Home » Landmarks » Industrial Credit and Investment Corporation of India Ltd. and another Vs. Sharad Khanna and others

Decided On, 27 July 1992

At, High Court of Judicature at Bombay


Anil Diwan with N.G. Thakkar and T.K. Cooper i/by M/s. Mehta and Girdharlal, for defendants. S.H. Doctor with Y.B. Pandya i/b. M/s. Pandya and Poonawala, for plaintiffs to show cause.



1. This chamber summons has been taken out by the defendants, seeking the relief that the ex parte decree dated 5th November, 1990, made by Agarwal, J., be declared to be a nullity and/or non executable with the further prayer that the said ex parte decree be set aside.

2. The facts leading to the present chamber summons indicate the considerable legal ingenuity which has gone into avoiding the day of reckoning. They are:

(a) The plaintiffs are financial institutions, which had advanced large sums of money to a Company known as Krimpex Synthetics Ltd., of which the defendants are Directors. While the first plaintiffs had advanced a sum of Rs. 87 lacs, the second plaintiffs had advanced a sum of Rs. 58 lacs. Usual agreements for compounding the interest were entered into between the said Company and the two plaintiffs. The loans were advanced not only against security of the plant, machinery, building and land of the said Company, but were also collaterally guaranteed by personal guarantees given by the defendants in the capacity of Directors of the said Company. The Company defaulted in making payment, and the plaintiffs became entitled, under their respective agreements, to enforce their debts forthwith. The plaintiffs filed a suit against the principal debtor-company on the basis of the mortgage-deeds and they also filed a summary suit, being Summary Suit No. 1935 of 1989, against the present defendants, based upon the guarantees.

(b) The details of the amounts claimed in the summary suit have some relevance, and, therefore, they need to be set out.

(i) The first plaintiffs claimed a sum of Rs. 1,11,30,538/- in the suits, the break-up of which was as under:–


Principal sum 87,00,000.00 Simple Interest 21,13,486.00 Compound Interest 2,98,999.00 Other costs (Liquid-ated Damages) 18,053.00 1,11,30,538.00

(ii)The second plaintiffs claimed a total sum of Rs. 73,98,866/-, which comprised the following:


Principal Outstanding 58,00,000.00 Simple Interest 13,93.347.00 Compound Interest 1,93,784.00 Liquidated Damages 11,735.00 73,98,866.00

(c) The plaintiffs also prayed for further interest at the rate of 12% per annum from the date of filing of the suit until payment of both the said sums.

(d) Summonses for judgment were taken out against the defendants. By an order dated 16th January, 1990, Variava, J., granted leave to the defendants to defend the suit, conditional upon depositing Rs. 50 lacs within a period of six months. The defendants appealed against the said order granting them conditional leave, and their appeal No. 567 of 1990, was summarily dismissed on 25th June, 1990, by the Division Bench (Mukherjee, C.J., and Bharucha, J.).

(e) On 20th July, 1990, the Prothonotary & Senior Master certified that the deposit, as required under the order of Variava, J., had not been made.

(f) In the meanwhile, the plaintiffs had, carried an appeal under Art, 136 of the Constitution, of India, to the Supreme Court of India, and the said appeal came to be dismissed by the Supreme Court on 26th July, 1990, wherein the Supreme Court made only a modification in the order to the effect that the defendants were permitted to furnish Bank Guarantee in the sum of Rs. 50 lacs, instead of depositing the said amount, within 8 weeks from the date of the said order, i.e., 26th July, 1990.

(g) the defendants failed to furnish the Bank Guarantee within the period prescribed by the Supreme Court.

(h) The plaintiffs obtained a Certificate of the Prothonotary dated 12th October, 1990, to this effect, and moved the learned Chamber Judge for an ex parte decree.

(i) On 5th November, 1990, the learned Chamber Judge (Agarwal, J.) made an order granting a decree as prayed, together with costs quantified at Rs. 10,001/-. A further order was made by the learned Chamber Judge on 7th October, 1991, for the issue of certified copy of the decree expeditiously.

(j) When the decree was to be drawn up and certified, the office objected to the draft decree as drawn up on the ground that the decree granted interest upon interest and that it was not permissible. The plaintiffs, therefore, moved the learned Chamber Judge, and, by an order dated 10th July, 1991, Agarwal, J., directed the Office of the Prothonotary and Senior Master to draw the decree in terms of prayer contained in the plaint.

