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The Jammu and Kashmir Bank Ltd. Vs. Seth Rawinandan - Court Judgment

LegalCrystal Citation
CourtDelhi High Court
Decided On
Case NumberElection First Appeal No. 94D of 1966
Reported inILR1970Delhi898
ActsCode of Civil Procedure (CPC), 1908 - Sections 13 and 41A; Displaced Persons (Debt Adjustment) Act, 1951 - Sections 2
AppellantThe Jammu and Kashmir Bank Ltd.
RespondentSeth Rawinandan
Advocates: P.L. Vohra,; M.N. Andley,; G.S. Vohra and;
Cases ReferredKrishan Talwar v. HindustanCommercial Bank Ltd. and
.....was passed in india, because of the reciprocating arrangements that existed between india and the, state of jammu at the relevant time, in pursuance of section 44-a, c.p.c. independently of the transfer certificate.; (iii) displaced persons (debt adjustment) act, (1951) - sections 2 & 37 - relief under section 37 conferred on displaced persons as such, irrespective of the place where his debts were incurred.; the intention of the legislature was to provide relief to that category of persons who were found to be displaced persons within the meaning of sub-section (1) of section 2 of the act. the necessity for this legislation arose because of the peculiar circumstances that were created after the partition of the country and it was felt that a special beneficial treatment was..........themeaning of the act?3. is the execution application barred by limitation under section 37 of the displacedpersons (debts adjustment) act?4. is the decree a nullity on account of its beingex-parte ?5. relief?(4) by the impugned order, the learned court, after hearingthe parties, came to the conclusion that the respondent was a displaced person within the meaning ofthe act and the decretal liability was also a debt withinmeaning of the act, and by reason of section 37 ofthe act, the execution application was barred by time.the decree, the learned court held, was also a nullitybecause the respondent had never submitted himselfto the jurisdiction of the jammu court which at the timewhen it passed the decree was a foreign court. withthese findings he dismissed the execution application.the.....

S.N. Shankar, J.

(1) This appeal is directed againstthe order of the Court below executing the decree receivedby it from the District Judge, Jammu. The learnedcourt has held that the decree was a nullity and the respondent-judgment-debtor was also a displaced personwithin the meaning of S. 2(1) of the Displaced Persons(Debts Adjustment) Act, 1951, and the executionagainst him was barred by time.

(2) Briefly stated, the relevant facts are that on 26/11/1949, the Jammu & Kashmir Bank Limited,the appellants herein, (hereinafter called 'the Bank')obtained a decree from the court of the District Judge,Jammu, for recovery of Rs. 81,487/8.00against the partnership firm, Hindustan Trading Company, and its twopartners, Seth Ravi Nandan, the respondent to thisappeal and Kirpal Chander, on the basis of a cash creditloan account in which advances were made by the Bankto the firm against security of stocks of iron and steelpledged with the Bank. Part of the decretal amountwas realised by the Bank by sale of these pledged goods.To realise the balance the Bank applied for a transfercertificate for Delhi where the respondent Seth RaviNandan, was stated to be residing and carrying on hisbusiness. By order dated 9/11/1961, the courtat Jammu issued a transfer certificate under Order 21,rule 6 of the Code of Civil Procedure. On 18/11/1961, the Bank, on the basis of this certificate appliedfor execution to the District Judge, Delhi who transferred the execution to Sub Judge First Class competentto execute the decree.

(3) On 9/01/1969, the respondent filed objectionsunder section 47 of the Code of Civil Procedure againstthe execution and contended that the decree againsthim was passed ex-parte and the court passing it wasa foreign court and he had never submitted himself tothe jurisdiction of that court and as such the decreewas a nullity. He also contended that the liabilitycreated by the decree was in any case a debt within themeaning of Displaced Persons (Debts Adjustment) Act,1951 and that he was a displaced person within themeaning of this Act and was entitled to its benefit. Theexecution application was further pleaded to be barredunder section 37 of this Act. The appellant Bank resisted these objections. The court struck the followingissues:

1. Is the applicant a displaced person within themeaning of Displaced Persons (Debts Adjustment) Act, 1951?2. Is the liability in dispute a debt within themeaning of the Act?3. Is the execution application barred by limitation under section 37 of the DisplacedPersons (Debts Adjustment) Act?4. Is the decree a nullity on account of its beingex-parte ?5. Relief?

