S.K. Hazra, J.
1. I have before me two motions relating to the final report made by an Advocate of this Court as Special Referee. An application for confirmation of the report has been made by the plaintiff Jaiswal Coal Company. Another application has been made by the defendant Fatehganj Co-operative Marketing Society Limited for setting aside the report or declaring the report as null and void.
2. The applications have been made under the facts and circumstances as hereunder.
3. Jaiswal Coal Company (I shall shortly call 'the firm') is a partnership firm, duly registered under the Indian Partnership Act, 1932. The firm carries on business at Gandhi House at No. 16, Ganesh Chandra Avenue, Calcutta.
4. Fatehganj Co-operative Marketing Society Limited (I shall shortly call 'the society') is a co-operative society with limited liability within the meaning of Uttar Pradesh Co-operative Societies Act, 1965 having its registered office and carrying on business at Fatehganj Galamandir, Lal Bag, Faizabad in the State of Uttar Pradesh.
5. On September 12, 1964, by an agreement in writing between the firm and the society, the firm agreed to supply coal to the society and the society agreed to act as selling agent of the firm in the district of Faizabad, inter alia, on certain terms and conditions. In respect of the coal supplied to Faizabad, the society will pay the railway freight, unloading, loading, transport and stacking charges upto the place of stacking. The coal will be sold to the consumers by the society at such rate as fixed by the firm. The society will realise the sale proceeds of coal on behalf of the firm. From the sale proceeds the society will deduct the investment in respect of the railway freight, unloading, loading, transport, stacking, supervisory and administrative charges and will pay the surplus to the firm. The firm will pay Rs. 1.50 paise per tonne as commission on the sal proceeds of the coal to the society.
6. In September 1964, it was agreed that the firm would pay to the society as commission at the rate of Re. 0.50 paise per tonne which the society would deduct from the sale proceeds of the coal payable to the firm and the society will be entitled to realise the balance of commission at the rate of Re. 1/- per tonne directly from the consumers.
7. Between January 19, 1965 and March 31, 1967, pursuant to the aforesaid agreement, the firm supplied 35,152 tonnes and 5 quintals of coal, the sale proceeds of which at the rate fixed by the firm was Rupees 8,50,615.18 paise. The society paid to the firm Rs. 8,30,822.80 paise.
8. On March 2, 1970, the firm instituted this suit against the society and claimed a decree for Rs. 1,78,239.19 p. as per particulars set out in the plaint.
9. On September 28, 1970, writ of summons was served on the defendant society. In December 1971, the suit was part-heard for two days before T. K. Basu, J. The defendant did not appear at the hearing of the suit.
10. On January 7, 1972, an application was made by the firm for amendment of the plaint by which the firm claimed a decree for the sum of Rs. 58,232.19 p. and interest on the said sum at the rate of 12 per cent, per annum from April 10, 1967 till February 25, 1970 amounting to Rs. 20,187.16 p. aggregating to the total sum of Rs. 78,419.35 p. in place of Rs. 1,78,232.19 p. (sic). The firm also claimed that account be taken of the sales made by the society of the quantity of 35,152 tonnes and 5 quintals of coal despatched and/or caused to be despatched to it by the firm and decree for the amount as may be found to be payable by the society to the firm in respect of such sales.
11. On the application of the firm an order was passed by the Court permitting the firm to amend the plaint.
12. The order of amendment and a copy of the amended plaint were served on the society. On April 17, 1972, the Attorney for the society appeared before T. K. Basu, J. and took adjournment. At the hearing of the suit, the society did not appear. The suit was heard on May 16, 1972. It was part-heard and was adjourned. On June 5, 1972, hearing was concluded and on that day, an ex parte decree for Rs. 58,232.19 was passed by T. K. Basu, J. in favour of the firm against the society together with interest thereon at the rate of 6% per annum from April 10, 1967 upto February 28, 1970 and thereafter with interest thereon at the said rate from March 2, 1970, being the date of filing of this suit until realisation. The decree further provided as follows:--
'It is further ordered and decreed that Mr. R. P. Sanyal, Advocate be and he is hereby appointed Special Referee on usual remuneration to enquire into the secret profits, if any, made by the defendant with regard to the sale of coal which is the subject-matter of this suit, and it is further ordered and decreed that the said Special Referee do file his report within the eleventh day of February one thousand nine hundred and seventy-three. And it is further ordered and decreed that all costs, charges and expenses in connection with the said reference by the said Special Referee (to be taxed by the Taxing Officer of this Court) be borne and paid by the plaintiff. And this court doth reserve the consideration of all further directions as to such enquiry until after the said Special Referee making the aforesaid enquiry shall have made his report. And the parties shall be at liberty to apply io this Court from time to time as they may have occasion.'
13. On July 4. 1972, application was made by the society for setting aside the ex parte decree. On August 30, 1972. the said application was dismissed with costs. The society has preferred an appeal against the said order and the appeal is now pending for final disposal.
14. On August 11, 1972, upon the matter being mentioned, T. K. Basil, J. directed all parties to act on the signed copy of the minutes.
15. Mr. R. P. Sanyal, an advocate of this Court who was appointed Special Referee under the decree dated June 5, 1972 filed a preliminary report on September 4, 1972. He filed a final report on January 15, 1973. In the final report he stated that the society has made secret profits of Rs. 2,81,232. On March 23, 1973, the firm made an application, inter alia, that (a) final decree be passed in terms of the findings of the Special Referee appointed in this suit for Rs. 2,81,232 being the secret profits made by the society by sale of coal supplied by the firm, be confirmed and (b) alternatively, the suit be set down in the peremptory list for further consideration .
16. On September 5, 1973, the society made an application inter alia for an order that the purported final report of the Special Referee alleged to have been filed in this Court on 15th January, 1973 be declared null and void and/or be set aside. In the petition the society states that on perusal of the application of the plaintiff firm verified by an affidavit of Muralidhar Gupta affirmed on March 20, 1973 for passing the final decree in terms of the finding of the Special Referee, the society came to know for the first time that the Special Reference on 7th January, 1973 settled the draft report in presence of the plaintiff's representative and filed his report on 15th January, 1973. The society states that the said report was settled by the Special Referee without any notice to the society.