(k) The decree was finally drawn up on 1st August, 1991. The drawn up decree, undoubtedly, directs payment of the amounts, referred to hereinabove, to the respective plaintiffs, and further directs interest at 121/2 per annum thereupon from the date of the filing of the suit until recovery.

(l) In the meanwhile, a Full Bench of this Court (Sukumaran, Saraf and Cazi, JJ.) decided in Union Bank of India y. Dalpat Gaurishankar Upadyay, ; the issue as to whether S. 34 of the Code of Civil Procedure, 1908, empowers the Court to direct payment of interest, which might have been claimed up to the date of the suit as part of the decretal amount. I shall have occasion to refer to this judgment in detail, but, for the present, continuing the narration of events, it might be pointed out that the Full Bench took the view that S. 34 of the Code of Civil Procedure did not empower the Court to grant interest upon interest, and that the expression “principal sum” used in S. 34, must be restricted to the original sum which was due, without adding the interest calculated thereupon up to the date of the suit.

(m) On 27th August, 1991, the plaintiffs took out Insolvency Notice No. 108 of 1991, and had it served on the judgment-debtors (the defendants).

(n) On 7th October, 1991 the defendants took out notice of motion to set aside the said insolvency notice by their Notices of Motion 107 of 1991 and 108 of 1991, which are still pending before the Insolvency Court.

(o) On 28th April, 1992, the defendants took out a draft notice of motion for setting aside the ex parte decree as well as for interim order staying the decree, pending hearing and disposal. The draft notice of motion was moved before Dhanuka, J., for ad-interim reliefs on 28th April, 1992, and the learned Judge was of the view that the appropriate remedy was by way of a chamber summons, and, accordingly, the said notice of motion was directed to be converted into the chamber summons, which is the present chamber summons. The present chamber summons was moved before me also on an earlier occasion for ad-interim relief, which I have refused.

(p) I may mention here that, though the defendants carried the matter of the order of conditional leave to defend all the way to the Supreme Court, for reasons known to them, they did not appeal against the ex parte order dated 5th November, 1990, passed by Agarwal, J., which has become final and binding.

3. The main contention of the defendants, vigorously canvassed by Mr. Diwan, learned counsel for the defendants, is that the decree dated 1st August, 1991, based on the ex parte order dated 5th November, 1990, of Agarwal, J., is a nullity, is nonest, and, therefore, despite the fact that the decree might have become otherwise final and conclusive, the defendants are entitled to challenge it, wherever and whenever the said decree is sought to be enforced against them. One of the modes of enforcing the decree is by taking out an insolvency notice, which has been done by the plaintiffs; the defendants contend that they arc entitled to object to a decree, which is non est and a nullity, wherever and whenever it is sought to be relied upon. Consequently, the defendants have moved this Court for a declaration that the decree is a nullity and non est.

4. Mr. Diwan contended that three questions basically arise in the present proceedings :

(a) Whether the Court can, in exercise of its powers under S.34 of the Code of Civil Procedure, direct interest to be awarded upon interest in a claim before it?

(b) If not, what is legal status of an order or decree awarding interest, not on the principal sum, but also on the interest claimed up to the date of the suit?

(c) Whether the defendants are entitled to raise this question at this juncture?

5. There is also an incidental question of delay, which is the subject-matter of prayer (a) in the chamber summons, which is easily disposed of.

6. It is the case of the defendants, as made out in the affidavit-in-support, that they came to know of the judgment of the Full Bench only by a newspaper report, which appeared in “The Economic Times” of the 23rd April, 1992, and immediately thereafter, they have taken out the draft notice of motion on 24th April, 1992, and, therefore, there is no delay. I am not inclined to hold against the defendants on the question of delay. I hold that the chamber summons is not likely to be dismissed on this ground alone, as the delay, if any, is liable to be condoned in the facts and circumstances of the case.

