Case: Major S. S. Khanna Vs. Brig. F.J. Dillon

Shah, J.1. Brig. F.J. Dillon and Major S.S. Khanna hereinafter called Dillon and Khanna respectively carried on business in partnership as Construction Engineers. They agreed to dissolve the partnership with effect from February 15, 1956. By the deed of dissolution it was agreed that Dillon was to take over all the assets and properties of the partnership as absolute owner and to pay all the debts and to discharge all the liabilities of the partnership and to keep Khanna indemnified against all demands and claims in relation to the partnership business.2. But the deed did not terminate the disputes between the partners, and Khanna commenced an action against Dillon in the Court of the Subordinate judge, 1st Class, Delhi "for dissolution of the partnership and rendition of accounts". On January 12, 1957, the parties arrived at a compromise (which was incorporated into a decree of the Court) confirming the earlier dissolution of the partnership, subject to a scheme of winding up, under which all outstanding realised from the debtors of the firm and the sale proceeds of certain assets were to go into a banking account to be opened in the joint names of Dillon and Khanna and were to be applied in the first instance to meet the liabilities of the dissolved firm, and the balance in that joint account was to belong to Dillon. Some outstanding of the dissolved partnership were collected by Dillon and were deposited in the joint account of Dillon and Khanna.3. Dillon filed a suit in the Court of the Subordinate judge at Delhi for a decree for Rs. 54, 250.00 with future interest alleging that between the months of May 1957 and November 1957 he had, at the request of Khanna, advanced in three sums an aggregate amount of Rs. 46, 000.00 as short- term loans which Khanna had promised to but had failed to repay. Khanna pleaded that he did not borrow any loans- from Dillon, and that the amounts claimed in the action being advanced, even on the pled of Dillon. out of joint funds belonging to the two partners, action for recovery of those amounts was, in law not maintainable.Out of the issues raised by the Trial Court in the suit the third, issue viz: "Whether this suit is not maintainable and the plaintiff is not entitled to institute this suit, as alleged in paras Nos. 15, 16, 17, 18 of the written statement was at the request of Khanna tried as a preliminary issue, and it was held that the suit being by a partner against another partner of a dissolved firm which was in the process of winding up, and in respect of advances from the partnership assets, was not maintainable.4. The High Court of Punjab in exercise of its revisional jurisdiction set aside the order, and directed that the suit be heard and disposed of according to law.5. With special leave this appeal is preferred by Khanna. The jurisdiction of the High Court to set aside the order in exercise of the power under s. 115 Code of Civil Procedure is challenged by Khanna on three grounds :- (i) that the order did not amount to "a case which has been decided" within the meaning of s. 115 Code of Civil Procedure (ii)that the decree which may be passed in the suit being subject to appeal to the High Court the power of the High Court was by the express terms of s. 115 excluded ; and (iii) that the order did not fall within any of the three clauses (a), (b) and (c) of s. 115. The validity of the argument turns upon the true meaning of s. 115 Code of Civil Procedure, which provides : "The High Court may call for the record of any case which has been decided by any Court subordinate to such High Court and in which no appeal lies thereto, and if such subordinate Court appears- (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or (c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make such order in the case as it thinks fit."The section consists of two parts : the first, prescribes the conditions in which jurisdiction of the High Court arises i.e. there is a case decided by a subordinate Court in which no appeal lies to the High Court ; the second, sets out the circumstances in which the jurisdiction may be exercised. But the power of the High Court is "exercisable in respect of "any case which has been decided". The expression "case" is not defined in the Code, nor in the General Clauses Act. It is undoubtedly not restricted to a litigation in the nature of a suit in a Civil Court : Bala- krishna Udayar v. Vasudeva Aiyar( L.R. 44 I.A. 261.) ; it includes a proceeding in a Civil Court in which the jurisdiction of the Court is invoked for the determination of some claim or right legally enforceable. On the question whether an order of a Court which does not finally dispose of the suit or proceeding amount to a "case which has been decided", there has arisen a serious conflict of opinion in the High Courts in India, and the question has not been directly considered by this Court. One view which is accepted by a majority of the High Courts is that the expression "case" includes an interlocutory proceeding relating to the rights and obligations of the parties, and the expression "record of any case" includes so much of the proceeding as relates to the order disposing of the interlocutory proceeding. The High Court has therefore power to rectify an order of a Subordinate Court at any stage: of a suit or proceeding even if there