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Tag: civil procedure (page 1 of 2)

What’s the issue – Understand why and how courts frame issues in civil suits

JSaiDeepak_OnTrialIt helps to occasionally step back and seek the true meaning of an element of procedure. This is true about the framing of issues in a civil suit since the significance of this step in a trial is often taken for granted.

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What is an issue?

The title of Order 14 of the Code of Civil Procedure, 1908 (“CPC”) is “Settlement of Issues and Determination of Suit on Issues of Law or on Issues Agreed Upon”. Clearly, a suit is determined on the basis of issues of law or other issues agreed upon by the parties in a suit. But what is an “issue”? Although the CPC does not define the term, Sub-rule 1 of Rule 1 of Order 14 says that issues arise when a material proposition of fact or law is affirmed by one party and denied by the other. In other words, both parties must disagree on a material proposition of fact or law.

The Evidence Act, 1872 also defines “Facts in issue” to mean and include any fact which, either by itself or in connection with other facts, has a bearing on a right or liability asserted or denied in a suit. According to the explanation to this definition, when a court records an issue of fact under the CPC, the fact to be asserted or denied in response to such an issue would also be treated as a fact in issue.

What is a material proposition giving rise to an issue? Sub-rule 2 of Rule 1 states that material propositions are those propositions of law or facts which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute a defence. Simply put, a material proposition is one that advances a party’s case factually or legally.

Sub-rule 3 mandates that each material proposition on which the parties disagree shall be framed as a distinct issue. Could it be said therefore, that propositions of fact or law which do not further a party’s case are not material and therefore ought not to be framed as issues? What consequences follow when a proposition of fact or law, although material, is not framed as an issue despite the parties being at variance with each other?

On this, the Supreme Court has held that the non-framing of an issue does not vitiate the proceedings as long as the pleadings of parties bear out that the issue exists and both parties have led evidence at trial to prove their respective contentions on the issue. In other words, a court can rule on an issue even if it has not been specifically framed, so long as it is material to the determination of the suit.

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The process of framing

How does a court go about framing an issue? Sub-rule 5 of Rule 1 lays down the procedure for this. At the first hearing of a suit, the court shall, after reading the plaint and the written statement, and after examination under Order 10 Rule 2, and after hearing the parties or their counsel, ascertain upon what material propositions of fact or law the parties are at variance, and shall then proceed to frame and record the issues on which the right decision of the case appears to depend.

What does this mean? Simply, that a court has to understand the contentions of the parties from their written pleadings and oral submissions and distill only those propositions of fact and law on which the parties differ and which are “material” for the adjudication of the suit. The question of materiality in Sub-rule 5 has no bearing on the tenability of the contentions of parties on factual or legal propositions. It simply refers to testing an issue for its relevance to the determination of the case.

For instance, in a suit for patent infringement, if there is no dispute between the parties about the plaintiff’s ownership of the patent, there is no point in framing an issue on it. Even though the question of ownership is material, the parties do not disagree on it. Contrast this with a situation where the plaintiff claims to be an assignee of the erstwhile patent owner and the defendant disputes the fact of assignment. The question of ownership or assignment of the patent is material because under the Patents Act, only a patentee or the exclusive licensee may institute a suit for infringement. In other words, the maintainability of the plaintiff’s action is in question. Moreover, since the parties disagree on this material question, the court has to frame an issue on it.

This procedure of framing of an issue needs to be clearly understood. Some people tend to read more into the mere framing of an issue under Order 14 than is warranted. The framing of an issue does not amount to a court taking a position on the contentions of the parties on a material question of fact or law. The court is merely etching the contours of the trial so that the progress of the trial is not waylaid by a slugfest on immaterial issues that have no bearing on the adjudication of the rights and liabilities of the parties. Reading the Supreme Court’s decision in Makhanlal Bangal v. Manas Bhunia (2001), delivered in the context of the Representation of the People Act, 1951, but relevant since the procedure under the CPC applies to the statute, will help clear the fog around the framing of issues.

In the next post, I will deal with the commencement of trial.

Sai Deepak is an engineer-turned-law firm partner-turned-arguing counsel. Sai is the founder of Law Chambers of J. Sai Deepak and appears primarily before the High Court of Delhi and the Supreme Court of India. He is @jsaideepak on Twitter and is the founder of the blawg “The Demanding Mistress” where he writes on economic laws, litigation, and policy. All opinions expressed here are academic and personal.

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More tools for litigators after Commercial Courts Act boosts discovery in India

JSaiDeepak_OnTrialI have often heard it lamented that India lacks U.S.-style discovery mechanisms at trial. While I am no expert on U.S. procedural law, I believe that Indian civil procedure contains substantial mechanisms for discovery. Let us now look at the mechanisms available under the Code of Civil Procedure, 1908 (“CPC”) including those recently introduced to the CPC through the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Commercial Courts Act“). Employed effectively, they can narrow down the scope of facts and issues that need examination at trial.

Discovery under the CPC

Section 30 of the CPC provides for a court’s power to order discovery. At any time during the conduct of a suit, this provision empowers a court, either of its own motion or on the application of a party, to pass necessary and reasonable orders relating to the delivery and answering of interrogatories; the admission of documents and facts; and the discovery, inspection, production, impounding, and return of documents or other material objects that may be produced as evidence. The provision also empowers a court to issue summons to persons whose attendance is required either to give evidence or to produce documents or other objects that may be led in evidence. A court can also order any fact to be proved by way of an affidavit. While it is commonly assumed that only Order XI of the CPC corresponds to Section 30, Orders XII, XIII, and XVI also contain provisions that relate to Section 30.

What’s the role of a court in discovery proceedings?