7. The first question raised by the learned counsel for the defendants has been settled by the Full Bench judgment of this Court in Dalpat’s case (supra). Expatiating on this contention, Mr. Diwan contended that S.34 of the Code of Civil Procedure, as interpreted in Dalpat’s case, puts a fetter on the Court’s power to award interest upon interest. If a Court were to make a decree contrary to the law as laid down by the Full Bench (which must be taken to have been so laid down as from the date on which S.34, as amended, stands on the statute book), such a decree is not merely erroneous, but one without jurisdiction, made by a Corum non judice, and, hence, the decree would be a nullity or non est. Such a decree, made by a Coram non judice, can be challenged, wherever and whenever it is sought to be relied upon. This is the crux of the argument of Mr. Diwan, in support of which, the learned counsel cited a number of authorities; which shall presently be noticed.

8. In Sushil Kumar Mehta v. Gobind Ram Bohra, , the Supreme Court’ was confronted with somewhat similar arguments. There was certain municipal land, on which some structures were constructed by a lessee, and the small portion in front of the building was left as open land. The lessor moved the Civil Court and obtained a decree for eviction. On appeal, the High Court took the view that the provisions of the Haryana Urban (Control of Rent and Eviction) Act? 1973 were applicable to the premises, and, as such, the Civil Court had no jurisdiction, whatsoever, to make a decree for eviction. The matter came up to the Supreme Court in appeal. The Supreme Court accepted the contention of the respondent that the Rent Control Restriction Act applied to the premises. After examining the provisions of the said Rent Control Legislation, the Supreme Court also took the view that the jurisdiction of the Civil Court was barred and exclusive jurisdiction was vested in the special forum created under the special Act, which could exercise the power of eviction of a tenant protected by the Act only in accordance with the stringent provisions of the Act, The Supreme Court, consequently, held that the decree made by the Civil Court was a total nullity, as the Civil Court completely lacked jurisdiction to make such a decree; that the issue between the parties was not res judicata, as an issue of jurisdiction did not bind the parties merely because the Court had taken an erroneous view of law and usurped the jurisdiction.

9. The Supreme Court, reiterating the principle laid down in an earlier judgment in Vasude v. Dhanjibhai Modi v.Rajabhai Abdul Rehman, , held that a decree, even if it be erroneous, is still binding between the parties, and it could be objected to in execution or collateral proceedings if the decree’ was passed by a Court which totally lacked jurisdiction, such objection as to basic lack of jurisdiction being incurable even by consent of parties or by resort to the principle of estoppel, Mr. Diwan has highlighted, rightly, the observations in paragraph 26 of the judgment (in the Supreme Court Report) as laying down the law. The law is laid down in the following words:–

“26. Thus it is settled law that normally a decree passed by a Court of competent jurisdiction, after adjudication on merits of the rights of the parlies, operates as res – judicata in a subsequent suit or proceedings and binds the parties or the persons claiming right, title or interest from the parties. Us validity should be assailed-only in an appeal or revision as the case may be. In subsequent proceedings, its validity cannot be questioned. A decree passed by a Court without jurisdiction over the subject matter or on other grounds which goes to the root of its exercise or jurisdiction, lacks inherent jurisdiction. It is a coram non judice. A decree passed by such a Court is a nullity and is non est. Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings. The defect of jurisdiction strikes at the authority of the Court to pass a decree which cannot be cured by consent or waiver of the party. If the Court has jurisdiction but there is defect in its exercise which does not go to the root of its authority, such a defect like pecuniary or territorial could be waived by the party. They could be corrected by way of appropriate plea at its inception or in appellate or revisional forums, provided law permits. The doctrine of res judicata under S. 11, C.P.C. is founded on public policy. An issue of fact or law or mixed question of fact and law, which are in issue in an earlier suit or might and ought to be raised between the same parties or persons claiming under them and was adjudicated or allowed uncontesled becomes final and binds the parties or persons claiming under them. Thus the decision of a competent Court over the matter in issue may operate as res judicata in subsequent suit or proceedings or in other proceedings between the same parties and those claiming under them. But the question relating to the interpretation of a statute touching the jurisdiction of a Court unrelated to questions of fact or law or mixed questions does not operate as res judicata even between the parties or persons claiming under them. The reason is obvious: a pure right, cannot be deemed to be a matter in issue. The principle of res judicata is a facet of procedure but not of substantive law. The decision on an issue of law founded on fact in issue would operate as res judicata. But when the law has since the earlier decision been altered by a competent authority or when the earlier decision declares a transaction to be valid despite prohibition by law it does not operate as res judicata. Thus a question of jurisdiction of a Court or of a procedure or a pure question of law unrelated to the right of the parties founded purely on question of fact in the previous suit, is not res judicata in the subsequent suit. A question relating to jurisdiction of a Court or interpretation of provisions of a statute cannot be deemed to have been finally determined by an erroneous decision of a Court. Therefore, the doctrine of res judicata does not apply to a case of decree of nullity. If the Court inherently lacks jurisdiction consent cannot confer jurisdiction. Where certain statutory rights in a welfare legislation are created, the doctrine of waiver also does not apply to a case of decree where the Court inherently lacks jurisdiction.”

