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Inherent Powers Of The Court: Manohar Lal Chopra v/s Seth Hiralal

It takes a long time for the majority of cases to be disposed of by the Indian Civil Court, most of the time, it is not because of the speed of disposal by the Courts themselves but the indecisiveness and unprofessionalism of the many parties involved. Such is so in the present case as well, where one dispute had to go through eight rounds of four Courts before reaching the Supreme Court and being finally disposed of. Present case gives valuable insight into what is inherent jurisdiction of the Court and when it is to be applied.

Inherent Powers of the Court: Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal - Supreme Court of India.
Citations: AIR 1962 SC 527, [1962] SCR Supl. (1) 450. - Judges: J.C. Shah, K.C. Das Gupta, K.N. Wanchoo, and Raghubar Dayal. - Date of Decision: 16.11.1961

Facts:
Special Leave Petition filed against the order of Madhya Bharat High Court by the Appellant.

The Appellant and the Respondent had entered into a partnership in the business of coal mines at Kajora gram, Burdwan District, and manufacture of cement, etc., by the name of Diamond Industries. The head office of the partnership was in Indore.

By a deed dated August 22, 1945, the partnership was dissolved.

Under the terms of this deed, the Appellant made himself liable to render a full, correct, and true account of all the money advanced by the Respondent and also to render accounts of the business.

The Appellant was held entitled to 1/4th of Rs. 4,00,000/- solely contributed by the Respondent toward the capital of the partnership, but he was not entitled to get this amount until and unless he had rendered the accounts and they had been audited.

Also, the second proviso at the end of the covenants in the deed of dissolution read, “disputes arising…shall be decided amicably or in court at Indore and at nowhere else.”

A notice was sent on September 29, 1945, to Respondent asking for clarifications of accounts of money since accounts submitted had not been properly kept and that many entries appeared to false, with evident mala fide intentions and thus causing wrongful loss to the Respondent and wrongful gain to the Appellant. Appellant expected payment within three months of receipt of the letter.

Reply sent by Respondent on December 5, 1945, to Appellant asking to meet him in Asansol or Kajoraram within ten days of receipt of the letter.

More than two and a half months passed, no action had taken place.

On August 18, 1948, the Appellant instituted a suit in the Court of the Subordinate Judge at Asansol against the Respondent for the recovery of Rs.1,00,000/- on account of his share in their earlier partnership firm, as well as, Rs. 18,000/- as interest for withholding of his share.

On October 27, 1948, the Respondent filed a petition in the Asansol Court praying for the stay of the suit in view of the arbitration agreement in the original deed of partnership. This application was rejected on August 20, 1949.

January 3, 1949, the Respondent filed a suit in the Court of the District Judge, Indore, against the Appellant, and prayed for a decree for Rs. 1,90,519 against the Appellant and further interest on basis of settled accounts and in the alternative for a direction to the Appellant to render true and full accounts of the partnership.

On April 28, 1950, the Appellant applied to the Indore Court for staying that suit under S. 10 and S. 151 Code of Civil Procedure. Stay rejected relied mainly on the second proviso.
In December 1951, the Respondent applied in the Court at Asansol for the stay of that suit in the exercise of its inherent powers. The application was rejected on August 9, 1952. Learned Sub-Judge, therefore, held that there could be no scope for acting under S. 151, as S.10 of that Code had no application to the suit, it having been instituted earlier than the suit at Indore.

On May 7, 1953, the Calcutta High Court confirmed the order and said that an order of temporary injunction cannot be issued if circumstances do not fall within the provisions of O. XXXIX of the Code. The Hon’ble Court further directed the matter regarding the preliminary jurisdiction to be heard by the Learned Subordinate Judge expeditiously.

Asansol Court had an earlier hearing date on the issue of jurisdiction.

September 14, 1953, Respondent under S. 151 applied, to the Indore Court, for restraining the Appellant from continuing the proceedings in the suit filed by him in the Court at Asansol.

To be noted, the Respondent did not state in his application that suit in Asansol had been finally dismissed by the Calcutta High Court. Neither did the Appellant in his objection specify the order rejecting the stay application of the Respondent.

The learned Additional District Judge, Indore, issued an interim injunction under Order XXXIX, Code of Civil Procedure, to the Appellant restraining him from proceeding with the Asansol suit.