The framework that emerges from a combined reading of Section 30 and Orders X, XI, XII, XIII, XVI, and XVIII informs us that the assumption that Indian courts lack powers of discovery because they adhere to the adversarial system of justice may not be true. In Maria Margadia Sequeria v. Erasmo Jack De Sequeria (2012), the Supreme Court, holding that discovery was one of the main purposes of the existence of courts, made some telling observations:

“A judge in the Indian System has to be regarded as failing to exercise its jurisdiction and thereby discharging its judicial duty, if in the guise of remaining neutral, he opts to remain passive to the proceedings before him. He has to always keep in mind that “every trial is a voyage of discovery in which truth is the quest”. In order to bring on record the relevant fact, he has to play an active role; no doubt within the bounds of the statutorily defined procedural law.

41. World over, modern procedural Codes are increasingly relying on full disclosure by the parties. Managerial powers of the Judge are being deployed to ensure that the scope of the factual controversy is minimized.

42. In civil cases, adherence to Section 30 CPC would also help in ascertaining the truth. It seems that this provision which ought to be frequently used is rarely pressed in service by our judicial officers and judges.”

The Court also quoted from the report of the Malimath Committee, which had highlighted the drawbacks in a strictly adversarial system and recommended that courts be statutorily mandated to become active seekers of truth. This fundamental shift in the Indian approach to disputes must be borne in mind when one invokes the mechanisms for discovery. In A. Shanmugam v. Ariya K.R.K.M.N.P.Sangam (2012), the Court, apart from reiterating the ratio of Maria Margadia Sequeria, categorically observed that ensuring discovery and production of documents and a proper admission or denial is imperative for the effective adjudication of civil cases.

Bar raised by Commercial Courts Act

The Commercial Courts Act, 2015 builds on this approach further by introducing an improved discovery mechanism, evident from the language and structure of Rules 1 to 5 in the revised Order XI, which is specific to suits of a commercial nature. The spirit of the revised framework is perhaps best captured by Sub-rule 12 of Rule 1. It unequivocally states that the duty to disclose documents that have come to the notice of the party shall continue until the disposal of the suit. It goes without saying that the reference here is to documents, which are relevant and necessary to decide any question that is germane to the dispute before the court. Critically, both parties are expected to file a list of all relevant documents which are in their power, possession, or control regardless of whether those documents support or undermine their respective positions on merits. Clearly, the bar has been raised under the Commercial Courts Act and both the parties and the courts have access to fairly effective discovery options to facilitate expeditious disposal of suits. The actual employment of these options, of course, remains to be seen.

In the next part of this series, I shall discuss framing of issues and the commencement of trial.

J. Sai Deepak is an engineer-turned-law firm partner-turned-arguing counsel. Sai is the founder of Law Chambers of J. Sai Deepak and appears primarily before the High Court of Delhi and the Supreme Court of India. He is @jsaideepak on Twitter and is the founder of the blawg “The Demanding Mistress” where he writes on economic laws, litigation, and policy. All opinions expressed here are academic and personal.

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Know all available interim reliefs but be smart about using them

JSaiDeepak_OnTrialIn my previous post here, I discussed a few important terms from the Code of Civil Procedure, 1908 (“CPC”). That discussion alone illustrates that mechanical compliance with procedural law is not enough. Even though they are regularly described as the handmaidens of justice, procedural legislations are also statutes to which rules of statutory interpretation apply. If you are still not convinced, just talk to some colleagues about some of the most basic terms and clauses in the CPC and you will see for yourself the varied and equally plausible interpretations they can give rise to. Imagine how much trouble the creative interpretation of procedure can cause!

Let us take the case of interim applications. These are applications filed as an adjunct to the primary suit proceeding and may result in interlocutory orders, dismissals of suits, or decrees. If you represent the plaintiff, you will file along with the suit, a host of interim applications — starting from the seemingly mundane applications under Order 13 of the CPC seeking exemption from filing original documents to the important ones seeking urgent ex parte interim reliefs under Order 39 pending disposal of the suit. If you represent the defendant, you will move applications along with your written statement objecting most frequently to the maintainability of the suit on the procedural and substantive grounds under Order 7, Rules 10 and 11. Clearly, while interim applications are expected in theory to proceed in parallel to the suit, more often than not they interfere with the progress of the suit and vice versa.

More interim reliefs in the CPC, Horatio, than are dreamt of in your philosophy

Because of practice and convention, a few interim applications are invoked more often than others. But lawyers cannot afford to limit their knowledge to provisions that they frequently encounter. In fact, what better way to impress a court than to invoke a less-trod procedural provision and to explain to the court the manner in which it should be construed and applied? For instance, when sued by a foreign party that has no immovable property in India, it might help to test waters by drawing the court’s attention to Order 25 of the CPC to require the plaintiff to deposit security in court. This will help you understand the plaintiff’s will to fight to the finish since an order for depositing security casts an additional financial burden on the plaintiff besides the court fee and legal costs it has already incurred.

Another example is Order 13-A of the CPC, introduced recently through the Commercial Courts Act, 2015. It allows a defendant to seek a summary judgment in any commercial dispute if it is able to convince the court that the plaintiff is unlikely to succeed at trial and therefore no need for a protracted conventional trial. The Commercial Courts Act, 2015 is replete with such opportunities because it is designed to reduce frivolous litigation and expedite genuine litigation.

Know when to press a procedural button

That said, it is also important to appreciate the distinction between the theoretical availability of a procedural option at any stage and the appropriateness of invoking it from a strategic perspective. For instance, interrogatories under Order 11 of the CPC allow a party to put factual questions or questions relating to documents with a view to elicit answers which are not evasive. While this mechanism has certain benefits on paper, it gives the other side a peek at the interrogating party’s potential strategy at trial, besides the obvious advantage of answering questions without being under the pressure of cross-examination. Similarly, while it may seem routine to lodge a caveat under Section 148A of the CPC with a view to pre-empt the grant of ex parte orders, it is important to consider how such a course of action may be perceived and the adverse inference that a court may draw. Once again, this is a question of strategy and a litigator has to strike a balance between knowledge of a provision and the advisability of its application.

