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Autolite Financiers (P) Ltd. & Others v. Swastika Financial Corporation
Case Summary — V.S. Deshpande, J.
Factual and Procedural Background
This appeal concerns the maintainability of a suit for declaration and injunction under the proviso to section 34 of the Specific Relief Act, 1963. The suit was instituted on 13-2-1963 (the day the Act came into force). The plaintiff (respondent No.1) claimed to be the owner of a motor truck which had been hired to respondent No.2 (Krishan Lal Jaggi). Appellant No.1 asserted a competing claim of ownership and allegedly hired the truck to respondent No.2, who removed it to Bihar.
When the plaintiff attempted to regain possession, the police investigated a complaint of theft by appellant No.1. During that investigation a Magistrate ordered the truck to be kept with the plaintiff as superdar (custodian of the Court). On appeal, the High Court of Patna set aside the Magistrate's order and ordered the truck to be kept with appellant No.2 as superdar. That High Court order came into effect a few days after the suit was filed.
The trial Court held that on the date of the suit the vehicle was in the Court's custody (not in the plaintiff's possession), and therefore the plaintiff should have sued for possession rather than merely for declaration and injunction; the trial Court also found the Delhi court lacked territorial jurisdiction to try the defendants resident in Bihar and dismissed the suit. The lower appellate Court disagreed, finding that the plaintiff was in actual possession on the date of the suit (rightly or wrongly), that part of the cause of action arose in Delhi, and that Delhi had territorial jurisdiction; it granted leave to sue the out‑of‑state defendants and remanded the case to trial. This second appeal followed by the defendants (appellants).
Legal Issues Presented
- Whether, on a proper construction of the proviso to section 34 of the Specific Relief Act, 1963 — in particular the meaning of the phrase "being able to seek further relief" — a suit for declaration and injunction by the plaintiff was maintainable.
- Whether the court at Delhi had territorial jurisdiction to try the suit (in light of the place where part of the cause of action arose and the removal of the truck to Bihar).
Arguments of the Parties
Appellants' Arguments
- The appellants (defendants) contended they had an ownership claim to the truck and that, following the police investigation, the custody situation changed such that appellant No.2's possession thereafter should be regarded as possession in his own right (i.e., not merely custodia legis).
- Learned counsel for the appellants argued that the police investigation ended without prosecution against the plaintiff; therefore the custodia legis ended, and the subsequent possession by appellant No.2 was possession in his own right which would bar a suit for mere declaration.
- The trial Court's view (aligned with appellants) was that the plaintiff was not in possession on the date of the suit and therefore should have sued for possession; the trial Court also held Delhi lacked territorial jurisdiction to try defendants resident in Bihar.
Plaintiff/Respondent's Arguments (as reflected in the opinion)
- The plaintiff asserted ownership of the truck and that it had been hired out; he relied on the fact that on the date of the suit the vehicle was in custodia legis as a result of the Magistrate's order (even though the High Court later changed the custodian), and therefore he was not "able to seek further relief" within the meaning of the proviso to section 34.
