Sh. Ram Sarup Lugani & Anr. v. Nirmal Lugani & Ors.

13. So far as the requirement of the suit under Section 92 being instituted by two or more persons is concerned, the prohibition is to be found in the statute itself. The object and reason for stipulating that a suit against the public trust would lie at the instance of the Advocate General or two persons or more who must seek leave of the court is to be found in public policy that a trust should not be unnecessarily dragged into litigation at the instance of any disgruntled trustee or person. The proposed suit must be at the instance of at least two persons and therefore application to seek leave has to be filed by two such persons. The two persons who are desirous of instituting the suit must therefore exist on the date when the application under Section 92 seeking leave to sue is to be heard.

14. This statutory mandate finds consideration in several authoritative and binding judicial precedents. It has been conclusively and repeatedly held that the suit under Section 92 must be brought by all the persons to whom the sanction of the Advocate General has been given and a suit instituted by some of them only is not maintainable. In these circumstances, in Narain Lal & Ors. v. Sunder Lal (Dead) & Ors., 1967 3 SCR 916, the court had occasion to consider a case where four persons obtained the consent of the Advocate General of Rajasthan to institute a suit against the respondents under Section 92 of the Code of Civil Procedure, 1908. Shortly thereafter, one of the said four persons died and the suit was instituted by three survivors. A preliminary issue was taken by the defendants as to whether the suit filed by three persons, while permission to sue has been given to four, is maintainable? It was held by the Supreme Court that an authority to sue given to several persons is joint authority and must be exercised by all jointly. A suit by some of them is not competent. When sanction in the present case was given to four persons arid one of them died before the institution of the suit, a suit by the remaining three was incompetent. Therefore sanction must be obtained afresh by the survivors for the institution of the suit.

16. Therefore, in the light of the principles laid down in these judgments, it is apparent that defect in the application for leave to sue in the nature of the number of persons or parties cannot be permitted to be cured or changed in the proposed suit by way of an application seeking impleadment of the applicant as a proposed plaintiff or by adding defendants. Such a defect goes to the root of the matter.

20. Therefore, so far an an application seeking leave to institute the suit under Section 92 is concerned, the applicant have to satisfy the court at the time of consideration that they have substantial interest in the management of the trust and this satisfaction has to be recorded by the court at the time of adjudicating upon the application seeking the leave to institute the suit. In the event that one of the two applicant has expired before the application is considered, it is evident that the court has occasion only to consider the interest of the one surviving applicant before it in the affairs of the trust. Therefore, the basic condition precedent in order to institute the suit against the trust is not satisfied. Such a single person cannot be given leave to sue and the same is contrary to the specific mandate of the statute. The effect in the permission, if granted to the sole applicant cannot be cured by way of an application under Order 1 Rule 10 of the Code of Civil Procedure, 1908 which comes into play, only after institution of the suit. This is also for the reason that there has been no consideration of the interest of the proposed plaintiff who seeks to be added as a plaintiff in the suit which stands registered.”

10. The learned Judge in Rahul Jain sought to buttress the conclusions which ultimately came to be recorded drawing an analogy from Section 69(2) of the Indian Partnership Act, 1932[5]. This would The 1932 Act be evident from the following observations as appearing in paragraphs 22 and 23 of the report and which are extracted hereinbelow: - “22. In (1994) 1 ArbLR 385 Kelson Construction v. Versha Spinning Mills Ltd. & Anr., the court held thus:— “6. In Loonkaran Sethia etc. v. Mr. Ivan E. John and others etc., AIR 1977 SC 336 the Hon'ble Supreme Court has held that the provisions of Section 69 are mandatory in character and its effect is to tender suit by a plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void. What is material is that on the date of institution of the suit the partnership should have been registered failing that the suit would fail. In Shankar Housing Corporation v. Smt. Mohan Devi and Others, AIR 1978 Delhi 255, a Division Bench of this Court had also taken the following view: “The point of time contemplated in Section 69(2) is at the time of the institution of the suit. That is to today, the firm must be a registered firm by the date of the institution of the suit and the person suing (i.e., all the partners) must have been shown in the Register of Firms as partners of the firm by the date of the institution of the suit. Sub-section (1) and (2) of Section 69 are substantives provisions intended to discourage the non-registration of firms. The provision in Section 69(2) is mandatory and makes the registration of a firm a condition p;precedent to the institution of a suit of the nature mentioned in it.” Similarly another single Bench of this Court in the case of Kavita Trehan and others v. Balsara Hygienic Products Ltd., AIR 1992 Delhi 92, had held that a suit filed by a partner of a firm which is not registered on the date of the filing of the suit would be hit by the provisions of Section 69(2) of the Indian Partnership Act and as such it is not maintainable and is liable to be dismissed. In the case of M/s. Shreeram Finance Corporation v. Yasin Khan and others, AIR 1989 SC 1769, the Hon'ble Supreme Court had gone to the extent of laying down that even if the suit is instituted by a registered firm, but change in the constitution of the firm had taken place whereby one new partner had been added and two had retired and a minor being admitted to the benefits of the firm, the suit was filed by the firm after such change in the constitution but the change was not notified to the Registrar of Firms, the suit was not maintainable as the current partners were not shown in the Register of Firms.”