be another remedy open to the party aggrieved i.e. by reserving his right to file an appeal against the ultimate decision, and making the illegality in the order a ground of that appeal. The other view is that the expression "case does not include an issue or a part of a suit or proceeding and therefore the order on an issue or a part of a suit or proceeding is not a "case which has been decided", and the High Court has no power in exercise of its re- visional jurisdiction, to correct an error in an interlocutory order.An analysis of the cases decided by the High Courts their number is legion-would serve no useful purpose. In every High Court from time to time opinion has fluctuated. The meaning of the expression "case" must be sought in the nature of the jurisdiction conferred by s. 115, and the purpose for which the High Courts were invested with it.B y their constitution the High Courts of Calcutta, Madras and Bombay were within Presidency towns, as successors to the respective Supreme Courts competent to issue writs of certiorari, mandamus and prohibition. This was so because the jurisdiction of the Courts of Kings Bench and Chancery in England to issue those writs was conferred upon the three Supreme Courts. But exercise of this jurisdiction which was established by Charters of the British Crown, was (except as to British subjects and servants of the Company) restricted. The jurisdiction did not ordinarily extend to the territories beyond the Presidency towns : Ryots of Garabandho v. Zamindar of Parlakimedi(L.R. 70 I.A. 129.). The appellate Courts, called the Sudder Adalats, which exercised appellate powers over the East India Companys Courts in the mofussil of the three Presidencies were not the Courts of the King of England : they were the creatures of Regulations, and did not administer the law of England. These Courts had no power to issue any of the prerogative writs-except probably the writ of habeas corpus. But the power to superintend the exercise of jurisdiction by the mofussil Courts was found essential to the proper functioning of the Sudder Courts, and the Sudder Courts were accordingly invested by express legislative enactments with authority to rectify orders of the mofussil Courts subordinate thereto. Bombay Regulation 11 of 1827 of Ch. 1 s. 5(2) authorised the Sudder Court at Bombay to call for the proceedings of any subordinate civil court and to issue such orders thereon as, the case may require. No Regulation was however enacted elsewhere conferring revisional jurisdic tion upon the Supreme Court or the Sudder Court in respect of adjudication by subordinate courts. The Code of 1859 contained no provision for the exercise of revisional powers by the Sudder Courts, but by s. 35 of Act XXIII of 1861 the Sudder Courts were invested with the power call for the record of any case decided in appeal by the subordinate courts and in which no further appeal lay, when it appeared, that a subordinate court had exercised jurisdiction not vested in it by law. With the set tin up of the High Courts in the Presidency towns of:, Calcutta, Madras and Bombay power of superintendence was conferred by s. 15 by the Charter Act (24 & 25 Vict. Ch. 104) upon the High Courts over subordinate Courts. By s. 622 of the Code of 1877 revisional jurisdiction of. the High Court was defined, and made exercisable in the conditions set out in cls. (a) & (b) of the present s. 115. Clause (c) was added by the Amending Act XII of 1879. This jurisdiction was exercisable suo motu as well as on application to the High Court. It was conferred in the widest terms. The jurisdiction was supervisory and visitorial and was complementary to the powers conferred by cl. 15 of the Charter Act, 1861, and the subsequent Constitution Acts, and was conceived in the interest of maintaining effective control over Courts subordinate to the High Courts. It had to be so conferred because in the historical evolution of the powers of the diverse High Courts supervisory jurisdiction to issue writs of certiorari, and prohibition could not be effectively made in respect of the mofussil Courts.The necessity arising out of the peculiar circumstances to invest the High Courts with the powers to rectify errors committed by subordinate Courts in the exercise of their jurisdiction and the consequent investiture of power are indicative of the extent of that power. The power being one of superintendence and visitorial and vested because the supervisory jurisdiction to issue writs of certiorari and prohibition over subordinate Courts in the mofussil could not be exercised, it would be reasonable to hold that it was intended in the absence of any overriding reasons disclosed by the statute (and none such appears on an examination of the statute) to be analogous- with the jurisdiction to issue the high prerogative writs and the power of supervision under the Charter Act and its successor provisions in the Constitution Acts.6. The expression "case" is a word of comprehensive import : it includes civil proceedings other than suits, and is not restricted by anything contained in the section to the entirety of the proceeding in a civil court. To interpret the expression "case" as an entire proceeding only and not a part of a proceeding would be to impose a restriction upon the exercise of powers of superintendence which the jurisdiction to issue writs, and the