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Soni Dineshbhai Manilal And Others v. Jagjivan Mulchand Chokshi .
Factual and Procedural Background
The litigation arises out of the dissolution of a partnership firm named “Bhagyoday Engineering Company,” in which the appellants’ father and the respondent were partners. Although a deed of dissolution was executed on 9 September 1965, disputes over the partners’ respective shares led the respondent to file a suit for dissolution and rendition of accounts.
The suit was dismissed on 29 July 1975, but the first appellate court reversed that decision, holding the respondent entitled to 56% and the appellants’ father to 44%, while also directing the taking of accounts (19 January 1960 – 9 September 1965). A second appeal resulted in equalising the shares at 50% each, which this Court affirmed on 25 February 1994.
Pursuant to the preliminary decree, final-decree proceedings were initiated. A Court Commissioner (Shri Vardhilal A. Shah) was appointed to take accounts and submitted a report on 13 August 1986. Numerous objections, applications to cross-examine the Commissioner, and requests to appoint a Chartered Accountant were filed by the appellants’ father; all were rejected, some of which orders were unsuccessfully challenged or withdrawn in revision.
The trial court eventually accepted the Commissioner’s report on 2 May 1997. The appellants’ appeal was allowed by the first appellate court on 11 December 1997, which also rejected the respondent’s cross-objection but directed the trial court to decide the question of interest. The respondent’s second appeal to the High Court was allowed on 6 April 2005, restoring the trial court’s acceptance of the Commissioner’s report. The present appeals are against that High Court judgment.
Legal Issues Presented
- Whether, in view of Order 43 Rule 1(u) of the Code of Civil Procedure (CPC), a second appeal lay against the appellate court’s remand/decision.
- Whether interlocutory orders passed during the final-decree proceedings (e.g., refusal to permit cross-examination of the Commissioner or production of additional account books) could still be challenged under Section 105 CPC after having attained finality.
- Whether the trial court erred in accepting the Court Commissioner’s report without allowing the appellants to cross-examine him or adduce further evidence.
Arguments of the Parties
Appellants’ Arguments
- The second appeal before the High Court was barred by Order 43 Rule 1(u) CPC.
- The High Court improperly relied on interlocutory orders that, under Section 105 CPC, were open to attack only in an appeal against the final decree.
- A party objecting to a Commissioner’s report is entitled to cross-examine the Commissioner and lead its own evidence; denial of this right vitiated the proceedings.
- The report ignored crucial material, including unproduced account books (“ublek” and stock books), and therefore should not have been accepted.
Respondent’s Arguments
- The appeal before the High Court was a composite challenge to both the dismissal of the cross-objection and the allowance of the appellants’ appeal; hence a second appeal was maintainable.
- A Commissioner appointed to examine accounts stands on a different footing because his report constitutes evidence; given the protracted litigation (preliminary decree dated 13 October 1978), the High Court’s decision should not be disturbed.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Shankar Ramchandra Abhyankar v. Krishnaji Dattatreya Bapat, (1969) 2 SCC 74; AIR 1970 SC 1 | Civil revision is part of the appellate jurisdiction; doctrine of merger implications. | Cited to show that earlier revision petitions filed (and withdrawn) constituted an exercise of appellate jurisdiction, thereby giving finality to interlocutory orders and limiting the scope of challenge under Section 105 CPC. |
| Pandiyan Roadways Corpn. Ltd. v. N. Balakrishnan, (2007) 9 SCC 755 | Supreme Court may decline to exercise jurisdiction under Article 136 despite technical errors if substantial justice is served. | Relied on to justify refusing to interfere merely because the High Court entertained an appeal under an arguably wrong procedural provision, given the long pendency and absence of prejudice. |
Court's Reasoning and Analysis
The Court examined the history of objections to the Commissioner’s report and noted that:
- The appellants repeatedly sought to challenge the report, primarily alleging non-production of “ublek” and stock books. These objections were decided against them in orders dated 26 July 1985, 29 April 1995, and 31 January 1996, none of which were successfully assailed.
- Under Order 26 Rules 11 and 16 CPC, the Commissioner had ample power to call for documents and examine witnesses. The appellants’ father could have produced evidence before the Commissioner but did not do so.
