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Supreme General Films Exchange Ltd. Vs. His Highness Maharaja Sir Brijnath Singhji Deo of Maihar and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtSupreme Court of India
Decided On
Case NumberCivil Appeal No. 1041 of 1968 and Special Leave Petition Nos. 2494 and 2533 of 1974
Judge
Reported inAIR1975SC1810; (1975)2SCC530; [1976]1SCR237; 1975(7)LC631(SC)
ActsTransfer of Property Act, Sections 52, 65A, 65A(2) and 65(2); Code of Civil Procedure (CPC) - Sections 64 - Order 21, Rule 95
AppellantSupreme General Films Exchange Ltd.;supreme General Films Exchange Ltd.
RespondentHis Highness Maharaja Sir Brijnath Singhji Deo of Maihar and ors.;her Highness Tej Suryawanshiji and
Appellant Advocate D.V. Patel,; P.R. Naolokar,; H.K.Puri,;
Respondent Advocate A.K. Sen, ; S.K. Gambhir and ; K.P. Gupra, Advs. For Responde
Cases ReferredJayaram Mudaliar v. Ayyaswami and Ors.
Prior historyAppeal by special leave from the Judgment and Decree dated August 30, 1967 of the Madhya Pradesh High Court in First Appeal No. 8 of 1966 and From the Jugment and Order dated September 30, 1974 of the Madhya Pradesh High Court in Civil Review No. 456 of 1
Excerpt:
commercial - lease - respondent filed suit for declaration that lease executed in favour of appellant by former owner of property is void and ineffective against his rights - existence of lessee rights would certainly affect price which auction purchaser would be prepared to pay for property or in other words what mortgagee or one who got property attached could realize for property to satisfy his dues - in such circumstances declaration sought by respondent could not be denied to him. - [ a.n. ray, c.j.,; a. alagiriswami,; k.k. mathew,; p.n. bhagwati and; y.v. chand, jj.] art. 22(4)(a) of the constitution says that no law providing for preventive detention shall authorise the detention of a person for a period longer than three months unless an advisory board has reported before..........'the bhatias'), is void and ineffective against the plaintiff's rights under decrees obtained in civil suit no. 15a of 1954 dated 7-5-60 and in civil suit no.3b of 1952 dated 20-4-1954 in execution of which the theatre had been attached. the plaintiff wanted the. declaration also to make it clear that an auction purchaser, purchasing the theatre in execution of either of two decrees, gets rights free from any obligation towards the defendant-appellant under the void lease.2. the former owners of the theatre, the bhatias, had borrowed rs. 2,50,000/-from the plainttiff-respondent, a maharaja, against the security of bales of cotton. on 29-12-1951, they executed a registered mortgage deed in respect of the plaza theatre in favour of the plaintiff as the price of pledged goods was.....
Judgment:

M.H. Beg, J.

1. The plaintiff-respondent had filed a suit in the District Judge's Court at Jabalpur claiming a declaration that a lease executed in favour of the Dependant-Appellant, M/s. Supreme General Films Exchange Ltd., (hereinafter referred to as 'the Company'), in respect of Sunder Vilas Theatre (now known as Plaza Talkies) by its former owners, Jiwan Das Bhatia and his sons (hereinafter referred to as 'the Bhatias'), is void and ineffective against the plaintiff's rights under decrees obtained in Civil Suit No. 15A of 1954 dated 7-5-60 and in Civil Suit No.3B of 1952 dated 20-4-1954 in execution of which the Theatre had been attached. The plaintiff wanted the. declaration also to make it clear that an auction purchaser, purchasing the theatre in execution of either of two decrees, gets rights free from any obligation towards the Defendant-Appellant under the void lease.

2. The former owners of the theatre, the Bhatias, had borrowed Rs. 2,50,000/-from the Plainttiff-Respondent, a Maharaja, against the security of bales of cotton. On 29-12-1951, they executed a registered mortgage deed in respect of the Plaza Theatre in favour of the plaintiff as the price of pledged goods was insufficient to satisfy the dues. The plaintiff, unable to recover the amount due, had brought Civil Suit No. 15 A of 1954 in which a compromise decree was passed on 7-5-1960, in terms of an agreement between the parties that amounts due will be realised by the sale of Plaza theatre.

3. The Central Bank of India, another creditor of Bhatias, had brought Civil Suit No. 3B of 1952 and obtained a decree for Rs. 1,24,000/- on 29-4-1952. Rights under this decree was assigned in favour of the plaintiff- respondent. The Plaza theatre, together with other properties of Bhatias, was attached on 4-5 1955 in the course of execution of that decree.

