Tarun Keshrichand Shah & Priyalata Keshrichand Shah v. M/s Kishore Engineering Co. & Nak Engineering Company Pvt. Ltd.

(d) Surya Dev Rai Vs. Ram Chander Rai and Ors. (2003) 6

(e) Bhutnath Chatterjee Vs. State of West Bengal and Ors. 1969 (3) Supreme Court Cases 675. (f) Prem Nath Monga Foods and Beverages Pvt. Ltd. Vs. Jainco Industries and Ors. in IA No. 1658 of 1996 and Suit No. 2709 of 1995, decided on 20.05.1996.

8. Before dealing with the controversy it will be material to consider the relevant facts as depicted from the record made available before this Court. The relevant facts are as follows: F A C T S

9. The suit is filed by the two plaintiffs claiming to be legal heirs of one Kesharichand Shah. He was the sole proprietor of M/s Union Commercial Corporation. He expired on 22/01/1980. Out of 1700 square feet, 525 square feet of the premises was let out to M/s. Modern Products Private Limited. Shri Tarun Shah, plaintiff No. 1 is director of said M/s. Modern Products Private Limited (hereinafter referred to as said M/s Modern). The said Modern has licensed that premises to the defendant- Company (description given in para no. 1 of the plaint).

10. The defendant was paying a rent to said M/s Modern and paying service charges @ of Rs. 2100/- per month to deceased Kesharichand Shah. It was for the purpose of use of various items and furniture and fixtures and two telephones. The said arrangement continued even after death of Kesharichand by the present plaintiffs. The subject matter of the suit is arrears of said service charges. City Civil suit is filed for recovery of Rs. 75,600/- towards arrears of service charges for the period from November 2004 to October 2007.

11. The Defendant M/s. Kishore Engineering Company though served have not appeared. Initially the Suit was filed on the Original Side of this Court and it was transferred to City Civil Court due to enhancement of the pecuniary jurisdiction As the defendant has neither appeared before this Court nor before City Civil Court, the said suit proceeded Ex-parte. For better understanding parties are referred to in following diagram:- M/s Union Commercial Corporation Proprietor Let out to M/s Modern Products Pvt. Ltd. Director (Shri Tarun Shah) Licensed premises to M/s Kishore Engineering Company Defendant Rent Charges to to M/s Modern Products Kesharichand Shah Pvt. Ltd. On his death to

1) Tarun K. Shah

2) Priyalata K. Shah Plaintiffs Parties before City Civil Court Plaintiff Defendant Tarun Keshrichand Shah V/s. M/s Kishore Engineering Co. and Anr. Parties before Small Causes Court Plaintiff Defendant M/s. Modern Products V/s. 1. M/s Kishore Engineering Company Pvt. Ltd. 2. M/s NAK Engineering Company Pvt. Ltd.

3. Mr. Himanshu Yashwant Patwa

4. M/s Blue Sky Consultants

12. My attention is invited to the following documents:-

(i) Notice dated 03/10/2005 given by the M/s Modern and present plaintiffs to Original defendant and applicant and it’s Director thereby cancelling the license granted to the original defendant and treating the applicant and its Director as unauthorized occupant.

(ii) Reply dated 28/12/2005 given by the applicant-Company to learned Advocate of M/s Modern.

(iii) Photocopy of acknowledgment of registered envelope of suit summons accepted by the defendant.

(iv) Copy of the summons issued in the Suit No. 3319/07 by this

(v) Copy of the Order dated 10/09/2008 passed by learned undefended suit.

(vi) Copy of Roznama from 27/01/2014 to 26/12/2015 of City

(vii) Order dated 06/09/2008 passed by the Small Cause Court.

(viii) Order dated 06/04/2009 by the Small Cause Revisional

(ix) Copy of extract of registration of defendant firm.