- Because revisions against certain interlocutory orders were filed and withdrawn, those orders attained finality, and Section 105 CPC could not be invoked to reopen them.
- Although technically a second appeal might not lie under Order 43 Rule 1(u), the High Court nonetheless possessed jurisdiction over the matter, and the appellants suffered no prejudice; substantial questions of law were framed and answered.
- Given the 40-year pendency and the nature and quantum of the dispute, the Supreme Court, exercising discretion under Article 136, declined to interfere on purely technical grounds.
Holding and Implications
Both appeals were dismissed.
Immediate Effect: The High Court’s judgment dated 6 April 2005 stands, thereby affirming the trial court’s acceptance of the Court Commissioner’s report and advancing the final-decree proceedings toward conclusion. The parties must abide by the Commissioner’s accounting and any further directions on interest as permitted by the first appellate court.
Broader Implications: The decision reiterates the limited scope of Supreme Court intervention under Article 136 where substantial justice has been achieved despite procedural irregularities. No novel legal principle was laid down, and the ruling primarily affects the parties to this long-pending partnership dispute.
S.B Sinha, J.— Leave granted.
2. The appellants in both the appeals are before us, aggrieved by and dissatisfied with the judgment and order dated 6-4-2005 passed by a learned Single Judge of the High Court of Gujarat in Second Appeal No. 37 of 1998.
3. For the purpose of determining the question involved in these appeals, Soni Dineshbhai Manilal and others are being referred to as the appellants, while Jagjivan Mulchand Chokshi is being referred to as the respondent.
4. The appellants' father and the respondent were partners of a partnership firm known as “Bhagyoday Engineering Company”. A decision was taken to dissolve the said firm. A deed of dissolution was entered into on 9-9-1965. A suit for dissolution of the partnership firm and accounts was filed by the respondent herein, inter alia on the premise of the existing dispute in regard to shares of the parties in the said partnership firm.
5. The suit was dismissed on 29-7-1975. However, the appeal preferred thereagainst was allowed holding that the respondent-plaintiff was entitled to 56% shares, whereas the father of the appellants was entitled to 44% shares. A decree was also passed for accounts for the period 19-1-1960 and 9-9-1965. Father of the appellants filed a second appeal before the High Court which was partly allowed, whereby the shares of the parties were determined at 50% each. The said decree was affirmed by this Court by its order dated 25-2-1994.
6. An application was thereafter filed for initiation of a final decree proceedings. A Court Commissioner was appointed for taking accounts. The Commissioner submitted his report on 13-8-1986. Objection thereto was filed by the father of the appellants. An application was also filed for permission to cross-examine the Court Commissioner. The same was rejected. A civil revision application was filed by the father of the appellants which was dismissed by an order dated 22-4-1996, stating:
“Mr D.K Acharya, learned Advocate for the petitioner seeks leave to withdraw the civil revision application. Leave granted. Rejected as withdrawn.
It is, however, clarified that the petitioner-defendant would be entitled to prove or disprove the accounts that may be submitted by the parties with regard to the partnership firm.”
7. An application was also filed by the father of the appellants before the trial court to allow a Chartered Accountant to verify the records and, account books. The said prayer was also rejected.
8. By an order dated 2-5-1997 the trial court rejected the objections of the appellants opining:
“Taking into consideration, the submissions, replies and evidences of both the sides, civil court had rejected the said suit and against the said order, Appeal No. 79 of 1975 was being admitted in the District Court. The appellate court had quashed the order of the civil court and share of the plaintiff was decided and it was ordered in respect of accounts to appoint the Court Commissioner for taking accounts. Thereafter in the Hon'ble High Court and in the Hon'ble Supreme Court, the said matter was filed and thereafter to draw final decree the same matter was adjourned.
In the said case, being kept for hearing on the debated point in respect of legal question, but both the parties were given proper time and reasonable opportunity, even though, their rights were closed as there were no submissions.
