become the sole arbitrator. On May 24, 1953, Professor Saba wrote to the respondent stating that as he had been appointed the sole arbitrator by the appellant, he fixed June 15, 1953, for the hearing of the case. On June 12, 1953, the respondent wrote to Professor Saba intimating that it had been advised that the appellant had no right to call for an arbitration and that the respondent did not recognise him (Professor Saba) as an arbitrator and also that he had no jurisdiction to act as one. Notwithstanding this Professor Saba started the arbitration proceedings on June 16, 1953. The respondent appeared by a lawyer before Professor Saba and repeated its objection to his jurisdiction to act as an arbitrator. Professor Saba overruled the respondent’s objection and held that he had jurisdiction to act as the sole arbitrator whereupon the representatives of the respondent retired from the proceedings which were then continued in their absence.

Professor Saba made an award which is dated June 17, 1953. The material portion of the award is in these terms The points requiring determination by me are as follows:-

1.Whether the Selection Grade of Professors was rightly withheld in the case of Dr. S. B. Dutt when it was given to all other professors of his standing and seniority.

2. Whether Dr. S. B. Dutt was appointed Professor and Head of the Chemistry Department of the University and was rightly removed from the Headship.

3 Whether the dismissal of Dr. Dutt by a resolution passed by the Executive Council on the 26th April, 1951, was mala fide and illegal and therefore wrongful and ineffectual.

4.Whether Dr. Dutt was harassed by the officials of the University and its effect.

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After giving the case my careful and earnest attention I find:

(a) The steps for giving the Selection Grade of Professors of the University to Dr. S. B. Dutt were wrongfully and without just cause not taken by the University and he has therefore been wrongfully deprived of the Selection Grade. (b) The terms of appointment of Dr. Dutt were that be would be also the Head of the Chemistry Department. His removal from Headship was wrongful.

(c) Dr. Dutt was wrongfully dismissed. His dismissal was ultra vires, mala fide and has no effect on his status. He still continues to be a professor of the University. (d) He has been subjected to harassment.”

At the request of the appellant, Professor Saha filed the award in the Court of the Sub-Judge, Delhi, on June 24, 1953. The respondent took various objections to it. The Sub-Judge overruled these objections and passed a decree on May 27, 1954, making the award, excepting a small portion thereof with which this appeal is not concerned, a rule of Court. The respondent filed two appeals from this decree, one in the Court of the senior Sub-Judge, Delhi, and the other in the Court of the District Judge, Delhi, as it was in doubt as to which was the proper Court to which the appeal lay. By an order made on November 26, 1954 the High Court withdrew both these appeals to itself for trial, and by its judgment dated January 15, 1955, allowed the appeals and set aside the award on the ground that it disclosed an error on the face of it. The present appeal is against this judgment.

Two points have been raised in this appeal, one by the appellant and the other by the respondent on a matter decided against it which will be referred to later. The appellant contends that the High Court was wrong in its view that the award disclosed an error on the face of it. The High Court had held that it was not open to the arbitrator “to grant Dr. Dutt a declaration that he was still a professor in the Univer-

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sity which no Court could or would give him.” The High Court felt that this declaration amounted to specific enforcement of a contract of personal service which was forbidden by s. 21 of the Specific Relief Act and therefore disclosed an error on the face of the award.

We are in entire agreement with the view expressed by the High Court. There is no doubt that a contract of personal service cannot be specifically enforced. Section 21, Cl. (b) of the Specific Relief Act, 1877, and the second illustration under this clause given in the section make it so clear that further elaboration of the point is not required. It seems to us that the present award does purport to enforce a contract of personal service when it states that the dismissal of the appellant ” has no effect on his status”, and ” He still continues to be a Professor of the University “. When a decree is passed according to the award, which if the award is unexceptionable, has to be done under s. 17 of the Arbitration Act after it has been filed in Court, that decree will direct that the award be carried out and hence direct that the appellant be treated as still in the service of the respondent. It would then enforce a contract of personal service, for the appellant claimed to be a professor under a contract of personal service, and so offend s. 21 (b).

It was said that this might make the award erroneous but that was not enough; before it could be set aside, it had further to be shown that the error appeared on the face of the award. The learned counsel contended that no error appeared on the face of the award as the reasoning for the decision was not stated in it. It was said that this was laid down in the well-known case of Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. (1). We were referred to the observations occurring in the judgment at p. 331 to the following effect:

” An error in law on the face of the award means, in their Lordship’s view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating

(1) (1923) L.R. 50 1. A. 324.

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the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.”

