Kerala High Court
K.P. Antony, "Santhosh", Calicut vs Thandiyode Plantations (Private) ... on 20 July, 1995
Equivalent citations: AIR1996KER37, AIR 1996 KERALA 37, (1995) ILR(KER) 3 KER 543, (1995) 2 KER LT 512, (1995) 2 CIVILCOURTC 713, (1996) 1 RRR 188, (1996) 21 CORLA 281, (1995) 2 BANKCAS 632, (1996) 1 ICC 596, (1996) 1 CIVLJ 79, (1996) 86 COMCAS 684, (1996) 5 COMLJ 230, (1996) 4 CURCC 74
JUDGMENT Pareed Pillay, C.J.
1. Company petition was filed under Section 155 of the Companies Act, 1956 (for short 'the Act') to rectify the register of shares of the first respondent-Company and to include petitioner's name as the joint holder of the shares registered in the names of respondents 2 and 3 and for consequential orders. Case of the petitioner is that he and respondents 2 and 3 had entered into an agreement in Nov. 1973 to acquire all the shares of the company and that respondents 2 and 3 in violation of the agreement acquired the shares and got it registered in their own names. The Company Court dismissed the petition holding that petitioner has no case that he had applied to the company for registration in the manner specified by the statute as transferee of its shares and that in the proceedings under Section 155 of the Act the direction regarding registration of a transfer cannot be granted overlooking the statutory prescriptions regarding the mode of transfer. The learned Judge also observed that the agreement set up by the petitioner itself is in dispute in O.S. No. 245 of 1976 and the matter is pending in appeal before the District Court. The learned Judge further held that in view of the dispute between the parties it may not be desirable even if permissible to pronounce on the question of title at this stage. Accordingly the petition was dismissed without prejudice to the petitioner's right to seek or pursue other remedies available in law.
2. As against that decision petitioner filed M.P.A. No. 547 of 1981. ADivision Bench of this Court allowed the appeal giving the following directions:--
"(1) The appellant's title right to 1 / 3rd right in the shares acquired in the names of respondents 2 and 3 in the Ist respondent company is here by declared.
(2) It is further declared that the appellant is entitled to get his name included in the share register of the 1st respondent company along with the names of respondents 2 and 3.
(3) Respondents 2 and 3 are directed to execute within one month from this date necessary instruments of transfer of shares, transferring 1/3 of their rights in the shares of the 1st respondent company standing in their names, and deliver it to the 1st respondent company as required under Section 108 of the Companies Act and the 1st respondent company is directed to rectify its share register by including the name of the appellant in its share register along with the names of respondents 2 and 3. Appellant and respondents 1 to 3 will also comply with any other statutory provisions including the furnishing of the particulars required under Section 150 of the Companies Act and notice to registrar under Section 156 of the Companies Act, which may be required to give effect to this order. Since Section 156 of the Companies Act does not envisage a situation as in this case, we direct that the notice of rectification is to be filed by the company with the Registrar within thirty days from the date of rectification. The company will also file a copy of this order before the Registrar of Companies along with Form No. 21 set out in Appendix I of the Companies Act, within thirty days.
(4) If the respondents fail to comply with the above said directions within the time specified the appellant will be entitled to have this order executed and the acts required to be done by the respondents, done so far as practicable through an officer appointed by the Court at the cost of the respondents."
A Special Leave Petition was filed before the Supreme Court against the judgment in the M.P.A. That petition was dismissed by the Supreme Court on 12-10-1987.
3. Company Application No. 418 of 1987 was filed for appointment of a receiver to take over possession of the available assets of the company and its office at Thandiyode to gether with all its records in the possession of respondents 1 and 2 for managing the affairs of the company and particularly to implement the directions of this Court in the judgment in M.P.A. No. 547 of 1981 as clarified by the order in C.M.P. No. 21744 of 1987.
4. Contention of respondents 1 and 2 is that the judgment in M.P.A. No. 547 of 1981 cannot be implemented as the Court lacked jurisdiction in entertaining the issues involved in the matter. In other words, the argument is that the judgment in the M.P.A. cannot be enforced as it is a nullity. Counsel for respondents 1 and 2 submitted that the learned single Judge was justified in holding that the company petition filed by the petitioner cannot be allowed as it is not within the domain of the court to grant the reliefs prayed for in the petition. According to him, the directions contained in the judgment of the Division Bench cannot be implemented as the Court lacked jurisdiction in issuing the same. Counsel relied on Kiran Singh v. Chaman Paswan, AIR 1954 SC 340for the proposition that a decree passed by the court without jurisdiction is a nullity and it can be challenged whenever and wherever it is sought to be enforced or relied upon.
