Gujarat High Court
The Indrapur Seva Cooperative Society ... vs Vaghasar Seva Sahakari Mandli Limited on 10 February, 2021
Equivalent citations: AIRONLINE 2021 GUJ 382
Author: Biren Vaishnav
Bench: Biren Vaishnav
C/SCA/15478/2020 CAVJUDGMENT
IN THEHIGHCOURTOF GUJARATAT AHMEDABAD
R/SPECIALCIVILAPPLICATIONNO. 15478of 2020
With
CIVILAPPLICATION(FORJOININGPARTY) NO. 1 of 2020
In R/SPECIALCIVILAPPLICATIONNO. 15478of 2020
FORAPPROVALANDSIGNATURE:
HONOURABLEMR. JUSTICEBIRENVAISHNAV
==========================================================
1 Whether Reporters of Local Papers may be allowed NO
to see the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copyNO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
THEINDRAPURSEVACOOPERATIVESOCIETYLIMITED
Versus
VAGHASARSEVASAHAKARIMANDLILIMITED
==========================================================
Appearance:
MR. MIHIRJOSHI,SENIORCOUNSELWITHMRDIPENDESAI(2481)for the Petitioner(s)
No. 1,2,3,4,5,6
MR. JAL UNWALA,SENIORCOUNSELWITHMS TEJALA VASHI(2704)for the
Respondent(s)No. 3
NOTICESERVEDBY DS(5)for the Respondent(s)No. 2,4
MR. PRAKASHJANI, SENIORCOUNSELWITHMR. SHIVANGP JANI(8285)for the
Respondent(s)No. 1
MR. ASHISHSHAH,ADVOCATEFORTHEAPPLICANTIN CIVILAPPLICATIONFOR
JOININGPARTY
==========================================================
CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV
Page 1 of 28
Downloaded on : Thu Feb 11 04:34:54 IST 2021
C/SCA/15478/2020 CAVJUDGMENT
Date: 10/02/2021
CAVJUDGMENT
1 In this petition under Article 226 of the Constitution of India, the prayer of the petitioner reads as under:
"6(A) The Hon'ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order, quashing and setting aside the proceedings of Lavad Suit No. 183 of 2020 preferred by the respondent no.1 before the Board of Nominees, Mehsana, and also be pleased to quash and set aside the order dated 17.11.2020 passed by the Board of Nominees, Mehsana, in Lavad Suit No. 183 of 2020 both annexed at Annexure:A Colly to the present petition."
2 The facts in brief are as under:
2.1 The petitioner Nos. 1 and 2 are Cooperative Societies registered under the Gujarat Cooperative Societies Act and members of the respondent No.2 - Mehsana District Cooperative Milk Producers' Union Limited, and petitioners Nos. 3 to 6 are individual members of the respondent No.2 - Union. The respondent No.2, Mehsana District Cooperative Milk Producers' Union is a specified Society under Section 74(C) of the Act. The last elections to the no.2 Union were held in November 2015, and therefore, in accordance with the provisions of Section 74(C)(2), the Managing Committee's term was to expire in November 2020.
The provisions of Section 74(C)(4) provides that the elections are Page 2 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT to be held before the term of the Managing Committee expires. 2.2 It is the case of the petitioners that the byelaws provide for 16 seats for the Board of Directors out of which 11 seats are to be filled up by all the representatives of the Milk Producers' Union 1 seat for each taluka, four seats as per byelaw 35(1)(a)(2) for highest supplier of the taluka and one seat for delegate of other societies and individual members.
2.3 It is the case of the petitioners that the respondent No.2 Union had started finalizing the process of elections by finalizing the limits of constituencies after inviting objections vide public notice dated 14.03.2020 and the final list of constituencies was prepared on 09.07.2020 which was sent to the Collector. After the pandemic, the Collector on 20.11.2020 granted permission to go ahead with the process of election and therefore the respondent No.2 Union vide public notice dated 20.11.2020 called for resolutions of the delegates of the member societies. The respondent No.1 preferred Lavad Suit no. 183 of 2020 before the Board of Nominees challenging the constituencies prepared by the respondent No.2 Union for the constituency of other societies and individual members. The respondent No.1 is a Society falling within the constituency of other societies. These constituencies i.e Page 3 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT the constituency of the other societies and the individual members are required to elect delegates who would then elect one director from their constituency.
2.4 The respondent No.1, according to the petitioner, has intentionally not joined the delegates of other societies and individual members as party respondents, and therefore, though the petitioners are not party respondents, they are necessary, and therefore, the petition is filed challenging the proceedings of the lavad suit.
