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Mahiganj Loan Office Ltd. Vs. Behari Lal Chaki - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1937Cal211
AppellantMahiganj Loan Office Ltd.
RespondentBehari Lal Chaki
Cases ReferredHriday Nath v. Ramchandra Barna
Excerpt:
- .....companies act for calling a meeting of the depositors including those who have filed suits and obtained decrees against the company. this application was granted. the respondent's suit for the recovery of his deposit was decreed on compromise on 5th june 1933. on 2nd july 1933 the meeting of the depositors was held and their majority in number representing three-fourths in value agreed to a scheme which was inconsistent with the terms of compromise on the basis of which the company allowed a consent decree to be passed against it in favour of the respondent. the respondent received one instalment of the decretal amount from the appellant in november 1933. the court ultimately sanctioned the scheme on 27th november 1933. the company there. after did not pay the balance of the decretal.....
Judgment:

1. The respondent was a depositor in the appellant banking company. He gave notice for the withdrawal of his deposit and the deposit became repayable in August 1932. The appellant did not repay the money. On 21st May 1933 a resolution was passed by the company for embarking upon a scheme. The respondent filed a suit for the recovery of his deposit the next day. On 30th May 1933 the appellant filed an application in 'the original side of this Court under S 153, Companies Act for calling a meeting of the depositors including those who have filed suits and obtained decrees against the company. This application was granted. The respondent's suit for the recovery of his deposit was decreed on compromise on 5th June 1933. On 2nd July 1933 the meeting of the depositors was held and their majority in number representing three-fourths in value agreed to a scheme which was inconsistent with the terms of compromise on the basis of which the company allowed a consent decree to be passed against it in favour of the respondent. The respondent received one instalment of the decretal amount from the appellant in November 1933. The Court ultimately sanctioned the scheme on 27th November 1933. The company there. after did not pay the balance of the decretal amount. The decree-holder thereupon put the consent decree into execution on 19th June 1935. The company objected to the execution of the decree on the ground that the decree had become incapable of execution by reason of the scheme sanctioned by this Court. The Subordinate Judge of Rangpur who heard this objection held that so long as the scheme stood, the consent decree could not be executed. He accordingly allowed the appellant's objection. On appeal by the decree-holder to the District Judge of Rangpur the learned District Judge held that the scheme was not binding on the decree-holder, inasmuch as the intention of the company was to arrange matters with those depositors who had not obtained decrees and not to make the scheme binding on those who had already obtained decrees. In this view of the matter the learned District Judge allowed the appeal and set aside the order of the learned Subordinate Judge. Hence this appeal by the judgment-debtor appellant company.

2. The point for determination in this appeal is whether the learned District Judge was right in holding that the scheme was not binding on the respondent decree-holder. The learned advocate appearing for the respondent decree-holder contends that the objection of the judgment-debtor that the scheme is a bar to the execution of the decree cannot be entertained in this execution proceeding. In this case the scheme was sanctioned by the Court after the decree and the objection of the judgment-debtor is that by reason of the sanction of the Court the scheme has now superseded the decree with the result that the decree has now become incapable of execution. The objection raised therefore relates to the execution or discharge of the decree and consequently comes within Section 47, Civil P.C. The learned advocate also contends that the scheme is only an adjustment as contemplated by Order 21, Rule 2 of the Code and as it has not been certified or recorded as required by that Rule, the executing Court cannot recognize this scheme. Order 21. Rule 2 contemplates an adjustment to the satisfaction of the decree-holder. The scheme which is agreed upon by the majority of creditors and is made binding on the minority in spite of their opposition by the order of the Court cannot be said to be an adjustment to the satisfaction of the creditors who oppose it. The Rule contemplates an adjustment which is binding between the decree-holder and the judgment-debtor as an agreement by reason of their consent to it. It does not contemplate an adjustment which, although not consented to, is made binding by operation of law. The contention of the respondent, that the objection of the company cannot be entertained in this execution proceeding, is therefore overruled.

3. We now come to the merits of the objection. It cannot be disputed that the scheme, as it now stands by its terms, binds the respondent decree-holder, as the scheme definitely includes the depositors who had filed suits or obtained decrees. There is no ambiguity in the language of the scheme. The petition of the company under Section 153 for an order for calling a meeting, the order of the Court calling the meeting, the report of the Chairman and the report of the Manager of the company which were placed before us by the learned advocate for the respondent, make the position abundantly clear that the depositors who had already filed suits or obtained decrees were intended to be bound by the scheme. The execution Court cannot modify, alter or amend the scheme which has been sanctioned under Section 153. If there are circumstances to justify modification or alteration or amendment of the scheme by excluding the depositors who had filed suits or obtained decrees, the remedy is to go to the Court which sanctioned the scheme. The learned advocate for the respondent however contends that if the order of the Court sanctioning the scheme, so far as it relates to the depositors who had filed suits and obtained decrees, be without jurisdiction, it is not binding on the executing Court and the executing Court can ignore it as if it had no existence. By 'jurisdiction' is meant

the authority which a Court has to decide matters that are litigated before it or to take cognizance of matters presented in a formal way for its decision: see Halsbury's Laws of England, Edn. 2, Vol. 8, p. 581.