Substantive legislations also provide for a host of interim applications addressing various aspects of the subject-matter they cover. For instance, on February 5, 2016, a full bench of the Delhi High Court delivered a decision on the application of Section 124 of the Trademarks Act, 1999 under which infringement suit proceedings can be stayed subject to the satisfaction of the conditions under the provision. This decision is being considered by a division bench in a batch of appeals where Section 124 has been commonly invoked. I happen to be arguing in one of the appeals and hopefully, shall be able to write on this issue once there is more clarity.

In the next post, I will discuss discovery proceedings.

J.Sai Deepak, an engineer-turned-litigator, is an Associate Partner in the Litigation Team of NCR-based Saikrishna & Associates. Sai is @jsaideepak on Twitter and is the founder of the blawg “The Demanding Mistress” where he writes on economic laws, litigation and policy. All opinions expressed here are academic and personal.

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‘Material facts’, ‘material particulars’ and other common CPC terms that are vital for a trial lawyer

JSaiDeepak_OnTrialThere are some terms that are frequently used in the Code of Civil Procedure, 1908 (“CPC”), and it is important to understand them well because the maintainability of a civil action can depend on your understanding. As you know, the court will not address the merits of a dispute until it is prima facie satisfied about the maintainability of an action.

Cause of action, act, and interest

In Orders 1 and 2 of the CPC, where joinder of parties and causes of actions are discussed among other things, one frequently comes across the terms “cause of action”, “interest”, and “act or transaction”. While Order 1 Rule 1 refers to “acts or transactions”, Order 1 Rule 8, which permits the filing of a representative suit, clarifies in its explanation that those claiming to file a representative suit need only have the “same interest”, they need not have the “same cause of action”. What do these terms mean?

An “act or transaction” is different from “cause of action”. The former gives rise to the latter. An actionable cause arises from an act when the act amounts to the infraction of a party’s right. For instance, selling a patented product without consent is an act which gives rise to a cause of action in favour of the patentee. The same act could also give rise to different causes of action in favour of the same right owner or several right owners. In the example above, the sale of a product could result in infringement of a patent as well as a trademark held by the same individual or could infringe several patents held by unrelated parties.

In contrast to Order 1, Rule 1, which deals with joinder of plaintiffs and Order 1, Rule 3 which deals with joinder of defendants, Order 1, Rule 8,which permits filing of a representative suit, uses the term “interest” to increase the scope for joinder of parties beyond what is provided in Rules 1 and 3. The word “interest” has been used to facilitate adjudication of all questions which arise from the same set of acts or transactions. This provision is intended to avoid multiplicity of litigation where all persons are aggrieved by the same acts or transactions. Importantly, this permits one person to represent all other “interested parties”. For instance, if a host of tenants have an issue with an act or acts of the landlord, instead of filing multiple suits or instead of naming all tenants as parties in one suit, one tenant may represent the rest. Therefore, Rule 8 enlarges the scope of joinder of parties so long as there is a communion of “interest” between the parties.

The distinction between “act or transaction”, “cause of action”, and “interest” affects the maintainability of a civil action. The failure to disclose a prima facie cause of action, for instance, would result in the dismissal of a suit at the outset under Order 7, Rule 11. Similarly, to justify arraying a host of parties as defendants, a plaintiff must set out their relationship inter se, along with their nexus to the transaction which has given rise to the cause of action in favour of the plaintiff against all the defendants. Should the plaintiff fail to justify this, his plaint could be assailed for misjoinder of parties or non-joinder of necessary parties.

Now, let us look at “facts” and “particulars”, two terms that occur frequently in relation to pleadings in Order VI.

Facts, material facts, and material particulars

CPCcontentsOrder VI of the CPC, as discussed earlier, deals with pleadings. It uses the terms “material facts” and “particulars” in different places. Are “material facts” and “particulars” the same? The rules of statutory interpretation and even a common sense understanding of the English language tell us that there is a clear difference. “Facts” refer to the broad matrix or the canvas in the backdrop of which a dispute is contested. “Material facts” are those facts which must find mention in a party’s pleadings in order to establish a claim. “Particulars”, on the other hand, refer to the addition of greater detail to the facts.

The absence of material facts prejudices a party’s case at the outset. The absence of material particulars on the other hand, is curable. The Supreme Court has discussed the distinction between material facts and particulars in Udhav Singh v. Madhav Rao Scindia (1975)In this case, the Court held that “all primary facts which must be proved at the trial by a party to establish the existence of a cause of action or his defence are material facts”. The Court also explained the consequences of the absence of material facts and material particulars.

“The distinction between “material facts” and “material particulars” is important because different consequences may flow from a deficiency of such facts or particulars in the pleading. Failure to plead even a single material fact leads to an incomplete cause of action and incomplete allegations of such a charge are liable to be struck off under Order 6, Rule 16, Code of Civil Procedure.

If the petition is based solely on those allegations which suffer from lack of material facts, the petition is liable to be summarily rejected for want of a cause of action. In the case of a petition suffering from a deficiency of material particulars, the court has discretion to allow the petitioner to supply the required particulars even after the expiry of limitation.”

These terms not only affect the the maintainability of an action, they also influence a party’s prospects at trial when a party is expected to lead evidence with respect to facts in issue. If such facts have not even been pleaded, the party cannot lead evidence to prove such facts. This would necessitate amendment of pleadings under Order 6, Rule 17, which can be a pretty messy affair.

