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2004(8) Supreme 290
SUPREME COURT OF INDIA
(From Madras High Court)
N. Santosh Hegde & B.P. Singh, JJ.
Shipping Corporation of India Ltd. -Appellant
versus
Machado Brothers and Ors. -Respondents
Civil Appeal Nos. 1855-1856 of 2004
(Arising out of SLP (C) Nos. 10033-10034 of 2003)
Decided on 25-3-2004
Counsel for the Parties :
For the Appellant : C.A. Sundram, Sr. Advocate, Vishwajit Singh, Ms. Rohini Musa, Prashanto Sen, Advocates.
For the Respondents : P.R. Kovilan, V. Krishna Murthy, Dr. A. Francis Julian, Advocates.
Held : If there is no specific provision which prohibits the grant of relief sought in an application filed under Section 151 of the Code, the courts have all the necessary powers under Section 151 CPC to make a suitable order to prevent the abuse of the process of court. Therefore, the court exercising the power under section 151 CPC first has to consider whether exercise of such power is expressly prohibited by any other provisions of the Code and if there is no such prohibition then the Court will consider whether such power should be exercised or not on the basis of facts mentioned in the application. (Para 19)
By the subsequent event if the original proceeding has become infructuous, ex debito justitiae, it will be the duty of the court to take such action as is necessary in the interest of justice which includes disposing of infructuous litigation. For the said purpose it will be open to the parties concerned to make an application under Section 151 of CPC to bring to the notice of the court the facts and circumstances which have made the pending litigation infructuous. Of course, when such an application is made, the court will enquire into the alleged facts and circumstances to find out whether the pending litigation has in fact become infructuous or not. (Para 24)
There seems to be no dispute that the original termination notice based on which first suit O.S.No. 4212/95 was filed, has since ceased to exist because of the subsequent termination notice issued on 23.8.2001, validity of which has already been challenged by the respondent in the third suit. While dismissing the application I.A.No. 20651/2001 the courts below proceeded not on the basis that the original notice of termination has not become infructuous, but on the basis that the said application lacks in bona fide and if the said application is allowed the interlocutory injunction hitherto enjoyed by the plaintiff will get vacated and consequently the plaintiff will be prejudiced. The question for our consideration now is whether such ground can be considered as valid and legal. While so considering the said question one basic principle that should be borne in mind is that interlocutory orders are made in aid of final orders and not vice versa. No interlocutory order will survive after the original proceeding comes to an end. (Paras 25 and 26)
Therefore, in our opinion, the courts below erred in continuing an infructuous suit just to keep the interlocutory order alive which in a manner of speaking amounts to putting the cart before the dead horse. (Para 27)
The courts below have also held that the application of the appellant lacks in bona fide. We fail to understand how this is so. If a party has a legal right to ask for dismissal of an infructuous suit, and pursuant to the said right it makes an application for dismissal of said suit, the same cannot be termed as an act in malice. (Para 29)
Parties and Background: (!) (!) [1000093060001][1000093060002] (!) The appellant (Shipping Corporation of India Ltd.) appointed the respondent (Machado Brothers) as its Steamship Agent under an agreement dated 3.6.1988 for handling vessels at Tuticorin port, which included a termination clause. (!)
Key Facts and Procedural History: [1000093060003] (!) The appellant terminated the agency via notice dated 23.2.1995. The respondent filed O.S. No. 4212/95 challenging the termination as illegal and obtained interim injunction on 24.11.1995 restraining interference, which became final. [1000093060003] During pendency, the appellant noted financial irregularities and issued a second termination notice dated 23.8.2001 under the same clause. [1000093060004][1000093060005] The respondent filed O.S. No. 4849/2001 (for accounts scrutiny) and O.S. No. 5100/2001 (for injunction against second termination, with status quo order). [1000093060004][1000093060005][1000093060006] The appellant filed I.A. No. 20651/2001 under S.151 CPC in O.S. No. 4212/95 seeking dismissal as infructuous, claiming the second notice superseded the first, eliminating the cause of action. [1000093060006] Trial court rejected it, citing lack of bona fides and prejudice from vacating injunction; High Court upheld. [1000093060007][1000093060008][1000093060009]
Issues: [judgement_subject][1000093060016] (1) Maintainability of application under S.151 CPC, 1908 to dismiss suit as infructuous due to subsequent events. [1000093060017] (2) Effect of second termination notice on first suit's cause of action. [1000093060016] (3) Validity of rejecting dismissal on grounds of bona fides, prejudice, or preserving interlocutory injunction. [1000093060025]
Decision: [1000093060030] (!) (!) Appeals allowed; I.A. No. 20651/2001 granted; O.S. No. 4212/95 dismissed as infructuous; costs to appellant.