23. In the pronouncement of this court in 1994 1 ArbLR 385 Kelson Construction v. Versha Spinning Mills Ltd. & Anr., the court held that if a suit on the date of its institution is not maintainable, there was nothing in the language of the section which by any implication has the effect of validating the same plaint with effect from the date of the registration of the partnership. It was further laid down that while it is the duty of the court to administer justice according to the principles of equity and good conscience, the courts are not supposed to circumvent or overlook the mandatory provisions of statute. When a statute does not permit any suit to be brought, contrary to its specific provisions, the courts cannot by the device of interpretation overcome such legal bar.”

11. The Court ultimately came to record and arrive at the following conclusions: -

12. A consideration of the principles which came to be enunciated and recognized in Rahul Jain would establish that the Court fundamentally held that on the date when an application seeking leave to sue is taken up for consideration, the record must reflect that it is supported by not less than two individuals in light of the mandatory provisions of Section 92. This is evident from the plain language employed in that provision which uses the expression “two or more persons having an interest…”.

13. Undoubtedly, a Section 92 suit cannot be recognized as having come to be instituted unless the application for grant of leave of the Court is granted. Till that time, the suit would remain a proposed action with respect to the affairs of a public charitable trust. Evidently, in Rahul Jain on the date when leave was granted by the Court, there was only one individual who remained on the record of the application seeking leave. It is in that backdrop that the Court came to conclude that the order granting leave was unsustainable.

14. In the considered opinion of this Court, Rahul Jain also correctly holds that a fundamental defect from which an application for leave may suffer cannot be rectified after leave has been granted. The learned Judge correctly came to record that the fact that the application seeking leave was being pursued by only one individual would not fall in the category of a procedural defect or irregularity which could be cured. Insofar as the provisions of Section 69(2) of the 1932 Act are concerned, it may be noted that a suit which is contemplated under that provision, does not follow the two-tier statutory procedure which is constructed and put in place by Section

92. In light of the express language of Section 69(2) of the 1932 Act, a registered partnership must be in existence on the date of institution of the suit itself. As distinguished from the position which would obtain in the context of Section 69(2) suits, a suit which is sought to be brought in terms of Section 92 of the Code cannot be said to have been instituted in accordance with law unless leave of the Court has been previously obtained.

15. The position which thus emerges from the aforesaid discussion would be that a suit under Section 92 of the Code would be recognized as having been instituted only after the application seeking leave of the Court has been obtained and granted. Till such time as that application is allowed and the Court grants leave, the suit remains a proposed action in respect of a trust. It is the grant of leave by the Court on an application preferred for that purpose by two or more persons that leads to the registration of the suit. It is in that backdrop that the decision in Rahul Jain is liable to be appreciated and understood. Bearing in mind the express provisions of Section 92 of the Code, Rahul Jain correctly holds that at least two persons must be in existence on the date when the application for leave is either taken up for consideration or on the date when leave is granted. The decision clearly holds that it is either of the two aforenoted dates which would be determinate. Rahul Jain also rightly found that a defect which relates to the minimum number of applicants who must be present before the Court on the pivotal date cannot be cured by way of impleadment after leave has been granted.