In the next post, I will discuss interim applications under the CPC and the circumstances in which they may be employed.

 J.Sai Deepak, an engineer-turned-litigator, is an Associate Partner in the Litigation Team of NCR-based Saikrishna & Associates. Sai is @jsaideepak on Twitter and is the founder of the blawg “The Demanding Mistress” where he writes on economic laws, litigation and policy. All opinions expressed here are academic and personal.c 

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Where to file suit for copyright infringement? Supreme Court’s purposive interpretation amounts to re-writing the Copyright Act

vijayaraghavannarasimhamA plain reading of Section 62 of the Copyright Act, 1957 will reveal that Section 62(2) of the Copyright Act is an exception to the general rule vesting jurisdiction in a civil court in case of ‘infringement of copyright in any work’.

Under Section 62(1), such a suit has to be instituted before ‘the district court having jurisdiction’ in respect of the ‘infringement of copyright in any work’.

The general rule, seen in Section 20 of the Code of Civil Procedure, 1908 (“CPC”), is that a civil proceeding complaining of ‘infringement’ has to be instituted where the ‘cause of action’, that is, the ‘infringement’ arose, or where the defendants reside or carry on business.

S62CopyrightAct S20CPC

Section 62(2), however, has a non obstante clause vis-a-vis Section 20 of the CPC and any other law in force. Therefore, only Section 62 is invoked to determine whether such a suit is territorially tenable.

Section 62(2) thus makes an exception to Section 62(1). It means that a ‘district court within whose jurisdiction plaintiff resides or carries on business’ is also a place of permissible jurisdiction. This necessarily means that even if the ‘infringement of copyright in a work’ arose within the jurisdiction of Court A, the suit can be filed by the plaintiff in Court B, within whose jurisdiction he resides or carries on business.

Once the plaintiff proves that he was residing at the chosen venue or he was carrying on business there, he can surely sue at that location. The plaintiff need only show that he was ‘actually and voluntarily residing’ there or ‘carrying on business’ or personally working for gain. Once these ingredients are satisfied, the suit has to be held maintainable. In effect, the criteria under Section 20 of the CPC, that is, where the ‘cause of action’ arose or where the ‘defendant was residing’ or ‘carrying on business’ are rendered otiose.

The reasoning behind creating this exception was that an artist must have total control and dominance over his ‘copyright in a work’. The artist has the right to carry his right to sue wherever the artist resides or moves to reside or carries on business or moves to carry on business, irrespective of where the cause of action or infringement arises. It is a clear and lucid departure from the ordinary rule of territorial jurisdiction.

How Sanjay Dalia rewrote the Copyright Act, all in the name of “purpose”

Unfortunately, in one more exhibition of the ‘purposive interpretation’ rule, the Supreme Court has affirmed the decision of the Delhi High Court in Indian Performing Rights Society Ltd. v. Sanjay Dalia.

The plaintiff was carrying on business through a branch office in Delhi though their head office was in Mumbai. The alleged ‘infringement’ had taken place in Mumbai. The concurrent findings of the Delhi High Court declining to entertain the suit in Delhi was affirmed by the top court.

“In our opinion, the provisions of section 62 of the Copyright Act and section 134 of the Trade Marks Act have to be interpreted in the purposive manner. No doubt about it that a suit can be filed by the plaintiff at a place where he is residing or carrying on business or personally works for gain. He need not travel to file a suit to a place where defendant is residing or cause of action wholly or in part arises. However, if the plaintiff is residing or carrying on business etc. at a place where cause of action, wholly or in part, has also arisen, he has to file a suit at that place, as discussed above.”

‘Purposivism’ and ‘consequentialism’ cannot be used to tide over the ‘convenience or inconvenience’ of parties. When the Parliament has conferred on the plaintiff, the right to sue for infringement wherever he resides or carries on business, is the Supreme Court right in concluding that plaintiff could not do so in a case where the infringement arose in Mumbai and defendant carried on business in Mumbai and plaintiff also had its head office? This amounts to re-writing the legislation. Oh, for an Antonin Scalia dissent of the Obamacare and Obergeleff genre.

Vijayaraghavan Narasimhan is an advocate practicing at the Madras High Court.

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Can a plaintiff-patentee withdraw a suit for patent infringement at will?

JSaiDeepakpicCan a patentee, after filing a suit for infringement and securing an interim injunction against the defendant, withdraw the suit at will? Interim orders after all, are granted only on a prima facie appreciation of the case and the result at the end of the trial could well be in favour of the defendant. Can the plaintiff therefore, be permitted to withdraw the suit at will without affording the defendant an opportunity to establish his case at trial? Also, since interim orders could have caused significant injury or loss to the defendant, can the defendant not legitimately expect restitution for the loss suffered by him? These questions are not answered by the Patents Act, 1970, but instead, require us to look into the Code of Civil Procedure, 1908 (“CPC”).

The relevant provisions of the CPC are Order 23, Rule 1 and Section 144. Order 23 of the CPC deals with ‘Withdrawal and Adjustment of Suits’.

Order23Rule1CPC

Clearly, the plaintiff-patentee has the right to withdraw the suit at will, and there is nothing in the law that prevents him from doing so. The defendant however, is not without a remedy and can seek restitution of the costs incurred by him during the course of the litigation and as a consequence of it. Section 144 of the CPC provides for a remedy in such a situation.

Section144_CPC

Sub-section 1 of Section 144 provides for restitution when a decree or order undergoes variation or reversal in an appeal or revision or “any other proceeding”. The sub-section also envisages restitution upon setting aside or modification of the decree or the order passed in the first suit in a counter-claim or a counter-suit instituted for the purpose of setting aside or modifying the decree or the order in the first suit.