13. It is undisputed fact that the Original Defendant M/s Kishore Engineering Company has not appeared in the suit before this Court and City Civil Court and have not filed written statement. Whereas evidence was closed on 11/02/2014 and the order to proceed that the Suit Ex-parte was noted on 12/11/2014. Whereas present applicant has moved these two Notice of Motions on 02/04/2018 and delayed filing of notice of motions is also one of the objection raised on behalf of the plaintiffs. If we read the avernments in those two notices, we may find that he has pleaded the case as follows: (a) The applicant-Company is the successor of the defendant firm under para IX of the Companies Act as such the applicant is necessary party in the suit. Photocopy of the memorandum and article of the association of the new Company is also filed. (b) The defendant firm was not aware about transfer of the suit from this Court to City Civil Court on or about 02/10/2012.

(c) Applicant came to know about the said transfer from his friend as well as website of the City Civil Court.

(d) The suit was kept for arguments from 27/01/2014 upto

23/07/2015 and thereafter for judgment from 24/08/2015 to 14/06/2016. Again the suit was shown for arguments from 14/06/2016 upto 23/09/2016. Again it was kept for judgment from 10/11/2016 to 15/03/2017 (Page No. 71 in WP No. 3456). (e) The name of advocate Dubey was wrongly shown in the proceedings of the suit even though he has not filed Vakalatnama. Extract of the case status from the website is filed. (f) There will not be any prejudice caused to the Plaintiff if the order closing the evidence vide Order dated 11/02/2014 and Ex-parte order dated 12/11/2014 are set aside.

14. In support of the contention, the applicant has filed following documents:- (a) Extract of the case status from website of the City Civil Court (b) Memorandum and articles of association of M/s NAK Engineering.

15. During the course of arguments, the learned Advocate for the Petitioners has invited my attention to the photocopy of the case status form the website of this Court about transfer of the suit and Order passed by the learned Single Judge on 05/02/2020 passed in Criminal Appeal No. 153 of 2019.

16. Trial Court has passed 2 orders. It will be material to consider the observations given by the Trial Court while allowing both these two Notices (Summary is given):- (a) Trial Court has taken note of letting out the premises to Kishore Engineering and their possession. (It ought to have been licensed to M/s Kishore Engineering) (b) Trial Court formed a prima-facie opinion that the applicant has taken over the business in interest of the defendant.

(c) The Trial Court observed that the dispute about the conversion of firm into private limited company cannot be decided and adjudicated by this Court. Whereas a certificate dated 22/02/1988 has to be considered as prima-facie proof of incorporation.

(d) The Trial Court has taken a note of the fact that the M/s NAK

Engineering is party before the Small Causes Court and defendant is having knowledge of the present litigation and they have failed to intervene. It is not clear while referring defendant trial Court intend to refer defendant who has not appeared or else. (e) The Trial Court considered the duty of the plaintiff to add applicant as a party. (f) While adjudicating the notice of motion, the trial Court feels that the issue whether the possession of the applicant is legal or illegal is not the issue. (g) The trial Court noticed that the Original defendant is not legal entity any more and hence presence of the applicant is necessary for proper adjudication of the matter.

17. That is why the Court first allowed Notice of Motion No. 1346 of 2018 and directed to implead the applicant as defendant. The Trial Court took a note of the fact of filing of the Criminal complaint by Plaintiff no. 1 against the applicant and its director for dishonor of two cheques.

18. Certificate is given by Registrar of Firm and it can be relied upon (which ought to have been Registrar of the Company) that is why the Court allowed the applicant to file written statement. Prior to going in to correctness of the factual observation, it will be material to consider the ratio laid down in the judgments relied upon by both the sides.