(4) By the impugned order, the learned court, after hearingthe parties, came to the conclusion that the respondent was a displaced person within the meaning ofthe Act and the decretal liability was also a debt withinmeaning of the Act, and by reason of section 37 ofthe Act, the execution application was barred by time.The decree, the learned court held, was also a nullitybecause the respondent had never submitted himselfto the jurisdiction of the Jammu court which at the timewhen it passed the decree was a foreign court. Withthese findings he dismissed the execution application.The appeal is directed against this order.

(5) Shri P.L. Vohra has argued the appeal on behalfof the appellant-Bank while Shri Gian Singh Vohrahas appeared for the respondent.

(6) While urging that the decree was not a nullity ShriP.L. Vohra conceded that the District Judge of Jammuat the time when he passed the decree was a foreigncourt within the meaning of section 2(5) of the Codeof Civil Procedure. The judgment, thereforee, on thebasis of which this decree was based was evidently aforeign judgment. He also conceded that the datewith reference to which the question as to whetherthis decree was a nullity or not has to be determinedis to be the date when the decree was passed and notthe date when the decree was subsequently transferredby the District Judge, Jammu, for execution after themerger of this territory with India. He, however, stronglyurged that the decree could not be a nullity, as held bythe learned court below, simply because it was passedex-parte against the respondent and he chose not toappear to contest the suit in the Jammu court. Heurged that according to well recognised principles ofInternational Law, a foreign court had jurisdiction toentertain an action against persons carrying on businessin territories within its jurisdiction as partners whensued in the name of the firm and placed reliance onthe respondents' own statement as JDW. 2. in the courtbelow. During his cross-examination dated 7/04/1962, the respondent has admitted in this statementthat he was carrying on business in Jammu as wellas Lahore and that he was also being assessed to income-tax at Jammu. The counsel submitted that after theseadmissions it was not open to the respondent to saytath the decree passed by the Jammu Court againsthim was a nullity. I find good deal of substance inthis submission. Dicey, in his famous treatise 'Conflictof Laws' in rule 26 of page 182 (VII Edition), whiledealing with the question of jurisdiction in actionsin personam has stated the general rule of InternationalLaw that when the defendant, in action inpersonam,at the time of the service of the writ, is not in England,the court has no jurisdiction to entertain the actionagainst him, but this rule is subject to certain exceptions. Those exceptions have been enumerated in thediscussion that followed. On page 209, exception 13 is inthe following, terms:

'THECourt has jurisdiction to entertain anaction against any two or more persons beingliable as co-partners, and carrying on businessin England when sued in the name of the firm(if any) of which such persons were co-partnersat the time of the accruing of the cause of action.'

(7) The principle enunciated in this exception is the recognition of the well established rule that two or morepersons can join together to work in the name of whatin legal terminology is called a partnership. If a person,to my mind, elects and agrees to carry on business inpartnership with a resident of the foreign State, underthe law in force there, he would be deemed to haveagreed to submit himself to the jurisdiction of the courtof that State in respect of transactions entered intoby him in the conduct of such a business. I am unable to see why the Municipal Court of the state,in such a case, will have no jurisdiction to entertainthe suit and pass a binding judgment against him.Cheshire in Private International Law on page 641-642(VI Edition) has dealt with this aspect of the questionin the following words:

'THEcircumstances in which an Englishcourt may assume power to determine a claimin perscnam are well settled, and it is legitimateto infer that the criterion by which the competence of an English court is tested must also beadopted when the inquiry relates to the competence of a foreign court. Personal jurisdictionin this country depends upon the right of a courtto summon the defendant. Apart from specialpowers conferred by statute it is obvious that, sincethe right to summon depends upon the power tosummon, jurisdiction is in general exercisable onlyagainst those persons who are present in England.If the defendant is absent from a country and hasno place of business there, then, whether he be acitizen or an alien, he would appear to be immunefrom the jurisdiction, unless he has voluntarilysubmitted to the decision of the Court. Theseconsiderations would seem to show that jurisdiction depends, either upon presence in accountry at the time of the suit (with which may beclassed the possession of a place of business there),or upon submission'.

