CPC

Op EdsOP. ED.

Order 1 of the Civil Procedure Code, 1908[1] addresses the varied issues concerned with the first and most prominent ingredient of civil suits: parties to a suit. This encompasses questions of addition, deletion, substitution, transposition as well as non-joinder and misjoinder of parties to a suit. The parties in a civil suit are the plaintiff i.e. the person who brings an action for his rights and the defendant i.e. the person against whom such rights are claimed. However, there may arise a situation wherein, upon institution of a suit, it may be realised that in addition to the existing parties in the suit, there may be persons whose presence may be material to effectively determine the questions arising from the subject-matter of the suit. Such situations are rectified by “joinder of parties[2]” either upon application by an existing party to the suit or suo motu by the court before which the civil suit is in lite.

The concept of “joinder of parties” includes non-joinder and misjoinder of parties to a suit and means the inclusion or exclusion of particular persons in a suit. Such joinder of parties is not a matter of initial jurisdiction of the court but a question of judicial discretion which has to be exercised in view of all the facts and circumstances of a case.[3]

Considerations to be borne when exercising the powers of joinder of parties

The powers granted to a court regarding joining of parties are very wide and extensive under Rule 10(2) of Order 1[4] and the following two considerations must be borne in mind while exercising these powers:

(i) The plaintiff is dominus litis i.e. he is the best judge of his own interest. Therefore, it is upon the plaintiff to choose his opponent from whom relief is claimed. Ordinarily, the court should not compel the plaintiff to fight against a person whom he does not desire to fight and from whom he claims no relief; and

(ii) If the court is satisfied that presence of a particular person is necessary to effectively and completely adjudicate all the disputes between the parties, irrespective of the wishes of the plaintiff, the court may exercise the power and join a person as a party to the suit.

The line has been drawn on a wider construction of the rule between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer i.e. he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights.[5] The question to be posed is whether there is curtailment or extinction of a legal right of the person.

The true test lies not so much in an analysis of what are the constituents of the applicants’ rights, but rather in what would be the result on the subject-matter of the action if those rights could be established.[6] The test is “may the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights”.[7]

Based upon these considerations, the court shall exercise its powers of joinder at any stage of the proceeding either upon an application by a party to the suit or suo motu on such terms and conditions as the court may deem just.

Doctrine of necessary and proper parties in essence

The doctrine of necessary and proper parties is eminent when determining this question of joinder or non-joinder of parties. There is a vital distinction between a necessary and a proper party to a suit. A necessary party is one whose presence is a sine qua non to the constitution of the suit and without whom, no effective order can be passed with respect to the questions arising before the court.[8] In contradistinction to this, a proper party is one in whose absence although an effective order can be passed, but whose presence is necessary for a complete and final decision on the questions involved in the proceeding.[9]

Two tests have been laid down for determining the question whether a particular party is a necessary party to a proceeding[10]:

(i) there must be a right to some relief against such party in respect of the matter involved in the proceeding in question; and

(ii) it should not be possible to pass an effective decree in absence of such a party.

In light of impleading necessary parties, regard must be had that joinder of parties shall not result in alteration of nature and character of the suit. For instance, in a suit for specific performance of a contract for sale, the necessary parties would be the parties to the contract or if they are dead, their legal representatives as also a person who had purchased contracted property from the vendor.[11] However, a person who claims independently or adversely to the claim of the vendor would not constitute a necessary party as it would change the nature of the suit. The proper course of action for such person would be to institute a separate suit for declaration of title.[12]

The abovementioned considerations were reiterated by the Supreme Court in Gurmit Singh Bhatia v. Kiran Kant Robinson[13] and it was observed that:

“A third-party or a stranger cannot be added in a suit for specific performance, merely in order to find out who is in possession of the contracted property or to avoid multiplicity of the suits. A third-party or a stranger to a contract cannot be added so as to convert a suit of one character into a suit of different character.”

The very object of the “doctrine of necessary and proper” parties is to include all such parties as would be necessary grant an effective relief for the issues that are pendente lite in the matter at hand. Therefore, where the issues before the Court pertain to a particular subject- matter, no person can be joined as a party merely on the ground that his claims relate to the subject-matter of the case but requires framing of additional issues. The mere fact that a fresh litigation could be avoided is no ground to invoke the power under Rule 10 of Order 1[14] in such cases.[15]

For instance, in a suit for specific performance of contract for sale between Party A (i.e. vendor) and Party B (i.e. purchaser) who are the parties to such contract would be necessary parties. While a person C, who claims a title adverse to the title of the Vendor (i.e. Party A) would not constitute a necessary party as this would alter the nature of present suit and result in conversion of a suit for specific performance of contract for sale into a suit for declaration of title, thereby enlarging the scope of suit. The effective remedy for Person C in such case would be to institute a separate suit and file a fresh claim against Party A.

Therefore, it may be concluded that persons, stranger to the contract, would also be strangers to the proceeding in that suit.

“Who constitutes a necessary party?” in light of judicial precedents

The principle of natural justice “audi alteram partem” forms the quintessential basis of Order 1 Rule 9[16], elucidating that, “No order can be passed behind the back of a person adversely affecting him and such an order if passed, is liable to be ignored being not binding on such a party as the same has been passed in violation of the principles of natural justice.”[17]

Therefore, it is well-settled principle consistent with natural justice that if some persons are likely to be affected on account of setting aside a decision enuring to their benefit, the court should not embark upon the consideration and the correctness of such decision in the absence of such persons.[18]

Where the plaintiff sued for possession and declaration that the auction proceedings and the subsequent conveyance by auction purchaser to defendant were void in law under a certain Act, it was held by the Supreme Court, that the liquidator was a necessary party and in his absence the suit for declaration must fail.[19]

In a suit filed against a doctor owing to his medical negligence, the doctor was held to be a necessary party since relief was claimed from him. However, the insurance company from whom the insurance had been obtained was held as neither a necessary nor a proper party, since no relief had been claimed from the said company.[20]

In a land acquisition proceeding, the local authority is a necessary party in the proceedings before the Reference Court and is entitled to be impleaded as a party in those proceedings wherein it can defend the determination of the amount of compensation by the Collector and oppose enhancement of the said amount and also adduce evidence in that regard[21].

An unsuccessful candidate challenging the selection as far as the service jurisprudence is concerned is bound to make the selected candidates parties. In Prabodh Verma v. State of U.P.[22] and Tridip Kumar Dingal v. State of W.B.[23], it has been held that “if a person challenges the selection process, successful candidates or at least some of them are necessary parties”. The aforesaid decisions do not lay down as a proposition of law that in every case when a termination is challenged, the affected person has to be made a party. What has been stated is when one challenges a provision as ultra vires the persons who are likely to be affected, some of them should be made parties in a representative capacity.

Furthermore, it must be reiterated that although the provisions of Civil Procedure Code do not strictly and holistically apply to writ petitions, the principle underlying Order 1 Rule 9 shall be applicable to writ petitions.

Statutory exceptions to Rule 10 of Order 1

There are certain special statutes which clearly provide as to who are the persons to be made as parties in the proceeding/suit filed under that special statute. For example, the provisions under Section 82 of Representation of the People Act, 1951[24] clarify the persons that are to be made parties in an election petition. There are other special statutes which also postulate who can be joined as parties in the proceedings instituted under that special statute, otherwise the provisions of CPC would be applicable.

Hence, it must be concluded that provisions of Rule 10 of Order 1 of the Civil Procedure Code, 1908[25] must be construed and interpreted harmoniously in addition to and not in derogation of any express statutory provision in this regard. The Civil Procedure Code is only a general law governing the procedure to be followed in case of civil suits and hence, when an express provision is made in any other statute about the joinder of additional parties or such other procedure to be followed, such special procedure shall prevail over the general law governing civil suits. This is based on well-founded rule of interpretation of statutes “generalia specialibus non derogant”.

Difference between non-joinder and misjoinder of parties

Where a person, who is a necessary or a proper party to a suit has not been joined as party to such suit, it is a case of non-joinder. Conversely, if two or more persons are joined as plaintiff or defendants in a suit in contravention to Rules 1[26] and 3[27] of Order 1 of the Civil Procedure Code, 1908 and they are neither necessary nor proper parties, it is a case of “misjoinder” of parties.

