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  • provisions of s. 446(3) of the Companies Act, 1956,
  • Order IX, Rule 9
  • Order 9 rule 9
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Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
Acts
  • provisions of s. 446(3) of the Companies Act, 1956,
  • Order IX, Rule 9
  • Order 9 rule 9
Smart Summary

Factual and Procedural Background

This opinion arises from an application concerning restoration of proceedings under Order IX, Rule 9 of the Code of Civil Procedure. The company Laxmi Investment Co. Pvt. Ltd. entered into an agreement (January 23, 1957; modified December 1957) to purchase immovable property for Rs. 60,000 (later increased by Rs. 25,000). The company filed a suit for specific performance and damages (C.S. No. 4 of 1960) on June 26, 1960. When the suit was fixed for hearing on February 22, 1961, the plaintiff's advocate reported no instructions and withdrew, and the Civil Judge dismissed the suit for default.

On March 22, 1961 the company filed an application (No. 28 of 1961) to restore the suit to the file under Order IX, Rule 9. Before that application was heard, the company was ordered to be wound up and a liquidator was appointed. The liquidator asserted he had no knowledge of the suit or of application No. 28 of 1961. Application No. 28 came up for hearing on April 19, 1962 and, with no one present on behalf of the company, was dismissed for want of prosecution.

The liquidator filed a fresh application on June 19, 1962 (renumbered as application No. 1 of 1966 after transfer to the High Court under s. 446(3) Companies Act, 1956) asking that the order dismissing application No. 28 of 1961 be set aside and that application No. 28 be restored to the file. The Single Judge referred the matter to a Division Bench because he doubted whether he had power to grant the relief sought, relying on the Division Bench decision in D.B. Manke v. B. Walwekar.

Legal Issues Presented

  1. Whether, when an application to restore a suit to the file under Order IX, Rule 9 has itself been dismissed for default, a further (subsequent) application to restore that earlier application to the file is maintainable.
  2. Whether the power to restore such an application can be founded on (a) Order IX, Rule 9 read with Section 141 of the Code of Civil Procedure (i.e., application of the procedure for suits to miscellaneous proceedings), or (b) the inherent powers of the Court under Section 151 of the Code of Civil Procedure.
  3. Whether the decision in D.B. Manke v. B. Walwekar operates as authority that a second application to restore an Order IX, Rule 9 application cannot be entertained.

Arguments of the Parties

Applicant / Liquidator's Arguments

  • The liquidator alleged complete lack of knowledge of the pendency of the suit, its dismissal for default, and of application No. 28 of 1961 which was pending for restoration.
  • On learning of these events on June 18, 1962 from a former director, the liquidator acted promptly: he telegrammed the Court clerk and instructed the company's advocate to apply for restoration; an application was filed on June 19, 1962 and an affidavit seeking condonation of one day's delay was filed on June 22, 1962.
  • The liquidator sought that the dismissal of application No. 28 of 1961 be set aside and that the application be restored to the file; implicitly he relied on the Court's power to grant such relief.