10. Relying strongly upon the law laid down in Sushil Kumar’s case (supra), Mr. Diwan contends that the decree made in the case of the defendants is not merely vitiated by an error of law but is completely non est and a nullity, as it has been made by a Court which lacks the basic jurisdiction or power to make the decree, and, further, such Court would be Coram non judice, as explained by the Supreme Court in Sushil Kumar’s case. This contention needs an in-depth and critical examination.

11. The defendants have also relied on Bahadur Singh v. Muni Subrat Dass ; K. K. Chari v. R. M. Sheshadri, ; Kaushalya Devi v. K.I. Bansal, ; Nagindas v. Dalpatram, . Isabella Jahnion v. M. A. Susai and Gnanendra Mohao Bhadun v. Rabindra Nath Chakravarty in support.

12. Bahadur Singh’s case (supra) was a case where a dispute between a landlord and tenant was referred to arbitration, and an award was made directing the tenant to occupy the property for seeking time and thereafter to vacate the same. The award was filed in Court, and a decree was obtained in terms of the award. When the decree was sought to be executed, the tenant objected to it on the ground, inter alia, that the decree was invalid and void, as, it had been passed in contravention of the provisions of the Delhi and Amjer Rent Control, Act, 1952 and, Therefore, the landlord could not execute the decree. In upholding this contention, the Supreme Court held that, under the applicable Rent Control Act, the Court was prohibited from passing a decree for order of recovery of possession of any premises in favour of the landlord against a tenant, except in such suit or proceedings instituted by the landlord against the tenant for recovery of possession on one of the grounds stated therein, and unless the Court was satisfied that the ground of eviction existed. Since the decree, on the face of it, did not comply with the provisions of the Delhi and Ajmer Rent Control Act, the Supreme Court held that the decree was a nullity, and, therefore, it could be validly objected to during the execution proceedings.

13. Chari’s case (supra) was also a case under the Rent Control Legislation as applicable in Tamil Nadu. There also a compromise decree for eviction of the tenant had been made. The decree and the record, per se, did not indicate that one of the statutory grounds for eviction of the tenant existed. The Supreme Court, therefore, held that such a decree was prohibited under the applicable Rent Control Legislation, and, therefore, the Court could not have made a decree in terms of the compromise in the absence of the existence of a statutory ground, which was neither admitted nor clearly demonstrable from the records. The decree was therefore, held to be a nullity and capable of being objected to in execution.

14. Kaushalya Devi’s case (supra) was also a case of similar nature where the provisions of the Delhi and Ajmer Rent Control Act, 1952, were invoked to contend that a compromise decree passed by the Court in an ejectment suit, without satisfying itself as to the existence of ground for eviction, was a nullity, and could not be executed.

15. In Nagindas (supra) also, the issue was very much the same. Existence of one or the other statutory ground mentioned in Ss. 12 and 13 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, was held to be a sine qua non for passing a decree of eviction. The statute contains a prohibitory mandate to the Rent Court that it shall not travel beyond the statutory grounds mentioned in Ss. 12 and 13 and to the parties that they shall not contract out of those statutory grounds. This was spelt out as being inherent in the public policy built into the statute. Merely because 0.23, R. 3 of the Code of Civil Procedure, was applicable to the proceedings in a suit under the Bombay Rent Act, the prohibition in-built into the statute could neither be waived, nor compromised, and any decree for eviction of a tenant, otherwise than upon the existence of a statutory ground, was held by the Supreme Court to be a nullity, capable of being objected to at all stages.

16. In Isabell’s case (supra) also, the same issue was considered by the Supreme Court, which reiterated the principle laid down in Sushil Kumar’s case (supra).

