GOVERNMENT OF ORISSA v. M-S. ASHOK TRANSPORT AGENCY AND ORS

Citation: [2002] 3 S.C.R. 632

Court: Supreme Court of India

Bench: M.B. SHAH, B.N. AGRAWAL

Judgment text

)- \ GOVERNMENT OF ORISSA ~ v. ,.... MIS. ASHOK TRANSPORT AGENCY AND ORS. • APRIL 30, 2002 ~ [M. B. SHAH AND B. N. AGRAWAL, JJ. ] Code ofCivil Procedure, 1908/0rissa Mining Corporation (Acquisition ~ L and Transfer ofCharge Chrome Division) Ordinance, 1991--0rderXXll Rule 1O/Clause 1(5)-Continuation ofsuit on devolution ofinterest during pendency ofsuit-Whether an ex-parte decree against a company taken over by State Government can be executed against the government even though the same was not brought on record before passing ofthe decree-Difference ofopinion among the Judges on the question-Hence, case referred to larger Bench. A The question for consideration in the present appeal was whether an "ex-parte decree against a company taken over by State Government can be executed against the Government even though the same was not brought > on record before passing of the decree.

~ Appellant-State contended that the decree passed against the defendant-company a division of Orissa Mining Corporation was not binding on the State, as it was not brought on record as party-defendant; it was duty of the plaintiff-respondent to bring the appellant-State on record in view of its taking over the company and on failure to do so, the decree against the original defendant would not be binding and cannot be executed against a person in whom the interest has devolved. ·~ Respondent contended that decree was binding on the State a·s it is a successor-in-interest of the original defendant as the State had not moved '> any application to set aside the ex-parte decree or filed appeal against the same or applied for declaration that the decree was binding. on it; and that successor. s are bound by the result of the litigation even if such successors are not brought 00 record. Referring the matter to the larger Bench, the Court ~i- GOVERNMENT OF ORISSA v.

ASHOK TRANSPORT AGENCY 633 • HELD : (Per Shah, J. ) I. I. Though it is true that whatever steps have already taken place in pending suit will continue to operate against and be binding on the transferee and in the present case on the State of Orissa. But as ex-parte - decree was not passed prior to taking over by the State Government, therefore, such decree would not be binding on the State Government as it was not impleaded in the suit and the plaintiff has not taken steps for continuing the suit against it. (643-D-El 1. 2. For continuance of the suit, the person who is affected has to file an application and normally such application is to be filed by the plaintiff. In the present case, plaintiff has not discharged such duty to apply for leave for bringing the State of Orissa on record as party defendant. (643-H; 644-A; 644-B( 1. 3. The party who wants to continue the suit or other proceeding has to apply to the Court to grant leave to continue suit or proceedings in - ' such cases.

To expect the party in whose favour an assignment, creation or devolution of interest has taken place during the pendency of the suit, to file application for continuing the suit against him, would be totally • unreasonable. Such party may not be knowing about such proceedings. May be that, in cases where principle of /is pendente is applicable, such party may apply to the court for grant of leave to continue the proceeding. Similarly, if the decree is passed against the defendant, before assignment, creation or devolution of interest, such party with the leave of court can continue the appeal or file such appeal.. ·Iris also true that Rule to of Order XXll CPC nowhere provides that. suit would abate in cases of assignment, creation or devolution of any interest. The apparent reason may be that f- suit would not abate against the original defendant and Court may pass a decree against such defendant. (639-D-F( 1. 4. Clause 1(5) of Orissa Mining Corporation (Acquisition and .

Transfer of Charge Chrome Division) Ordinance, 1991 is in consonance with the provisions of Order XXll Rule to and other provisions of the CPC. For continuing the suit against the State Government the State Government is ;-equired to be brought on record. Not that, automatically the State Government is deemed to be party to the suit or proceedings. For continuing the suit the plaintiff has to file application as contemplated under Order XXll Rule 10 for bringing the State Government on record as a successor-in-interest. 1642-C-EI Bhagwan Dass Chopra v. United Bank ofIndia and Ors. , (1987] Supp. 536 and St ·te ofOrissa v. Klockner and Company and Ors. , (1996] 8 SCC, distinguished.

L It cannot be said that the decree passed against the original defendant is binding on the State, as it is a successor-in-interest of the original defendant since the State Government has not taken steps, such as (a) moved an application under Order IX Rule 13 CPC for setting aside the ex-parte decree, (b) preferred an appeal with the leave of the Court against the original judgment and decree and (c) filed an independent suit for declaration that the ex-parte judgment and decree was not binding on the State Government. Even if it was open to the appellant to file application for setting aside the ex-parte decree or to prefer an appeal, that would not mean that the ex-parte decree which is passed against the original defendant is binding on it as the decree was passed after devolution of interest and not prior to it. 1644-B-DI 3. It cannot be said that successors are bound by the result of the litigation even if such successors are not brought on record. 1644-EI --.. _ Manda/ v.