17. The application by the society for an order that the final report of the Special Referee be declared null and void and/or be set aside was argued first and I shall deal with the said application now.
18. Mrs, S. Pal, Advocate appearing for the firm look the preliminary point that the society is precluded from challenging the report of the Special Preferee as the report has become and stands confirmed by efflux of time. Mrs. S. Pal relied on Chapter XXVI, Rules 89 and 90 of the Original Side Rules and submitted that an application to discharge or vary a certificate or report has to be made within fourteen days from the date of the filing thereof or within such further time as may be obtained for that purpose. As the application has not been made within the time limited by Rule 89, the certificate or report will be taken as conclusive evidence of the facts found therein.
19. In answer to the preliminary point. Mr. T. K. Biswas on behalf of the society first submitted that Chapter XXVI of the Original Side Rules does not apply in the instant case as the reference was directed to a Special Referee who is a member of the Bar. He has argued that Chapter XXVI will apply only in those cases of reference which appear in the printed cause list of the Original Side for each day.
20. In view of the arguments advanced by the learned Advocates for the parties on this point, the question is whether Reference Rules in Chapter XXVI of the Rules of the High Court at Calcutta, Original Side will apply when such Reference has been directed to a member of the Bar.
21. In references directed to officers of the Court, the provisions laid down in Rr. 4 to 10 of Chap. XXVI have to be followed before such references can be placed in the printed list of the day for hearing. On the other hand, in references directed to persons who are not officers, the normal practice is that an office copy of the order or decree is served upon the Referee who thereafter proceeds to hear the matter upon giving notice to the parties. In several Rules under Chapter XXVI the word 'Officer' appears. In Chapter XXVI, Rule 17, the mode of proceeding before an officer on a reference shall be by Summons, (Form No. 1) to be taken out by the party having the carriage of the reference. Under Rule 22 the 'officer' gives preliminary directions. Under Rule 26 the 'officer' may proceed ex parte on default of party summoned. Under Rule 27 the 'officer' shall be at liberty to proceed ex parte on default of filing statement of account etc. The 'officer' may direct any cost of fees to be paid (Rule 29). Under Rule 48 the 'officer' shall at the commencement of each daily sitting, hear applications with regard to pending reference. Under Rule 48 in all matters referred to him an 'officer' shall be at liberty upon an application of any party interested to make a separate report or re-ports from time to time. Under Rule 49 in all matters referred to him an officer shall be at liberty, upon an application of any perty interested to make a separate report or reports from time to time. Under Rule 50 any 'officer' taking a reference may at any l is pending the reference or on its conclusion apply for the opinion of the Court on any question which may arise on the reference Under Rule 51 in case an 'officer' refuses or declines to make a special report where requested by a party to do so, such party may apply to the Judge in Chambers for an order requiring the officer to report specially. Under Rule 52 if any party prosecuting a reference does not proceed with due diligence the conduct of the reference may be committed by the 'officer' to any other party. Under Rule 53 the 'officer' to whom the reference is directed may, here be thinks fit strike the same out of the list ed the same shall also be struck out of the List of Reference. Under Rule 54 where an 'officer' strikes a reference out of his list he shall forthwith certify the fact to the Registrar. Under Rule 56 where a suit referred to an 'officer', is finally disposed of without his report or is referred by the order of the Court the parties may forthwith notify the same to the 'officer' who shall there upon strike out the reference from his list. Under Rule 57 each officer shall at the beginning of every quarter report to the senior depresiding on the Original Side all the cases in which he considers that there has been any undue delay in the proceedings before him. Under Rule 58 where it shall appear to the Court or a Judge on the representation of any officer or otherwise, that there is any undue delay in the prosecution of account or inquiries, the Court or Judge may require any party to explain the delay and give necessary directions for expediting the proceedings. Rule 82 provides for proceedings v here a separate report is made by an officer/ Rule 88 provides for filing of the certificate of the report of an officer made on reference in the Registrar's office on payment of all necessary fees of Court. Under Rule 90 a certificate or report of an 'officer' unless this charged on varied shall be taken as conclusive evidence of the facts found therein.
22. Now the question is who is an officer of the Court? Is Mr. R. P. Sanyal a practising advocate of this Court an 'Officer' of the Court within the meaning of the word in Chapter XXVI (Reference Rules ol the Original Side)?
23. So far as I have been able to ascertain the point whether Rules 90 and 91 of Chapter XXVI are applicable to references directed to persons who are not officers of the Court, has not been directly decide in any previous case. In the judgment denvered by me on 8-6-1973 in the case of Sm Amar Latika Dassi v. Administrator General of West Bengal (Administration Suit No. 1408 of 1965 (Cal)) which was specially assigned to a Bench consisting of A. N. Sen, J. and myself by the learned Chief Justice on a reference made under Chapter V, Rule 2 of the Original Side Rules by Ramendra Nath Datta, J. I expressed my doubts as to the applicability of such rules, but in the particular circumstances of that case I was not called upon to express my decision on the point. This point has now been argued before me.
24. Clause 8 of the Letters Patent (1865) relates to appointment of officers. The relevant portion of clause 8 of Letters Patent (1865) is as follows :
'And we do hereby authorise and empower the Chief Justice of the said High Court of Judicature at Fort William in Bengal from lime to time, as occasion may require, and subject to any rules and restrictions which may be prescribed by the Governor General in Council, to appoint so many and such clerks and other ministerial officers as shall be found necessary for the administration of justice, and the due execution of all the powers and authorities granted and committed to the said High Court by these our Letters Patent. And it is our further will and pleasure and we do hereby ............ give, grant, direct, and appoint, that all and every the officers and clerks to be appointed as aforesaid shall have and receive respectively such reasonable salaries as the Chief Justice shall, from time to time, appoint for each office and place respectively, and as the Governor Genera, . Council shall approve of .......'
25. Clause 37 of the Letters Patent states that it shall be lawful for the High Court to make rules and orders for the purpose regulating all proceedings brought before the High Court provided that the High Court shall be guided in making such ruies and orders as far as possible by the provisions of the Code of Civil Procedure.
