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Kranti Mohan Guruprasad Mebra and anr. Vs. Fatehchand Vasuram Behal - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai High Court
Decided On
Case NumberA.F.O. No. 546 of 1980
Judge
Reported inAIR1982Bom263; (1981)83BOMLR445; 1983MhLJ141
ActsCode of Civil Procedure (CPC), 1908 - Sections 9A
AppellantKranti Mohan Guruprasad Mebra and anr.
RespondentFatehchand Vasuram Behal
Appellant AdvocateV.H. Gumaste and;Usha V. Madhabhavi, Advs.
Respondent AdvocateC.K. Jalsinghant, Adv.
Excerpt:
civil procedure code (act v of 1908), section 9-a (as inserted by mah. act lxv of 1977) - scheme and object -- composite hearing of preliminary issue about jurisdiction and interim relief -- duty to determine issue of jurisdiction on consideration of all aspects and by giving full opportunity to lead all evidence.;it is true that it may be permissible for the court to adopt a composite hearing of the preliminary issue about the jurisdiction of the court and the interim relief and even to determine the preliminary issue at such hearing and it may even be conceivable in certain circumstances such determination on both counts by a composite order. however, in that event it cannot be underestimated that though existing in the same proceeding, both matters would run on different tracts, though.....1. for some reason of the other, the partners of a partnership firm had fallen out, and it is on account of the subsequent events that this proceeding has come into existence. the plaintiff who is the respondent herein was one of the partners along with the ist appellant, tha is the 1st defendant in the suit along with certain other persons in a partnership firm which was dealing in textiles and the concern was knows in the mercantile world as bhuvaneshwari silk mills. this partnership firm came to be dissolved on aug., 25, 1977 by a deed of dissolution with the net result that under the settlement, the plaintiff had become the owner of the powerlooms 16 in number which were initially a part of the partnership property. first in all 25 looms were put in operation by the partnership firm.....
Judgment:

1. For some reason of the other, the partners of a partnership firm had fallen out, and it is on account of the subsequent events that this proceeding has come into existence. The plaintiff who is the respondent herein was one of the partners along with the ist appellant, tha is the 1st defendant in the suit along with certain other persons in a partnership firm which was dealing in textiles and the concern was knows in the mercantile world as Bhuvaneshwari Silk Mills. This partnership firm came to be dissolved on Aug., 25, 1977 by a deed of dissolution with the net result that under the settlement, the plaintiff had become the owner of the powerlooms 16 in number which were initially a part of the partnership property. First in all 25 looms were put in operation by the partnership firm and 8 looms had been entrusted to the 1st defendant under the said settlement.

2. On Oct., 5, 1977, the plaintiff and the 1st defendant recorded a separate agreement of hire purchase in respect of a out of the said looms with the consideration fixed at Rs. 1,20,000/- under a stipulation that the same should be discharged by payment of monthly instalments of Rs. 2500/- with interest at 18 percent on the unpaid amount. The monthly instalments were to be paid be or before the 10th day of every month. And it was to commence from Nov., 10 1977. The agreement contains several other clauses which are normally incorporated in a hire purchase agreement. Under D. 5, the plaintiff that had a right to terminate the agreement will, or without notice and to relate and resume the possession of the looms, if there is a default of payment for 3 instalments, and further it gave a right to the plaintiff even to construct or erect a brick wall in the slide where the looms were installed right from the beginning in such a manner so that the said a looms could be aspirated from the other looms belonging to the 1st defendant. The agreement also contained several other clauses, the consideration of which need not detain us in this proceeding.

3. On the date of the agreement a cheque for Rs. 2500/- towards the initial payment under the agreement was given, and it is claimed that the said cheque bounced and was dishonoured, and no further payments towards instalments have ever been paid meaning thereby that in spite of this specific agreement executed between the parties, it had not been honoured by one party who had taken the looms on hirs, and thereby committed the breach, and according to the plaintiff's contention, he was vested with the rights ex facie to proceed against the defendants for the purpose of resuming the property. The agreement also stipulated that in case the contract had to be terminated on account of lapse on the part of the defendants, then a certain amount of damages was required to be paid as contained in the condition in Cl. 6 under which the hirer was obliged to pay to the owner the stipulated hire including interest up to the date of such determination including the apportioned hire for any broken period of the month and 40 per cent of the balance of total unpaid hire as mentioned in cl. 3 as compensation for extra depreciation in the value of the said looms.