Biswanath Manda/, AIR (1915) Calcutta 103 and Mahanth Harihar Gir v. Karu Lal and Ors. , AIR (1935) Patna 488, referred to. Per B. N. Agrawal, J. 1. Under Rule 10, Order 22 CPC, when there has been a devolution of interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against persons upon whom such interest has devolved and this entitles the person, who has acquired an interest in the subject . t matter of the litigation by an assignment or creation or devolution of interest pendente lite or suitor or any other person interested, to apply to the Court for leave to continue the suit. But it does not follow that it is obligatory upon them to do so. If a party does not ask for leave, he takes the obvious risk that the suit may not be properly conducted by the plaintiff on record. 1649-G, HI Sm/. Saila Bala Dassi v. Smt. Nirma/a Sundari Dasi and Anr. , AIR (1958) Supreme Court 2159, followed. Rikhu Dev v. Che/a Bawa Hariug Das v.

Som Dass (deceased) through GOVERNMENT OF ORISSA v. ASHOK TRANSPORT AGENCY 635 his Che/a Shiama Das, AIR (1975) Supreme Court 2159, relied on, State ofOrissa v. K/ockner and Company and Ors. , (1996) 8 SCC 377, distinguished. Moti Lal v. Karab-ud-Din, (1898) 25 Cal. 179; Prannath v. Rookea - Begum, (1851-59) 7 M. l. A. 323; Rai Charan Manda/ and Anr. , v. Biswanath Manda/ and Ors. , AIR (1915) Calcutta 103 and Mahanth Harihar Gir v. Karu Lal and Ors. , AIR (1995) Patna 488, referred to. - 2. 1. Executing Court can allow objection under Section 47 CPC to the executability of the decree if ii is found that the same is void ab initio and nullity, apart from the ground that decree is not capable of execution under law either because the same was passed in ignorance of such a provision of law or the law was promulgated making a decree inexecutable after its passing'. (662-E-G) 2. 2.

In the case on hand, the decree was passed against the defendant without seeking leave of the Court to continue the suit against the Government of Orissa upon whom interest of the defendant devolved and impleading it. Such an omission would not make the decree void ab initio so as to invoke Section 47 CPC and entail dismissal of execution. The validity or otherwise of a decree may be challenged by filing a properly constituted suit or taking any other remedy available under law on the ground that original defendant absented himself from the proceeding of the suit after appearance as it had no longer any interest in the subject of dispute or did not purposely take interest in the proceeding or colluded with the adversary or any other ground permissible under law. (662-E-GJ Dhurandhar Prasad Singh v. Jai Prakash University and Ors. , (2001 J 6 sec 534, relied on. Kiran Singh and Ors. v. Chaman Paswan and Ors. , AIR (1954) S. C. 340; lttyavira Mathai v. Varkey Varkey and Anr.

, AIR (1964) SC 907; Vasudev Dhanjibhai Modi v. Rajabhai Abdul Rehman and Ors. , AIR (1970) SC 1475; Everest Coal Company (P) Ltd. v. State ofBihar and Ors. , )1978) 1 SCC 12; Haji S. K. Subhan v. Madho Rao, AIR (1962) SC 1230 and Vidya Sagar v. Smt. Sudesh Kumari and Ors. , AIR (1975) SC 2295, referred to. ~ Durayappah v. Fernando and Ors. , (1967) 2 All England Law Reports 152; In re McC. (A minor) (1985) 1 Appeal Cases 528: Director of Public Prosecution v. Head, (1959) Appeal Cases 83 and Paddington Valuation Officer and Anr. v. Exparte Peachey Property Corporation Ltd. , (1965) 2 All . )r. ,.. - England Law Reports 836, referred to. Judicial Review ofAdministrative Action, Fifth Edition by De Smith, Woolf and Jowell; Judicial Remedies in Public Law by Clive Lewis, referred to. 2. 3. The question whether a decree can.

be executed against successorin-interest of the defendant upon whom interest has devolved during the pendency of the suit without bringing him on record and seeking leave to continue the suit against him, cannot be decided under Section 47 CPC by Executing Court, such a decree being not a nullity, and only voidable which can be avoided by challenging the same effectively in a properly constituted suit in a court of competent jurisdiction on the ground permitted by law and in such a case the bar created by Section 47(1) CPC to the institution of separate suit shall not operate. The provisions of Section 50 and Section 52 CPC can be of no avail for deciding the point in issue as the same can apply in cases of death of a person covered by Order 22 Rules 3 and 4 CPC, as the case may be, and not in cases of assignment, creation or devolution of interest which is governed exclusively by Rule 10 of Order 22. (644-F-H; 665-A] 3. 1.

