1- A

KUPPA GOUNDAN & ANR.

v .

M.S.P. RAJESH

May 5, 1966

[M. HIDAYATULLAH, V. RAMASWAMI AND J.M. SHELAT, JJ.)

Criminal Procedure Code, 1898 (Act 5 of 1898). s. 476-Trial con eluded-Maintainability of the complaint for perjury.

At a trial the appellants gave evidence against the respondent.

After the conlusion of the trial the respondent filed a petition in the court of the Magistrate under s. 476(1) Criminal Procedure Code, praying for the prosecution of the appellants for giving false evidence under s. 193 Indian Penal Code, and adduced evidenee in support of his contention. The Magistrate thought that in the interest of justice the, appellants should be prosecuted and accordingly filed a complaint. The appellants contended that the complaint was not maintainable, because the trying Magistrate had not followed the procedure under s. 479-A, Criminal Procedure Code and it was therefore not' open to the Magistrate to take recourse to the provisions of s. 476.

HELD: The prosecution of the appellants under the provisions of s. 476 Criminal Procedure Code by the Magistrate after the conclusion of the trial was legally valid and was not affected by the bar of cl. (6) of s. 479-A. Criminal Procedure Code. [377G]

The bar of cl. (6) will not apply to a case where perjury is detected not merely with reference to the evidence adduced at the trial but with reference to the evidence adduced in some other distinct proceeding not then brought before the court or because there is some other material subsequently produced after the conclusion of the trial and delivery of judgment which renders the prosecution for perjury essential in the interests of justice. [377 F]

Shabir Hussein Bholu, v. State of Maharashtra, [1963] Supp. 1 S.C.R. 501, explained and distinguished.

C.P. Kasi Thevar v. Chinnia'i Konar, A.LR. 1960 Mad. 77 and In re Gnanamuthu A.LR. 1964 Mad. 446, approved.

Joi Bir Singh v. Malkhan Singh, A.I.R. 1958 All. 364, Parsotam Lal Vir Bhan v. Madan Lal Bas'iambar Das, A.LR. 1959 Punj. 145 and Amolak v. State. A.LR. 1961 Raj. 220, disapproved.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 69 of 1966.

Appeal by special leave from the judgment and order dated December 9, 1965 of the Madras High Court in Criminal Revision Case No. 1261 of 1964 and Criminal Revision Petition No. 1235 of 1964.

R. Thiagarajan, for the appellants.

Purshottam Trikamdas and T. V. R. Tatachari, for the respondent.

374 Sl'PREME COL"RT REPORTS

(1966) Sl:PP. S.C.R.

The Judgment of the Court was delivered by Ramaswami, J. The 2nd petitioner Kuppuswami lodged a a complaint with Y ercaud Police on October 12, 1963 alleging that the respondent, M. S. P. Rajesh and other persons had formed an unlawful assembly and committed offences of house trespass, mischief and causing hurt at 10 p.m. on October 11,

1963. The complaint was the subjct-matter of investigation by the police who did not present a charge-sheet against respondent. M.

Rajesh but filed a charge-sheet against 4 other persons under ss.

323. 325 and 448, Indian Penal Code in C.C. No. 3097 i 1963 in the Court cf Sub-Magi>tr•1te 3.

Sa'em. The case was tried by the Sub-Magistrate \\'ho ultimately acquitted all the accused by his judgment dated December 13, 1963. In the course of evidence at that trial the !st petitioner was examined as P.W.

I and 2nd petitioner as P.W. 2 and it is alleged by the respc'ndent that the petitioner gave false evidence to the effect that the respondent was also among the trespassers and assailants and that he was armed with a gun which another accused took from him. After the conclusion of the trial the rpondent ti!ed a petition in the court of

the Magi5tratc under s. 476(1), Criminal Procedure Code alleging D that on October 11. 1962 he along with certain other Directors. had attended a meeting of the Board of Diccctors of Chembra Peak Estate Ltd. from 4.30 p.m. to 5.15 p.m. at Bangalore and that he was not at Yercaud on October 11. 1963. and prayed for the prosecution of the petitioners for giving false evidence under s. 193, Indian Penal Code. The respondent produced a copy of the Draft Minutes of the Board meeting and also cited certain

witn~"es in support of his case. After co-nsidering the matter, the Sub-Magistrate of Salem held that he was satisfied that the respondent could not have been present at the alleged occurrence on

October 11, 1963 at Yercaud and that P.W.s 1 and 2 deliberntely committed perjury and implicated Mr.

Rajesh as among the assailants. The Suh-Mag; strate thought that in the interest of justice the petitioners should be prosecuted under s. 193, Indian Penal Code and accordingly filed a complaint against the petitioners under s. 193, Indian Penal Code in the Court of District Magistmte (Judicial), Salem. The petitioners contended that the complaint was not maintainable in law because the tryin!? Magistrate

G had not followed the procedure under s. 479-A. Criminal Procedure Code and it was therefore not open to the Magistrate to take recourse to the provisions of s.

476. Criminal Procedure Code. By his order dated Februry 10 1964 the fli<trirt fltaistrate discharged the petitioners holding that the complaint was not sustainable i, view of the decision of t'1is Court in Shabir Hmsain

B/10/11 v. State of Mal1arashtra('). Thereupon the respondent filed Crimina.1. R.C. No. 1261 of 1964 in the Madras High Court aainl H the order of the District Magistrate (Judiciall, Salem. B); his

(l) [1933] s, p~. I S.C.R. 5Jl.

,, ' I

KOPPA GOUNl•AN v. RAJE8R (Ram.a1rwmni, J.) 375

judgment dated December 9, 1965 Anantanarayanan'. J. set aside the orders of •!:Je District Magistrate (Judicial) and drrected that the case should be taken up by the District Magistrate and the trial proceeded with in accordance with law.

This appeal is brought, by special leave, from the order of the Madras High Court dated December 9, 1965 in Crl. R.C. No. 1261of1964.

The question of law arising in this case is-what is te true meaning and scope of s. 476, Criminal Procedure Code m the context of s. 479-A( l) and (6), Criminal Procedure Code with regard to a prosecution authorised by a Court m respect of an offence of prejury committed before it in the course Clf the trial?

Chapter XXXV of the Code of Criminal Procedure prescribes the procedure to be followed for prosecution of offenders in case cf certain offences affecting the administration of justice. Section 4/6 sets out the procedure for prosecution of offenders for offences enumerated in s. 195(l)(b) and (c) of the Code of Crimi•

nal Procedure. If a Civil, Revenue or Criminal Court is of opinion, that it is expedient in the interests of justice that an enquiry should be made into any offence referred to in s. 195(1)(b) or (c) which appears to have been committed in or in relation to a proceeding in that Court, such Court may, after such preliminary inquiry, if any. as it thinks necessary, record a finding to that effect and make a complaint thereof in writing and forward the same to a Magistrate of the first class having jurisdiction. Section 476-A authorises a superior Court to make a complaint where a Subordinate Court has omitted to do so in respect of offences and in the circumstances mentioned in s. 476(1). Section 476-B provides for a right of appeal against the order making or refusing to make a complaint. Sections 478 and 479 deal with the procedure which may be followed in certain grave cases. Section 479-A which was added by the Code of Criminal Procedure (Amendment) Act 26 of J 955 by the first sub-section (in so far as it is material) provides as follows :

"479-A. (!) Notwithstanding anything contained in sec• tions 476 to 479 inclusive, when any Civil, Revenue or Criminal Court is of opinion that any person appearing before it as a witness has intentionally given false evidence in any stage of the judicial proceeding or has intentionally fabricated false evidence for the purpose of being used in any stage of the judicial proceeding, and that, for the eradication of the evils of perjury and fabrication of false evidence and in the interests of justice, it is expedient that such witness should be prosecuted for the offence which appears to have been committed by him, the Court shall, at the time of the delivery of the judgment or final order disposing of such proceeding, record a finding to that effect stating its reasons therefor and J,/8fi8Cf-'.?G

376 SUPl\QE OOIJBT l\EPOl\TS (1966)

SUPP.

8.C.11.

may, if it so thinks fit, after giving the witness an opportunity A of being heard, make a complaint thereof in writing signed by the presiding officer of the Court setting forth the evidence which, in the opinion of the Court. is false or fabricated and forward the same to a. Magistrate of the first class having jurisd; ction, and may ..................... ".

Sub-section (6) of this section enacts as follows: -- "(6) No proceedings shall be taken under sections 476 to 479 inclusive for the prosecution of a person for giving or fabricating false evidence. if in respect of such a person proceedings may be taken under this section.

The scheme of s. 479-A is to enact a special procedure for the more expeditious and effective manner of dealing with certain C cases of perjury and fabrication of false evidence by witnesses in the course of judicial proceedings. There is, however. a necessary condition for the application of s. 479-A, Criminal Procedure Code. The condition is that the Court before it delivers its judg ment or at any rate at the time of delivering the judgment must form an opinion that a particular witness or witnesses, is, or, are D giving false evidence, if the court could not fom1 any opinion about the falsity of the evidence of the witness appearing before it, then certainly the court cannot at the time of delivering its judgment, record any finding about the same. It is manifest that a court can come to a conclusion that a witness is false only when there are materials placed before it to justify that opinion. If no materials are placed before the court to enable the court to form E an opinion that a witness is giving false evidence, then certainly it could not form that opinion. In the present case, the respondent produced material before the trial court on December 23, 1963 after the conclusion of the trial that the petitioners had given false evidence in the case and the respondent produced the necessary documents along with an application for proceeding against the petitioners under s. 476. Criminal Procedure Code. Till those J documents were produced there was no opportunity or occasion for the magistrate to form an opinion about the falsity of the evidence adduced by the petitioners. It is, therefore, manifest that at the time when the judgment was delivered the magistrate had no material before him to form an opinion that the petitioners had given false evidence. It is only after the respondent had made his application on December 23, 1963 and brought the necessary G material to the notice of the court that the falsity of the evidence of the petitioners became apparent and the magistrate was in a position to form an opinion about the falsity of the evidence given by the petitioners. It is, therefore, clear that s. 479-A will not be applicable on the facts of this case, and if the provisions of s. 479-A will not apply on the facts of this case it follows that the H

bar contemplated by cl. (6) of that section \viii not be applicable.