Appellant appealed to the High Court of Judicature at Madhya Bharat, contending that the Additional District Judge erred in holding that he was competent to issue such an interim injunction to the Appellant under Order XXXIX

The High Court dismissed the appeal issuing an order dated May 10, 1955, propounding that O. XXXIX Rule 1 did not apply but also held that the order of injunction could be issued under inherent powers.

Relevant Laws and Application:
Clause (c) of S. 94, which talks about Temporary injunction, is not necessarily applied only when express conditions according to O. XXXIX are there but can also be invoked when the Court uses inherent powers to deliver justice to cases where condition do not fall within O. XXXIX.

Under S. 10, the suit in Indore which had been instituted later should have stayed. Since all its criteria were met, despite Respondent contending that matters in dispute were different.
Inherent powers allow the Court to make such orders as may be necessary for the ends of justice, or to prevent abuse of the process of the Court and need to rely only on certain cases.[1]

O. XXXIX, Code of Civil Procedure talks about the temporary injunction and inter-locutory orders, here, to pass an order to the Appellant restraining him from proceeding with his Asansol suit pending the decision of the Indore suits.

Issues:
Whether inherent powers could be exercised when there were specific provisions in the Code of Civil Procedure for the issue of interim injunctions, them being, S. 94 and O. XXXIX.
Whether the court, in the exercise of its inherent jurisdiction, exercised its discretion properly, keeping in mind the facts of the case.

Arguments:
The Appellant contended that clause (c) of s. 94, Code of Civil Procedure only allows temporary injunction to be invoked if the cases fulfil criteria “if it is so prescribed” under the rules, here, under Rules 1 and 2 of O. XXXIX. Under S. 2, ‘prescribed’ means 'prescribed by rules.'

The Respondents alleged that the Appellant’s suit was vexatious and was filed to put him to trouble, heavy expenses, and wastage of time in going to Asansol.

Judgment:
Regarding the first issue, the Madhya Bharat High Court had a view that the court can issue an interim injunction under circumstances that are not covered by O. XXXIX of the Code if the Court is of opinion that the interests of justice require the issue of such interim injunction.[2] Supreme Court believed this view is correct and that the Courts have inherent jurisdiction to issue temporary injunctions in circumstances that are not covered by the provisions of O.XXXIX, Code of Civil Procedure.

S. 94 does not expressly prohibit the issue of a temporary injunction in circumstances that are not covered by O. XXXIX under the Code. It is a well-settled principle that the provisions of the Code are not exhaustive because the Legislature is incapable of foreseeing future events and thereby providing for procedure of them. The term, ‘if it is so prescribed’ under S. 94 is also inclusive of inherent powers and not only the circumstances given under O. XXXIX.

Furthermore, the provisions of s. 151 of the Code makes it clear that the inherent powers are not controlled by the provisions of the Code.

In the case, Padam Sen v. The State of Uttar Pradesh,1961 AIR 218, Hon’ble Supreme Court observed:
The inherent powers are in addition to the powers expressly provided by the Coe on the Court. They are complementary to those powers and therefore it must be held that the Court is free to exercise them for the purpose mentioned in S. 151 of the Code, but only when the exercise of those powers is not in conflict with what has been already provided in the Code or against the intentions of the Legislature.

On the second issue, the Supreme Court was of opinion that the Courts below were in error in issuing a temporary injunction to the Appellant and thereby restraining him from proceeding with the suit in the Asansol Court. Inherent powers are to be exercised in exceptional circumstances, where the Code lays down no procedure.

This temporary injunction was passed under the pretences of a vexatious suit. Conditions for vexatious suits were explained in Hyman v. Helm, 24 Ch. D. 53 I. There Court in that cases said:
Where a party claims this interference of the Court to stop another action between the same parties, it lies upon him to show to the Court that the multiplicity of actions is vexatious and that the whole burden of proof lies upon him. He does not satisfy that burden of proof by merely showing that there is a multiplicity of actions, he must go further.
Hyman v. Helm, 24 Ch. D. 53 I.

