MANGRU MAHTO & ORS. v.

SHRI THAKUR TARAKNATRJI TARAKESHWAR MATH &

ORS.

March 8, 1967 [K. N. WANCHOO, R. S. BACHAWAT AND V. RAMASWAMI, JJ.j

Code of Civil Procedure (Act 5 of 1908), 0.XXI, rr. 58 and 63- 0rder on claim petition against decreeholder-No suit filed for setting aside order-Res judicata, to what extent.

Mortgage--Suit by n1ortgagee-Lessees of morigaged property !JOI parties-Property sold in execution of n1ortgage decree-Effect on le'isees' right of redemption.

The owner of certain properties over which K had a mortgage granted leases to certain persons.

The lands were sold in execution of the mortgage decree of K, and were. purchased by K at the auction The lessees allowed the property to be sold and did not apply for being joined as parties.

K obtained a money decree against one of the lessees and in execution attached the lands.

The lesse"" filed claim petitions objecting to the attachment ooder 0.21 r. 28 C.P.C. The claim petitions were allowed and the executing court found that the leases were genuine.

K did not file any suit under 0.21 r. 63 C.P.C. But later, K filed a suit against the mortgagor and the lessees for recovery of p<JMCSsion of the lands alleging that the leases were collusive transactions and were otherwise not binding on him. The trial court dismissed the suit holding that leases were genuine, but the High Court decreed the suit holding that the leases were sham transactions and made in contravention of s. 65A of tile Transfer of Property Act. In appeal to this Court, the appellants contended that (i) as K did not file any suit under Order 21 r. 63 C.P.C. the adverse Orders passed against him in the proceedings under 0.21 r. 58 C.P.C. operated as res judicata and he was precluded from alleging that the leases were not binding on him; and

(ii) the leases granted by the mortgagor were binding on K.

HELD : In view of the orders passed against K in the claim proceedings and his failure to institute suits under 0.21, r. 63 C.P.C., K was precluded from claiming that he had the right to attach the suit lands in execution of his money decree, but he was not precluded from claiming that he had the right to sell the lands in execution of his mortgage decree. [128 E]

~ claim proceeding under 0.21 r. 58 C.P.C. is not a suit or a proceeding analogous to a suit. An order in the claim proceeding does not operate as res judicata. It is because of 0.21 r. 63 that the order becomes conclusive. The effect of r. 63 is that unless a suit is brought as provided by the rule, the party against whom the order in the claim proceeding is made or any person claiming through him cannot reagitate in any other suit or proceeding against the other party or any person cbiming through him the question whether the property was or was no• liable to attachment and sale in execution of the decree out of which the claim Proceeding arose, but the bar of rule 63 extends no further. [129 A-Cl

Kandadai Naras; mhachariar v. Raghava Padayachi & Ors. I.L.R. 1946 !\fad. 79; approved.

SUP.IUIMB COURT RBPOB.TS

[1967] 3 S.C.R

Subbier v. Moideen Pltchai, A.I.R. 1923 Mad. 562, and Sar/u Prasad A Mlssir and Ors. v, Maktudan Chaudhuri & Ors, A.I.R. 1922 P.C. 341; referred to.

(ii) The validity of the leases granted by the mortgagor was not affected by s. 65A of the Transfer of Property Act as the leases were granted before the enactment of s. 65A. [131 A-Bl

The leases were not in the ordinary course of management of the B mortgagor as the agent or bailiff of the mortgagee and were not binding of the mortgagee. [132 A-BJ

A lease granted by the mortgagor,. out of the ordinary course of management, though not binding on the martgagee, is binding as be tween the mortgagor and the lessee.

Such a lessee acquires an interest in the right of redemption and is entitled to redeem. If such a lease is created before the institution of a suit relating to the mortgage, the C lessee must be joined as a party to the suit under 0.34, r. I, C.P.C.; otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption. But in view of s. 52 of the Transfer of Property Act, if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction-purchaser. The lessee could apply for being joined as a D party to the suit and ask for an opportunity to redeem the property.

But if he allows the property <to be sold in execution of the decree,. he loses hisright of redemption.

In the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They cannot resist the claim of the auction-purchaser for recovery of possession of the lands. [132 D-0]

Raja Kamakshya Narayan Singh Bahadur v. Chohan Ram and Anr.

E [1953 J S.C.R. 108; followed.

Madan Mohan Singh v. Raj Kishori Kumari, 21 C.W.N. 88, 92; Gobinda Chandra Saha & Ors. v. Sasadhar Manda/, A.I.R. 1947 Cal. 73, 75 and Rust v. Goodale, [1957] 1 Ch. 33, 42 and 43; referred to.

CML APPELLATE JURISDICTION : Civil Appeals Nos. 988 and 989 of 1964.

F Appeals from the judgment and decree dated February 16, 1961 of the Patna High Court in Appeal from Original Decree No. 390 of 1953.

D. Goburdhun, for the appellants (in C.A. No. 899 of 1964).

S. C. Agarwal and R. K. Garg, for the appellants (in C.A.

G No. 989 of 1964).

D. N. Mukher; ee and S. Musta{i, for respondent No. 1 (in both the appeals).

The Judgment of the Court was delivered by

Bachawat, J. One Harbans Narain Singh was the proprietor of villages Seha and Dhobaha and other villages. He created several incumbrances over these villages including a mortgage

MANGllU v. TAllAKESHWAll MATH (Bachawat, J.) 127

dated February 10, 1886 in favour of Basanti Bibi, two mortgages dated September 9, 1907 and February 5, 1910, in favour of Harprasad Das and a mortgage dated August 2, 1911 in favour of defendant No. 1 Ramanandan Lal. On June 23, 1915, Harbans Narain sold the villages to Mahabir Missir subject to the above mortgages. Mahabir Missir redeemed the mortgages in favour of Basanti Bibi and Harprasad Das and became subrogated to their rights. Ramanandan Lal instituted a suit to enforce his mortgage, obtained a final decree for sale, put the decree into execution, at the execution sale purchased villages Seba and Dhobaha and obtained possession of the villages in 1919 and

1920. In 1924, Mahabir instituted suit No. 17 of 1924 to enforce his mortgage lien prayin2 for rateable contribution of his dues in respect of villages Scha and Dhobaha from Ramanandan Lal and obtained a final decree on August 22, 1931. Mahabir died leaving his son Kashinath as his legal representative.

Kashinath put the decree in suit No. 17 of 1924 into execution.

On July 13, 1934, Ramanandan Lal paid the decretal dues in respect of village Seba. On November 4, 1935, village Dhobaha D was sold in execution of the decree in suit No. 17 of 1924 and was purchased by Kashinath. In June, 1934, Ramanandan Lal through his constituted attorney, Munshi Sheobaran Lal granted five leases in respect of the suit lands in the village to defendants 2 to 7. At the time when the leases were created, Ramanandan Lal was the mortgagor in possession of the suit lands over which a: Kashinath had a mortgage lien. One of the questions in issue in these appeals is whether the leases were binding on Kashinath.

It appears that Kashinath obtained a money decree against Ramatahal Pandey, husband of defendant No. 3 and in execution of the money decree attached the suit lands. Defendants 2 to 7 filed claim petitions objecting to the attachment under 0.21, r. 58, CPC. The claim petitions were allowed and the lands were released from attachment by orders of the executing court dated November 20, 1942 and February 26, 1944. The executing coun found that the leases were genuine. Kashinath did not file any suit under 0.21, r. 63, CPC. One of the questions in these appeals is whether the orders passed in the claim proceedings !1nder 0.21, r. 5~ precluded Kashinath from setting up his claim m the preselilt swt.

On J.une 11, 1946, Kashinath instituted the suit out of which these appeals arise against Ramanandan Lai and the lessees for

recovecyi of possession of the suit lands and mesne prafits alleging that the leases were collusive transactions and were otherwise not binding on him. The defendants contested the suit. In the meantime, in other proceedings, it was declared that Mahabir was a benamidar for Shri Thakur Taraknathji and the deity was the real owner of the villages. In view of this adjudication, Kashinath lost

128 SUPIU!MB COU1T JlBPOJ.TS

(1967) 3 S.c.R.

all interest in the present suit. By order dated Aug\ISt 25, 1952, the A deity was added as a coplaintilf in the suit.-

The subordinate Judge, Arrah, held that the leases were genuine, were granted by Ramanandan Lal in due course of management and were binding on the plaintilfs. On this finding, he dismissed the suit. The deity preferred an appeal to the High B Court of Patna. The High Court allowed the appeal and decreed the suit. It held that the leases were sham transactions were made in contravention of s. 65A of the Transfer of Property Act and were not binding upon the plaintiffs. Before the High Court, it was contended on behalf of the defendants that the plaintiffs were precluded from challenging the leases in view of the orders passed c against Kashinath in the proceedings under 0. 21, r. 58, CPC, but the High Court rejected this contention. Defendants Nos. 2, 6 and 7 and the widow of defendant No. 5 have filed C. A.

