Gujarat High Court
The Indrapur Seva Cooperative ... vs Vaghasar Seva Sahakari Mandli ... on 10 February, 2021
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
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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 ?
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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
NOTICESERVEDBY DS(5)for the Respondent(s)No. 2,4
MR. PRAKASHJANI, SENIORCOUNSELWITHMR. SHIVANGP JANI(8285)for the
MR. ASHISHSHAH,ADVOCATEFORTHEAPPLICANTIN CIVILAPPLICATIONFOR
JOININGPARTY
==========================================================
CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV
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
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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
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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
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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
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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
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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
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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
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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,
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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. "
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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