The reason is that cl. (6) can be invoked only in cases in which

KUPPA GOUNDAN 1), RAJESH (Ramaswami, J.) 377

s. 479-A(l) will be applicable. The crucial words of cl. (6) are "!f

in respect of such a person proceedings may be taken under this section". It is clear that the bar under s. 479-A (6) refers not to the legal character of the offence per se but to the possibility of action' under s. 479-A upon the facts and circumstances of the particular case. If, for instance, material is made avaiabl~ to the court after the judgment bad been pronounced, rendermg 1t clearly beyond doubt that a person had committed perjury during the trial and that material was simply unavailable to the Court before or at the time of judgment, it is very difficult to see how the court could have acted under s. 479-A, Criminal Procedure Code at all. It cannot be supposed that the legislature contemplated that such a case of perjury, however, gross should go unpunished in such circumstances. It appears to us tha.t the true interpretation of the language of cl. (6) of s. 479-A is that it does not operate as a bar to the prosecution for perjury in a case of this

description. Take, for instance, the trial of 'A' for the murder of 'B' in the Sessions Court where 'C', 'D' and 'E' gave evidence that they actually saw 'A' committing the murder of 'B'. Suppose at the conclusion of the trial and after delivery of judgment by the Sessions Court 'B' is found alive and there is uncontestable evidence to show that 'A' was falsely charged for the murder of 'B'. Is it to be contemplated tha.t in such a case there is no remedy available to the Court to prosecute C, D, and E for perjury under the provisions of s. 476, Criminal Procedure Code, though action cannot be taken, in the circumstances of the case, under s. 479-A, Criminal Procedure Code? In our opinion, such a startling consequence was not contemplated by Parliament and the bar of cl. (6) of s. 479-A was intended only to apply to cases of perjury and fabrication of false evidence in which the trying Magistrate could have acted under s. 479-AO). In other words, the bar of cl. (6) will not apply to a case where perjury is detected not merely with reference to the evidence adduced at the trial but with reference to the evidence adduced in some other distinct proceeding, not then brought before the court or because there is some other material subsequently produced after the conclusion of the trial and delivery of judgment which renders the prosecution for perjury essential in the interests of justice. Applying the principle in the present case we are of opinion that the prosecution of the petitioners under the provisions of s. 476, Criminal Procedure Code by the Magistrate after the conclusion of the trial is legally valid and is not affected by the bar of cl.

(6) of s. 479-A, Criminal Procedure Code.

On behalf of the appellants Mr. Thiagarajan referred to the decisi.3n of this Court in Shabir Hussein Bholu v. State tJf Maharashtra('). But the principle of that decision does not afford any assistance to the appellants in this case. It appears that the

~78

SUPREME OOURT REPORTS [1966j Sl:PP. 8.C.R.

appellant in that case appeared as a witness in a jury trial for murder. Before the CoW't he gave a statement contradictory to the I one he had given before the committing oourt. After the conclusion of the trial and delivery of judgment the Sessions Judge passed a separate order for prosecution of the appellant for intentionally giving false evidence under s. 193, Indian Penal Code.

It was held by this Court that the provisions of s. 479-A had not been complied with and no cogni1.ancc could be taken of the offence. Two conditions were laid down for the exercise of the powers under s. 479-A, (i) the court must form an opinion that the person has committed one of the two categories of offences referred to in s. 479-A, and (ii) the Court must come to the conclusion that for the eradication of the evils of perjury etc. and in the interests of justice it is expedient that the person be prosecuted. This opinion and conclusion must be arrived at at the time of c

the delivery of the judgment or final order in the trial; the court cannot later on resort to s. 476 and make a complaint against the witnesses. The provisions of s. 479-A were held applicable to the case and the fact that the trial was with the aid of a jury did not preclude the Sessions Judge from recording the findings required by s. 479-A. While considering whether action should be taken under s. 479-A it was open to the Sessions Judge to say whether the evidence tendered at the trial was true or false. It is manifest that the material in that case was produced before the Sessions Court for coming to the conclusion that the appellant had committed perjury and so the procedure contemplated in s. 479-A(lJ was applicable and since the Sessions Judge did not proceed under that section, though he could have done so, the bar contemp'ated by cl. (61 of s. 479-A operated and no action could have been taken under s. 476, Criminal Procedure Code. The ratio of that decision is not applicable to the present case because the material facts are different. It is necessary to add that in Shabir Hussein Bholu v. State of Maharashtra(') this Court observed that if the Judge is unable to come to a conclusion that the statement made at the trial is false then provisions of s. 479-A (!) would not be applicable. At page 512 of the Report it was observed by this Court as follows:

"But. for considering the applicability of s. 479-A(l) what has to be borne in mind is that in a jury trial it is possible for the Judge to come a concluion that the statement made at the trial is false. If he comes to that conclusion then, as rightly observed in Badullah's case

(A.LR. 1961 All. 397\, he has no option but to proceed under s. 479-A(l), Cr. P.C. The question then is whether he could act 1Jnder this provision if he is unable to form an opinion one way or the other as to whether the evidence tendered at the trial is false

or the evidence before the committing Magistrate is false.

H What would be the position in S~£~ a case? If the Eo~~~:

A ings before the committing Magistrate must be held to be entirely separate proceedings then we agree with the Allahabad High Court that s. 479-A(I) would not apply."

There is divergence of opinion among the various High Courts on the question of Jaw presented for determination in this case. In Jai Bir Singh v. Malkhan Singh and another('), it was heM by Sahai, J. that the bar of s. 479-A(6) applies to all cases of perjury, viz., (]) those where the perjury or the fabrication of false evidence has been detected by the court when the judgment is pronounced, and (2) cases where the perjury or fabrication of false evidence does not come to light till after the judgment has been pronounced and it was not open to the Court to proceed under s. 476, Criminal Procedure Code for prosecution in the latter class of cases. The same view has been taken by the Punjab High Court in Parshotam Lal L. Vir Bhan v. Madan Lal Bishambar Das(') and the Rajasthan High Court in Amolak v.

State('). A contrary view has been expressed by the Madras High Court in C. P. Kasi Thevar v. Chinniah Konar(') and In re. Gnana

muthu(').

For the reasons already expressed we are of opinion that the decision of the Madras I i; gh Court in C.P. Kasi Thevar v. Chinniah Konar(') and In re. Gnanamuthu(') represents the correct law on the point.

For these reasons we hold that there is no merit in this appeal which is zcordingly dLmissed.

 1'1 A.LR. 1958 All. 364. ,:sl A.LR. 1961 Re.jastha•1 220.

Appeal dismissed.

( 2 } A.LR. 1959 Punjab 145.

I') A.LR. 19GO Mad. 77. e1 A,.I.R. 196-! i.\'Iad. 440.

A

KUPPA GOUNDAN & ANR

S.P. RAJESH

M. HIDAYATULLAH

V. RAMASWAMI

M. SHELAT, JJ.

Criminal Procedure Code, 1898

s. 476

s. 476(1)

Criminal Procedure Code

s. 193

Indian Penal Code

s. 479

Criminal Procedure Code

s. 476

s. 476

Criminal Procedure Code

s. 479

Criminal Procedure Code

ss.

323

Indian Penal Code

s. 476(1)

Criminal Procedure Code

s. 193

Indian Penal Code

s 1 and 2

s. 193

Indian Penal Code

s. 193

Indian Penal Code

s. 479

Criminal Procedure Code

s.

476

Criminal Procedure Code

s. 476

Criminal Procedure Code

s. 479

Criminal Procedure Code

Chapter XXXV of the Code

Section 4

s. 195(l)(b)

s. 195(1)(b)

Section 476

s. 476(1)

Section 476

Sections 478 and 479

Section 479

sections 476 to 479

s. 479

s. 479

Criminal Procedure Code

s. 476

Criminal Procedure Code

s. 479

s. 479

s. 479

s. 479

s. 479

s. 479

Criminal Procedure Code

s. 479

s. 476

Criminal Procedure Code

s. 479

Criminal Procedure Code

s. 479

s. 479

s. 476

Criminal Procedure Code

s. 479

Criminal Procedure Code

s. 193

Indian Penal Code

s. 479

s. 479

s. 479

s. 476

s. 479

s. 479

s. 479

s. 479

s. 479

s. 476

Criminal Procedure Code

s. 479

s. 479

s. 479

s. 479

s. 479

s. 476

Criminal Procedure Code


INDIAN CHEMICAL PRODUCTS

ST A TE OF ORISSA A ANR.

May 5, 1966

(J. R. MUDHOLKAR, R. S. BACHAWAT AND RAGl!UBAR DAYAL.. JJ.J

Compan11 Law-DijJe1"ence between "transmission" and "transfer" of shares-Ownership of shares passing by operation of !au.~ Board of directors whether can refu.se amenclment of share register.

Indian Companies Act, 1913, s. 38- Court's power under-Proper exercise of.

As a result of constitutional changes following the Indian Independence Act, 1947, the ownership of the public propertiea of the Y:aharaja of the Mayurbhanj includins certain shares in the appellant company passed to the State of Orissa. Although tb.e State had acquired title to these shares by operation of law, it also obtained D from the Maharaja by way of abundant caution, a deed transferring these shares to it. In 1950, the State Government lodged the share scrip and transfer deed with the company and requested it to make the necessary chanies in the share register. Despite repeated requests, however, the directors of the company refused to do so.

In 1955 the State filed an appliootion under s. 38 of the l.ndian Companies Act, 1913 in the High Court of Orissa, asking for re<:, tificution of the share l'E'(!, ister by inserting its name as the holder or the share in place of the Maharaja. The High Court allowed the appli- E cation and passed a supplemental order directing the filing of the notice of rectification with the Reistrar within a fortnight. The company's appeal before the Division Bench failed, whereupon it appealed to this Court by specialleave.

It was urged on behalf of the appellant company, inter alia, that under Art. 11 of its Articles of Association as well as under cl. 22 of Table A read with art. 1-A the diredorn has power to refuse registration of the transfer.

HELD: (i) In Table A which was attracted by art. 1-A of the company's Articles of Association, the word 'transmiaaion' is put in contradistinction to the word 'transfer'. One means a transfer by the act of the parties, the other a transmission by devolution of law.

Art. If refers to transfers. A devolution of title by operation of law is not within its purview. Being a restricth-e provision the article must be strictly construed. In the instant case, the title to the shares 6 vested in the State of Orissa by operation of law and the State did not require an instrument of transfer from the Maharaja to complete its title. Article 11 docs not confer upon the Board of directors a power to refuse recognition of such a devolution of title. [383G-384Cl.

In re Beritham Mills Spinning Compan11. (1879) 11 Ch. D. 900. referred to.

(ii) Clause 22 of the regulations in Table A read with Art. 1-A B confers power on the Board of directors to decline registration of transmission of title In consequence of the death or insolvency of a

A .

.~·

INDIAN CHm.t:. l'RODTJCTS v. ORISSA (Bachawat, J.) 381

member. In the instant cas'e there was no transmission of title in consequence of death or insolvency and clause 22 had, therefore no appiicatwn. [384 DJ

(iii). In so far as the claim of the State was based on the transfer deed it fell within the purview of Art. 11. But the refusal of the board of directors to register the transfer under that article was ma!a fide. The power under that article was a discretionary power.