3 Mr.Mihir Joshi, learned Senior Advocate appearing with Mr.Dipen Desai, learned advocate for the petitioners, would submit by drawing the attention to the provisions of Section 74(C) that the provision provides for the conduct of elections of Committees and officers of certain societies. He would submit that this provision is a separate provision, and therefore, receives entirely a special treatment. He would submit that when read in context of Section 145 onwards, elections of committees and officers of certain societies are provided for, and they are special provisions. 3.1 Mr.Mihir Joshi, learned Senior Advocate, would submit that the Lavad Suit preferred by the respondent No.1 is not Page 4 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT maintainable as the Board of Nominees has no jurisdiction or authority to entertain the suit. It is on this count that the petitioners have challenged the order dated 17.11.2020 passed in the Lavad Suit No. 183 of 2020 where the Board of Nominees had passed an adinterim order staying the process of election of the constituency of individual members and other societies of Mehsana District Cooperative Milk Producers' Union Limited. 3.2 Mr. Mihir Joshi, learned Senior Advocate, would submit that as per Section 145U of the Act, when read, it would indicate that the section begins with the language and the words "notwithstanding anything contained in Section 96 of the Act", any dispute relating to an election of a specified Society in accordance with Section 145U has to be referred to the Gujarat State Co operative Tribunal by preferring an election petition after the results of the election is declared. In his submission, the words "relating to an election" are wide enough to suggest that the realm of dispute raised in the plaint which he extensively read amounted to an election dispute. He would further submit that the suit preferred by the respondent No.1 is completely barred. 3.3 Mr.Mihir Joshi, learned Senior Advocate, would invite the attention of the Court to the definition of the word "Election" as Page 5 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT defined under Section 145B to mean that the election of members of the Committee of the Society, and therefore, any dispute relating to the election of the members of the Managing Committee can only be raised before the Tribunal.
3.4 Referring to the plaint of Lavad Suit No. 183 of 2020, Mr.Mihir Joshi, learned Senior Advocate, would demonstrate that in the Lavad Suit, challenge is to the notification dated 14.03.2020 and 18.07.2020 published by the Mehsana District Cooperative Milk Producers' Union Limited for delimitation of constituencies. The power to delimit constituencies is available under Rule 3(A) (1) to Rule 3(A)(7) of the Gujarat Specified Cooperative Societies Rules, 1982. These rules are framed under section 145Y of the Act. 1982 Rules therefore are framed to provide for and to regulate all or any other matters relating to the various stages of elections. He would further rely on the provisions of section 145Y together with the provisions of Rule 3(A) and submit that as suggested by the heading of the rule, it is pertaining to delimitation of constituencies for the purpose of election, and therefore, what the challenge essentially while challenging the notifications dated 14.03.2020 and 08.07.2020 is a challenge to the exercise under Rule 3(A)(1) and Rule 3(A)(7). This dispute therefore would fall in Page 6 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT a dispute relating to an election of a specified society and the plaint is clearly barred.
3.5 Mr.Joshi, learned Senior Advocate, would further submit that from the reliefs claimed in the suit, which read, would indicate that the relief is that the respondent No.2 should not declare the election of the constituency of individual members and other societies. This relief would, therefore, clearly fall within the election dispute. This fact get substantiated in the submission of Mr.Mihir Joshi, learned Senior Advocate as the Deputy Collector by a notification dated 01.12.2020 to which at page No. 205 Shri Joshi, draws the attention of the Court, the election of the constituencies in question is not declared because of the impugned order of the Board of Nominees. This therefore has a direct relation and effect on the election of the specified society. 3.6 Even the conduct of the respondent No.1 plaintiff has been under a cloud according to Mr.Mihir Joshi, learned Senior Advocate. He would submit that when the elections were held in the year 2015, a similar suit was preferred before the Board of Nominees, Mehsana, being Lavad Suit No. 182 of 2015. Shri Joshi, learned Senior Advocate, would take the court to the averments made in the Lavad Suit and submit that similar issues and Page 7 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT contentions were raised as in the present suit i.e the death of various individual members etc. The suit came to be entertained and an interim injunction was granted staying elections of the specified society. That order was a subject matter of challenge by way of Special Civil Application No. 18357 of 2015 and this Court by an order dated 30.10.2015 has admitted the petition and has granted stay by specifically observing that the Board of Nominees had no jurisdiction to entertain the suit in view of Section 145U of the Act.
3.7 Mr.Joshi, learned Senior Advocate, would submit that the said suit was preferred by Laxmipura Seva Sahakari Mandali Limited. Even at this time, when the elections of the Union are due in the year 2020, the very plaintiff preferred Lavad Suit No. 156 of 2020 raising similar contentions and suppressed the order of 30.10.2015. However, when some aggrieved societies made applications to be joined as parties, the suit came to be withdrawn on 10.11.2020. Within three days thereafter, the respondent No.1 has preferred the suit being Lavad Suit No. 183 of 2020. He would invite the court's attention to the plaint of Lavad Suit No. 156 of 2020 and the present Lavad Suit No. 183 of 2020 and would submit that the suit verbatim raises similar contentions and Page 8 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT averments, and therefore, since both suits are identical and the suit by Laxmipura came to be withdrawn, it shows the conduct of the respondent No.1 as being malicious and an abuse of the court's process.