17. One feature is common to all these cases. They all arose under the Rent Control Legislation, which, as a matter of public policy, prohibils an eviction decree being passed against a tenant, except upon the existence of one or the other statutory ground. These were all cases where the Court had passed an ‘eviction decree either on a compromise or upon an arbitration award or by ignoring the statutory restrictions on its jurisdiction. In my view, these judgments are clearly distinguishable. The jurisdiction of the Civil Court was barred in all these cases by the applicable Rent Control Legislation, and, simultaneously, jurisdiction was vested in a special forum. This special forum also could pass a decree for eviction only if certain statutory conditions existed. In these circumstances, if a Court, whether relying on a compromise by consent terms, proceeded to pass a decree for eviction of a tenant, except upon a statutory ground, it would obviously, be traversing beyond its jurisdiction, which was not possessed of even by the special Court. Thus, in these cases, the Supreme Court took the view that the Civil Court, which has passed the decree, lacked inherent jurisdiction to entertain the subject-matter of the suit, and, therefore, it was held that the decree passed by the Civil Court was a nuility. Consequently, its invalidity could be set up in any proceedings, including execution proceedings.

18. The cases arising under Rent Control Legislation or any other Slate Legislation, where a special forum has been created to adjudicate the rights of parties and the jurisdiction of a Civil Court is barred, either expressly or by implication, create no difficulty. It is easy to sec that a Court whose jurisdiction is barred expressly or impliedly is coram non judice, and, therefore, its order or decree would be non est.

19. The Special forum having limited jurisdiction under the statute, its decree would be a nullity if it aets beyond the statutory restrictive limits.

20. In the case of the defendants, however, the decree was not passed by a Court which lacked inherent jurisdiction. It is not disputed, indeed it could not be, that this Court had jurisdiction to entertain the summary suit, in which the ex parte order was passed. What is, however, contended is that, under S. 34 of the Code of Civil Procedure, 1908, as expounded by the Full Bench, this Court lacked inherent power to award interest upon interest, and, therefore, this situation was no different from the situation of lack of jurisdiction, which was considered by the Supreme Court in the cases cited hereinabove.

21. It is difficult to agree with this contention advanced by the learned counsel. A situation, where a statute mandates the Court of plenary jurisdiction to do or not to do something, and the Court breaches the mandate, cannot be equated with a situation where the Court inherently lacks jurisdiction to adjudicate upon the subject-matter of the dispute or with the case of a special forum of limited jurisdiction acting out of bounds of its jurisdictional limits. The former results in an erroneous decree; the latter in a decree which is a nullity.

22. The Rent Control cases are, therefore, distinguishable and, in my view, they do not support the proposition canvassed by the defendants.

23. Mr. Diwan then cited an authority of the Privy Council in Gnanendra Mohan Bhaduri v. Rabindra Nath Chakravarty, AIR 1933 PC 611 in support. This was a case which “arose under the Arbitration Act, 1899, under which there was no provision for the Court to make a decree in terms of an award. Under the said Act, an award was enforceable, per se, as a decree of the Court. The award was filed in Court and there were no proceedings taken out for setting aside the award. Parties, however, were aggrieved by a certain direction in the award, and, by consent, agreed that the award shall be modified as agreed between them. Consent Terms were filed before the High Court, and they applied for a decree in terms of the award, as modified by their Consent Terms. A decree was granted in terms of the Consent Terms. One of the parties was a minor at the time the decree was made. Much later, after attaining majority, he challenged the decree as a nullity. The Privy Council pointed out that the only jurisdiction of the High Court, under the Arbitration Act of 1899, was to remit or set aside the award, and that, in the absence of an order setting aside or remitting the award for reconsideration of the Arbitrator, the Award, which had been filed in the Court, was enforceable, as if it were a decree of the Court. The Act did not contain any provision for making a decree on an award, much less, on an award as modified by consent terms, and, therefore, the decree, if made, was one without jurisdiction and, therefore, a nullity. The Privy Council, therefore, upheld the judgment of the High Court that the decree had been passed without jurisdiction and was, therefore, incapable of execution as such. Mr. Diwan contends that this, at least, is a situation where the Court, which made the decree, had jurisdiction to entertain the subject-matter. Since it had been entertained in a manner contrary to statute, the Privy Council had found that the decree was one without jurisdiction, and, therefore, non est. In my view, this judgment is also capable of being distinguished. Under the Act of 1899, in the absence of a provision for making a decree in terms of the award, the decree, upon its being filed in the High Court, was capable of being enforced, as if it were a decree of the Court. Thus, the situation was one where the parties concerned could have enforced the award as it stood. However, in the absence of any provision of law under which the Court could modify the award, even by consent of parties, the Privy Council found that such order of the Court was one wholly without jurisdiction, and, therefore, a nullity. This was also a case where the jurisdiction of the Court was limited by the statute, viz.. to remit or set aside the award. There was no further jurisdiction to make a decree in terms of the award, or for a modification of the award, even by consent of parties. It cannot be forgotten that arbitrators derive jurisdiction by consent of parties and not by statute. The parties, by consent, had conferred jurisdic-

