2012 Supreme(Bom) 1314

High Court of Judicature at Bombay
D.Y. CHANDRACHUD & R.D. DHANUKA
Nusli Neville Wadia
Versus
Ferani Hotels Private Limited & Others
APPEAL NO.817 OF 2010 IN NOTICE OF MOTION NO.1863 OF 2008 IN SUIT NO.1628 OF 2008 WITH APPEAL NO.806 OF 2010
Decided on : 19-07-2012

The provisions of Section 9A of the Code of Civil Procedure, 1908 are mandatory and must be strictly followed. The Court shall proceed to determine at the hearing of the application the issue as to jurisdiction as a preliminary issue before granting or setting aside the order granting interim relief.

Headnote:

Section 9A of the Code of Civil Procedure, 1908 - Preliminary issue - Limitation - Maintainability of suit - Ad interim relief - Delay - Genuine third party - Fraud - Construction - Agreement - Interpretation - Powers of attorney - Auditors - Injunction - Damages - Commercial document - Business understanding - Contemporaneous conduct - Ready reckoner - Encroachment - Third party rights - Injunction restraining sale of units - Gross total consideration - Commissioner for recording evidence.

Fact of the Case:

Plaintiff, as administrator of the estate of E.F. Dinshaw, instituted a suit against Defendant Ferani Hotels Private Limited for a declaration that an agreement entered into between them stood vitiated by fraud and had been duly determined. Plaintiff sought consequential reliefs, including the revocation of powers of attorney executed in favor of Defendants and the invalidation of certain agreements entered into between Ferani and other Defendants. Plaintiff also sought an injunction restraining Ferani from carrying out further construction on the disputed lands and to demolish the constructions that had been put up. Ferani raised an objection to the maintainability of the suit on the ground that the claim was barred by limitation. The Learned Single Judge accepted the contention and held that no case for the grant of ad interim relief, within the meaning of Section 9A(2) was made out on the ground of delay. However, the Learned Single Judge proceeded to dispose of the Motion for interim relief on the ground that since affidavits have been filed and parties were heard at length, it would not be appropriate or proper to have a hearing confined only to the disposal of the application for ad interim relief.

Finding of the Court:

The Court held that Section 9A of the Code of Civil Procedure, 1908 mandates that when an objection on the ground of jurisdiction is raised at the hearing of an application for granting or setting aside an order granting interim relief, the Court shall determine that issue first. However, sub section (2) of Section 9A does not preclude the Court from granting such interim reliefs as it may consider necessary pending the decision on the question of jurisdiction. The Court also held that the provisions of Section 9A are mandatory and must be strictly followed. The Court further held that the Learned Single Judge was justified in raising the issue of limitation as a preliminary issue, but erred in disposing of the Motion for interim relief finally without the issue of jurisdiction being resolved. The Court also held that the delay on the part of the Plaintiff in moving the Court for ad interim relief was a factor to be considered in declining to grant a stay on construction at the ad interim stage.

Issues: 1. Whether the objection raised by Ferani Hotels Private Limited to the maintainability of the suit on the ground of limitation was valid? 2. Whether the Learned Single Judge was justified in raising the issue of limitation as a preliminary issue under Section 9A of the Code of Civil Procedure, 1908? 3. Whether the Learned Single Judge erred in disposing of the Motion for interim relief finally without the issue of jurisdiction being resolved? 4. Whether the delay on the part of the Plaintiff in moving the Court for ad interim relief was a factor to be considered in declining to grant a stay on construction at the ad interim stage?

Ratio Decidendi: 1. An objection to jurisdiction may in a certain conceivable situation be to the jurisdiction of the Court to entertain the suit in its entirety as for instance, where the Court lacks the jurisdiction to entertain the subject matter of the suit on the ground that properly construed the suit relates to the relationship of a lessor and lessee falling within the exclusive domain of the Small Causes Court in the city of Mumbai. Alternately, the objection may be to the lack of territorial jurisdiction or on the ground of a lack of pecuniary jurisdiction. Equally an objection as to jurisdiction can well be in respect of a part of the cause of action which is set up in the suit. 2. If an objection to the jurisdiction of the Court to entertain a part of the cause of action which is set up in the suit is raised and sustained, that part of the cause of action would fall outside the scope of adjudication in the suit before the Court before which the objection is raised. The object of the legislature was to preclude the Plaintiff from pursuing an application for interlocutory relief though the claim on the basis of which the application is founded falls outside jurisdiction. This rationale would be relevant both to a situation where the entirety of the claim lies outside the jurisdiction of the Court as well as in a situation where a part of the cause of action is outside the jurisdiction, though the rest falls within. 3. An objection as to the jurisdiction of the Court “to entertain such a suit” must bear its natural and ordinary connotation which would mean an objection to the jurisdiction of a Court to entertain even a part of the cause of action raised in a suit. For this Court to hold that Section 9A would not apply in a situation where the objection of jurisdiction would not result in the disposal of the entire suit, even if it were to be upheld would be to introduce a condition which has not been imposed by the legislature. 4. The provisions of Section 9A are mandatory and must be strictly followed. The Court shall proceed to determine at the hearing of the application the issue as to jurisdiction as a preliminary issue before granting or setting aside the order granting interim relief. Such an application cannot be adjourned to the hearing of the suit and must be disposed of expeditiously.

Final Decision: 1. Appeal 817 of 2010 filed by Ferani Hotels Private Limited was allowed, and the impugned order of the Learned Single Judge dated 19 July 2010 was set aside. 2. The issue of whether the claim of the Plaintiff in the suit is barred by limitation was raised under Section 9A of the Code of Civil Procedure, 1908 and was to be tried as a preliminary issue. 3. The Plaintiff was directed to file an affidavit in lieu of the examination-in-chief within a period of four weeks from the date of the judgment. Shri Justice D.G. Karnik, Former Judge of this Court was appointed as Commissioner for recording evidence. 4. Pending the hearing and final disposal of the preliminary issue, Ferani Hotels Private Limited was directed to maintain accounts and to continue depositing an amount equivalent to 12% of the gross sale consideration in a designated bank account. The amount upon deposit was to be invested in a fixed deposit to abide by further orders of the Learned Trial Judge. 5. Parties were to endeavour an expeditious completion of the recording of evidence before the Commissioner, preferably within a period of three months from the date of the judgment. 6. The Learned Single Judge was requested to endeavour an expeditious disposal of the preliminary issue preferably within a period of three months after the receipt of the report of the Commissioner appointed for recording evidence. 7. Liberty was reserved to the Plaintiff to apply before the Learned Single Judge for appropriate interim reliefs after the final decision on the preliminary issue. 8. Appeal 806 of 2010 filed by Mr. Nusli Wadia was disposed of in the aforesaid terms.