supervisory ju- risdiction are not subject, and may result in certain cases in denying relief to an aggrieved litigant where it is most needed, and may result in perpetration of gross injustice. It may be observed that the majority view of the High Court of Allahabad in Buddhulal v. Mewa Ram(I.L.R. 43 All. 564 (F.B.)) founded upon the supposition that even though the word "case" has a wide signification the jurisdiction of the High Court can only be invoked from an order in a suit, where the suit and not a part of it is decided, proceeded upon the fallacy that because the expression "case" includes a suit, in defining the limits of the jurisdiction conferred upon the High Court the expression "suit" should be substituted in the section when the order sought to be revised is an order passed in a suit. The expression "case" includes a suit, but in ascertaining the limits of the jurisdiction of the High Court, there would be no warrant for equating it with a suit alone.That is not to say that the High Court is obliged to exercise its jurisdiction when a case is decided by a subordinate Court and the conditions in cls. (a), (b) or (c) are satisfied. Exercise of the jurisdiction is discre- tionary : the High Court is not bound to interfere merely because the conditions are satisfied. The interlocutory character of the order, the existence of another remedy to an aggrieved party by way of an appeal from the ultimate order of decree in the proceeding or by a suit, and the general equities of the case being served by the order made are all matters to be taken into account in considering whether the High Court, even in cases where the conditions which attract the jurisdiction, exist, should excr- cise its jurisdiction.7. The Subordinate Judge in the present case held by an interlocutory order that the suit filed by Dillon for re- covery of the amounts advanced to Khanna was not main- tainable. That was manifestly a decision having a direct bearing on the rights of Dillon to a decree for recovery of the loan alleged to have been advanced by him, which he says Khanna agreed to repay, and if the expression "case" includes a part of the case, the order of the Subordinate Judge must be regarded as a "case which has been decid ed". The next question which falls to be determined is whether the High Court has power to set- aside an order which does not finally dispose of the suit, and when from the decree or from the final order passed in the proceeding an appeal is competent. Relying upon the Use of the expression "in which no appeal lies thereto" in s. 115 Code of Civil Procedure it was urged that the High Courts jurisdiction to entertain a petition in revision could be exercised only if no appeal lay from the final order passed in the proceeding. But once it is granted that the expression "case" includes a part of a case, there is no escape from the conclusion that revisional jurisdiction of the High Court may be exercised irrespective of the question whether appeal lies from the ultimate decree or order passed in the suit. Any other view would impute to the Legislature an intention to restrict the exercise of this salutary jurisdiction to those comparatively unimportant suits and proceedings in which the appellate jurisdiction of the High Courts is excluded for reasons of public policy. Nor is the expression "in which no appeal lies thereto" susceptible of the interpretation that it excludes the exercise of the revisional jurisdiction when an appeal may be competent from the final order. The use of the word "in" is not intended to distinguish orders passed in proceedings not subject to appeal from the final adjudication from those from which no appeal lies. If an appeal lies against the adjudication directly to the High Court, or to another Court from the decision of which an appeal lies to the High Court, it has no Power to exercise its revisional jurisdiction, but where the decision, itself it not appealable to the High Court directly or indirectly, exer- cise of the revisional jurisdiction by the High Court would not be deemed excluded. The judgment of the Rajasthan High Court in Purohit Swarupnain v. Gopinath and another(I.L.R. [1953] Raj. 483 F.B.) on which strong reliance was placed by the appellant does not, in our judgment, correctly interpret s. 115 of the Code. In that case the Court relying upon an earlier judgment of a Division Bench Pyarchand and others v. Dungar Singh(I.L.R. [1953] Raj. 608.) held that "where it is open to a party to raise a ground of appeal under s. 105 of the Code from the final decree or order, with respect to any order which has been passed during the pendency of a suit, it should be held that an appeal in that case lies to the High Court within the meaning of the term in which no appeal lies thereto appearing in s. 115 Civil Procedure Code", and the exercise of revisional jurisdiction of the High Court is excluded. It was observed in that case that the use of the word "in instead of the word "from" in s. 115 Code of Civil Procedure indicated an intention that if the order in question was one which could come for consideration before the High Court in any form in an appeal that may reach the High Court in the suit or proceeding in which the order was passed, the High Court has no revisional jurisdiction. But the argument is wholly inconclusive, if it be granted that the word cc " includes a