(8) Proceeding further the learned author makes referenceto the provision of Administiation of Justice Act, 1920which in setting up the system of extended judgmentsfor the British Empire provides in clear terms that nojudgment would be ordered to be registered under thatAct if the judgment-debtor being a person who wasneither carrying on business nor ordinarily residentwithin the jurisdiction of the original court did notvoluntarily appear or otherwise submit or agree tosubmit to the jurisdiction of that Court. The exceptionmade in the case of persons carrying on business in theforeign State unmistakably shows that a judgmentagainst him was to be perfectly valid, I have, thereforee,no hesitation in holding that the carrying on of thebusiness by the judgment-debtor in such a case in theforeign territory would be sufficient to give jurisdictionto the competent foreign court over him and the judgmentpassed by that court in such a case will not be a nullity.The basic reason for the judgment of the foreign courtbeing inoperative and not binding on the non-residentforeigners is that he is presumed to be bound by thelaw of his own State and not to owe allegiance to theforeign State. It could not be said to be so in a casewhere it was found that the foreigner impugning thejudgment had voluntarily submitted himself to thejurisdiction of the foreign court by his own conduct inagreeing to carrying on business in partnership withthe resident of the State.

(9) It is not in dispute in this case, in fact it is admittedby the respondent in the objections filed by him, thathe carried on business at Jammu. Paragraphs 2 and3 of his objections read as under:

'2.That before the partition of the countryin August 1947 amongst various other businesseshe was also running a business under the name andstyle of 'Hindustan Trading Company' at Residency Road, Jammu, as a partner with one SethKirpal Chander the other judgment-debtor inthis case3. That during the course of this business ofHindustan Trading Company, the applicant judgment-debtor along with the other judgment debtorSeth Kirpal Chander, his partner as aforesaid, hadan Overdraft Account with the Jammu & KashmirBank Ltd., Jammu Branch where in at the time ofpartition of the country certain sums are allegedto have been due to the said Bank from the judgment-debtor. The said liability of the judgment-debtor had been incurred before the applicantjudgment debtor came to reside in India, and wassecured by the pledged of movable property consisting of stocks of Iron and Steel, Machinery etc.lying in their godown at Jammu, belonging to thejudgment-debtors. The Bank had been placed inpossession of the said property at that time beforethe partition of the country, who actually deputedtheir employee who was in the custody of suchstocks and who supervised the sales of the saidstocks. The entire sale proceeds of the said stockswere deposited with the Bank and were not to beappropria.ted by the judgment debtors'.

(10) Then as stated earlier, appearing as his own witnessas JDW2, he stated that he was carrying on businessat Jammu, even though through the other partner, andthat he was also assessed to income-tax at Jammu. Thisunmistakably proves that the respondent was voluntarily carrying on business at Jammu.

(11) I am, thereforee, clear in my mind that this case squarely falls within the exception mentioned in Dicey's 'Conflict of Laws' extracted above and the judgment passedby the Jammu Court against the respondent was nota nullity.

(12) The learned court below has relied upon SirdarGurdyal Singh v. The Rajah of Faridkote 21 IA 171 to conclude that this judgment was anullity. The facts of that case were different. Noquestion of the person impugning the judgment, himself carrying on business in the foreign State was involved there. The appellant, Sirdar Gurdyal Singh, in thatcase for five years beginning in 1869 was in the service ofRajah of Faridkote as his Treasurer. He, thereafter,left Rajah's service and ceased to reside within the territorial jurisdiction of the native State of which he wasa native subject and where he was domiciled. Atthe time the suit was filed he was neither residing inFaridkote nor carried on any business there. In fact,it was found that after 1874 he had never gone to Faridkote. Processes of the suits filed by the Rajah wereserved on him at jhind. He disregarded them withthe result that ex-parte decrees were passed againsthim. It was, in these facts that their Lordships heldthat there was nothing to take this case out of the general rule that the plaintiff must sue in the Court to whichthe defendant is subject at the time of the suit. Thedecision has no application in the facts of the case inband.