All objections on the ground of non-joinder or misjoinder of parties shall be taken at the earliest possible opportunity and always before settlement of issues, unless the ground of objection has subsequently arisen[28]. Any such objection not so taken shall be deemed as a waiver.[29]

Although a defect of non-joinder is serious, it is not incurable and the court may pass appropriate directions to join a person if it believes that such a person is a necessary party.

A suit cannot be dismissed only on the ground of non-joinder or misjoinder of parties subject to the exception that non-joinder of a necessary party may render fatal to the case[30]. Therefore, the court cannot dismiss a suit solely based upon the ground that a party, be that a proper party, has not been joined or any unwarranted person has been joined erroneously in the suit unless such party is a necessary party in whose absence an effective order cannot be passed in the questions arising in the suit. The principles enshrined in the proviso to Order 1 Rule 9 of the Civil Procedure Code, 1908 provide that impleadment of a necessary party is mandatory and in case of non-joinder of necessary party, the plaintiff may not be entitled for the relief sought by him.

This submission highlights the importance of the doctrine of necessary and proper parties when instituting a civil suit and holistically elucidates its consideration in all matters such as service matters, writs, suits for specific performance, suits for declaration. The doctrine of necessary and proper parties is a preliminary issue to be dealt with prior to any other question of law or fact since it shall determine the very sanctity of the trial due to its roots in the principles of natural justice. Any ignorance of this principle shall vitiate the effectiveness of the adjudication as it would cause such trial to be conducted in absentia of persons who were necessary for a fair, effective and complete adjudication of the questions involved in such suit.

*LLM law student of Symbiosis Law College, Pune and qualified Company Secretary.

[1] <http://www.scconline.com/DocumentLink/EN5r67DU>

[2]Rr. 1 and 3, Or. 1 CPC, 1908.

[3]Razia Begum v. Sahebzadi Anwar Begum, 1959 SCR 1111.

[4] <http://www.scconline.com/DocumentLink/q1lC86vn>.

[5] Razia Begum v. Sahebzadi Anwar Begum,  1959 SCR 1111.

[6]United States of America v. Dollfus Mieg et Cie SA, 1952 AC 582 : (1950) 2 All ER 605, 611

[7] Ibid.

[8] Vidur Impex and Traders (P) Ltd. v. Tosh Apartments (P) Ltd., (2012) 8 SCC 384.

[9] Ibid.

[10] Kasturi v. Iyyamperumal, (2005) 6 SCC 733, 738.

[11] Kasturi v. Iyyamperumal, (2005) 6 SCC 733.

[12]Shri Swastik Developers v. Saket Kumar Jain, 2013 SCC OnLine Bom 897.

[13](2020) 13 SCC 773.

[14] <http://www.scconline.com/DocumentLink/q1lC86vn>.

[15] Ramesh Hirachand Kundanmal v. Municipal Corpn. of Greater Bombay, (1992) 2 SCC 524, 528.

[16] <http://www.scconline.com/DocumentLink/LFx2EvM3>.

[17]J.S. Yadav v. State of U.P., (2011) 6 SCC 570.

[18] Poonam v. State of U.P., (2016) 2 SCC 779.

[19]Vishnu Mahadeo Pendse v. Rajen Textile Mills (P) Ltd., (1975) 2 SCC 144.

[20] Praveen Bhatia v. M. Ghosh, 1989 SCC OnLine Del 8.

[21]U.P. Awas Evam Vikas Parishad v. Gyan Devi, (1995) 2 SCC 326.

[22] (1984) 4 SCC 251.

[23](2009) 1 SCC 768 .

[24] <http://www.scconline.com/DocumentLink/Hdzyo7ZB>.

[25] <http://www.scconline.com/DocumentLink/q1lC86vn>.

[26] <http://www.scconline.com/DocumentLink/6Deyg1Zj>.

[27] <http://www.scconline.com/DocumentLink/vfT6ILim>.

[28] R. 13, Or. 1 CPC, 1908.

[29] R. 13, Or. 1 CPC, 1908.

[30] S. 99 CPC, 1908.

Case BriefsHigh Courts

Jharkhand High Court: Deepak Roshan, J., while allowing the present writ application, said, “This court is having no hesitation to hold that there is a procedural irregularity in passing the impugned order of punishment. As such, the impugned order of punishment and all subsequent orders deserve to be quashed and set aside.”

Background

The facts of the instant writ application are briefly mentioned hereunder;

  1. That while the petitioner was posted as Manager at Jamshedpur Branch of the respondent Bank, a memorandum of charge was issued on 19-07-1999 and delivered to him on 30-07-1999 whereby, it was proposed to hold a departmental enquiry against him with regard to imputation of misconduct.
  2. Thereafter, in terms of the aforesaid charge-sheet, departmental enquiry has been conducted in which the petitioner filed a detailed written brief denying all allegations leveled against him.
  3. Thereafter, the Inquiry officer submitted his enquiry report on 18-02-2002, which was delivered to the petitioner on 28-02-2002.
  4. Pursuant to that, petitioner filed a detailed reply against the finding of the Inquiry Officer and finally the order for removal from service was passed against the petitioner by the Disciplinary authority.
  5. Being aggrieved, the petitioner filed an appeal on 16-01-2003, which was also dismissed vide order dated 02-01-2004.
  6. Thereafter, the petitioner filed a writ application; W.P.(S) No. 444 of 2005 before the present Court and the said writ application was disposed of by order dated 1st March, 2012, whereby the petitioner was directed to prefer a review application and the reviewing authority was directed to consider the case of the petitioner.
  7. Pursuant to the aforesaid order of this court, the petitioner filed a review application which was also dismissed.

 Contentions

Krishna Murari, Counsel for the petitioner, submitted that the impugned order of punishment, as well as the appellate and review order, are bad in law, inasmuch as, the issue raised by the petitioner, right from the stage of enquiry proceedings, has not been considered by either of the authorities. He further referred to Rule 6(5) and 6(10) of the Central Bank of India Officer Employees (Conduct) Regulations, 1976 and contended that it is a mandatory requirement that the Inquiry Authority, where the Officer/Employee does not admit all or any of the article of charge, furnish to such officer a list of documents and list of witnesses along with the article of charge. However, in the instant case, the mandatory requirement as enshrined in the aforesaid Regulation has not been complied with. It was further submitted that the stand taken by the petitioner, wherein it has been specifically stated that the “list of witnesses proposed and the documents relied upon by the Bank were never supplied to the petitioner and the witnesses were produced on a particular date without the knowledge of the petitioner, thus, depriving him of the opportunity to prepare himself for the cross-examination of the witnesses as per rule,” has been replied evasively by the respondent Bank. In this regard, the Counsel emphasized on Order VIII Rule 4 and 5 of the Code of Civil Procedure which clearly says that denial must be specific and not evasive, and further placed reliance on State of U.P. v. Saroj Kumar Sinha, (2010) 2 SCC 772 and G.V. Aswathanarayana v. Central Bank of India, (2004) 1 LLJ 36.

P.A.S. Pati, Counsel for the respondent Bank, supports the impugned order, however, could not demonstrate that the mandatory requirement as envisaged in Rule 6(5) and 6(10) of the Regulation was complied with. He cannot dispute the averment made in the counter affidavit while replying to the categorical statement made in the writ application, however, he reiterated that principle of natural justice has been complied with.

 Observations

Court reproduced the allegation as well as the reply made by the respondent bank and further reproduced the language of Order VIII Rule 4 and 5(1) of the CPC, 1908.

Rule 4. Evasive denial – Where a defendant denies an allegation of fact in the plaint, he must not do so evasively, but answer the point of substance. Thus, if it is alleged that he received a certain sum of money, it shall not be sufficient to deny that he received that particular amount, but he must deny that he received that sum or any part thereof, or else set out how much he received. And if an allegation is made with diverse circumstances, it shall not be sufficient to deny it along with those circumstances.

Rule 5. Specific denial – (1) Every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted except as against a person under disability: Provided that the Court may in its discretion require any fact so admitted to be proved otherwise than by such admission.”