No. 988 of 1964 and defendants 1 and 4 have filed C. A. No. 989 of 1964 under certificates granted by the High Court.

The appellants contend that as Kashinath did not file any suit under 0. 21, r. 63, CPC, the adverse orders passed against him in the proceedings under 0. 21, r. 58, CPC operated as res judicata, and he and the deity who now stands in his shoes, were precluded from alleging that the leases were not binding on them.

We think that this contention should be rejected. In view of the orders passed against Kashinath in the claim proceedings and his failure to institute suits under 0. 21, r. 63, CPC, Kashinath was precluded from claiming that he had the right to attach the svit lands in execution of his money decree, but he was not precluded from claiming that he had the right to sell the lands in execution of his mortgage decree. Rules 58 to 62 of Order 21, CPC, provide for a summary investigation of the claims and ob.iections to the attachment of any property attached in execution of a decree.

The issue in the proceeding is whether "such property is liable to such attachment". If the claim is allowed, the property is released from attachment (r. 60). If the claim is disallowed, the attachment continues (r. 61). If the property is subject to mortgage or charge in favour of some person not in possession, the attachment may be continued subject to such mortgage or charge (r. 62). The party against whom an order is made in the claim proceeding may institute a suit to establish the right which he claims to the property in dispute, but subject to the result of such suit. if anv. the order is conclusive ( r. 63). Tf no suit is brou.eht under r. 63 within the prescribed period of limitation, the O'der in the claim proceeding is conclusive on the question whether he

property was or was not liable to attachmnt and sale in. executton of the particular decree. But the order 1s not conclusive for al~ purposes, see Kandadai Narasimhachariar v. Raghava Padayachr

and others('). A claim proceeding under r. 58 is not a suit or a proceeding analogous to a suit. An order in the claim proceeding does not operate as res judicata.

It is because of rule 63 that the order becomes conclusive. The effect of r. 63 is that unless a suit is brought as provided by the rule, the party against whom the order in the claim proceeding is made or any person claiming through him cannot re-agitate in any other suit or proceeding against the other party or any person claiming through him the question whether the property was or was not liable to attachment and sale in execution of the decree out of which the claim procee<ling arose, but the bar of rule 63 eXtends no further

In support of the contention that the orders in the claim proceedings operated as res judicata, counsel for the appellant relied on several decisions. In Subbier v. Moideen Pitchai('), the decree-holder in execution of a money decree attached a debt alleged to be due to the judgment-debtor. The garnishee objected to the attachment on the ground that the debt was not due to the judgment-debtor, it had been assigned and he had promised to pay to the assignee and the amount of the debt was Rs. 300 and not Rs. 350. The objection was disallowed. The attached debt was sold in execution of the decree and was purchased by the decree-holder. The decree-holder purchaser then sued to recover the debt. As the garnishee did not file a suit under 0. 21, r. 63. the order passed against him in the claim proceeding became conclusive, and he was precluded from re-agitating his objection~ in the suit. In the course of his judgment, Schwabe, CJ. referred to s. 11 of the Code of Civil Procedure and his observations l!; ive some support to the contention of the appellants in the pre5ent

case that the order in the proceeding under r. 58 operates as rel! j11dicata.

But we cannot agree with those observations. The order in the summary proceeding under r. 58 does not operate as res jrulicata. The reason why the garnishee could not reagitate his objections was that in view of r. 63 he was nrecluded from asserting that the decree-holder was entitled to attach and sell the Particular debt on the footing that it was due to the judgment-debtor. In Sarju Prasad Missir and others v. Maksudan Choudhuri and others('), O"e Lalji Lal obtained a decree for sale of the property mortgaged to him. In execution of the decre~.

Lalii Lal attacher! !he property, One Kamal Narain Choudhry filed a petition objecting to the attachment. By an order dated September 14, 1886 passed under s. 278, CPC of I 882. corresponding to 0. 21. r. 58 CPC of 190~. th~ executing court directed that the property should not be sold under the decree obtained bv Lalji Lal. Sarju Prasad, an assignee of the decree executed the decree, at the execution sale purchased the property and suhsern 1.L.R. 1946 Mod. 7'1. r2) A.l.R. 1923 Mad. S62. "1 A.l.R. 1922 P.C. 341.

130 SUPIU!MB COURT llBPOJlTS (1967] 3 S.C.ll.

quently instituted a suit against the heir of Kamal Narain for recovery of possession of the property. The Privy Council held that the order dated September 14, 1886 became final and binding upon Lalji Lal and all persons claiming title Under him. Sir John Edge observed :-

"The petition of objection was a petition which the Subordinate Judge had to consider and dispose of and any party to that proceeding who was dissatisfied with the order which the Subordinate Judge might make could have appealed from it. Lalji Lal was a party to that proceeding and he did not appeal, and the order became final and binding upon Lalji Lal and upon those who claim title under him."

The observation that the party dissatisfied with the order made under s. 278 of the Code of Civil Procedure, 1882, could have appealed from the order, seems to have been made per incuriam.

It seems that no appeal Jay from such an order. The reason why Lalji Lal was precluded from contending that the property was liable to be attached and sold in execution of the decree .obtained by him was that in the absence of a suit under s. 283 of CPC

of 1882, he and Sarju Prasad claiming title under him, could not subsequently contend that the property was liable to be sold in execution of the decree. In the two cases discussed above, the adverse orders in the claim proceeding became conclusive on the question whether the property was liable to attachment and sale E in execution of the particular decree then sought to be executed.

Equally, .in the absence of any suit under 0. 21, r. 63, CPC, the adverse orders passed against Kashinath conclusively decided that the suit lands wero not liable to be sold in execution of the money decree obtained by him against Ramtahal Pandey.

But those orders were not conclusive on the question whether the lands were liable to be sold in execution of the mortgage decree obtained by Kashinath against Ramanandan Lal.

On the merits, the question is whether the leases granted by Ramanandan Lal, while he was the mortgagor, in possession of the suit lands were binding on the mortgagee Kashinath. The . High Court held that the leases were in contravention of s. 65A G of the Transfer of Property Act, 1882. Section 65A was inserted in the Transfer of Property Act, 18 82 by s. 30 of the Transfer <>f Property (Amendment) Act, 1929, which came into force on April 1, 1930 Section 63 of the Transfer of Property (Amendment) Act 1929 provided that nothing in the provisions of s. 30 of the amending Act would be deemed if any to affect the "terms H <Jr incidents of anv transfer of nropertv made or effected before the Ist day of April, 1930". Now Kashinath was entitled to the rights of the mortgagees under the mortgages dated February 10,

1886, September 9, 1907, February 5, 1910. All these mortgages were executed before April 1, 1930 and nothing in s. 65A affected their inciaents. The power of the lessor to make leases binding on the mort2aee• wa• an incident of the mortgages and was not affected by s. 65A. The validity of the leases granted by the mortgagor in June 1934 must be determined with reference to the law as it stood before the enactment of s. 65A.

In Madan Mohan Singh v. Ra; Kishori Kumari(') Mookerjee, J, held that a mortgagor iii possession may grant a lease confonnable to usage in the ordinary course of management, for instance he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of house~. But he is not competent to grant a lease on unusual terms or to alter the character of the land or to authorise its use in a manner or for a purpose different from the mode in which he himself had used before he granted the mortgage. This view of the law as it stood before the enactment of s. 65A was approved in Raia Kamaksh, va Narayan Singh Bahadur v. Chohan Ram and Another(') and this court held that the question whether the mortgagor in possession has power to lease the mortgaged property must be determined with reference to the authority of the mort - gagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management. In Gobi11da Chandra

Saha and others v. Sasadhar Manda!("), B. K. Mukherjea, .)1., pointed out that normally a permanent lease with rent fixed in perpetuitv is not sanctioned by the ordinary course of management. He observed :-

"The mortgagor might be within his rights to create a lease which is from month to month or from vear to year as the c.ase might be, but he cannot grant a permanent lease with a rent fixed in perpetuity. This amounts to an alienation of his right to increase the rent in fur~ and is as good as the sale of the property itself.

This is not sanctioned by the ordinary course of management as has been mentioned above nor is it warranted by the previous user of this particular property."

In the present case, defendants 2-7 were lessees under five leases anted by the mortgagor in June 1934. All these defendants claimed to be ve"!Danent lessees with rent fixed in perpetuity.

Four of the leases were granted by registered pattas. Jn respect of four leases the mortgagor received nazrana or premium All !]ie leasei: were created after the property was advertised fr sale in execu!Ion of the mortgage decree. The High Court has found

(I) 21C.W.N.88, 92:--~

(2) [1953J S.C.R.tr8, 118.