4. This authority may be, subject to certain limitations imposed upon it by law; such limitations may be either as to the kind or nature of the actions and matters of which the particular Court has cognizance or as to the area over which the jurisdiction shall extend, or it may partake of both of these characteristics. Since the jurisdiction is the power to hear and determine a case it does not depend upon the regularity or the exercise of that power or upon the correctness of the decision pronounced:

A Court has jurisdiction to decide wrong as well as right. If it decides wrong, the wronged party can only take the course prescribed by law for Betting the matter right and if that course is not taken, the decision however wrong cannot be disturbed: see Malkarjun v. Narhari (1901) 25 Bom 337.

5. In that case Lord Hobhouse also observed that though the Court made a sad mistake in following the procedure, it was still exercising its jurisdiction in doing so, and to treat such an error as destroying the jurisdiction of the Court is calculated to introduce great confusion into the administration of the law:

There is a clear distinction between the jurisdiction of the Court to try and determine a matter and the erroneous action of such Court in the exercise of that jurisdiction. The former involves the power to act at all, while the latter involves the authority to act in a particular way in which the Court does act. The boundary between an error of judgment and the usurpation of power is this: the former is reversible by an appellate Court within a certain fixed time and is therefore only voidable; the latter is an absolute nullity. When parties are before the Court and present to it controversy which the Court has authority to decide, a decision not necessarily correct, but appropriate to that question is an exercise of judicial power or jurisdiction. So far as the jurisdiction itself is concerned, it is wholly immaterial whether the decision upon the particular question be correct or incorrect. Were it held that a Court had jurisdiction to render only correct decisions, then each time it made an erroneous ruling or decision, the Court would be without jurisdiction and the ruling itself void: see Hriday Nath v. Ramchandra Barna AIR 1921 Cal 34.

6. If an order of a Court is without jurisdiction, it is liable to be challenged in a collateral proceeding as it is an absolute nullity. If it is merely an erroneous order which can be set right by the Court on its own motion or on an application for review by the party concerned or on appeal to a superior tribunal the propriety of such an order made in a cause in which the Court has jurisdiction cannot be challenged collaterally. Now the grounds on which the order of this Court sanctioning the scheme is challenged as without jurisdiction are these: (1) that no notice of the meeting was served upon the respondent in the proceeding under Section 153 of the Act. (2) That in the said proceeding the Court did not order that the meeting of the different classes of depositors should be held separately with the result that the depositors who had not filed suits or obtained decrees feasted upon the rights of those who had already filed suits and obtained decrees and while sanctioning the scheme the Court did not take these facts into consideration. The first ground relates not to the question of the existence of jurisdiction, but to the exercise of jurisdiction. Further, there is no finding by any of the Courts below that the notice was not served on the respondent. The learned District Judge has observed that there is no evidence that any notice was served on the respondent. The learned Judge however has wholly overlooked the evidence of the clerk of the Company who says that notice of the meeting was served. It was not disputed at the Bar that the certificates of posting the notice of the meeting show that notice was served upon the respondent. The final order of the Court sanctioning the scheme shows that there had been due advertisement and service of notice.

7. The substance of the second ground is that the Court would not have sanctioned the scheme so far as it related to depositors who had already filed suits and obtained decrees if the Court had applied its mind to the fact that it had not ordered a separate meeting of this class of depositors to be held, and that the interest of this class was opposed to that of the other depositors who had not filed any suits or obtained decrees. There is nothing to show that the Court, while sanctioning the schemes, did not take into consideration these facts. If after taking into consideration these facts this Court gave a wrong decision or made a wrong order or if the Court did not at all apply its mind to these facts, the decision or order would not be without jurisdiction and void. The objection to such a decision or order does not touch the question of the existence of the jurisdiction, but relates only to the illegal or irregular exercise of the jurisdiction. Such a decision or order cannot be collaterally attacked and the proper remedy of the party who considers himself to be aggrieved by it would be to have it rectified according to law in an appropriate proceeding. So long as the order stands it continues to be binding upon the party whom it purports to bind. We are therefore of opinion that the scheme which this Court has sanctioned as it now stands is binding on the decree-holder respondent. The result therefore is that this appeal is allowed, the order of the District Judge is set aside and that of the Subordinate Judge is restored with costs in the Courts below. There will be no order for costs in this appeal.


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