The directors must exercise thaV power reasonably and in good faith. The Court can control this discretion if they act capriciously or in bad faith. [384 E-F; 385 C-D]

(iv) The name of the State of Orissa had without sufficient reason, been omitted from the register, and there was default in not entering on the register the fact of the Maharaja having ceased to be a member. The Court's jurisdiction under s. 38 was, therefore, attracted. The High Court rightly ordered the rectification in the exercise of its summary powers under s. 38. The jurisdiction created by s. 38 is very beneficial and should be liberally exercised.

[385G]

CIVIL APPELLATE JURISDICTION; Civil Appeal No. 303 of 1963.

Appeal from the judgment and order dated September 5, 1960 of the Orissa High Court in Appeal under Orissa High Court Order No. 4 of 1956.

N. C. Chatterjee, R:111adev Chaudhuri, G. S. Chatterjee and S. C. Majumdar, for the appellant.

C. K. Daphtary, Attorney-General, N. D.

Karkhanis and R. N. Sachthey, for respondent No. 1.

The Judgment of the Court was delivered by Bachawat, J. On November 29, 194 7, the Indian Chemical Products, Ltd., a limi.ted company, was incorporated having its registered offices in Baripada, Mayurbhanj and in the town of Calcutta. Its authorised capital is Rs. 25 lakhs divided into 25,00U shares of Rs. l 00 each. The company has seven share-holders.

The Maharaja of Mayurbhanj subscribed and paid for 7,500 shares. The remaining six shareholders hold 150 shares only. All the shareholders are signatories to the memorandum of association of the company. The State of Orissa claims that by reason of the constitutional changes since the declaration of independence, all the shares held by the Maharaja of Mayurbhanj have now vested in it by operation of law. The State also based its claim to the shares on a formal instrument of transfer executed by the Maharaja. On March 16, 1950, the Government of Orissa lodged the share scrip and the transfer deed with the company, and requested it to make the necessary changes in the share register. The Government as also the Maharaja, through his agent, the Imperial Bank of India, repeatedly requested the company to register the Secretary to the Government of Orissa,, Finance Department as the holder of the shares in place of the Maharaja.

There was protracted correspondence in the matter for over three L/S5SCI-26(a)

38:!

RCPREME COUR'l' REPORTS i.1966 j 8L'l'P. <.C.R.

years and eventually on May 16, 1953, the board of directors of A the company refused to register the transfer. On December I, 1953, Sri S. K. Manda!, attorney for the State of Orissa, requested the company to record the name of the State as the owner of the shares in the share register, but the company declined to do so.

On February 9, 1955, the State of Orissa filed an application under s. 38 of the Indian Companies Act, 1913 in the High B Court of Orissa asking for rectification of the share register by inserting its name as the holder of the shares in place of the Maharaja. The company and the Maharaja were impleaded as respondents. The application was contested by the company only.

On November 22, 1956, Ray, J. allowed the application. On September 13, 1957, he passed a supplemental order directing the filing of the notice of rectification with the Registrar within a C fortnight. On September 5, 1960, a Division Bench of the High Court dismissed the appeal preferred by the company. The company now appeals to this Court on a certificate granted by the High Court.

Both courts concurrently held that (I) the tit'e to the shares vested in the State of Orissa by operation of law; (2) the refusal of D the board of directors to register the transfer was ma/a fide; (3) the State of Orissa was entitled to rectification of the share register and a proper case for the exercise of the Court's jurisdiction under s. 38 of the Indian Companies Act. 1913 had been made out; (4) the petition was not liable to be dismissed on the ground that the State had asked the company to register the name of the Secretary to the Government of Orissa, as the share- E holder in place of the Maharaja. The appellate Court also held that under the articles of association of the company the board of directors had no power 10 refuse registration of a transfer where the transfer was by operation of law. The appellant challenges the correctness of these findings.

The courts below concurrently found that the 7,500 shares F were held by the Maharaja in his capacity as ruler of the State of Mayurbhanj. This finding is amply supported by the documentary evidence on the record and is no longer challenged. The State of Mayurbhanj was one of the fcudawry States of Orissa under the suzerainty of th•; British Crown. As from August 15. 1947, with the declaration of independence the paramountcy of the British Crown lapsed. Thereafter, steps were taken for the integration of G the State with the Dominion of India. On October 17, 1948, the Maharaja of Mayurbhanj signed an agreement for the merger of the Stnte with the Dominion. By art. I of this agreement, the Maharaja c0mpletly ceded to the Dominion his sovereignty over the State of Mayurbhanj as from November 9, 1948.

Article 4 of the agreement allowed the Maharaja to retain the H ownership of his private properties only as distinct from the State properties. On and from November 9. 19-l8. as a necessary

,. .

consequence of the cesser of sovereignty all the public properties of the State including the 7 ,500 shares in the company vested in the Dominion. By operation of law in consequence of the change of sovereignty, all the public properties of the State which were vested in the Maharaja as the sovereign ruler devolved on the Dominion as the succeeding sovereign.

As from January 1. 1949, the Government of India in exercise of its powers under s. 3(2) of the Extra Provincial Jurisdiction Act (47 of 1947) delegated to the Government of Orissa the power to administer the territories of the merged State. On

August 1, 1949. the States Merger (Governors' Provinces) Order, 1949 came into force, and in consequence of s. 5(1) of the Order, all property vested in the Dominion Government for purposes of governance of the merged State became from that date vested in the Government of Orissa, unless the purposes for which the property was held were central purposes. By a certificate dated November 10, 1953, the Government of India declared that the 7,500 shares were not held for central purposes. Under the Constitution which came into force on January 26, 1950, the territories of the merged State were included in the State of Orissa. By reason of these successive constitutional changes, the shares became vested in the State of Orissa. The State is now the legal owner of the shares and the directors of the company are bound to enter its name in the register of members, unless there is ome restrictive provision in the articles authorising them to refuse the registration.

The company contends that under its articles, the directors have the power to refuse the registration. lt relies on art. 11. which reads:

"The Board of Directors shall have full right to refuse to register the transfer of any share or shares to any person without showing any cause or sending any notice to the transferee or transferor.

The Board may refuse to register any transfer of shares on which the Company has ], ien."

Article 1-A attracts the regulations in Table A of the First Schedule to the lndian Companies Act, 1913 so far as they are applicable to private companies and are not inconsistent with the

articles. The regulations in Table A make a distinction between transfer and transmission of shares. in respect of a transfer, they re4uirc that the instrument of transfer shall be executed both by the transferor and the transferee. A transmission by operation of law in not such a transfer. In In re.

Bentham Mills Spinning Company('), James. L.J. said "In Table A the word 'transmission'

(') (!879) 11 Ch. D. 000. ""'

SUPREME OOURT REPORTS (1966]

SUPP.

8.C'.R.

A is put in contradistinction to the word 'transfer'. One means a transfer by the act of the parties, the other means transmission by devolution of law." Article 11 refers to transfers. A devolution of title by operation of law is not within its purview. Being a restrictive provision, the article must be strictly construed. In thcinstant case, the title to the shares vested in the State of Orissa by B operation of law, and the State did not require an instrument of transfer from the Maharaja to complete its title. Article 11 does not confer upon the board of directors a power lo refuse recognition of such a devolution of title. We may add that we express no opinion on the question whether such an article applies to an involuntary transfer of shares by a Court sale having regard to the provisions of 0.21, r. 80 of the Cede of Civil Procedure with re- 0 gard to the execution of necessary documents of transfer.

Clause 22 of the regulations in Table A read with art. 1-A confers power upon the board of directors to decline registration of transmission of title in consequence of the death or insolvency of a member. In the instant case, there is no transmission of title in consequence of death or insolvency, and clause 22 has no D application. Under the articles, the directors had therefore no power to refuse registration of the devolution of title on the State of Orissa by operation of !aw in consequence of the constitutional changes.

Though the State of Orissa had acquired title to the shares by operation of law, by way of abundant caution it obtained a g deed of transfer and lodged it with the company together with the share scrip. The transfer deed was duly stamped and complied with all the formalities required by law. The claim of the State of Orissa based upon the transfer deed was within the purview of Art. 11. Even with regard to this claim, the Courts be.ow concurrently held that the board of directors acted ma/a fide in refusing to register the transfer. This finding is amply supported by the materials on the record. In spite of the fact that the State had filed F with the company a certificate of the Collector of Stamp Revenue. West Bengal, that no stamp duty was payable on the transfer, the company raised the objection that the transfer deed must be stamped. To avoid this objection, the Government stamped the deed and again lodged it with the company. For over three years. the directors de1aycd registration of the transfer on frivolous G pretexts. On May 16, 1953, the directors without assigning any reason declined to register the transfer. Before the High Court, the company asserted J.hat the registration was refused because the Maharaja of Mayurbhanj was under an obligation to execute an agreement conferring valuable rights on the company and the

State of Orissa had failed to honour this obligation. Reliance waS' H placed on cl. 6 of the company's memorandum of association, which stated that the company and the Maharaja proposed to

• •

. 0

DIDIAN CHEM. rRODUCTS v. ORISSA (Bc/wwat, J.) 385

cnkr into an agreement and a copy of the proposed agreement was annexed. Uause 6 shows that there was a proposal between the parties to enter into an agreement, but there was no concluded aoreemcnt between them, nor was there any binding obligation on

the Maharaja to execute an agreement.

The directors could not use their power of declining to register the transfer under Art. I I for the purpose of forcing the State of Orissa to enter into the proposed agreement. Actually. the reason given at the trial was an afterthought. The Imperial Bank of India representing the Maharaja was pressing for registration of the transfer.

By its letter dated March 17. 1953, the company assured the Bank that the registration would be effected shortly. Nevertheless, on May

16. 1953 the directors capriciously refused to register the transfer .

The power under Art. 11 to refuse registration of the trans fer is a discretionary power. The directors must exercise this power reasonably and in good faith. The Court can control their discretion if they act capriciously or in bad faith. The directors cannot refuse to register the transfer because the transferee will not enter into an agreement which the directors conceive it to be for the interests of the company.

We cannot accept the contention that the petition was liable to be dismissed because the State of Orissa had asked for registration in the name of the Secretary, Finance Department. No such objection was taken by the company, although it had taken numerous other objections. Moreover, by .Jetter dated December I,

1953, Shri S. K. Manda], the attorney for the State of Orissa, had definitely called upon the company to record the name of the State as the owner of the shares in the share register. In spite of this letter. the company refused to make the necessary registration.

The Maharaja of Mayurbhanj has ceased to be the owner of the shares. The State of Orissa. is now their owner, and has the legal right to be a member of the company and is entitled to say that the company should recognise its membership and make an entry on the register of the fact of its becoming a member and its predecessor-in-title having ceased to be a member. The name of the State of Orissa has, without sufficient reason, been omitted from the register and there is default in not entering on the register the fact of the Maharaja having ceased to be a member.