26. Under Section 122 of the Code of Civil Procedure 1908, the High Court may from time to time make rules regulating their own procedure and procedure of the Civil Courts subject to their superintendence. Under Section 128 of the Code of Civil Procedure matters for which rules may provide are enumerated. Such rules shall not be inconsistent with the provisions of the body of the Code, but subject thereto, may provide for any matters relating to the procedure of Civil Courts. Section 128, Sub-section (?) says .
'in particular, and without prejudice to the generality of the powers conferred by clause (i) such rules may provide for all or any of the following matters : (i) delegation to any Registrar, Prothonotary or Master or other official of the court of any Judicial, quasi-judicial and non-judicial duties;'
So, under Section 128(2)(i), High Court may make rules for delegation to any particular officer named in that rule or other official of the Court of any judicial, quasi judicial or non-judicial duties.
27. According to Shorter Oxford Dictionary, the meaning of the words 'Officer' and 'Official' is: One who holds a public office is an official. One who holds an office or post is an officer. An officer is a functionary authoritatively appointed to exercise some public municipal or corporate function.
28. I may observe, in passing, that although the word 'Officer' has not been defined in the rules of the Court, Chapter IV contains rules laying down the duties of the various officers of the Court and the liabi-ties to which the officers in general are subject.
29. I am inclined to take the view that the provisions contained in Chapter XXVI of the Rules of the Original Side do not strictly apply when reference is directed to a practising lawyer or an advocate of this Court. Mr. R. P. Sanyal a practising advocate of this Court is not an 'officer' of this Court within the meaning of the word used in Chapter XXVI. There are many rules in Chapter XXVI which are wholly inapplicable to references directed to persons who are not officers of this Court. When a practising lawyer or an advocate of this Court is appointed as Special Referee such reference does not appear in the daily cause list but Rules 10 and 11 provide that each day's cause list shall contain list of reference for that day and no reference shall be placed in the list until ripe for hearing.
30. Mr. Dipankar Gupta, the learned counsel for the firm admitted that certain rules of chapter 26 of the Original Side Rules cannot apply unless it is done by the Officer of the Court, but Mr. Gupta referred to Chapter 40, Rule 3 of the Original Side Rules, which provides that where no other provision is made by the Code or by these rules the present procedure and practice- shall remain in force and submitted that even in those cases where a member of the Bar is appointed as Special Referee, the rules under Chapter 26 of the Original Side Rules are followed as a matter of practice.
31. It may be noted in this connection that the words 'special referee' do not appear in Chapter 26, but the word 'referee' appears in Chapter 10, Rule 29, sub-rule (c) of the Original Side Rules.
32. Mr. Gupta cited the case of Union of India v. Kshetro Mohan Banerjee, reported in AIR I960 Cal 190 and referred to the observation of H. K. Bose, J. at page 198 of the report which is as follows:--
'It is a long standing practice of the original side of this High Court to pass decrees in the nature of preliminary decrees directing references or inquiries which involve questions of detail which it would be wasting the time of the Court to investigate. Chapter XXVI of the Original Side Rules is designed to meet such a purpose. In the case of D. N. Ghose and Bros. v. Popat Narain Bros., ILR 42 Cal 819 - (AIR 1916 Cal 566) Jenkins, C. J. and Woodroffe, J. pointed out that as a general rule splitting up of the trial into two enquiries first as to the right and secondly as to the amount of damages was not desirable but sending an action to a referee might be necessary in some cases where an inquiry would involve questions of detail and investigation by the Court would entail considerable loss of time of the Court.'
33. There is no doubt that when a decree is passed in the original side of this Court directing reference in an appropriate case, to an officer of this Court the provisions of Chapter XXVI (Reference Rules) of the High Court at Calcutta (Original Side) will apply;but the point which has been argued before me, namely, whether the reference rules under Chapter XXVI will apply when reference is directed to a praclis-ing lawyer or an advocate of this Court was not argued or decided in that case : AIR1960Cal190 . The said observation of the learned Judge is not an authority for the said point which has been raised before me.
34. Even if it is assumed (contrary to my view) that Chapter XXVI of the Rules of the Original Side is applicable in case where reference is directed to a practising advocate of this Court, it has been argued before me by Mr. Biswas that the Reference Rules in Chapter XXVI have not been followed or adopted in the instant case. I accept the argument on this point. Chapter 26, Rule 17 of the Original Side Rules which provides for the mode of proceeding has not been followed in the instant case. Chapter 26, Rule 17 says :
'The mode of proceeding before an officer on a reference shall be by summons (Form No. 1) to be taken out by the party having the carriage of the reference appointing a time for the purpose of taking into consideration the matter of the decree or order directing the reference.'
35. The summons in Form No. 1 has been prescribed in Appendix I at page 416 of the Rules of the High Court, Original Side 5th Edition, Vol. 1. It says:
'Let all parties concerned attend before the Registrar (or other officer conducting the reference) at the Court house, to take into consideration the matter of the reference directed.'
36. The provision seems to be mandatory on the part of the officer to whom the reference is made by the court or a judge. This rule has not been followed in the instant case.
37. Again under the reference rules where the object of the reference is an enquiry as to matters of fact a statement shall be filed (Rule 37). Every objection to a statement of fact shall be made by a counter statement (Rule 39). Where any accounts, statements or objections or any statement or counter statement of facts required to be filed on a reference is not in accordance with these rules or with the directions given or where the affidavit in verification thereof be insufficient a further account, statement, counter statement or affidavit may be called for and the officer may give such directions as to the payment of any costs thrown away as he may think fit. (Rule 41). These are matters which have not been followed or complied with in the instant case. The certificate or report shall be settled on notice to the parties who have appeared on the reference. (Rule 87). The society states that the special referee in the instant case settled the draft report on January 7, 1973 in the presence of the firm's representative and behind the back of the society's representative and filed his report on January 15, 1973 in violation of the Rule 87. It seems to me that the certificate or report has not been settled on notice to the society. The special referee did not follow or adopt the procedures laid down in Chapter 26 of the rules of the Original Side.