4. In view of the lapse committed by the defendants, the plaintiff filed Suit No. 596 of 1976 in the City Civil Court for Gr Bombay canvassing all these contentions and ultimately claiming various reliefs. The first was regarding the declaration to the effect that the said agreement had been validly terminated or determined and that the plaintiff is the owner of the said looms in question whose the 1st defendant be declared is have no concern whatsoever with the same Rendering of the account of the business carried by the 1st defendant on the basis of the said looms as from Aug., 1, 1977 was the subject-matter of the other relief the plaintiff also asked for 2 decree for the profits which have been earned by the defendant from the said date and for which purpose, the accounts were sought to be taken. A decree for damages was also asked for. The other important relief claimed was that the 1st defendant himself or through his servants and agents be restrained permanently from interfering with the plaintiff's possession of the said 8 looms and also from preventing the plaintiff from erecting a brick wall in the said shed interim reliefs were also claimed to the effect of asking for an interim injunction on the same lines and also asking for the appointment of Receiver with further stipulation that either of the parties may be permitted to function the looms as an agent of the Receiver. The suit came to be file on Feb., 5, 1979.

5. A notice of motion was taken out by the plaintiff for claiming interim relief on the lines suggested earlier. It is important to note that no ad interim relief was granted, but the learned Judge felt the necessity of issuing notice to the other side and question was deferred till then, except appointment of Receiver and the incidental relief, though the more prominent relief of injunction was not granted.

6. After the service of the notice, both the defendants put in their affidavits and resisted the said notice on all counts. It was inter alia contended that no cause of action accrued in favour of the plaintiff for initiating the said proceeding. A point of substantial importance which is also of primary significance was canvassed on behalf of the defendants in terms that the City Civil Court has no jurisdiction and also the suit as framed is not maintainable in view of the insufficiency of the Courtfee stamp. It was also submitted that on merits, no prima facie case has been made out by the plaintiff not in there any right existing in his favour much less there is any injury to any such right and lastly the balance of conference was entirely in favour of the detendants. It was further submitted that the accounts of the partnership af the relevant time were really not settled. And in real ty quite a substantial amount to the time of about Rs. 3,00,000/- was due to the 1st defendant from the plaintiff as it was canvassed in that behalf that at the time of the dissolution of the partnership and the settlement of accounts, apart from the looms and certain bales of cloth, the substantial part of the assets of the partnership, though being the subject matter of the accounting, had remained to be undesided, and it was further contended on the basis of various writings which were available that the plaintiff had held certain assets which ultimately should have gone to the share of the 1st defendant and that is how, the plaintiff was under a liability and obligator to pay such a large amount to the defendants and before it could be settled the plaintiff devised this mode in a mood to short-circuit the said process. The further submission Haws out of this on behalf of the defendants is that in reality it would be the defendants who would be required to recover certain amounts from the plaintiff, and as such that would be an additional ground for not granting an equitable relief in favour of the plaintiff.