Key Holdings and Reasoning: - Courts possess inherent powers under S.151 CPC to prevent abuse of process by dismissing infructuous suits if no Code provision prohibits, after verifying facts. [1000093060017][1000093060018] (!) (!) - Subsequent events fundamentally impacting relief must be considered; if they render suit infructuous (e.g., superseded termination notice eliminating cause of action), court must dispose litigation ex debito justitiae via S.151 application. [1000093060016][1000093060020][1000093060023][1000093060024] (!) (!) - First suit infructuous as original 23.2.1995 notice ceased with 23.8.2001 notice (challenged in third suit). [1000093060016][1000093060024] - Interlocutory injunctions aid final relief and abate on suit's end; cannot perpetuate infructuous suit to sustain them ("cart before dead horse"). [1000093060025][1000093060026] (!) - Rejection on lack of bona fides invalid: exercising legal right to seek dismissal not malicious. [1000093060028] (!) Prejudice from injunction loss irrelevant if suit infructuous. [1000093060027] - Revision against S.151 order maintainable; no appeal provision exists. [1000093060015]
JUDGMENT
Santosh Hegde, J.-Heard learned counsel for the parties.
Leave granted.
2. These two civil appeals arise out of a common order made by the High Court of Madras at Chennai in Civil Revision Petition (P.D.) No. 309 of 2003 and CMP No. 2222 of 2003. By the above order, the High Court upheld an order made by the City Civil Court at Chennai in I.A.No. 20651 of 2001 in O.S.No. 4212 of 1995. The said I.A. filed under Section 151 C.P.C. by the appellant herein was for the dismissal of the suit O.S.No. 4212/95 which was filed by the respondent herein on the ground that the said suit had become infructuous.
3. The facts necessary for the disposal of these appeals are as follows:
The appellant herein had appointed the respondent as the Steamship Agent of the appellant for the purpose of handling tankers, bulk carriers, and tramp vessels, calling at the port of Tuticorin. It is the contention of the appellant that the said agreement provides for termination of the contract. On being dissatisfied with the conduct of the respondent, invoking the said clause of termination and for the reasons mentioned therein, by a notice dated 23.2.1995, the appellant terminated the said contract of agency. The respondent herein challenged the said termination by way of a suit in O.S.No. 4212/95 in the City Civil Court at Madras (the trial court). In the said suit the respondent inter alia prayed for the following reliefs:
"The plaintiff, therefore, prays for a judgment and decree against the defendants 1 to 3 for a declaration to declare that the order of the termination issued by the 1st defendants on 23.2.1995 through telex terminating the Plaintiff s agency, as per the agreement dated 3.6.1988, is illegal, void and unenforceable."
4. During the pendency of the said suit, the respondent also prayed for an interim injunction restraining the appellant from interfering with the agency of the respondent. The trial court by an order dated 24.11.1995 was pleased to grant interim relief sought for by the respondent which became final consequent upon the appellant s challenge to the same made before the High Court being rejected.
5. During such continuation of the agency, the appellant allegedly noticed certain financial irregularities and was contemplating to take fresh steps to terminate the agency once again. Anticipating such subsequent termination, the respondent herein filed another suit O.S.No. 4849/2001 before the trial court praying for production of accounts of the appellant and appointment of an Advocate Commissioner to scrutinize the accounts of the parties.
6. During the pendency of the above noted two suits filed by the respondent, the appellant by a notice dated 23.8.2001 again terminated the agency of the respondent on the ground of respondent charging excess amount and on the charge of tampering with invoices and bills. The said notice stated that the appellant was terminating the agency under Clause 31 of the Agency Agreement and on expiry of 90 days from the date of the receipt of the said notice the agency will stand terminated.
7. On receipt of the above notice, the respondent filed another suit for permanent injunction in O.S.No. 5100/2001. In the said suit, respondent sought for an interlocutory injunction but the trial court in the said application granted an order of status quo. The appellant attempted to get the said order of status quo vacated and having failed, it challenged the same in a revision petition before the High Court along with a prayer for dismissal of all the three suits pending before the trial court. The said revision petition came up for orders before the High Court on 7.12.2001 and the same was remanded with the direction that I.A.No. 14780 of 2001 should be heard with I.A.No. 15301 of 2001. Thus when the matter stood remanded to the trial court, the appellant filed I.A.No. 20651 of 2001 in O.S.No. 4212/95 (the first suit) inter alia praying for the dismissal of that suit on the ground the same had become infructuous
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