The Court's jurisdiction under s. 38 is, therefore, attracted. The High Court rightly ordered the rectification in the exercise of its summary powers 11nder s. 38. The jurisdiction created by s. 38 is very beneficial and should be liberally exercised. We see no reason why the Court should deny the applicant relief under s. 38.

The directors of the appellant company on the most frivolous of objections have prevented the State of Orissa from becoming a

SUPREMY. COt'liT REPORT/oi i 1966) SUPP. '.<·.n

member for the la<t 16 years. It is a matter of regret that justice has been obstructed so long. There is no merit in this appeal.

The appeal is dismissed with costs. The appellant comp;1ny do forthwith carry out the order of rectiflcation passed by the Courts below in case the order has not been carried out yet.

Appeal dismissed.

,..

'.)

';-

.i j:

' t

INDIAN CHEMICAL PRODUCTS

R. MUDHOLKAR

R. S. BACHAWAT

RAGl!UBAR DAYAL

Indian Companies Act, 1913

s. 38

to the State of Orissa. Although

s. 38

Companies Act, 1913

Art. 11

cl. 22

art. 1

art. 1

Article 11

Clause 22

Art. 1

clause 22

Art. 11

s. 38

s. 38

s. 38

s. 38

Indian Companies Act, 1913

s. 38

Companies Act

Article 4

s. 3(2)

s. 5(1)

art. 11

Article 1

Article 11

Article 11

Clause 22

art. 1

clause 22

Art. 11

cl. 6

Art. 11

s. 38

s. 38

s. 38

s. 38


ABHOY PADA SAHA

v .

bUDHlR KUMAR MONDAL

May 5, 1966

[A. K. SARKAR, C. J .. J. R. MUDHOLKAR, R. S.

BACHAWAT,

J M. SHELAT AND RAGHUBAR DAYAL, JJ.J

Contruction (Sohedn!ed Castes) 1950.

Part 13, Item 40- "Sunris excbudin§" Sahns", Scope of.

C When item 40 of Part 13 of the Schedule to the Constitution

(Scheduled Castes) Order, 1950, declared "Sunris excluding Sahas" as a Schduled Caste, it indicates that men of Sunri caste but not those

vithin that caste who formed the smaller caste group of Sahas, are members of a Scheduled Caste. It does not indicate that Sahas are a caste distinct from the Sunri caste, nor was it intended to exclude from Sunris those members of that caste who bore the surname Saha.

[391 A, D].

Therefore, when the respondent challenged the election to the West Bengal Legislative A55embly, of the appellant who described himself as a member of the Sunri caste, on the g"ound that he was a member of the Saha caste group but failed to prove the a1legation,

it must be held that the appellant was a Sunri by caste and belonged to tho Scheduled caste specified in the item, even though he bore the surname Saha. [392 Dl

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 931 and 1149 of 1965.

Appeals from the judgment and decree dated July 31, 1964 of the Calcutta High Court in Appeal from Original Decree No. 613 of 1962.

N. C. Chatterjee, Ja11aradan Sharma, K. B.

Rohtagi and S. Ba/akrishnan, for the appellant (in C.A. No. 931 of 1965) and the respondent (in C. A. No. 1149 of 1965).

D. N. Mukherjee, for the respondent (in C.A. No. 931 of 1965) and the appellant (in C.A. No. 1149 of 1965).

The Judgment of the Court was delivered by Sarkar, C.J. These appeals arise out of an election to a G seat in the West Bengal Legislative Assembly from the Khargram Murshidabad constitutency reserved for members of the Scheduled Castes.

The contestants at this election were Abhoy Pada Saha and Sudhir Kumar Monda]. Sudhir is admittedly a member of a Scheduled Caste.

Abhoy Pada described himself in the nomination paper as "a member of the Sunri caste which is a Scheduled H Caste". Sudhir objected to this nomination contending that Abhoy Pada did not belong to any Scheduled Caste. The objection was rejected by the Returning Officer.

At the election which

SUPREME MURT RF.PORTS

(I 966) SUPP. 8.C.R.

ensued, Abhoy Pada secured 16,730 votes and Sudhir, 15,523 and A the former was consequently declared elected.

Sudhir then filed a petition challenging the validity of Abhoy Pad a 's election on various grounds.

At the hearing of the petition by the Election Tribunal, however, he challenged the clcction only on the ground that Abhoy Pada was a member of the Saha JI caste and not a member of a Scheduled Oiste. The Election Tribunal rejected this conlen1ion and dismissed the petition. Sudhir then appealed to the High Court at Calcutta which reversed the decision of the Tribunal and declared the election of Abhoy Pada invalid and set it a'ide on the ground that he did not belong to a Scheduled Caste.

In his petition Sudhir had further claimed that he should be declared elected in the place of the appellant if the C latter's election was found to be invalid. This prayer. however, was rejected by the High Court. These two appeals are from the judgment of the High Court.

Appeal No. 931 of 1965 is by Abhoy Pada.

He challenges the validity of the order of the High Court setting aside his election.

Appeal No. 1149 of 1965 is by Sudhir and he challenges the valicl:ty of the order of the High D Court rejecting his prayer to be declared elected.

We shall first deal with Appeal No. 931 of 1965 filed by Abhoy Pada and shall hereafter refer to him as the appellant and Sudhir as the respondent.

Art. 332 of the Constitution provides that seats shall be reserved for the Scheduled Castes in the Legislative Assembly of every State. Art. 341 gives power to the President to specify by E

public notificaticn the castes or parts of or groups within castes which shall for the purpose of the Constitution be deemed to be Scheduled Castes.

The President, on August 10, 1950, passed the Constitution (Scheduled Castes) Order, 1950 under Art. 341 setting out in its schedule the various castes which were declared Scheduled Castes.

This Order was amended from time to time by statutes passed by Parliament and it is agreed that at the relevant F time Item 40 of Part 13 of the schedule to the Order which set out which were Scheduled Castes in West Bengal stood as follows: "Sunri excluding Saha". Item 40 and some other items of the. schedule were made applicable to the State of West Bengal except the Purulia District and the territories transferred from Purnea District of Bihar and it is w; th this item that we are concerned.

The question is, whether the appellant was a member of the Sche- C: dulcd Caste specified in this item.

In the election petition. the respondent had stated that the appellant. was a member of the Saha caste and not a member of any Schedule Caste.

It was said that this showed that the respondent's case was that the appellant belonged to an independent caste which P. had nothing to do with Sunri caste and that it was, therefore, not open to him at the trial to contend, as he appears to have done,

A '

AllHOY PADA "· 8UDHIR KUMAR (Sarkar, 0. J.) 389

that the appellant was a Sunri by caste but was excluded from the Scheduled Caste group because he belonged to a smaller caste group of Sunirs known as Sahas. We are unable to take this strict view of the pleading. The petition may, in our opinion, be reasonably read as stating that the appellant was a member of the Saha caste, a smaller caste group within the bigger caste group of Sunirs and was for that reason not a member of the Scheduled Caste specified in item 40.

We also observe that this reading of the petition which was accepted by the Election Tribunal, did not cause an)I surprise to the appellant at the trial or result in any injustice. The High Court also read the petition in the same way.

In our view, it was open to the respondent to show that the appellant belonged to the Saha caste group within the Sunri caste group and did not, therefore, belong to the Schedule Caste specified in item 40 as he claimed.

The Tribunal rejected the respondent's case that the Sunri caste was divided into certain groups of which the Sahas formed one. It came to the conclusion that the Sahas originally belonged to the Sunri caste but for a long time past they had formed themselves into a different caste which had no connection with the Sunris.

It is not very clear whether the Tribunal thought that the Sahas were originally a smaller caste group within the Sunri caste group or were only distinguished from the other Sunris by their surname.

We are, however, inclined to think that the Tribunal thought that the Sahas were originally a smaller caste group within the Sunri caste because it rejected a contention advanced by the respondent that item 40 excluded from Sunirs those who bore the surname Saha observing that the names given in the schedule to the Order all referred to castes, subcastes or groups. It found that the evidence clearly established that the appellant belonged to the Sunri caste-a fact which appears to have been admitted by the respondent-and, therefore, did not belong to the independent caste which according to the Tribunal, the Sahas have formed for a long time past.

Jn that view of the matter, the Tribunal held the appellant to be a Sunri and a person belonging to the Schedule Caste specified in item 40 and, therefore, dismissed the election petition.

It took the view that item 40 had excluded Sahas from Sunirs by way of abundant caut; on. so that the Sahas who had originally belonged to the Sunri caste but had long ago severed all connections with it and developed into a distinct and independent caste, might not claim, by virtue of their origin, to belong to the Sunri caste stated in the item.

In the High Court P. N. Mookerjee, J. observed that the Tribunal had gone wrong in considering the Sahas as an independent caste. He said that the expression "excluding" denoted that the Sahas contemplated would, but for this word, have come within the Sunri caste.

He held that the Sahas formed "a group within the Sunri caste be it a sub-caste strictly so called or other-

. 390 ·. \ '

/ >

SUPRE~IE COURT REPORTS [19G6j SUPP. 8.C.R.

........ ---·---•: wise"<" He also held that the evidence did not establish that the A Sahas" formed a subcaste strictly so called within the Sunri _caste or a caste wholly independent of the Sµnri caste .. His conclusion was that the expression "excluding Saha" referred to those Sunris who bore the surname Saha irrespective of whether they belonged to. a sub-easte strictly so called, of Sunris or not. The learned Judge; therefore, held that as the appellant bore the surname Saha, B he did not belong to the Scheduled Caste specified in item 40 though he was a Sumi. The other learned Judge, Basu, J .· held that the words "parts or _groups within castes" in Art. 341 were wide enough to refer to any determinate part of a caste distinguished by a surname or otherwise and it was not necessary that such part must I\ecessarily form a sub-caste. He halsoh held thadt th, e a evidence broadly supported "the conclusion t at t e respon ent s . family belongs to the Saha sub-caste or . group within the Sunri

"caste" .. .The learned Judge however, appears to have set aside the decision ofthe Tribunal and directed the election of lhe appellant to be set aside on the ground that the appellant; bore the surname ·- Saha and was thereby excluded from the Scheduled. Caste specified in item 40 for he said "these Saha families, within the fold of D Sunri caste, distinguished themselves by their surname, whatever might be their other characteristics" and have come to form a class apart from the rest of the Sunris.

Now, the point in issue is, whether the appellant satisfied the description "Sunri excluding Saha" in item 40 of the President's Order.· To decide that point, the description has first to be pro- E perly interpreted and understocd. As we have said. the Tribunal thought that the Sahas formed a -distinct caste wholly outside the Sunri caste and they had been specifically excluded in item 40 for greater safety o prevent them from c; laiming to be Sunris by reason of their origin. The learned Judges of the High Court thought that the effect of the item was to exclude from the Sunri caste those who belonged to.that caste but bore the surpame Saha. We are unable P to agree with either of these interpretations.

