Sahib Enterprises and Another vs Sharma and Sharma Gas Agency and Another

Deepak Gupta, J.—By means of this petition the petitioners challenge the order dated 21.10.2005 passed by the learned District Judge, Hamirpur rejecting the application filed by the petitioners (here-in-after referred to as the defendants) under Order 14 Rule 2(2) for treating issue No.5 as a preliminary issue before calling for evidence on the other issues.

A Full Bench of this Court in Prithvi Raj Jhingta and Anr. v. Gopal Singh and another, Latest HLJ 2006 (2) 1179, considered the ambit and scope of Order 14 Rule 2 and held as under:

When one draws a comparison between the earlier Rule 2 and the amended Rule 2, the comparison immediately leads to a conclusion that

1 Whether the reporters of local papers may be allowed to see the Judgment? Yes.

whereas under the old Rule 2 it was mandatory for a Court to try the issues of law in the first instance and to postpone the settlement of issues of fact until after findings had been arrived at with respect to the issues of law, under the new, amended Rule 2, as has been spelt out and clearly stipulated in Sub-rule (1) thereof, the legislature has mandated that a Court shall pronounce judgment on all issues, both of law as well as facts, notwithstanding that a case may be disposed of only on a preliminary issue. Under the new Rule 2 the only exception is contained in Sub-rule (2) thereof which, in a manner of speaking relaxes the aforesaid legislative mandate to a limited extent by conferring a discretion upon the Court that if it is of the opinion that the case or any part thereof may be disposed of on a issue of law only, it may try that issue first, in the process postponing the settlement of other issues until the issue of law has been determined. This discretion even though conferred by the aforesaid legislative amendment has however been circumscribed and limited, specifically and explicitly only to two situations and these are that the issue or issues of law only upon which the case or any part of the case may be disposed of must relate to either the jurisdiction of the Court or a bar to the suit created by any law for the time being in force. By a combined reading of Sub-rule (1) and Sub-rule (2) of Rule 2 what therefore emerges is that, except in situations covered by Sub-rule (2) a Court must dispose of a suit as a whole, try all issues of law and fact together and accordingly pronounce judgment on all such issues even though the case may be disposed of on a preliminary issue. More importantly, and for the purposes of our case, in the light of the specific reference on the formulated question of law, Rule 2 as it presently stands caters to and creates two sets of situations in a suit. One situation is where, at the stage of framing of issues the Court exercises its discretion conferred upon it under Sub-rule (2) and frames, in the first instance issues of law only and passes an order specifically and explicitly proposing to try issues of law only, in the process postponing the settlement of other issues until after it has decided the issue of law only. In this situation, at the stage of determining or deciding the issues of law only the Court may either dispose of the suit based on such determination of the issues of law only, of course these issues of law relating to the jurisdiction of the Court or a bar to the maintenance of the suit created by law for the time being in force, or upon determination of issues of law only the Court may hold that the suit is maintainable and/ or that it has jurisdiction also to try the suit and thus, consequently to proceed to settle other issues for trial and determination. Such a situation is contemplated by Sub-rule (2) and there is no manner of doubt that in taking recourse to such a situation the Court has the mandate as well as the sanction from the legislature.

xxx xxx xxxxxx xxx xxx 7. The legislative mandate is very clear and unambiguous. In the light of the past experience that the old Rule 2 whereby, in the fact situation of the trial Court deciding only preliminary issues and neither trying nor deciding other issues, whenever an appeal against the judgment was filed before the Appeal Court and the Appeal Court on finding that the decision of the trial Court on preliminary issues deserved to be reversed, the case per force had to be remanded to the trial Court for trial on other issues. This resulted in delay in the disposal of the cases. To eliminate this delay and to ensure the expeditious disposal of the suits, both at the stage of the trial as well as at the appeal stage, the legislature decided to provide for a mechanism whereby, subject to the exception created under Sub-rule (2), all issues, both of law and fact were required to be decided together and the suit had to be disposed of as a whole, of course based upon the findings of the trial Court on all the issues, both of law and fact.

Based upon the aforesaid reasons therefore, and in the light of legislative background of Rule 2 and the legislative intent as well as mandate based upon such background, as well as on its plain reading, we have no doubt in our minds that except in situations perceived or warranted under Sub-rule (2) where a Court in fact frames only issues of law in the first instance and postpones settlement of other issues, under Sub-rule (1), clearly and explicitly in situations where the Court has framed all issues together, both of law as well as facts and has also tried all these issues together, it is not open to the Court in such a situation to adopt the principle of severability and proceed to decide issues of law first, without taking up simultaneously other issues for decision.

This course of action is not available to a Court because Sub-rule (1) does not permit the Court to adopt any such principle of severability and to dispose of a suit only on preliminary issues, or what can be termed as issues of law. Sub-rule (1) clearly mandates that in a situation contemplated under it, where all the issues have been framed together and have also been taken up for adjudication during the course of the trial, these must be decided together and the judgment in the suit as a whole must be pronounced by the Court covering all the issues framed in the suit.

To my mind one of the main objects behind amending Order 14 Rule 2 was that a suit should be tried on all issues and should not normally be disposed of on preliminary issue since if a suit is disposed of on a preliminary issue and later on in appeal that finding is set-aside the trial has to start de novo. In the present case, the issue of jurisdiction cannot be decided without examining some oral evidence. It is also settled law that it is the discretion of the trial Court to decide whether an issue is to be treated as a preliminary issue or not. The exercise of such discretion cannot be gone into by this Court in the exercise of its supervisor jurisdiction unless it is shown that the order is perverse or the Court has acted in a highly illegal manner. In the present case the learned District Judge has given valid reasons for not treating the issue as a preliminary issue. No interference is called for. Therefore, the petition is rejected. The parties through their counsel are directed to appear before the learned trial Court on 15th February, 2011.