tion on the Arbitrator and agreed to be bound by it. No one — not even a Court, in the absence of a specific statutory power — could usurp it. The power granted to the Civil Court under law, as it then stood was to set aside the award or to remit the award for re-consideration, on extremely limited grounds. It was in these circumstances that the Privy Council held that the decree made by the Court in terms of award and that too by introducing a modification in the award, was a nullity, as it lacked inherent jurisdiction to do so. 1 am, therefore, unable to accept the contention of Mr. Diwan that his judgment is an authority for the proposition he canvasses.

24. Mr. Diwan then contended that a careful reading of the Full Bench judgment would indicate that the Full Bench has held that the Court is ‘prohibited’ from granting interest upon interest, that the decision deals with the interpretation of S. 34 of the C.P.C., which “empowered” the Court to award interest. It is also pointed out that the Full Bench heavily relied upon the Report of the Joint Committee on the Bill, which preceded the 1956 amendment of S. 34 of the C.P.C. The relevant part of the report states, “the Committee are of; the opinion that interest should not be awarded on interest, but only on the principal sum. Suitable amendment has, accordingly, been incorporated in this clause.” Learned counsel emphasized the observations of the Full Bench on the Report of the Joint Committee to the effect:

“The aforesaid observations of the Joint Committee make it abundantly clear that the intention of the legislature was not to allow the award of compound interest by the Court…..”

He also drew my attention to the further observations of the Full Bench :

“The object of the amendment, as is evident from the report of the Joint Committee, was to prohibit award of interest on interest and was to restrict it only on the principal sum. Under S. 34, as amended, the interest can be awarded only on the principal sum and not on the aggregate sum comprising the principal and interest accrued thereon.”

Highlighting the emphatic language used by the Full Bench, in expounding the amplitude of the power of the Court under S. 34 of the C.P.C., Mr. Diwan was at pains to contend that the Full Bench, by the law it declared, has circumscribed the jurisdiction of the Court under S. 34 of the C.P.C. to award interest. Traversing out of these limits, the Court would not only be traversing the limits set by the statute, but traversing the limits of its jurisdiction. Out of bounds is out of jurisdiction, contends counsel.

25. It is difficult to agree with the contention of the learned counsel for the defendants that, if a Court, while exercising jurisdiction under S. 34, awards interest on the aggregate of the principal sum plus interest, it would be an exercise lacking in inherent jurisdiction and not one merely of an erroneous exercise within its jurisdiction. A Court, which otherwise has jurisdiction to entertain a dispute, equally has jurisdiction to decide it erroneously. The remedy, in such a situation, is by way of appeal, if one is provided, or other constitutional one. If there is no resort to them, or, as in the instant case, the resort to them draws a blank, the order of the Court becomes final and it is not capable of being ignored on the ground of its being noh est or a nullity. In my view, the Court, in such a situation, cannot and does not became coram non judice.

26. It would be useful, at this juncture, to refer to a judgment of the Supreme Court in Hiralal v. Kali. Nath, , This was a case where the decision of the High Court was challenged on the ground that the suit filed on the Original. Side was wholly incompetent for want of territorial jurisdiction, and, therefore, the award which followed on the reference to arbitration, and the decree of the Court under execution, were all null and void. The Supreme Court, repelling the contention, observed (at page 200):

“The validity of a decree can be challenged in execution proceedings only on the ground that the Court which passed the decree was lacking in inherent jurisdiction in the sense that it could not have seized of the case because the subject-matter was wholly foreign to its jurisdiction or that the defendant was dead at the time the suit had been instituted or decree passed, or some such other ground which could have the effect of rendering the Court entirely lacking in jurisdiction in’ respect of the subject matter of the suit or over the parties to it.”

