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Dalmia JaIn Airways Ltd. Through C.P. Lal Vs. the Registrar, Joint Stock Companies, Delhi State and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany;Civil
CourtPunjab and Haryana High Court
Decided On
Case NumberLetters Patent Appeal Nos. 1-D to 4-D of 1954
Judge
Reported inAIR1955P& H231
ActsCompanies Act - Sections 153 and 153A; Code of Civil Procedure (CPC) , 1908 - Sections 151 - Order 41, Rules 20 and 23; Government of India Act, 1935 - Sections 59
AppellantDalmia JaIn Airways Ltd. Through C.P. Lal
RespondentThe Registrar, Joint Stock Companies, Delhi State and anr.
Appellant Advocate Ved Vyas,; S.K. Kapur and; N.H. Hingorami, Advs.
Respondent Advocate C.K. Daphtary, Solicitor General,; Porus A. Mehta, Adv.,;
DispositionAppeals dismissed
Cases ReferredChokalingam Chetty v. Seethai Ache
Excerpt:
.....[as inserted by act 22 of 2002] & 104:[dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] writ appeal held, a writ appeal shall lie against judgment/orders passed by single judge in a writ petition filed under article 226 of the constitution of india. in a writ application filed under articles 226 and 227 of constitution, if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. - as this definition covers not only decisions in suit or actions but 'orders' in other proceedings as well which start with applications, it may be said that any final order passed on an..........v. kali sundari debia', 10 ind app 4 (pc) (m), and the privy council observed:'these learned judges held (and their lordships think rightly) that whether the transmission of an order under section 610 would or would not be a merely ministerial proceeding. pontifex j. had in fact exercised a judicial discretion and had come to a decision of great importance, which, if it remained, would entirely conclude any rights of kali soondari to an execution in this suit. they held, therefore, that it was a judgment within the meaning of section 15.'in this case kali sundari applied to the high court for execution of the decree of the privy council with regard to a moiety. an objection was taken that the decree could be executed as a whole and not partly. this objection was allowed and the.....
Judgment:

Kapur, J.

1. This judgment will dispose of four appeals-Letters Patent Appeals Nos. 1-D, 2-D, 3-D and 4-D of 1954--Which are directed against four decisions of Falshaw J. given in four different First Appeals for order but in which the question for decision is the same.

2. Briefly stated the facts are that Dalmia Jain Airways. Ltd., went into voluntary liquidation in June 1952. A scheme under Sections 153 and 153-A, Companies Act was proposed and was approved of by the share-holders of the company at meetings arranged for the purpose and we are told that the share-holders were the only creditors.

The essential part of the scheme was that theshare-holders were to get, and they could choose one of the following three alternatives, Rs. 5/- per share of the face value of Rs. 10/- immediately, Rs. 6/- per share of Rs. 10/- within five yearsor Rs. 10/4/- per Rs. 10/- share within twelve years. The following from the judgment of the learned Judge will show what the position of the company was:--

'The underlying basis of the scheme was that Dalmia Jain Airways, Ltd., which does not seem to have carried on any serious aviation business, had entered into a partnership with another company belonging' to the so-called Dalmia Jain Group called Messrs. Alien Berry and Company, Ltd., for the purpose of buying motor vehicles and spareparts from the Disposal Department of Government. This partnership was later dissolved and the of spare parts was transferred entirely toAlien Berry and Company, Ltd., which becameliable to pay Dalmia Jain Airways, a sum of overthree crores.

This liability has since been transferred to another company in the group called the Dalmia Cement and Paper Marketing Company, which is liable to pay Dalmia Jain Airways Ltd. a sum of Rs. 3,400,0000/- over a period of sixteen years.'

The scheme was placed before the learned District Judge of Delhi as Liquidation judge, a number of objections were raised by various shareholders, but eventually the scheme was sanctioned With certain modifications which were that instead of Rs. 5/-, Rs. 5/4/- were to be paid, instead of Rs. 6/- Rs. 7/- were to be paid & the period in the third case was reduced from 12 years to 10 years. This scheme was sanctioned by the learned District Judge on 10-2-1953. Against this four appeals were filed, one by Moti Lal Gupta, Advocate, another by D.K. Jahdev and three other shareholders, the third by Kamla Devi and Arun and the fourth by four share-holders including His Highness the Raj Pramukh of Madhya Bharat.