7. In spite of the vigorous controversy that was apparently reflected through the documents and the arguments the order in contrast reflects on unsatisfactory picture and I am constrained to observe that there is no detailed discussion as such on such an important matter and the question of jurisdiction has practically been dealt with almost in a summary manner. Apart from this the more disturbing feature is that when a specific plea was raised on behalf of the defendants vis-a-vis lack of jurisdiction in the said court with a further application and a motion to decide that question of jurisdiction at the theshold, the learned judge declined to uphold that contention and felt that he could well decide the said question along with the notice of motion on its own merits simultaneously. That is how both these questions were bundled up in one order, and both were answered in favour of the plaintiff. The learned Judge fell that he had pecuniary jurisdiction to entertain suit, and be also fit that in substance, the suit was not one for possession. He also negatived the court-fee of Rs. 30/- was insufficient as essentially it was a suit for recovery of possession and the value of the property on the showing of the plaintiff himself was worth Rs.1,20,200/- and the further contention is that even on the basis of the stipulations in the agreement vis-a-vis the quantum of damages and the amounts payable to the plaintiff, it would still exceed the pecuniary jurisdiction of the said court. On merits, the learned Judge held that in view of the agreement coupled with the fact that no instalment has been paid by the defendants, a prima facie case has been made out by the plaintiff that the plaintiff had a legal right covered under the agreement vis-a-vis the property in question as the property in goods had never been transferred to the defendants and there was an obvious injury to the said legal rights in as much as the defendants were utilising the said looms and earning profits adverse to the interest of the plaintiff. As regards the balance of convenience, the learned Judge fell that it tilted in favour of the plaintiff. In keeping with these findings, the learned Judge granted the notice of motion and passed the order containing several clauses. Thus, the appointment of the Court Receiver was made vis-a-vis the said looms. An option was however given to the defendants when it was directed that the Receiver shall not take possession of the looms if the 1st defendant would deposit Rs. 60,000/- within one month, an additional sum of Rs. 15,000/- each for 3 months and Rs. 250/- per month thereafter till completing the initial consideration of Rs. 1,20,000/- and the 1st defendant was also given an option along with this to give an undertaking for the interim period till the payment of the said amounts not od deal, alienate or dispose of he property in question. On the 1st defendant declining to exercise theoption, the Court Receiver was to take possession of the looms in question immediately. It was further stipulated that since then, that it, from the date of the order, the 1st defendant be deemed to be functioning as the Receiver's agent and the 1st defendant was also restrained from dealing with the looms to the prejudice of the plaintiff. This order which was recorded on Dec. 1, 1980 is being impugned in this proceeding on behalf of the detendants.

8. The learned counsel on both the sides have agitated more of less the same points, though in more detants, since the matter deserves a detailed investigation and consideration. Mr. Gumaste the learned counsel on behalf of the appellants made a strenuous grievance about the manner in which the impugned order had been scribed and an equal grievance was made about the learned Judge's order in legalising the defendants contention about deciding the question of jurisdiction first. The learned counsel submits that in reality this is nothing but a suit for possession as there is a liberal user of the terminology in that sense conveying the meaning that the physical possession of the property had passed on to the 1st defendant though the property in goods may remain with the plaintiff, and that the plaintiff was seeking to recover possession from the defendants, Several clauses in the agreement, several features in the plaint ans several recitals in the documents are relied upon for the purpose. The corollary of this submission that flows or emits out of the first is to the effect that even in reality, this is a suit for recovery of possession of the property, the value of which on the ascertainment of the plaintiff himself is to the time of Rs. 1,20,000/- then obviously it would fall beyond the pecuniary jurisdiction of the City Civil Court, and therefore, apart from lack of jurisdiction in the City Civil Court, it would also follow that a suit has been filed on the wrong forum when it ought to have been filed in this Court. In addition to this reference to the property and its value vis-a-vis the claim for possession. It was further contended that there is an apparent garb created by the plaintiff to cover up the real nature of the transaction and also to save the court-fees and also to justify filing of a suit on the wrong forum and if this garb is torn ojt, then it would be clear that apart from the question of possession, there is no question of rendering of the accounts and further there is no question of the quantum of damages remaining unascertained, as according to the learned Counsel , different clauses in the agreement take care of these features in no uncertain terms on the basis of which the total sum of which could be payable to the plaintiff to the 1st defendent would never remain in any nebulous form and in that event even that amount would exceed the pecuniary jurisdiction of the city civil court and consequently not paying the court fees on the said ascertained amount would again be fetter to the suit . Several aspects were canvassed on the merits of the matter , one of which relating to a large and substantial amount being due to the first defendent from the plaintiff. A grievance was also made as regard the rigour in the final order passed by the learned judge and lastly the greivance was made that no sufficient time was given for the defendants even to move this court . All these submissions were preceded by another serious greivance that no fair opportunity was given to the defendants to agitate all the points and the learned counsel who appeared in the trial court was also not heard fully.

9. Mr. Jaisinghani the learned counsel for the respondents/ plaintiff has sought to repel all these contentions on merits. According to him, there is no question of user of any garb or a pretext in as much as under various clauses of the agreement and in the nature of the hire- purchase agreement and in the nature of the transaction , the plaintiff never lost possession apart from not losing the title or the property in goods and what was sought to be done was merely to resume that possession with there being no discontinuity as such . The learned counsel further submit that by asking for the relief of restraining the defendants from not interfering with his right to erect the brick wall and to deal with the property in question , the plaintiff in reality has not asked for possession of the property as such , but since the possession continued with him , he had merely asked for a mandate of non-interference to that right from the defendants. It was further submitted that in view of this position , the City Civil Court would obviously vested with the requisite jurisdiction , and as regard the quantum of amount payable to the plaintiff, the said could obviously not be ascertained unless the accounts are taken as the looms were being run and operated by the defendant No.1 adverse to the plaitiff's interest. The learned counsel submits that since the year 1977, that is from the date of the agreement , no amount has been paid against either of the instalments. The contention about the substantial amount being due from the plaintiff to the defendant No.1 is also denied. As regard the question of jurisdiction and the so called procedural lapse committed by the learned trial judge , Mr. Jaisinghani the learned counsel submits that it squarely fails under the provisions contained in S. 9A of the Civil P.C.