However, there is no express mention of whether or not such restitution is available in the event of withdrawal of a suit. That said, the provision is broad enough to accommodate such an eventuality since it refers to variation or reversal in “any other proceeding”, a phrase that captures the spirit of the provision to provide a remedy to a defendant who has suffered losses or costs as a consequence of the plaintiff’s suit.

When can an application for Section 144 be filed? Who can it be filed before?

Sub-section 1 of Section 144 answers both these questions. An application under Section 144 may be filed before the court which passed the decree or the order which was subsequently varied or reversed.

Such an application must naturally only be filed after such a variation or reversal of the decree or the order has happened. This also means that once the decree has been varied or reversed by an appellate court and rendered final, a stand-alone application under Section 144 may be moved before the court of first instance which had passed the original decree or order. Such an application would stand independent of the suit and the court shall hear it by virtue of being the court that passed the decree or the order.

A Calcutta High Court decision in Dilip Kumar Dey v. Vishwamitra Ram Kumar throws more light on Section 144.

DilipKumarDeyvVishwamitraRamKumar_AIR1995Cal31.jpg

Instead of an application under Section 144, can a counter-claim for damages or costs be instituted by the defendant? Sub-section 2 of Section 144 bars such a counter-suit:

(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under sub-section(1).

In summary therefore, although the plaintiff may withdraw the suit at will, the defendant is not without remedy to seek restitution, courtesy Section 144 of the CPC. An independent application can be filed, notwithstanding the withdrawal of the suit. Secondly, a remedy which may be sought under Section 144 cannot be sought by way of or as part of a counter-claim or a counter-suit.

(J. Sai Deepak, an engineer-turned-litigator, is a Senior Associate in the litigation team of Saikrishna & Associates. He is the founder of “The Demanding Mistress” blawg. All opinions expressed here are academic and personal.)

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Conflict between the CPC and the Evidence Act

In the case of Dinesh Viniyog Limited and Others v. The Oriental Gas Company Limited and OthersG.A. No. 859 of 2009 (2011 AIR CC 1405 (CAL)), the judgement was given by Justices Bhaskar Bhattacharya and Sambuddha Chakrabarti. The brief facts of the case were thus:

The respondents in the appeal had filed an execution application in the Calcutta High Court for execution of a decree and order passed in an English court in favour of the respondents. The appellant filed an objection, saying that the decree and order were not properly certified and that the decree holder had already realised more than the decretal dues by selling certain shares. The Single Judge of the High Court acknowledged the objection and gave the respondents three months time to remedy the same. Pursuant to such direction, the respondents filed the certified order. The appellant objected to the same again. However, the Single Judge rejected such objection and passed an order. The appeal was filed in appeal to the same.

Justice Bhaskar Bhattacharya Image above is from the website of the Calcutta High Court.

Justice Bhaskar Bhattacharya
Image above is from the website of the Calcutta High Court.

The appellants raised two main objections in the instant Letters Patent appeal. At first, it was contended that the purported certificate and the true copy of the order were not in compliance with the Supreme Court Rules, 1965 as applicable in India. It was further contended that there was a binding requirement to comply with Order 71, Rule 13(4) of the aforesaid rules for a judgment to be executed in India. Secondly, it was contended that an interest amount had been levied which was contrary to law and was passed without jurisdiction.

The Court negatived both the contentions of the appellant. With regard to the first contention, the Hon’ble Division Bench was pleased to hold that the purported certificate and true copy of the order passed by the English Court were in compliance with Section 44A of the Code of Civil Procedure, 1908 (“the CPC”) and thus executable in courts of India. Section 44A of the CPC is set out below:

Section 44A: Execution of decrees passed by Courts in reciprocating territory.

(1) Where a certified copy of decree of any of the superior courts of any reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court.

(2) Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.

(3) The provisions of Section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the District Court shall refuse execution of any such decree, if it is shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) of section 13.

Explanation 1- “Reciprocating territory” means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section; and “superior Courts”, with reference to any such territory, means such Courts as may be specified in the said notification.

Explanation 2 – “Decree” with reference to a superior Court means any decree or judgment of such Court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect to a fine or other penalty, but shall in no case include an arbitration award, even if such an award is enforceable as a decree or judgment.

As regards the second contention, the Hon’ble Division Bench stated that appellant should have contested the objection to such interest levied in the appropriate forum in England and the same issue could not be opened or adjudicated in India. However, the appellant failed to do so. The Hon’ble Division Bench, being only the executing court, was bound by the certificate showing interest had been levied.

The first part of the judgment needs a closer scrutiny and consideration. The decision of the Hon’ble court is based purely on the CPC. The Hon’ble division bench, however, failed to take into account Section 82 of the Indian Evidence Act, 1872 (“the Evidence Act”). That section provides for the presumptions to be followed by a court of law with regard to documents which are admissible in England:

Section 82 of the Evidence Act, 1872 states as follows:

Presumption as to document admissible in England without proof of seal or signature – When any document is produced before any Court, purporting to be a document which, by the law in force for the time being in England or Ireland, would be admissible in proof of any particular in any Court of Justice in England or Ireland, without proof of the seal or stamp or signature authenticating it or of the judicial or official character claimed by the person by whom it purports to be signed, the Court shall presume that such seal, stamp or signature is genuine, and that the person signing it held, at the time when he signed it, the judicial or official character which he claims, and the document shall be admissible for the same purpose for which it would be admissible in England or Ireland.