3.8 Mr.Joshi, learned Senior Advocate, would further submit that till the impugned order dated 17.11.2020 was passed, the elections of the specified society were not being declared. However, after the Board of Nominee stayed the election of the constituency of individual members that the Collector gave permission to hold elections, and therefore obviously the intention of the respondent No.1 was to stall the elections of the constituency. To the preliminary contention of Mr.P.K.Jani, learned Senior Advocate appearing for respondent No.1 that the petition is not maintainable at the hands of the petitioners who were not parties to the Board of Nominees, Shri Joshi, learned Senior Advocate would submit that this contention is baseless. He would submit that the petitioners are directly affected by the impugned order inspite of which the petitioners were not joined as parties. Since the challenge is to the maintainability of the suit, the petitioners are entitled to invoke the jurisdiction under Article 226 of the Constitution of India. Further in support of this submission, Mr.Joshi, learned Senior Advocate, Page 9 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT would rely on the judgment of the Division Bench of this Court rendered in the case of K.K.R India Financial Services Ltd vs. Axis Bank Ltd., rendered in Special Civil Application No. 18466 of 2019 dated 05.03.2020, wherein, the Court has held that even when a person is not a party to the proceedings before the lower authority, he can prefer a petition before this Court. 4 Mr.P.K.Jani, learned Senior Advocate, appearing for the respondent No.1 would contend that the writ under Article 226 of the Constitution of India filed by the petitioners is not maintainable. The conditions required for seeking a writ of certiorari are not satisfied. The petitioner is not a party to the suit, that there are no infirmities in the order of the Board of Nominees so as to warrant a challenge.
4.1 Mr.Jani, learned Senior Advocate, would submit that the petitioners have not filed any application for being joined as a party, and therefore, it is open for them to seek appropriate orders before the Board of Nominees by filing such an application. Even otherwise, the order is an exparte interim order and the petition challenging the same is not maintainable. The petitioners have a remedy of filing an application for vacating of the order or to Page 10 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT challenge the order by filing revision application before the Gujarat Cooperative Tribunal under Section 150(9) of the Gujarat Co operative Societies Act, 1961.
4.2 The present dispute, according to Mr.Jani, learned Senior Advocate, would squarely lie within the scope and ambit of Section 96 of the Act and in support of this, Mr.Jani, learned Senior Advocate, would rely on the decision of this Court in the case of Ramchandran Bhagwandas Desai vs. Gulabdas Kalidas Desai and Others reported in 1996 (1) GLH 212.
4.3 Mr.Jani, learned Senior Advocate, would further submit that as per the facts made out, it is evident that the Mehsana District Co operative Milk Producers Union, is a specified society with three categories of membership. The subject matter of the plaint and the suit is in relation to one seat of individual member and other societies which elects delegates and these delegates in turn will be the voters. He would submit that the election of delegates is held by the concerned Cooperative Society as per its own procedure. What is essentially therefore involved is election of voters in appointing delegates and therefore it is not an election per se of the societies managing committee. The election is not held by the Deputy Collector, but is held by the Managing Director by virtue of Page 11 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT the powers under the byelaws, and therefore, it would not fall within the realm of a dispute relating to election, hence it is outside the purview of the District Collector as an election officer. 4.4 Mr.Jani, learned Senior Advocate, would further submit that even in Rule 15 of the Gujarat Societies Rules, voting rights of individual members in federal society are prescribed, and therefore, the only remedy that the petitioner has is to file an application and as the election of the delegates is not in the hands of the Collector and within the jurisdiction of the Cooperative Societies, it would not fall within the purview of Section 145U of the Act. He would submit that the contention of Shri Joshi, learned Senior Counsel, that the Cooperative Tribunal would have jurisdiction, reading of the provisions of Chapter 11(A) of the Act would not cover the election of delegates, and therefore, this contention of the petitioner must be disregarded.
4.5 Mr. P.K.Jani, learned Senior Advocate, would invite the attention of the Court to the affidavit in reply filed in the petition and submit that the Lavad Suit is filed mainly on the count that a number of individual members have died, and therefore, the list needs to be recast and a large number of primary cooperative societies who have nothing to do with agricultural activities are Page 12 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT given membership and therefore because of these omissions, the Lavad Suit has been filed. The suit filed, according to Mr.Jani, learned Senior Advocate, raises the issue of competency, eligibility of inclusion of 38 societies who are added as members and of not removing the names of at least 49 individual members who have died. If these corrective steps are not taken, the entire composition of the election of delegates from amongst the eligible persons would get changed. These issues would not fall within the realm of Section 145U but only in the forum constituted under Section 96 of the Act.