- The plaintiff relied implicitly on authorities and legal principles establishing that property in custodia legis is held by the Court for the benefit of the successful party and that when custody (custodia legis) exists the proviso to section 34 does not bar a declaratory suit by the owner.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Sunder Singh v. Managing Committee, AIR 1938 Privy Council 73 | Where neither the plaintiff nor the defendant is in possession or control and no relief other than declaration (and possibly injunction) is claimable against the defendant, a suit for declaration is maintainable (proviso to section 34 does not bar it). | Used to illustrate that the proviso is not engaged where further relief against the defendant is not available because possession is not held by the defendant. |
| Nawab Humayun Begam v. Nawab Shah Mohammad Khan, AIR 1943 Privy Council 94 | A suit for declaration is not barred by the proviso where the subject matter is in the possession of a third party (e.g., a bank) which is not a party to the suit. | Applied to show that third‑party possession (custody by someone not party to suit) does not prevent a declaration suit by the claimant against an adverse party. |
| Deo Kuer v. Sheo Prasad Singh, AIR 1966 S.C. 359 | Property under attachment (custodia legis) during criminal proceedings is held by the court for the benefit of the party ultimately successful; a party can sue for declaration of ownership despite attachment. | Relied upon to support the proposition that attachment/custodia legis places the property in court custody and does not bar a declaratory suit by a claimant. |
| Teeka & Others v. The State of Uttar Pradesh, AIR 1961 S.C. 803 | Property in custodia legis is in the court's custody; the judgment‑debtor has no right to dispose of it and would be guilty of theft if he did so. | Used to explain the nature of custodia legis and to reinforce that the court's custody is factual and for the litigation's outcome, not a legal claim by the court. |
| Lachhimi Nath Pathak v. Bholanath Pathaw, AIR 1964 Allahabad 383 | When a final order under section 145 Cr.P.C. is passed and property is delivered to the successful party, custody ends and thereafter the defendant's possession operates as a bar to a suit for mere declaration. | Applied to show the opposite situation — once custody ends and defendant has possession in his own right, a plaintiff cannot maintain only a declaratory suit. |
| Sajja Suryanarayana Rao v. Sajja Veer a Rajamma, AIR 1964 Andhra Pradesh 223 (FB) | Where a defendant is in actual possession, the plaintiff is disabled from suing for a mere declaration. | Used as an authority for the proposition that actual possession by a defendant bars a suit for only a declaration. |
| Fateh Shah v. Bahab Shah, AIR 1927 Lahore 127 | The proviso to the declaration section must be applied as at the institution (date) of the suit, not by subsequent events. | Applied to hold that the plaintiff's entitlement to sue for declaration must be judged on the date the suit was instituted (custody at that date is decisive). |
Court's Reasoning and Analysis
The central statutory text examined was the proviso to section 34 (corresponding to section 42 of the earlier Act). The pivotal phrase was "being able to seek further relief". The Court analyzed that phrase as directed primarily against defendants: the proviso applies only when the plaintiff is able to seek further relief against the defendants (for example, possessory relief).
The Court rejected a formulation that the plaintiff must be in actual possession in his own right at the time of suit. Instead, it held that the correct inquiry is whether any defendant (or party to the suit) is in possession such that the plaintiff could obtain further relief against that defendant. If possession is held by a third party (not a defendant) or by the Court in custodia legis, the proviso does not apply to bar a declaratory suit.
The Court distinguished possession (which involves both fact and legal right) from custody (custodia legis), which is a factual holding by the Court without the Court claiming legal title; the custody is maintained solely pending litigation and for the benefit of the party ultimately entitled. The Court applied prior authorities to show that attachment or court custody amounts to custodia legis and does not permit the plaintiff to be required to seek possessory relief against the court; hence the proviso cannot be invoked to bar a declaration suit when the property is in custodia legis.
The Court then addressed the appellants' submission that subsequent events (the end of police investigation and the defendant's later possession) converted custody into defendant's own possession. The Court accepted, arguendo, that custody may have ended later and defendant may have held possession in his own right thereafter, but emphasized that the proviso is to be applied as at the date of institution of the suit. Thus a later change of status does not retrospectively disentitle the plaintiff to have filed the declaratory suit.
Finally, on jurisdiction, the Court found that part of the cause of action arose in Delhi (the plaintiff allegedly bought the truck in Delhi and gave it out on hire there; appellant No.1 also in Delhi and asserted hostile title), and the removal of the truck to Bihar did not deprive the Delhi court of local jurisdiction. The exercise of discretion by the trial Court under section 20(b) of the Civil Procedure Code to permit proceedings against an out‑of‑state defendant in Delhi was not unreasonable.
Holding and Implications
Core Ruling: APPEAL DISMISSED.
The Court held that, on the date the suit was instituted, the motor truck was in custodia legis; consequently the plaintiff was not "able to seek further relief" against the defendants within the meaning of the proviso to section 34, and the plaintiff's suit for declaration and injunction was maintainable. The Court also held that a part of the cause of action arose in Delhi and that the Delhi court had territorial jurisdiction; the trial Court's exercise of discretion under section 20(b) CPC was not unreasonable.
Direct consequences:
- The appeal by the defendants is dismissed.
- The plaintiff's suit for declaration and injunction is held to be maintainable (hedged by the factual finding that on the date of suit the property was in custodia legis).
- The dismissal is made without any order as to costs.