There is no doubt that Sunri is a caste.

Nobody disputes that.

That also follows from the fact that the Constitution (Scheduled Castes) Order. 1950 was promulgated to indicate those castes who are to be considered as Scheduled Castes for the purpose of the Constitution. "Sunri" in item 40, therefore. refers to a caste. If G

Sunri is a caite. the word 'Saha' in the expression "excluding Saha" in the item must, without more; also refer to a caste group within the Sunri caste. It is legitimate to think that when a statute says that a thing is to be excluded from another, both things are of the same kind; if one is a caste. the other must be a caste. It follows that when the item excluded Sahas from Sunris, since Sunri is a H caste group, Saha must equally be another caste group. The Tribunal appears to have taken the sa!T1e view. Now a thing can be

.ABHOY P.AD"' v; SUDHJR KUMAR (Sarkar, o. J.) 391

A excluded from another only if it was otherwise within it. Therefore, the correct interpretation of the item is that it indicates men of the Sunri caste but not those within that caste who formed the . smaller caste group of Sahas. This is where the Tribunal went .wrong.

The Tribunal crune to its conclusion that "Saha" in the item referred to a caste distinct from the Sunri caste because the evidence before it did not show that there was within the Sunri caste, a smaller caste group called Sahas. The error of the Tribunal lay in interpreting the' Order in the light of the evidence before it. :There was no justification for doing that. Afterall, the evidence Jed in a case may be imperfect. Suppose the evidence in another case led to the conclusion, as it might conceivably do, that. there was a smaller easte group within the Sunri caste, called Sahas. In that case, if the reasoning applied by the Tribunal is' right, it has to be held that the expression "excluding Saha" meant excluding a smaller caste group called Sahas. A method of interpreting a statutory provision which might lead to such. uncertainty, cannot be correct. If the correct interpretation of item 40 was, as we thinkit was, that Sahas were a caste group within the Sunri caste, no question of Sahas being a distinct class independent of Sunris .could arise. The finding that Sahas . were a wholly independent caste. was altogether. irrelevant to the point in issue. Evidence cannot alter the natural interpretation of the words in the Order.

_ For the same reason, we are unable to agree with the interpretation of the High Court that the Sahas excluded were those Sunris who bore the surname Saha. _We think the learned. Judges of the High Court also interpreted item 40 in the light of the evidence in the case. If the intention was to exclude from Sunris those members of that caste who bore the surname Saha, the item would have said so; it would then have read "Sunri excluding those who bore the surname Saha". In the absence of such words "Saha" must, in the context, be understood as referring to a smaller caste group within the bigger caste group of Sunris. Surname is irrelevant as a test for applying item 40 unless it is shown that it indicated a smaller caste group of Sunris. It is nobody's case that there is evidence to show that. It is of interest to remind in the connection that the Oder provides that the Sunris in the Purulia District G . and those parts of the Purnea District which had been transferred . to West Bengal were not to be considered as belonging to a Scheduled Caste. That would show that where the exclusion is by a test other than a caste group, the Order expressly says so. It is natural to think that if the excluded Sahas were those Sunris who bore the surname Saha, the Order would have made that clear. In

H our opinion, the learned Judges of the High Court were in error in interpreting the item on the evidence in the case as they appear to have done. ·

L[S5SCI-27

39:!

ScPl<F.MF. COURT REPORTS [1966] SUPP. s.c.R.

If we are right in our interpretation of item 40, then the only .l question that has to be decided in this case is, whether the respon dent has established that the appellant belonged to a smaller caste group called Sahas "ithin the Sunri caste.

This question presents no difficulty.

The respondent called witnesses to establish that the appellant belonged to the smaller caste group of Sahas.

These witnesses were disbelieved by the Tribunal which described them as unreliable. P.N. Mo<'kerjce. J. said, "it has not been proved that the respondent (appellant herel belonged to any separate Saha caste or to any Saha ... sunri sub, aste of the Sunri caste".

Though Ilasu, J. said that the appellant belonged to the Saha group of Sunris, it would appear that h~ was thinking of that group as consisting of those Sunris who bore the surname Saha.

All the courts in West Bengal, thcrdore. came to the conclusion that it had not been prov ed in this case that the appellant belonged to the smaller caste group of Saha>.

We have no reason to take a different view of the evidence.

The result then is. that the appellant is a Sunri by caste and has not been proved to belong to the smaller caste group of Sahas.

He must be held to belong to the Scheduled Caste specified in item 40.

That being so, the election petition must fail.

Accordingly, wc allow Appeal No. 931 of 1965 and set aside the judgment of the High Court and restore that of the Election Tribunal dismissing the petition.

The appellant will get the costs throughout.

In the view that we have taken in Appeal No. 931 of 1965, the other appeal must necessarily be dismissed and we, therefore, dis miss it with costs.

One set of hearing: fees only.

Appeal No. 931 of 1965 al/oweti.

Appeal No. 1149 of 1965 dismissed.

ABHOY PADA SAHA

bUDHlR KUMAR MONDAL

A. K. SARKAR

R. MUDHOLKAR

BACHAWAT,

J

M. SHELAT

RAGHUBAR DAYAL, JJ

Art. 332

Art. 341

Art. 341

Schedule C

Schedule C

Schedule C

Art. 341


NARANDAS MOKARDAS GAZIWALA It ORS.

S. P. AM. PAPAMMAL & ANR.

March 25, 1966

(K. SUBBA RAO AND V. RAMASWAM!, JJ.J

Principal and Agent-Whether Agent can sue Principal for ren dition of accounts.

Indian Evidence Act, 1872, s. 92, Proviso 3-0ral agreement not to enforce promisso711 note till certain conditions precedent fulfilled-

Such oral agreement whether can be proved.

An agent sued his principals for rendition of accounts for the period of the agency. The principals alw filed a suit claiming enforcement of a promissory note the agent had executed in their favour.

The agent pleaded an oral agreement by which the prmeipals were not to enforce the promissory note during the period of the agency and unless the sum remained due and payable after accounting. The trial court granted a decree on the promissory note b11t directed that it should be adjusted against any sum found due after accounting in the agent's suit. The principals went to the High Court and failing there appealed to this Court. It was contended on behalf of the appellants that (1) an agent was not entitled in law to sue his principal for accounts and (2) the parole agreement could not be proved in view of s. 92 of the lndian Evidence Act.

HELD: (i) Though an agent has no statutory right .for an account from his principal, nevertheless there may be special circumlltances rendering it equitable that the principal should account to the agent. Such a case may arise when all the accounts are in the possession of the principal and the agent does not possess account. to enable him to determine his claim for commission against his principal. The right of the agent ma'' also arise in an exceptional case when his remuneration depends on the extent of dealings which are not known to him or where he cannot be aware of the extent of the amount due to him unless the accounts of his principal are gone into. In the special circumstances of the present case the agent was entitled to sue his principals for accounts for the material period.

(42 H D-E]

(ii) The parole agreement relied on in the case was a collateral agreement and was not related to the mode of discharge of the obligation under the promissory note. It was a condition precedent to the enforceability of the promissory note and therefore evidence of oral G agreement could be adduced under the 3rd proviso to s. 92 of the Evidenc~ Act. ( 43H-44B]

Case law referred to.

OVJL APPELLATE JuRISD!CTION : Civil Appeals Nos. 177 and 178 of 1964.

Appeals by special leave from the judgment and decree dated H December 20, I 960, of the Madras High Court in Appeals Nos. 45 and 202 of I 957.

_,' I < I

N. M. GAZIWALA v. PAl'AMM.lL (Ramaswr1mi, J.) :19

A S. V. Gupte, Solicitor-General. B. Datta. J. B. Dadachanji, for

the appellants.

S. T. Desai and R. Gopalakrishnan, for the respondents.

The Judgment of the Court was delivered by

Ramaswami, J. These appeals are brought, by special leave, from the judgment and decree of the Madras High Court dated September 20, 1961 in A.S. Nos. 45 and 202 of 1957.

Narandas Morardas Gaziwala and Lakshmi Chand & Co. were two firms of partnership carrying on business in lace and sil ver thread at Surat in the State of Bombay. They had dealings with another firm at Kumbakonam-Krishna and Company-who acted as their agents for selling their goods in the three districts of Tanjore, Tiruchirapalli and Mathurai in the State of Madras on commission basis. The two partners of Krishna & Co. were Murugesa Chettiar and his wife's sister's husband Gopal Chettiar. It appears that Krishna & Co. was acting as commission agents on behalf of the two firms at Surat from 1944 till 1951 when the part nership of Krishna & Co. became dissolved by mutual agreement between the partners. Murugesa Chettiar, one of the partners of Krishna & Co. took over all the assets and liabilities of the firtn on dissolution and the other partner Gopal Chettiar retired from the firm. In respect of the dealings of the two firms at Surat (hereinafter to be referred to as the Surat Firm) with Krishna & Co., the latter became indebted in 1951. On April I, 1951 Murugesa Chettiar (hereinafter referred to as the plaintiff) executed a promissory note in favour of Narandas Morardas Gaziwala for a sum of Rs. 7,500/- the amount ascertained as due and payable by Krishna & Co. in respect of the dealings of that firm with the Surat firm on a settlement of account. It is the case of the plaintiff that on April I, 1951 the Surat firm constituted Murugesa Chettiar as the sole agent for selling their goods bearing the trade mark -Napoleon" ...... Vivekanada" and other marks for the three districts for a period of 5 years from April I, 1951 agreein~ to pay commission at a flat rate of Rs. 2 /- per 'mark' for all sales effected in those territories either on orders booked by him or not. The case of the plaintiff was that the Surat firm circumvented the terms of this contract of sole agency and privately effected sales through others or direct to customers in those territories. The plaintiff's contention further was that the Surat firm as part of this agreement of sole agency agreed to have its indebtedness under the promissory note adjusted towards the commission that may be earned by him. The plaintiff therefore instituted O.S. No. 87 ol 1954 in the District Munsif's Court, Kancheepuram praying for rendition of accounts from April 1, 1951 till the date of the suit in order to ascertain the amount due and payable to him. The Surat

LS5SCI-5

,0 SUPREllE COURT REPORTS (1966] St:PP. S.C, R.