5 Mr.Jal Unwala, learned Senior Advocate, would submit that the exercise of verification as apprehended by the respondent No.1 that even the voters who are dead are on the list is under progress. 6 Having considered the submissions of the learned advocates appearing for the respective parties, before analyzing the submissions, it will be in the fitness of things to reproduce provisions of Section 145B, 145U and 145Y of Rule 3A of the Act, which read as under:
"145 B Definitions. In this Chapter, unless the context Page 13 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT otherwise requires,
(a) "Collector" means the Collector having jurisdiction over area in which the registered office of the society concerned is situated and includes the Additional Collector, and also any officer not below the rank of Deputy Collector appointed by the State Government to exercise the powers and perform the duties of the Collector under this Chapter;
(b) "election" means election of a member or members of the committee of a specified society;
(c) "specified society" means a society belonging to any of the categories specified in Section 74C. 145U. Disputes relating to elections to be submitted to the [Tribunal].(1) Notwithstanding anything contained in Section 96 or any other provisions of this Act, any dispute relating to an election shall be referred to the [Tribunal]. (2) Such reference may be made by an aggrievd party by presenting an election petition to the [Tribunal]:
Provided that no such petition shall be mae till after the final result of the election is declared and where any such petition is made it shall not be admitted by the [Tribunal] unless it is made within two months from the date of such declaration. Provided further that the [Tribunal] may admit any petition after the expiry of that period, if the petitioner satisfies the [Tribunal] that he had sufficient cause for not preferring the petition within the said period.
(3) In exercising the functions conferred on it by or under this Chapter, the [Tribunal] shall have the same powers as are vested in a Court in respect of
(a) proof of facts by affidavit;
(b) summoning and enforcing the attendance of any person and examining him on oath;
(c) compelling discovery or the production of documents, and
(d) issuing commissions for the examination of witnesses.
In the case of any such affidavit, an officer appointed by the [Tribunal] in this behalf may administer the oath to the deponent.
(4) [Subject to any regulations] made by the [Tribunal] in Page 14 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT
this behalf, any such petition shall be heard and disposed of by the [Tribunal] as expeditiously as possible. An order made by the [Tribunal] on such petition shall be final and conclusive and shall not be called in question in any Court. 145Y Power to make rules for purposes of this Chapter. Without prejudice to any other power to make rules contained elsewhere in this Act, the State Government may make rules consistent with this Act generally to provide for and to regulate all or any of the other matters relating to the various stages of the elections (including preparation of the list of voters)." 6.1 Reading the provisions of Section 145U would indicate that the heading would suggest that disputes relating to elections are submitted to the Tribunal. The section begins with the word "Notwithstanding" saying that "Notwithstanding anything contained in Section 96 or any other provisions of this Act, any dispute relating to an election shall be referred to the Tribunal". 6.2 Reading the averments in the plaint together with the prayer, what is under challenge before the Board of Nominees in the Lavad Suit are the notifications dated 14.03.2020 and 08.07.2020 for de limitation of constituencies. The power to delimit the constituencies is available to the Society under the provisions of Rule 3A of the Specified Societies Rules. The heading of the rule itself suggests that the delimitation of constituencies is for the Page 15 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT purposes of election. Apparently when therefore the provisions of Rule 3A are read in context of Section 145U, the language would indicate that there is a similarity of the intention inasmuch as, the dispute relating to an election under Section 145U of the Act would take within its fold the purpose of election i.e the delimitation of constituencies for the purposes of election. It is under Chapter 11A that Section 145Y which provides for power to make rules for the purposes of this Chapter finds its place. Section 145Y also would suggest that the power to make rules is given to the State Government to provide for and to regulate all or any of the matters relating to the various stages of election, including the preparation of the list of voters. Therefore, Shri Jani's submission that the purpose of filing the Lavad Suit is an indirect way of challenging the medium of election of voters who would be delegates for the Managing Committee is misconceived. Essentially what is under challenge in the Lavad Suit is not only a dispute relating to an election or for the purposes of election, but is a challenge to stage of election. Admittedly therefore, it would not fall within the purview of Section 96 of the CoOperative Societies Act. This conclusion is evident on reading the provisions of Section 145U, 145Y r/w. Rule 3A of the Specified Societies Rules. Page 16 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021
C/SCA/15478/2020 CAVJUDGMENT 6.2 Even from the conduct of respondent No.1 as demonstrated by Shri Joshi, learned Senior Advocate, it is evident that once a lavad suit was filed in the year 2015 raising similar issues and contentions and subject matter of that suit is at large before this Court in Special Civil Application No. 18357 of 2015 wherein the Court has stayed the proceedings of the lavad suit, and in addition thereto by comparing the pleadings of Lavad Suit No. 156 of 2020 which was withdrawn with that of the present suit, namely, Lavad Suit No. 183 of 2020, it is apparent that similar submissions and contentions are raised in the present suit as compared to lavad suit No. 156 of 2020 which was withdrawn by the Laxmipura Seva Sahakari Mandali Limited. This was particularly done to avoid suppression and bringing to the notice of the Court, which ought to have been done that the suit was not maintainable when the exercise of jurisdiction at the hands of the Board of Nominees in the earlier suit of 2015 was stayed by this Court. 7 The fact that the elections to the other societies proceeded forth except for the constituencies in which the lavad suit is a subject matter of challenge at the hands of the Deputy Collector itself also would suggest that the dispute relates to an election Page 17 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT dispute.