Section 44A of the CPC merely provides for the processor execution of a foreign judgment in the courts of India. However, Section 82 of the Indian Evidence Act is a special law with regard to England and Ireland and thereby all such documents which would have been admissible in England would be deemed to be admissible in India. The Hon’ble division bench, when deciding the instant matter, could have taken advantage of this provision and decided on the admissibility of the documents produced on this basis. The court, however, failed to do the same, which unfortunately in my opinion is a grave mistake for admissibility of judicial documents coming from England could only be analysed through the prism of Section 82 of the Indian Evidence Act.

 

(Anubhav Sinha is an advocate in Kolkata.)

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A decision on the powers of a director

Does a director need a resolution specifically enabling him to sign, verify, and institute a suit on behalf of the company? This was the question posed before the Allahabad High Court in Bhanu Pratap Mehrav. M/s. Brij Leasing Private Limited, 2011 (104) AIC 311 (Alld.H.C.). The factual background to the case was that Brij Leasing Private Limited (“the Company”) filed a suit for specific performance against Bhanu Pratap Mehra and the plaint was duly signed and verified by Avin Jain, the director of the company. The defendant filed a written statement specifically disputing the authority of Avin Jain, to sign, verify, and institute the suit on behalf of the company, contending that no documentary proof had been filed at the time of presentation of the suit in compliance of Order 7 Rule 14 read with Order 29 Rule 1 of the Code of Civil Procedure, 1908 (“the C.P.C.”).

It was not in dispute that Avin Jain was a director of the company. As per the provisions of the Companies Act, the director is authorised to do all acts on behalf of the company, unless he is specifically restrained from doing any specific work. Under Section 291 of the Companies Act, any act done by the director is deemed to be on behalf of the company. It has been further held that under Order 29 Rule 1 C.P.C., the director can sign and verify on behalf of the company.

The defendant however, had contended that while under Order 29 Rule 1 of the C.P.C., the director can sign and verify a suit; signing and verifying a plaint is different from filing a suit. Only a person authorised by the Board of Directors can file a suit. In the present case, there was no specific resolution authorising the director concerned to do so. Therefore, it was contended that the suit was not maintainable and was liable to be rejected. In support of the contention, the defendant relied upon the decisions of the Delhi High Court in M/s. Nibro Limited v. National Insurance Company Limited, AIR 1999 Delhi 25, M/s. Rajghria Paper Mills Limited v. General Manager, Indian Security Press and Another, AIR 2000 Delhi 239, and the Supreme Court in Dale and Carrington Investments Private Limited v. P.K. Prathapan, (2005) 1 SCC 212.

The Allahabad High Court has disagreed with Justice Sunanda Bhandare's decision in M/s. Nibro Limited v. National Insurance Company Limited. The image above is from the website of the Delhi High Court.

The Allahabad High Court has disagreed with Justice Sunanda Bhandare’s decision in M/s. Nibro Limited v. National Insurance Company Limited.
The image above is from the website of the Delhi High Court.

The Allahabad High Court discussed each of the above cases to assess their applicability in the present scenario. In the cases of M/s. Nibro Limited v. National Insurance Company Limited (supra) and in the case of M/s. Rajghria Paper Mills Limited v. General Manager, Indian Security Press and Another (supra), drawing a distinction between the signing of the plaint and the authority to file the suit, the Delhi High Court held that unless a power to institute a suit is specifically conferred on a particular director, he has no authority to institute the suit on behalf of the company. In the case of Dale and Carrington Investments Private Limited v. P.K. Prathapan (supra) the dispute related to the right to control and manage the company. While deciding the dispute the Apex Court observed that a company is a juristic person and that it acts through its directors who are collectively referred to as the Board of Directors. An individual director has no power to act on behalf of a company of which he is a director, unless by some resolution of the Board of Directors of the company, the specific power is given to him or her. The Allahabad High Court however, held that the observation of the Supreme Court should be read in the context of the specific issue involved and the issue there did not relate to the authority of a director vis-à-vis filing a suit; the decision of the Supreme Court was therefore held not applicable.

In the case of Bharat Petroleum Corporation Limited v. M/s. Amar Autos, 2008 (72) ALR 75, a similar argument had been raised relying on the decision of the Delhi High Court in the case of M/s. Nibro Limited v. National Insurance Company Limited (supra). The Allahabad High Court in that case negated the submissions and held as follows:

“Persuasive value of M/s Nibro Ltd. (supra) cannot pursue us. There is a thinner line in between authorization to sign and verify the pleadings, and to institute a suit on behalf of the corporation, company or a body corporate. Whenever a person is authorised to sign and verify the pleadings other than verification of plaint, written statement, memorandum of appeal, etc., it is doing so by filing affidavit in support of such contentions. Therefore, it stands on a better position than ordinary verification. But a person when verifies the plaint, written statement or memorandum of appeal, it is a verification simplicitor, meaning thereby that the verification part is also to be evidently proved unlike an affidavit, which itself is an evidence. Hence, authorization to institute a suit stands in the lower side than putting signature and verifying a pleading by way of an affidavit. On the other hand, signature and verification of the pleading of a plaint cannot be made for the sake of signature and verification alone but for the purpose of filing of the same before the Court either by him or by his learned Advocate. As soon as it is filed, the same will be treated to be institution of such proceeding by the person who has signed and verified. It is automatic.”

The director acts as an agent of the company unless anything is provided to the contrary. Order 29 Rule 1 provides that a director can sign and verify the plaint. There is no provision under the C.P.C., which provides that a director cannot institute the suit unless he is authorised by the Board of Directors. The objection raised by the revisionist-defendant, was held by the Court to be highly technical, and not one that could be allowed to defeat the justice. In view of the above reasoning and the cases cited, the Allahabad High Court disagreed with the view taken by the Delhi High Court and held that a director of a company does not need a specific resolution to institute a suit on behalf of the company.

 

(Vipul Kharbanda is an Allahabad-based advocate.)