JUDGMENTS ON WRIT JURISDICTION

19. The Full bench of this Court in case of Advani Oerlikon Ltd. (supra) as referred above has elaborately discussed about the scope of powers under Articles 226 and 227 of the Constitution and when it is to be exercised. The history for incorporating those Articles and the Judgments so far delivered by the Hon’ble Supreme Court is also considered. It was also observed that “Distinction between two jurisdictions under Articles 226 and 227 stands almost obliterated in practice” (Para 9). One of the difference in exercise of power under Article 226 is original jurisdiction whereas jurisdiction under Article 227 is not Appellate or Revisional jurisdiction but it is supervisory jurisdiction. When there is patent error or breach of principles of natural justice is one of the contingencies where Court is justified in exercising the supervisory jurisdiction under Article 227 (para 8). On the other hand on the same issue Respondent relied upon a judgment in case of Surya Dev Rai (supra) as referred above. There was a proceeding arising out of rejection of interim injunction application by the Trial Court and confirmed by the District Court when High Court dismissed the Writ petition under Article 226, as not maintainable against private Respondent, the Hon’ble Supreme Court observed that jurisdiction under Articles 226 and 227 is an addition to Revisional jurisdiction. It is also observed that power under Article 227 is wider than power under Article 226 (para 22). Certain restrictions are also imposed while exercising jurisdiction under Article 226. The High Court could not substitute its own opinion, while exercising jurisdiction under Article 226. Whereas it is permissible under Article 227 (para 38).

20. In case of Bhutnath Chatterjee Vs. State of West Bengal and Ors., the Hon’ble Supreme Court also discussed the scope of the power of High Court under Article 227 of the Constitution, the purpose is to secure that the subordinate Court/trial Court does not transgress the limits of the jurisdiction. Such jurisdiction is not appellate. It can not see it to correct what it regards as merely an error of law/fact (para 4).

JUDGMENT ON IMPLEADMENT

21. On the point of impleadment of party, the learned Advocate for the Petitioners relied upon a judgment in case of Sandeep Ramesh Solanki (Supra) when the application was filed belatedly by transferee pendente lite. It was rejected. This Court has also considered this contingencies in case of Antonio Menezes (Supra) the principle that Plaintiff being “dominus litus” was considered. Addition of the party was not allowed on account of delay.

22. As against this Respondents relied upon a judgment in case of Ramesh Hirachand Kundanmal (Supra) as referred above. It was a suit challenging notice asking to demolish unauthorized construction. The Respondent No. 2 requested for impleadment in Order to support the case of the unauthorized construction. It was rejected by the trial Court. The Writ Court confirmed the said Order. The test of proper or necessary party was discussed. The Order of the impleadment was set aside by the Hon’ble Supreme Court. One of the reason was the intervenor was not having interest in the alleged unauthorized construction (para 18). It is observed that “it will embarrass the plaintiff and issues are not germane of the suit”.

23. Whereas in case of S. Subbarayudu (supra) as referred above the Hon’ble Supreme Court considered the issue of impleadment in a writ petition. The factors like plaintiff being dominus litus and avoiding multiplicity of the proceedings were balanced and the factor of avoiding multiplicity of the proceedings was given preference.

JUDGMENT ON EX-PARTE ORDER

24. While dealing with the case of Abdul Rasheed Paddar Vs. Pramod Sood the High Court of Himachal Pradesh discussed about residuary powers vested in Court (para 17). There are proceedings for setting aside Ex-parte Order.

25. The Factors like old age, filing of the application at early stage were considered in favour of the defendants. (and not by a third party). Similarly High Court of Delhi in case of Prem Nath Monga Foods (supra) as referred above has dealt with the provisions of Order 9 Rule 7 of the Code of Civil Procedure. The phrase ‘good cause’ implies lesser decree of proof than the phrase of ‘sufficient cause’ (para 7). CONCLUSION

26. When ratio laid down in above judgments are considered we may find that while exercising supervisory jurisdiction under Article 227 of the Constitution, the Court has to see whether the Trial Court has exercised the jurisdiction which he did not possess. The Court has to see whether the Trial Court has failed to exercise the jurisdiction which is vested in him. The Court has to see whether the Trial Court has overstepped the limits. The Court has to see whether there is patent perversity or breach of principles of natural justice. It is not that all above parameters are to be fulfilled simultaneously. One of the parameter is sufficient to exercise jurisdiction. By applying these principles, the issue involved before the trial Court needs to be looked into. There are two issues. A) Whether applicant is proper or necessary party? B) Whether Ex-parte Order can be set aside on the request of the third party?

27. The provisions of Order 1 Rule 10 of the CPC can certainly guide the Court. There are two tests. They are in the alternative. It is incorporated in Order 1 Rule 10 (2) of the Code of Civil Procedure. They are as follows:

(i) The party who ought to have been joined.