3. On 3-12-1953 the Registrar Joint Stock Companies Mr. R.B. Seth filed applications to be added as a party to the proceedings in appeals and prayed that the scheme be not sanctioned and he be granted time to be able to place all the facts relating to the Company before the Court and he alleged that the whole scheme was a complete fraud on the share-holders, in the interest of justice it was necessary to place before the Court the material in support of his allegations.

4. Objection was taken before the learned Judge that the Registrar could not be made party, but he repelled this contention and acting under Section 151, Civil Procedure Code ordered the addition' of the Registrar, as a party to the proceedings. I quote the following from his judgment:

'In this matter I do not think there can be any doubt that the only right and proper course in the circumstances will be to allow the Registrar to appear in these appeals and make available to the Court material which will be highly relevant in determining the question in issue, and which was not previously available'.

And finally the learned Judge said:--

'I accordingly accept the applications and permit the Registrar, Joint Stock Companies of Delhi State to be joined as a party in these appeals, and to place before the Court such evidence as is available of the alleged frauds by the management of the company'.

The Dalmia Jain Airways Limited has come up in appeal under Clause 10, Letters Patent, and a preliminary objection was raised that no appeal lies as the decision of the learned Judge does not amount to a 'judgment' within the meaning of the word as used in Clause 10.

5. The learned Solicitor-General relies on ---'Ramaswami Chettiar v. Roya Kanniappa Mudaliar', AIR 1930 Mad 987 (A), where it was held that an order under Order 1, Rule 10 (2), Civil P. C., adding a party to a suit is not a 'judgment' within the meaning of Clause 15, Letters Patent, arid no appeal therefore lies against such an order. The learned Judges there relied on a Full Bench judgment of Sir Arnold White C. J. in -- Tuljaram Row v. Alagappa Chettiar', 35 Mad 1 (B), where the learned Chief Justice laid down the following test:--

'The test seems to me to be not what is the form of the adjudication but what is its effect is the suit or proceeding in which it is made. If its effect, whatever its form may be, and whatevermay be the nature of the application on which it is made, is to out an end to the suit or proceeding so far as the Court before which the suit or proceeding is pending is concerned, or if its effect, if it is not complied with, is to put an end to the suit or proceeding, I think the adjudication is a judgment within the meaning of the clause.

An adjudication on an application which is nothing more than a step towards obtaining a final adjudication in the suit is not, in my opinion, a judgment within the meaning of the Letters Patent'.

This test has been approved of by the Supreme Court in -- 'Asrumati Debi v. Rupendra Deb, AIR 1953 SC 198 at p. 200 (C). Referring to the judgment of White C. J., Mukherjea, J. said:--

'According to White C. J., to find nut whether an order is a 'judgment' or not, we have to look to its effect upon the particular suit or proceeding in which it is made. If its effect is to terminate the suit or proceeding, the decision would be a 'judgment' but not otherwise.

As this definition covers not only decisions in suit or actions but 'orders' in other proceedings as well which start with applications, it may be said that any final order passed on an application in the course of a suit, e. g., granting or refusing a party's prayer for adjournment of a suit or for examination of a witness, would also come within the definition.

This seems to be the reason why the learned Chief Justice qualifies the general proposition laid down above by stating that 'an adjudication on an application, which is nothing more than a step towards obtaining a final adjudication in the suit, is not a judgment within the meaning of the Letters Patent'.'

This definition in the Madras case as stated by Sir Shadi Lal C. J. in -- 'Ruldu Singh v. Sanwal Singh', AIR 1922 Lah 380 (2) at pp. 383-384 (D) furnishes a better and a surer test for deciding the question whether an adjudication is or is not a judgment than that given by Sir Richard Conch C. J. in the case of -- 'Justices of the Peace for Calcutta v. Oriental Gas Co.', 8 Beng LR 433 (E), where Sir Richard Couch G. J. said:

'We think 'judgment' in Clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability. It may be either final or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole Cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.'

At another place Sir Richard Couch observed:

'For example, there is an obvious difference between an order for the admission of a plaint and an order for its rejection. The former determines nothing, but is merely the first step towards putting the case in a shape for determination. The latter determines finally so far as the Court which makes the order is concerned that the suit, as brought, will not lie. The decision, therefore, is a judgment in the proper sense of the term.'