Broader implications: The judgment applies and synthesizes existing authorities about custodia legis, the meaning of "being able to seek further relief" in section 34, and the temporal application of the proviso (i.e., assessment at the date of institution of the suit). The opinion does not purport to lay down a novel rule beyond the application of those established principles.
V.S Deshpande, J.:— The most important question in this appeal is whether on a proper construction of the proviso to section 34 of the Specific Relief Act, 1963 (hereinafter called the Act) — corresponding to section 42 of the Specific Relief Act, 1877 the suit for declaration and injunction by the plaintiff respondent No. 1 is maintainable.
The suit was filed on 13-2-1963, the same day when the Act came into force. The plaintiff alleged that he was the owner of a motor truck hired from him by Respondent 2 Krishan Lal Jaggi. The appellant No. 1, however, claimed to be the owner of the truck and purported to hire it out to respondent No. 2 who took it away to Bihar. When the plaintiff tried to take back possession of the truck from appellant No. 2, the police intervened and investigated into a complaint of theft by appellant No. 2. During the investigation the Magistrate ordered the motor truck to be kept with the plaintiff-respondent No. 1 as superdar (custodian of the Court). On an appeal by appellant No. 2, however, the High Court of Patna set aside the order of the Magistrate and ordered that the motor truck should be kept with the appellant No. 2 also as a superdar (custodian of the Court). The order of the High Court was implemented a few days after the suit was filed. The trial Court held that the possession of the truck was with the Court and not with the plaintiff and, therefore, the plaintiff was not in possession of the motor truck on the date of the suit. He was, therefore, bound to sue for possession of it and could not merely sue for declaration and injunction. It also held that the Court in Delhi did not have the territorial jurisdiction to try the suit and leave should not be granted to the plaintiff to file the suit against the appellant No. 2 who are the residents of Bihar. The suit was, therefore, dismissed. The lower appellate Court on the other hand held that the plaintiff was in actual possession of the motor truck on the date of the suit rightly or wrongly and this was sufficient to sustain the suit for declaration and injunction. It also held that a part of the cause of action arose in Delhi and the Court at Delhi had territorial jurisdiction to try the suit and granted leave to the plaintiff to pursue the suit against appellant No. 2. It, therefore, remanded the suit back to the trial Court for trial on merits. Hence this second appeal by the defendants 2 and 3 against the plaintiff and defendant No. 1.
The relevant part of section 34 of the Act is as follows:
“Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief.
Provided that no court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so.”
The decision of this case turns on the meaning of the phrase “being able to seek further relief”. The trial Court thought that these words require the plaintiff to be in actual possession of the motor truck in his own right while the lower appellate Court thought that the actual possession of the plaintiff in whatever right was sufficient. It has to be clarified, therefore, that the thrust of these words is firstly against the defendants. It is only when the plaintiff is able to seek further relief against the defendants that the proviso becomes applicable. If, therefore, the defendants or any of them were to be in possession of the motor truck then the plaintiff would be bound to seek the relief of possession. The Court is not restricted to enquire only whether the plaintiff is in physical and legal possession of the motor truck. If, therefore, the possession is with a third person who is not a party to the suit, the plaintiff may not be necessarily disabled from filing the suit for declaration if he fulfils all the other requirements of section 34 and the proviso thereto. This may be illustrated by a few important decisions.
In Sunder Singh v. Managing Committee, AIR 1938 Privy Council 73 (1) the plaintiff was a trustee who was not in possession or control of the management of the institution. Nor was the defendant in such possession or control. The suit for declaration by the plaintiff was held to be maintainable as no further relief other than an injunction was claimable by him against the defendant. In Nawab Humayun Begam v. Nawab Shah Mohammad Khan, AIR 1943 Privy Council 94 (2) the plaintiff sued for a declaration that the money in the fixed deposit in the bank belonged to her as against her husband and his son. The possession of the money in the fixed deposit was with the bank which was not a party to the suit. The suit of the plaintiff was, therefore, held not to be barred by the proviso. In Deo Kuer v. Sheo Prasad singh, AIR 1966 S.C 359 (3), the property was under attachment under section 146 of the Criminal Procedure Code prior to its amendment in 1955 which was analogous to an attachment under section 145 Criminal Procedure Codes. Such an attachment during the pendency of the proceedings had the effect of placing the property in custodia legis. The court held it for the benefit of the party which would be ultimately successful. A suit by one of the parties for a declaration of his ownership to such property was, therefore, held not to be barred by the proviso. In Teeka and others v. The State of Uttar Pradesh, AIR 1961 S.C 803 (4), the Supreme Court further explained that the property in custodia legis was in possession of the Court and the judgment-debtor had no right to disposes such a custodian of the Court. If he did so he would be guilty of theft.