A firm in its turn instituted 0.S. no. 21of1954 in the court of Subordinate Judge, Chingleput against the plaintiff seeking to recover the amount due under the promissory note, viz .. a sum of Rs. 7.500i-

By an order of the District Court, Chingleput O.S. no. 87 of 1954 on the file of District Munsif, Kancheepuram was transferred to the file of the Subordinate Judge, Chingleput and taken on his file as O.S. no. 35 of 1955. Both the suits were tried together by con- B sent of parties. On December 12, 1956 the Subordinate Judge held that the plaintiff was constituted as the sole agent on commission basis for the three territories, Tanjore, Tiruchirappalli and Madurai for a periC'd of 5 years as pleaded and proved by him and the Surat firm was liable to render an account of their sales in those

territories from April I, 1951 and accordingly granted a preliminary decree for rendition of accounts. In O.S. no. 21 of 1954 the c

Subordinate Judge granted a decree for the amount covered by the promissory note but directed that the decretal amount should be adjusted out of the commission that may be found due and payable on taking of accounts in 0.S. no. 35 of 1955. The Surat firm preferred an appeal against the decree in O.S. no. 21of1954- D A.S. no. 45 of 1957. They also preferred an appeal agains~ the decree in 0.S. 35 of 1955 to the District Court of Chingleput and that appeal was transferred to the High Caurt and heard along with A.S. no. 45 of 1957. The High Court, by its judgment dated September 20, 1961. dismissed both the appeals.

The first question presented for determination in these appeals is whether the plaintiff is entitled to sue for account~. he being the E agent and the defendant-Surat firm being the principal. Section 213 of the Indian Contract Act specifically provides th:lt an agent is bound to render proper accounts to his principal on demand. The principal's right to sue an agent for rendition of accounts is, therefore, recognised by the statute. But the question is whether an agent can ue the principal for accounts. There is no such provision in the Indian Contract Act. In our opinion. the statute is not exhaus- F tive and the right of the agent to sue the principal for accounts is an equitable right arising under special circumstances and is not a statutory right.

In English law n agent has a right to have an accaunt taken, and where the accounts are of a simple nature they can be taken in an ordinary action in the Queen's Bench Division (Halsbury's Laws G of England, Vol. I, p. 196). In Bowstead on Agency, 12th Edn., p.

J 73 it is observed as follows:

"Where the accounts between a principal and agent are of so complicated a nature that they cannot be satisfactorily dealt with in an action at law, the agent has a right to have an account taken in equity, but the relation of principal and agent H is not alone sufficient to entitle an agent to an account in equity, when the matter can be dealt with in an section at law."

\ I

-~ ,,

~ • ill

,;;.._

' •

In the 14th edition of Story's Equity Jurisprudence, the leaned anthor, after setting out the general law that an agent 1s not enl!tled to sue his principal for accounts, observes as follows:

"There are usually exceptions to all rules, and where the principal has kept the accounts between him and his agent and the matters and things transacted in the course of the agency are within his own peculiar knowledge, the agent may ask for accounting."

In 1852 it was held in Padwick v. Stanley(') that merely because the principal was entitled to have an account taken in equity as against his agent, it by no means followed that the agent had a similar right against his principal. Notwithstanding this ruling a suit by an agent against his principal for accounts was entertained by the Vice Chancellor in Shepard v. Brown.(') In that case, the plaintiff alleg ed that he was employed by the defendants to obtain orders for goods manufactured by them and that he was to be allowed re muneration in the shape of commission upon the amount of all goods sold under orders which were obtained through his efforts.

The plaintiff sought an account of all orders received and executed by the defendants through his exertions and to have it ascertained how much was payable t; i him for commission in respect of the goods so sold. The Vice-Chancellor overruled the demurrer that the plaintiff might recover in an action the whole amount of that commission which he was seeking to recover by account in the Equity Court and observed as follows :

"Where the case of the plaintiff is one in which he seeks an account of transactions and dealings with the defendants, the evidence of which transactions must remain principally, it not entirely, in the hands of the defendants, it is extremely diffi. cult to say that, upon a bill seeking an account of that kind upon a case so stated, this Court has no jurisdiction to entertain it."

The very next year the Appeal Court in Chancery ruled that a bill for an account in equity by an agent against his principal for his commission on orders obtained by the agent was demurrable. It was held in Smith v. Leveaux(') that the fa.ct that the agent may be ignorant of the orders did not entitle him to file a bill for an account of what was due to him for commission, but that his remedy was at law. According to Lord Justice Turner, in the absence of an allegation as to complication of accounts, the bill could not be entertained in equity. The remedy at law was not however doubted, though that remedy was not as efficacious as the equitable remedy in matters of account. But the principle was affirmed by the Vice-Chancellor

(') 68 E.R. 664.

L,'S5SOl-5(a)

(') 46 E.R. 274.

(') 66 E.R. 681.

42 Sl'PREME COURT REPORTS [J!l66) , l'PP, d, C.11.

again in a later case, Blyth v. Whifjin, (') that the agent can. main- A tain a bill in equity agairst his principc; l for an account in special circumstances. It was observed by the Vice-Chancellor in that case:

"With regard to that question, whether an agent can maintain a bill agJinst his principal for an account, it is not necessary to go further than to say I entertain no doubt on the subject ............ if there are complicated accounts it is just as much open to the suit of the agent against the principal as on the part of the principJI against the agent; but in neither case is it to be permitted unless there be a complicated account."

The right of an agent to claim an account against the princ; pal for the commission due to him on orders received by his principal from the customers introduced by the agent was recognised also in Bullen & Leake's Precedents of Pleadings, I Ith Edn. at pp. 71-72.

In our opinion, the legal position in India is not <lifferent.

Though an agent has no statutory right for an account from his principal. nevertheless there may be special circumstances rendering it equitable that the principal should account to the agent. Such a case may arise where all the accounts are in the possession of the principal and the agent does not possess accounts to enable him to determine his claim for commission against his principa I. The right of the agent may also ar'se in an exceptional case where his remuneration depends on the extent of dealings which are not known to him or where he cannot be aware of the extent of the amount due to him un'ess the accounts of his pr'ncipal are gone into. This view is borne out by the decision of the Madras High Court in Ramachandra Madhavadoss Co. v. Mool'llkat Moid1111k1mi Bira11k1111i & Bros. Firm. Ca1111anore('). of the Lahore High Court in Ram Lal Kapur & Sons v. Asian Commercial Assurane C<>. Ltd.(') and of the Kagpur High Court in Basant Kumar and others v.

Roslianla/('). In the present case the High Court has found that the transactions in respect of which the plaintiff is entitled to commission arc peculiarly within the knowledge of the principal alone. viz .. of the Surat firm. There is also prima facie evidence adduced on behalf of the plaintiff in this case in support of his allegation that the Surat firm had made direct sales to customers in contravention of the contract of sole agency granted to the pJa; ntiff. The High Court referred in this connection to the evidence of the plaintiff-

Es. A-26 and A-28--which are complaints made by the plaintiff to the Surat firm with regard to direct sales made to Mr. M. K. Iyengar.

The High Court has also observed that to none of the letters or telegrams from the plaintiff the Surat firm or their accredited representative Ratilal cared to send any reply. We are, therefore, of the

I') (172) 271 .. r.R. 330. (') A.l.H. 1938 Mnd. 707.

(') A.1.IL 19'.l~ Lah. ~1:':( (4; l.L.IL [1964] !\agpur 43.i.

' . •

I '

opinion that, in the special circumstances of this case, te plaintiff is entitled to sue the Surat firm for accounts for the material penod.

We proceed to consider the next question involved in this case viz. whether the plaintiff is entitled to set up a perole agreement to prove the condition precedent as to the enforceability of the promissory note. The argument cf the Solicitor-General on behalf of the Surat firm is that the p1aintiff is precluded from setting up a parole agreement by reason of the provisions of s. 92 of the Evidence Act which states:

"92. When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting. varying, adding to, or subtracting from, its terms:

Proviso (])

Proviso (2)

Proviso (3) The existence of any separate oral agreement, E constituting a condition precedent to the attaching of any obligation under any such contract, grant or disposition of property, may be proved.

It was submitted by the Solicitor-General that the High Court has F found that there is an agreement between the parties that the promissory note should be discharged by commissicn payable by the Surat firm. It was contended that the agreement was with regard to the mode of discharge of the obligation of promissory note and not a condition precedent to its enforceability. It was therefore argued that the bar under s. 92 of the Evidence Act operates and the plaintiff was not entitled to adduce any evidence with regard to a G parole agreement. The contention was that the promissory note represented in law an unconditional undertaking to pay an amount which the plaintiff was already under a liability to pay and it was not open to him in law to plead a contemporaneous oral agreement contrary to the terms of that undertaking. We are unable to accept the submission of the Solicitor-General as correct. The finding of the High Court is that there was a collateral oral agreement that H the obligation under the promissory note will not be enforced for 5 years and unless the amount was due after accounting for the period of the commission agency. In our opinion, the agreement was

H SUPllEKE OOURT REPORTS jl 966] BUPP. 8.C.R.

not r~Iated to the mode of discharge of the obligation under the A promissory note but tha~ it was a condition precedent to the enforceabihty of the promissory note and it is open to the plaintiff to adduce. eVIdence of oral a_greement under the 3rd proviso to s. 92 of the ~idence Act. I.he View tht we have taken is borne out by the decsi?n of the Judicial Committee in Rowland Ady and others

v. Admm1strator-G7neral of f!u; ma('). In that case it was observed by B -<- the Jud1c1al Commlltce that It is necessary to distinguish a collateral agreement which alters the legal effect of the instrument from an agreement that the instrument should not be an effective instrument until some condition is fulfilled, or. to put it in another form, it is necessary to distinguish an agreement in defcasance of the contract from an agreement suspending the coming into force of the conc tract contained in the promissory note. It was therefore held by the Judicial Committee in that case that where the promissory note is, by its express terms. payable on demand, that is at once, the obligation under the note attaches immediately. A collateral oral agreement not to make demand until a certain specified condition is fufilled has the intention and effect of suspending the coming into force of that obligation. which is the contract contained in the pro- D missory note. Such an oral agreement constitutes a condition precedent to the attaching of the obligation and is within the terms of Proviso 3 of s. 92 of the Evidence Act. On the facts of that casei the Judicial Committee held that by terms of the oral agreement no liability under the note could arise until the happening of an event and that being so. the case fell within the 3rd proviso to s. 92 of the Evidence Act. It was further made clear that unless the agreement E had the effect of making the liability conditional upon the happening of an event. proof of an oral agreement at variance with the •• terms of the note would not be permitted. At page 202 of the Report, Lord Wright observed as follows:

"A case like the present is to be distinguished from that dealt with in Ramjibun Serowgy v. Oghore Nath Chatterjee- F ,. l.L.R. 25 Cal. 401.-in which the promissory note, though absolute in ils terms. was said to be subject to an oral agreement, providing that it was not to be enforceable by suit until the happening of a particular event. Sale J., in rejecting this evi- • dencc. expressed his opinion that the proper meaning of Proviso (3) was that the contemporaneous oral agreement to be admissible must be to the effect that a written contract was to G be of no force at all and was to constitute no obligatic; n until the happening of a certain event. This description in their ..