13) A.l.R. 1947 Cal. 73, n.

132 SUPllEMB COU!lT llEPO!lTS [1967] 3 s.c.R.

that the leases were created by the mortgagor in bad faith with a view to cause loss to the mortgagee-decree-holder. The leases were not in the ordinary course of management of the mortgagor as the agent or baillif of the mortgagee, and were not binding on the mortgagee.

On behalf of the appellants it was argued that the leases might not be binding on Kashinath while he was the mortgagee, but after he purchased the property he ceased to be a 1Uortgagee, and he could not thereafter assert that the leases were not binding on him. This novel argument is ingenious but unsound.

An auction-purchaser at a sale held in execution of a mortgage decree buys not only the interest of the mortgagor but also the interest of the mortgagee. If the lease does not bind the mortgagee, it does not equally bind the auction-purchaser. It is interesting to notice that in Rust v. Goodale('), Harman, J. held that the right of the mortgagee to treat a tenant of the mortgagor as a trespasser was a right which passed on sale or foreclosure to his assignee.

A lease granted by the mortgagor, out of the ordinary course of management, though not binding on the mortgagee, is binding as between the mortgagor and the lessee. Such a lessee acquires an interest in the right of redemption and is entitled to redeem.

If such a lease is created before the institution of a suit relating to the mortgage, the lessee must be joined as a party to the suit under 0 34, r. 1, CPC; otherwise he will not be bound by the decree passed in the. suit and will continue to retain his right of redemption.

But in view of s. 52 of the Transfer of Property Act, if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction-purchaser. The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property. But if he allows the property to be sold in execution of the mortgai!e decree and they have now Jost the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the rigl.Jt of redemption. They cannot resist the claim of the auctionpurchaser of recovery of possession of the lands.

If a mortgagor in possession of the mortgaged property executes a lease of the property in the ordinary course of management as the agent or bailiff of the mortgagee during the pende1?CY of a suit by the mortgagee to enforce the mortgae. a quest10n may arise whether such a lease is in the eye of the law a lease granted by the mortgagee through his agent ad therefore bin.ding on him. But in the present case, that question does not anse

(t)[19S7] 1 Ch 33, 42, 43.

MANGRU V. TAllAKBSHWAR MATH (Bachowat, J,) 133

as the leases were not granted by the mortgagor in the ordinary course of management as the bailiff or agent of the mortgagee.

The High Court held that the leases were sham transactions.

We do not think it necessary to decide this question. Even assuming that the leases were not sham transactions they were

not binding on Kashinath and the deity. The High Court rightly decreed the suit.

The appeals are dismissed with costs.

There will be one hearing fee,

Y.P.

Appeals dismissed.

MANGRU MAHTO & ORS

THAKUR TARAKNATHJI TARAKESHWAR MATH & ORS

March 8, 1967

K. N. WANCHOO

R. S. BACHAWAT

V. RAMASWAMI, JJ

Code of Civil Procedure

C.P.C

C.P.C

s. 65A

Transfer of Property Act

C.P.C

C.P.C

C.P.C

C.P.C

SUP.IUIMB COURT RBPOB.TS

[1967] 3 S.C.R

s. 65A

Transfer of Property Act

s. 65A

C.P.C

s. 52

Transfer of Property Act

D. Goburdhun

S. C. Agarwal

R. K. Garg

D. N. Mukher

S. Musta{i

Bachawat

Harbans Narain Singh

Basanti Bibi

Harprasad Das

August 2, 1911

Ramanandan Lal

June 23, 1915

Harbans Narain

Mahabir Missir

Ramanandan Lal

Seba

Dhobaha

Mahabir

August 22, 1931

Kashinath

July 13, 1934

November 4, 1935

Dhobaha D

Munshi Sheobaran Lal

Ramatahal Pandey

CPC

20, 1942

February 26, 1944

CPC

J.une 11, 1946

Ramanandan Lai

Thakur Taraknathji

Arrah

High B Court of Patna

s. 65A

Transfer of Property Act

CPC

CPC

CPC

CPC

CPC

Schwabe

s. 11

the Code of Civil Procedure

Lalji Lal

Lalii Lal

Kamal Narain Choudhry

September 14, 1886

s. 278

CPC

CPC

Lalji Lal. Sarju Prasad

Kamal Narain

John Edge

s. 278

Code of Civil Procedure, 1882

s. 283

CPC

Sarju Prasad

CPC

Ramtahal Pandey

s. 65A

Transfer of Property Act, 1882

Section 65A

Transfer of Property Act

s. 30

April 1, 1930

Section 63

s. 30

February 10,

1886

September 9, 1907, February 5, 1910

s. 65A

s. 65A

s. 65A

Mookerjee

s. 65A

B. K. Mukherjea

CPC

s. 52

Transfer of Property Act

MANGRU V. TAllAKBSHWAR MATH


M/S. HAJJ ESMAIL NOOR MOHAMMAD & CO. AND ORS.

A v.

1HE COMPETENT OFFICER, LUCKNOW & ORS.

March 8, 1967

[K. SUBBA RAo, C.J., J. C. SHAH, J. M. SHELAT, V. BHARGAVA 8

AND G. K. MITTER, JJ.]

U.P. Administration of Evacuee Property Ordinance, 1949. Adminis tratlon of Evacuee Property Act (Central) 1950 and Evacuee Interest (Separation) Act (Central) 1951-Partner of firm declared 'evacuee' under U.P. Ordinance-Fresh declaration under s. 7 of 1950 Act whether necessary-Proceedings under 1951 Act before Appellate Authority at Delhi-Appellate Authority appointed by U.P. State but of]ice situated at C Delhi-Allahabad High Court whether has jurisdiction under Art. 226 over Appellate Authority.

Constitution of India, Part /II-Fundamental Rights of partners of firm whether affected by one of the partners being declared evacuee and his property being taken over by Custodian.

A partnership firm carrying on business in Calcutta had also a branch in Kanpur.

In 1948, 'A' one of its partners went away to Pakistan.

Under the United Provinces Administration of Evacuee Pro• perty Ordinance 1949 all evacuee property situated in the United Provinces, vested in the Custodian of Evacuee Property. In September 1949 the Deputy Custodian of Evacuee Property, Kanpur, took possession of the Kanpur property of the firm.

The firm raised objections under s. 8 of the aforesaid Ordinance. On October 18, 1949 a Central Ordinance namely the Administration of Evacuee Property Ordinance 1949 came into force; it was succeeded on April 17, 1950, by the Administration of Evacuee Property Act, 1950.

Under the ptovisions of the Central Ordinance as also the Act any property which had vested in the Custodian under the Provincial Ordinance would be deemed to continue being so vested.

On May 31, 1950 the Deputy Custodian of Evacuee Property (Judicial) Allahabad Circle, Kanpur, dealing with the aforesaid objections raised by the firm held 'A' to be an evacuee and his share in the firm to be evacuee property.

No appeal was filed against this order.

On December 13, 1952 the Competent Officer, Kanpur sent separate notices under s. 6 of the Evacuee Interest Separation Act, 1951 to each of the partners of the firm calling upo!I them to file their claim for the purpose of determining the interest of the evacuee in the partnership business. The firm filed a claim under s. 7 of the Act and raised various objections contending that 'A' was not a member of the firm.

The comA potent officer rejected all the objections. The firm's appeal to the Ap pellate Officer failed; whereupon it filed petitions under Art. 226 of the Constitution before the High Court. The petitions were dismissed by a single Judge who took the view that the orer of the Competent _Officer had merged in that of the Appellate Authority whose office was Sltua•d in Delhi beyond the territorial jurisdiction of the High Court.

Special appeals before the Division. Bench were also dismissed.

Th~. firm and its partners appealed to this Court. They also filed a peht1on under Art. 32. The Court had to consider (i) Whether a fresh notice and declaration under s. 7 of the Centfll Ordinance of 1949 or of th" Central Act of 1950 was necessrrry. (ii) Whether any fundamental right of

the partners of the firm had been affected, (ii') Wheher the Appellate Authority was subject to the jurisdiction of the High Court of Allahabad.

HELD : From the facts it was clear that 'A', in v; ew of disturbed conditions, went away to Pakistan in the year 1948 and therefore he was an 'evacuee' within the meaning of U.P. Ordinance 1 of 1949.

His property i.e. his interest in the partnership business immediately vested under the Ordinance in the Custodian.

This automatic vesting was con~ tin_ued by Central Ordinance 27 of 1949 and Central Act 31 of 1950 by the deeming provisions contained therein.

Therefore no question of issuing further notice or making a declarat:on that the said interest was evacuee property under s. 7(1) of the Ordinance arose. Section 7 only applied to properties other than those which have vested automatically in the Custodian. Such a vesting cannot be reopened under the Central Ordinance or the Central Act for it has already vested !hereunder by a fiction. [142 E-G]

(ii) It followed that the partners had no interest in the share of 'A' in the firm which had vested in the Custodian. They had also acquiesced in the order of the Deputy Custodian of Evacuee Property (Judicial) (Allahabad) holdia.g 'A' 's property to be evacuee property. It was no longer open to them to question that finding.

