Back
Supreme Court Of India
S. S. KHANNA
Versus
F. J. Dillon (in both the Appeals)
Decided On : August 14, 1963
CIVIL PROCEDURE CODE - SECTION 115 - JURISDICTION OF HIGH COURT TO SET ASIDE INTERLOCUTORY ORDER - CONDITIONS - INTERPRETATION OF EXPRESSION "CASE" - DISTINCTION BETWEEN "CASE" AND "SUIT" - POWER OF HIGH COURT TO INTERFERE WITH INTERLOCUTORY ORDER EVEN IF APPEAL LIES FROM ULTIMATE ORDER OR DECREE - MEANING OF EXPRESSION "IN WHICH NO APPEAL LIES THERETO" - EXERCISE OF DISCRETION BY HIGH COURT - LEGALITY AND MATERIAL IRREGULARITY IN EXERCISE OF JURISDICTION.
Fact of the Case:
In a suit for dissolution of partnership and rendition of accounts, the parties arrived at a compromise confirming the earlier dissolution of the partnership, subject to a scheme of winding up. Some outstandings of the dissolved partnership were collected by one of the partners and deposited in a joint account of both partners. One of the partners filed a suit for recovery of certain amounts alleging that he had advanced the amounts to the other partner as short-term loans which the latter had promised to repay. The other partner pleaded that he did not borrow any loans and that the amounts claimed were advanced out of the joint fund belonging to both partners. The trial court held that the suit was not maintainable as it was by a partner against another partner of a dissolved firm which was in the process of winding up, and in respect of advances from the partnership assets. The High Court set aside the order and directed that the suit be heard and disposed of according to law.
Finding of the Court:
The High Court was right in setting aside the order passed by the trial court and in holding that without investigation as to the respective claims made by the parties by their pleadings on the matters in dispute the suit could not be held not-maintainable.
Issues: 1. Whether the High Court has jurisdiction to set aside an interlocutory order passed by a subordinate court? 2. Whether the expression "case" in Section 115 of the Code of Civil Procedure includes an interlocutory order? 3. Whether the High Court can interfere with an interlocutory order even if an appeal lies from the ultimate order or decree in the proceeding? 4. What is the meaning of the expression "in which no appeal lies thereto" in Section 115 of the Code of Civil Procedure? 5. What are the factors to be considered by the High Court in exercising its discretion under Section 115 of the Code of Civil Procedure?
Ratio Decidendi: 1. The High Court has jurisdiction to set aside an interlocutory order passed by a subordinate court under Section 115 of the Code of Civil Procedure if the subordinate court has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity. 2. The expression "case" in Section 115 of the Code of Civil Procedure includes an interlocutory order relating to the rights and obligations of the parties. 3. The High Court can interfere with an interlocutory order even if an appeal lies from the ultimate order or decree in the proceeding, provided that no appeal lies directly or indirectly to the High Court from the interlocutory order. 4. The expression "in which no appeal lies thereto" in Section 115 of the Code of Civil Procedure means that the High Court has jurisdiction to set aside an interlocutory order only if no appeal lies to the High Court from the final order passed in the proceeding. 5. In exercising its discretion under Section 115 of the Code of Civil Procedure, the High Court should consider the following factors: * The interlocutory character of the order * The existence of another remedy to an aggrieved party by way of an appeal from the ultimate order or decree in the proceeding or by a suit * The general equities of the case being served by the order made.
Final Decision: The appeals were dismissed.
Judgment
SHAH, J.
( 1 ) BRIG. F. J. Dillon and Major S. S. Khanna hereinafter called dillon and Khanna respectively carried on business in partnership as Construction Engineers. They agreed to dissolve the partnership with effect from 15/02/1956. By the deed of dissolution it was agreed that Dillon was to make over all the assets and properties of the partnership as absolute owner and to pay all the debts and to discharge all the liabilities of the partnership and to keep Khanna indemnified against all demands and claims in relation to the partnership business.
( 2 ) BUT the deed did not terminate the disputes between the partners, and Khanna commenced an action against Dillon in the Court of the Subordinate Judge, 1st Class, Delhi "for dissolution of the partnership and rendition of accounts. On 12/01/1957, the parties arrived at a compromise (which was incorporated into a decree of the Court) confirming the earlier dissolution of the partnership, subject to a scheme of winding up, under which all out-standings realised from the debtors of the firm and the sale proceeds of certain assets were to go into a banking account to be opened in the joint names of Dillon and Khanna and were to be applied in the first instance to meet the liabilities of the dissolved firm, and the balance in that joint account was to belong to Dillon. Some outstandings of the dissolved partnership were collected by Dillon and were deposited in the joint account of Dillon and Khanna.
( 3 ) DILLON filed a suit in the Court of the Subordinate Judge at Delhi for a decree for Rs. 54,250. 00 with future interest alleging that between the months of May 1957 and November 1957 he had, at the request of Khanna, advanced in three sums an aggregate amount of Rs. 46,000. 00 as short-term loans which Khanna had promised to but had failed to repay. Khanna pleaded that he did not borrow any loans from Dillon, and that the amounts claimed in the action being advanced, even on the plea of Dillon, out of joint fund belonging to the two partners, action for recovery of those amounts was in law not maintainable.
( 4 ) OUT of the issues raised by the Trial Court in the suit, the third issue viz:"whether this suit is not maintainable and the plaintiff is not entitled to institute this suit, alleged in paras Nos. 15, 16, 17, 18 of the written statement?,was at the request of Khanna tried as a preliminary issue, and it was held that the suit being by a partner against another partner of a dissolved firm which was in the process of winding up, and in respect of advances from the partnership assets, was not maintainable.
( 5 ) THE High Court of Punjab in exercise of its revisional jurisdiction set aside the order, and directed that the suit be heard and disposed of according to law.
( 6 ) WITH special leave this appeal is preferred TO by Khanna.
( 7 ) THE jurisdiction of the High Court to set aside the order in exercise of the power under S. 115 Code of Civil Procedure is challenged by Khanna on three grounds:- (I) that the order did not amount to "a case which has been decided within the meaning of S. 115 Code of Civil Procedure; (II) that the decree which may be passed in the suit being subject to appeal to the High Court; the power of the High Court was by the express terms of S. 115 excluded; and (III) that the order did not fall within any of the three clauses (a) (b) and (c) of S. 115. THE validity of the argument turn upon the true meaning of S. 115 Code of Civil Procedure, which provides :"the High Court may call for the record of any case which has been decided by any Court subordinate to such High Court and in which no appeal lies thereto, and if such subordinate Court appears - (A) to have exercised a jurisdiction not vested in it by law, or (B) to have failed to exercise a jurisdiction so vested, or (C) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make such order in the case as sit thinks fit. the section
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