10. I have already indicated the skeleton of the contentions raised on behalf of both the sides , even on merits. However, this proceeding can be disposed of on a short premise without expressing any opinion on the merits or any aspect, though I may hasten to add that the aspects sought to be propagated by both the sides are not such which can be disposed of almost in a summary manner and the same requires a deeper investigation and probe on the anvil of ratio of the various judicial pronouncements which are sought to be cited in this proceeding .

11. Section 9A of the code, which is the product of the amendment by the ode of Civil Procedure ( Maharashtra Amendment ) Act, 1970 under Maharashtra Act No . XXV of 1970 when the said section has been inserted , consists of two parts. The first sub-clause envisages that if in a hearing of a application for granting or setting aside an order granting any interim relief , including injunction and appointment of receiver made in a suit , an objection to the jurisdiction of the Court to entertain the suit is undertaken by any of the parties , then the Court shall proceed to determine at the hearing of such an application the issue about the jurisdiction as preliminary issue before granting or setting aside the order already granted for interim relief. Sub-cl (2) provides that inspite of the provisions contained in sub-cl (1) , pending the determination of such an application vis-a vis the claim of jurisdiction , an interim relief can be granted .

12.The combined reading of these two clauses of the said provisions would entail into projecting certain logical and inescapable deductions., is contemplated that in the first instance , after filing of the suit , there comet into existence an application for interim relief .Such a prospective interim relief can be in different shape and thus can be by way of injunction ,appointment of receiver or otherwise , and this last residuary clause would include other interim reliefs. Either of the two situations in that behalf can be visualised. It may be that ad interim injunction or any interim relief would be granted in a notice of motion till the service of the said notice on the other side or that this ad interim relief may also be postponed till that time. The contesting, party therefore , on its appearance or any time thereafter ask for setting aside the ad interim relief , if so granted earlier or oppose the granting of any such interim relief if not granted so far, and it is in that context that the provision contemplates an application either for granting or for setting aside an order granting any interim reliefs. If a motion or an application vis-a vis the jurisdiction of the court to entertain the suit itself is made by the other contesting party , then it must be attended to immediately. This is obviously in consonance with the legislative intent in inserting this provision that a suit which is capable of being disposed of on the basic premise of jurisdiction , then it should be done so before any further proceeding is taken or the suit is allowed to linger and secondly, if the very foundation of the jurisdiction is brought under controversy , and if it is spelt and if the said plea is ultimately upheld , then the court would obviously have no jurisdiction even to grant an interim relief. Such a motion can be made even at the inception , and need not be necessarily at a later stage . However, the same can be even at the time of granting of the interim relief, and it can be made equally at the time of setting aside such an interim relief, if already granted .Once such an application or motion is initiated by one of the parties , then the necessary obligation ipso facto devolves on the court with the resultant consequence that the question of interim relief has got to be shelved in the background, though temporarily , and to bring on the fore front the main motion about the jurisdiction . The Court is further enjoined to proceed to hear such an application or a motion and determine the same. For that purpose, it is prescribed that the same should be treated as a premilinary issue in the suit , and it is further prescribed that this has to be done before the granting of the said interim relief or if any relief is so granted , then before setting it aside. The application of interim relief is said to be heard and disposed of expeditiously and a further qualification is cast that in view of the objection to the jurisdiction, the matter need not be adjourned to the hearing of the suit . This and the other aspect indicated earlier mainfestly suggest the legislative intent that in the first instant the objection to jurisdiction itself be dealt with expeditiously and obviously before granting the interim relief; that it should not be responsible for the lingering of the suit , and that is why it should be treated as a preliminary issue and thirdly the decision of such a preliminary issue need not be postponed to the full dressed trial on merits on other issues , and thus its hearing and adjudication is brought in advance and lastly the application for interim relief also need not be postponed to the final hearing of the suit.