4. The appellant company claimed to be a lessee in occupation of the theatre where it had carried on the business of running a Cinema under an un registered lease obtained on 27-2-1940. The lease of 1940 had expired on 10-4-1946. The company continued as a tenant holding over until the impugned lease deed of 30-3-1956 was executed. If this was a valid lease, it would have conferred upon the company the right: to be a tenant of the property under the lease for eight years, from 10-2-1956 to 10-2-1964, with an option for a renewal until 10-2-1970. This lease was executed after the company had filed a suit (No. 16A of 1954) on 20-11-1954 for the specific performance of an agreement to lease contained in a letter dated 19-7-1948. A compromise decree was passed on 24-3-1956 in this Suit also. The lease deed of 30-3-1956 purported to carry out the terms of that compromise decree passed in a suit in which the plaintiff was not impleaded at all.

5. The plaintiff's case was that the lease of 30-3-1956 was void as it was struck by three statutory provisions, namely, Section 52 of the Transfer of Property Act, Section 65A of the Transfer of Property Act, and Section 64 of the Civil Procedure Code. The defendant-appellant company, in addition to denying the alleged rights of the plaintiff to the benefits of, these provisions, pleaded that a suit of the nature filed by the plaintiff did not lie at all as it fell outside the purview of Section 42 of the Specific Relief Act, 1877, altogether.

6. The Trial Court and the High Court, after having over-ruled the pleas of the defendant-appellant, had decreed the plaintiff's suit. The defendant company obtained special leave to appeal to this Court under Article 136 of the Constitution.

7. Learned Counsel for the appellant company tried to persuade us to held that the plaintiff had neither a legal character nor any such present right in any property for which a declaration could be granted under Section 42 of of the Specific Relief Act 1877 (re-enacted as Section 34 of the Specific Relief Act of 1963). Furthermore, he contended that the defendant company had never denied any of the rights of the plaintiff. Finally, he submitted that, in any case, no declaration at all was needed by the plaintiff if the lease of 1956, executed by the former owners of the theatre in favour of the defendant-appellant, was void. These arguments rest on the assumption that no declaratory relief can be granted outside the ambit of Section 42 of the Specific Relief Act, 1877 which read as follows :

42. Discretion of Court as to declaration of status or right. Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the Court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief :

Bar to such declaration - Provided that no Court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so.

Explanation - A trustee of property is a 'person interested to deny' a title adverse to the title of some one who is not in. existence, and for whom, if in existence, he would be a trustee.

8. Learned Counsel for the appellant sought to support his arguments by citing -.Deokali Koer v. Kedar Math ILR 39 Cal 704 ; Sheoprasad Singh and Ors., v. Ramnandan Singh (since deceased) and Ors. 43 I.A. P. 91; Bali Shri Vaktuba v. Thakore Agarsinghji Raisinghji ILR 34 Bom 676; Kishori Lal v. Beg Raj and Ors. .

9. Deokali Koer's case (supra) arose out of a dispute on the amount of court fee payable. It was observed there that the history of 'decrees merely declaratory' indicated that these were innovations given authoritative sanction in England by Section 50 of the Chancery Procedure Act, 1852. It was pointed out that Section 15 of the Civil Procedure Code of 1859 extended this recognition to decrees in suits in this country by enacting that 'no suit shall be open to objection on the ground that a merely declaratory decree or order is sought thereby and it shall be lawful for the Civil Courts to make binding declarations of right without granting consequential relief'. This provision was repealed by Act 10 of 1877 as this form of relief was recognised by Section 42 of Specific Relief Act I of 1877 as this form of relief was recognised by Section 42 of Specific Relief Act I of 1877 subject to the limitation indicated there. Jenkins C .J., explained the new provision as follows (at p. 709) :

The terms of the Section are not a precise reproduction of the provision contained in the Act of 1859 and the English Law : in one direction they are more comprehensive, in another more limited. It is common tradition that the section was designed to be a substantial reproduction of the scotch action of declarator, but whether this be so or not is of no great moment. We have to be guided by its provisions as they are expressed. The section does not sanction every form of declaration, but only a declaration that the plaintiff's 'entitled to any legal character or to any right as to any property'; it is the disregard of this that accounts for the multiform and, at times, eccentric declarations which find a place-in Indian plaints.