The partners had therefore no fundamental right in regard to the interest of 'A' in the part

nership. [143 Bl

(iii) The Appellate Authori'y, tnough for convenience having its head office in New Delhi, was factually and legally functioning under the State Act within the territorial jurisdiction of the Allahabad HiP!

Court. Such an appellate authority is located within the territorial limits of the High Court for the purpose of disposing of the appeals under the Act. (146 B-C]

Election Commission, India v. Saka Venkatn Subba Rao (1953] S.C.R. 1144, Lt. Col. Khajoor Singh v. Union of India, (1961] 2 S.C.lt. 828, A. Thangal Kunju Musaliar v. M. Venkitachalam Potti, (1955] 2 S.C.R. 1196, Collector of Cu.r•oms v. East India Commercial Company,

[1963] 2 S.C.R. 563, Shriram Jhunjhunwala v. The S/'al.e of Bomhav A.I.R. 1962 S.C. 670 and The State of Uttar Pradesh v.

Mohammad Nooh, [1958} S.C.R. 595, distinguished.

0RIGINAL/CrvrL APPELLATE JuRrsorcT!ON : Writ Petition No. 14 of 1963.

Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights.

AND Civil Appeals Nos. 1566 and 1567 of 1966.

Appeals by special leave from the judgment and order dated January 11, 1963 of the Allahabad Hi"h Court in Special Appeals Nos. 26 and 27 of J 963 respectively."

S. T. Desai, E. C. Agarwala, Bhawanilal, Champa/ Rai and P. C. Agrawala, for the petitioners (in W.P. No. 14 of 1965).

S. P. Sinha, E. C. Agarwala, Bhawanilal, Champat Rai and P. C. Agrawala, for the appellants (in both the appeals).

l 3fi SUPllBMll COUllT REPOllTS

(1967] 3 S.C.R.

N. S. Bindra and S. P. Nayyar, for the respondents (in W.P.

No. 14 of 1963 and C.As. Nos. 1566 and 1567 of 1966).

Tho Judgment of the Court was delivered by Subbarao, C.J.

The writ petition and the two appeals are ninnected and they arise out of a dispute under the Evacuee interest (Separation) Act, 1951, (Act No. 64 of 1951) in reprd to a partnership firm carrying on business in the name and style of Messrs.

Hajee Esmail Noor Mohammad & Co.

Its principal place of business is Calcutta and it has branches at Kanpur and Bombay.

In 1947 a partnership deed was executed in respect of the said business.

Though the business continued to be carried on under the said name, from time to time, J; iaving regard to the exigencies, new partnership deeds were executed.

In the year 1948, Abdul Latif Hajee Esmail, one of the partners -0f the firm, went to Pakistan.

On May 1, 1949, it appears that the said Abdul Latif Hajee Esmail sent from Pakistan a letter addressed to the partnership firm at Calcutta indicating his intention to retire from the partnership.

On June 24, 1949, The United Provinces Administration of Evacuee Property Ordinance, 1949 (U.P. Ordinance No. 1 of 1949) came into force.

Under that Ordinance all evacuee property situated in the United Provinces vested in the Custodian.

On August 8, 1949, another deed of partnership was executed between the partners excludlng therefrom the said Abdul Latif Hajee-Esmail and the document was registered on October 24, 1949.

On September 7, 1949, l'he Deputy Custodian of Evacuee Property, Kanpur, informed the firn~ that possession of the Kanpur property of the firm would be takrt:1 within 24 hours. Pursuant to the notice, possession of the firm at Kanpur was taken by the Deputy Custodian.

On September 24, 1949, the firm filed a claim une1er s. 8 -Of the U.P. Ordinance I of 1949 to the e!Iect that the said property wa~ not evacuee property.

On October 18, 1949, The AC!m.inistration of Evacuee Property Ordinance No. 27 of 1949, hereinafter called the 'Central Ordinance', came into force.

Thereafter, on April 17, 1950, The Administration of Evacuee Property Act, 1950 (Act 31 of 1950) came into force.

On May 31, 1950 the Deputy Custodian of Evacuee Property (Judicial), Allahabad Circle, Kanpur, in the objection petition filed by the firm found that Abdul Latif Hajeo Esmail was an evacuee, that the notice issued by him to the firm was invalid, as it was not given to the individual partners thereof, that the said Abdul Latif Hajee Esmail would be deemed to be continuing as a partner, that he was an evacuee and that, therefore, his share in the partnership vested in the Custodian.

In the result he declared that the share of Abdul Latif Hajee Esmail in the firm, which was annas 5 out of annas 19 and pies 3, was evacuee property.

He released .the other shares from attachment.

NOOR MOHAMMAD"' co. v. COMPETENT OFFICER (Si1bba Rao, C.I.) 137

appeal was filed against that order.

On December 13, 1952, the Competent Officer, Kanpur, sent separate notices under s. 6 of the Evacuee Interest (Separation) Act, 1951 (Central Act 64 of

1951) to each of the partners of the finn calling upon them to file their claim for the purpose of detennining the interest of the evacuee in the partnership business.

In March 1953, the finn filed a petition under s. 7 of the Central Act 64 of 1951 claimiµg 14 annas and 3 pies share out of the total share of 19 annas and 3 pies of the Kanpur branch of the partnership finn.

On December 31, 1953, Abdul Latif Hajee Esmail died.

On September 12, 1959, the firm raised various objections, including one of jurisdiction, the main objection being that Abdul Latif Hajee Esmail was not a partner of the present firm.

The Competent Officer rejected all the objections and held, by his order dated November 10, 1950, that the firm was accountable to the Custodian in respect of the assets and profits of the firm so far as it related to the Kanpur Branch of the firm, from February I 0,

1949 upto the date of the order.

The firm preferred an appeal against that order to the Appellate Officer appointed under Central Act 64 of 1951.

On April 25, 1960, the Appellate Officer dismissed the appeal.

Thereafter, on July 25, 1960, the firm filed a petition in the High Court of Allahabad under Art. 226 of the Constitution against respondents I and 2 for quashing their orders and for issuing an appropriate writ or suitable directions against all or any of the respondents.

On September 25, 1961, the finn and its partners filed another petition under Art. 226 of the Constitution in the said High Court for similar reliefs.

The second petition became necessary because certain technical objections were raised in regard to the first petition.

On November 29, 1962, Oak, J., of the said High Court dismissed both the petitions. The learned Judge held that the High Court had no jurisdiction to quash the order of the Competent Officer for taking accounts inasmuch as his order had merged in the order of the Appellate Authority whose office was situated in Delhi beyond the territorial jurisdiction of the said High Court.

Special Appeals preferred to a Division Bench of the High Court were also dismissed.

Hence the two appeals.

The firm and its partners also filed a petition in this Court under Art. 32 of the Constitution for the same reliefs.

We shall first take the petition filed in this Court under Art. 32 of tho Constitution.

Mr. S. T. Desai, learned counsel for the petitioners, raised before us the following points : ( 1) Abdul Latif Hajee Esmail was not an evacuee and, therefore, his property was not evacuee property within the meaning of els. ( c) and ( d) of s. 2 of the µ.P. Ordinance No. 1 of 1949 and, therefore, the orders of the Competent Officer or of the Appellate Officer were without IA Sup. Cl/67-10 D.

138 SUPREME COtlltT llBPOl.TS

(1967) 3 S.C.R.

jurisdiction. ( 2) The decision given by the two officers were also without jurisdiction as no notice was issued and as no declaration was made under s. 7 of the Central Ordinance No. 27 of 1949 or of the Central Act 31 of 1950. ( 3) The said officers. also had no jurisdiction to pass any order relating to the share of Abdul Latif Hajee Esmail confined only to the Kanpur branch of the finn. ( 4) In any case, the said Officers committed an error in holding that Abdul Latif Hajee Esmail had a subsisting share in the partnership even after February 10, 1949 and August 8, 1949, i.e., after the dates of reconstitution of the partnership.

Mr. N. S. Bindra, learned counsel for the respondents, apart from contesting the correctness of the points raised by the petitioners' counsel, argued that the petitioners had no fundamental right to maintain the petition.

His contention was that the interest of Abdul Latif Hajee Esmail in the partnership had automatically vested in the Custodian under the provisions of the U.P. Ordinance No. 1 of 1949, that the petitioners had no interest in the said share and, that, therefore, no fundamental right of theirs was affected by the order of the Competent Officer or of the Appellate Officer made in the appeal against the said order.

To appreciate the contentions it. is necessary to consider the provisions of the relevant Ordinance and the Acts.