8 As far as the preliminary contention of Shri Joshi, learned Senior Advocate with regard to the petitioners' locus to file a suit is concerned, it is evident from the decision in the case of K.K.R India Financial Services (supra) that even if a person is not a party to the suit, the petition would lie. It would be relevant to reproduce paragraphs 33 to 49 of the said decision which read as under:
"33 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following two questions fall for our consideration:
[i] Whether the two applications under Article 227 of the Constitution are maintainable at the instance of the applicants being the affected third parties? [ii] Whether the impugned consent order passed by the Commercial Court on the strength of the consensus arrived at between the plaintiff and the defendants has led to a serious miscarriage of justice warranting interference at the end of this Court in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India.
34 We shall first deal with the preliminary objection raised on behalf of the respondent No.1 - Axis Bank (original plaintiff) as regards the maintainability of the present applications under Article 227 of the Constitution of India.
35 The Supreme Court in Virudhunagar (supra) sounded a note of caution by observing that the Courts should bear in mind a distinction between (i) cases where alternative remedy is available before the Civil Courts in terms of the provisions of the Code of Civil Procedure and (ii) cases where such Page 18 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT alternative remedy is available under the special enactments and/or statutory rules and the forum provided therein happen to be the quasi judicial authorities and Tribunals. The Supreme Court observed that in respect of the cases falling under the first category which may involve suits and other proceedings before the Civil Courts, the availability of an appellate remedy in terms of the provisions of the CPC should be construed as a near total bar when it comes to invoking the supervisory jurisdiction of the High Court under Article 227 of the Constitution. However, at the same time, in para 14 of its decision, the Supreme Court observed that the availability of a remedy under the Civil Procedure Code should deter the High Court not merely as a measure of self imposed restriction, but as a matter of discipline and prudence from exercising its power of superintendence under the Constitution. Should the decision of the Supreme Court in Virudhunagar (supra) be construed as an absolute bar for the High Court to entertain an application invoking supervisory jurisdiction under Article 227 of the Constitution even if the occasion or situation demands interference with a view to doing substantial justice between the parties and with a view to correcting the gross injustice. 36 So far as the decision of the Supreme Court in the case of Virudhunagar (supra) is concerned, we should consider the factual background in which the observations of the Supreme Court came to be made. 37 We take notice of the fact that in Virudhunagar (supra), the appellant had instituted a suit praying for certain relief. The appellant also moved an Interlocutory Application seeking an interim order of injunction restraining the respondents from convening the meetings of the general Body and the Executive Committee. The Trial Court, after hearing both the sides, passed an order allowing the interlocutory application filed by the plaintiff and thereby injuncted the defendants from proceeding with the meeting of the General Body and the Executive Committee as scheduled. As against the order of the Trial Court granting injunction, the fifth defendant in the suit (the third respondent in the appeal before the Supreme Court) who was claiming to be the Patron for life, filed a Regular Appeal under Order 43 Rule 1(r) of the Page 19 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT Code of Civil Procedure. However, the respondents Nos.1 and 2 before the Supreme Court who were the defendants Nos.1 and 6 respectively, instead of filing a Regular Appeal, filed a Civil Revision under Article 227 of the Constitution of India before the Madurai Bench of the Madras High Court. It appears that despite objections to the maintainability of the revision under Article 227 on the ground of availability of an appellate remedy, the High Court allowed the Civil Revision Petition and set aside the order of injunction granted by the Trial Court.
38 In the aforesaid background, the Supreme Court took the view that the High Court ought not to have entertained the revision application and ought not to have exercised its supervisory jurisdiction under Article 227 of the Constitution of India when a direct remedy of appeal under Section 104 (1)(i) read with Order 43, Rule 1 (r) of the Code of Civil Procedure was directly available to the respondents Nos.1 and 2 respectively. While saying so, the Supreme Court also thought fit to clarify that the availability of a remedy of appeal may not always be a bar for the exercise of supervisory jurisdiction of the High Court. In saying so, the Supreme Court relied upon a decision in the case of Venkatasubbiah Naidu Vs. S. Chellappan and others reported in (2000) 7 SCC 695. The Supreme Court observed that if there is statutory remedy under the enactments for the parties to the suit to file an appeal, the High Court ought not to entertain the revision under Article 227 of the Constitution of India.