10. In Deokali's case (supra), the learned Chief Justice pointed out that one declaration sought by the plaintiff there seemed designed to get round the need to set aside a decree on grounds of fraud and collusion. He held two other declarations sought to be vague. He, however, explained (at p. 710) :

I would only add this that the limit imposed by Section 42 is on decree which are merely declaratory, and does not expressly extend to decrees in which relief is administered, and declarations are embodied as introductory to that relief. For such declarations legislative sanction is not required : they rest on long established practice. But for all that the Court should be circumstance and even chary as to the declarations it makes: it is ordinarily enough that relief should be granted without the declaration.

11. In Deokali's case (supra), the plaintiff's suit was not thrown out on a preliminary ground, but the plaintiff was given an opportunity to amend the plaint by asking for a consequential relief for setting aside the impugned decree and paying an additional court fee. The case could have only an indirect bearing on the case now before us where no question of a payment of any additional court-fee after adding a consequential relief involved arises. The observations made in Deokali's case must be read in the context of what arose for decision there.

12. In Sheoparsan Singh and Ors., case (supra), what was really held by the Privy Council was that a grant of probate under the probate and Administration Act (V of 1881), which operated as a judgment in rem, could not be collaterally assailed by a suit for a declaration brought by reversioners seeking to question the will. Sir Lawrence Jenkins who had, incidentally, decided Deokali Koer's case (supra) too said (at p. 97) :

It is not suggested that in this litigation the testamentary jurisdiction is, or can be, invoked, and yet there can be no doubt that this suit is an attempt to evade or annul the adjudication in the testamentary suit, and nothing more.

We think that the decision in this case also does not assist the appellant much.

13. In Bai Shri Vektuba's (supra), the Bombay High Court held that a Talukdar plaintiff could bring a suit for a declaration and an injunction to restrain the defendant from claiming that he was the plaintiff's son. Learned Counsel for the appellant, however, relies upon the following passage from it (at p. 680) :

It has long been established that the general power vested in the Courts in India under the Civil Procedure Code to entertain all suits of a civil nature excepting suits of which cognizance is barred by any enactment for the time being in force, does not carry with it the general power of making declarations except in so far as such power is expressly conferred by statute.

14. Kishori Lal's case (supra) was cited to show that declaratory decrees falling outside Section 42 of the Specific Relief Act are not permissible because Section 42 Specific Relief Act is exhaustive on this subject. This view must be held to have been rejected by this Court when it declared in Veruareddi Ramaraghaba Reddy and Ors. v. Konduru Seshu Reddy and 2 Ors. 1966 Su SCR 270 :

In our opinion, Section 42 of the Specific Relief Act is not exhaustive of the cases in which a declaratory decree may be made and the courts have power to grant such a decree independently of the requirements of the section. It follows, therefore, in the present case that the suit of the plaintiff for a declaration that the compromise decree is not binding on the deity is maintainable as falling outside the purview of Section 42 of the Specific Relief Act.

15. The result is that Section 42 merely gives statutory recognition to a well-recognised type of declaratory relief and subjects it to a limitation, but cannot be deemed to exhaust every kind of declaratory relief or to circumscribe the jurisdiction of Courts to give declarations of right in appropriate cases failing outside Section 42.

16. We think that the circumstances in which a declaratory decree under Section 42 should be awarded is a matter of the discretion depending upon the facts of each case. No doubt a complete stranger whose interest is not affected by another's legal character or who has no interest in another's property could not get a declaration under Section 42 Specific Relief Act with reference to the legal character or the property involved. Such, however, is not the case before us. The plaintiff-respondent, in the case before us, had not only the rights of a mortgagee decree-holder with regard to the property involved, but he was also the assignee of the rights of the Bank which had got the property in question attached in execution of its decree. We find, from connected special leave petitions against orders u/O. 21, Rule 95, Civil Procedure Code that the plaintiff's wife became the auction purchaser of this property during the pendency of the litigation now before us. At the time when he filed the suit the plaintiff may have been looking forward to purchasing the property. Although, the mere possibility of future rights of an intending purchaser could not, by itself be enough to entitle him to get a declaration relating to a purported lease affecting the right to possess and enjoy the property. Yet, we think that the plaintiff possessed sufficient legal interest in the theatre, as a mortgagee as well as an assignee of a decree holder who had got the property attached before he filed his suit, so as to enable him to sue for the declarations he sought. He was not seeking a merely whimsical or eccentric or an unreasonable declaration of a right in property with no enforceable legal claims over it which could remain unaffected by the defendant appellant's claims as a lessee.