38. Mr. Biswas then argued that the provisions contained in Order 26 of the Code of Civil Procedure will apply in the instant case. His submission is that there is no provision in the Code of Civil Procedure about limitation of time for taking objection to the report. Under the provision of the Code of Civil Procedure, the report does not become binding upon the Court or the party. He contended that in the instant case when the report is before the Court he is entitled to raise objections to the report and there is no question of limitation. The report shall be evidence in the suit and where the Court is dissatisfied with the report the Court will direct further enquiry. He referred to Order 26, Rule 12 of the Code of Civil Procedure. I accept the argument of Mr. Biswas on this point. I am of opinion that Order 26, Rule II of the Code of Civil Procedure is the material provision of the Code under which the reference has been made. Order 26, Rule 11 reads as follows:--
'In any suit in which an examination or adjustment of accounts is necessary, the Court may issue a commission to such person as it thinks fit directing him to make such examination or adjustment.'
39. I will quote here the observation of Shah, J. in the case of Biharilal Ramcharan Cotton Mills Ltd. v. China Cotton Exporters a firm, reported in : AIR1963Bom59 which is as follows:
'Where, therefore, an order for issue of a commission and appointment of a commissioner for the purpose of taking accounts in any suit is directed to be made, the High Court has to be guided by the provisions of the Cod of Civil Procedure in that behalf as enacted by clause 37 of the Letters Patent and Order 26, Rule 11 is the only provision in the Code under which a Commissioner for taking accounts can be appointed.'
40. I agree with the said observation of the learned Judge.
41. I think I shall note here the Calcutta case Kashiram Budhia v. Chajgram Budhia, (ILR 61 Cal 488 = AIR 1934 Cal 737) decided by Panckridge, J. which is referred to in the said Bombay decision : AIR1963Bom59 . The head note of the report ILR 61 Cal 488 = (AIR 1934 Cal 737) runs thus :--
'In proceedings conducted by a Commissioner of partition and Special Referee appointed by the Original Side of the High Court, the provisions of Rules 5 and 6 of Order XVIII of the Code of Civil Procedure apply and the deposition of a witness should be read over and explained to him after it is completed and, if necessary, translated into language which he understands.'
42. In the premises, I am not inclined to accept the preliminary point that the report of Mr. R. P. Sanyal as Special Referee has become binding automatically by efflux of time. If I accept the contention of Mrs. Pal I shall have to hold that although the various provisions of Chapter XXVI are inapplicable to references directed to persons who are not officers of the Court, only Rules 90, 91 and 92 are so applicable. I am unable to do so. In my view, Chapter XXVI, Rule 89 or 90 will not apply in the instant case.
43. Assuming however that the said rules apply, even then under Chapter XXVI, Rule 91, question of law may be raised at the hearing of the suit on further consideration and an application to discharge or vary the certificate or report as to such question need not be made. Under Chapter XXVI, Rule 92, again an application to re-open certificate or report after it has become binding can be made by motion on the ground of fraud, suppression or mistake or such other grounds as may be allowed by the Court. Therefore, it may be necessary to consider whether there are other grounds on which the certificate or report may be re-opened.
44. Mr. Biswas then contended that the report of the special referee is illegal because Order 26, Rule 18 of the Code of Civil Procedure has not been followed in the instant case and therefore the report should be set aside without going into the merits. His argument is that under Order 26, Rule 18 of the Code of Civil Procedure unless a writ of Commission is issued by the Court the Commissioner is not empowered to enter into the reference. He further argued that the Court has no power to issue Commission ex parte. Mr. Biswas referred to the decision of Latchman Naidu v. Ram Krishna Ranga Rao, (AIR 1934 Mad 548) and relied on the observation of Cornish, J. at page 549 of the report:--
'Rule 18 is mandatory, and is intended to ensure that parties have notice of the appointment of the Commissioner and that they must attend his investigation. Therefore, there is no power in the court to issue an ex parte commission.'
45. Mr. Biswas cited several cases which followed AIR 1934 Mad 548. He cited;Labanya Dcbi v. Govinda Malik. : AIR1960Ori66 ;Seetbaramappa v. Appaiah, : AIR1962AP84 and Jamil Ahmed Taban v. Must. Khair-Ul-Nisa, : AIR1970Delhi205 .
46. I do not think that an order by Court appointing a Commission ex parte without issuing notice to the defendant will make the order illegal as it does not seem to be opposed to Order 26, Rule 18 of the Code of Civil Procedure. I will quote here the observation of Ramaswami, J. in re P. Moosa Kutty, : 23ITR349(Mad) :
'This issue of Commission can be made 'ex parte' and in fact it stands to common sense has often got to be made 'ex parte'.'
47. In view of the above matter I am unable to accept the contention of Mr. Biswas that the Court has no power to make an ex parte order issuing commission. I agree with the observation made by A. Narayana Pai, J. in M. Shivarama Bhat v. Mahabala Bhatt Muliya, (AIR 1970 Mys 45 at p. 46):
'The general statement that the Court has no power to make an ex parte order issuing commission cannot of course be accepted,'
48. I will quote in this connection the note given in Mulla's Code of Civil Procedure 13lh edition at p. 1332 which is as follows :--
'Notice of commission to be given to the parties. Though there is an observation in a Madras case that 'there is no power in the Court to issue an ex parte commission' (AIR 1934 Mad 548), it has since been clearly laid down that there is no provision in the Code which bars the Court from issuing a commission ex parte.' : 23ITR349(Mad) .
Mr. Biswas however relied very much on the further note given in Mulla's Code of Civil Procedure at page 1332 which is as follows :--
'But this rule comes into operation after an order appointing a Commission has been made and it requires that the Court should give notice to the parties to appear before the Commissioner and where that is not done, the proceedings before him are illegal. A notice given by the commission is not sufficient.'
49. I cannot accept this part of the argument of Mr. Biswas under the special facts and circumstances of this case as set out below :--
It appears that on August 11, 1972 the learned Judge directed all parties to act on the signed copy of the minutes. The minutes of the Court dated August II, 1970 are as follows :-- 'Before the Hon'ble Mr. Justice T. K. Basu, Dated the llth day of August. 1972. Suit No. 107 of 1970 Jaiswal Coal Companyv.Fatehgunj Co-operative Marketing Society Ltd.Mrs. Pal mentions for the plaintiff. Mr. B. R. Lodge for the defendant. The Court: Let the suit appear in the list on 25-8-72 for hearing. Special Referee to file his report within 6 months from date. Let this order be incorporated in the decree dated 5-6-1972. Special Referee and all parties to act on a signed copy of the minutes.Sd/- Illegible11-8-1972Assistant Registrar, High Court. Original Side, Calcutta.'