Commenting on this Mukherjea J. said at p. 200:

'It cannot be said, therefore, that according to Sir Richard Conch every judicial pronouncement on a right or liability between the parties is to be regarded as a 'judgment', for in that case there would be any number of judgments in the course of a suit or proceeding, each one of which would be challenged by way of appeal. The judgmentmust be the final pronouncement which puts an end to the proceeding so far as the Court dealing with it is concerned.'

6. In the case before the Supreme Court the question to be decided was whether an order for transfer of a suit under Clause 13, Letters Patent of the Calcutta High Court is a judgment and it was held that it is not, because it neither affects the merits of the controversy between the parties in the suit itself, nor terminates or disposes of the suit on any ground.

7. The track of decisions in the Indian Courts is generally the one which (in line with?) the view taken by the Calcutta and Madras High Courts, but it is in the matter of application of this test that there is a wide divergence of judicial opinion.

8. In the Lahore case, AIR 1922 Lah 380 (2) (D) an order of remand under Order 41, Rule 23, Civil P. C. was held to be a judgment, and Sir Shadi Lal C. J. observed at p. 384:

'If an adjudication puts an end to the suit or appeal, or if its effect, if it is not complied with, is to put an end to the suit, or the appeal, then it is clearly a judgment, the difficulty, however, arises when an adjudication has no such effect upon a suit or appeal, but disposes of only an application made in a suit or appeal. Now there can be no doubt that it is not every application which results in an adjudication which can be hold to be a judgment.'

9. In a subsequent Lahore case, -- 'Pahlad Rai v. Shiv Ram', AIR 1927 Lah 540 (F), an order refusing to transfer a pending case from one Court to another was held not to be a judgment as it does not put an end to a case so far as the Court dealing with it is concerned, and reference was made to -- 'Krishna Reddy v. Thanikachala Mudali, AIR 1924 Mad 90 (G) and to the contrary view taken in -- 'Khatizan v. Sonairam Daulatram', AIR 1920 Cal 797 (2) (H), which two cases give the rival opinions.

10. As to what the test should be again came up for decision in the Lahore High Court before a Full Bench in -- 'Shaw Hari Dial and Sons v. Sohan Mal Beli Ram', AIR 1942 Lah 95 (FB) (I), where the Court had decided that it had no jurisdiction to hear the suit and returned the plaint for presentation to proper Court. On appeal the High Court held that the Court had jurisdiction and the order was held to be a judgment within the meaning of Clause 10 and it was held that each case must be considered on its own facts and circumstances. The judgment of the Court was given by Dalip Singh J. who after discussing the cases decided by the various Courts including the two Calcutta and Madras cases 8 Beng LR 433 (E) and 35 Mad 1 (FB) (B), said at page 100:

'It is really unnecessary to say any more except that I would agree entirely with the remarks in AIR 1922 Lah 380 (2) (D) that the best test propounded so far is the test laid down in 35 Mad 1 (FB) (B).'

11. Counsel for the appellant relying on certain judgments of the Bombay and Madras High Courts submits that the decision of Falshaw J. amounts to a judgment, because if he had decided the matter as to whether the appeal was competent or not, the matter which has not been decided by the learned Judge, then it would have decided one way or the other the controversy between the. parties and in adding the Registrar as a party he has exercised a jurisdiction which he did not possess on the ground that there is no provision in the Code of Civil Procedure or in any other lawby which the Registrar could be made a party at the appellate stage,

12. Reliance for the first submission was placed on -- 'Hadjee Ismail v. Hadjee Mahomed', 13 Beng LR 91 (J-K), where leave given under Clause 12 was held to be a judgment.

13. In -- 'Secy. of State v. Jehangir Maneckji', 4 Bom LR 342 (L), the question was in regard to affidavit of documents and it was held that it was the duty of a Judge to decide the question in regard to privilege.

14. Reliance was next placed on -- 'Hurrish Chunder v. Kali Sundari Debia', 10 Ind App 4 (PC) (M), and the Privy Council observed:

'These learned Judges held (and their Lordships think rightly) that whether the transmission of an order under Section 610 would or would not be a merely ministerial proceeding. Pontifex J. had in fact exercised a judicial discretion and had come to a decision of great importance, which, if it remained, would entirely conclude any rights of Kali Soondari to an execution in this suit. They held, therefore, that it was a judgment within the meaning of Section 15.'