Lordships' judgment applies to the present case. To the same ~· effect Page J .. in Walter Mitchell v. A. K. Tennent-I.LR. 52 Cal. 677.-held that the collateral agreement alleged in that case constituted a condition precedent to the attachment of any obligation under the cheques in question so that they remained inoperative until the condition was fulfilled." H

('I A.I.R. 10:.s P.C. 19".

Ml In that present case also we are of opinion that the oral agreement found to have been proved by the High Court constituted a condition precedent to the attaching of the obligation under the promissory note and falls within the terms of the 3rd proviso to s. 92 of the evidence Act and it was, therefore, open to the plaintiff to lead evidence and to prove such an oral agreement.

For the reasons expressed we hold that the judgment of the Madras High Court is correct and both these appeals must bs dismissed with costs.

Appeal.~ dismissed.

NARANDAS MOKARDAS GAZIWALA It

S. P. AM. PAPAMMAL & ANR

K. SUBBA RAO

Indian Evidence Act, 1872

s. 92

s. 92

s. 92

S. 35

Section 213

Indian Contract Act

s. 92

s. 92

s. 92

s. 92

s. 92

s. 92


RAMCHANDRA AGGARWAL AND ANR.

v .

STATE OF UTTAR PRADESH & ANR.

May 5, 1966

[J. R. MUDHOLKAR AND V. RAMASWAMI, JJ.J

Code of Criminal Procedure (Act 5 of 1898), s. 146 (1)-Reference by Magistrate to Civil Court-If to a persona designata.

Code of Civil' Procedure (Act 5 of 1908), s. 24-Ju, risdiction of District Judge to transfer reference from one Civi! Court to another.

Under s. 146(1), Criminal Procedure Code, a Magistrate referred to a Civil Court of competent jurisdiction the auestion as to 'Nhich of the parties was, at the relevant point of time, in posse'5ion of the

subject-matter of dispute in a proceeding under s. 145 Cr. P.C. Under s. 24, Civil Procedure Code, the District Judge transferred the reference to another Civil Court. It "as contended that the District Judge acted v:1thout jurisdiction because (i) the reference was to a persona designata; andl (ii) the provisions of C.P.C. did not apply to the proceeding as it was not a proceeding in a court of Civil jurisdiction within the meaning of s. 141, C.P.C.

HELD: (i) Where a special or local statute refers to a constituted court as a court and does not refer to the presiding officer o.f the court, the reference cannot be said to be to a persona desi'gnata. The power under s. 146(1) is not to refer the matter to the presiding J udgE of a Civil Court, but to a court. [396A-Cl

(ii} The provisions of the Civil Procedure Code apply generally to a proceeding before a civil court arising out of a reference made by a Magistrate under s. 146(1) Cr. P.C. r399 E-Fl

Adaikappa Chettiar v. Chanwra, sekhara Thevar,

74 I.A. 264, Mamg Ba Tha.w v. Ma Pin, 61 I.A. 158 and South Asia Industris

(P) Ltd. v. S. B. Sarup Singh, [1965] 2 S.C.R. 756 applied.

Section 24 C.P.C., refers to "other proceeding in any court subordinate to it" and not to a civil proceeding pending before a sul:- ordina te court. The term "proceeding" is comprehensive enough to include all matters coming up for judicial adjudication and' is not confined to civi1 proceedings alone, and therefore, there is no need to invoke s. 141, V.P.C. [399 F-Hl

Obiter: The proceeding before the civil court is a civil proceeding as contemplated by s. 141 C.P.C. [398 F-H] A proceeding stemming from a criminal matter does not alv.rays bear the stamp of a criminal proceeding. r397 D-El Sri Sheonath Prasad v. City Magistrate, Varanasi, A.IR. 1959 All. 467, disapproved.

The Magistrate •.vhen he refers the question to a civil court, does not confer a part of his criminal jurisdiction upon the civil court.

Under s. 146(1D}, Cr.P.C., neither an appeal nor a revision lies against the finding of the civil court in the reference, because of the express provision and not because theproceeding before the civil court is not a civil proceeding, [398 A-CJ

394 st:PRE>!E COUll'r REPORTS

(1966] SUPP, S.C.R,

CRJMJ!'-IAL APPELLATE JURISDICTION: Criminal Appeal No. 113 .&. of 1965.

Appeal from lhe judgment and order dated October 26. 1964 of the Allahabad High Court in Criminal Revision No. 803 of 1963.

J. P. Goyal, for the appellants.

0. P. Rana and Atiqur Rehman. for respondent No. I.

S. K. Mehta and K. L. Mehta, for respondent No. 2.

B. R. L. Iyengar and B. R. G. K. Achar, for the Intervener.

The Judgment of the Court was delivered by Mudholkar, J, The only point which falls to be decided in this appeal by certificate granted by the High Court at Allahabad is whether the District Judge has jurisdiction under s. 24 of the Code of Civil Procedure to transfer a reference made by a Magistrate to a particular civil court under s. 146 of the Code of Criminal Procedure to another civil court. It arises this way.

Proceedings under s. 145, Cr. P.C. were initiated by a Magistrate on the basis of a report of a police officer to the effect that a dispute likely to cause a breach of the peace existconcerning a plot of land situate within the jurisdiction of the Magistrate between the parties mentioned in the report and praying for appropriate action under s. 145 of the Code of Criminal Procedure. The learned Magistrate upon being satisfied about the possib; lity nf a breach of the peace made a preliminary order under s. 145. Cr. P.C .. attached the property to which the dispute related and called upon the parties to adduce evidence in respect of their respective claims.

In due course he recorded the evidence but he was unable to make up his mind as to which of the parties was in possession on the date of the preliminary order and within two months thereof.

He, therefore, referred the case under s. 146([) of the Cr. P. C. to a civil court for decision as to which of the parties was in possession at the material point of time and in the meanwhile directed that the attachment of the property shall continue.

The reference went to the court of the Munsiff within whose territorial jurisdiction the property was situate.

But thereafter one of the parties Brij Gopal Binani, respondent No. 2 before us, made an application to the District Judge under s. 24, C.P.C. for transfer of the case to some other court.

The ground

ven was that in the execution case out of which proceedings under s. 145, Cr.P.C. had arisen the same Munsiff had made an order against him depriving him of costs.

The Munsiff having no objection to the transfer the District Judge transferred the case to the court of another Munsiff.

The opposite parties, that is, the appellants before us Ram Chandra Aggarwal and Kcdar Prasad Aggarwal acquiesced in the order of transfer and did not raise any question as to the jurisdiction of the transferee court to hear and decide the reference.

Eventually evidence was led by both sides and a lnding given by the transferee court. This finding was in favour

G ·---.

UMOKANDU •. u. P. STATF (Mudho!kar, J.) 395

of the second respondent. After receiving the finding the learned Magistrate heard the parties and held that it was the second respondent who was in possession at the relevant date and passed an order under s. 145(6), Cr. P.C. pursuant thereto.

A revision application was preferred by the appellants before the court of Sessions in which the objection was taken for the first time that the decision of the civil court was a nullity because it had no territorial jurisdiction over the subject-matter of the dispute. It was further contended that the District Judge had no jurisdiction to transfer the case and that consequently the ultimate order made by the learned Magistrate was a nullity. The learned Additional Sessions Judge who heard the revision application rejected these contentions on the ground that they were not raised earlier. The appellants then took the matter to the High Court in revision.

The appellants rested their revision application on the sole ground that s. 24, C.P.C. was not available in respect of a reference under s. 146(1), Cr. P.C. and that, therefore, the proceedings subsequent to the transfer of the reference from the court of one Munsiff to that of another are a nullity. The High Court permitted the point to be urged. The attack was based upon two grounds: that the reference under s. 146(1), Cr. P.C. was to a persona designata and that the provisions of s. 24, C.P.C. were not available with respect to it.

The second ground was that the proceeding before the civil court was not a civil proceeding within the meaning of s. 141, C.P .C. The High Court negatived both the grounds on which the contention was based.

On behalf of the appellants Mr. Goyal has reiterated both the contentions. In fairness to Mr. Goyal it must be said that his attack on the order of the District Judge transferring the case under s. 24. C.P.C. was based more on the ground that the reference under s. 146(1) Cr. P.C. is not a civil proceeding than on the ground that the reference was to a persona designata.

However, as he did not wish to abandon the other point we must deal with it even though Mr. B. R. L. Iyengar who appears for the State conceded that a reference under s. 146(1) is to a constituted court and not to a persona designata.

In Balakrishna Udayar v. Vasudeva Aiyar(') Lord Atkinson has pointed out the difference between a persona designata and a legal tribunal. The difference is in this that the "determinatons of a persona designata are not to be treated as judgments of a legal tribunal". In the Central Talkies Ltd. v. Dwarka Prasad(') this Court has accepted the meaning given to the expression persona designata in Osborn's Concise Law Dictionary, 4th edn. p. 263 as "a person who is pointed out or described as an individual, as opposed to a person ascertained as a member of a class. or as filling a particular character." Section 146(]) Cr. P.C. empowers a Magis-

. -- --·-·-<·· ~

(1) 44 I.A. 261.

(')'[1961]'3 S.C.R. 495; 500..:..IOJ,

~-- ·-.

3D6

SUPRE~IE COURT REPORTS

(1966] SUPP. 6.C.P.:

--~----· ~---

tr; te to refer the quesiion as to whether any, and if so, which of the parties was in possession of the subject-.matter of dispute at the relevant point of time to a civil court of competent jurisdiction.

The power is not to refer the. matter to the presiding .Judge of a particular civil court but to a court. When a special or local law provides for an adjudication to be made by a constituted court-. that is, by a court not created by a special or local law but to an existing courtit in fa9t enlarges the ordinary jurisdiction of sue~ a court. Thus where a special or local statute refers to a constt-· tuted court as a court and does not refer to the presiding officer of that court the reference cannot be said to be to a persona design'!ja.

This question .is well settled. It is, therefore, unnecessary to. say anything more on this part of the case except that cases dealing with the point have been well summarised in the.recent decision in Chatur'Mohan v. Ram Behari Dixit.(').