If two actions are brought by the same plaintiff against the same defendant in England for the same cause of action prima facie that is vexatious. And the fact that one was filed away from England and one was filed in England does not suffice. The mere fact that the Court is situated far away from the place of residence of the Respondent is not sufficient to establish that the suit has been filed to put the Respondent to trouble and harassment and unnecessary expense. Here applying the same in this case, the Respondent must go beyond their contention on why it was a vexatious suit and the filing in Asansol is not a reasonable ground and the reliance on this point by Indore Court was erroneous.

The issue of jurisdiction of the suit before the Asansol Court would be decided by the same Court, the Indore Court cannot decide that question. It is the jurisdictional matter solely of the Asansol Court. Supreme Court said that the Asansol Court would not act in a way that may put the Appellant in a difficult position and Indore Court will show a spirit of cooperation.

No need to go into S.151 since special circumstances non-existent. Further, S. 22 of the Code talks about the transfer of suits where a suit which could be instituted in any one of two or more Courts is instituted in one of such Court and is transferred on application by the Respondent in any such Court and the acceptance by the Court. This provision was not utilized in this case. It was open to the Respondent to apply for the transfer of the suit at Asansol to the Indore Court and if the suit had been transferred to the Indore Court and the two courts could be tried together.

In the dissent, Shah J., perused the judgment delivered by Mr. Justice Dayal thereby agreeing with the conclusion that the appeal must succeed but dissenting on the fact that civil courts generally have inherent jurisdiction in cases not covered by Rules. 1 and 2 of O.XXXIX of the Code. He further clarified that the Code of Civil Procedure is undoubtedly not exhaustive but According to him, those powers are only enjoyed by the Chartered High Courts in the exercise of their ordinary original Civil jurisdiction.

Held:
The court allowed the appeal with costs and set aside the order restraining the Appellant from proceeding with the suit at Asansol.

Conclusion:
Regarding the first issue, the majority said that S. 151 can be applied even when there are specific conditions, whereas the dissent concluded that the said section cannot be applied when there exist express provisions already concerning that subject matter, that this power of inherent power can only be applied by certain Courts and not all Civil Courts.

Regarding the second issue, the majority restricted the application of inherent powers of Court under S. 151, saying it should be applied only in certain exceptional circumstances/the plaintiff of the suit could only be restrained from proceeding with his suit if the suit was vexatious and useless. It was not so in the present case. As directed by the Calcutta High Court, the issue should have been decided by the Asansol Court. The Indore Court could not decide on this issue.

The Indore Court erred in giving its decision but only because the fact concerning Calcutta High Court’s direction was not laid on the table, neither by the Respondent nor did the Appellant take the matter up.

It seems as though the Respondent was fearful of an adverse judgment made against him solely on the basis that the forum of dispute happened to be different from what was initially planned upon according to the decree. So he did everything to bring the disputed matter where it belonged, that was the Indore Court. But the steps taken were unnecessary because if the Asansol Court had no jurisdiction to try the suit given the terms of the deed of dissolution, the suit would not have continued in Asansol. He could have also availed for S. 22 for transfer but that was not done either.

There is no such expression in S. 94 which bars the issuance of a temporary injunction if the given circumstances are not covered by O. XXXIX or by any rules made under the Code, i.e. Order 39 is not exhaustive. Yet, the Respondent applied for the injunction in September 1953, knowing full well of the order of the Calcutta High Court confirming the order refusing a stay of the Asansol suit and directing that Court proceeds with the decision of the issue of jurisdiction at an early date, this amounted to an abuse of process of the Court.

Evidently, whatever we study is in consonance with the Legislative intent, especially when it’s regarding procedural matters. Therefore we can say that the existence of S. 151 in the Code and that power being inherent is something that cannot be discriminated amongst Courts of different natures. A power like that is necessary for full and final justice when the circumstances so provide. Had the power not been made available to other Courts as per Judge Shah, the matter would have to be dismissed causing injustice or go to Higher Courts leading to addition in backlogs.

End-Notes:
  1. Section 151 of the Civil Procedure Code,1908.
  2. See Dhaneshwar Nath v. Ghanshyam Dhar, AIR 1940 All 185, Firm Bichchha Ram v. Firm Baldeo Sahai, AIR 1940 All 241 and Chinese Tannery owners' Association v. Makhan Lal, AIR 1952 Cal 560.

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