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Judgment
Raju, J.—Having regard to the nature and scope of consideration involved both in the Civil Miscellaneous Petitions and the main revision, a
date has been fixed for the hearing of both the petitions by an order dated 19-12-1994. Hence, both are taken up together for hearing. The above
revision has been filed against the order of the learned 3rd Additional Subordinate Judge, Coimbatore, dated 24.1.1994 in I.A.No. 9 of 1994 in
OS.8 of 1985, wherein the application filed by the second defendant (defendant) in the suit came to be rejected. In the said application filed u/s
151 of the Civil Procedure Code, read with Section 125 of Companies Act, the second defendant sought for treating the issue regarding limitation
and the sale of shares, as preliminary issue and dispose them of as such before finally adjudicating the suit.
In the affidavit filed in support of the said application, it was stated that the suit by the plaintiff was for the recovery of Rs. 2,96,87,614/-, that
the plaintiff was not entitled to the suit claim, since the plaintiff has committed breach of trust without sufficient considerations on account of selling
the shares of the company held in Revahi CP Equipment limited at a very low price without sanction from the court, especially during the pendency
of the lis and that the acknowledgment by signing the confirmation of statement will not have the effect of the renewal of the original pronote and
the confirmatory statement will not give a cause of action making the suit claim viable u/s 125 of the Companies Act and that the suit claim itself is
barred by limitation. In the light of the above, the issues pertaining to the above contentions were sought to be got tried as preliminary issues. It is at
the time of hearing while reiterating the above stand, the learned counsel for the petitioner also contended that if the issues were not tried as
preliminary issues, grave injustice will be caused to the second respondent and that the plaintiff would be placed in a position, giving an
unreasonable upper hand against the second defendant. The application was opposed by the plaintiff by filing a counter. It was also contended that
neither of the issues sought to be tried as preliminary issues, could be decided as pure questions of law, on the basis of pleadings without going into
the evidence and facts of the case and that the object of the petitioner was only to delay the completion of the trial in which the plaintiffs evidence
was already over and the petitioner has taken more than once adjournments to examine himself The Court below by the order under challenge in
this revision has rejected the application holding that the issues can be tried and disposed of only on the basis of the oral and documentary
evidence also and not merely on the basis of submission of legal issues and that therefore there was no justification in seeking the Court to decide
the issues as preliminary issues. Hence the above revision.
The learned counsel for the petitioner while reiterating the stand taken in the grounds made in the Memorandum of Grounds, contended that
apart from the plea of limitation which had to be adjudicated as a preliminary issue, the issue relating to the legality, validity and propriety of the
sale of the shares would help, in case the second defendant is able to substantiate his claim, to set off the real sale market value of the shares as
against the suit claim. The learned counsel also contended that according to them, the real sale market value of the shares would be about Rs. 24
crores as against the suit claim of Rs. 2 crores and odd and that it is all the more necessary for the reason that the plaintiff has chosen to sell the
shares belonging to the second defendant during the pendency of the suit without even obtaining the orders or directions of this court, to the
detriment of the second defendant. The learned counsel further contended that there is ample power and authority in the trial court to accede to the
request made to decide the issues in question as preliminary issues to do substantial justice to parties and that the failure to do so constitutes failure
to exercise jurisdiction vested in the Court below and this warrants interference of this Court even at this stage of the proceedings.
The leaned counsel for the respondent/plaintiff placed reliance upon Order 14 Rule 2 of Civil Procedure Code; as also the decisions reported in
Usha Sales Ltd. Vs. Malcolm Gomes and Others, , Major S.S. Khanna Vs. Brig. F.J. Dillon, , S.M. Peter Soundaraj v. P.S. Irudayaraj 1986
TLNJ 311 Dhirendranath Chandra Vs. Apurba Krishna Chandra and Others, to substantiate their claim that the issues in question cannot and need
not be tried as a preliminary issue and that the order of the Court below does not call for any interference. Before dealing with the respective
contentions of the Learned Counsel, it becomes necessary to advert to the relevant provisions of law relied upon by the learned counsel and also
the decisions cited supra.