In the said case, Commissioner's report at Mark 44/1, which was being admitted in evidence according to provisions of Order 26 Rules 11, 12 was taken on record by Ext. 124 for taking into consideration for evidence. In the said case, the record and Commissioner's report which were produced before me, being taken into consideration and if determined as per law, the Commissioner's report and the findings which were given by taking into account the fact, are found reasonable and when said report was given by the defendant by violating the provisions of existing law, have been (sic having) failed to prove the same, in that circumstances, it is found that it is reasonable and just to give sanction to the details of the report of Court Commissioner. So taking into consideration the facts and documentary evidence produced, I pass the following order in the interest of justice.”
9. An appeal preferred thereagainst, however, was allowed by an order dated 11-12-1997. Cross-objection was filed by the respondent therein and while rejecting the said cross-objection, the first appellate court observed:
“The cross-objections, Ext. 11 filed by the respondent-plaintiff are hereby rejected. However, the learned trial Judge is directed to allow the said party to agitate the question regarding interest and the same be decided as per law.”
10. The respondent filed a second appeal thereagainst which has been allowed by reason of the impugned judgment.
11. Mr Pravin Satale, learned counsel appearing on behalf of the appellant submitted:
(i) Having regard to the provisions of Order 43 Rule 1 sub-rule (u) of the Code of Civil Procedure the second appeal was not maintainable.
(ii) The High Court committed a serious error in relying upon the orders passed by the trial court from time to time without taking into consideration the fact that in view of Section 105 of the Code of Civil Procedure, such orders are open to challenge in an appeal preferred against a final order.
(iii) The Commissioner appointed to take accounts should be allowed to be cross-examined by a party taking objection to his report and in any event, he is entitled to adduce his own evidence in support of his objection.
(iv) The Commissioner having ignored vital facts including non-production of books of accounts and ledger, his report could not have been accepted.
12. Ms Meenakshi Arora, learned counsel appearing on behalf of the respondent, on the other hand, contended:
(i) The appeal preferred by the respondent being a composite one both against the order dismissing the cross-objection as also (sic the order allowing) the appeal preferred by the appellants, a second appeal was maintainable.
(ii) A distinction must be made between a Commissioner appointed to examine accounts and other Commissioners inasmuch as the report in the former case is to be treated as evidence in the suit. In any view of the matter, keeping in view the facts and circumstances of the case, in particular the fact that the preliminary decree was passed as far back as 13-10-1978, the impugned judgment should not be interfered with.
13. The learned trial Judge inter alia opined that opportunities have been granted to the appellants to adduce evidence which they did not avail.
14. The learned court of appeal, on the other hand, held that the appellants were prejudiced as the objections filed by them had not been considered.
15. In the final decree proceeding, one Shri Vardhilal A. Shah was appointed as a Commissioner. He was asked to examine the accounts of the dissolved partnership firm. He submitted a detailed report. It is not the case of the appellants that while preparing the said report he was not allowed to place any document before him or call for any document which was in custody or possession of the respondent. For the purpose of determining the issue referred to him by the Court in terms of Order 26 Rule 11 of the Code of Civil Procedure, principally the books of accounts which were maintained by the firm were required to be taken into consideration. If any additional books of accounts or any other document was required to be taken into consideration therefor, it was for the appellants to point out the same. It appears that the first objection which was taken by the appellants was non-production of “ublek” books and stock books. An objection was filed to that effect on 1-7-1985 which was rejected by an order dated 26-7-1985. It does not appear that any civil revision application was filed thereagainst. The said order, therefore, attained finality.
16. Another application was filed in 1994 to cross-examine the Commissioner. The same was rejected on 29-4-1995. However, an observation was made by the trial court that the “averments are fabricated with bad intention by the defendant and that the delay may be caused for recovery of decretal amount”. Another objection filed by the respondent was rejected by a very detailed order dated 31-1-1996 not only taking into consideration the provisions of law but also the precedents operating in the field. Conduct of the parties had also been taken into consideration therein. The learned Judge also considered the nature of the objections raised, one of which, we may notice, is that the Commissioner was not an expert in accounts. It was pointed that no such objection was raised at the time of the appointment of the Commissioner.