Respondents' / Opposing Arguments

  • The respondents relied on the Division Bench decision in D.B. Manke v. B. Walwekar to contend that a further application to restore an application dismissed for default may not lie.
  • Counsel (Mr. Cooper) pointed out that s.151 did not apply to the Small Causes Court in D.B. Manke because at that time the Small Causes Court lacked the power under s.151 — a factual circumstance that affected the applicability of the decision to the present case.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
D.B. Manke v. B. Walwekar, [1923] A.I.R. Bom. 386 Held that there is no rule in the CPC enabling restoration of an application under Order IX, Rule 9 dismissed for want of prosecution; considered s.151 but found insufficient cause on the facts. The Court distinguished this case: it held that D.B. Manke is a decision on its facts and does not establish a general rule that a second application to restore cannot be entertained; further, the headnote gives a misleading impression. The Court rejected using D.B. Manke as an absolute bar to such applications.
Thakur Prasad v. Fakirullah, 1894 I.L.R. 17 All. 106 (P.C.) Explained that s.151 is declaratory of an inherent power; and that the provision corresponding to s.141 applies to "original matters" (ejusdem generis) such as probate and guardianship and not to executions. The Court relied on this decision to frame the interpretive problem: whether s.141 applies to interlocutory restoration applications. The Court used Thakur Prasad to support a restrictive (ejusdem generis) interpretation of s.141.
Sarat Chandra Bose v. Bisweswar Mitra, 1926 I.L.R. 54 Cal. 405 Interpreted Thakur Prasad as meaning the expression "so forth" is ejusdem generis with probate and guardianship and that "original matters" are matters which originate in themselves. The Court endorsed this reasoning and expressly stated that the latter view (ejusdem generis / restrictive interpretation) is to be preferred in cases like the present.
Bipin Behari Shaha v. Abdul Barik, 1916 I.L.R. 44 Cal. 950 Took a contrary view to Sarat Chandra Bose regarding the scope of s.141 (i.e., a broader reading). The Court recorded that Sarat Chandra Bose dissented from this earlier Calcutta decision and favoured the dissenting (restrictive) approach; Bipin Behari Shaha thus represents the contrary approach which the Court did not adopt.
Nathuni Singh v. Naipal Singh, [1958] A.I.R. Pat. 107 Followed the restrictive interpretation (following Sarat Chandra Bose). The Court cited it as one of several authorities that follow the view preferred by the Court (that s.141 does not apply to interlocutory restoration applications of the type before the Court).
Kunj Behari v. Chanchala Das, [1966] A.I.R. Or. 24 Followed the view that s.141 (read with Order IX, r.9) applies in the restrictive sense consistent with Sarat Chandra Bose. The Court cited it as supportive authority for the view it preferred.
Pooranchand v. Komalchand, [1962] A.I.R. M.P. 64 Followed the restrictive interpretation (Sarat Chandra Bose line). The Court cited it as another High Court decision consistent with the view adopted by the Court.
Doma Chaudhary v. Ram Naresh Lal, [1959] A.I.R. Pat. 121 (F.B.) Expressed a contrary view (Patna High Court) on the applicability of s.141 to such applications. The Court noted its inability to accept the Patna High Court's view, citing it as an example of decisions taking the opposite approach to the one the Court preferred.
Raj Appa Bow v. Veera Raghava, [1966] A.I.R. A.P. 263 A.P. High Court decision that took the contrary view on applicability of s.141. The Court recorded its disagreement with that decision and did not follow it.
Ramkarandas v. Bhagwandas, [1965] A.I.R. S.C. 1144 Considered ex parte decrees and held that different considerations apply (specific provisions like Order XXXVII r.4 may provide the remedy, precluding resort to s.151). The Court distinguished Ramkarandas as concerned with ex parte decrees; it said the present case (dismissal for default of restoration application) is different and Ramkarandas does not govern it.
Arjun Singh v. Mohindra Kumar, [1964] A.I.R. S.C. 993 Held that the inherent power under s.151 cannot be used to override express provisions of the Code where specific remedies exist for ex parte decrees. The Court relied on this principle to clarify it was not dealing with ex parte decree cases; it distinguished Arjun Singh as inapplicable to the facts before the Court.
Pitambar Lal v. Dodi Singh Referenced in discussion of prior interpretations (context: illustrative citation in the Sarat Chandra Bose discussion). The Court mentioned this case in recounting prior arguments but did not base a distinct ruling on it in this opinion.

Court's Reasoning and Analysis

The Court first identified the threshold question: whether a subsequent application to restore an application (under Order IX, r.9) dismissed for default is maintainable. The Single Judge had doubted his power because of reliance on D.B. Manke. The Division Bench analyzed D.B. Manke closely and concluded that that decision was fact-specific: the Division Bench in D.B. Manke assumed s.151 might be available but held that on those facts the defendant had not shown sufficient cause to be restored; the present Court found that the headnote of D.B. Manke misleads if read to mean that a second application can never lie.

The Court then set out two alternative legal bases under which power to restore such an application might be found:

  1. Order IX, Rule 9 read with Section 141 of the Code (i.e., applying the procedure for suits to proceedings as far as applicable), and
  2. The inherent powers of the Court under Section 151 of the Code where no other remedy is available.