(13) The learned counsel for the appellant, referring tothe statement of the respondent also pointed out thatafter his admission that he was carrying on business asa partner at Jammu and that he was also being assessedto income-tax at Jammu it was no where even allegedby him that he was not the subject of the State of Jammu.This, indeed, was a fact that had to be established bythe respondent before he could assail the judgment.No evidence in this regard has, however, been pointedout to me. This also supports my conclusion that it isnot possible in this case to hold that the judgmentagainst the respondent was a nullity.

(14) The learned counsel for the respondent however,placed strong reliance on Raj Rajendra Sardar MolojiNar Singh Rao Shifole v. Shankar Saran and others : [1963]2SCR577 The owners & Partnersof the firm named Shah Kantilal v. Dominion of Indiaowning East Indian Railway : AIR1954Cal67 Firm Kanhaiyalal Mohanlal Somani v. Paramsukhalias Premsukh Jaskaran Kabra Meheshri AIR 1956 Nag 2730 ; H.M. Subbarya Setty & Sons v. S.K.Palani Chetty & Sons AIR 1952 Mys 690 Ram kishanJanakilal and others v. Seth Hermukharai Lachminarayan AIR 1955 Nag 103 Shah Prem Chandv. Shah Darmal AIR 1954 R&H; 4 and GokaldasNaranji v. Dwarkadas Jethabhai AIR 1954 Sau123. None of these cases throws any light on the aspect of the problem that is involved here, namely, whena person impugning the judgment was found to be voluntarily carrying on business within the jurisdiction of theforeign court which passed the judgment and thenabsented himself when the suit was filed against him.For reasons afoiesaid, I am unable to endorse thefinding of the learned court below that the judgment ofthe Jammu Court in this case was a nullity and could beignored.

(15) The learned Counsel for the respondent then urgedthat even if it be assumed for the sake of argument thatit was a valid decree the same could not be transferredby the Jammu Court for execution to India. Noobjection was taken in the court below to the validityof the transfer certificate issued by the District Judge,Jammu, on the basis of which the execution came to bepending in this court. The learned counsel urged thatit was purely a legal question and the absence of thisobjection at the earlier stage did' not debar him fromcanvassing it now. Placing reliance on the full Benchdecision of the Punjab High Court in Film Ms RadheSham Roshan Lal v. M/s. Kunctan Lal Mohan Lal he contended that the mere fact thatthe State of Jammu subsequent to the passing of thedecree ceded to India does not make the decree of erstwhile State executable in India. He said that the decreeby the District Judge of Jammu was suffered by therespondent because he knew fully well that it was aforeign court and that he will be entitled to resist it?execution in case the same was executed against himin India. This right of the respondent he said, was avested right which could not be taken away by thechange brought about by subsequent events as a resultof the merger. He placed strong reliance on the observations of the Bench on page 198 of the report of thiscase where it was observed that the decree passed by acourt of a Native State was a non est and was never agood decree as far as India was concerned where thedefendant had not submitted himself to the jurisdictionof the foreign court. This disability, it was observedby the court could not be removed because a thing whichwas non est could never become a positive fact. Thedecree under execution, the learned counsel contended,was a 'lion est' and was of no avail in the territory ofIndia. The fact that the Code of Civil Procedure wassubsequently extended to the State entitling it to issuea transfer certificate did not make any change in theposition and the decree would still remain non-executable.

(16) The argument, to my mind, is not a pure questionof law because amongst others it does involve referenceto the terms of merger. But assuming that the argumentis purely legal it loses sight of the subsistence of reciprocal arrangement between the two States at the relevant time in so far as the execution of such a decree wasconcerned. The existence of such an arrangement between India and the erstwhile State of Jgmmu is not,denied. Provisions of S. 44-A of the Code of Civi lProcedure thereforee, were clearly attracted in this case.Sub-section (i) of S. 44-A governed the case. It reads asunder:

'WHEREa certified copy of a decree of anyof the superior Courts of any reciprocating territory has been filed in a District Court, the decreemay be executed in India as if it had been passedby the District Court.'

(17) Decree of the Jammu Court at the time when itwas passed was, thereforee, executable in India under thisprovision.