It went on to conclude, “After going through the specific provision under Code of Civil Procedure and in the background of the statement given in the counter affidavit it can be easily inferred that the statement made in Paragraph 38 of the writ application regarding non-supply of documents and list of witnesses, are not denied specifically by the respondents.

 Decision

Allowing the present writ application, the Court held, “Normally, in such type of cases, the matter should have been remitted back to the competent authority to start the proceeding from the stage of the irregularity commenced, by following principles of natural justice. However, in the instant case, the petitioner has already retired on 31-03-2010 and at present he is about 74 years. Further, the case relates to the year 1999 and calling the management witness now will be a futile exercise, as such, no fruitful purpose would be served to remit the case back to the Disciplinary authority for compliance of mandatory requirements of the Regulation. Consequently, the Impugned Order and all subsequent orders are hereby quashed and set aside. The Respondents are directed to give consequential benefits to the petitioner.”[Rama Shankar v. Central Bank of India, 2020 SCC OnLine Jhar 1039, decided on 15-12-2020]

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Case BriefsHigh Courts

Kerala High Court: R. Narayana Pisharadi, J., while allowing the instant petition, set aside the order of trial Court, thereby allowing the amendment of the plaint contrary to the provisions of Code of Civil Procedure.

In the present case, respondent instituted a suit before trial Court for obtaining a decree of declaration that respondent has got the absolute title, ownership and possession over the property described in the plaint, schedule C and also a decree of prohibitory injunction restraining the appellant from trespassing into that property. After commencement of the examination of witnesses in the suit, the respondent filed an application (Ext.P5) under Order VI Rule 17 of the Code of Civil Procedure, 1908 for amendment of the plaint, which was allowed by the trial Court.

The impugned order of the Trial Court was challenged in the instant petition. One of the main contentions raised by the petitioner was that the application for amendment of plaint cannot be allowed since it was filed by the respondent after the commencement of the trial of the suit.

While ascertaining the date of trial the Court reiterated its decision in Sasidharan v. Sudarsanan, 2020 SCC OnLine Ker 4540, wherein it was held that, “the trial in a suit commences on the date on which the affidavit in lieu of examination-in-chief of a party or his witness is filed for the purpose of recording evidence.” The Court further relied on Vidyabai v. Padmalatha, (2009) 2 SCC 409, where it was held by the Supreme Court that,

 “Order 6 Rule 17 CPC is couched in a mandatory form. Unless the jurisdictional fact, as envisaged in the proviso to Order 6 Rule 17 CPC is found to be existing, the Court will have no jurisdiction at all to allow the amendment of the plaint.”

The Court observed that the trial court has not considered whether the objections raised by the respondent are legally sustainable or not. Hence, the Court set aside the impugned order with the directions that the application is remanded to the trial court for fresh consideration and disposal. The trial court was directed to consider all relevant contentions raised by both parties and dispose of the application in accordance with law by a speaking order, within a period of one month from the date of production of a certified copy of this judgment. [T.V. Sasikala v. C.P. Joseph, 2020 SCC OnLine Ker 7702, decided on 21-12-2020]

Case BriefsHigh Courts

Chhattisgarh High Court: Sanjay K Agrawal J., dismissed the second appeal being devoid of merits.

The facts of the case are such that the suit property was held by Jhulan Rajwar, who acquired patta of suit land in his favour in Surguja Settlement and remained in possession during his lifetime and died issueless leaving behind his wife Sonmet. Since Jhulan Rajwar was issueless, he adopted his nephew Ramcharan’s son namley Budhu Rajwar (plaintiffs’ father) and also executed a Will dated 05-03-1942 and after the death of Jhulan Rajwar, Budhu Rajwar came into possession of the said suit land by way of the Will. It is the case of the plaintiffs (sons of Budhu Rajwar) that after the death of Jhulan Rajwar his wife Sonmet executed a gift deed in favour of Rangu i.e. defendants’ predecessor in interest registered on 22-05-1962, as such; plaintiffs’ suit deserves to be dismissed. The Trial Court held that plaintiffs have failed to prove the Will in accordance with Section 63(c) of the Indian Succession Act, 1925 read with Section of the Indian Evidence Act, 1872. Agrreived by this, first appeal was filed which upheld that Trial Courts verdict. Aggrieved by the same, instant second appeal has been filed under Section 100 of the CPC.

Counsel for the appellants submitted that the Will has been duly proved as per the provision contained in Section 69 of the Evidence Act, 1872. the Will dated 05-०३-1942 (Ex. P/4) is a more than 30 years old document which has been produced from proper custody, therefore, presumption of valid execution of the Will would be made and even if the attesting witnesses have not been examined, presumption of due execution and attestation of the Will (Ex. P/4) will be raised by virtue of the provision contained under Section 90 of the Evidence Act.

Counsel for the respondents submitted that plaintiffs utterly failed to prove the will prescribed by Section 69 of the Evidence Act. It was further submitted that Section 90 of the Evidence Act which states about the presumption of validity of a 30 years old document is not applicable in this case and the Will has to proved in accordance with Section 63(c) of the Indian Succession Act read with Section 68-69 Of the Indian Evidence Act.

Issue 1: Section 69 of Evidence Act, 1872

The Court relied on judgments Babu Singh v. Ram Sahai, (2008) 14 SCC 754, K. Laxamanan v. Thekkayil Padmini, (2009) 1 SCC 354, Kalyanswami. v. L. Bakthavatsalam,  2020 SCC OnLine SC 584 wherein it was observed that Section 69 of the Evidence Act provides that if execution of Will could not be proved by examining the attestor or in absence of non-availability of attestor, to prove the Will, secondary evidence could be adduced by proving the handwriting of one of the attesting witnesses and signature of the executant of the document to be in the handwriting of that person. Two conditions are required to be proved for valid proof of the Will, the person who has acquaintance of the signature of one of the attesting witnesses and also the person executing the document should identify both the signatures before the Court.

Issue 2: Section 90 of the Evidence Act, 1872

The Court relied on judgments Laxmi Barvah v. Padma Kanta Lalita, (1996) 8 SCC 357; Bharpur Singh v. Shamsher Singh, (2009) 3 SCC 687 wherein it was held that Section 90 of the Evidence Act is founded on necessity and convenience because it is extremely difficult and sometimes not possible to lead evidence to prove handwriting, signature or execution of old documents after lapse of thirty years. In order to obviate such difficulties or improbabilities, to prove the execution of an old document, Section 90 has been incorporated in the Evidence Act, 1872, which does away with the strict rule of proof of private documents. Presumption of genuineness may be raised, if the document in question is raised from proper custody. It is, however, the discretion of the Court to accept the presumption flowing from Section 90. There is, however, no manner of doubt that judicial discretion under Section 90 should not be exercised arbitrarily and not being informed by reasons.

The Court observed that it is quite vivid that both the attesting witnesses of the Will namely Bhullu Rajwar and Gangaram had already died at the time of institution of the suit and they were not available to prove the Will. In these circumstances, duty is cast upon the plaintiffs to prove the Will as per Section 69 of the Evidence Act that the signature of the executant on the Will that it is of his own and at least the signature of one of the attesting witnesses have to be identified in the manner known to law. Merely saying that the signature of the attesting witness is of him may not be sufficient unless he produces the signature of the attesting witness on some admissible document and makes both the signatures available for comparison by the Court to find out whether the person acted as a real witness, which has admittedly not been done in the instant case.

The Court thus held that given the observations in light of the facts stated above, it cannot be held that the Will has been proved in accordance with Section 69 of the Evidence Act. It was further held that Section 90 of the Evidence Act would have no application in case of Will in view of the strict requirement contained in Section 63(c) of the Indian Succession Act read with Section 68 of the Indian Evidence Act,

In view of the above, impugned order upheld and the second appeal was dismissed.[Choudhari v. Ramkaran, 2020 SCC OnLine Chh 1015, decided on 29-09-2020]

Arunima Bose, Editorial Assistant ahs put this story together

Case BriefsHigh Courts

Karnataka High Court: M. I. Arun J. dismissed the petition without interfering in the discretion exercised by the Appellate Court in the impugned judgment.