50. The order dated August II, 1972 was passed in the presence of the Solicitor for the society. It seems to me that by reason of the said order the special referee can act before writ of commission, was issued to him. In the Original Side of this Court it may be necessary to pass order that a Commissioner or special referee or receiver appointed by the Court to act on signed copy of the minutes and very often learned Judges pass such order. Whenever such order is passed the person appointed acts on the signed copy of the minutes before the writ of commission or certified copy of the order is issued or served on him and this practice is followed in the Original Side. Therefore, I am unable to accept the argument of Mr. Biswas that the report is illegal because no commission was issued by the Court. In the premises I decide to go into the merits of the report. I will now consider what the special referee did after the order dated August 11, 1972.
51. It may be noted that in the preliminary decree dated June 5, 1972 no direction was given by the Court as to the mode in which reference would be conducted but it is provided that the parties would be at liberty to apply to Court from time to time as the occasion may arise. The special referee or the firm did not take any direction from the Court as to the mode in which the special referee has to enquire into the secret profits and without taking such direction from the Court what the Special Referee did was as follows ;--
On August 18, 1972, the Special Referee Mr. Sanyal started for Mogulsarai and from there he proceeded to Varanasi. In the petition, the society states that the office of the plaintiff is also situate at Varanasi. This statement of the society is not specifically denied by the firm. From Varanasi, the special referee started for Faizabad and went to the office of the society. He met there Baldeo Prasad Parhak, Accountant and Sri Ram Prasad Singh, President of the defendant society. There he served a notice dated 18th August, 1972 upon the defendant society asking the society to produce before him certain documents for his examination. It is staled in the report by the special referee, the particulars of documents he wanted from the defendant society. These are :
(1) Cash Books;
(2) Stock Registers;
(3) Sale Registers;
(4) Counter foils of Cash Memo Books;
(5) Registers containing the names of the buyers;
(6) Correspondences, and
(7) Other necessary papers all relating to the dealings between the parties from January 19. 1965 to March 31, 1967. It is stated that the President of the society accepted the said notice of the Special Referee.
52. With regard to this part of the first report of the Special Referee dated 4th September, 1972;Mr. Biswas, the learned counsel for the society contended that the Special Referee acted in disregard to Chapter 26. Rule 17 of the Original Side Rules. He did not hold meeting in the court house. He went to Faizabad and himself went to the office of the defendant and thereafter, he went to the office of the Registrar of Co-operative Societies Government of Uttar Pradesh and met the District Registrar and sought his cooperation. It is stated by the special referee in his first report that at that time, the partner of the plaintiff firm and the Secretary of the defendant were present there. Shri Mishra, the District Assistant Registrar of Co-operative Societies, Government of Uttar Pradesh told him that police has seized some papers of the society including the relevant paper concerning a criminal case pending against the Ex-secretary of the society. Shri Mishra suggested to the special referee to go to Gorakhupur and contact Sheo Prosad Sirgh, the Inspector who is investigating the case. He then saw Mr. Md. Rafi, advocate, Director and Legal Advisor of the society and asked him to produce certain documents. But Md. Rafi told him that he was not in a position to produce any papers. Then it is stated in the first report that in course of his enquiry the special referee contacted some of the local dealers dealing in coal and also other persons. He names five of such persons and states certain facts.
53. In paragraph 32 of the petition of the society filed on 5th September, 1973 it is stated that the special referee did not give any notice to the society to appear before him at Varanasi or in Faizabad and the Special Referee examined the said persons in course of the enquiry behind the back of the defendant society. The names of the persons whom the special referee examined has been mentioned in his first report and the statements of those persons, namely. Ram Murti Singh;Locus Singh;Surya Pal Tewari;K. K. Singh and Jagat Narayan Panda are recorded in the report. While going through the first report it seems to me that the special referee made a private enquiry disregarding the rules of this Court and the procedure laid down in the Code of Civil Procedure. He examined the witnesses behind the back of the society. He did not follow the rules of the Code of Civil Procedure laid down in Order 18, Rules 5 and 6. He did not take down evidence as provided under Section 138 of t he Evidence Act.
54. In paragraph 33 of the affidavit-in-opposition of Gorakh Nath Jaiswal filed on November 27, 1973 it is denied that notices were not given to the society as alleged and it is stated that the society was given ample opportunity to cross-examine all witnesses examined by the special referee. In the report, however, it is stated by the special referee 'in course of my enquiry I contacted some of the local dealers in coal and also other persons' and then the special referee sets out the names of other persons whom he contacted and made enquiries. There is nothing to indicate that he look evidence of the above persons in the presence of anyone representing the society. It seems to me that he himself made enquiries from those persons and stated in the report the result of such enquiry made by him. The first report of the Special Referee dated the 4th September, 1972 was filed in this Court on March 8, 1973. There are no minutes annexed with the first report filed in Court to indicate how, where and in whose presence, the special Re-free made the enquiries. The words 'I contacted the persons' mentioned in the first report indicate that he himself contacted these persons. It seems to me that the Special Referee has exceeded the limits of his power and authority. He cannot make any personal enquiry or secret enquiry himself and contact people and state in his report the result of his personal enquiry and what he found op his own enquiry. The final report was made by the Special Referee on 15th January, 1973 and the same was filed on 8th March, 1973. In the final report he states that on September 6. 1972 he started by Bombay Mail from Howrah and arrived at Moghalsarai on September 7. 1972;and proceeded towards Varanasi. Immediately thereafter, he started for Gorakhpur and went to the office of C. I. D. Police. He states that the society did not attend in spite of his notice. The Police Officer produced before him certain documents of the society as seized by them. The Special Referee copied some of the entries in some books produced before him by the police officer. He put his initial in the Register. He copied out the names of buyers and he records his views on the papers and books which were produced before him. He himself copied out certain portions from these books and papers. It appears that some of the books were written in Hindi. While reading the report it seems to me thatSpecial Referee exceeded bis power, authority and jurisdiction. He cannot himself go to the office of C. I. D. Police and himself make copies of the entries of the books lying there. In the final report it is further stated by the Special Referee: 'I visited again the office of the C. I. D. branch on September 8, 1973 and examined the said documents in details. Thereafter I proceeded towards Faizabad. At about 6 P. M. I went to the office of the defendant society and met with its President Sri Ram Prosad Singh, Secretary Mr. Jogendra Pandey and Director-cum-Legal Adviser Mr. Mohammad Rafi, Advocate.'