The Supreme Court turned down the objection based on territorial jurisdiction as deemed to have been waived and held that the parties were estopped from raising such objection at the execution stage.

27. Following upon this judgment, Madon, J., of this Court (as his Lordship then was) has, in Erandol Taluka Gramodyog Utpadak Sahakari Society v. M/s. Sunil Waste Corporation, AIR 1971 Borrf 91 considered and laid down what 1 consider, with respect, the correct test to be adopted for deciding if the decree is capable of being objected to in collateral proceedings as a nullity. In this case, a suit was filed in the Court of the Subordinate Judge, Delhi, against a co-operative society registered under the Maharashtra Co-operative Societies Act with regard to a dispute touching the business of the society. The respondent, which had filed the suit, obtained a money decree which was passed ex parte. After obtaining the ex parte decree, it was transferred to the Civil Judge, Junior Division, Erandol, for execution. During the Darkhast proceeding, an objection was raised that the decree was a nullity, as the condition precedent in S. 164 of the Maharashtra Co-operative Societies Act, of a previous notice to Registrar, had not been complied with. The trial Court held that a failure to give the notice, required under S. 164 of the Societies Act, was not a question which affected the jurisdiction of the Court to pass a decree, and, hence, this could not be gone into by the executing Court. The appeal to District Judge also failed. While dismissing the second appeal, in which the only ground urged was that the respondent had instituted a suit without giving the requisite notice under S. 164 of the Societies Act, and, hence, the trial Court had no jurisdiction to entertain the suit or to pass a decree therein, and that the decree was incapable of being executed as it was a nullity, reiterating the principle adopted in Rana Harkishandas Lallubhai v. Rana Gurabdas Kalyandas, the learned Judge (Madan, J.) pointed out (at page 516):

“…… .It is always necessary to make a distinction between pleas that tend to show that the decree in question is a nullity and pleas that merely challenge the validity or the propriety of the decree on the ground that it is contrary to the provisions of law. If the plea is that the decree is contrary to law in the sense that in passing the said decree certain provisions of the law have been ignored or contravened, that would not necessarily make the decree a nulity and allegations about the impropriety or the illegality of the decree cannot be entertained in execution proceedings.”

The learned Judge derived support from the judgment of the Supreme Court in Seth Hiralal Patni’s case (supra) and also from the judgment of the Supreme Court in Ittyavira Mathai v. Varkey Varkey, , where it was held that, though S. 3 of the Limitation. Act is peremptory and casts a duty on the Court to take notice of the said provision and give effect to it, though the point of limitation is not raised in the pleadings. Even so, it cannot be said that, where the Court fails to perform its duty and fails to dismiss the suit on the ground of limitation, it acts without jurisdiction. If it fails to do its duty, it merely commits an error of law and an error of law can be corrected only in the manner laid down in the Code of Civil Procedure. If the party aggrieved does not take appropriate steps by way of preferring an appeal to have that error corrected, the erroneous decree will hold good and will not be open to challenge on the basis of its being a nullity.

28. With respect, the approach adopted by Madon, J., in the Erandol Taluka’s case commands itself to me as eminently rational and conducive to justice, and I would prefer to adopt it.

29. For a moment, even assuming the correctness of the contention of Mr. Diwan that the Full Bench judgment has expounded the law and held that the “power” of the Court under S. 34 of the Code of Civil Procedure is “restricted” and that the Court is “prohibited” from granting interest upon interest, a Court, which acts contrary thereto, does not act without inherent jurisdiction; it may act erroneously. Thus, a decree, which grants interest upon interest, cannot be said to be a nullity, nor can the Court, which passes the decree, be said to be coram non judice. In my view, therefore, the ex parte decree dated 5th November, 1990, made by Agarwal, J., does not amount to nullity, nor is it “non est”; much less can be Court be said to have been coram non judice.

30. Mr. Doctor, learned counsel for the plaintiffs, contends that, at the highest, even if the contention of the defendants were to be upheld, only that part of the decree which awards interest upon interest would be bad and that there is no reason to hold that the entire decree is bad. Since the portion of the decree which grants interest is clearly severable, there is no reason why the entire decre’e should be declared to be a nullity.