part of case. Again on the footing case that the use of the expression "in" and not "from" indicates some discernible legislative intent, it must be remembered that the word "in" has several meanings a preposition and as an adverb. The use of the preposition "from"-in the sense of a source or point of commencement or distinction-would not in the context of the clause, yield to greater clarity, because the relation established thereby would be between "case" and appeal, and not "decided" and appeal. If the use of the expression "in" is inappropriate to express the meaning that the orders not appealable to the High Court were subject to the revisional jurisdiction, the substitution of "from" for "in" does not conduce to greater, lucidity.In considering whether the revisional jurisdiction of the High Court was intended to cover decisions, which did not dispose of the suit or proceeding, possibility of delay arising in the disposal of some cases because of in- vestigation commenced by the High Court is not, in our judgment, a sound ground for presuming, that, the juris- diction was to be limited to those matters which were finally disposed of.8. For the effective exercise of its superintending and visitorial powers, revisional jurisdiction is conferred; upon the High Court and it would be putting an unwarranted restriction upon the jurisdiction of the High Court to restrict it to those cases only where no appeal would reach the High Court from the final order passed in the pro- ceeding. We are therefore unable to agree with the view which prevailed with the Rajasthan High Court that there is a restriction placed upon the power of the High Court in the exercise of the revisional jurisdiction as would limit the exercise of that power only to cases where no appeal is competent from the final order passed in the suit or proceeding.9. The third question may now be dealt with. By the order passed by the Court of First Instance on the third issue it was held that the suit filed by Dillon was not maintainable. That decision, in our judgment, affected the rights and obligations of the parties directly. It was a decision on an issue relating to the jurisdiction of the Court to entertain the suit filed by Dillon. In any event the decision of the Court clearly attracted cl. (c) of s. 115 Code of Civil Procedure, for the Court in deciding that "the suit was not maintainable as alleged in paragraphs 15, 16, 17 and 18 of the written statement" purported to decide what in substance was an issue of fact without a trial of the suit on evidence. Dillon alleged in his plaint that at the request of Khanna, he had advanced diverse loans (from the funds lying in deposit in the joint account) and that the latter had agreed to repay the loans. The cause of action for the suit was therefore the loan advanced in consideration of a promise to repay the amount of the loan, and failure to repay the loan. By his written statement Khanna had pleaded in paragraph 15 that Dillon had not advanced any money to him and that Dillon had not claimed the amount for himself and there- fore he was not entitled to file a suit for recovery of the amounts. By paragraph 16 he pleaded that Dillon having admitted in the plaint that the amounts in suit were to be paid back to the joint account he was not entitled to file the suit. By paragraph 17 it was pleaded that a suit by one joint owner against the other joint owner for recovery of the Joint Fund or any item of the joint fund was not maintainable and by paragraph 18 he pleaded that Dillon could not institute a suit against him because the amount was not repayable. All these contentions raised substantial issues of fact which had to be decided on evidence, and Dillon could not be non-suited on the assumption that the pleas raised were correct. At the threshold of the trial two problems had to be faced : (1) Whether in a suit to enforce an agreement to repay an amount advanced in consideration of a promise to repay the same, the question as to the ownership of the fund out of which the amount was advanced is material ; and (2) if the answer is in the affirmative, whether the fund in fact belonged jointly to Dillon and Khanna.The Judge of the Court of First Instance unfortunately assumed without a trial an affirmative answer to both these questions. Under 0. 14 r. 2, Code of Civil Procedure, where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the Court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the Court ; not to do so, especially when the decision on issues even of law depend upon the decision of issues of fact, would result in a lop-sided trial of the suit. We are at this stage not expressing any opinion on the question whether the allegations made by Dillon and Khanna are true ; we are only concerned to point out that what was regarded as an issue of law as to maintainability of the suit could only be determined after several questions of fact in dispute between the parties were determined. In proceeding to decide the third issue merely on the pleadings and on the assumption that the allegations made by the defendant in his written statement were true and those made by the plaintiff were not true, and on that footing treating the- joint account as of the common ownership of the two partners, the trial Judge acted illegally and with material irregularity in the exercise of his jurisdiction.10.