(ii) For effective and complete adjudication of all questions involved in the Suit, presence of such party is necessary.

28. It is true that the applicant has not been joined as party defendant. The provisions of Order 1 Rule 3 give guidelines who may be joined as defendants. If right to relief against such person exist they can be joined as defendant. So also if separate suits are brought against such persons and if common question of law and fact arises, then such persons may be joined as defendant in one and the same suit.

29. It is true that the law gives right to the plaintiff to select a person as defendant, If we consider the case of the plaintiffs, they do not claim that the right to relief exist against the applicant. In fact they do not recognize the existence of the said applicant. When according to the plaintiffs right to relief does not exist against the applicant, there is no question of satisfying the test of “involving common question of law or facts” That is why it is said that plaintiff is dominus litus.

30. It does not mean that Court seized of all the power to add third person as a party. This principle is recognized in Order 1 Rule 10 (2). Said power can be exercised suo-moto or on the application of either of the party. Here the applicant is not party to the suit. They have requested the Court. If facts warrants the Court can certainly consider such request as a suo-moto cognizance. But ultimately the third party has to fall under either of the categories laid down under Sub-Rule 2.

31. We get some guideline for deciding this issue from the judgments referred above. Certainly the applicant cannot be said to be proper party. Proper party has been interpreted as party without whose presence the suit is bound to fail. For example if there is grievance against local body and local body is not joined as a party but its officers are only joined, it can be said to be the case of the proper party. Whereas the necessary party is a party who is not a proper party but still his presence is necessary. Ultimately the Court has to adjudicate the questions in order to give finality to the lis. In order to achieve said object, if presence of the party is necessary, he has to be joined.

32. So we have to see whether case of the applicant falls under this category. For deciding this issue what are questions involved in suit before City Civil Court needs to be considered. They are as follows: A) What is the relationship in between the plaintiffs and the defendant (if it is admitted enquiry will be limited and if it is disputed then enquiry will be wide). B) What is relief sought. C) Is there any law which governs the field.

33. Admittedly, there is no relationship in between the plaintiffs on one hand and applicant on the other hand. It is no doubt that the applicant has produced copy of the certificate of registration. It is true that normally such certificate has got evidentiary value even at interim stage. Be that it may the issue is whether the new entity/applicant has got any connection to the relief sought. Learned Advocate Dr. Shri Chandrachud pointed out certain lacunaes in that certificate. Once it is established that the assignment of the business by the defendant in favour of the applicant is as per law before the Competent Court, certainly it can be said that the applicant has got connection to the relief sought. The Registrar of the Company is not having jurisdiction to decide about validity of the certificate if it is disputed by any party.

34. The Applicant took assistance of they being joined as party defendant in the licensee eviction suit. It is also true that the trial Court as well as the Revisional Court of the Small Causes have rejected the application of the applicant for grant of permission to deposit the license fee/rate in the Small Causes Court. It was rejected on the ground of absence of privity of contract.

35. The learned Advocate Dr. Shri Chandrachud is right in his submission that the unauthorized occupant need to be joined as a party before a Small Causes Court. It is the Commercial premises. So the Suit for possession lies before the Small Causes Court only. It is but natural that unauthorized occupant has to be joined as a party there. It can be said that they are necessary party. Because if the lis is decided in their absence, there will be difficulty in execution of decree if at all passed. It will apply this test to issue involved in City Civil Court. We may find that the suit is based clearly on oral or written contract in between the plaintiffs on one hand and the defendant on the other hand. The plaintiffs are the owners of furnitures and fixtures and they have charged the money for its use from the defendant. So suit is based on the provisions of the Contract Act. The Contract Act does not say that if the user permits other persons to use the furniture and fixtures, presence of this third party is required for deciding the money claim. It is not compulsory. I think that the trial Court has not looked into issue from this angle.

36. The trial Court is swayed away by granting of certificate of registration in favour of the applicant and it is evidentiary value. The trial Court swayed away by the impleadment of the applicant before a small Causes Court. The trial Court has not considered (considering the nature of the dispute and for deciding it completely and effectively) whether presence of the applicant is required.