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Understanding the Ayodhya verdict

We all remember the anticipation with which the verdict of the Special Bench of the Allahabad High Court (“the First Special Bench”) in the Ayodhya matter was awaited at the end of September 2010. Unprecedented security arrangements such as the increased presence of security forces in certain ‘sensitive’ areas, coupled with widespread rumours regarding the date of pronouncement of the verdict led to heightened tension. The Lucknow and Allahabad (Principal) Benches of the Allahabad High Court as well as the twin cities of Ayodhya-Faizabad had virtually been transformed into fortresses in order to check any untoward incidents.

Well aware of the likely impact of the judgment, the High Court along with its lengthy order, also issued a press release containing what the judges considered the operative part of the judgment, as the sheer volume of the judgment would have taken anybody at least a couple of days to figure out and make sense of. The great volume of the order coupled with the fact that all three judges had given separate judgments lead to such ambiguity and confusion about the ratio decidendi of the order that another Special Bench of three judges had to be constituted by the Allahabad High Court (“the Second Special Bench”) which, in Gopal Singh Visharad v. Jahoor Ahmad and Others, 2011 (104) AIC 273 (Alld-HC), decided how the decree for the five suits in the Ayodhya matter would be drawn up and executed.

Order XLI Rule 35 of the Code of Civil Procedure, 1908 (“the CPC”) provides that where there is more than one judge on a bench and there is difference of opinion among them, then it shall not be necessary for a judge dissenting from the judgment of the court to sign the decree. It means that a dissenting judge need not sign the decree drawn by the majority. However, this provision applies to the preparation of a decree by a court acting in its appellate jurisdiction, whereas in the Ayodhya case, the First Special Bench had heard and decided the suits in original jurisdiction transferred to it from the subordinate court. Thus, that provision or any other provision in the CPC could not shed any light on the problem.

The only other place where the Second Special Bench could have turned to for guidance was Chapter XV of the High Court Rules, which contained certain provisions in respect of original and extraordinary original civil jurisdiction. Rule 22 refers to the trial of suits transferred or withdrawn by the High Court to itself from any inferior court, for trial and determination by itself in exercise of its extraordinary original civil jurisdiction, and provides that rules contained in Chapter XV shall apply to such suits also. However, even in Chapter XV, the Second Special Bench could find nothing about the manner in which a decree could be prepared by the High Court, particularly in a case heard by a larger bench consisting of three judges, all three of whom had given different judgments. The Ayodhya order, in the High Court’s own words, was an “extraordinary situation”.

Therefore with no legal provision or precedent to guide it, the Second Special Bench proceeded to interpret the judgment delivered by the First Special Bench with the only guiding principle being that the decree should be discerned in the light of the majority decision or the unanimous decision, as the case may be, even though contained in separate decisions of all the (three) judges concerned.

The approach of the Second Special Bench was to evolve principles for interpreting the order of the First Special Bench with regard to the issues framed in the first suit and then apply the same principles to those framed in the other suits. 

A view of the Babri Masjid prior to its destruction. Image above is taken from Wikimedia Commons.

A view of the Babri Masjid prior to its destruction.
Image above is taken from Wikimedia Commons.

Abiding by the well settled common law maxim that relief if not granted is deemed rejected, the Second Special Bench read the judgment of Justice S.U. Khan and concluded that he did not grant any relief to the plaintiff in the first suit as nothing had been said specifically or otherwise, towards the relief prayed for in first suit. The judgment of Justice Sudhir Agarwal, partly decreed the first suit by making a declaration that the plaintiff had the right to worship at the disputed site including in that part of the land which was held by the court to be the place of birth of Lord Rama (thereby affirming such faith and belief of the Hindus), subject to such restrictions as may be deemed necessary by the authorities concerned to maintain law and order. The rest of the relief was specifically denied. Justice Dharam Veer Sharma on the other hand, denied granting relief to the plaintiff while also holding that the defendants were not entitled to special costs, as the plaintiff who had initially filed the suit had passed away. He thus ordered that the first suit be dismissed with easy costs.

Order XX Rule 6 of the CPC provides that the decree shall normally specify the relief granted or any other determination in the suit. In respect of the first suit, Justice S.U. Khan had not granted any relief to the plaintiff while Justice D.V. Sharma had dismissed the same. It was only in the decision of Justice Sudhir Agarwal that the suit was decreed partly and some relief was granted.

In this context, the question that the Second Special Bench had to consider was whether or not the minority decision should also form part of the decree.

In order to answer the above question, the Second Special Bench had to first consider what a “decree” was, stood for, or meant? The term “decree” has been defined in Section 2(2) as containing the “formal expression” of adjudication. These words have not been used again in Section 2(11) that defines “judgment”. Even though in Section 2(16), the word “order” includes the phrase “formal expression”, it is the formal expression of a decision of a civil court and not the formal expression of an adjudication, the term “adjudication” having a far wider import.

Referring to various legal and non-legal dictionaries and encyclopaedias, the Second Special Bench held that the distinction between a “judgment” and a “decree” was that a judgment contained reasons as well as the conclusions thereof, whereas a decree contained only the formal expression of an adjudication thereby conclusively determining the rights of the parties with regard to all or any of the matters in controversy in the suit. The phrase “all matters in controversy in the suit” would cover the ultimate conclusion and adjudication made by the court, which would form part of the decree, as it is this part that is presented for execution before the executing court in accordance with Part II of the CPC. It is for this reason that Section 33 provides that after the case has been heard, the court shall pronounce judgment, and on such judgment, a decree shall follow. Accordingly the conclusive determination when expressed formally by the judge should form part of the decree and not that of the judgment.