U.P. Ordina11ce No. 1. of 1949

Section 2. (c) "evacuee'.'.:, means any person,

( i) who, on account of the setting up of the Dominions

of India and Pakistan or on account of civil disturbances or the fear of such disturbances, leaves or F has on or after the 1st day of March, 1947 left any place in the United Provinces for any place outside the territories now forming part of India, or

(ii) who is resident in any place now forming part of

Pakistan and is for that reason unable to occupy, supervise or manage in person his property in the United Provinces or whose property in the Province has ceased to be occupied, supervised or managed by any person, or is being occupied, supervised or managed by an unauthorised person, or ..... .

• • • ( d) "evacuee property" means any property in which an evacuee has any right or interest ...... .

NOOR MOHAMMAD & co. v. COMPETENT OFFICER (S11bba Rao, C.l.) 139

(e) "property" includes any property, right or interest, but does not include a mere right to sue or a cash deposit in a bank.

Section 5.

Vesting of' evacuee property in the Custodian.

(1)

Section

Subject to the provisions of this Ordinance, all evacuee property situated in the United Provinces shall vest in the Custodian. 6.

Notification of evacuee property. ( 1) . The Custodian may from time to time, notify by publication in the official Gazette or in such other

(2)

manner as may be prescribed, evacuee properties which have vested in him under this Ordinance.

Where after the vesting of any evacuee property in the Custodian any person is in possession of any such property, he shall be deemed to be holding it on behalf of the Custodian and shall on being so required, surrender possession thereof to the Custodian or any person appointed by him in this behalf.

Under this Ordinance 'property of an evacuee' as defined in s. 2 ( c) automatically vests in the Custodian under s. 5. Thereafter any person in possession of the said property holds it only on behalf of the Custodian, who can take necessarv steps to take E possession from him.

The Administration of Evacuee Property (Chief Commissioners'

Provinces) Ordinance, No. 12 of 1949.

This Ordinance was extended to the United Provinces by the Administration of Evacuee Property (Chief Commissioners' Provinces) Amendment Ordinance, No. 20 of 1949.

It came into force on August 23, 1949.

Section 5.

Vesting of evacuee property in the Custodian.-

( 1) Subject to the provisions of this Ordinance, all evacuee properties situate in a Province shall vest in the Custodian of that Province.

(2) Where immediately before the commencement of this Ordinance any evacuee property in a Province had vested in any person exercising the powers of a Custo dian under any corresponding law in force in that Province immediately before such commencement. that evacuee property shall, on the commencement of this Ordinance, be deemed to have vested in the Custodian appointed for the Province under this Ordinance.

140 SUPRBMB COURT RBPOJl.TS

[1967] 3. S.C.R.

Section 7 and 8 of this Ordinance correspond to ss. 7 and 8 A of the U.P. Ordinance No. 1 of 1949; the former confers power on the Custodian to take possession of any evacuee property vested in him and the latter provides for filing of claims by interested persons.

L'nder this Ordinance the evacuee property automatically vested in the Custodian was deemed to have vested in the CUstodian for the Province concerned.

Central Ordinance No. 27 of 1949.

This Ordinance came into force on October 18, 1949.

Section 55. ( 1) The Administration of Evacuee Property Ordinance, 1949 (XII of 1949), as in force in the Chief Commissioners' Provinces and the Province of Madras and the United Provinces is hereby repealed.

(2)

( 3) Notwithstanding the repeal by this Ordinance of the Administration of Evacuee Property Ordinance, D 1949, or of any corresponding law, anything done or any action taken in the exercise of any power conferred by that Ordinance or law shall be deemed to have been done or taken in the exercise of the powers conferred by this Ordinance, and any penalty incurred or proceeding commenced under that Ordi- E nance or law shall be deemed to be a penalty incurred or proceeding commenced under this Ordinance as if this Ordinance were in force on the day on which such thing was done, action taken, penalty incurred or proceeding commenced.

Section 8.

(1)

(2)

• Where immediately before the commencement of this Ordinance any evacuee property in a Province had vested in any person exercising the powers of a Custodian under any law repealed hereby, the evacuee property shall, on the commencement of this Ordinance, be deemed to have vested in the Custodian appointed or deemed to have been appointed for the Province under this Ordinance, and shall continue to so vest.

It is clear from the said provisions that the Administration of Evacuee Property (Chief Commissioners' Provinces) Ordinaace, No. 12 of 1949, was repealed and under s. 8 (2 ). the evacuee property automatically vested under U.P. Ordinance No. 1 of

1949 and thereafter deemed to have been vested in the Custodian under the Administration of Evacuee Property (Chief Commissioners' Provinces) Ordinance, No. 12 of 1949, as amend~ by the~~~ tration of Evacuee Property (Chief Col1lllllSS1oners Provinces) Amendment Ordinance, 1949, Ordinance No. 20 of 1949, was deemed to have been vested in the Custodian appointed under this Ordinance. Under the saving clause things done or action taken under the previous Ordinance was deemed to have been taken or done under this Ordinance.

Central Act 31 of 1950

Section 58.

( 1) The Administration of Evacuee Property Ordinance,

(2)

(3)

1949( ...... are hereby repealeil

The repeal by this Act of the Administration of Evacuee Property Ordinance, 1949 . . . . . . shall not affect the previous operation of that Ordinance, Regulation or corresponding law, and subject thereto, any~ thing done or any action taken in the exercise of any power conferred by or under that Ordinance, Regulation or corresponding law, shall be deemed to have been done or taken in the exercise of the powers con~ ferred by or under this Act as if this Act were in force on the day on which such thing was done or action was taken.

Section 8 ( 2) of this Act corresponds to s. 8 ( 2) of the Central Ordinance No. 27 of 1949.

This Act repeals the Ordinance and practically enacts its provisions.

Under this Act also the automatic vesting of the evacuee property in the Custodian under the U.P. Ordinance No. 1 of 1949 deemed to have continued to vest under the Custodian appointed under the Central Ordinance No. 27 of 1949 is continued, by fiction, under this Act.

The High Court of Allal!abad in Azimunnissa's(') case held that there was no valid vesting under Ordinance XII of 1949 or even under Qrdi. nance XX of 1949 for lack of legislative competence and, that, therefore, the deeming clause in Ordinance XXVII of 1949 or Act XXXI of 19 50 would not continue the vesting. This defect was cured by Act 1 of 1960 retrospectively validating the vesting under the earlier laws.

This aspect of the case was considered by this Court in Azimunnissa v. The Deputy Custodian, Evacuee (1l A. I. R. 1951All.561.

I 42 SUPREME COTJllT llBPORTS [1967) 3 S.C.k.

Properties, District Deoria('). Therein Kapur, J., speaking for the Court, observed :

"The effect of s. 8(2-A) is that what purported to have vested under s. 8 (2) of Ordinance XXVII of 1949 and which is to be deemed to be vested under s. 8 of the Act which repealed that Ordinance, notwithstanding any invalidity in the original vesting or any decree or order of the Court shall be deemed to be evacuee property validly vested in the Custodian and any order made by the Custodian in relation to the property shall be deemed to be valid. Thus retrospective effect is given to the Act to validate ( 1) what purports to be vested; (2) removes all defects or invalidity in the vesting or fictional vesting under s. 8 ( 2) of Ordinance XXVII of 1949 or s. 8 (2) of OrdinanC{l XXVll of 1949 or s. 8(2) of the Act which repealed the Ordinance; (3) makes the decrees and judgments to the contrary of anY, court in regard to the vesting ineffective; ( 4) makes the property evacuee property by its deeming effect; and ( 5) validates all orders passed by the Custodian in regard to the property." In the instant case, from the narration of the facts it is clear that Abdul Latif Hajee Esmail, in view of the dis.turbed conditions, went away to Pakistan in the year 1948 and, therefore, he was an evacuee within the meaning of the U.P. Ordinance 1 of 1949.

His property, i.e., his interest in 'the partnership business, automatically vested under the Ordinance in the Custodian.

The Deputy Custodian of Evacuee Property, Kanpur, issued notice to the firm on September 7, 1949, informing the firm that the Kanpur property of the firm would be taken possession.

The said vesting was deemed to have taken place under the Central Ordinance 27 of 1949 and the Central Act 31 of 1950. Subsequent proceedings were taken under the provisions of the said Central Ordinance and Act.

As stated above, the automatic vesting of Abdul Latif Hajee Esmail's share in the firm was continued by Central Ordinance 27 of 1949 and Central Act 31 of 1950 by the deeming provisions contained therein.

Therefore, no question of issuing further notice or making a declaration that the said interest was evacuee property under s. 7 ( 1) of the Ordinance arises. Section 7 only applies to properties other than those which have. been vested automatically in the Custodian.