37. This Court feels that even if the applicant is not present before the Court, the issue of arrears of service charges can be decided. It can be looked into from another angle also. If at all money decree is passed and it is put to execution, how it can be executed when the defendant firm is not in existence (as pleaded by the applicant). This will be a pure money decree. It can be executed by attachment of property. There is one more angle. If the applicant is allowed to be joined as a party defendant, they are bound to plead about assignment of the business in their favour and about certificate of registration. In that case, the plaintiffs will have to plead that the certificate is not proper. This Court feels that if the enquiry is conducted on this enlarged issues, the City Civil Court may be compelled to conduct the enquiry which is not warranted considering the limited issue involved. There is also a provision in Code of Civil Procedure under Order 22 Rule 10. It deals with the assignment, creation or devolution of any interest. In those cases party can be joined. Those contingencies may occur in case of transfer pendente lite, death of trustee or change in management of the trust or society are some of the instances. However that provision is applicable if the contingencies occur during the pendency of the suit. Here alleged assignment took place earlier to the suit.

38. At the same time when the applicant is not proper or necessary party, they cannot asked for relief to set aside ex-parte decree. The Original defendant is entitled to ask for that relief and it can be granted subject to fulfillment of the condition. Here the applicant has failed to satisfy the first test. It is true that there are two Orders passed in the Suit. One is passed on 10/09/2008 by this Court “Suit was transferred to the list of undefended suits to be on board after two weeks”. Thereafter, on 02/10/2012, the Suit is transferred to City Civil Court. Admittedly, neither defendant nor the applicant applied for setting aside said Order. Thereafter, Plaintiffs gave their evidence before City Civil Court and closed their evidence on 11/02/2014. Order sheet dated 12/11/2014 mentions “Defendant ex-parte”. It cannot be said to be an Order. But it just mentions the status of the suit. Though the matter was closed for arguments, judgment was not pronounced till filing of two notice of motions. The plaintiffs have not explained reasons.

39. It is pertinent to note that “there is a prayer of recalling orders dated 11/02/2014 and 12/11/2014 in Notice of Motion No. 1925 of

2017. In fact as such they cannot be said to be orders by which suit was ordered to be proceeded ex-parte. In fact vide Order dated 10/09/2008 suit was transferred to undefended list. There was an argument that in the year 2007, plaintiffs joined M/s NAK Engineering as a party in Small Causes Court, then why not before City Civil Court. The explanation offered by the plaintiffs is acceptable. It is discussed in earlier part of the order.

40. Applicant tried to give reasons for not filling Notice of Motion earlier. Applicant was not aware of the suit and transfer of suit also. Applicant was not a party in a suit for recovery of arrears of service charges. But the same time, they were one of the defendant in a Small Causes suit instituted in the year 2007.

41. Trial Court has allowed Notice of Motion No. 1925/2017 predominantly for the reason that Notice of Motion No. 1346/2018 for impleadment is allowed. It is true that as per the provisions of Code of Civil Procedure, it is only defendant who can apply for setting aside exparte Order either by showing good/sufficient reasons. In the entire Order, the trial Court has not expressed any opinion on the explanation offered for not filing Notice of Motion earlier.

42. The judgments relied upon by the applicant for setting aside exparte order are not useful to them. It is for the reason that they could not satisfy the test laid down under Order 1 Rule 10 (2) of th Code of Civil Procedure and they could not make out a case for setting aside ex-parte Order.

43. In view of above discussion, this Court feels that there is patent illegality. The Trial Court has not considered those issues, hence there is need for interference by this Court. Filing of the Criminal complaint against the applicant Company and in pursuant to the perjury initiated against them by the plaintiffs is not considered by this Court. Hence the following Order is passed:- O R D E R (a) Both the Writ Petitions are allowed. (b) The Orders dated 05/10/2018 passed in Notice of Motion Nos. 1346 of 2018 and 1925 of 2017 are set aside.

(c) Both Notice of Motions stand dismissed.

(d) The City Civil Court is directed to proceed with the