39 In the case on hand, the applicants are not parties to the suit proceedings. They have come before this Court seeking to invoke the supervisory jurisdiction under Article 227 of the Constitution as aggrieved and affected third parties. Even if they want to prefer an appeal under Order 43 Rule 1 (r) of the CPC, they would have to prefer an application seeking leave to appeal and if ultimately leave is granted, the appeal would be heard. The grant of leave to appeal is discretionary and cannot be claimed as a matter of right. On the other hand, a party to the suit proceedings, if aggrieved, has a right to prefer a statutory appeal.Page 20 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021
C/SCA/15478/2020 CAVJUDGMENT 40 We have discussed the facts of this litigation at length. We
have given more than a fair idea about the respective claims of the parties to this litigation. The stance of the Axis Bank that it has the first charge over the sale proceeds of the defendants and that the applicants have nothing to do with the same, prima facie, appears to be unpalatable. The first and the foremost thing which was expected of the Axis Bank was to implead the applicants as the defendants in the suit. We are sure of one thing having regard to the nature of the dispute that the applicants are necessary parties and in the absence of the necessary parties, the suit instituted by the Axis bank cannot be adjudicated. There are many larger issues involved in the suit instituted by the Axis bank for the recovery of its dues from the defendants. Prima facie, as noted above, the Axis Bank is not ready and willing to accept the fact that the applicants are secured creditors and it was understood between all the secured creditors that they would all together reach to an appropriate understanding with regard to the disbursement of the amount. The Axis Bank wants the entire pound of flesh to itself claiming to be a vigilant banker.
41 Bearing the aforesaid in mind, we are of the view that we should not reject these applications only on the ground that the applicants have a remedy to seek leave to appeal before this Court and if, ultimately, leave is granted, the appeal would be registered and heard. Granting Leave to Appeal once again would be discretionary. Seeking Leave to Appeal is not a matter of right. We may not be understood as having laid down as an absolute proposition of law that seeking leave for the purpose of filing appeal is not an alternative remedy for an affected third party. What we are trying to convey is that leave by itself is not a remedy. In such circumstances, many other aspects of the matter should be looked into by the court of a particular matter before declining to entertain the application under Article 227 of the Constitution on the ground that the remedy is to file appeal after seeking leave of the court. 42 Mr. Joshi, the learned senior counsel is right in his submission to a considerable extent that having regard to the nature of the impugned consent order passed by the Commercial Court, it is difficult to say that the same is passed in exercise of Page 21 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT power under Order 39 Rule 1 or Rule 2 of the CPC so as to make such an order appealable under Section 104(1) (i)read with Order 43 Rule 1(r) of the Civil Procedure Code. Order 39 Rule 1 empowers the Civil Court to grant temporary injunction in cases in which any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit, or wrongfully sold in execution of a decree, or the defendant threatens, or intends, to remove or dispose of his property with a view to defrauding his creditors, or if there is any threat at the end of the defendant and the plaintiffs have dispossessed from any property in dispute in the suit. The impugned order is not on merits. It is a consent order. It is an order passed on the basis of the consensus arrived at between the parties to the suit.
● LEAVE TO APPEAL:
43 Indisputably, the applicants are not parties to the suit instituted by the Axis Bank. The question whether a person who is not a party to a suit, has a right to file appeal, came up for consideration before the Supreme Court in State of Punjab (now Haryana) v. Amar Singh (1974) 2 SCC 70 : AIR 1974 SC 994. In the said elaborate judgment Hon'ble Mr. Justice Krishna Iyer held that a person, who is not a party to a suit, has no right to file appeal as a matter of right. The relevant portion of the judgment is extracted as under: "An order like Annexure 'A' ordinarily binds the parties only and here the State which the appellant is seriously prejudiced by that order but is not a party to it. Therefore, it cannot bind the State proprio vigore. It was argued by Shri Dhingra that the State could have moved by way of appeal or review and got the order set aside if there was ground and that not having done so it was bound by the order. As a matter of fact, the State, which is not a party to the proceedings, does not have a right of appeal. The ordinary rule is that only a party to a suit adversely affected by the decree of any of his representativesininterest may file an appeal. Under such circumstances a person who is not a party may prefer an appeal with the leave of the appellate court "If he would be prejudicially affected by the judgment and if it would be binding on him as resjudicata under Explanation 6 to Section 11" (See Mulla Civil Procedure Code 18th Edn. vol. 1, p. Page 22 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021
C/SCA/15478/2020 CAVJUDGMENT
421). Section 82 of the Punjab Tenancy Act, 1887, which may perhaps be invoked by a party even under the Act, also speaks of applications by any party interested. Thus, no right of review or of appeal under section 18 can be availed of by the state as of right."