5. In the said decision the Supreme Court held that it is the fundamental and well established principle that a decree passed by a Court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon and it is so even at the stage of execution and in collateral proceedings. It is true that a defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject matter of the action, strikes at the very authority of the Court to pass any decree. It is equally true that such a defect cannot be cured even by consent of parties. It is trite law that a decree passed by a court without jurisdiction on the subject matter or on the grounds on which the decree made which goes to the root of its jurisdiction or lacks inherent jurisdiction is coram non-judice, and that a decree passed by such a court is a nullity and is non est. Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings. The defect' of jurisdiction strikes at the very authority of the court to pass a decree which cannot be cured by consent or waiver of the party. [See Chiranjilal Shrilal Goenka v. Jasjit Singh, (1993) 2 SCC 507 : (1993 AIR SCW 1439)].
6. Contention of the respondents is that even according to the averments in the petition, petitioner is not entitled to rectification of the Company register under Section 155 of the Act, that the averments only disclose that the shares held by respondents 2 and 3 are to enure to his benefit as well and that he has become entitled to the shares held by them and as there is only agreement between the parties the only course open to him is to have recourse to the civil court for appropriate reliefs and as the Company Court lacked jurisdiction to entertain the petition the Division Bench went wrong in allowing the M.P.A. overlooking the fact that it lacked jurisdiction.
7. It is true that it is open to a party to raise the contention in an appropriate case that decree is a nullity even at the execution stage. But this is a case where the M.P.A. was decided on merits considering the entire aspects of the matter. Every contention advanced by respondents 1 and 2 was considered by the Division Bench. As the judgment in the M.P.A. has been challenged before the Supreme Court and as that Court has dismissed the Special Leave Petition it has indeed become final.
8. As the respondents have taken part in the proceedings before the Company Court and before the Division Bench and raised their contentions to be decided by the Court and as the decision of the Division Bench in the M.P.A. has become final, they cannot be allowed to take up the issue again on the ground that the court lacked jurisdiction in entertaining the M.P.A.
9. The exclusion of the jurisdiction of the civil courts to entertain a civil cause cannot be assumed unless a particular statute contains an express provision to that effect or leads to a necessary and inevitable implication of that nature. Merely because the Companies Act provides for certain remedies it cannot be said that the jurisdiction of civil courts to deal with a case brought before it in respect of some of the matters covered by the Act is barred. The validity of the decision in M.P.A. cannot be challenged when-it is sought to be enforced on the ground of lack of jurisdiction especially when it cannot be said that the court lacked jurisdiction in dealing with the dispute. In Firm I.S. Chetty & Sons v. State of A.P., AIR 1964 SC 322 Supreme Court held that the mere fact that a special statute provides for certain remedies may not by itself necessarily exclude the jurisdiction of the civil courts to deal with a case brought before it in respect of some of the matters covered by the said statute- As the respondents had participated in the proceeding, of course raising the contention that the Company Court lacked jurisdiction to resolve the controversy between the parties and having been worsted in their effort, they cannot re-agitated same contentions when the judgment is sought to be enforced against them.
10. The Supreme Court in Sunder Dass v. Ram Prakash AIR 1977 SC 1201 has laid down that the validity of a decee can be challenged in execution proceedings only on the ground that the court which passed the decree lacked inherent jurisdiction. A court is said to be lacking in jurisdiction when it could not have seisin of the case because the subject matter was wholly foreign to its jurisdiction or that the defendant was dead at the time of institution of the suit or when the suit was decreed. Inherent lack of jurisdiction means a power or jurisdiction which does not at all exist or vest in a court. A court lacks inherent jurisdiction when the subject matter is wholly foreign to its ambit and is totally unconnected with its recognised jurisdiction. So long as it-cannot be said that the court lacked inherent jurisdiction to entertain the petition contention of the respondents does not deserve acceptance. In V. Appannammanayuralu v. B. Sreeramulu, AIR 1978 Andh Pra 160 the Andhra Pradesh High Court held:
"The validity of a decree can be challenged in execution proceedings only on the ground that the court which passed the decree was lacking in inherent jurisdiction. It can be said that the court, which has passed a decree, is lacking in inherent jurisdiction only when it could not have seisin of the case because the subject matter was wholly foreign to its jurisdiction, or that the defendant was dead at the time the suit had been instituted or decree passed, or some such other ground which could have the effect of rendering the Court entirely lacking in jurisdiction in respect of the subject matter of the suit or over the parties to it."