In this case Kali Sundari applied to the High Court for execution of the decree of the Privy Council with regard to a moiety. An objection was taken that the decree could be executed as a whole and not partly. This objection was allowed and the application was refused. An appeal was taken under Section 15 of the Charter of 1865 and an objection was taken under Section 610 of Act 10 of 1877 that the order was not a judgment and therefore it was not appealable.

Two of the Judges were of the opinion that the Judge had dealt with question judicially and now purely ministerially and the decision was appealable as judgment and they were of the opinion that the judgment on the objection was erroneous and should be set aside and the decree should be transmitted to the Court of the Subordinate Judge for execution. The Chief Justice was of the opinion that the Judge in dealing judicially with the execution has usurped jurisdiction in that respect which he did not possess and that his duties were, purely ministerial and therefore no appeal was competent, and as I have said the Privy Council held that whether the order is ministerial or not, if judicial discretion is exercised, it may amount to a judgment, but they did not define the word 'judgment'.

15. All these cases show that in the circumstances of those cases the decision was a judgment and appeal was competent, but Mr. Ved Vyasa strongly relied on the judgment of the Privy Council where it was held that there would be a valid ground of appeal if a Judge of a High Court makes an order under a misapprehension as to the extent of his jurisdiction, and in that case the High Court would have power by appeal or otherwise in setting right such a miscarriage of justice. This Privy Council judgment does not help the appellant because the present case is not one of usurpation of jurisdiction, and, as I have said, the Privy Council did riot define what a 'judgment' is.

16. It cannot be said in the present ease that Falshaw J. had no jurisdiction. The appeal was before him from the order of the District Judge in his company jurisdiction and the appeal was properly placed before the learned Judge of this Court and in that appeal any application which does not lie to a Judge had to be decided by the learned Judge and I cannot hold that he had no jurisdiction--whether the decision is right or wrong may be another matter.

17. The case next referred to is -- 'Vaghoji Kuverji v. Camaji Bomanji', 29 Bom 249 (N). The plaintiffs in that case asked for declaration that they were entitled to the exclusive possession and enjoyment of a talao which was situated outside the jurisdiction of the Court. They also sought an injunction to give effect to the declaration. The plaintiffs obtained leave under Clause 12, Letters Patent to file a suit in the High Court and the defendants obtained a Judge's summons calling upon the plaintiffs to show cause why the leave granted should not be rescinded and the plaint taken off the file. Russell J. dismissed the summons and an appeal was taken from this order and the Court held that it was apparent that on the question whether the suit was one for land or not Russell J. had decided adversely to the defendants, so that dismissal of the summons had become decisive against the defendant and an appeal therefore lay and 13 Beng LR 91 (J-K), was followed.

The ground on which the Appellate Court proceeded was that if the suit was one for land, then leave would be of no avail, and Russell J. erroneously thought that the granting of leave would make a difference one way or the other, but it really had nothing whatever to do with the case because the suit was one for land. Referring to this judgment White C. J. said in 35 Mad 1 (FB) (8): 'Here the adjudication asked for if made, would have disposed of the suit.' But this observation which has been strongly relied upon by counsel for the appellant does not help him. The matter which was to be decided there was whether the suit related to land which was outside the jurisdiction of the Court and according to the appellate Court the giving of leave would have been of no avail.

18. The next Bombay case which was relied upon was -- 'Secy. of State v. Mansey Lakhamsey', AIR 1930 Bom 262 (O), where it was held that a finding on an issue which does not merely regulate the procedure in a suit but goes further so as to, decide some right affecting the merits of the question between the parties, amounts to a judgment.

19. 'Jivanlal Narsi v. Perojshaw R. Vakharia & Co.', AIR 1933 Bom 85 (P) was next relied upon, and there was held that a decision under Section 10, Civil P. C. determines the right of a plaintiff to sue in the Bombay High Court and such a decision is not a mere order regulating procedure in the suit but is a 'judgment'.