Such a vesting cannot be reopened under the Central Ordinance or the Central Act, for it has already vested thereunder by a fiction. It follows that the petitioners have no intereat ia the lhare of Abdul Latif Hajee Esmail in the firm which had vested in the Custodian.

(I) (19611 2 S. C.R. 91, 104.

A .

That apart, after the Central Act 31 of 1950 came into force on April 17, 1950, the Deputy Custodian of Evacuee Property .(Judicial), Allahabad, made an order on the objections .filed y the firm.

Therein he held that the share of Abdul Latif Ha1ec Esmail in the firm, i.e., 5 annas out of 19 annas and 3 pies, vested in the Custodian and on that finding declared it to be evacuee B property.

That order had become final.

The firm did not take ll!IY further proceedings under the Act to set as!de that orer whic~ had become final.

It is no longer open to 1t to questton finding.

It follows that the petitionrs hve no fu.nental nght in regard to the interest of Abdul Latif Ha1ee Esmail m the partnership. c But this will not dispose of the petition.

The petition is not solely based upon the fundamental right in respect of the interest of Abdul Latif Hajee Esmail, for the allegations made in the petition and the reliefs asked for disclose that the petitioners' case IS that the fundamental right of the firm and its partners is infringed by the impugned orders in the manner mentioned in the D petition.

But the reliefs asked for are similar to those asked for in the appeals.

As we lire remanding the appeals to the High .Court for decision on merits, the other questions raised in the

writ petition can more conveniently be disposed of only after the High Court gives its findings on the other points raised in the appeals. If the appeals succeed in the High Court, this writ g petition will become unnecessary; if they fail, the findings therein will be binding in the writ petition.

In that event, if appeals are filed in this Court, the questions will be finally decided therein.

In these circumstances we dismiss the writ petition without prejudice to the petitioners' personal rights which we will presently"consider in the appeals.

This order will be subject to the final orders ll that may be passed in the petitions by the High- Court pursuant the order of remand that we are making in the appeals. There Mil be no order as to costs.

Now coming to the appeals, the High Court, as indicated

ar.lie~, ismis~ the wri~ peti!ions on the ground that it had no JUrisd1ct1on to ISsue a wnt agamst the Appellate Officer in whose G order .the order of the Competent Officer had merged as he

Jield his office outside the territorial jurisdiction of the Higb Court CJf Uttar Pradesh.

To appreciate this argument it is necessary to state some relevant facts.

The Competent Officer of Kanpur who made the H Clfder dated November 10, 1959, has his office at Kanpur in Uttar Pradesh. 'f!1e ; Appellate Officer, who by his order dated April

25, 1960, dismISs~ the appeal against the order of the Competent Officer, has his office located at New Delhi. In the memo-

144 SUPRBMB COUllT REPORTS

randum of appeal filed by the appellants before the Appellate Officer the location of his office was described thus :

"In the Court of the Appellate Officer. Under the Evacuee Interest (Separation) Act, 1951. Ministry of Rehabilitation. Government of India, Dilaram Place, Mussoorie." In the order of the Appellate Officer, the said Officer is described thus :

"Shri Parshottam Swarup, Appellate Officer, India."

It also shows that the appeal was heard and the judgment was delivered at Allahabad.

In the counter-affidavit filed in the writ petition on behalf of the Appellate Officer it is stated in paras 4(a) and 4(b) that the office of the Appellate Officer is situated at New Delhi and the record of the Appellate Court is kept at Delhi.

In the rejoinder affidavit filed by the appellants it is aver- .red that the Appellate Officer to whom the appeal was presented

had his head-office at Mussoorie, that he was appointed by the State Government and that he gave his decision at Allahabad on April 25, 1960. From the aforesaid affidavits the following facts emerge : The Competent Officer's office is at Lucknow and he made his order at Lucknow.

The Appellate Officer, who was appointed by the State Government, had his main office at Mussoorie in Uttar Pradesh, heard the appeal at Allahabad and dismissed it there.

Later on, his main office was shifted to Delhi.

Section 2(a) of the Evacuee Interest (Separation) Act, 1951 (Act No. 64 of 1951) defines "appellate officer" thus:

" "appellate" officer means an officer appointed as such by the State Government under section 13."

Under s. 13 of the said Act, the State Government with the approval of the Central Government may, by l)Otification in the Official Gazette, appoint as many appellate officers as may be necessary for the purpose of hearing appeals against the orders of the competent officers and an appellate officer shall have jurisdiction over such local area or areas as may be specified in . the notification.

Sections 14 to 18 provide for filing of appeals and also define the powers of the competent appellate officers in the matter of disposing of those appeals. The Appellate Officer therefore derives his jurisdiction under a State statute, he is appointed by the State Government, though in consultation with the Central Government, and exercises his jurisdiction within the territorial limits of the High Court. It appears that the snme officer is also appointed by other States and that for convenience his office is now situated at Deihl, though he disposes of appeals

pertaining to each State cinly in that State.

A On these facts the question arises whether the High Court of Allahabad has jurisdiction to issue a writ under Art. 226 of t_he Constitution against the Appellate Officer. It has now been well settled that under Art. 226 of the Constitution, before it wa:. amended, the High Court had no jurisdiction to issue a writ thereunder against a person or authority unless the person or authority resided or was located within the territorial jurisdiction of the appropriate High Court : See Election Commission., India

v. Saka Venkata Subba Rao(') and Lt. Col. Kha1oor Singh v.

T/1e Union of India( 2). In the context of jurisdiction of the High Court to issue a writ of certiorari against orders made by a hierarchy of tribunals or authorities, two situations arise, namely, c ( l) where the order of an appellate authority or tribunal, having its office 0utside the territorial jurisdiction of the High Court, is a nullity, and (ii) where the order of the original authority within the territorial jurisdiction of the High Court merges with !hat of the appellate authority outside its terriiorial jurisdiction, in the former case the appropriate High Court can issue a writ against the D order of the original authority. and in the latter it cannot : see

A. Thangal Kunju Musaliar v. V. Venkitachalam Pott('); Collector of Customs v. East India Commercial Company('); and Shriram lhunjhunwala v. The State of Bombay('). This Court has also held that in all cases after the appellate authority has disposed of the appeal. the operative order was of the final authority whether it has reversed, modified or confirmed the original E orders : see Collector of Customs v. East India Commercial

Company('). Though Das, C.J., in The State of Uttar Pradesh _v. Mohammad Noah("), was not able to equate the orders made m departmental enquiries with decrees in civil courts in the context of the doctrine of merger, this Court in Collector of

<; ust<?ms, Calcutta v. East India Commercial Co., Ltd.(') dis- 11 tinguIShed that case with the following observations at p. 573 : . . ·~t case was .not concerned with the territorial Jnscn. of the High Court where the original authonty is w1n sch territorial jurisdiction while the appellate auonty 1s not and must therefore be confined to the special facts with which it was dealing."

G thhthc~ the Court held that, as the Central Board of Revenue otli c . a confirm":? the order of the Collector of Customs had its wri~ m. Ne~ Delhi, !he Calcutta High Court could not issue a . agt .1t., But m none of the cases tile Court considered tli;1tuatron similar to that now presented to us. They dealt witl!

a~ of an appellate autl!ority or tribunal which had been R appomt by the Central Government and was disposing of only

(I) (1953] S.C.R. 1144

(3) [1955] 28 CR 1196

(4) [1963] 2 s.c.R. 563. • •

(6) (1958]8.C.R. 595, 610.

146 SUPUMB COtlllT llBPOllTS

[1967} 3 S.C.R.

statutory appeals or other proceeding.! in a place outside the territorial jurisdiction of the concerned High Court, though in one

of the cases, i.e., Election Commission, India v. Saka Yenkata Subba Rao('), the Central Authority for convenience heard the parties and made the order within the territorial jurisdiction of the High Court. In all thase cases the appellate authority, both factually and legally; had its residence or location outside the territorial jurisdiction of the High Court. But in the present case, the appellate authority, though for convenience is having its head office in New Delhi, is factually and legally functioning under .the State Act within the territorial jurisdiction of the High Court.

To hold that such an authority which is appointed by the State Government and holds office, entertains and disposes of appeals within the State is outside the jurisdiction of the High Court is to carry technicality beyond reasonable limits. One can hold reasonably that such an appellate authority is located within the territorial limits of the High Court for the purpose of disposing of the appeals under the Act. This is a converse case where lega!.'y and factually the appellate authority is located in the State though for convenience it also holds office in New Delhi, as presumably the same officer has been appointed appellate officer by other States under different Acts.

We, therefore, hold that the High Court has jurisdiction to issue a writ in appropriate cases against such an authority under Art. 226.

In the result, the order of the High Court is set aside and the appeals are remanded to it for disposal in accordance with . law.

Costs will abide the result.

G.C.

Appeal remanded.