16. To the extent of what stands recorded hereinabove, the instant application clearly does not raise an insurmountable obstacle since the applicants are neither seeking impleadment after leave has been granted nor is it one which has been instituted after the Court may have granted permission to a particular set of proposed plaintiffs. However, while learned counsel for the respondent may be correct in his submission that the provisions of Order I Rule 10 or for that matter Order XXII Rule 3 of the Code would not be applicable at this stage since, strictly speaking, a suit is yet to be registered and instituted, the Court finds no justifiable ground to refuse the prayers made in the instant application for the following reasons.

17. It must and at the outset be reemphasized that the proposed applicants crave liberty of the Court to join the pending application for grant of leave. This is therefore not a case where parties are proposing to join the lis after leave may have been granted or seeking impleadment in proceedings post the grant of permission by the Court in terms of Section 92. Further, even if the Court were to grant the prayers as made in the instant application, it would not amount to the Court according leave to sue. That would be an issue which would survive for consideration once the Court takes up I.A No. 4760/2019.

18. The Court while arriving at the aforesaid conclusion also bears in mind that the Code, as has been repeatedly held, is not liable to be viewed as exhaustively providing for the infinite contingencies which may arise in the course of civil litigation. It is perhaps to take care of the unpredictable vagaries of litigation that the Legislature in its inherent wisdom preserved and recognised the inherent powers of the Court by insertion of Section 151. Section 151 and its scope was lucidly explained by a Full Bench of the Allahabad High Court in Raj Narain Saxena vs. Bhim Sen and Ors.[6] in the following terms: -

(d) of Rule 5. There is no mention in Rule 5 that an application for permission can be rejected on the ground that the court has no jurisdiction because every plaint, appeal or application is liable to be rejected on the ground of want of jurisdiction as already explained. No statutory provision is required at all for an authority's refusing to exercise jurisdiction not vested in it; a statutory provision would be required only if it had not to reject a plaint, appeal, application etc. on the ground of want of jurisdiction but to return it. Rule 5 does not contain an authority for rejecting an application for permission on the ground that it is barred by time because Sec. 3 of the Limitation Act contains the required provision. Moreover, there is Sec. 151 in the Code preserving the inherent power of 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.” This expressly authorises a court to make such orders as it considers necessary for the ends of justice or prevention of abuse of the process of the court. A court can make any order even though not provided in the Code, the only condition being that it is necessary for the ends of justice or prevention of abuse of the process of the court. The provisions of the Code are generally meant to serve the ends of justice but in their very nature they cannot reach all possible circumstances that can exist and there are bound to be no provisions dealing with some of the circumstances. Also some of the provisions may result in abuse of the process of the court. Consequently every court has the inherent power, recognised by Sec. 151, to make any orders that it considers necessary for the ends of justice or preventing abuse of the process of the court. The Code cannot and does not even purport to, be exhaustive and hence the residuary power has been conferred upon the court through recognition of its inherent power. With this residuary power the Code is now exhaustive; for circumstances which are likely to exist frequently or can be contemplated there are express provisions; for others there is the inherent power of the court. The existence of the inherent power pre-supposes that any order that is not prohibited is within the competence of the court. Any order not prohibited by the Code can be made by a court; if it is expressly provided for it is made by virtue of that authority and if it is not expressly provided for it is made because of its being necessary for the ends of justice or prevention of abuse of the process of the court. I respectfully adopt the statement of Mahmood, J. in Narsingh Das v. Mangal Dubey [I.L.R. 5 Alld. 163.] that “Courts are not to act upon the principle that every procedure is to be taken as prohibited unless it is expressly provided for by the Code, but on the converse principle that every procedure is to be understood as permissible till it is shown to be prohibited by the law” subject to only this condition that the procedure that is not provided for expressly by the Code must be justified on the ground of the ends of justice or of prevention of abuse of the process of the court. In Gupteshwar Missir v. Chaturanand Missir [A.I.R. 1950 Patna 309.] Sinha, J., with whom Rai, J. concurred, said at page 310 that “it is true the Code is not exhaustive, but certainly it is exhaustive in matters specifically provided for.” What is not exhaustive is the Code minus Sec. 151; since Sec. 151 contains the residuary power it necessarily follows that the power conferred by the remaining provisions is not exhaustive. It is also not correct to say that the Code is exhaustive in matters specifically provided for because even in respect of such matters the court is left free to make a different order if it is necessary for the ends of justice or prevention of abuse of the process of the court. Consequently, rule 5, cannot be said to be exhaustive of the circumstances in which an application for permission can be rejected; it can be rejected in other circumstances to secure the ends of justice or prevent abuse of the process of the court and rejecting an application on the ground that the court has no jurisdiction over it is rejecting it for the ends of justice and preventing abuse of the process of the court. If the court has no jurisdiction it would be abuse of its process if it is made to proceed on it. The only just order that can be passed on such an application is that of rejection. It is unusual for a legislature, when vesting a certain power in a particular authority, to enact an express provision that an authority other than it must reject an application for its exercise (on the ground of want of jurisdiction); obviously this is because the authority to which an application is made has inherent jurisdiction to refuse to exercise a power not vested in it. I respectfully agree with what was said in Nanda Kishore Singh v. Ram Golam Sahu [I.L.R. 40 Cal. 955 at p. 960.]. In Shamu Patter v. Abdul Kadir Ravuthan [L.R. 39 Indian Appeals 218 at page 223.] it was pointed out by his Lordship Amer Ali that “every court trying civil cases has inherent jurisdiction to take cognizance of questions which cut at the root of the subject matter of controversy between the parties” even in the absence of any provision in the Code.”