The pivotal analytic issue became whether Section 141 applies to an application of the present type. In resolving that, the Court relied on the Privy Council decision in Thakur Prasad v. Fakirullah and on the exposition in Sarat Chandra Bose v. Bisweswar Mitra. The Court adopted the interpretation that the wording in Thakur Prasad should be read ejusdem generis — that Section 141 applies to "original matters" akin to probate, guardianship, succession and similar proceedings which originate in themselves, and not to interlocutory applications that arise from suits. The Court regarded the latter view as the correct approach.

Having accepted the restrictive (ejusdem generis) interpretation, the Court reasoned that Section 141 would not, in the circumstances of this case, supply the procedural basis for restoring an application under Order IX, Rule 9 that had been dismissed for default. Where there is no specific remedy in the Code applicable to this factual situation (i.e., no applicable provision that exhausts the scope of remedy), the inherent power under Section 151 may be invoked. The Court emphasized that Section 151 is declaratory of inherent powers but that s.151 cannot be used where the Code provides an exclusive remedy.

The Court expressly limited its ruling to the particular factual matrix before it — where a suit was dismissed for default, an application to set aside that dismissal was made and itself was dismissed for default — and disclaimed application of its reasoning to cases involving ex parte decrees, where different provisions and considerations (and specific rules such as Order XXXVII r.4) may govern.

Holding and Implications

Holding: The Court held that the application filed by the liquidator on June 19, 1962 (supported by the affidavit of June 22, 1962) may be considered under the inherent powers of the Court under Section 151 of the Code of Civil Procedure. The Single Judge's reference is answered accordingly, and the case is remitted to the Single Judge for disposal according to law. Costs shall be costs in the application.

Implications: The Court clarified that D.B. Manke does not operate as a blanket bar to a subsequent application to restore an application under Order IX, Rule 9 dismissed for default; rather, D.B. Manke was a decision on its facts. The Court preferred the restrictive (ejusdem generis) interpretation of Section 141 (following Sarat Chandra Bose and several High Court decisions) and thereby concluded that where Section 141 does not supply a remedy, the inherent power under Section 151 can be invoked to restore such an application. The Court expressly limited its ruling to the facts before it and distinguished cases dealing with ex parte decrees, where specific Code provisions may preclude recourse to s.151.

    Laxmi Investment Co. Pvt. Ltd. Akola (In Liq.) v. Tarachand Harbildas

    Kotval, C.J:— This petition has been referred to a Division Bench for decision by Mr. Justice Tulzapurkar because the learned Judge entertained some doubt whether he has the power to grant the application made before him. It virtually raises the following question:

    “Where an application to restore a suit to file under Order 9 rule 9 is itself dismissed for default, whether a further application to restore the application under Order 9 rule 9 to the file will at all lie?”

    2. The learned Judge felt that in view of the decision of this Court in D.B Manke v. B. Walwekar . [1923] A.I.R Bom. 386. such an application might not lie, but there are conflicting authorities on the question. The circumstances under which Miscellaneous Petition No. 1 of 1966 came to be filed are as follows: The applicant is the liquidator of a company known as the Laxmi Investment Co. Private Ltd. of Akola. He was appointed the liquidator of the company after an order of winding up was passed on February 12, 1962. This company had entered into an agreement with one Tarachand and others to purchase the immoveable property from the said Tarachand and others for a sum of Rs. 60,000 on January 23, 1957. The agreement was subsequently modified in December 1957 whereby the company agreed to pay Rs. 25,000 more to the vendors. The vendors did not fulfil their agreement and the company filed a suit (C.S No. 4 of 1960) for specific performance and damages on the footing of the agreement. The suit was filed on June 26, 1960 and was fixed before the Civil Judge, Senior Division, Khamgaon on February 22, 1961. On that date the advocate for the plaintiff reported no instructions and withdrew from the suit in consequence of which the Civil Judge dismissed the suit for default. On March, 22, 1961, the company made an application No. 28 of 1961 for restoration of the suit to the file under O. IX, r. 9, of the Code of Civil Procedure. Before that application could be heard, the company was ordered to be wound up and the liquidator was put in charge of the affairs of the company. According to the liquidator, however, he knew nothing of the pendency of the suit or of the application for restoration filed on March 22, 1961. That application (application No. 28 of 1961) for restoration of the suit came up for hearing before the Civil Judge on April 19, 1962, and no one being present on behalf of the company the application was dismissed. The Court did not know that a liquidator had been appointed and the liquidator did not know that the suit had been filed and dismissed or that the application for its restoration was pending.