We are unable to agree that the Judicial Committee laid down the proposition that the learned counsel for the appellant ascribes to them. When they referred to the reasons for the judgment, they were contemplating a case where the judgment, that is, the award itself, did not disclose an error but the reasons given for it in an appended paper, did. They did not intend to say that no error can appear on the face of an award unless the reasons for the decision contained in the award were given in it. In our view, all that is necessary for an award to disclose an error on the face of it is that it must contain, either in itself or in some paper intended to be incorporated in it, some legal proposition which on the face of it and without more, can be said to be erroneous. This was the decision of the Judicial Committee in the Champsey Bhara & Co. case (1). As the award in this case directs specific enforcement of a contract of personal service, it involves a legal proposition which is clearly erroneous.

Another point raised on behalf of the appellant was that the portion of the award which held that his dismissal had no effect on his status and that he continued to be a professor was merely consequential and hence a surplusage and therefore an error disclosed in it would not vitiate the award. This contention seems to us to be unfounded. The award held that the appellant had been dismissed wrongfully and mala fide. Now, it is not consequential to such a finding that the dismissal was of no effect, for a wrongful and mala fide dismissal is none the less an effective dismissal though it may give rise to a claim in damages. The award, no doubt, also said that the dismissal of the appellant was ultra vires but as will be seen later, it did not thereby hold the act of dismissal to be a nullity and, therefore, of no effect. We are also clear in our mind that the contention about the offending portion of the award being a mere surplusage affords

(1) (1923) L.R. 50 I.A 324.

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no assistance to the appellant for it was not said on his behalf that the offending portion was severable from the rest of the award and should be struck out as a mere surplusage. It, therefore, has to remain as a part of the award and so long as it does so, it would disclose an error on the face of the award and make it liable to be set aside as a whole.

It was then contended that a declaration that the appellant continued in his service under the respondent in spite of his dismissal by the latter was a declaration which the law permitted to be made and was not therefore erroneous. It was said that such a declaration had in fact been made by the Judicial Committee in The High Commissioner for India v. I. M. Lall (1). This contention, in our view, also lacks substance. That was not a case based on a contract of personal service. Indeed the contract of the respondent in that case provided that the service was ” to continue during the pleasure of His Majesty, His Heirs and Successors, to be signified under the hand of the Secretary of State for India “. The respondent had been dismissed by an order made under the hand of the Secretary of State for India, and as he was liable to be dismissed at the pleasure of the Crown, he could base no complaint against his dismissal on the con- tract of service and did not, in fact, do so. He founded his suit on the claim that his dismissal by the Crown from the Indian Civil Service of which he was a member, was void and of no effect as certain mandatory provisions of the Government of India Act, 1935, had not been complied with. The Judicial Committee accepted this claim and thereupon made the declaration that the purported dismissal of the respondent was void and inoperative and he remained a member of the Service at the date of the institution of his suit. The declaration did not enforce a contract of personal service but proceeded on the basis that the dismissal could only be effected in terms of the statute and as that had not been done, it was a nullity, from which the result followed that the respondent had continued in service. All that the Judicial Committee did in

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this case was to make a declaration of a statutory invalidity of an act, which is a thing entirely different from enforcing a contract of personal service. The learned counsel for the appellant also referred, up, to Ram Kissendas Dhanuka v. Satya Charan Law (1), in support of his contention that the declaration in the form made in the award was legal. That was a case of a suit by the minority shareholders in a company against its directors for a declaration that an ordinary resolution of the company terminating the appointment of its Managing Agent was void and inoperative inasmuch as under art. 132 of the Articles of Association of the Company the Managing Agents could be removed by an extraordinary resolution only. The High Court had declared the resolution to be void and inoperative. The Judicial Committee maintained that declaration and rejected the argument that ” to affirm the continuance in force of the Managing Agent’s appointment amounted to specific enforcement of the contract of personal service and was a violation of s. 21(b) of the Specific Relief Act, 1877.” It is quite clear to us that this decision has no application to the case in hand. That was not a case in which specific performance of a contract of service was sought. In fact the servant, that is to say, the Managing Agent, was not a party to the action at all. As the Judicial Committee observed: ” It (the decree) merely prevents dismissal of the managing agents or termination of their appointment at the instance of a majority in violation of the articles of association of the company which the minority are entitled to have observed. As between the company and the managing agents it certainly has not the effect of enforcing a contract of personal service.” It was a case, as the Chief Justice of the Calcutta High Court said in his judgment, in Ram Kissendas v. Satya Charan (2) at p. 331 ” not to enforce a claim to employment with an employer, but a suit to prevent third persons interfering with the Company’s employees who are carrying out their contract of service with the company. In other words, it is not a suit to enforce a contract, but a suit to prevent the procurement of a breach of contract.” To

(1) (1949) L. R. 77 1. A. 128.

(2) (1945) 50 C.W.N. 331.

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such a suit, of course, s. 21 of the Specific Relief Act has no application.