31. Mr. Doctor, learned counsel for the plaintiffs, placed reliance on a judgment of the learned single Judge of this Court in Fattechand Murlidhar Shop v. Shrikrishna Tejmalji Chandak’, a judgment of the Madras High Court in Ganapathi v. Balasubrammania Gounder,, AIR 1987 Mad and a Division Bench judgment of this Court in D. Shanalai v. Bank of Maharashtra, to repeal the contentions of the defendants.

32. Mr. Doctor cited the judgment of the Supreme Court in Smt Ujjam Bai v. State of Uttar Pradesh, AIR 1962 SC, 1621 part-cularly, in paragraph 15 as under:–

”It is necessary first to clarify the concept of jurisdiction. Jurisdiction means authority to decide. Whenever a judicial or quasi-judicial Tribunal is empowered or required to enquire into a question of law or fact for the purpose of giving a decision on it, its findings thereon cannot be impeached collaterally or on an application for certiorari but are binding until reversed on appeal. Where a quasi-judicial authority has jurisdiction to decide a matter, it does not lose its jurisdiction by coming to a wrong conclusion, whether it is wrong in law or in fact. The question whether a Tribunal has jurisdiction depends not on the truth or falsehood of the facts into which it has to enquire, or upon the correctness of its findings on the these facts, but upon their nature, and it is determinable ‘at the commencement, not at the conclusion, of the inquiry.”

This appears a test of what is a jurisdictional issue.

33. Mr. Doctor also relied on a judgment of a Division Bench of this Court in D. Shanalal v. Bank of Maharashtra, 1988 Mah LJ 956 and contended that, once leave to defend is refused or made conditional and the condition is not fulfilled, the party could not be heard in appeal against the ex parte decree. In my view, the contention canvassed for the defendants is somewhat larger, and, therefore, this authority is not much of help.

34. Mr. Doctor also relied on ajudgment of the learned single Judge of the Madras High Court in Ganapathi v. Balasubramania Gounder , which takes the view that the question of validity of a decree is not one which can be agitated in execution, because it does not relate to the satisfactory discharge of the decree. It is only where a decree is passed by a Court, which lacks inherent jurisdiction to pass the decree, that the objection to the validity of the decree may be raised in a proceeding in execution, if such an objection appears on the face of the record.

35. Reliance is also placed on behalf of the plaintiffs on a judgment of the learned single Judge of this Court in Fattechand Murlidhar Shop v. Shrikrishna Tejmalji Chandak, this was a case arising under the Maharashtra Slum Areas (Improvement, Clearance and Redevelop-

ment) Act, 197], under which, no suit for eviction of any occupier from any building or land in a slum area could be instituted without permission of the Competent Authority and, on an objection being raised, or the Court noticing the non-compliance thereof, the suit would not be entertained. A suit had been instituted without obtaining the permis-sion of the Competent Authority, as required under S. 22 of the said Act, An objection was raise in the executing Court that the decree was a nullity, as it has been passed contrary to the provisions of S. 22 of the said Act, and this Court negatived the objection by holding that the executing Court could not entertain and allow the objection to the executability of the decree, since it could not be said that the decree was passed by this Court having no inherent jurisdiction, and was, therefore, a nullity.

36. In my view, the true principle of the matter is the one which has been adopted in the judgment of Madon, J., in Erandol Taluka’s case (supra). Applying the said principle, I am unable to accept or uphold the contentions of the learned counsel for the defendants.

37. In the result, I hold that the ex parte Decree dated 5th November, 1990, made by Agarwal, J., is not a nullity, nor is it non est. The Court which passed the said decree was not coram non judice. Consequently, it is not open to the defendants in these proceedings or in other collateral proceedings to object to the validity of the said decree.

38. In the premises, the chamber summons must fail. Although prayer (a) was granted by me by condoning the delay, the chamber summons fails on merits, and it is, consequently, hereby dismissed with costs.

39. Mr. Diwan applies for an order to stay further proceedings in insolvency to enable the defendants to canvass the matter in appeal. Mr. Pandya, learned counsel for the plaintiffs, makes a statement that the Insolvency Notice would be on board on 4th August, 1992, and, on that day, it would, by consent, be adjourned by a period of two weeks. This should give sufficient time to the defendants. Hence, no order of stay.

40. Chamber summons dismissed.

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