    3. The present application which under certain circumstances, has come to be renumbered as application No. 1 of 1961, was filed by the liquidator on behalf of the company on June 19, 1962, praying that the order of dismissal of the application to set aside the ex parte decree dated April 19, 1962, should be set aside and the miscellaneous application No. 28 of 1961 should be restored to the file. The liquidator has alleged that he had no knowledge whatever of the pendency of the suit or of its dismissal for default nor of the fact that an application to restore the suit to the file had been made and was pending on the file of the Civil Judge. He alleged that he came to know of the pendency of the suit and the application only on June 18, 1962, from one of the former directors of the company one Amratlal Vyas and thereupon he acted very promptly. He alleges that he sent a telegram to the Clerk of the Court of the Civil Judge, Senior Division, Khamgaon, informing him that he had learnt about the dismissal of the application for restoration and that he had instructed the company's advocate, Mr. Bhate of Khamgaon to make an application for restoration of the said application No. 28 of 1961. This application was filed on behalf of the liquidator by the said advocate on June 19, 1962 and was followed up three days later by an application for condonation of one day's delay in filing the said application for restoration on June 22, 1962.

    4. These were the proceedings taken before the Civil Judge, Senior Division, Khamgaon, but in view of the liquidator having been appointed in the meanwhile on March 20, 1963, the Civil Judge acting under the provisions of s. 446(3) of the Companies Act, 1956, transferred the proceedings to the High Court. At that stage the application presented on June 19, 1962, came to be renumbered in this Court as application No. 1 of 1966. It is that application which came before the learned Single Judge and since the decision in D.B Manke v. B. Walwekar was relied on behalf of Tarachand and others and since that is a decision of a Division Bench, the learned Judge felt that he should refer the question to a Division Bench for considering the effect of the decision in D.B Manke v. B. Walwekar.

    5. Now we may say at once that in our opinion the decision in D.B Manke's case cannot apply to the facts of the present case, nor is it an authority for what it is supposed to be. In that case the plaintiff had filed a suit in the Court of Small Causes at Bombay to recover wages from the defendant. The suit was decreed ex parte because the defendant's pleader did not attend to contest the suit at the hearing. The defendant then filed an application for setting aside the ex parte decree and the application was fixed for hearing on April 10, 1922. The notice issued was under O. IX, r. 9, of the Code of Civil Procedure. The notice was, however, struck off for want of prosecution and the defendant presented a further application for setting aside the ex parte decree which was clearly barred. The Small Causes Court treated it as an application to restore the application previously made under O. IX r. 9. The Court restored it and passed an order against the plaintiff for a fresh trial of the suit. The plaintiff had come up to the High Court in revision against that order.

    6. Now what the Division Bench held in D.B Manke's case was that (p. 386):

    “…It cannot be said that there is any rule in the Code of Civil Procedure that enables the Court to restore an application made under Order IX, Rule 9 which has been dismissed for want of prosecution. It is urged upon us that the Court has inherent powers to make orders within the provisions of section 151 and that this was an order made accordingly. There is no reference made in the decision of the Covet that the order was made under Section 151. It is quite clear that if that Section had been considered, the order under revision could not possibly have been made under it. That section gives the Court power to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. The plaintiff has got a decree and the defendant had every opportunity of appearing in Court at the time of hearing and also when notices were issued by him against the plaintiff for a new trial. It cannot be said therefore that in any circumstance it is necessary for the ends of justice that he should have yet another opportunity of harassing the successful party”.