44 In 'Province of Bombay v. W. I. Automobile Association', AIR 1949 Bom 141, Chagla, C.J. And Bhagwati, J., held that a person not a party to a suit may prefer an appeal if he is affected by the order of the trial Court provided he obtained leave from the Court of appeal. The learned Chief Justice observed as follows : "The Civil Procedure Code does not in terms lay down as to who can be a party to an appeal. But it is clear and this fact arises from the very basis of appeals, that only a party against whom a decision is given has a right to prefer an appeal. Even in England the position is the same. But it is recognized that a person who is not a party to the suit may prefer an appeal if he is affected by the order of the trial Court, provided he obtains leave from the Court of appeal; therefore whereas in the case of a party to a suit he has a right of appeal, in the case of a person not a party to the suit who is affected by the order he has no right but the court of appeal may in its discretion allow him to prefer an appeal." Bhagwati, J., referred to the decision in 'AIR 1934 Mad 360' (L) and accepted it as authority for the position that no person who is not a party to a suit or proceeding has a right of appeal. But if he was aggrieved by a decision of the Court the remedy open to him was to approach the appellate Court and ask for leave to appeal which the appellate Court would grant in proper cases. The learned Judge cites a passage from the decision in 'In re Securities Insurance Co.', (1894) 2 Ch D 410 (P), where Lindley, L.J., said that the practice of the Courts of Chancery both before and after 1862 was well settled that while a person who was a party could appeal without any leave a person who without being a party was either bound by the order or was aggrieved by it or was prejudicially affected by it could not appeal without leave.
45 The aforesaid decision of the Bombay High Court has been referred to and relied upon by a Division Bench of the Madras High Court in the case Page 23 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT of SM K Ponnalagu Ammal vs. State of Madras, Represented by Secretary to Revenue Department, Madras reported in 1953 AIR (Mad) 485 wherein the Madras High Court observed as under:
"17 There is abundant authority recognising the existence of such a practice and innumerable instances of such a practice to some of which learned counsel referred us, namely, 'In re Markham Markham v. Markham', (1881) 16 Ch D 1 (Q); 'In re Padstow total Loss and Collision Assurance Association', (1882) 20 Ch. D 137 at p.142 (R); 'Attorney General v. Marquis of Ailesbury', (1885) 16 Q B D 408 at p. 412 and 'In re Ex Tsar of Bulgaria', (1921) 1 Ch D 107 at p.110 (T). The position is thus stated in the Annual Practice for 1951 at page 1244 : "Persons not parties on the record may, by leave obtained on an ' ex parte ' application to the Court of appeal, appeal from a judgment or order affecting their interests, as under the old practice."
Halsbury's Laws of England, Volume 26, page 115, gives the same rule in a different form :
"A person who is not a party and who has not been served with such notice (notice of the judgment or order) cannot appeal without leave, but a person who might properly have been a party may obtain leave to appeal."
Several instances are referred to in the footnote and the limits of the rule can be gathered from these instances. Leave will not be given where the applicant could not have been a party and application for leave must be made within the time limited for the appeal. The reason for the practice apparently is the principle that a person who could have been made a party and who might have appealed could not afterwards bring an action to declare that the judgment or order was not binding on him (Vide 'In re Hambrough's Estate; Hambrough v. Hambrough', (1909) 2 Ch 620 (U).) 18 In more or less similar terms the rule and its limits are stated in Seton on Judgments and Orders, 7th Page 24 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT Edition, Volume 1, at page 824: "Where the appellant is not a party to the record he can only appeal by leave to be obtained on motion ' ex parte ' from the Court of Appeal...... Leave to appeal will not be given to a person not a party unless his interest is such that he might have been made a party."
46 A Division Bench of the Kerala High Court in the case of S.Govinda Menon vs. K Madhavan Nair reported in 1964 AIR (Ker) 235, after referring to the aforesaid two decisions, has observed as under:
"The Code of Civil Procedure does not provide who can prefer an appeal. A party to a proceeding has a right to prefer an appeal when such appeal is allowed by law. As to whether a person who is not a party can file an appeal under such circumstances, Courts in India have been followingthe practice of the Chancery Court, which is summarised in Halsbury's Laws of England as follows :
"Any of the parties to an action or matter and any persons served with notice of the judgment or order may appeal (by leave, where leave is necessary). A person who is not a party and who has not been served with such notice, cannot appeal without leave, but a person who might properly have been a party may obtain leave to appeal." (Vol. 30, p. 461).