The learned counsel for the appellant also contended ;that the present case was a case of an ultra vires act as I. M. Lall’s case (1) was and therefore governed by the same considerations. He relied for this purpose on that portion of the award which held that the ” appellant’s dismissal was ultra vires “. We find no basis for this contention. No point as to the dismissal of the appellant being ultra vires bad been referred to the arbitrator. The points for decision set out by the arbitrator do not refer to any question of the dismissal being ultra vires. Again the letter of the appellant, dated April 28, 1953, setting out the disputes of which he required decision by arbitration does not make out any case that the dismissal of the appellant by the respondent was ultra vires the latter’s incorporating statute. His point about the dismissal was that it had been malicious and therefore wrongful ; that it had been brought about by a resolution of the Executive Council of the respondent on the basis of the report (also called award) of the investigators, Sir S. Vardachariar and Bakshi Sir Tek Chand, procured by the Vice-Chancellor, Dr. Sen, by denying to the members of the Council any opportunity to discuss the merits of that report. His case on this point in his own words was this:

” When the award was put before the Executive Council Dr. Sen definitely prohibited all discussions of it on the ground that it was an award and suppressed those who desired to comment on it, feeling as they did that the decision, specially in the matter of the supposedly altered telegram was open to grave doubts. In regard to this, questions were asked but not answered.

If Dr. Sen had not wrongly disallowed discussion, I venture to say that the Council would not have agreed to a dismissal, or at any event any allegation of moral turpitude.”

It is clear therefore that the appellant was challenging his dismissal on the ground that the Vice-Chancellor, Dr. Sen, who, he said, was inimically disposed towards (I) (1948) L.R. 75 I.A. 225.

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him, had shut out all discussion on the question and procured a resolution for the dismissal of the appellant, and that because of such malicious and wrongful barring of discussion, the resolution was wrongful. It was not the appellant’s case before the arbitrator that the dismissal was ultra vires the statute or otherwise a nullity. We also find that this point was not advanced in the courts below. The last point raised on behalf of the appellant was based on s. 45 of the University Act. The terms of that section have been earlier set out. The contention of the learned counsel is that since the section says that any dispute arising out of a contract between the University and any officer or teacher of the University shall, on the request of the officer or teacher concerned, be referred to a Tribunal of Arbitration, a dispute as to dismissal and a claim to reinstatement might be referred to arbitration under it, and if that could be done, then, the award might properly direct the dismissed professor to be reinstated. For this part of his argument the learned counsel referred us to Western India Automobile Association v. Industrial Tribunal, Bombay (1). It had been held there that an Industrial Tribunal had power in an award made on a reference under the Industrial Disputes Act, 1947, to direct reinstatement of discharged employees. The learned counsel referred us to the following observation occurring in -the judgment of the Federal Court at p. 332 :

” Any dispute connected with the employment or non- employment would ordinarily cover all matters that require settlement between workmen and employers, and whether those matters concern the causes of their being out of service or any other question and it would also include within its scope the reliefs necessary for bringing about harmonious relations between the employers and the workers.” It was contended that, as in the Western India Automobile Association case (1), the words ” any dispute ” in s. 45 of the University Act would include a dispute as to a claim for reinstatement and would therefore give the arbitrator power to order reinstatement. We do not think that any analogy can be drawn from the,

(1) [1949] F.C.R. 321.

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wording of the Industrial Disputes Act. That Act is concerned with considerations which are peculiar to it. The proceedings before a Tribunal constituted under that Act cannot be said to be arbitration proceedings nor its decision an award, though called an award in the Act, in the sense in which the words ” arbitration proceedings ” and ” award ” are used in the Arbitration Act. An award under the Industrial Disputes Act cannot be filed in Court nor is there any provision for applying to Court to set it aside. All considerations that apply to an award under the Industrial Disputes Act, cannot be said to apply to an award made under the Arbitration Act. Furthermore, under s. 45 of the University Act, the arbitration held under it is to be governed by the provisions of the Arbitration Act, 1940, and the validity of an award made under such an arbitration has, therefore, to be decided by reference to the rules applying to that Act, one of such rules being that the award should not disclose an error on its face. For these reasons, in our view, this argument is unfounded.

This disposes of all the points raised on behalf of the appellant and brings us to the contention raised on behalf of the respondent. That contention was that the appointment of Professor Saha as the sole Arbitrator was illegal. It was said that the respondent claimed to appoint Professor Saha the sole arbitrator under s. 9 of the Arbitration Act but that section could only apply where the reference was to two arbitrators, one to be appointed by each party, while the proper interpretation of s. 45 of the University Act was that the arbitration was to three Arbitrators, one nominated by each of the parties and the third by the Chanceller of the University. This point was decided against the respondent by the High Court. As, however, the appeal must be dismissed for the reason that the award contains an error on the face of it, as we have earlier found, it becomes unnecessary to decide the point raised by the respondent. We, therefore, do not express any opinion on this question. In the result this appeal is dismissed with costs throughout. Appeal dismissed.

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