13. When sub-cl (2) comes into operation , it is not as if the entire field for the interim relief is re-opened , but what is contemplated by that provision is that if the exigencies of the situation impress the Court that either of the sides should be protected without wasting any time , howsoever short it may be , which may consumed for determining the said preliminary issue, then the Court may on such merits grant such an interim relief as it thinks proper. There are obviously two qualifications annexed by this provision . The first is that such an interim relief , even for such an interim period is to be given only if the court is satisfied that some protection is necessary even during the short span of time during the pendency of the application taking objection to the jurisdiction. And such concession can be bestowed in favour of the party even at the time of the motion made by the other side regarding the jurisdiction of the court , but certainly before its determination . Lastly, there is a qualification or a limitation about the tenure of such an interim relief , viz, that if such an interim relief is granted , then it shall hold good and be in force only upto the moment when the application or motion vis-a-vis the jurisdiction is heard and finally decided on merits treating the same as a preliminary issue.

14.It is true that it may be permissible for the court to adopt a composite hearing of the said preliminary issue and the interim relief and even to determine the preliminary issue at such hearing and it may be even conceivable in certain circumstances to make such determination on both counts by a composite order , however the governing clause remaining intact would enunciate that the adjudication of the preliminary issue would precede the decision of the interim application , the applicability of which would be insisted upon equally in such composite hearing or even in a composite order recorded on both counts , which principle is obviously founded on the sound premise that it is only the finding or decision on the preliminary issue of jurisdiction would govern the further jurisdiction of the Court to grant the interim relief . However , in that event it cannot be underestimated that though existing in the same proceeding , both matters would run on different tracks , though parallel to each other and further more the depth of the field of either of these two items would be distinct with clear gradation . Thus, it cannot be overlooked that the scheme of the said provision unmistakably indicates that the court is expected to determine the objection to jurisdiction as an issue in the suit which should be treated as a preliminary issue and having regard to the concept of the pleading, the issues arising therefrom and the determination of such issues on evidence and on the anvil of procedure as prescribed under the Code, it would be clear that the determination of such an issue even at that stage would be on the consideration of all aspects in which the said issue is enveloped ; secondly, it would be after giving the parties a full opportunity to lead all the necessary material and the evidence as they would have done when the issue was framed at the trial and lastly the determination of such an issue even at that stage would get a label of finality in so far as that proceeding and the suit is concerned. That means it is not as if that the same issue need to be re-heard in the second round , when the other issues are heard at the trial , and it is equally not as if that the first round being only a prima facie , superficial view on a tentative objection while the second round being a full fledged , final decision or adjudication on all aspects of the merits transforming the said objection into regular issue. The user of certain phraseology cannot be without any purpose or significance. It is this depth that is in contrast with the thinner one of the interim application for an interim relief which is to be decided essentially on the prima facie view without probing deeper in the finer shades and aspects. One tends to touch the root where as the other remains on the surface . This difference would be equally alive even both the matters are heard at one and the same time . Therefore, permissibility and desirability of such a feature of composite hearing are two separable features and the course to be adopted can well be left to the presiding judge in the context of the facts and circumstances of each case. If it is decided to consider only the said preliminary issue and to keep back for the time being the interim application , then the possibility of any irreparable harm being caused to either side can well be avoided as cl. (2) takes care of such a situation under which even during this interim period till the adjudication of the preliminary issue , the court is empowered to grant the interim relief purely on interim basis.

15. Section 9A of the Code, therefore, opens an umbrella under which exists a self- contained scheme with a definite object. I am fortified in this view by ratio of two decisions of this Court in Porbunderwalla v. Gulam Hussein , : AIR1974Bom288 and Radhakrishnan v. Sheila Govind Mirchandani, : AIR1977Bom35 .