55. In the minutes of September 8, 1972 which is annexed to the second and final report it is recorded that the place where the sitting was held was the office of the C. I. D. Police, Gorakbpur at 8-30 P. M. and it is recorded that none appears for the defendant. It is not recorded in the minutes that notice was given to the defendant for holding a sitting of the special referee at the office of the C. I. D. Police, Gorakhpur. On the same day, namely on September 8, 1972, at 6 P. M. a sitting was held in the office of the Society. It is stated in the minutes by the special referee that he offered the society copies of the papers brought by the police. Ram Prosad Singh suggested that they should go to the house of Mr. Rafi .Advocate. At 6-20 P. M. on the same day he goes to the house of Mr. Rafi, advocate and in the minutes, the special referee records that Mr. Rafi submitted that the society was not prepared to co-operate with this reference as advised by his solicitor and he also refused to put his signature on the minutes. Then the Special Referee came to the office of the plaintiff on September 9, 1972 and examined several persons ex parte. The names of those persons are given in the report. He also examined several person on September 10, 1972 at Faizabad. From the minutes dated September 9, 1972, which is annexed to the second report, it appears that the special referee contacted several persons while he was travelling by car, namely, Mr. Chiranji Lal Jaiswal, Mr. Thakur Sahib and Anirita Lal Jaiswal. He has recorded what happened on September 10, 1972 on car at Faizabad. He contacted several persons from whom he collected the information regarding quantity of coal purchased and price paid per M/ton. I should state here that I am very much surprised with the manner in which the Special Referee proceeded with the reference as recorded by him. He makes enquiries himself in the car and meets people from whom he collects information while travelling in car. After collecting the said information the special referee comes back to Calcutta on September 11, 1972. It is clear that the special referee has exceeded the limits of his authority and power. Thereafter, what the special referee did has been stated in the second and final report. On October 22, 1972 he arrived at Varanasi. Immediately thereafter he proceeded towards Faizabad to contact respective co-operative societies to whom the defendant society sold out coal. He collected the names of the said societies- from the coal registers of the defendant society then in possession with the C. B. I. Criminal Branch, Government of Uttar Pradesh at Gorakhpur. On enquiry he came to know that some of the co-operative societies whose names do appear in the Coal Register of the defendant society were already defunct long time ago. The special referee mentions in his report the names of some of the co-operative societies whom he contacted. He also contacted several other persons. It is stated in the report that Md. Rafi, Advocate and Director and Legal Advisor of the defendant society requested him to allow the defendant society an opportunity to cross-examine the persons- whose evidences were recorded by him before the submission of his Report. On December 29, 1972, he arrives at Faizabad and immediately, thereafter, he contacted Mr. Md. Rafi, and it is stated in the report that Md. Rafi requested him to hold the meeting on December 31, 1972 at the office of the defendant society. It is stated that on the next morning he sent a notice to the office of the defendant accordingly, but the defendant society refused to accept the same. Then he personally went to the office of the defendant society to serve the copy of his notice along with the copies of statements of the persons recorded by him when the defendant society refused to accept the same. The special referee returned back to Calcutta on January 2, 1973.
56. The learned counsel for the society commented that what is recorded in the minutes of the special referee dated September 9, 1972 is different from what is recorded in the report. In the report it is stated that he merely contacted 41 persons on September 9 and 10, 1972. He records some other persons are willing to give evidence, but I should go to their respective places. I agreed.' Then he goes to Faizabad and records names of 10 persons. Here he contacted several persons while he was travelling in the car and also records the names of 17 persons whom he contacted on car at Faizabad. Mr. Biswas submitted that this cannot be the evidence or admissible as evidence. None of those persons produced any receipt or books of accounts and the statement of any persons made on car to the special referee is not evidence on which the special referee can rely. Mr. Biswas pointed out that in the minutes of the meeting dated September 10, 1972 it is recorded: 'sitting adjourned for six weeks', but the special referee did not give the place or time when the next meeting will be held. The next meeting was held on October 25, 1972, at the office of D. C. D. F. Protapgarh. It is submitted before me that the meeting held on October 25, 1972 was without any notice to the society. It is also submitted that the society had no opportunity to cross-examine the witnesses whom the special referee contacted. The minutes dated October 26, 1972 show that there was a sitting, but Mr. Biswas stated that the society was not notified of that sitting or the next sitting which was held on October 27, 1972.
57. It is submitted that the report of the special referee in the reference proceedings is based on no evidence on record on the basis of which a report can be made and the report is perverse. The facts contained in such a report cannot be conclusive evidence and the report is perverse and illegal on the face of it and ought to be set aside. The conclusions arrived at by the special referee are not on the basis of any legal evidence. He has given his reasons as to the question whether the defendant society has really made any secret profits not on the basis of any legal evidence. It is also submitted before me that no evidence has been laid by the plaintiff as to the price at which the defendant society was required to sell. The selling price of coal at 46.72 stated by the Special Referee in his report is based on supposition, surmises and conjectures and on inadmissible evidence. Special Referee also refers to certain resolutions. It is stated that the said resolutions were in Hindi script and the same were not proved before the special referee. It is submitted that the scope of the enquiry was made beyond what is stated by the plaintiff in paragraph 14 of the plaint. There is no material on which the special referee can come to the conclusion that the plaintiff is entitled to get the difference of Rs. 8/- per ton of coal and it is submitted that there is no material to arrive at the conclusion that the defendant society made secret profits to the tune of Rs. 2,21,220/- as found by the special referee in his report.
58. In the premises, it is submitted that this Court will set aside the report of the special referee dated January 15, 1973.
59. I accept the submissions of Mr. Biswas on these points. Considering the report of the special referee which was placed before me, there is no doubt in my mind that the special referee has acted beyond the scope of his power, authority and jurisdiction. He based his report and arrived at his conclusion in the report in disregard of the law and procedure of this Court and without legal or admissible evidence before him. He has taken evidence in the absence of one party and received secret information himself. The report of the Special Referee is perverse and should be set aside.