Now, as to the argument based on the ground that the pro-: ceeding before the chdl court is not a civil proceeding, Mr. Goyal's contention is that . since the proceeding before the criminal. court under s. 145 is a criminal proceeding any matter arising out of it, including a reference to a civil court, does not lose its initial character of a criminal proceeding. In support of his contention he has placed strong reliance upon the-observations of Jagdish-Sahai J., in Sri Sheonath Prasad. v. City Magistrate, Varanasi.(') In that case the learned Judge was called upon to consider the meaning of the expression. "civil court of competent jurisdition" occurring in s. 146(!) of the Code of Criminal Procedure. It was contended before him that the competency of the court is to be determineJ not merely with respect to the territorial jurisdiction of the court but also with respect to its pecuniary jurisdiction. The question arose because it was contended before him that the finding on a question of possession was recorded by a civil court which though it had territorial jurisdiction over the subject matter of the dispute the value of the subject matter was in excess of the pecuniary jurisdiction of the court. In the course of his judgment the learned Judge has observed: "that a proceeding even on reference made to a civil court retains its old moorings and does not change•its character from a criminal proceeding to a civil proceeding and does not become a proceeding in the suit." Then he went on .to .Point ol!t

that the criminal court still retains its jurisdiction becau;; e it :could withdraw the reference from the civil court at anf time and. al.>o G because the ultimate decision .with the respect to th.e dispute ,, bet~ ·

ween the parties was to be made by the Magistrate arid not bv the. civil court. All this, according to the learned Judge, \Vould show that the proceeding even before the civil. court would.not be a civil proceeding and the idea of pecuniary jurisdiction of a court being foreign t.o the Code of Criminal Procedure it was not 'necessary to

(') 1964 AU. L. J 2.l6. · -- - (')-A.I.R. 1059 All. 467. • ·- ·

l\ .. MCHA1'1JRA "· u. P. STA1'E (illudholhrt, J.) 397

ascertain whether the court to which a reference was made under s. 146(1) Cr. P.C. had pecuniary jurisdiction over the subject matter of the dispute or not. This decision ignores the vast body of authority which is to the effect that when a legal right is in dispute and the ordinary courts of the country are seized of such d; spute the courts are governed by the ordinary rules of procedure applicable to them.

Two of the decisions are Adaikappa Chettiar v.

Chandrasekhara Theyar(') and Maung Ba Thaw v. Ma Pin(') and also a decision of this Court which proceeds upon the same view.

Thus in South Asia Industries (P) Ltd. v. S. B. Sarup Singh(') it was held that where a statute confers a right of appeal from the order of a tribunal to the High Court without any limitation thereon the appeal to the High Court will be regulated by the practice and procedure obtaining in the High Court. We would also like to refer to the decision of this Court in Narayan Row v. lsinvarlal(') in which it was held that there is no reason for restricting the expression "civil proceeding" only to those proceedings which arise out of civil suits or proceedings which are tried as civil suits.

Though this decision was concerned with the meaning of the words

"civil proceeding" used in Art. I 33(1)(c) of the Constitution the reasoning behind it sufficiently repels the extreme contention of Mr. Goyal that a proceeding stemming from a criminal matter must always bear the stamp of a criminal proceeding. Then. according to Mr. Goyal, when a magistrate refers a question as to which party was in possession at the relevant date what he dces is to delegate that duty, initially resting upon him. to the civil court. In performing that duty the civil court would, therefore, be acting as a criminal court .inst as the magistrate would be doing where he has to decide the question himself.

The two Privy Council decisions we have referred to sufficiently answer this contention. No doubt, the Magistrate. while discharging his function under the Code of Criminal Procedure under s. 145(1), would be exercising his criminal jurisdiction because that is the only kind of jurisdiction which the Code confers upon the magistrates but when the magistrate refers the question to a civil court he does not confer a part of his criminal jurisdiction upon the civil court. There is no provision under which he can clothe a court or a tribunal which is not specified in the Criminal Procedure Code with criminal jurisdic . tion .. We: are, therefore. unable to accept the contention of Mr.

.Goyal. ·

Mr. Iyengar tried to put the matter in a somewhat different way.

In the first place. aceording to him. if we h61d that the proceeding before the civil court is a civil proceeding then all the mies of procedure contained in the Civil Procedure Code. including those relating to appeals or revision would apply to the proceeding. This.

·- ··· - (lJ 74·1.A. ~Ut. ·----(')-irn:a: JM: . .. .. ·

(') [1965] 2 S.Q, J>,,.}~. _

_ (') .U.R. 1950 S.C. 1818.

BIJl'RBlU COURT REPORTS

(1966] BUPP. S.0.R.

he points out, would be contrary to the provisions of s. 146(1-Dl of A the Code of Criminal Procedure which bar an appeal, review or revision from any finding of the civil court. From this he wants us to infer that the proceeding docs not take the character of a civil proceeding even though it takes place before a civil court.

We are not impressed by this argument. If sub-s. 0-D) had not been enacted (and this is really a new provision) an appeal or revision application would have been maintainable.

Now that it is there, the only efiect of it is that neither an appeal nor a revision is any longer maintainable. This consequence ensues because of the express provision and not because the proceeding before the civil court is not a civil proceeding.

The next contention-and it was the one pressed strenuously C by him-was that a proceeding upon a reference under s. 146(1) entertained by a civil court not being an original proceeding the provisions of s. 141. C.P.C. are not attracted and that, therefore. those provisions of the Civil Procedure Code which relate to suits are not applicable to a proceeding undertaken by a civil court upon a reference to it under s. 146(1) of the Code of Criminal Procedure.

A number of cases dealing with this point were brought to our notice either by him or by Mr. Goyal. It seems to us, however, that those cases are not relevant for deciding the point which is before us.

In passing, however, we may mention the fact that a full bench of the Allahabad High Court has held in Maha Ram v. l/arbans(') that the civil court to which an issue on the question of proprietary rights has been submitted by a revenue court under s. 271 of the Agra Tenancy Act, 1926 has jurisdiction to refer the issue to arbitration under paragraph I of Schedule II of the C.P.C.

This decision is based upon the view that by virtue of s. 141, C.P.C. the provisions relating to arbitration contained in the second schedule to the Code of Civil Procedure before the repeal of that schedule applied to a proceeding of this kind. Similarly recently this Court has held in Munshi Ram v. Ba11wari/a/(') that under s. 41 of the Arbitration Act and also under s. 141. C.P.C. it was competent to the court before which an award made by an arbitration tribunal is filed for passing a decree in terms thereof to permit parties to compmmise their dispute under 0. XXIll, r: 3, C.P.C.

Though there is no discussion, this Court has acted upon the view that the expression "civil proceeding" in s. 141 is not necessarily

confined to an original proceeding like a suit or an application for appointment of a guardian etc., but that it applies also to a proceeding which is not an original proceeding. Thus, though we say that it is not necessary to consider in this case whether the procecdmg before the civil court is a civil proceeding as contemplated by

8. 141 or not there is good authority for saying that it is a civil proceeding. All that we are concerned with in this case is whether

(')"J.L.11. [19'1] AD. Illa.

C') J.L.11. 1002 s.e. llllll.

RAMC!L<NDP.A 1'. u. P. STATE (Mwl.hollcar, J.) 399

A the provisions of s. 24(1)(b) of the Code of Civil Procedure are

available with respect to a proceeding arising out of a reference under s. 146(1), Cr. P.C. The relevant portion of s. 24 may, therefore, be set out. It reads thus:

"On the application of any of the parties and after notice to the parties and after hearing such of them as desired to be heard, or of its own motion without such notice, the High Court or the District Court may at any stage-

(a)

(b) withdraw any suit, appeal or other proceeding pending in any Court subordinate to it, and

(ii) transfer the same for trial or disposal to any Court subordinate to it and competent to try or dispose of the same; or

(iii)

It plainly speaks of "other proceeding pending in any court subordinate to it" and not only to the civil proceeding pending before a subordinate court. The decisions of the Privy Council and one decision of this Court which we have earlier quoted would warrant the application of the provisions of the Code of Civil Procedure generally to a proceeding before a civil court arising out of a reference to it by a Magistrate under s. 146(1) of the Code of Crin1inal Procedure. The expression "proceeding" used in this section is not a term of art which has acquired a definite meaning. What its meaning is when it occurs in a particular statute or a provision of a statute will have to be ascertained by looking at the relevant statute. Looking to the context in which the word has been used in s. 24(J)(b) of the Code of Civil Procedure it would appear to us to be something going on in a court in relation to the adjudication of a dispute other than a suit or an appeal.

Bearing in mind that the term "proceeding" indicates something in which business is conducted according to a prescribed mode it would be only right to give it, as used in the aforesaid provision, a comprehensive meaning so as to include within it all matters coming up for judicial adjudication and not to confine it to a civil proceeding alone. In a recent case Kochadai Naidu v. Nagavasami Naidu(') Ramachandra Iyer J., (as he then was) was called upon to consider the very question which arises before us. The learned Judge held

(') I.L.}I. [l96IJ; M•d. 413.

SUPRElil COURT REPORTS [1966] euPP. e.c.R.

that a proceeding before a civil court arising out of a reference to A it under s. 146(1), Cr. P.C. can be transferred by the High Court or District Court under s. 24, C.P.C. because it is in any case a

'proceeding". He has also considered this question from the an!tle . of the nature of the proceeding and expressed the view that the B proceeding was a civil proceeding to which the procedure for suits could, with the aid of s. 141, C.P.C. be applied. If indeed the term "proceeding" in s. 24 is not confined to a c; vil proceeding there is no need whatsoever of taking the aid of s. 141, C.P.C.

C Vpon this view we dismiss.the appeal.

Appeal dismissed.

RAMCHANDRA AGGARWAL AND ANR

STATE OF UTTAR PRADESH & ANR

R. MUDHOLKAR

V. RAMASWAMI, JJ

Code of Criminal Procedure

s. 146

s. 24

s. 146(1)

Criminal Procedure Code

s. 145

s. 24

Civil Procedure Code

C.P.C

s. 141

C.P.C

s. 146(1)

s. 146(1)

[1965] 2 S.C.R. 756

Section 24

C.P.C

s. 141

s. 141

C.P.C

Cr.P.C.

the Code of Civil Procedure

Code of Criminal Procedure

Code of Criminal Procedure

s. 24

C.P.C

s. 145

Cr.P.C

s. 145(6)

s. 24

C.P.C

s. 146(1)

s. 146(1)

s. 24

C.P.C

s. 141

s. 24

C.P.C

s. 146(1)

s. 146(1)

Section 146(])

s. 145

s. 146(!)

Code of Criminal Procedure

Code of Criminal Procedure

s. 146(1)

Code of Criminal Procedure

s. 145(1)

Code of Criminal Procedure

s. 146(1)

s. 141

C.P.C

s. 146(1)

Code of Criminal Procedure

s. 271

Agra Tenancy Act, 1926

Schedule II

C.P.C

s. 141

C.P.C

the Code of Civil Procedure

s. 41

s. 141

C.P.C

C.P.C

s. 141

s. 24(1)(b)

the Code of Civil Procedure

s. 146(1)

s. 24

the Code of Civil Procedure

s. 146(1)

s. 24(J)(b)

the Code of Civil Procedure

s. 146(1)

s. 24

C.P.C

s. 141

C.P.C

s. 24

s. 141

C.P.C