 The facts of the case are that an original suit was filed before Additional Civil Judge, Senior Division, Kolar for a decree of partition and separate possession of 1/4th share in the suit schedule properties. The respondents in the original suit i.e. petitioners in the present writ petition entered appearance through their advocate but failed to file the written statement despite several opportunities being given, pursuant to which decree was granted in favour of the plaintiff in the original suit. The judgment was later challenged by a delay of 3 years (condoned by Court) by an appeal which was later prayed for dismissal. Thereafter petition under Order 9 Rule 13 of Code of Civil Procedure i.e. CPC was filed for setting aside the impugned decree and was later dismissed vide order dated 27-06-2011.  The dismissal order was further challenged by an appeal which was allowed and the original suit was restored to file. Aggrieved by the said order, this revision petition has been preferred.

Counsel for the respondents submitted that the appearance in the original suit was entered through advocate alone and no written statement was filed or arguments were advanced, therefore they cannot be considered as ex parte and should not be entitled to prefer an application under Order 9 Rule 13 CPC.

Order 9 Rule 13 reads as under:

 In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit;

Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also:

Provided further that no Court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff’s claim.

Explanation-
Where there has been an appeal against a decree passed ex parte under this rule, and the appeal has been disposed of an any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under this rule for setting aside that ex parte decree.

 The Court observed that bare reading of the Explanation to Order 9 Rule 13 CPC makes it clear that when an appeal is preferred against the decree passed Exparte and when the same is disposed of, any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under Order 9 Rule 13 CPC for setting aside the Exparte decree. It means if the appeal has been disposed as withdrawal, in that event a petition under Order 9 Rule 13 CPC is maintainable.  It is immaterial whether the appeal was withdrawn reserving the liberty to prefer an application under Order Rule 13 of CPC or not.

In view of the observations, Court held relied on judgment G. Ratna Raj v. Sri Muthukumarasamy Permanent Fund Ltd., (2019) 11 SCC 301 and held that when the defendants entered appearance but did not contest the case, it will be treated as Exparte and the defendants can maintain a petition under Order 9 Rule 13 CPC.

In view of the above, the revision petition was dismissed.[M. Krishnappa v. Menasamma, 2020 SCC OnLine Kar 1648, decided on 23-10-2020]

Arunima Bose, Editorial Assistant has put this story together

Op EdsOP. ED.

1. Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, as amended (in short ‘CCA’) has been enacted with the object to have a streamlined procedure which is to be adopted for the conduct of cases in the Commercial Courts and in the Commercial Divisions by amending the Code of Civil Procedure, 1908, so as to improve the efficiency and reduce delays in disposal of commercial cases. The proposed case management system and provisions for summary judgment will enable disposal of commercial disputes in a time bound manner.

2. As per Section 16 of CCA, certain provisions of CPC stand amended in the manner specified in the Schedule to the Act, with respect to their application to any suit in respect of a commercial dispute of a specified value, and the same shall be followed by the Commercial Division and Commercial Court in the trial of a suit in respect of a commercial dispute of a specified value.

Order XIII–A has been incorporated in CPC only for purposes of adjudication of commercial suit under the said Act in terms of the Schedule referable to Section 16. The said Order reads as under:

“1. Scope of and classes of suits to which this Order applies.– (1) This Order sets out the procedure by which Courts may decide a claim pertaining to any commercial dispute without recording oral evidence.

(2) For the purposes of this Order, the word “claim” shall include-

(a) part of a claim;

(b) any particular question on which the claim (whether in whole or in part) depends; or

(c) a counterclaim, as the case may be.

(3) Notwithstanding anything to the contrary, an application for summary judgment under this Order shall not be made in a suit in respect of any commercial dispute that is originally filed as a summary suit under Order XXXVII.

2. Stage for application for summary judgment.- An applicant may apply for summary judgment at any time after summons has been served on the defendant:

Provided that, no application for summary judgment may be made by such applicant after the Court has framed the issues in respect of the suit.

3. Grounds for summary judgment.– The Court may give a summary judgment against a plaintiff or defendant on a claim if it considers that–

  • the plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim, as the case may be; and
  • there is no other compelling reason why the claim should not be disposed of before recording of oral evidence.

4. Procedure.- (1) An application for summary judgment to a Court shall, in addition to any other matters the applicant may deem relevant, include the matters set forth in sub-clauses (a) to (f) mentioned hereunder:

(a) the application must contain a statement that it is an application for summary judgment made under this Order;

(b) the application must precisely disclose all material facts and identify the point of law, if any;

  • in the event the applicant seeks to rely upon any documentary evidence, the applicant must, –

(i) include such documentary evidence in its application, and

(ii) identify the relevant content of such documentary evidence on which the applicant relies;

(d) the application must state the reason why there are no real prospects of succeeding on the claim or defending the claim, as the case may be;

(e) the application must state what relief the applicant is seeking and briefly state the grounds for seeking such relief.

(2) Where a hearing for summary judgment is fixed, the respondent must be given at least thirty days’notice of:

(a) the date fixed for the hearing; and

(b) the claim that is proposed to be decided by the Court at such hearing.

(3) The respondent may, within thirty days of the receipt of notice of application of summary judgment or notice of hearing (whichever is earlier), file a reply addressing the matters set forth in clauses (a) to (f) mentioned hereunder in addition to any other matters that the respondent may deem relevant:

(a) the reply must precisely––

(i) disclose all material facts;

(ii) identify the point of law, if any; and

(iii) state the reasons why the relief sought by the applicant should not be granted;

(b) in the event the respondent seeks to rely upon any documentary evidence in its reply, the respondent must—

(i) include such documentary evidence in its reply; and

(ii) identify the relevant content of such documentary evidence on which the respondent relies;

(c) the reply must state the reason why there are real prospects of succeeding on the claim or defending the claim, as the case may be;

(d) the reply must concisely state the issues that should be framed for trial;

(e) the reply must identify what further evidence shall be brought on record at trial that could not be brought on record at the stage of summary judgment; and

(f) the reply must state why, in light of the evidence or material on record if any, the Court should not proceed to summary judgment.

5.Evidence for hearing of summary judgment.–(1) Notwithstanding anything in this Order, if the respondent in an application for summary judgment wishes to rely on additional documentary evidence during the hearing, the respondent must:

(a) file such documentary evidence; and

(b) serve copies of such documentary evidence on every other party to the application at least fifteen days prior to the date of the hearing.

(2) Notwithstanding anything in this Order, if the applicant for summary judgment wishes to rely on documentary evidence in reply to the defendant’s documentary evidence, the applicant must:

(a) file such documentary evidence in reply; and

(b) serve a copy of such documentary evidence on the respondent at least five days prior to the date of the hearing.

(3) Notwithstanding anything to the contrary, sub-rules (1) and (2) shall not require documentary evidence to be:

(a) filed if such documentary evidence has already been filed; or

(b) served on a party on whom it has already been served.

6. Orders that may be made by Court. – (1) On an application made under this Order, the Court may make such orders that it may deem fit in its discretion including the following:

(a) judgment on the claim;

(b)conditional order in accordance with Rule 7 mentioned hereunder;

(c) dismissing the application;

(d) dismissing part of the claim and a judgment on part of the claim that is not dismissed;

(e) striking out the pleadings (whether in whole or in part); or

(f) further directions to proceed for case management under Order XV-A.

(2) Where the Court makes any of the orders as set forth in sub-rule (1)(a) to (f), the Court shall record its reasons for making such order.

7. Conditional order.– (1) Where it appears to the Court that it is possible that a claim or defence may succeed but it is improbable that it shall do so, the Court may make a conditional order as set forth in Rule 6(1)(b).

(2) Where the Court makes a conditional order, it may:

(a) make it subject to all or any of the following conditions:

(i) require a party to deposit a sum of money in the Court;

(ii) require a party to take a specified step in relation to the claim or defence, as the case may be;

(iii) require a party, as the case may be, to give such security or provide such surety for restitution of costs as the Court deems fit and proper;

(iv) impose such other conditions, including providing security for restitution of losses that any party is likely to suffer during the pendency of the suit, as the Court may deem fit in its discretion; and

(b) specify the consequences of the failure to comply with the conditional order, including passing a judgment against the party that have not complied with the conditional order.