(18) Relying on Firm Shah Kantilal's case : AIR1954Cal67 the learned counsel contended thatprovisions of S. 44-A could not be invoked in such.atcase. I am unable to accept the submission that thiscase is an authority for the broad proposition soughtto be made out. No doubt the head-note does make areference to section 44-A and states that it will notapply but the judgment read as a whole clearly showsthat there was no question of reciprocity involved inthat case and section 44-A was not at all considered bythe Court in this background. The ex-parte decreewhich was sought to be executed in that case was obtainedon 21/10/1948 from the court of the Civil Judgeat Okhamandal in the former State of Baroda againstthe Union of India as owning the East India Railway.The decree was got transferred to the Calcutta HighCourt for execution. The objection taken before theHigh Court was that the decree could not be executedin Calcutta firstly because it had been passed by the court ofnative State of Baroda not established or continuedby the authority of the Central Government and secondlybecause it was a decree against a foreign State whichnever submitted to the jurisdiction of the foreign Court.Both these submissions prevailed and the High Courthad that the Court at Okhamandal in the former Stateof Baroda was a foreign court and had no jurisdictionto pass a decree against a foreign State which at thattime was Dominion of India. The decree, thereforee,it was held, was a nullity in breach of the InternationalLaw. It was in this context that section 44-A wassaid to be not applicable. No question as to the effectof the existence of arrangement of reciprocity arosein that case. The case, thereforee, is of no assistanceto the respondent.

(19) For the reasons aforesaid, I am of the view that thedecree passed by the District Judge of Jammu againstthe respondent in this case was not a nullity and inview of the reciprocating arrangements that are admittedto have existed between India a.nd the State of Jammuat the relevant time the same was executable in Indiain pursuance of S. 44-A of the Code of Civil Procedure independently of the transfer certificate.

(20) This takes me to the next question as to whetherthe respondent was entitled to the benefit of the Displaced Persons (Debts Adjustment) Act and its provisions.The provisions under which the respondent claimedrelief under this Act are sections 17 and 37. Section 17 provides that where in respect of debt incurred by adisplaced debtor and secured by the pledge of immovable property belonging to him the creditor has beenplaced in possession of such property at any time beforethe debtor because a displaced person, the creditormay, if he is still in possession of the pledged property,realise the sum due to him by sale of such property aftergiving to the debtor reasonable notice of the same butthe debtor shall not be liable to pay the balance wherethe proceeds of such sale are less than the amount of the debt due. Section 37 provides that notwithstanding the provision of section 48 of the Code ofCivil procedure no order for the execution of a decreein respect of a debt against a person shall be made uponan application Presented after expiration of six yearsin case of the decrees passed before the commencementof this Act. The case of the respondent is that in thiscase goods had admittedly been pledged by his firm withthe Bank which the Bank had already sold. In termsof section 17 the respondent maintains that he is nolonger liable for the balance of the decretal amount IF any is left after adjusting the sale proceeds of the pledgedgoods. Under S. 37 his case is that this decree havingbeen passed on 26/11/1949, that is, before thecommencemeat of this Act, application for its executionwas barred by time after the expiry of six years from thecommencement of the Act, namely, after December,1957.

(21) The learned counsel for the appellant at first contendedthat the provisions of Section 17 as well as Section 37 of the Displaced Persons (Debts Adjustment) Act couldnot be invoked by the respondent in a civil Court becauseaccording to the purpose and the scheme of this Actthese provisions could be invoked only by a displacedperson before the Tribunal constituted under the Act,after he had made an application under the Act, for adjustment of this debts. The respondent it was maintained,never made any such application before such a Tribunaland was, thereforee, not entitled to the benefit of theseprovisions. In reply to this argument, the learned counsel for the Respondent cited Krishan Talwar v. HindustanCommercial Bank Ltd. and another where the Division Bench held that section 3 of this Act gave over-riding effect to the provisions of the Act and the rules made there under as againstany other law for the time being in force or any decreeor order of the court or even a contract between theparties and that provisions of section 17 were inaddition to the substantive law of the country. In thatcase the advantage of section 17 was held to be availableto a debtor even in a civil court. He also cited Punjab Cooperative Bank Ltd., v. Amrik Singh and others,a single Bench decision of the Allahabad High Court : AIR1966All216 where this view of the Punjab High Court was affirmed. In face of these authorities,the learned counsel for the appellant did not press hisargument that the provisions of the Act were not applicable to the instant case. Nothing further, thereforee,need be said on this aspect of this case.