17. The appellants' principal grievance centres round the non-production of “ublek” books which, as noticed hereinabove, had been dealt with in the earlier orders of the court. It was pointed out that the Commissioner had prepared a balance sheet inter alia on the basis of the purchase bills and the sales bills.
18. A civil revision application, as noticed hereinbefore, was filed against one of the orders, which was later withdrawn. It is accepted at the Bar that the other civil revision application was also withdrawn.
19. The High Court in its impugned judgment had taken the said facts into consideration. Order 26 Rule 11 of the Code of Civil Procedure provides for appointment of a Commissioner to examine or adjust accounts, if necessary. He is competent to decide all questions raised before him, taking into consideration all aspects of the matter. He is to assist the Court. A Commissioner's report can be set aside only upon assignment of proper and sufficient reasons. In the event any defect in the conduct of inquiry by him is found out, the Court may issue any further directions. A further inquiry can also be ordered. A report of the Commissioner is a part of the record. It is to be treated as evidence in the suit.
20. Rule 16 of Order 26 of the Code of Civil Procedure provides for powers of the Commissioners which is in the following terms:
“16. Powers of Commissioners.—Any Commissioner appointed under this order may, unless otherwise directed by the order of appointment,—
(a) examine the parties themselves and any witness whom they or any of them may produce, and any other person whom the Commissioner thinks proper to call upon to give evidence in the matter referred to him;
(b) call for and examine documents and other things relevant to the subject of inquiry;
(c) at any reasonable time enter upon or into any land or building mentioned in the order.”
21. The appellants' father was, therefore, entitled to raise all the contentions in regard to non-production of books of accounts and other matters. It was also permissible for him to examine witnesses in support of his case before the Commissioner. It may be true that any order passed can be questioned on the grounds taken in the appeal against the final orders, but such interlocutory orders are required to be challenged. Nothing has been shown before us that such interlocutory orders and particularly those which are referred to hereinbefore had specifically been challenged in the memorandum of appeal but the said interlocutory orders were not subjected to revision. What is essential is that they should not have been appealed against. If a revision has been filed which is a part of the appellate jurisdiction, although stricto sensu, doctrine of merger may not apply but Section 105 of the Code of Civil Procedure also would not apply in such cases. Each of those orders attained finality. It has been held in Shankar Ramchandra Abhyankar v. Krishnaji Dattatreya Bapat (1969) 2 SCC 74, AIR 1970 SC 1 that civil revision is a part of appellate jurisdiction.
22. As noticed hereinbefore, before the Court, objections to the report of the Commissioner had been taken. Several orders were passed. There is nothing on record to show that the appellant intended to adduce any evidence in support of his case. In fact he was permitted to do so.
23. It may be true that in view of Rule 1(u) of Order 43 a second appeal was not maintainable but the scope of an appeal under Section 100 of the Code of Civil Procedure is narrower. If the appeal had been entertained upon hearing both the parties, this Court may not exercise its extraordinary jurisdiction to set aside that order, as what matters most is to see whether substantial justice has been done to the parties and not the technicalities involved therein.
24. In a given case the appellate court in exercise of its inherent jurisdiction can convert one type of appeal to the other. Forum for preferring a second appeal as also an appeal under Order 43 Rule 1(u) is the same, namely, the High Court. As the scope of an appeal under Order 43 Rule 1(u) is wider than a second appeal, the appellants on their own showing are not prejudiced in any manner, if the High Court proceeded to consider the question involved in the appeal in its impugned judgment.
25. Even substantial questions of law were framed and the same have been answered. We, however, although agree that technically a second appeal was not maintainable from one part of the judgment, keeping in view of the fact that the matter is pending for more than 40 years and in view of the nature of the dispute as also the quantum of amount involved, we are of the opinion that it is not a fit case where we should exercise our discretionary jurisdiction under Article 136 of the Constitution of India. It is now well settled that this Court may decline to exercise its jurisdiction, although it would be lawful to do so. (See Pandiyan Roadways Corpn. Ltd. v. N. Balakrishnan (2007) 9 SCC 755, (2007) 7 Scale 758.)
26. In the above circumstances both the appeals fail and are dismissed. However, in the facts and circumstances of the case there shall be no order as to costs.
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