8. Power to impose costs. – The Court may make an order for payment of costs in an application for summary judgment in accordance with the provisions of Sections 35 and 35-A of the Code.’

7. Insertion of Order XV-A – 7. After Order XV of the Code, the following Order shall be inserted, namely:

                                    *                *                  *

6. Powers of the Court in a Case Management Hearing. – (1) In any Case Management Hearing held under this Order, the Court shall have the power to-

(a) prior to the framing of issues, hear and decide any pending application filed by the parties under Order XIII-A;

*                 *              *”

3. It may be noted here itself that the provisions of Order XIII – A CPC are para materia to Rule 24.2 of the Civil Procedure Rules in England.

4. Emphasising the scope of Order XIII – A CPC, the Delhi High Court in the judgment of Bright Enterprises Private Limited  MJ Bizcraft LLP[1],  held as under:

“21…Rule 3 of Order XIII-A CPC empowers the Court to give a summary judgment against a plaintiff or defendant on a claim if it considers that – (a) the plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim, as the case may be; and (b) there is no other compelling reason why the claim should not be disposed of before recording of oral evidence…”

5. In the judgment of Rockwool International A/S v. Thermocare Rockwool (India) Pvt. Ltd.[2], the Delhi High Court observed the following requisites for passing a summary judgment:

  • There is no real prospect of a party succeeding in a claim;
  • No oral evidence would be required to adjudicate the matter;
  • There is a compelling reason for allowing or disallowing the claim without oral evidence.

6. The scope of Summary Judgment has also been explained by the Delhi High Court in the judgment of R. Impex v. Punj Lloyd Ltd.[3], as under:

“18….but vide the said Act, Order XIII-A titled “Summary Judgment” has been incorporated in  CPC insofar as applicable to commercial suits and Rule 2 whereof, while prescribing the stage for making application for summary judgment, provides that the same be filed at any time after the summons have been served on the defendant but not after the court has framed the issues in respect of the suit. Rule 3 of Order XIII-A, while prescribing the grounds for summary judgment, empowers the Court to give summary judgment against a plaintiff or defendant on a claim, if it considers inter alia that the plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim, as the case may be and there is no other compelling reason why the claim should not be disposed before recording of oral evidence. Rule 4 prescribes the procedure for making summary judgment.

                    *                         *                             *

 27. The purpose of the proviso to Rule 2 of Order XIII-A is to discourage filing of applications for summary judgment after issues have been framed, thereby delaying trial and to empower the Court to, if finding the same to be dilatory, dismiss the same in limine.

 28. The objective of the Commercial Courts Act even otherwise is to expedite the disposal of the commercial suits and none of the provisions thereof can be interpreted as counterproductive to the said objective of the Commercial Courts Act and it would delay rather than expedite the disposal of commercial suits, if inspite of finding a suit to be befitting of summary judgment, the Court considers itself constrained merely on account of issues having been framed.”

7. The scope of Summary Judgment as also the object of CCA was re-emphasised by the  Delhi High Court in Mallcom (India) Limited  Rakesh Kumar[4].

 8. The above principle has been reiterated in the matter of Jindal Saw Limited Aperam Stainless Services and Solutions Precision SAS[5], wherein the Delhi High Court have explained the scope of Order XIII-A  CPC. The relevant text of the judgment is reproduced below:

“22. Order XIII-A CPC, as made applicable to commercial suits within the meaning of the Commercial Courts Act, is titled “Summary Judgment”. Rule 2 thereof provides, that an application for summary judgment may be made at any time after summons have been served on the defendant, till the framing of issues. Rule 3 is as under:

“3. Grounds for summary judgment.–…………….

(a) the plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim, as the case may be; and

(b) there is no other compelling reason why the claim should not be disposed of before recording of oral evidence.”

  1. Rule 4 thereof providing the procedure for applying for a summary judgment inter alia requires the applicant to state the reason why there are no real prospects of succeeding on the claim or defending the claim and requires notice of the said application to be given to the opposite party of 30 days, and the reply to such application to precisely identify the points of law if any and the reasons why the relief of summary judgment should not be granted and why there are real prospects of succeeding on the claim or defending the claim and to state the issues to be framed for trial and what evidence is to be lead thereon and permits additional documentary evidence to be filed with such reply.”

 

9. Reference in this regard may also be made to Oxbridge Associates Limited v. Atul Kumra[6] and Universal Contractors & Engineers (P) Ltd. v. National Projects Constructions Corporation Ltd.[7]

10. Comparing the scope of Order XII Rule 6 CPC and Order XIII–A CPC, the Delhi High Court in its judgment Venezia Mobili (India) Pvt. Ltd. v. Ramprastha Promoters and Developers Pvt. Ltd.[8], observed as under:

 “36…broadly speaking, the basis for seeking summary judgment as well as judgment on admission is the same i.e. that there is no triable issue which arises for consideration, there are reasons for allowing the claim without oral evidence and the defence raised by the defendants is a moonshine and a sham.”

 11. Re-emphasising the legislative intent in incorporating Order XIII–A CPC, the Delhi High Court in  Su-Kam Power Systems Ltd. v. Kunwer Sachdev[9], observed as:

“49. Consequently, this Court is of the view that when a summary judgment application allows the Court to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. It bears reiteration that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the Court the confidence that it can find the necessary facts and apply the relevant legal principles so as to resolve the dispute as held in Robert Hryniak (supra).

50. In fact, the legislative intent behind introducing summary judgment under Order XIII-A CPC is to provide a remedy independent, separate and distinct from judgment on admissions and summary judgment under Order XXXVII CPC.

 51. This Court clarifies that in its earlier judgment in Venezia Mobili (India) Pvt. Ltd. v. Ramprastha Promoters & Developers Pvt. Ltd.[10], while deciding two applications, both filed by the plaintiff in the said case (one under Order XII Rule 6 and other under Order XIII-A) it had applied the lowest common denominator test under both the provisions of the Code of Civil Procedure and held that the suit could be decreed by way of a summary judgment.

52. Consequently, this Court is of the opinion that there will be ‘no real prospect of successfully defending the claim’ when the Court is able to reach a fair and just determination on the merits of the application for summary judgment. This will be the case when the process allows the court to make the necessary finding of fact, apply the law to the facts, and the same is a proportionate, more expeditious and less expensive means to achieve a fair and just result…”

 It is thus clear that Order XIII–A CPC confers much wider powers upon the Commercial Courts for a speedy and expeditious disposal of Commercial Suits than under Order XII Rule 6 CPC which, as held above, is a test of lowest denominator for the purposes of Order XIII–A CPC.

12. In exercise of powers conferred by Section 129 CPC, the Delhi High Court has framed the Delhi High Court (Original Side) Rules, 2018. Chapter X-A of the said Rules under the heading Case Management, and more particularly relating to Summary Judgment provides as under:

 “1. Summary Judgment.- At the time of Case Management hearing, a Court, may of its own, decide a claim pertaining to any dispute, by a summary judgment, without recording oral evidence.”

(emphasis supplied)

13. It is trite law that in case of conflict between the provisions of CPC and Original Side Rules, the latter would prevail and override the former. [Refer HTIL Corporation B.V. v. Ajay Kohli[11]; Iridium India Telecom Ltd. v. Motorola Inc.[12] and Print Pak Machinery Ltd. v. Jay Kay Papers Converters[13].]

14. Though Order XIII–A CPC, as applicable to CCA, provides for presentation of a formal application as also the outer time-limit for moving such an application, however, not only in view of the Original Side Rules of the Delhi High Court to the contrary but also interpreting the provisions of Order XIII–A CPC by the Delhi High Court on the touchstone of Doctrine of Purposive Legislation, while interpreting the same, held that an application is not essential to seek summary judgment and the Court, on its own or on the asking of either party, at any point of time, even after settlement of issues, is entitled to see/adjudicate as to whether a case for summary judgment is made out. [See R. Impex[14] (supra), Mallcom (India) Limited[15] (supra) and Jindal Saw Limited[16] (supra]).

*Advocate and a qualified Chartered Accountant. Author is currently a Senior Associate in the Dispute Resolution Practice at L&L Partners Law Offices, New Delhi. Author’s views are personal only.