Decision reasoning: 0[ds]For the effective exercise of its superintending and visitorial powers, revisional jurisdiction is conferred; upon the High Court and it would be putting an unwarranted restriction upon the jurisdiction of the High Court to restrict it to those cases only where no appeal would reach the High Court from the final order passed in the pro- ceeding. We are therefore unable to agree with the view which prevailed with the Rajasthan High Court that there is a restriction placed upon the power of the High Court in the exercise of the revisional jurisdiction as would limit the exercise of that power only to cases where no appeal is competent from the final order passed in the suit orthird question may now be dealt with. By the order passed by the Court of First Instance on the third issue it was held that the suit filed by Dillon was not maintainable. That decision, in our judgment, affected the rights and obligations of the parties directly. It was a decision on an issue relating to the jurisdiction of the Court to entertain the suit filed by Dillon. In any event the decision of the Court clearly attracted cl. (c) of s. 115 Code of Civil Procedure, for the Court in deciding that "the suit was not maintainable as alleged in paragraphs 15, 16, 17 and 18 of the written statement" purported to decide what in substance was an issue of fact without a trial of the suit on evidence. Dillon alleged in his plaint that at the request of Khanna, he had advanced diverse loans (from the funds lying in deposit in the joint account) and that the latter had agreed to repay the loans. The cause of action for the suit was therefore the loan advanced in consideration of a promise to repay the amount of the loan, and failure to repay the loan. By his written statement Khanna had pleaded in paragraph 15 that Dillon had not advanced any money to him and that Dillon had not claimed the amount for himself and there- fore he was not entitled to file a suit for recovery of the amounts. By paragraph 16 he pleaded that Dillon having admitted in the plaint that the amounts in suit were to be paid back to the joint account he was not entitled to file the suit. By paragraph 17 it was pleaded that a suit by one joint owner against the other joint owner for recovery of the Joint Fund or any item of the joint fund was not maintainable and by paragraph 18 he pleaded that Dillon could not institute a suit against him because the amount was not repayable. All these contentions raised substantial issues of fact which had to be decided on evidence, and Dillon could not be non-suited on the assumption that the pleas raised were correct. At the threshold of the trial two problems had to be faced : (1) Whether in a suit to enforce an agreement to repay an amount advanced in consideration of a promise to repay the same, the question as to the ownership of the fund out of which the amount was advanced is material ; and (2) if the answer is in the affirmative, whether the fund in fact belonged jointly to Dillon and Khanna.The Judge of the Court of First Instance unfortunately assumed without a trial an affirmative answer to both these questions. Under 0. 14 r. 2, Code of Civil Procedure, where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the Court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the Court ; not to do so, especially when the decision on issues even of law depend upon the decision of issues of fact, would result in a lop-sided trial of the suit. We are at this stage not expressing any opinion on the question whether the allegations made by Dillon and Khanna are true ; we are only concerned to point out that what was regarded as an issue of law as to maintainability of the suit could only be determined after several questions of fact in dispute between the parties were determined. In proceeding to decide the third issue merely on the pleadings and on the assumption that the allegations made by the defendant in his written statement were true and those made by the plaintiff were not true, and on that footing treating the- joint account as of the common ownership of the two partners, the trial Judge acted illegally and with material irregularity in the exercise of his jurisdiction.