The custody of the Court of-course comes to an end when a final order is passed under section 145 Cr.P.C and the property is delivered to the successful party. Thereafter the possession of the property by the defendant is a bar to a suit by the plaintiff for a mere declaration as held in Lachhimi Nath Pathak v. Bholanath Pathaw, AIR 1964 Allahabad 383 (5). Similarly when a defendant was in actual possession, a plaintiff was held disabled from suing for a mere declaration in Sajja Suryanarayana Rao v. Sajja Veer a Rajamma, AIR 1964 Andhra Pradesh 223 (FB) (6).
In the light of the above decisions it must be held that the motor truck in the present case was in custodia legis both because of the order of the Magistrate as also by the order of the High Court, the difference only being that under the former order the plaintiff while under the latter order the defendant was to be the custodian. There is an essential distinction between possession and custody. Possession consists both of fact and law, that is to say, of actual control and the legal right to it. On the other hand, custody is a mere fact without a legal right. The Court holds the property actually without claiming any legal interest in it for the benefit of the successful party. As the Court does not claim any right in itself and as the only object of the custodia legis is to await the success of either party in the litigation, the plaintiff is not “able to seek further relief” against the Court within the meaning of the proviso to section 34. He cannot be required to join the Court as a defendant. For, as soon as the Court is satisfied that a litigation between the parties has ended in favour of the plaintiff, the Court would terminate its custody and hand over the possession of the motor truck to the plaintiff.
On the date of the suit the Court was in custody of the motor truck. Learned counsel for the appeallants submitted that thereafter the police investigation came to an end and no prosecution was instituted against the plaintiff-respondent No. 1 at the instance of the defendent No. 3 — appellant 2. He submitted, therefore, that the possession of the appeallant No. 2 thereafter must be regarded as a possession in his own right. For, the custodia legis could continue only during the pendency of the police investigation. It automatically ended when the police investigation ended. Ordinarily, the Court would pass an order for the final disposal of the property after the end of the investigation if no prosecution was to follow. Even if the Court forgot to do so in the present case, I am prepared, to assume that the custodia legis came to an end and the defendant No. 3 thereafter continued in possession on his own right and not on behalf of the Court. But it is unnecessary to decide this question. For, the title of the plaintiff to sue for declaration is to be judged on the date of the suit. Undoubtedly the motor truck was in custodia legis on the date of the suit. The plaintiff was, therefore, entitled to sue for declaration. It would be necessary to decide whether the custodia legis came to an end thereafter only if such a subsequent event would have compelled the plaintiff to seek further relief. But the proviso to section 34 is to be applied only at the institution of the suit and not at a subsequent stage of it as pointed out by a Division Bench of the Lahore High Court in Fateh Shah v. Bahab Shah, AIR 1927 Lahore 127 (7). The subsequent possession of the motor truck by appellant No. 2, even if it were to be in his own right, does not have the retrospective effect of disentitling the plaintiff to file a suit. The plaintiff's suit for a declaration and injunction was, therefore, maintainable.
A part of the cause of action undoubtedly arose within the local jurisdiction of the Delhi Court inasmuch as the motor truck was allegedly bought by the plaintiff in Delhi and given to the appellant No. 2 on hire. The appellant No. 1 is also in Delhi and claimed a title hostile to that of the plaintiff. The motor truck was removed from Delhi to Bihar. The Court at Delhi had, therefore, the local jurisdiction to try the suit. In the circumstances, the exercise of the discretion by the trial Court under section 20 (b) of the Civil Procedure Code to prosecute the suit against the defendant No. 2 could not be said to be unreasonable. I find so.
The appeal is, therefore, dismissed but without any order as to costs.
Appeal dismissed.
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