    7. The latter portion of the order which we have deliberately quoted in extenso commencing from the reference to s. 151, nowhere says that s. 151 cannot apply in such a case. On the contrary, what the Division Bench in effect said was that if that section were to be considered, upon the facts and circumstances before it the order under revision could not possibly have been made. They proceeded to demonstrate why and they pointed out that s. 151 only justified the making of an order for the ends of justice or to prevent abuse of the process of the Court and in the circumstances of that case, justice was met by not giving the defendant another opportunity of harassing the successful party. That, therefore, was a decision upon the facts and circumstances of that case. What the Division Bench clearly said in that case was that assuming that s. 151 applied, sufficient cause had not been shown for the restoration of the second application. At no stage did the Division Bench say that s. 151 would not or did not apply. On the contrary, they assumed that it would apply but showed that upon the facts and circumstances of that case even if it applied sufficient cause had not been made out. We cannot, therefore, regard that case as authority for the proposition that under s. 151 the second application would not lie to restore to file the application under O. IX, r. 9 dismissed for default. It is the head note of the case which gives a completely wrong impression.

    8. Mr. Cooper has also pointed out one other circumstance in connection with that case namely that in point of fact s. 151 did not apply to Small Causes Court at that time and the powers under s. 151 could not have been exercised by the Court of Small Causes in that case at all. This circumstance was not taken into account.

    9. Upon the authorities a power to restore such an application to the file can be spelt out under two heads. There are a number of authorities supporting either one or the other view. The two alternative views are; (a) to support such an application under O. IX, r. 9, read with s. 141 of the Code of Civil Procedure which says that the procedure provided in the Code in regard to suits shall be followed, as far as it can be made applicable, in all proceedings in any Court of civil jurisdiction; (b) that in such a case s. 151 of the Code of Civil Procedure could well be applied because there is no other remedy open.

    10. The difference of opinion between the several High Courts stems from the remarks of the Privy Council in the leading case of Thakur Prasad v. Fakirullah . 1894 I.L.R, 17 All. 106, P.C. It is now settled law that s. 151 of the Code of Civil Procedure does not confer any power upon any Court but is merely declaratory of a power which inherently exists in every Court and all that it says is that

    “Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court”.

    11. The section assumes that the power is inherent in a Court and is merely declaratory of it. Secondly, it is also settled law that s. 151 of the Code cannot be invoked where there is a specific provision in the Code giving a remedy to a party. In such a case the party would be limited to that remedy and the inherent power under s. 151 would not be available to such a party.

    12. It is basing themselves upon the last mentioned principle that the Courts have differed on the nature of the remedy available to a party in a case like the one before us. The question they raise is whether in a case like the present s. 141 of the Code of Civil Procedure read along with O. IX, r. 9 would apply or not. If it applies, obviously upon the principle stated above, s. 151 of the Code of Civil Procedure would not be attracted, but if s. 141 read with O. IX, r. 9 would not apply, then there would appear to be no other remedy provided in the Code and the inherent power under s. 151 would come into play.

    13. The principal question, therefore, is whether s. 141 would apply in a case like the one we have before us and it is here that the remarks of the Privy Council in Thakur Prasad v. Fakirullah, come into play. In that case the Privy Council were concerned with an application for execution and the question was whether s. 647 of the then Code of Civil Procedure which corresponds to s. 141 of the present Code applied. The Privy Council held that s. 647 does not apply to applications for execution. They took the view that it only applied to original matters in the nature of suits. Their Lordships said (P. 111):

    “…Their Lordships think that the proceedings spoken of in s. 647 include original matters in the nature of suits such as proceedings in probates, guardianships, and so forth, and do not include executions.”

    14. The divergence of opinion amongst Courts in India has arisen from the different interpretations put upon this view of the Privy Council, especially as to what their Lordships implied by the words “such as proceedings in probates, guardianships, and so forth”. The Courts which have taken the view that s. 141 read with O. IX, r. 9 would apply to an application to restore an application under O. IX, r. 9 which has been dismissed for default, have interpreted the remark of the Privy Council to include all applications within s. 141. Since s. 141 would apply to other applications according to this view, there is no question of turning to s. 151. The other view has limited the remarks of the Privy Council to applications which are ejusdem generis with proceedings in probates, guardianships and so forth, that is to say not interlocutory applications which arise out of other proceedings such as suits but which in themselves initiate a lis. In our opinion, the latter view is to be preferred.