(22) He, however, contended that the decree in questionwas not a debt within the meaning of the Act nor wasthe respondent a displaced person to be entitled tothe benefits of section 17. I have not been able to persuade myself to accept this contention Displaced personis defined in sub-section(IO) of section 2 of the Act inthe following terms:

''Displaced person' means any person who,on account of the setting up of the Dominionsof India and Pakistan, or on account of civil disturbance or the fear of such. disturbances in anyarea now forming part of West Pakistan, has,after the 1st day of March, 1947, left or beendisplaced from his place of residence in such areaand who has been subsequently residing inIndia and includes any person who is residentin any place now forming part of India and whofor that reason is unable or has been renderedunable to manage, supervise or control anyimmovable property belonging to him in WestPakistan, but does not include a banking company ;'

(23) There is unrebutted statement of the respondentas J.D.W. 2 that he had properties in Lahore but afterthe partition on account of setting up of the Dominionsof India and Pakistan, he bad to shift from there becausehe was unable to manage those properties. He was,therefore, clearly a displaced person within the meaningof the Act.

'DEBT'is defined in section 2, sub-section (6) of theAct. The clause applicable and relevant for this caseis clause (a) of this sub-section. It reads as under :(6) 'Debt' means any pecuniary liability,whether payable presently or in future, or undera decree or order of a civil or revenue court orotherwise, or whether ascertained or to be ascertained, which (a) in the case of a displacedperson who has left or been displaced from hisplace of residence in any area now formingpart of West Pakistan, was incurred before he cameto reside in any area now forming part of India'.

(24) The learned counsel urged that in order to be a 'debt'falling within clause (a), the only liability envisagedwas the liability incurred by the Displaced person ata place which now forms part of Pakistan. He submitted that a debt incurred in a foreign country was notcovered by this clause. I am unable to see any distinctionin this definition between a debt incurred by a displaced person in territories now forming pa't of WestPakistan and the debt incurred by him in any otherforeign country. The Act was promulgated to makeprovisions for the adjustment and settlement of debtsdue by persons and for the recovery of certain debtsto them and for matters connected therewith and incidental thereto as would be apparent from its preamble.The intention of the Legislature was to provide reliefto that category of persons who were found to be displaced persons within the meaning of sub-section (1)of section 2 of the Act. The necessity for this legislationarose because of the peculiar circumstances that werecreated after the partition, of the country and it wasfelt that a special beneficial treatment was called forin respect of this category of persons to enable them torehabilitate themselves. The relief was provided notwith reference to the debts or the place where they wereincu'red but it was conferred on displaced persons assuch, for whose benefit the Act was promulgated. Inthis view, thereforee, the respondent is a displaced personand the decree in question is a debt within the meaningof the Act.

(25) If the provisions of sections 17 and 37 conferredindependent rights on a displaced person even thoughhe did not resort to the provsions of Displaced Persons(Debts Adjustment) Act, 1951, as the learned counselfor the appellant concedes that it does, there is no escapefrom the conclusion that the benefit of both these provisionwas available to the respondent. The debt incurred by himwas secured by the pledge of movable property whichhad been placed in the possession of the Bank at a timebefore he became a displaced person which the Bankhas already sold. The rights and liabilities of the parties in this premises will be governed by section 17 ofthe Act. In terms of clause (c) of this section he is notliable to pay any balance even if the sale proceeds of thepledged properties are less than the amount of the debtdue. Similarly according to section 37 of the Act,which in terms has to be applied not withstanding anything contained in section 48 of the Code of Civil Procedure, no order for the execution of the decree in respectof this debt can be made upon an application presentedafter the expiration of six years of the date of the decree.The decree in question was passed as far back as 26/11/1949. Execution taken out in the year 1961 wasclearly barred by this provision. I am, thereforee, of theview that the application for execution of the decreefiled by the appellant in the court at Delhi was incompetent and was rightly dismissed by the learned court below.

(26) This appeal consequently fails and is dismissedbut in the circumstances of the case and the nature ofcontroversy involved the parties are left to bear theirown costs.

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