19. The Full Bench of that Court in Raj Narain Saxena drew sustenance from the principle expounded by the learned Justice Mahmood who had held that courts must not proceed on the premise that every procedure is to be understood as prohibited unless expressly or particularly granted but in fact proceed on the converse principle of every procedure being sanctioned in law unless shown and established to the contrary.

20. The Court is thus of the considered opinion that the grant of the prayers as made in the instant application would not fall foul of any provision of the Code. No provision of the Code, either expressly or impliedly, prohibits persons from joining an application for leave to sue. All that Section 92 mandates is that the application seeking leave must be made by at least two persons. For the purposes of determining whether the aforesaid prescription stands satisfied, the Court must ensure that the statutorily prescribed minimum number of applicants exist on the record on the date when the said application is taken up for consideration or permission to sue is granted.

21. Neither Rahul Jain nor any other decision rendered either by this Court or any other High Court was shown to hold that a Court lacks the power to permit persons joining an application which seeks leave to institute a suit against a trust. Rahul Jain is merely an authority for the proposition that on the date when the application seeking leave to sue is taken up for consideration or permission granted, there must be in existence before the Court two or more persons who pray for and seek that relief. Rahul Jain also constitutes an authority for the principle that a fundamental flaw which may be found to exist on the record on the date when leave is granted is not curable by subsequent impleadment of parties. The Court thus comes to the firm conclusion that the injuncts as propounded in Rahul Jain do not stand attracted in the facts and circumstances of the present case.

22. The Court further finds that the exercise of power under Section 151 of the Code clearly appears to be permissible in law in absence of an express provision in the Code prohibiting the adoption of the measure propounded by the Court in exercise of it inherent powers. More fundamentally, the facts of the present case clearly justify the invocation of inherent powers in order to ensure that the ends of justice are subserved and the asserted silence of the Code does not result in prejudice being caused. The situation which arises clearly warrants the invocation of the inherent powers of the Court in order to ensure that the interest of the lis is not rendered a casualty on the altar of a technical and pedantic interpretation of a procedural statute.

23. Accordingly, the instant application is allowed. The Court consequently permits Major Atul Dev and Dr. Neerja Lugani Sethi to join as applicants in I.A No. 4760/2019. All contentions of respective parties insofar as they pertain to the merits of the aforesaid application are kept open. CS(OS) 182/2019 & I.A. 22105/2022 (Interim Direction)

1. List again on 10.02.2023.

YASHWANT VARMA, J. JANUARY 04, 2023