    15. We cannot put the matter better than it has been put by Mr. Justice Mukerji in Sarat Chandra Bose v. Bisweswar Mitra . 1926 I.L.R 54 Cal. 405, at p. 411.. After quoting the said passage from the judgment of the Privy Council in Thakur Prasad v. Fakirullah, the learned Judge remarked

    “…The expression ‘so forth’ must, in my opinion, be read as meaning proceedings ejusdem generis with the instances that precede it, and include such proceedings as in divorce, in insolvency, for succession certificate and the like and the expression ‘original matters’ in my opinion confirms that view as meaning matters which originate in themselves and not those which spring up from a suit or from some other proceedings or arise in connection therewith.”

    16. The Calcutta High Court itself had taken a contrary view in Bipin Behari Shaha v. Abdul Barik . 1916 I.L.R 44 Cal. 950., and the Division Bench in Sarat Chandra Bose v. Bisweswar Mitra, dissented from it as follows (p. 411):

    “…The criterion of originality as indicated in Bipin Behari Shaha v. Abdul Barik In the passage quoted above is not what is meant. This passage has been construed by the learned Judges of the Allahabad High Court as meaning that the second application might be treated as an original application for restoration of the suit itself [Pitambar Lal v. Dodi Singh4a] but with all respect I am unable to agree that is what the passage means. I think the true meaning of the passage is that, in the opinion of the learned Judges, a proceeding which originates in a new application which has to be numbered as a separate miscellaneous case and decided upon evidence satisfies the requirements laid down in the decision of the Judicial Committee. In this view I am unable to concur.”

    17. Several other Courts have followed this view. See Nathuni Singh v. Naipal Singh . [1958] A.I.R Pat. 107. Kunj Behari v. Chanchala Das . [1966] A.I.R Or. 24. and Pooranchand v. Komalchand . [1962] A.I.R M.P 64.. We are unable to accept the view of the Patna High Court in Doma Chaudhary v. Ram Naresh Lal . [1959] A.I.R Pat. 121, F.B and of the Andhra Pradesh High Court in Raj Appa Bow v. Veera Raghava . [1966] A.I.R A.P 263..

    18. We may make it clear at this stage that we are strictly confining ourselves to a case where an application to restore a suit to file is dismissed for default and not a case where an ex parte order is passed, for as pointed out in Ramkarandas v. Bhagwandas . [1965] A.I.R S.C 1144., different considerations would prevail in such a case. In such a case it may be urged that a remedy under O. IX, r. 13 exists and therefore the inherent power under s. 151 could not be invoked. In the Supreme Court case to which we have just referred the Supreme Court was concerned with an ex parte decree passed in a summary suit under O. XXXVII of the Code of Civil Procedure and the question was whether such a decree could be set aside under the inherent power under s. 151. The Supreme Court pointed out that r. 4 of O. XXXVII expressly gives power to the Court to set aside the decree passed under the provisions of that Order and therefore there was no scope for resort to s. 151 for setting aside the decree. Similarly, in another case referred in the arguments before us, namely Arjun Singh v. Mohindra Kumar . [1964] A.I.R S.C 993., the Supreme Court was considering a case where an ex parte decree had been passed and the Supreme Court held that the inherent power of the Court could not override the express provisions of the law.

    “…If there are specific provisions of the Code dealing with a particular topic and they expressly or by necessary implication exhaust the scope of the powers of the Court or the jurisdiction that may be exercised in relation to a matter the inherent power of the Court cannot be invoked in order to cut across the powers conferred by the Code”.

    19. For this reason we would make it clear here that we confine ourselves to the facts and circumstances of the present case where the suit was dismissed for default, an application to set aside that dismissal for default was made and it was also dismissed for default. We are also not concerned with a case where an ex parte decree happens to be passed and proceedings are taken to set it aside. In our opinion, therefore, the application filed by the Liquidator on June 19, 1962, and supported by an affidavit of June 22, 1962, can be considered under the inherent powers of the Court under s. 151 of the Code of Civil Procedure. Since this was the question upon which the learned single Judge entertained doubt, and in view of what we have said in this judgment the case must now go back to the learned single Judge for disposal according to law. Costs shall be costs in the application.

    20. Order accordingly.

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    Comments

    Laxmi Investment Co. Pvt. Ltd. Akola (In Liq.) v. Tarachand Harbildas
    (Apr 20, 1967)