[1] (2017) 1 HCC (Del) 100 : 2017 SCC OnLine Del 6394 at p. 110

[2]2018 SCC OnLine Del 11911 

[3] 2019 SCC OnLine Del 6667

[4] 2019 SCC OnLine Del 7646

[5] 2019 SCC OnLine Del 9163

[6]2019 SCC OnLine Del 10641

[7] 2019 SCC OnLine Del 11436

[8] 2019 SCC OnLine Del 7761

[9] 2019 SCC OnLine Del 10764

[10] 2019 SCC OnLine Del 7761

[11] 2006 SCC OnLine Del 657

[12] (2005) 2 SCC 145

[13] 1979 SCC OnLine Del 123

[14] 2019 SCC OnLine Del 6667

[15] 2019 SCC OnLine Del 7646

[16] 2019 SCC OnLine Del 9163

Op EdsOP. ED.

Introduction:

One of the most sought after remedies under the Arbitration and Conciliation Act, 1996[1] (the Act) is the grant of interim relief under Section 9 of the Act which allows the parties to apply to the court for interim relief before or during the arbitral proceedings, or after an award is passed but before it is enforced. The law of interim reliefs took a great stride under the Act as neither the Arbitration Act of 1940 nor the UNICTRAL Model Law had envisaged granting interim reliefs to a party in a post award scenario. The Act accordingly allows the parties, before executing the award, to apply to the court for securing the proceeds of the arbitral award to protect the decretal amount, so that the award debtor cannot evade the obligations under the award and make the realisation of the award illusory.

The importance of a post award Section 9:

The grant of interim reliefs under Section 9 of the Act, especially in a scenario where the award has been delivered, assumes significance primarily because the Act provides for a statutory period of three months for the award debtor to file a challenge to the award. This created a unique hurdle in the enforcement of the award by the successful award-holder since the mere filing of a Section 34 application would automatically stay the execution of the award, pending the adjudication of the setting aside application.

To remedy such an incongruity in law, the Act, as amended in 2015 removed the concept of an automatic stay on the execution of awards, pending the adjudication of a setting aside application, and allowed award- holders to forthwith move for the execution of the award, even if a Section 34 application was pending before the court. This was deemed essential to ensure that the decree obtained in favour of the award- holder did not remain unsatisfied and be rendered a mere paper decree amidst the rigmarole of the award debtor’s attempts to stall execution of the award. Under the amended Act, an award debtor has to now necessarily apply for a stay of the execution of the arbitral award by the successful award-holder, through a separate application. Therefore, the amendment to the Act created two distinct scenarios where firstly, what was available on a platter under the Act has to be now asked for and secondly, a grant of it can be conditional upon an adjudication of the grounds made out in the stay application [See Rendezvous Sports World v. Board of Cricket Control in India[2], BCCI v. Kochi Cricket Ltd.[3] and Hindustan Construction Company Ltd. v. Union of India[4]]

Accordingly, a post award Section 9 application attains renewed significance because while the amended Act allows for the execution of the award as a money decree pending a Section 34 challenge, it does not cover situations where the 90 day period provided to award debtors to challenge an arbitral award is utilised to alienate its assets with the sole intent of resisting execution of the award. In such a circumstance, even if the successful award-holder moves for the execution of the award upon expiry of the statutory period, he would be prevented from enjoying the fruits of his decree on account of the award debtor’s mala fide conduct. The only remedy available to a successful award-holder to seek interim protection of the award amount in such circumstances therefore remains a post award Section 9 application.

The scope of a post award Section 9: Applying principles of Order 39 strictu sensu?

When it comes to the principles guiding grant of interim relief, there prima facie appears to be a consensus among the courts on applicability of procedural law principles enunciated under the Civil Procedure Code, 1908 (CPC) and the Specific Relief Act, 1963 (SRA) supervising the operation of Section 9, which includes inter alia, prima facie test, balance of convenience and irreparable harm. [See Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd.[5]] However, there appears to be a divergence on the issue of the degree to which such principles from the CPC and SRA can be imported in the adjudication of a post award Section 9 application. In any event, it is essential to note that the nature of reliefs in a post award Section 9 application can only be to a limited extent of preservation of the subject-matter of the arbitration agreement or securing the amount in dispute and not for the execution of the award pending the objections against the award. [See Afcons Infrastructure Ltd. v. Board of Trustees of Port of Mumbai.[6]]

In reference to the guidelines that the courts are supposed to follow while granting a post award interim relief, there have been various judgments which have held that a Section 9 court is not duty bound to observe the provisions of CPC strict sensu but have to merely refer to the CPC for guidance on principles governing injunctions on the alienation of assets and deposit of the award amount. The Bombay High Court in Delta Construction Systems Ltd., Hyderabad v. Narmada Cement Company Ltd., Mumbai,[7] held that in case of securing the amount in dispute, all that is required to be established is a case that if interim relief is not granted, the award in favour of a party will become nugatory. Similarly, the Kerala High Court in M. Ashraf v. Kasim V.K.[8], held that a Section 9 court has to necessarily take a liberal approach while granting interim reliefs post award and not be stymied by the application of the CPC in its most rigid sense.

However, the recent judicial trends seem to suggest that depending on the facts and circumstances of each case, the courts are inclined to apply the three–fold test of prima facie case, balance of convenience and irreparable harm and injury enshrined under Order 39 the CPC for grant of temporary injunctions while adjudicating a post award Section 9 application. Reference in this regard may be drawn to two Bombay High Court decisions in Felguera Gruas India Pvt. Ltd v. Tuticorin Coal Terminal Pvt Ltd.[9] (Felguera) and Mahyco Monsanto Biotech (India) Pvt. Ltd. v. Nuziveedu Seeds Ltd.[10], (Monsanto) wherein the Bombay High Court applied the principles of Order 39 CPC in securing the award amount by way of a post award interim relief. In the cases as above, the court merely established the existence of a prima facie case for grant of interim relief (based on the financial position of the award debtor and its conduct with regard to alienation of its assets) and proceeded to grant deposit of the entire arbitral award pending the execution of the award.

Accordingly, evidence of the declining financial position of the award debtor coupled with mala fide conduct in dealing with its assets is essential to make out a case for a post award Section 9. It is important to remember that owing to the limited period for challenge under the Act upon expiry of which an award becomes enforceable, the courts are generally hesitant to grant a post award relief and that too in a circumstance where the challenge to the arbitral award has not been filed yet. However, if a prima facie case can be made out to the court’s satisfaction, and in compliance with the principles governing Order 39 CPC – establishing that the declining financial position of the award debtor and its surreptitious conduct in disposing of its assets would amount to the award being rendered a mere paper decree, the chances of obtaining a deposit or injunction order from the courts would increase manifold.

Recent judicial trends:

Recent pronouncements on the issue can be looked at from two different perspectives:

(a) The grant of post award interim reliefs in situations where a Section 34 challenge has been filed; and

(b) The grant of post award interim reliefs in situations apprehending the filing of a Section 34 challenge by the award debtor.

Analysing the jurisprudential development on the subject, it is crucial to note that the courts generally grant deposit of the entire award amount as and by way of a post award relief under Section 9, and the grant of such relief is usually predicated upon the contumacious conduct of the award debtor and/or its brazen attempts to renege from its payment obligations under the award. The Delhi High Court in Power Mech Projects v. Sepco Electric Power Construction Corporation (Sepco)[11], granted a 100% deposit of the principal amount in the award before hearing the objections to the award filed by the award debtor. This was because in the facts and circumstances of the case, the award debtor had no immoveable assets in India and sought to furnish security for the award amount on the strength of its ongoing projects in India. The Court in Sepco, while negating the award debtor’s arguments held that revenue generated from the ongoing projects cannot be accepted as security against the enforcement of the award and further observed that valuations of machinery and other assets at the project site also cannot be taken as solvent security since the award is to be enforced as a money decree and cannot be secured by moveable assets such as machinery.