16. The Learned trial judge has no doubt observed in his order that according to him , the provisions of S. 9A of the Code do not make it necessary for a split hearing of the motion into two distinct stages and does not prevent the court from hearing the motion on merits unless it has heard and decided the point relating to the jurisdiction and it is keeping in with this view that the learned appears to have directed both the learned counsel to address him simultaneously on the question of jurisdiction as well as on the merits of the motion . Mr. Gumaste the learned counsel for the appellants makes a greivance that even assuming that such a course is permissible , yet in the first instance no adequate opportunity was given to the parties and especially to the defendants to substantiate their contention about lack of jurisdiction with the court and secondly the learned judge has not considered all the aspects and has practically decided that issue also in the same manner in which the notice of motion was heard and decided on merits. This submission cannot be said to be without any substance. The main contention of the defendants is that there is no pecuniary jurisdiction vested in the said Court having regard to the real nature of the transaction and the valuation of the property and especially when the gist for the relief sought for and the tenor of the pleading expressly indicates that the plaintiff was asking for possession of the property. It is true that the learned judge was of the opinion that the plaintiff had never lost possession in as much as the custody or physical possession by the defendants was that of a bailee. The learned judge relied on some of the conditions and in particular condition No. 4 in clause 6 of the agreement. The learned judge , was of the opinion that it was not necessary for the plaintiff to value his claim on the basis of the price of the goods , and therefore, the valuation as made by the plaintiff on his claim was proper and justified. It is apparent that it is the only discussion by the learned judge on this aspect which has got to be examined in the context of the contentions raised on behalf of the first defendant . Mr. Jaisinghani the learned counsel for the respondent/ plaintiff adopting the reasons assigned by the learned judge further submitted that this is a peculiar kind of transaction under which not only the property in goods is not transferred from the owner , but it can be held that even the possession would continue to remain with the owner till all the instalments are paid, which submission is disputed on behalf of the appellants,and Mr.Gumaste sought to rely on several statements in the plaint in sub-port of his submissions that on the showing of the plaintiff himself,he had lost possession and that he was asking to get back the possession. Reliance was placed on some decisions on either side and a grievance was equally made on behalf of the appellants that all these aspects which were argued before the learned trial judge have not been considered at all,and this point has been disposed of only in one short para. It is the further contention of the defendants that it was futile for the plaintiff to suggest that the damages and other amounts payable to him could not be assessed in as much as the same can be easily ascertained even on the basis of certain stipulations in the agreement in that behalf and when so assessed, the safe would equally be beyond the pecuniary jurisdiction of the court and it is with that object that the plaint has been purposely kept vague and Mr.Gumaste submits that the learned trial judge has not applied his mind to this aspect at all.In my opinion, the contentions deserve a serious consideration and having regard to the nature of the controversy, it would have been better in the fitness of things if there was a detailed discussion at least trying to meet various points raised on behalf of both the parties,particularly when as stated earlier the learned judge was earlier deciding the preliminary issue on jurisdiction and for the interim period and was not viewing the matter on the surface as could be done while granting or refusing to grant the interim application, but was required to go deeper as the decision of that issue had a capacity of finality in so far as the suit is concerned. This, however , may not be confused as the said finding is been upset on merits inas much as under the circumstances , it is not desirable as also not necessary to express any view and finding either way as the matter requires further investigation , and if need the appellants /defendants would be required to be given an adequate opportunity to substantiate their contentions by producing any further material . It is submitted with some justification that since the interim application was being disposed of, it may be there all the relevant material necessary for the proper adjudication of the preliminary issue could not have been produced , which could have been so produced if the learned judge had decided to try that issue separately or independently . It was also contended that some aspects were not allowed to be elaborated while in respect of many there has been utter non-application of mind and the proceeding has been disposed of in a too summary manner . In view of this position, it is desirable to afford a reasonable opportunity to the defendants in that behalf.