60. The view of the matter which I have already taken is sufficient to dispose of the applications, before me but I think I shall deal with another branch of the argument which has been advanced before me. Mr. T. K. Biswas in course of argument took the point that the Court has no power to appoint a Commissioner whether it is called a special referee or by any other description for the purpose of enquiry into secret profits. The court can only issue commission for the purpose specified in Section 75 of the Code of Civil Procedure and for no other purpose. His argument is that the Court can appoint a Commissioner to enquire into account but not as to secret profits. Mr. Biswas is challenging only that part of the order and decree by which the special referee is appointed 'to enquire into secret profits, if any' as without jurisdiction and nullity. His contention is that this part of the decree is without jurisdiction and the report of the special referee dated 15th January, 1973 should therefore be declared as null and void. In support of his argument Mr. Biswas referred to Section 75, sub-section (c) of the Code of Civil Procedure and relied on the decision of the Supreme Court in Padam Sen v. State of Uttar Pradesh, 0065/1960 : 1961CriLJ322 and the subsequent decision of the Supreme Court in Monoharlal Chopra v. Seth Hiralal, : AIR1962SC527 . Mr. Biswas also referred to Order 20, Rule 16 of the Code of Civil Procedure and stressed on the words 'directing such accounts to be taken as it thinks fit' mentioned in that rule and argued that the decree in the instant case does not say account be taken but says enquiry into secret profits and submitted that there is no scope for such an enquiry. The Court has jurisdiction to direct Mr. Sanyal to take accounts. Under Order 20, Rule 17 the Court may give such direction as to the mode in which the account is to be taken or vouched in a particular case. In the instant case direction is not given in the decree and no such direction was taken as to the mode of accounting. The mode in which the account is to be taken may be directed by the Court either in the decree or by any subsequent order (Order 20, Rule 17). Here the Court did not give such direction nor the Special Referee took any direction from the Court and he is not entitled to adopt any, procedure he likes.
61. Mr. Biswas submitted that the order directing accounts as to the secret profits is without jurisdiction and nullity and referred to the decision of the Supreme Court in Official Trustee, West Bengal v. Sachindra Nath, reported in : 3SCR92 and my own judgment in Sisir Kumar v. Monorama, : AIR1972Cal283 and also referred to the decision of Arjun Singh v. Mohindra Kumar, reported in : 5SCR946 and relied on the observation of the Supreme Court at 1003.
62. Mr. Dipankar Gupta, learned Counsel for the firm argued that Section 75 of the Code lays down the substantive power of the court to issue commissions and Order 26 lays down the procedure. Rule 11 and Order 26 relate to commission to examine accounts. Examination of accounts is not synonymous with examination of 'books of accounts.' Mr. Gupta referred to Section 211 of the Indian Contract Act and submitted that an agent is bound to conduct the business of his principal according to the directions given by the principal, and when the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and, if any profit accrues, he must account for it. An agent is bound to conduct the business of his agency with skill and diligence. Under Section 216 of the Contract Act if an agent, without the knowledge of his principal, deals in the business of the agency on his own account instead of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction. The case of the secret profits comes under Section 217 of the Indian Contract Act. The duty of the agent is to render proper accounts and, therefore, the court can direct proper accounts to be taken in a suit by the principal against the agent. Ascertaining of secret profits made by the agent is according to Mr. Gupta, a process of accounting. , It is a case of ascertaining proper accounts under Section 213 of the Contract Act. Mr. Gupta referred to Hals-bury's Laws of England Vol. I, 3rd, Edition, Article 444, page 192 also Article 440, p. 189. He also relied on Bowstead on Agency 13th Edition page 150, Article 58 and page 159 Article 60. He referred to the English case Regier v. Campbell Stuart. (1939) 1 Ch 766. He submitted that agent is liable for secret profits. Enquiry into secret profits is a process of rendition of accounts and Order 20, Rule 16 applies in the instant case. The decree was not without jurisdiction and the Court was competent to pass the decree. He also referred to the case of : AIR1960Cal190 as to the practice of the Court regarding Special Referee. He argued that O. 20 is not exhaustive and the Court has jurisdiction to appoint Special Referee to enquire into secret profits.
63. In view of the arguments of the learned Counsel for the parties the points which arise are:-- Whether that part of the order and decree dated 5th June, 1972 which provides that the Special Referee is appointed to enquire into secret profits if any, is null and void and without jurisdiction and whether the report of the Special Referee should be declared null and void.
64. In a suit filed by the principal against the agent for account the jurisdiction, authority and power of the Court to decide the question of liability of the agent to account cannot be disputed. If the agent fails to keep proper accounts or conceals the true nature of the transaction from the principal fraudulently or receives secret profit the agent is liable to the principal in a suit for account. The Court can decide the question in a proper proceeding whether the agent would be 'liable or not. In (1939-1 Ch 766) the principal (Regier) brought an action against the agent for damages for fraudulent misrepresentation and for account of all profits obtained by the defendant without her knowledge or consent in his capacity as her agent and Harwell, J. held :
'That, accordingly, the defendant, having concealed the true nature of the transaction from the plaintiff by fraud, had acted in breach of his duty as agent and. was liable to account to the plaintiff for all profits obtained by him without her knowledge and consent in his capacity as agent for her.'