In Sampson Maritime Limited v. Hardy Exploration & Production (India) Inc.,[12] (Samson Maritime) even though a Section 34 application was pending in the case, the Madras High Court proceeded to hear the Section 9 application and granted full deposit of the awarded amount. In doing so, the Court observed that an action under Section 9 of the Act, post award, in no manner qualified as enforcing the award in itself and sought to distinguish a post award Section 9 application from an application made under Order 38 Rule 5  CPC. The remedy under Order 38 Rule 5 squarely applies in situations where the attachment of the judgment debtor’s assets is sought before judgment and the rights of the award-holder have not crystallised. Hence, an application under Order 38 Rule 5 needs to necessarily be supported by material averments to establish how the award-holder expects his rights to be defeated by the conduct of the judgment debtor. However, in a post award Section 9 application, the rights of the award-holder have crystallised since he has a decree in his favour. In such a scenario, the Court need not go into the question of the intention of the judgment debtor to delay the execution of the award and the making of a positive case by the award- holder establishing the mala fide intent of the judgment debtor. The Madras High Court held that pending the adjudication of a Section 34 application, the successful award-holder can seek protection under Section 9 post the delivery of the award – not on any apprehended action of the respondent but as a matter of right.

In Candor Gurgaon Two Developers & Projects Pvt. Ltd. v. Srei Infrastructure Finance Ltd.,[13] (Candor) the Calcutta High Court was dealing with a question of a post award Section 9 application by the award- holder, apprehending the filing of a Section 34 application by the judgment debtor. In Candor, the award directed the judgment debtor to make payment of Rs 25 crores within 30 days of the making of the award. However, since no such payments were furnished by the judgment debtor, the Section 9 application was filed seeking protection of the award amount. The Court held that since the judgment debtor had not made any effort to repay the amounts due to the successful award- holder, notwithstanding the fact that the judgment debtor still had time to file its challenge to the award, the award-holder was entitled to the protection of the award amount. Highlighting the scope of a post award Section 9, the Court observed that the protection under Section 9 can be exercised to the extent of protecting the arbitral amount if there exists a real likelihood that the award amount will be disposed of or is at general risk of being rendered nugatory.

Conclusion: Post award Section 9 reliefs – jumping the gun?

At the outset, it is crucial to note that the threshold of maintaining a case for post award relief is extremely high, even when proof of the financial weakness of the award debtor is furnished. The Gujarat High Court in Essar Oil Limited v. United India Insurance Company Limited,[14] has categorically observed that mere proof of financial instability would not in itself be sufficient to maintain a case for post award reliefs. It held that if there are extenuating circumstances showing that the conduct of the award debtor is such that it leads to the inescapable conclusion that they are likely to dispose of the property with a view to defeat the decree/awards, the Court may in the exercise of powers under Section 9(ii)(b) of the Act, pass an order of protecting the award amount. Similarly, since the statute provides a 90-day period for the award debtor to lodge his challenge to the award, the enforcement mechanism kicks in immediately after the expiry of the 90 days. Therefore, the burden on the award-holder is very high to satisfy to the court that pending the filing of the challenge to the award (and even in cases where such challenge is filed) and before the execution of the award, the circumstances are such that warrant grant of interim protection to prevent the award from becoming a paper decree.

However, should a situation arise which makes it evident that the award debtor is encumbering its assets to defeat the award, Monsanto and Felguera may be used as a guide to understanding the factors that contribute towards demonstrating the commercial insolvency of the award debtor[15]. Since the Act, as amended in 2015 does away with the concept of the automatic stay, it would be prudent to initiate execution proceedings upon the expiry of the 90 day period lest there exist prima facie exigencies which make it evident that there exists a likelihood of the award being defeated.

***

*Final year student of Government Law College, Mumbai

** Associate (Dispute Resolution) Vashi and Vashi, Advocates and Solicitors, Mumbai

[1] Arbitration and Conciliation Act, 1996 

[2] 2016 SCC OnLine Bom 6064  

[3] (2018) 6 SCC 287  

[4] 2019 SCC OnLine SC 1520 

[5] (2007) 7 SCC 125

[6] 2013 SCC OnLine Bom 1946 

[7] 2001 SCC OnLine Bom 630 

[8] 2018 SCC OnLine Ker 4913 

[9] Felguera Gruas India Pvt. Ltd. v. Tuticorin Coal Terminal Pvt. Ltd., Commercial Arbitration Petition No. 1403 of 2019,  order dated  20-11- 2019.

[10]. Mahyco Monsanto Biotech v. Nuziveedu Seeds Ltd.,Commercial Arbitration Petition No. 312 of 2019, judgment dated  6-3- 2019.

[11] Power Mech Projects v. Sepco Electric Power Construction Corporation, Judgment dated F 17-2- 2020, in O.M.P. (I.) (COMM.) 523/2017

[12] 2016 SCC OnLine Mad 9122 

[13] 2018 SCC OnLine Cal 2430

[14] 2014 SCC OnLine Guj 6737 

[15] Supra Note 10, at para 19

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Jayant Nath, J. allowed an appeal filed against the previous order whereby the right of defendants to file written statement was closed as 120 days prescribed in CPC for filing a written statement had expired.

Ms Sudeepti, Advocate appearing for the defendants submitted that a written statement was filed within 120 days but there was a delay in re-filing the same. She relied on the order of the Joint Registrar where it was noted that a written statement was filed but returned under office objection.

The High Court took note of the admitted fact that defendants have filed a written statement. Reference was made to Indian Statistical Institute v. Associate Builders, (1978) 1 SCC 483 and it was observed to be a settled legal position that delay in re-filing has to be considered on a different footing. Contention put forward by N. Prabhakar and Dhruv Sharma, Advocates for plaintiffs that re-filing tantamount to fresh filing did not find favour with the Court. Accordingly, the appeal was allowed. The written statement was directed to be taken on record if re-filed within one week. [Narender Kumar Sharma v. Maharana Pratap Educational Centre, 2018 SCC OnLine Del 13146, dated 13-12-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Manmohan, J., allowed the suit filed by Bennett Coleman for restraining the defendant from infringing its trademark, copyright, etc. in channel name TIMES NOW.

The defendant was using the channel name NATIONAL TIMES NOW. The plaintiff, popularly known as Times Group company, has been in the media industry since 1838. It runs several publications including Times of India and Economic Times. It is also India’s largest media conglomerate, popularly known as Times Network which owns and operates several channels including TIMES NOW. It was submitted that the plaintiff’s mark TIMES NOW had acquired distinctiveness and have become source identifier of plaintiff’s business. Moreover, the petitioner is the registered owner of the said mark-channel name.

The High Court, while deciding the instant application filed under Order XIII Rules 2, 4 and 6 CPC seeking a summary judgment, duly considered the submissions made on behalf of the petitioner. The plaintiff also submitted that TIMES NOW form a dominant and essential part of the name of plaintiff’s channels, and the defendant’s channel name NATIONAL TIMES NOW is deceptively similar to the names of various channels and websites of the plaintiff. On bases of the fact that the plaintiff was a registered user of the trademark in question, and noting the fact that the defendant neither entered appearance nor filed its written statement, the Court was of the view that the defendant did not have any real prospect of defending the claim. Accordingly, the suit was decreed in favour of the plaintiff and against the defendant. [Bennett Coleman and Co. Ltd. v. M. Akram Pasha,2018 SCC OnLine Del 10473, dated 08-08-2018]

Case BriefsHigh Courts

Himachal Pradesh High Court: A Single Judge Bench comprising of Ajay Mohan Goel, J. dismissed a petition filed against the order of trial court whereby petitioner’s application under Order 10 Rules 9 and 10A CPC was rejected.

In the abovesaid application, the petitioner had prayed to the court that a revenue expert be appointed to prepare excerpt and to report the history of the suit land as per pedigree table, as in its absence, the petitioner won’t be able to prove his case. Trial court rejected the application holding that it was for the petitioner to prove his case by leading his own evidence. Aggrieved thus, the petitioner filed the instant petition.