17. On merits also , the discussion by the learned trial judge is not in detail and the said aspect equally suffers from an identical deficiency . No doubt there is an agreement, apparently in favour of the plaintiff , the execution of which is not seriously disputed by the first defendant , who however has several contentions in that behalf as reflected in that affidavit . According to him , a partnership earlier was in existence between himself and one Mr. Mehra and after the retirement of Mehra, the plaintiff and one Khanna as also one Madhan was taken as partners . He has contended that the plaintiff's activities were against the interest of the partnership on account of which he was obliged to file a complaint with the police . The said partnership came to be dissolved by a deed of dissolution on March 25, 1977. According to him further the accounts were not settled and the large amount was due from the plaintiff to him over the sale of quantity of saris and grey cloth . He has also indicated the real nature of the transaction . The learned trial judge no doubt was impressed by the existence of the said agreement along with the conditions therein as also the conduct of the first defendant in giving a cheque for Rs. 2,500 on October 15th , 1977 , which was the day of execution and which cheque bounced back . The learned judge felt that there was something inherently improbable in the first defendant case of the plaintiff being indebted to him . As regards the non-settlement of accounts , the learned judge realised that one letter was addressed by the plaintiff to the bankers of the dissolved firm which was in consonance with the defendants case and the learned judge has observed ; 'there appears to be some truth in what the first defendant says' . Along with this , Mr. Gumaste the learned counsel submits that two important features , apart from the contention of the defendant No.1 are not properly considered . Thus, even though the agreement pertains to an amount of Rs. 1,20,000/- , still the amount of monthly instalment was fixed at Rs. 2,500 only when the looms were to be operated by the 1st defendant, which would mean that ,the entire amount under the agreement would be satisfied after several years. It was also submitted that the agreement was executed on October 15th , 1977 and the cheque for Rs. 2,500 towards the first instalment was issued on the same day and the plaintiff must have realised soon thereafter that it was dishonoured and even according to the plaintiff nothing has been paid thereafter by the defendants to the plaintiff, meaning thereby that till the filing of the suit there was absolutely no payment made by the defendants . This would mean that the plaintiff must have realised long back about the intention of the defendants to dishonour the agreement and to grab the property where by the plaintiff was loser all along and under the terms of the agreement , the plaintiff was entitled to terminate the agreement immediately and also got a right to recover the balance of the amount with damages. The learned counsel submits that inspite of this , the suit came to be filed as late as on Febuary 5, 1979 . The learned trial judge does not appear to have considered all the facets of the matter in proper perspective and therefore , it is yet another ground for having hearing of the matter on merits afresh .

18.In this view of the matter, the only course open is either to send back the matter to a trial court for a fresh hearing or to hear it on merits in this proceeding itself. However, it is well settled that normally a matter should be decided on merits by the court of the first instance who has an advantage of considering all the material on facts and whose decision would provide some assistance while dealing with the matter in appeal. In view of this , it is deemed proper to send back the matter to the trial court for being heard on merits afresh on the preliminary issue of jurisdiction as also on merits regarding the notice of motion so that both the parties would get an adequate opportunity to ventilate their greivances. It is true that it may consume some time in view of this remand. However, it is in this situation that the provisions contained in cl. (2) can be brought effectively in operation . Mr. Jaisinghani the learned counsel submits that some protection should be afforded to his client as prima facie the agreement is in his favour and the looms are in the custody of the defendant No.1 , and the learned counsel further submits that status quo be maintained which plea is opposed by Mr. Gumaste on behalf of the defendants.

19.On considering the pros and cons of the matter and examining the rival contentions, in my opinion, if may not be a proper exercise of discretion to allow the status quo in its entirely is (sic) maintained as under which the appellants/defendants have deposited so far cash amount to the tune of Rs. 45,000/- and have also furnished a bank guarantee to the tune of Rs. 52,500/- in addition to giving an undertaking not too alienate, transfer, dispose of or to deal with the property in question. However, since the attack on behalf of the defendants is at the very root of the matter and when entire field of merits on both the counts is left open and when ever the notice of motion is to be heard afresh on merits, it would not be proper to retain all the said conditions. The two items viz., the payment of cash amount anf furnishing of bank guarantee will have to lifted as those would not be in consonance with the view that I am taking in this matter and especially when the entire matter is yet to be agitated afresh on all aspects including the question of jurisdiction and the merits. However the item of the undertaking already given by the appelllants'defendants deserves to be retained as affording adequate protection even for the interim period and in addition thereto, in my opinion, it would be just and proper to bind down the 1st defendant to furnish solvent security to the tune of Rs. 35,000/- to the satisfaction of the Registrar, City Civil Court, Bombay, which amount is calculated on the basis that it will accrue and become due on the date of the suit under the agreement and under the stipulation of payment by instalments. It is however made clear that both these conditions viz., about the undertaking and furnishing of the security shall remain in force only as an interim relief till the final disposal of the motion of the application of the 1st defendant challenging the jurisdiction of the City Civil Court and would continue to be in force till the disposal of the interim application for the interim relief under the notice of motion in the event its issue of jurisdiction is decided against the defendants and in the event of the notice of motion and the preliminary issue are disposed of at one and the same time by a common order, this the said undertaking and security shall remain in force till the passing of the order.