17. Suriya Kumar Dhar v. Girish Chandra Ghose and Anr. AIR 1951 Ass 101, was cited to contend that the declaration sought by the plaintiff was unnecessary if the lease of the defendant appellant was void. We find, from the pleadings in the case before us, that the defendant-appellant had actually denied the plaintiff's rights as a mortgagee and also the validity of the compromise decree in suit No. 15A of 1954. No doubt the plaintiff had not sought a decree for possession as that could not be granted at the time when the suit was filed. Nevertheless, he had reasonable grounds to apprehend that the defendant-appellant company will rely upon its alleged lease, as it did, in the course of execution proceedings, to resist delivery of actual possession to an auction purchaser. The existence of lessee rights would certainly affect the price an auction purchaser would be prepared to pay for the property, or, in other words, what a mortgagee or one who had got the property attached could realize for the property to satisfy his dues. Thus, the plaintiff needed the declaration ; and, in the circumstances of the case, the declarations sought for could not be reasonably denied to him.

18. The contention that the case fell outside the purview of Section 52 of the Transfer of Property Act as the lease was executed in purported satisfaction of an antecedent claim rests upon the terms of an agreement of 1948, embodied in a letter, on the strength of which the defendant-appellant had filed his suit for specific performance. We find that the terms of the compromise decree in that suit and lease-deed of 1956 purported to confer upon the defendant-appellant new rights. Indeed, there are good grounds for suspecting that the compromise in the suit for specific performance was adopted as a device to get round legal difficulties in the execution of the lease of 1956 in favour of the defendant-company. We are unable to accept the argument, sought to be supported by the citation of Bishan Singh and Ors. v. Khazan Singh and Anr. : [1959]1SCR878 , that the lease was merely an enforcement of an antecedent or pre existing right. We think that it purported to create entirely new rights pendente lite. It was, therefore, struck by the doctrine of lis-pendens, as explained by this Court in Jayaram Mudaliar v. Ayyaswami and Ors. 1973 (3) SCR 139 embodied in Section 52 of the Transfer of Property Act.

19. An alternative argument of the appellant was that a case falling within Section 65A(a)(e) of the Transfer of property Act, confining the duration of a lease by a mortgagor to three years, being a special provision) displaces the provisions of Section 52 of the Transfer of Property Act. This argument overlooks the special objects of the doctrine of lis pendens which applies to a case in which litigation, relating to property in which rights are sought to be created pendente lite by acts of parties, is pending. Moreover, for the purposes, of this argument, the defendant-appellant assumes that the provisions of Section 65A(2)(e) Transfer of Property Act are applicable. If that was so, it would make no substantial difference to the rights of the defendant-appellant, which would vanish before the suit was filed if Section 65A applies. We however, think that, as the special doctrine of lis pendens is applicable here, the purported lease of 1956 was invalid from the outset. In this view of the matter, it is not necessary to consider the applicability of Section 65A(2)(e), which the defendant denies, to the facts of this case.

20. As regards the applicability of Section 64, Civil Procedure Code, we find that parties disagree on the question whether the attachment made by the Central Bank on 20-4-1955, in execution of the decree of which that plaintiff respondent was the assignee, existed on the date of the impugned lease of 30-4-1956. Learned Counsel for the appellant relied upon the terms of an order recorded on the order sheet, in the Court of Additional District Judge, Jabalpur, in Civil Suit No. 3B of 1 952, on 25-1-1956, showing that, in view of the stay order received from the High Court, execution could not proceed. The order sheet, however, also contains the enigmatic statement that execution was dismissed an infructuous but the attachment was to continue for six months The High Court had treated the last part of the statement in the order sheet as void and ineffective presumably on the ground that the Additional District Judge had no jurisdiction either to life the attachment or to dismiss the execution proceedings after the High Court had given its order staying all further action in execution proceedings. The terms of the High Court's order are not evident from anything placed before us. On the other hand, learned Counsel for the plaintiff-respondent relies upon a subsequent order of the same Court, passed on 30-4-1960, in the same suit. This order shows that a compromise had been arrived at between the decree holder and the judgment-debtor under which the decree holder had agreed to lift attachment of property except with regard to Plaza Talkies which was to continue. We are, therefore, unable to hold that the concurrent findings of the Trial Court and the High Court, that the Plaza Talkies was attached in execution of decree in suit No. 3B of 1952 on 4-5-1955 and that this attachment was in existence when the impugned lease was executed on 30-3-1956, are erroneous. On these findings, the lease of 1956 was certainly struck by the provisions of Section 64, Civil Procedure Code also. Section 64, Civil Procedure Code, in fact, constitutes an application of the doctrine of lis pendens in the circumstances specified there.

21. For the reasons given above, we dismiss this appeal with costs.


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