The principle of English Law on the point will appear from Halsbury's Laws of England 3rd Edition Vol. I, Article 444 at page 192 and Article 440 at page 189. See also Bowstead on Agency, 13th Edition Article 58 at page 150 and Article 60 at page 159. There is no difference in this respect between the English Law and the Indian Law. (As to Indian Law see Sections 211, 213 and 216 of the Indian Contract Act, 1872)
65. But can the Court issue commission and ask the Commissioner or Special Referee to enquire into secret profits, if any? Can the Court ask him to decide the question of liability of the agent for secret profits? The general powers of the Court to issue commissions have been summarised in Section 75 of the Code. Section 75(c) of the Code says that the Court may issue commission to examine or adjust accounts. This power of the Court to issue commission is subject to 'such conditions and limitation as may be prescribed.' The detailed provisions are set forth in Order 26 of the Code. Order 26, Rules 11 and 12 relate to commissions to examine accounts and Order 26, Rules 15, 16, 17 and 18 relate to general provisions. These rules do not amplify the scope of Section 75(c). The words in Section 75(c) are : 'to examine or to adjust accounts.' So the Court can appoint a Commissioner or Special Referee for accounts only for the purposes specified in Section 75(c). Has the Court inherent power to issue commission for accounts for purposes other than those mentioned in Section 75(c)? In 0065/1960 : 1961CriLJ322 the question arose before the Supreme Court whether the order passed by the learned Munsif appointing a person as Commissioner for seizing 'books of accounts' of the plaintiff in that case can be said to be an order which was passed by the Court in exercise of its inherent jurisdiction. The Supreme Court held that the Court has no inherent powers under Section 151 (of the Code of Civil Procedure) to appoint a Commissioner to seize account books in the possession of the plaintiff, upon an application by the defendant that he has apprehension that they would be tampered with. At page 219 of the report Raghubar Dayal, J. delivering the judgment of the Supreme Court observed : --
'Specific powers have to be conferred on the Courts for passing such orders which would affect such rights of a party. Such powers cannot come within the scope of inherent powers of the Court in the matters of procedure, which powers have their source in the Court possessing all the essential powers to regulate its practice and procedure. ... ... ... ... ... ... ... Even in such cases where the Court summons a document from a party, the Court has not been given any power to get hold of the document forcibly from the possession of the defaulting party.'
66. Padam Sen's case came up for consideration before the Supreme Court in : AIR1962SC527 and Shah, J. observed at page 538 :
'Section 75 empowers the Court to issue a commission for purposes specified therein: even though it is not so expressly stated that there is no power to appoint a commissioner for other purposes, a prohibition to that effect is in view of the Court in Padam Sen's case 0065/1960 : 1961CriLJ322 implicit in Section 75.'
67. In : 5SCR946 the Supreme Court observed :--
'It is common ground that the inherent power of the Court cannot override the express provisions of the law. In other words if, there are specific provisions of the Code dealing with a particular topic and they expressly or by necessary implication exhaust the scope of the powers of the Court or the jurisdiction that may be exercised in relation to a matter the inherent power of the Court cannot be invoked in order to cut across the powers conferred by the Code. The prohibition contained in the Code need not be express but may be implied or be implicit from the very nature of the provisions that it makes for covering the contingencies to which it relates.'
Having regard to the principles of law laid down by the Supreme Court, in my view, the Court can issue commission to examine the account only for the purposes specified in Section 75 sub-section (c) and there is no inherent power of the Court to issue commission for any other purposes. The Commissioner or Special Referee cannot decide the question of liability of the agent for payment of secret profits to the principal. This is a matter for the Court to decide. In : AIR1960Cal190 what happened was that in a suit brought by the contractors against Union of India for monies said to be due for work done in accordance with contract the trial Judge (J. P. Mitter, J.) directed reference, for ascertainment of the amount due and payable by the defendant to the plaintiff after (1) ascertaining on evidence the market rate for certain items of work done by the contractor;(2) ascertaining the increase in labour charges in respect of the excess quantities of work done under certain items;(3) determining the quantity of work done under the different items on the basis of the measurement books. In the appeal from the decision of the learned Judge one of the points urged was that the learned Judge was not entitled to ask the referee to ascertain the market rate. At page 194 of the report : AIR1960Cal190 K. C. Das Gupta, C. J. observed :--
'Looking at the contents of the order that was made by Mitter, J. in this case, I am of opinion that in so far the order directed a reference for the ascertainment of the market rate and also in so far as it made a reference for the ascertainment of the extent of the rise in labour rates, if any, and thus deliberately refrained from deciding the cardinal matter in controversy, namely, as regards the rates at which the contractor was entitled to payment, there was no adjudication of the real matters in controversy, and so the decision was not a judgment within the rule laid down by Sir Richard Couch.'
At : AIR1960Cal190 H. K. Bose, J. observed :
'It may be that the directions upon the Special Referee to determine the market rate or as to whether there has been an increase in the rate of labour charges are matters which cannot strictly form the subject-matter of a preliminary decree but those directions having been incorporated in the decree part of which clearly satisfies the test of a preliminary decree, are to be deemed as part of that decree, and an appeal lies from the entire decree.'
The order however held to be a judgment as part of the order was in accordance with Order 20, Rule 16 of the Code.
68. In ILR 42 Cal 819 = (AIR 1916 Cal 566) it was held by the Appeal Court consisting of Jenkins, C. J. and Woodroffe, J. that a reference should be directed by the Court to assess damages only when the enquiry would involve questions of detail which would be wasting the time of the Court to investigate. Jn the judgment delivered by Jenkins, C. J. the learned Judge protested against the reference of this nature and quoted with approval the observation of Lord Justice Bowen :--
'Cases ought only to be referred to other persons to assess the damages where the injury involves question of detail which would be wasting the time of the Court to investigate.'
If a Court passes an order directing a reference for accounts outside the limit of Section 75(c) of the Code, the order, in my view, would be without jurisdiction. On this matter, reference may be made to the principle of law laid down in : 3SCR92 and the view I have taken in : AIR1972Cal283 . But it is not necessary for me to decide this question for the purpose of this application and declare the report to be void as I have already expressed the view that the report of the Special Referee should be set aside for reasons stated in my judgment. Considering the manner in which the reference was conducted by Mr. R. P. Sanyal, I do not think he should act as Special Referee any further in this matter.
69. In view of the above matter, 1 pass the following order in this application :
(a) The report of the Special Referee dated the 15th January, 1973 is set aside.
(b) The respondent firm shall pay to the applicant society the costs of and incidental to the application.
(c) Mr. R. P. Sanyal will not act as Special Referee any further. The parties are given liberty to apply, if so advised, for appointment of a Special Referee in place of Mr. Sanyal after the decision of the Court of Appeal In Appeal No. 273 of 1972 (Cal) (Falehganj Co-operative Marketing Society Ltd. v. Jaiswal Coal Co.) preferred by the society which is now pending for final disposal, or earlier if the parties so desire. The respondent firm shall pay the fees and other charges of the Special Referee.
70. As regards the application by the plaintiff firm, the same is dismissed. The parties will bear and pay their respective costs of and incidental to this application.