The application itself came to be filed u/s 151 of the Code of Civil Procedure, invoking the inherent powers of the Court. It is by now well
settled that the inherent powers of a Court arc not only in addition to, but also complementary to the powers expressly conferred under the Code
and that such power will not normally be exercised, if it is inconsistent and comes into conflict with any of the powers expressly or by necessary
implication conferred by the other provisions of the Code. If there are any express provisions exhaustively covering a particular topic normally in
such case, the Court will not resort to exercise its power in a manner other than the one prescribed by such provisions, by having recourse to the
inherent power of the Court. In substance under the inherent power of the Court, it can act ex-debito justitiae to do real and substantial justice
without violating any specific provision to the contra contained in any part of the Code. Order 14, Rule 2 on which reliance has been placed for the
respondent/plaintiff provides that notwithstanding that a case may be disposed of on a preliminary issue, the court shall, subject to the provisions of
sub rule (2), pronounce judgment on all issues. Sub rule (2) of Order 14 Provides that where issues both of law and of fact arise in the same suit,
and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try first that issue which relates to,
(a) the jurisdiction of the Court, or (b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit,
postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on
that issue. Learned counsel for the petitioner contended that the claim of the second defendant/petitioner in the present proceedings does not
satisfy the requirements of Rule 2 of Order 14 and that therefore the Court below was right in rejecting the request made by the petitioner.
In Usha Sales Ltd. Vs. Malcolm Gomes and Others, , a learned Single Judge of the Bombay High Court held, while construing the scope of
Order 14 as amended in 1976, that after amendment in 1976 there is an obligation cast upon the Court that even though a case may be disposed
of on a preliminary issue, the Courts shall subject to the provision of sub rule (2) pronounce judgment on all issues and in other words, the
obligation to decide a question of law as a preliminary issue if that decision dispose of the case or part of the case is no longer there. It was also
held that the discretion to decide any other issue/her than the one contemplated under sub rule (2) of Order 14 as a preliminary issue has been
taken away totally from the Court and an obligation has been cast upon the Court that it must proceed to hear all the issues and pronounce
judgment on the same. In 1986 TLNJ 311, in the case of S.M. Peter Soundaraj v. P.S. Irudayaraj a learned single Judge of this Court has chosen
not to interfere with an order of the trial Court rejecting a petition to try an issue as a preliminary issue on being satisfied with the soundness of the
reason given by the trial Court in support of its decision. The decision as could be seen from the reported decision, proceeds merely on the scope
of interference in exercise of the revisional jurisdiction of this Court with the reasons assigned and the discretion exercised by the trial court. In that
case, it had the approval of the learned Judge as being supported by sound reasons and proper exercise of the judicial discretion. This would only
go to show that there cannot be any invariable or uniform rule as such of universal application in this regard and to some extent the particular facts
and circumstances of the case alone would be of considerable relevance.
In Major S.S. Khanna Vs. Brig. F.J. Dillon, , the Supreme Court held that the jurisdiction to try issues of law apart from the issues of fact may
be exercised only where in the opinion of the Court that the whole suit may be disposed of on the issue of law alone and the Code conferred no
jurisdiction upon the Court to try a suit on merely issues of law and facts as preliminary issues and normally all the issues should be tried by the
Court and that failure to do so would result in a lopsided trial of the suit.
In Dhirendranath Chandra Vs. Apurba Krishna Chandra and Others, , a learned Single Judge of the Patna High Court held expressing a view
that a plain reading of Rule 2 will show that ordinarily even if the case may be disposed of on a preliminary issue, the Court is bound to pronounce
judgment on all issues and that the ordinary rule is subject to only one exception carved out in sub rule (2). It was also held therein that where the
trial Court disallowed the request of the petitioner to try the issue, namely, whether the suit was barred u/s 66(1) of the CPC as preliminary issue
there was no error touching the exercise of jurisdiction on the part of trial Court as that was itself a discretionary matter.
In Ramdayal Umraomal Vs. Pannalal Jagannathji, , a Full Bench of the Madhya Pradesh High Court expressed the view that even an issue
relating to jurisdiction can be tried as a preliminary issue only if it can be disposed of without recording any evidence and that where an issue
relating to jurisdiction, is a mixed question of law and fact requiring recording of evidence the same cannot be tried as a preliminary issue.