The dictum of Lumley, L.J., in In re, Securities Insurance Co., (1894) 2 Ch 410 which has been followed by the High Courts in India is extracted below : "Now, what was the practice of the Court of Chancery before 1862, and what has it been since ? I understand the practice to be perfectly well settled that a person who is a party can appeal (of course within the proper time) without any leave, and that a person who without being a party is either bound by the order or is aggrieved by it, or is prejudicially affected by it, cannot appeal without leave...... If a person alleging himself to be aggrieved by an order can make out even a prima facie case why he should have leave he will get it; but without leave he is not entitled to appeal." We may mention here some of the decisions in Page 25 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT which this principle has been followed : Province of Bombay v. W. I. Automobile Association, AIR 1949 Bom 141, Heersingh v. Veerka, AIR 1958 Raj 181 and Shivaraya v. Siddamma, AIR 1963 Mys 127. This Court also adopted this view in Executive Officer v. Raghavan Pillai, AIR 1961 Kerala 114. It has also been pointed out in these decisions that the question whether such, leave should be granted or not is a matter which lies in the discretion of the Court of appeal and that no hard and fast rule can be laid down in the matter, the decision in each case depending upon its own facts and circumstances. We may observe that one test in granting leave is whether he could properly have been made a party to the original proceeding. The following passage in Seton on Judgments may with advantage be extracted:
"Leave will not be given unless his interest is such that he might have been made a party''.
Vol. 1, p. 825.
This principle may be gathered from In re B., an Infant, (1958) 1 QB 12. The Advocate General while contending that the appellant must be held to be a party to the original petition was prepared to grant that in the circumstances of the case the appellant could have been made eo nomine a party; we also entertain no doubt that lie might have been so made a party. It may therefore be taken as settled law that a person who is not a party to the decree or order may with leave prefer an appeal from such decree or order."
47 The only idea with which we have referred to and discussed the aforesaid decisions is to indicate that a party to a suit proceedings has a right to prefer an appeal against any decree or order (if provided) under the provisions of the CPC, but a person who is not a party to the suit proceedings and finds himself in a precarious situation on account of some prejudicial order passed by the Civil Court in the suit proceeding has the option of filing an appeal, but only after seeking leave to appeal and leave to appeal cannot be as a matter of right, but it would be the discretion of the appeal Court. This aspect Page 26 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021 C/SCA/15478/2020 CAVJUDGMENT has a considerable bearing when it comes to examining the question whether an aggrieved third party has an alternative efficacious remedy available under the Civil Procedure Code or not. There exists special and exceptional circumstances in the case on hand to justify the applicants bypassing the alternative remedy which was available to them by way of an appeal after obtaining leave to appeal. Whether the leave would have been granted if prayed for or not is altogether a different issue. ● ARTICLE 227 OF THE CONSTITUTION:
48 We may begin with noticing that the power of superintending control conferred by Article 227 of the Constitution is similar to the control exercised by the Court of Kings Bench over the inferior Courts of England under the Common Law. The history of Article 227 and its scope were considered by the Apex Court in Waryam Singh v. Amarnath, (1954) SCR 565, and it was indicated that the material part of Article 227 substantially reproduces the provisions of Section 107 of Government of India Act 1915, except that the power of superintendence has been extended by the Article also to Tribunals.
49 The history of Article 227 suggests that the framers of our Constitution believed that they were restoring to the High Court the power which had been taken away by Section 224 of Government of India Act, 1935. In the original Constitution of India Article 227 was devised to empower the High Court to exercise its supervisory jurisdiction not only over the inferior courts within its territory but also over the statutory or quasi judicial Tribunals to ensure that all these inferior bodies exercise the powers conferred on them 'within the bounds of their authority' and 'in a legal manner'. But the supervisory jurisdiction of the High Court over all the administrative Tribunals was abolished by the 42nd Amendment Act, 1976 on the ground that it caused delay and obstruction in the implementation of the Government Policies. By the 44th Amendment Act, 1978, all the Tribunals other than Military Tribunals were again brought under the supervision of the High Court. "
Page 27 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021
C/SCA/15478/2020 CAVJUDGMENT 9 Accordingly, Special Civil Application No. 15478 of 2020 is
allowed. The proceedings of the Lavad Suit No. 183 of 2020 preferred by the respondent No.1 before the Board of Nominees are held as not maintainable and the proceedings therefore are quashed and set aside. Rule made absolute accordingly with no orders as to costs. Civil Application is disposed of accordingly.
(BIRENVAISHNAV,J) BIMAL FURTHER ORDER Mr.P.K.Jani, learned Senior Counsel for the respondent No.1, requests that the operation of the order be stayed for a period of two weeks. Accordingly, the operation of the order is stayed up to 24.02.2021.
It is clarified that the Board of Nominees, by virtue of the operation of the order of stay of the judgment, shall also not proceed with the hearing of the suit.
(BIRENVAISHNAV,J) BIMAL Page 28 of 28 Downloaded on : Thu Feb 11 04:34:54 IST 2021