M/S. HAJJ ESMAIL NOOR MOHAMMAD & CO. AND ORS

M/S. HAJJ ESMAIL NOOR MOHAMMAD & CO. AND ORS

1HE COMPETENT OFFICER, LUCKNOW & ORS

K. SUBBA RAo, C.J.

C. SHAH, J.

M. SHELAT

V. BHARGAVA

G. K. MITTER, JJ.

Adminis tratlon of Evacuee Property Act

s. 7

Art. 226

Constitution of India

Calcutta

Kanpur

Pakistan

s. 8

October 18, 1949

April 17, 1950

Administration of Evacuee Property Act, 1950

May 31, 1950

December 13, 1952

s. 6

Evacuee Interest Separation Act, 1951

s. 7

the Evacuee Interest Separation Act, 1951

the Evacuee Interest Separation Act, 1951

Art. 226

Delhi

Art. 32

s. 7

High Court of Allahabad

s. 7(1)

Section 7

New Delhi

(1955] 2 S.C.R. 1196

[1963] 2 S.C.R. 563

Art. 32

Constitution of India

S. T. Desai

E. C. Agarwala

Bhawanilal

Champa/ Rai

P. C. Agrawala

S. P. Sinha

Champat Rai

N. S. Bindra

S. P. Nayyar

Subbarao

Hajee Esmail Noor Mohammad & Co.

Bombay

Abdul Latif Hajee Esmail

May 1, 1949

Abdul Latif Hajee Esmail

June 24, 1949

August 8, 1949

Abdul Latif Hajee-Esmail

October 24, 1949

September 7, 1949

September 24, 1949

s. 8

Evacuee Property Ordinance

Abdul Latif Hajeo Esmail

s. 6

The Administration of Evacuee Property Act, 1950

The Administration of Evacuee Property Act, 1950

s. 7

December 31, 1953

September 12, 1959

November 10, 1950

April 25, 1960

July 25, 1960

Art. 226

September 25, 1961

Art. 226

November 29, 1962

Oak

Art. 32

Art. 32

s. 2

SUPREME COtlltT llBPOl.TS

(1967) 3 S.C.R.

Cl/67-10 D.

138 SUPREME COtlltT llBPOl.

s. 7

February 10, 1949

Section 2

1st day of March, 1947

India

Section 5

s. 2

s. 5

August 23, 1949

Section 5

Section 7 and 8

ss. 7 and 8

Section 55

Madras

Section 8

s. 8

Amendment Ordinance, 1949

Section 58

Section 8

s. 8

High Court of Allal!abad in

Azimunnissa

Therein Kapur

s. 8(2-A)

s. 8

s. 8

s. 8

s. 8

s. 8(2)

s. 7

Section 7

Allahabad

Abdul Latif Ha1ec Esmail

Abdul Latif Ha1ee Esmail

Abdul Latif Hajee Esmail

Mussoorie

Government of India, Dilaram Place, Mussoorie."

Parshottam Swarup

Lucknow

Uttar Pradesh

Section 2(a)

section 13

s. 13

Central Government

Sections 14 to 18

Deihl

Art. 226

Art. 226

Das

Calcutta High Court

he Calcutta High Court could not issue a .

SUPUMB COtlllT llBPOllTS

[1967} 3 S.C.R.

Art. 226


MADAN LAL v.

SUNDERLAL & ANOTIIER

March 9, 1967

[K. N. WANCHOO, R. S. BACHAWAT AND V. RAMASWAMI, IJ.]

Arbitration Act 10 of 1940-S. 30, objection on filing award-con- 1aining grounds for setting it aside-Whether Art. 158 Limitation Act applicable.

An arbitration award in respect of certain disputes between the appellant and the respondents was filed in Court and notice of the served on the appellant on September 30, 1957. The appellant filed an objection on November 3, 1957 attacking the validity of the award 011 various grounds.

The respondents contended before the trial Court that the objection was in the nature of an application to set aside the award and contained grounds which fell under s. 30 of the Arbitration Act 10 o~ 1940; lberefore as the objection was filed more than 30 days after notice wu served o~ the appellant,. it was barred by limitation under Art. 158 of the Limitation Act No. 9 of 1908. The trial Court '!!'held the appellant's objection and an appeal to the High Court was dismissed.

On appeal to this Court,

HELD : Dismissing the appeal,

The Arbitration Act contemplates making of an application to set aside an award on grounds mentioned in s. 30.

This application must be made within 30 days of the date of service of notice as provided in Art. 158 of the Limitation Act.

An objection petition in 1he nature of a written-statement may in appropriate cases be treated as such .applica- on provided it is filed within the period of limitation prescribed. 1f the court has the power to set a•ide an award suo m_otu that power cannot be used to set aside an award on grounds falling under s. 30, If taken in a petition filed more than 30 days after the service of notice, for in that case the limitation provided would be completely neptived.

(151 E, G-H; 152 D-E]

Hastimal Dalichand Bora v. Hlralal Motichand Mutlta, A.I.ll. (1954) Born. 243, Saha cl Co. v. Ishar Singh v. Krlpal Singh, A.l.R (1956) Cal. 321 and M, ohan Das v. Kwumal, A.I.R. (1955) Ajm. 47, distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No 990 of 1964. .

Appeal from the judgment and decree dated April 15, 1963 of the Allahabad High Court, Lucknow Bench in First Appeal from Order No. 30 of 1960.

B. C. Misra and C. P. Lal, for the appellant.

P. K. Chatterjee, for respondeq.t No. 1.

S. P. Sinha and P. K. Chatterjee, for respondent No. 2.

148 SUPREME COURT RBPOllTS (1967] 3 S.C.ll.

The Judgment of the Court was delivered by

Wanchoo, J. This is an appeal on a certificate granted by the Allahabad High Court and arises' in the following circumstances.

On May 20, 1965, an agreement was entered into between the appellant and the respondents referring certain differences between them to the arbitration of three persons. On January 19, 1956, an award was made, signed by two out of the three arbitrators as the third arbitrator had refused to sign the award. The award was filed in court on September 7, 1957 and the respondents prayed for a decree in accordance with the award. Notice of filing of the award was issued to the appellant and was served upon him on September 30, 1957. On November 3, 1957, the appellant filed an objection in the nature of a written statement. By this objection the appellant attacked the validity of the award on various grounds. But the objection did not contain any prayer at the end, nor did it indicate what relief the appellant desired, though there were as many as 43 paragraphs therein. When the matter came to be heard in the trial court, the respondents contended that the so-called objection was in the nature of an application to set aside the award and contained grounds coming under s. 30 of the Arbitration Act, No. 10 of 1940, (hereinafter referred to as the Act).

Therefore, as the objection was filed more than 30 days after the notice was served on the appellant, it was barred by limitation under Art. 158 of the Indian Limitation Act, No. 9 of 1908.

The trial court held that the appellant's objection was not maintainable, as his remedy was to apply under s. 33 of the Act, if he wanted the award to be set aside on the grounds raised in the objection. As ilehad not done so and as the objection was itself filed more than 30 days after the service of notice on him, he was barred from raising any ground for setting aside the award which fell under s. 30 of the Act.

The trial court also held that the objection could not be treated as an application under s. 33 of the Act in view of the fact that it was beyond 30 days as required by Art. 158 of the Limitation Act. The trial court therefore passed a decree in terms of the award.

The appellant then went in appeal to the High Court, and the main question urged there was whether the appellant could maintain his objection when he had failed to make an application under s. 33 of the Act for setting aside the award on grounds contained in the objection. It seems that there were other points also before the High Court, but the High Court held that if the main question was answered against the appellant it would not be necessary to go into other points. It seems therefore that other points were not pressed before the High Court. , Thd High. Court came to !he

conclusion that the award could not be set aside on grounds which fell under s. 30 of the Act, except on an application under s. 33

MADANLAL v. SUNDER, LAL (Wanchoo, 1.) t4i.

of the Act within thirty days of the service of notice of filing of the award as required by Art. 158 of the Limitation Act. The High Court further held that the objection of the appellant could not be treated as an application under s. 33, as, if it was treated

as such application, it would be barred by time. The High Court therefore dismissed the appeal, but granted a certificate to theappellant to appeal to this Court.

We have heard learned counsel for the appellant on the main question raised in the High Court.

We may add that learned counsel wanted to raise other points which were not pressed before the High Court, but we have not permitted him to do so.

We are of opinion that this appeal must fail. The Act was. passed in 1940 and as the long title shows it is an Act to consoli date and amend the law relating to arbitration. Before 1940, the law relating to arbitration was mainly contained in the Second Schedule to the Code of Civil Procedure, which was repealed by the Act which is now a self-contained code in the matter of arbitra tion.