As the question of jurisdiction has already been decided by the Division Bench of this Court and as that has become final, it cannot be reagitated when the judgment is sought to be enforced. In other words, as the judgment in M.P.A. has been confirmed by the Supreme Court when the Special Leave Petition was dismissed respondent cannot advance the contention that the court lacked jurisdiction in entertaining the petition.
11. The settled legal position is that the executing court can go behind a decree only if there was lack of inherent jurisdiction and not on the ground that there was erroneous exercise of jurisdiction. It will not be open to a party to challenge a judgment when it is sought to be enforced on the ground that the judgment is based on wrong conclusions or on erroneous findings or on wrong application of law. As the remedy of the aggrieved party in such cases is to challenge the same in appeal or revision as the case may be and not to challenge it when it is sought to be enforced, the respondent's challenge in this case against the judgment can be sustained. In the present case, lack of jurisdiction was pleaded by the respondents and that has been considered and found against them. So they cannot raise the very same point in the executing court.
12. The inescapable conclusion is that the court executing the decree cannot go behind it and question its validity unless it is established that decree is nullity. So long as that has not been established the assumption can only be that the decree is valid. In Ahmed Khan v. Mohd Khasim AIR 1976 Kant 13 the Karnataka High Court held (at p. 16 of AIR) :
"Where the objection as to the jurisdiction of the court to pass the decree does not appear on the face of the record and requires examination of the questions raised and decided at the trial or which could have been but have not been raised, the executing court will have no jurisdiction to entertain an objection as to the validity of the decree even on the ground of absence of jurisdiction."
The Supreme Court held that when the decree is passed by a court which lacked inherent jurisdiction to pass it objection as to its validity can be raised in execution proceedings if the objection appears on the face of the record. But if it does not so appear and requires examination of the questions raised and decided at the trial, or which could have been but have not been raised, the executing Court will have no jurisdiction to enterain such an objection. In V.D. Modi v. R.A. Rehman, AIR 1970 SC 1475 the Supreme Court held that when the decree is made by a Court which has no inherent jurisdiction to make it, objection as to its validity can be raised in execution proceedings if the objection appears on the face of the record. The Supreme Court observed that where objection as to the jurisdiction of the court which passed the decree does not appear on the face of the records and requires examination of the questions raised and decided at the trial or which could have but have not been raised the executing court will have no jurisdiction to entertain an objection as to the validity of the decree even on the ground of absence of jurisdiction. In the above case, decree for eviction of a tenant was passed by a Court of Small Causes without any objection as to its jurisdiction. The question of jurisdiction of the court to the suit depended upon interpretation of the terms of the lease and the user to which the land was put at the date of grant of lease. The Supreme Court held that these questions cannot be allowed to be raised in execution proceedings so as to displace the judgment of the Court which passed it.
13. Identical is the situation in the case in hand before us. As the Division Bench has considered the respective contention of the parties and came to a particular conclusion, the aggrieved party cannot challenge it on the ground of lack of jurisdiction. The Division Bench considered the challenge against the maintainability of the petition under Section 155 of the Act and held in favour of the petitioner. Even if it is assumed that the Division Bench judgment is erroneous, it will not be possible to hold that it is a nullity. Even a wrong decision on the question of jurisdiction cannot be considered as a nullity.
14. It is also pertinent to note that an application was filed for appointment of a receiver during execution proceedings. That petition was allowed on 20-2-1989. That would show that the decree has been executed in part by appointing a receiver. Having participated in the proceedings before the Company Court and having raised the plea of lack of jurisdiction of the Court and being worsted in the M.P. A. and also in view of the fact that receiver has been appointed to the property contention raised in execution regarding nullity of the judgment cannot be countenanced.
The objection raised by respondents 1 and 2 stands overruled.
15. An oral application was made by counsel for respondents under Article 134A of the Constitution of India for certificate for appeal to the Supreme Court. We hold that no substantial question of law of general importance to be decided by the Supreme Court is involved in this case. Hence leave is refused.