Therefore, the Second Special Bench took the view that adjudication conclusively determining the rights of the parties by the Court, being the majority decision, should be contained in the decree, and not just the mere “expression” given by all the judges. The suggestion that as per Order XLI Rule 35, the judge(s) constituting the minority need not sign the decree, was rejected by the Second Special Bench as such a provision did not apply to a decree drawn by the Court in its original jurisdiction. The decree, the Second Special Bench held, may thus be signed by all the judges constituting the Bench. It was however felt that in the interest of all parties concerned and also to avoid perpetration of confusion prevailing so far about the judgment of the First Special Bench, only the candid and unambiguous parts of the majority opinion should be declared operative.

The Court therefore directed that the decree of first suit should express the Court’s formal expression of adjudication conclusively determining the rights of parties concerned, with regard to all the matters in controversy in the suit and be prepared accordingly as under:

“Order of the Court (Majority Order):

S.U. Khan, J. No relief granted.

D.V. Sharma, J. Suit dismissed with easy costs.”

 

(Vipul Kharbanda is an Allahabad-based advocate.)

 

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Resisting enforcement of foreign decrees at the interim stage

In Dhirajlal v. Navinbhai Dave (Notice of Motion 726/2011 in Suit 536/2011, judgment dated June 14, 2011), the Bombay High Court considered the question of whether the enforcement of a foreign decree could be resisted at an interim stage. The plaintiffs had filed a suit in the Court seeking the enforcement of a decree passed by the District Court, Dallas County, Texas. A Notice of Motion was taken out seeking interim reliefs with respect to certain properties of the defendants, in order to safeguard the plaintiffs’ rights under the foreign judgment.

In the U.S. proceedings, through a written answer to summons issued by the U.S. Court, the two defendants had contended that the U.S. Court did not have jurisdiction as no part of the cause of action had arisen in the United States. Based on the rules of civil procedure in Texas, the written answer of Defendant No. 2 (Swan Mills Limited) was struck out, and Swan Mills was directed to appoint an attorney entitled to practice in Texas to represent it in the proceedings. Swan Mills did not do so within the stipulated period of time. The plaintiffs also filed a motion for summary judgment against both the defendants, and the motion was served on the defendants. Neither of the defendants took part in proceedings in the U.S. Court, and a summary judgment was entered in favour of the plaintiffs. The plaintiffs sough to enforce this summary judgment in the Bombay High Court, and sought interim protection this respect.

In the High Court, the defendants relied on Section 13 of the Code of Civil Procedure, 1908 and argued that the Dallas summary judgment was not conclusive between the parties, and that no interim reliefs should be granted. Under Section 13, foreign judgments are conclusive as to any matter directly adjudicated upon between the same parties, subject to certain exceptions. One of the exceptions is where the foreign judgment has not been given on the merits of the case. Another exception is where the foreign court has no jurisdiction.

The defendants argued before the Bombay High Court that the Dallas judgment was a summary judgment, without hearing the defendants. Although the rules of civil procedure in Texas had been followed, it was contended that an ex-parte decree passed in a summary manner under a special procedure, without going into the merits and without taking evidence, is not enforceable in India.

Justice S.J. Vazifdar of the Bombay High Court. Image above is from the website of the Bombay High Court.

Justice S.J. Vazifdar of the Bombay High Court.
Image above is from the website of the Bombay High Court.

Justice S.J. Vazifdar, relying on the observations of the Supreme Court in M/s International Woolen Mills v. M/s Standard Wool (UK), AIR 2001 SC 2134, summarised the legal position in the following words:

“… the burden of proving that the decree is not on merits would be on the party alleging it, in this case the defendants… even though the defendant has not entered evidence, the plaintiff may prove its case through oral and documentary evidence… if, after consideration of oral and/or documentary evidence an ex-parte decree is passed it would be a decree on merits. The [foreign] Court must be found to have applied its mind to the matter and considered the evidence made available to it in order that it may be said that there has been an adjudication upon the merits of the case…”.

Justice Vazifdar was also mindful of the fact that he was dealing with an interim application, and the plaintiffs at this stage only had to show the existence of a prima facie case. As to the question of whether the Dallas Court had jurisdiction, he found that the Dallas Court had considered the issue and had held that the defendants had accepted jurisdiction of that Court by filing answers. Further, he also found on a perusal of the records that the Dallas Court had not merely passed the judgment as a matter of course or as a mere formality. Whatever evidence was before the Dallas Court, had been considered; and the judgment was based on that evidence. The Dallas Court had not passed a summary judgment simply due to non-appearance of the defendants, but had applied its mind to the merits.

It was thus held that the relevant questions were thus at least considered by the foreign court. The learned Judge held that whether the extent of consideration given by the foreign court to these questions was adequate to meet the test of Section 13 or not, was undoubtedly an important point. That point, however (he further held), should be left to be decided at the final hearing of the suit and not at the interim stage.

The Bombay High Court has thus affirmed that in interim relief sought in a suit for execution of a foreign judgment, the plaintiff is not required to establish the conclusiveness of the foreign judgment beyond doubt. Even when there are valid doubts about the conclusiveness of the judgment under Section 13 of the Civil Procedure Code, the enforcing court will hesitate to refuse grant of interim protection; and will grant the reliefs required if the plaintiff has merely a possible case for conclusiveness of the foreign judgment. To sum up in Justice Vazifdar’s own words,

“I must clarify that I do not for a moment suggest that the matter is free from doubt. Indeed, there is much to be said in favour of the defendants. The matter certainly requires deeper consideration at the final hearing. I am, however, unable at this stage of the proceedings to come to the conclusion that the judgment is absurd and does not satisfy the test of section 13. That being so, the plaintiff would be entitled to protect their interests under the foreign judgment and decree…”.

 

(Mihir Naniwadekar is a Mumbai-based advocate.)

 

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