I have carefully considered the submissions of the learned counsel appearing on either side on the correctness or otherwise of the claim as also
the need for determining the issues sought to be adjudicated as preliminary issues. The Court below had chosen to reject the claim mainly, rather
on the only ground that the adjudication of the issues sought to be tried and decided as a preliminary issue would also require oral and
documentary evidence and that therefore, there was no justification in the plea on behalf of the petitioner to have the two issues raised tried as
preliminary issues. In my view, after the amendment to the provisions contained in Rule 2 of the Order 14 by the substitution of a new rule in the
place of the old Rule 2, the disposal of a claim made in the suit should be by pronouncing a judgment on all issues. Notwithstanding the fact that the
case may be disposed of on a preliminary issue also. The exception carved out is only in respect of the issues visualised and specified under Sub
Rule (2) of the Rule 2 of Order 14. The learned counsel for the petitioner contended that the restriction or embargo placed under Rule 2 of Order
14 could be applicable only in respect of where the case itself would be disposed of and not in respect of cases where such a result would not in
respect of cases where such a result would not follow as an unsuitable consequence upon the result of the main case itself. Though attractive the
submission may appear to be, in my view, the same cannot withstand a close scrutiny and consideration. Accepting such a proposition would mean
that in all cases where the adjudication of an issue may not result in the ultimate disposal of the claim or the case itself, the Court can decide the
issues as it likes or it suits the court. That in my view, could not be the object of the provisions contained in the Order 14, Rule 2,and an
interpretation of that type, if countenanced, would defeat the very object of the amendment itself. The explanation carved out in sub rule (2) of Rule
2 of Order 14 is only in respect of cases, where the issues are merely issues of law simpliciter and upon the decision of which the case or a part
thereof may be disposed of and that too when it relates only to the jurisdiction of the Court or in respect of a bar to the suit created by any law for
the time being in force. Having regard to the nature of issues involved in this case which are sought to be got adjudicated as preliminary issues, it
cannot be contended that the same could be decided merely as legal issues or issues of law only without the necessary factual basis or evidence in
support or aid of the same. The questions involved particularly the plea of limitation could be only mixed question of fact and law and not merely an
issue of law. The other issue relating to the legality and the propriety of the sale of the shares for gross under value is concerned, unless the
necessary facts relating to the market value etc., are brought on record, there is no scope for deciding such an issue and therefore permitting a
partial trial in respect of the two issues only at this stage resulting in the Court undertaking a perfunctory exercise of power, may even lead to, as
the Supreme Court is pleased to put it, a lopsided trial of the suit, and consequent miscarriage of Justice.
The learned counsel for the petitioner no doubt is right in saying that the decision on the two issues as above would safeguard his interest and
save the defendant from much of embarrassment and inconvenience and enable him to safely project the claim of set off or a counter claim but that
allegation, in my view, is no ground to direct the trial of the two issues as preliminary issues, particularly when the reasons given by the court below
for rejecting such a claim of the petitioner constitute sufficient and valid grounds and do not appear to be either an injudicious or arbitrary and
unreasonable exercise of its discretion. For all the reasons stated above, in my view no interference is called for with the order of the Court below
and the revision, therefore, fails and shall stand dismissed. In view of the above, no further order is necessary in the connected civil Miscellaneous
petition.
The learned counsel for the petitioner would contend that the rights of the petitioner accruing or flowing from and out of any ultimate findings on
the trial and disposal of the suit, in respect of the issues sought to be tried as preliminary issue should not be jeopardised to plead for adjustment or
appropriation or to set off the suit claim in its entirety or portion and such rights and liberties should be protected and preserved and liberty should
be granted to work out his remedy in this behalf at the later stages. The learned counsel for the respondent objects to any such protection or liberty
being granted. In my view, objection on the part of the learned counsel for the respondent only betrays, perhaps the unethical and unreasonable
course of action taken by the sale of the shares during the pendency of the trial of the suit without even obtaining any orders or permission of the
Court, as pleaded by the learned counsel for the petitioner to the detriment of the rights of the second defendant. In my view, but for the fact that
the order of the court is a discretionary one which has not been shown to be patently illegal or to be vitiated by perversity of approach and the
amended provisions of law there was every justification even to countenance the claim of the petitioner in view of the piquant situation created by
the plaintiff by resorting to the sale of shares after the filing and during the pendency of the list. Consequently the request of the learned counsel for
the petitioner appears to be well-merited and justified. The petitioner shall be at liberty to work out his remedies, as prayed for.
In view of the above order, no orders are required in the Civil Miscellaneous Petitions.