The scheme of the Act is to divide arbitration into three classes. The first consists of arbitration without intervention of a court and is contained in Chap. II of the Act which has 17 sec

tions from s. 3 to s. 19. The second consists of arbitration with i:itervention of a court where there is no suit pending, which is in Chap. III of the Act, and there is only one section (s. 20) therein, as sub-s. (5) thereof applies the other provisions contained in the Act to this type of arbitration also so far as they can be made appli

cable. The third type of arbitration is contained in Chap. IV, namely, arbitration in suits.

This chapter contains 5 sections, and s. 25 thereof applies the other provisions of the Act so far as they can be made applicable.

Chapter Il makes various provisions with respect to arbitrations of the first type. Reference may be made to a few which are material for our purpose. SC\:tion 5 lays down that the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the court, unless a contrary intention is expressed in the arbitration agreement.

Section 8 gives power to court to appoint an arbitrator or umpire in certain circumstances. Section 11 gives power to court to remove an arbitrator or umpire in certain circumstances and s. 12 gives consequential power to court to appoint persons to fill vacancies which may have arisen. Section 13 provides for powers of the arbitrators and s. 14 provides for the award to be sill!led and filed.

When the award is filed the court has to give notice to the parties of the filing of the award under s. 14(2). Under s. 15, the court is given power to modify or correct an award and under s. 16 the court can remit the award for reconsideration.

Section 17 provides for judgment in terms of the award and reads thus :-

150 SUPRBMB COUllT RBPORTS (1967] 3 s.c.R.

"Where the court sees no cause to remit .award on any of the matters referred to arbitration for reconsideration or to set aside the award, the court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according.to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award." Section 19 gives power to the court to supersede the arbitration agreement in certain circumstances.

This analysis of the relevant provisions of the Act contained in Chapter II which apply mutatis mutandis to arbitrations of the other two types shows that the court has to pronounce judgment in accordance with the award if it sees no cause to remit the award or any of the matters referred to arbitration for reconsideration, or if it sees no cause to set aside the award. The court has to wait for the time given to a party to make an application for setting aside the award and where such an application has been made the court has to decide it first and if it rejects it the court proceeds to pronounce judgment according to the award. It is clear therefore from s. 17 that an application to set aside the award is contemplated therein and it is only when no such application has been made within the time allowed or if such an application has been filed and has been rejected that the court proceeds to pronounce judgment in terms of the award. The Act therefore contemplates the making of an application to set aside an award and the grounds on which such an application can be made are to be found in s.

30. Tue grounds on which an application can be made for setting aside the award are-(a) that an arbitrator or umpire has misconducted himself or the proceedings, (b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under

11. 35, or (c) that an award has been improperly procured or is otherwise invalid. These are the only grounds on which an award can be set aside uqder s. 30 and it will be seen that if a party wants 11n 1lward to be set aside on any of these grounds it has to make 11n application.

Thus any party wishing to have an award set aside on the ground that it was improperly procured or otherwise invalid has to make an application. We may also refer to s. 32 which lays down that "notwithstanding any law for the time being in force, no suit shall lie .on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or 11ward, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act.".

MADANLAL v. SUNDEil LAL (Wanchoo, /.) 151

It is clear therefore from me scheme of the Act that if a party wants an award to be set aside on any of the grounds mentioned in s; 30 it must apply within 30 days of the date of service of notice of filing of the award as provided in Art. 158 of the Limitation Act. If no such application is made the award cannot be set

as~ on any of the grounds specified in s. 30 of the Act. It may be conceded that there is no special form prescribed for making such an application and in an appropriate case an objection of the type made in this case may be treated as such an application, if it is filed within the period of limitation. But if an objection like this. has been filed after the period of limitation it cannot be treated as an application to set aside the award, for if it is so treated it will be barred by limitation.

It is not in dispute in the present case that the objections raised by the appellant were covered by s. 30 of the Act, and though the appellant did not pray for setting aside the award in his objection that was what he really wanted the court to do after hearing his objection.

As in the present case the objection was filed more than 30 days after the notice it could not be treated as an application for setting the award, for it would then be barred by limitation The position thus is that in the present case there was no application to set aside the award as grounds mentioned in s. 30 within the period of limitation and therefore the court could not set aside the award on those grounds. There can be no doubt on the scheme of the Act that any objection even in the nature of a written-statement which falls under s. 30 cannot be considered by the court unless such an objection is made within the period of limitation (namely, 30 days), though if such an objection is made within limitation that objection may in appropriate cases be treated as an application for setting aside the award.

. Learned counsel for the appellant however urges that s. 17 gives power o the court to set aside the award and that such powacan be exercised even where an objection in the form of a writtenstatment has n made more than 30 days after the service of the notice .of e 1!Jing of th~ award as the court can do so suo motu He relies Ill this connectton on Hastimal Dalichand Bora v H" l110tichand ¥utha(') and Saha & Co. v. lshar Singh KriPaI S; gh

( ) AssllDllllg that ·!11~ court has power to set. aside the award suo motu: we are of op1ruon that that power cannot be exercised to set as1e an award on grounds which fall under s 30 of the A t "f tf en !11 an obection petition filed more than 30 °days after sei~ o n?ttce of filmg of the award, for if that were so the limitation Provtded uner Art. 158 of the Limitation Act would be complet~Iy negati~~· The two cs on which the appellant relies do not m our Oplll!on support him. In Hastimafs case(') it was

(0 A.I.R. 1954 Bom. 243.

(2) A.f.R. 1956 Cal, 32!.

152 SUPREME COURT llEPOllTS [1967] 3 S.C.ll.

observed that "if the award directs a party to do an act which is prohibited by law or if it is otherwise patently illegal or void it would be open to the court to consider this patent defect in the

iiward suo motu, and when the court acts suo motu no question of limitation prescribed by Art. 158 can arise". These observations only show that the court can act suo motu in certain circumstances which do not fall within s. 30 of the Act.

Saha & Co.'s case(') was a decision of five Judges by a majority of 3 : 2 and the majority judgment is against the appellant. The minority judgment certainly takes the view that the non-existence or invalidity of an arbitration agreement and an order of reference to arbitration may be raised after the period of limitation for the purpose of setting aside an award because they are not grounds for setting aside the award under s. 30. It is not necessary in the present case to resolve the conflict between the majority and the minority Judges in Saha & Co.'s case('), for even the minority judgment shows that it is only where the grounds are not those falling within s. 30, that the award may be set aside on an objection made beyond the period of limitation, even though no application has been made for setting aside the award within tl1e period of limitation. Clearly therefore where an objection as in the present case raises grounds which fall squarely within s. 30 of the Act .that objection cannot be heard by the court and cannot be treated as an application for setting aside the award unless it is made within the period of limitation. Th~ Saha & Co.'s case(') therefore also does not help the appellant.

Learned counsel for the appellant also relies on Mohari Dll3

v. Kessumal ('). In that case the objection which was made more than 30 days after the service of notice was that the award had been filed by a person not authorised by the arbitrator to do so. The

court held that such an objection did not fall within s. 30 of the Act and therefore Art. 158 of the Limitation Act did not apply.

On these facts the decision in that case may be right.

But the court seems to have made a general observation that Art. 158 cannot apply to a written-statement by a defendant in reply to an application to have the award made a rule of the court. If by that general observation the court means that even if the objection is of the nature falling within s. 30 and is filed more than 30 days after service of notice, it would be open to the court to set aside the award on such objection, we are of the opinion that the view is incorrect.

In the result the appeal fails and is hereby dismissed with costs.

R.K.P.S.

(I} A.l.R. 1956 Cal. 321. (2)AJ.R. 1955 Ajm. 47

Appeal dismissed.

MADAN LAL

SUNDERLAL & ANOTIIER

K. N. WANCHOO

R. S. BACHAWAT

V. RAMASWAMI

S. 30

Art. 158

Limitation Act

s. 30

Art. 158

Limitation Act

s. 30

Art. 158

Limitation Act

s. 30

CIVIL APPELLATE JURISDICTION

Allahabad High Court, Lucknow Bench

B. C. Misra

C. P. Lal

P. K. Chatterjee

S. P. Sinha

Wanchoo

Allahabad High Court

January 19, 1956

September 7, 1957

September 30, 1957

November 3, 1957

s. 30

Art. 158

Limitation Act

s. 33

s. 30

s. 33

Art. 158

Limitation Act

s. 33

s. 30

s. 33

Art. 158

Limitation Act

s. 33

Second Schedule

the Code of Civil Procedure

s. 3

s. 19

s. 20

s. 25

Section 8

Section 11

s. 12

Section 13

s. 14

s. 14(2)

s. 15

s. 16

Section 17

Section 19

s. 17

s.

30

s. 30

s. 32

Art. 158

Limitation Act

s. 30

s. 30

s. 30

s. 30

s. 17

s 30

Art. 158

Limitation Act

Art. 158

s. 30

Saha & Co.

s. 30

s. 30

s. 30

s. 30

Art. 158

Limitation Act

Art. 158

s. 30