From a bare perusal of Sections 2(c)(3), 4(5) and 5 of the Ordinance, it would be plain that liability of the Charge Chrome Division in the suit upon its being taken over became liability of the Government of Orissa and is enforceable against it. Such a provisions that the suit shall not abate, be discontinued or in any manner prejudically affected by reason of devolution of interest during its pendency has not been explicitly made in Order 22 rule 10 CPC like Section 4(5) of the Ordinance but the same is implicit therein. Both the provisions lay down that in case there is devolution in interest during the pendency of a suit under Order 22 Rule 10 CPC as well as Section 4(5) of the Ordinance, the suit may be continued by or against the person upon whom the interest has devolved.

A successorin-interest may challenge validity or otherwise of a decree passed against the predecessor-in-interest without impleading the successor-in-interest upon whom the interest has devolved during the pendency of the suit, by filing a properly constituted suit or taking any other remedy available under law on the ground that the original defendant absented himself from the proceeding ofthe suit after. appearance and filing written statement as he had no longer any interest in the subject of dispute or did not purposely GOVERNMENT OF ORISSA v. ASHOK TRANSPORT AGENCY [SHAH, J. ] 637 take interest in the proceeding or colluded with the adversary or any other ground permissible under law as such a challenge would make the decree voidable and not void much less ab initio so as to make it nullity. (665-H; 666-A-DI 3. 2. In the present case, it cannot be said that the decree is even voidable much less void or void ab initio.

Therefore , the Government of Orissa is precluded from challenging its validity or otherwise even by filing a separate suit much less taking objection under Section 47 CPC. (666-G-H( CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3209 of 2002. From the Judgment and Order dated 19. 7. 2000 of the Orissa High Court in C. R. No. I l 7 of 1998. - Altaf Ahmed, Additional Solicitor General and Kirti Renu Mishra for the Appellant. B. A. Mohanty, Ashok Mathur, Ms. Mamta Tripathi, Harshvardhan Jha, Anukul Chandra Pradhan and Shiv Sagar Tiwari for the Respondents. The Judgments of the Court were delivered by SHAH, J. Heard the learned counsel for the parties. Leave granted. Short question involved in this matter is-whether an ex parte decree passed against a Company which was taken over by the Orissa Ordinance No. 8 of 199 l by the State Government can be executed against the State Government even though the Government of Orissa was not brought on record before passing of the decree?

Admittedly, the Ordinance taking over the assets of the Charge Chrome Division of the Orissa Mining Corporation Ltd. was promulgated on 24th September, 1991 and the suit filed by the respondents was decreed against the Charge Chrome Division on 12th November l99l without bringing the State Government on record as party defendant. _.. ,. Thereafter, the judgment creditor filed an Execution Application on 24th October, 1994 for recovering the amount decreed from the Government of Orissa as well as other respondents. The State Government contended that the decree is not executable against it as it was not brought on record and there is no decree against it. The trial court rejected the objection raised by the appellant on the basis of decision rendered by this Court in State of Orissa v. Klockner and Company and Ors. , [1996] 8 SCC 377. Against that judgment and order, the appellant preferred C. R. No. 117 of 1998 before the High Court of Orissa, Cuttack.

The Orissa Mining Corporation Limited also filed C. R. No. 64 of 1998 against the said order by contending that decree against it is not executable. The High Court allowed the revision filed by the Orissa Mining Corporation on the ground that Execution Application against it would not survive as no liability accrued against it. However the revision filed by the State Government was dismissed. Hence this appeal. Mr. Altaf Ahmad, Additional Solicitor General appearing for the appellant submitted that the judgment and decree passed against the defendant-Charge Chrome Division of the Orissa Mining Corporation is not binding on the appellant as the appellant was not brought on record as party defendant. After the Ordinance which was promulgated on 24th September, 1991, it was the duty of the plaintiff respondent to bring the appellant on record as party defendant in view of its taking over the company, if at all plaintiff wanted a decree executable against it.

He submitted that in such cases, procedure prescribed under Order XXII Rule l0 of the CPC which enables the plaintiff to continue the suit is required to be followed. It is his contention that it is the choice of the plaintiff to bring the person on record in whose favour an assignment, creation or devolution of any interest during the pendency of the suit has taken place for continuing the suit and ifhe does not bring them as party defendants, then the decree passed against the original defendant would not "be binding and cannot be executed against the person in whom the interest has devolved. As against this, learned counsel for the respondent submitted that the judgment and order passed by the High Court is in accordance with law and does not call for any interference.