The High Court found no merit in the petition. It noted that the suit was filed somewhere in 2008; issues were framed and evidence was led. It was at that stage of hearing that the said application was filed. The Court observed that before ordering any investigation under the said rules, the court has to be satisfied that the same shall be necessary for the purpose of adjudication. Further, in the present case, the matter being a property dispute, the onus was on the petitioner to prove his case. Neither scientific investigation was required, nor the court deemed a local investigation necessary for the purpose of elucidating evidence. The Court also observed that it is not a right conferred upon a party to call upon the court to order an investigation. Accordingly, the petition was found sans merit and was dismissed. [Rajinder Singh v. Ran Singh,2018 SCC OnLine HP 889, dated 18-07-2018]

Case BriefsHigh Courts

Calcutta High Court: A Single Judge Bench comprising of Soumen Sen, J. allowed an application filed under Clause 13 of Letters Patent Act, 1865 for transfer of suit from City Civil Court to the High Court.

The applicant filed a suit in the High Court under Section 6 of Specific Relief Act, 1963 for recovery of possession on the ground that he was dispossessed wrongfully and forcibly. The defendant filed a suit before the City Civil Court for an injunction restraining the applicant from use and enjoyment of the suit premises. The present application was filed praying for transfer of the suit from the City Civil Court to the High Court.

The Court heard both the parties and noted, there was no doubt that the issues in both the suits were not entirely similar. However, the Court observed that although the issues may not be the same; but the same set of evidence and witnesses would be required to prove the respective issues. Further, Section 151 CPC gives the Court an inherent power to direct consolidation of suits. The Court was of the view that it was just and convenient if both the matters were tried together; it would not only minimize the time but would save expenses. Accordingly, the suit pending before the City Civil Court was directed to be transferred to the High Court. [Royal Bank of Scotland Plc v. Impressions,  2018 SCC OnLine Cal 4497, decided on 05-07-2018]

Case BriefsHigh Courts

Punjab and Haryana High Court: A Single Judge Bench comprising of Kuldip Singh, J. dismissed the appeal filed against the order passed by the Civil Judge in execution proceedings.

The appeal was filed by partners of one Dashmesh Artia Cotton Factory which was attached and auctioned as a result of recovery and execution proceedings against one of its partners. Other partners filed an objection to the said auction under Order XXI Rule 90 CPC  which was dismissed by the learned Civil Judge. The appellant challenged the decision of the Civil Judge.

The High Court considered the submissions of the appellant and after referring to various decisions of the Apex Court as well as other High Courts, observed that under Order XXI Rule 90 CPC, the auction can be set aside only on account of fraud or material irregularity which has resulted in substantial injury to the applicant. For this purpose bald allegations are not sufficient, fraud has to be alleged and established. On the facts of the instant case, the Court held that there was no such fraud or material irregularity in the auction sale of the property concerned that would render it liable to be set aside under Order XXI Rule 90. Therefore, the appeals were dismissed. [Bahadur Chand v. Madanlal,  2018 SCC OnLine P&H 636, dated 01-03-2018]

Case BriefsHigh Courts

 

Hyderabad High Court: In the instant appeal, the question arose that whether a counter-claim can be rejected in terms of Order VII, Rule 11 of CPC, to which the Bench of V. Ramasubramanian, J., held that in addition to the parameters provided in Order VII, Rule 11 of CPC, the Court must examine while dealing with a prayer for rejection of the counter-claim, as to whether the rejection of the counter-claim would have the effect of striking off the defence and rendering the defendant defenceless. It was also observed that at the stage of invoking Order VII, Rule 11 CPC, the Court is not concerned with the merits of the claim. But while dealing with a written statement, the Court will certainly consider the merits of the claim

As per facts of the present case, an eviction suit was filed by the respondents against the appellants. The respondents claimed that a shop was taken on lease by the father of the appellant/defendant in December, 2003 and subsequently took over the shop; and that the appellant/defendant committed default in payment of rent from April, 2015 and therefore after issuing an eviction notice dated 23-12-2015, the respondents/plaintiffs were forced to file the suit for eviction. The appellant contended that the lease was for 25 years and that therefore he was not liable to be evicted. In addition the appellant/defendant also made a counter-claim by seeking a decree for the relief of specific performance of the registration of the lease deed. The respondents/plaintiffs however made a request to the trial court to reject the counter-claim in terms of Order VII, Rule 11 of CPC which was accepted by the trial court, thereby resulting in the present second appeal.

Perusing the facts of the case and the provisions of CPC, the Bench observed that Order VIII, Rule 6-A(4) CPC clearly states that a counter-claim shall be treated as a plaint and governed by the rules applicable to plaints, therefore, the applicability of Order VII, Rule 11 CPC to counter-claims cannot be ruled out. Generally a counter-claim which consists of the defence to the plaintiffs claim and another comprising of the counter-claim and the survival of one does not depend upon the other; it may be possible to apply Order VII, Rule 11, however in cases where defence to a suit and the counter- claim are joined in such a manner as “Siamese twins”, with an inherent danger to the survival of the defence to the suit, upon the rejection of the counter-claim, the Court must do something more than what Order VII, Rule 11 generally mandates. Noting the provisions laid down under Order VIII, Rule 6-A(1) sub-rule (2), Order VIII, Rule 6-A, Order VIII Rule 6-A sub-rule (4) and Order VIII, Rule 6-C of CPC, the Court observed that a counter-claim is not exactly the same as a plaint, despite having the traits of a plaint and the scheme of Order VIII, Rules 6-A to 6-G of CPC itself recognises the fact that there could be two different scenarios, one where the counter-claim could be intertwined with the defence and another where it is capable of being prosecuted as an independent suit. [Jinendra Jewellers v. B.Venkateswara Rao, 2017 SCC OnLine Hyd 442,  decided on 15.12.2017]

Case BriefsHigh Courts

Hyderabad High Court: In the instant appeal, question arose that whether the Application I.A.No. 1751 of 2006 filed for recovery of shares, is an application under Section 8 of the Arbitration and Conciliation Act, 1996 or whether it is an application under Order VII Rule 11 of CPC seeking rejection of plaint on the ground that arbitration clause in the contract bars the suit. The Division Bench of S.K. Kait and D.V.S.S. Somayajulu, JJ., allowing the appeal held that, the said application is under Order VII Rule 11 CPC seeking rejection of the plaint while observing that when a statute describes or requires a thing to be done in a particular manner; it should be done in that manner or not at all.

As per the history of the case, in 2005 a suit was filed for recovery of shares of various companies belonging to the appellants’ share allegedly sold by the respondents/defendants. Post the filing of the suit, one of the defendants filed an application under Order VII Rule 11 CPC pleading inter alia that the dispute between the parties should be settled according to arbitration as per Bye-law No. 248(c) of the Bombay Stock Exchange Bye-laws. However, instead of asking for an order under Section 8 of the 1996 Act to refer the parties to arbitration, the defendant sought for rejection of the plaint. The Additional Chief Judge, City Civil Court, Secunderabad while agreeing that there is a valid arbitration clause, rejected the plaint thereby leaving the parties to invoke the arbitration clause. The appellants/plaintiffs via their counsel Mahmood Ali in addition to opposing the application of 2006 also argued that the appellants were not in the purview of the arbitration clause. However the respondents/ defendants’ counsel argued that the arbitration clause was well highlighted in the contract between the parties and that this Court has no jurisdiction over the matter as per the provisions of Section 8 of 1996 Act.

The Division Bench duly noting the averments made by the counsel observed that the issue of the case is that whether the Chief Judge was right in “rejecting” the plaint. The Court observed that the lower court should have noted that Section 8 of only empowers the Court to “refer” the parties to arbitration but does not give the Court an option to reject a plaint whereas Order VII Rule 11 CPC empowers the Court to reject the plaint, when there is “bar” to the suit because of any law and Section 8 is not a bar to a Civil Court and provides an alternative to a defendant against whom a civil suit is initiated to submit to the jurisdiction of the civil Court. The Court observed that an application under Section 8 of the Act is an application that should be made in a particular manner and at particular time. The application should be accompanied by the original arbitration agreement or a certified copy thereof. The Court thus noted that the lower court did understand it as an application under Order VII Rule 11 CPC only. However the Division Bench also observed that the application was misconceived in the first place and thereby set aside the order of the lower court dated 16.11.2006. [M. Shankara Reddy v. Amara Ramakoteswara Rao, 2017 SCC OnLine Hyd 426, decided on 24.10.2017]