20. The next case is -- 'P.V. Rao v. Ahmed Haji', AIR 1949 Bom 125 (Q), where it was held that an order purporting to he by the Provincial Government duly authenticated under Section 59, Government of India Act, 1935 cannot be challenged in a Court of law, and where in such case a petition is filed for the issue of a writ of 'certiorari' against the officer who has signed the order and it is alleged that the order is not by the Provincial Govt. but by the officer who has signed it and the Court issues an order for the personal attendance of the officer in Court for cross-examination, the order amounts to a judgment, and the word 'judgment' was defined to be one which affects the merits of the question between the parties by determining some rights and liabilities. If the production of an order under Section 59 is conclusive, then calling upon the officer to appear would affect the rights of the parties and be a judgment within the meaning of the word as given in 35 Mad 1 (FB) (B), and other cases which have been given above.

21. The other cases which have been relied upon do not really help the matter one way or the (sic). As was pointed out by Dalip Singh J. in AIR 1942 Lah 95 (FB) (I) each case mustbe considered on its own facts and circumstances, and, in my opinion, the matter should then be decidedin accordance with the test laid down in 35 Mad 1 (FB) (D) which has been accepted in this Court land in the Lahore High Court. The only case which deals with the question of adding a party is the Madras case AIR 1930 Mad 987 (A), where a Division Bench of the Madras High Court applied the test laid down by Sir Arnold White C. J. in 35 Mad I (FB) (B) and held that an order adding a party to a suit is not a judgment, it does not put an end to a suit but is only a step towards final adjudication and it settles no rights other than the right to be heard in the cause.

22. In an earlier Madras case -- 'Official Assignee of Madras v. Ramalingappa', AIR 1926 Mad 534 (B) an order of a Judge transposing certain defendants as plaintiffs and allowing the suit to proceed was held not to he a 'judgment'. Referring to 31 Mad 1 (FB) (B), Courts Trotter C. J. at p. 555 said:

' Applying that and endeavouring as best as I can to see what is its true application, I think it is this, that a determination, call it what you will, which has the effect, whether on a technical ground or on the merits, of putting an end to the proceedings as regards the particular people or 'in toto' is a judgment and is appealable; but, if the pronouncement leaves the suit, free to go on, then it is not a judgment within the meaning of the clause.'

Looking at the order of Falshaw J. its effect is to allow the appeal to go on for determination on the merits and I am unable to say that, an order adding a party is a decision the effect of which is to put an end to the appeal and the decision of the learned Judge is not a judgment. Ramesam J. in AIR 1926 Mad 554 (R) said:

'The line dividing judgments from orders must be drawn somewhere short of this. Having regard to the fact that in the case before us no substantial right of the defendants has been adversely affected by the order under appeal, I would say that it does not fall on the judgment side of the line. Beyond this I make no further attempt.' I respectfully agree with this. Two cases, --'C.E. Dooply v. M.E. Moolla', AIR 1927 Rang 180 (S) and -- 'Commercial Bank of India v. Sabju Sahib', 24 Mad 252 (T), were cited before us which show that if a party is not added the decision becomes a judgment and is appealable, but in each one of these cases the effect of the order as far as the party who wanted to be added was that it put an end to the suit or the appeal as the case may he and therefore it would come within the test laid down by Arnold White C. J. in 35 Mad 1 (FB) (B).

23. What the argument of counsel for the appellant amounts to on this point of the case is this that at first it may be decided whether an appeal lies or not and then the question of adding a party will be decided. I am unable to accept that this is a correct approach to the question.

24. It was then contended that the Registrar cannot be added because the case would not fall within Order 41, Rule 20, Civil P. C., but that is a provision which applies to persons who are parties to the original suit and are added in appeal. In -- 'Chokalingam Chetty v. Seethai Ache', AIR 1927 PC 252 (U), it was held that a person who was a party to the suit and is not made a party to the appeal is no longer interested in the result of the appeal and therefore he cannot be added, but thatis not what can be said about the Registrar in the present case.

25. Objection was then taken that the order of the learned Judge llowing the Registrar to make available to the Court certain evidence amounts to a judgment. I do not see how that will amount to a 'judgment', nor does it come within the test laid down in 35 Mad 1 (FB) (B).

26. I would, therefore, dismiss these appeals with costs. There will be only one set of costs.

Bishan Narain, J.

27. I agree.


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