For appreciating the contentions raised by the learned counsel for the parties, we would only refer to relevant part of Rule l0 of Order XXII of the CPC which reads as under:- "10(1) In other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such GOVERNMENT OF ORISSA '· ASHOK TRANSPORT AGENCY [SHAH, J. ] 639 interest has come or devolved. " Order XXII provides the procedure for bringing the legal representatives of parties on record in case of death, marriage or insolvency of parties. It also provides in which cases the proceeding would abate where legal representatives - are not brought on record. As against that, Rule 10 only provides for continuing the suit where there is an assignment, creation or devolution of any interest during the pendency of the suit.

It is an enabling provision to the affected party to continue the suit by or against the person to or upon whom such interest has come or devolved. Normally, ifthe plaintiffs interest has come to or devolved, say in Y, then Y has to approach the Court for enabling him to continue the suit with the leave of the court. This provision also applies at the appellate stage. Further, defendant would not approach the Court by filing an application that leave may be granted to continue the suit against him. It is for the plaintiff to approach the Court when there is assignment, creation or devolution of interest during the pendency of the suit and Court may permit to continue the said suit against the person upon whom such interest has come or devolved. That means, the party who wants to continue the suit or other proceeding has - '{ for failure to substitute the person upon whom the interest ofa plaintiff or a defendant devolves while a suit is pending.

This rule merely provides that should the interest of the plaintiff devolve upon another person by assignment or otherwise while the litigation is still proceeding such other person may obtain the permission of the Court to continue the litigation as if he were the plaintiff in the suit. It similarly provides that in those cases where the interest of the defendant devolves on another person during the pendency of the litigation may be continued as against such other person with the permission of the Court. The language of this provision does not ... suggest that in the latter case the person upon whom the interest of ~ the defendant has devolved cannot himselfcome forward and ask the Court to allow the suit to be continued against him, nor does it suggest that if the plaintiff fails to substitute the assigned or the person upon whom the interest ofthe defendant otherwise devolves, such a person would not be bound by the decree passed against the original defendant.

It is interesting to compare this provision with the provisions relating to abatement which are more or less ofa mandatory character and which also state clearly that in case the legal representative ofa deceased party is not substituted, the suit or appeal shall abate against the party who is dead and whose legal representative has not been substituted Thus the intention of Order 22 Rule 10 seems to be that though it is desirable that the party having a present interest in the litigation should be before the Court, yet the litigation is not to become infructuous, if such a part is not brought before the Court. Indeed the provision that such a party can be brought before the Court only by the leave of the Court seems to suggest that there may be cases in which leave may be refused and --. : the case allowed to proceed in the name of the original plaintiff or defendant. In the present case it is not denied that a preliminary \ .

decree had been passed against Mahant Krishna DayaJ Olr by a Court of competent jurisdiction. I cannot conc11\11 ofany prlnclp/1 of law undor which such a d1cr1t1 should ba ragard1d as a nullity mt1rtl/J1 b1causo Mahant Krishna DQJ1al Glr chostl to rollnqulsh his rights In favour ofthfJ app1llants without 11'/formlng tho Court or tht1 dfJcrt11• holder. " [Emphasis added] The effect of failure to seek leave or bring on record the person upon whom the interest has devolved during the pendency of the suit was subject matter of consideration before this Court in various decisions. In the case of Smt. Sa/la Bala Dass/ v:Smt. Nlrmala Sundarl Dass/ and Anr. , AIR (1958) Supreme Court 394, T. L. Venkatarama Aiyar, J, speaking for himself and on behalf of S. R. Das, C. J. and A. K. Sarkar and Vivian Bose, JJ.

laid down the law that ifa suit is pending when the transfer in favour of a party was made, that would not affect the result when ho application had been made to be brought on the record in the original court during the pendency of the suit. In the case of Rlkhu Dev, Che/a Bawa Harjug Dass v. Som Dass (deceased) through h/s Che/la Shiama Dass, AIR (1975) Supreme " Court 2159, while considering the effect of devolution of interest • within the meaning of Order 22 Rule 10 of the Code, on the trial of a suit during Its pendency, this Court has laid down the law at page 2160 which runs thus: "This rule is based on the principle that trial of a suit cannot be brought to an end merely because the interest of a party In the subject matter of the suit has devolved upon another during the pendency of the suit but that suit may be continued against the person acquiring the interest with the leave of the Court.

When a suit is brought by or against a person in a representative capacity and there is a devolution of the interest of the representative, the rule that has to be applied is Order 22, Rule I0 and not Rule 3 or 4, whether the devolution takes place as a consequence of death or for any other reason. Order 22, Rule l0, is not confined to devolution of interest of a party by death; it also applies if the head of the mutt or manager of the temple resigns his office or is removed from office. In such a case the successor to the head of the mutt or to the manager ofthe temple may be substituted as a party under this rule. " I OOVBRNMllNT OF ORISSA v. ASHOK TRANSPORT A06NCY [B. N. AORAWAL, J,) 655 The two decisions of thl1 Court relied upon by the Hl&h Court In the ~ '----