20. Nothing herein above observed shall be taken as an expression of opinion so as to filter the discretion of the learned Judge while dealing with the matter on merits afresh. The learned trial Judge shall decide the matter in light of the observations hereinabove giving full opportunity to both the sides to canvass their contentions and to place all the relevant material in both the categories including the preliminary issue about the jurisdiction and the said material can be in the shape of affidavits, documents or even in the form of leading evidence, if so desired by the parties. The decisions on the said preliminary issue would obviously govern the further course in the proceeding before the learned trial Judge. At the composite request of both the sides and having regard to the urgency of the matter, the learned tria Judge shall endeavour to decide the proceeding in question expeditiously and as far as possible and feasible under the circumstances by the end of July, 1981,

21. Before parting, I may incidentally refer to a rather disturbing development in the trial Court. After the impugned order was passed, the l;earned Counsel for the defendant No. 1 applied for the stay of the order for a period of two weeks to enable him to approach this Court to get interim and urgent orders. This motion was rejected, though on the ground that since the receiver was not to take possession of certain period, no prejudice would be cause to the defendants. However, the rigour of the order was not wiped out, since while rejecting the motion itself the learned Judge observed and suppurated that if the 1st defendant did not give an undertaking as prescribed within one week, then it would be taken to mean that he did not wish to avail of the concession of the payment offered to him under the order. The inevitable implication of this order to that if such an undertaking was not given within one week, then if would convey to the court the reluctance of the defendants to exercise the option. The further necessary consequence would obviously be serious in the receiver getting a clear direction thereby to take charge of the property without walling for any further period. If that be so, then denying a short period of two weeks for the defendants to move this Court appears to be rather brash and certainly unjustified apart from being not quite fair. It cannot be underestimated that it is the privilege of a Court to pass an order one way or the other on merits, in accordance with law, yet a laudable principle is implicit in the system to give a fair deal to exch of the litigants who knocks the door of the Court and implicit therein is a further laudable principle that ever litigant who is aggrieved by the order litigant who is aggrieved by the order of the Court of the first instance has a legitimate right to move the higher Court ask for redress, and therefore, a reasonable opportunity should normally be given in that behalf to all the litigants, provided of course the prayer on the face of if does not appear to be frivolous or vexatious. This principle is essential to be preserved so as to instil a sense of confidence in the system of administration justice.

22. In the result, the appeal is allowed. The impugned order dated Dec., 1, 1980, recorded by the learned judge of the City Civil Court, Bombay in notice of motion No. 550 of 1979 in Suit No. 569 of 1979 is set aside.

The proceedings are sent back to the City Civil Court, Bombay for disposal of the matter afresh on merits expeditiously in the light of the observations hereinabove.

The undertaking given by the 1st defendant not to transfer, allenate, dispose of or deal with in any manner the property in question viz., 8 powerlooms 1982 Bom./18 VI G - 15 installed in the shed in question shall remain in force not only till the disposal of the application or the motion raising the question of jurisdiction but also would continue to be in force till the disposal of the notice of motion on merits. If such an occasion arises and in the event of the notice of motion and the preliminary issue are disposed of at one and the same time by a common order, then the said undertaking shall remain in force till the passing of that order. In addition thereto the 1st defendant shall furnish a solvent security to the tune of Rs. 35,000/- to the satisfaction of the Registrar of City Civil Court, Bombay which security shall remain in force till the disposal of the application about the jurisdiction of the said Court as raised by the 1st defendant, and in case the issue is decided in favour of the plaintiff, then the said security shall continue to be in force till the final disposal of the notice of motion, and in the event of the notice of motion and the preliminary issue are disposed of at one and the same time by a common order, then the said security shall remain in force till the passing of that order.

The order directing the 1st defendant about payment of cash amount and also furnishing bank guarantee is rescinded with the result that the 1st defendant is at liberty to withdraw the cash amount of Rs. 45,000/- so far deposited by him in the trial court and the bank guarantee furnished by him also stand lifted. It is, however, directed and made clear that the 1st defendant shall get the liberty to withdraw the said amount of Rs. 54,000/- so far deposited by him only after furnishing the solvent security for Rs. 35,000/- as stipulated earlier. There will be no order as to costs.

In view of the above order and direction, the civil application does not survive.

23. Order accordingly.


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